Cathie Wood Doubles Down On Growth Stocks After Fund Loses A Fifth Of Its Value In 2021

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Topline

Famed stock picker Cathie Wood of $60 billion (assets) Ark Invest kicked off 2022 by doubling down on some of her favorite growth stocks, looking to bounce back after her funds widely underperformed the market last year.

The innovation investor added to positions in DraftKings, Roblox and Robinhood.

Patrick T. Fallon/AFP via Getty Images

Key Facts

The founder and CEO of Ark Invest purchased roughly 1.2 million shares of daily fantasy and sports betting operator DraftKings on Tuesday, a position worth just over $30 million.

The same day, Wood bought more than 300,000 shares each of video game company Roblox (roughly worth $30 million) and Block, formerly Square (worth nearly $50 million).

So far this year, Wood also bought nearly 400,000 shares of popular stock trading app Robinhood while offloading around 360,000 shares of social media platform Twitter.

The stock purchases so far this week follow a rough year for Wood’s funds: After rising to fame and surging nearly 150% in 2020, her flagship ARK Innovation fund fell 24% in 2021—losing over a fifth of its value–while the S&P 500 was up 27%.

The fund, which is down over 2% this week, is under pressure after major losses in some of its top holdings including Teladoc Health, Zoom Video and Exact Sciences.

Wood remains undeterred, however: She says innovation stocks are “not in a bubble,” rather they have entered “deep value territory.”

Key Background:

Wood’s largest holding to date in her flagship fund—a position worth roughly $1.3 billion—is electric vehicle giant Tesla, which gained 50% in 2021. ARK Innovation’s other top holdings are Roku, Teladoc, Zoom and Coinbase, all of which account for at least 5% or more of the portfolio. Wood also has sizable positions in Unity Software, Spotify, Exact Sciences, Twilio and Block.

Crucial Quote:

“Don’t drift from your style. Just keep your eye on the prize. Truth will win out,” Wood told investors during a webinar last month. “We have the best research on innovation in the world and I know the returns that we will generate for our clients over the next five years, if our research is right, are going to be spectacular.”

Surprising Fact:

Despite the Ark Innovation fund’s rough performance last year, it still saw more than $4.8 billion of inflows in 2021, according to data from FactSet. That number is still down from roughly $8 billion of inflows in 2020, however.