Cathie Wood Watch: Ark Reverses Course on Electric-Vehicle Titan Tesla

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The prominent investor Cathie Wood, chief executive of Ark Investment Management, reversed course on a big electric-vehicle maker in her May 23 trading.

Ark also bought and sold some familiar names. All valuations below are as of Monday’s close.

Ark Innovation ETF  (ARKK) – Get ARK Innovation ETF Report purchased 15,858 of electric-vehicle titan Tesla  (TSLA) – Get Tesla Inc Report, valued at $10.2 million. 

Wood for months had been selling Tesla shares, but she had said that the sales reflected profit-taking and that she still believed in the Austin company.

Wood may see Tesla stock as a good value now, given its 36% drop year to date through Monday. An Ark spokeswoman said the firm doesn’t comment on daily trading activity.

Tesla is Ark Innovation’s second biggest holding, and was No. 1 until video-streaming platform Roku  (ROKU) – Get Roku, Inc. Class A Report surpassed it last week.

Ark Innovation’s No. 3 holding is videoconferencing service Zoom Video Communications  (ZM) – Get Zoom Video Communications, Inc. Class A Report. And the fund snagged 99,388 shares of that stock, valued at $8.9 million. Zoom Video stock leaped after the company’s earnings report.

Ark funds snapped up 91,868 shares of Coinbase  (COIN) , the biggest U.S. cryptocurrency exchange, valued at $6.1 million.

Ark Genomic Revolution ETF ARG snatched 399,701 shares of Adaptive Biotechnologies  (ADPT) – Get Adaptive Biotechnologies Corp. Report, valued at $3.2 million.

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On the selling side, Ark funds dumped 331,947 shares of Singapore-based digital entertainment company Sea  (SE) – Get Sea Ltd. (Singapore) Report, valued at $25.6 million.

Finally, Ark Genomic unloaded 459,364 shares of Ionis Pharmaceuticals  (IONS) – Get Ionis Pharmaceuticals, Inc. Report, valued at $18.1 million.

Trailing the S&P 500

As Ark funds have tumbled in recent months, Wood has defended herself by noting that she has a five-year investment horizon.

And the five-year track record of her flagship fund Ark Innovation ETF ARKK could indeed give investors comfort until May 9. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled 11% through May 23, compared to 12.63% for the S&P 500.

Ark Innovation has plunged 59% so far this year, as Wood’s young, disruptive technology companies have hit the skids. And it’s down 75% from its February 2021 peak. Raging inflation and soaring interest rates have helped put the kibosh on tech stocks.

Still, Wood’s investors aren’t deserting her. Ark Innovation enjoyed a net inflow of $1.4 billion so far this year, as of the week of May 16, The Wall Street Journal reported.

Morningstar’s View

Meanwhile, on March 29, Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation.

“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.

Wood countered Greengold’s points in an interview with Magnifi Media by Tifin. “I do know there are companies like that one [Morningstar] that do not understand what we’re doing,” she said.

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