Renowned money manager Cathie Wood, chief executive officer of Ark Investment Management, focuses on fledgling tech companies she considers disruptive.
But on Friday, she bought shares in a company that is certainly not a fledgling, and one that few consider a disruptive technology company. To be sure, this is also a company that has performed well in recent years under a highly regarded executive.
The company is General Motors (GM) – Get a free reportand the CEO is Mary Barra.
Ark Autonomous Technology & Robot ETF (ARKQ) – Get a free report purchased 70,226 shares, worth $2.9 million as of the end of Friday.
So why did Wood join GM? She did not disclose her reasons for the private transactions. Perhaps she considers its electric vehicle (EV) segment a disruptor.
GM .’s Electric Vehicle Effort
On its website, the company says it is “moving towards an all-electric future”. Specifically, “we are actively pursuing every aspect of what it takes to get people into an electric vehicle,” GM said.
That’s “because we need millions of EVs on the road to make a meaningful impact on building a zero-emission future,” the company said.
“GM is positioned to design, engineer and manufacture electric vehicles of all makes and prices, and we are rapidly building a competitive advantage in battery, software, vehicle integration, manufacturing and experience.” customer experience.” GM aims to sell only zero-emissions vehicles by 2035.
GM Tesla’s EV Competitor (TSLA) – Get a free reportdominates the market, representing the second largest holding in Wood’s flagship Ark Innovation fund (ARKK) – Get a free report.
Some investors might see GM as a value game. The stock was recently trading at $40.80, and Morningstar analyst David Whiston puts it at a fair value of $70.
But Wood is a growth investor, not a value investor. So it’s more likely she won GM stock based on its potential in the EV space and perhaps on the overall strong performance.
Wood’s underperformance
Ark’s ETFs have tumbled this year, as their tech stocks have been hit by weak earnings. Wood has defended herself by noting that she has a five-year investment roadmap.
And the Ark Innovation ETF’s five-year track record could really give investors some comfort through May 9. The fund’s five-year returns beat the fund’s returns. S&P 500 until then.
But Ark Innovation’s five-year total annual return was just 4.68% through November 11, far short of the S&P 500’s 11.06%.
The fund’s performance is also far below Wood’s target of 15% annual return over the five-year period. Ark Innovation is down 58% so far this year and 75% off its February 2021 peak.
The underperformance of the $8.2 billion fund may finally start to push investors away. Ark Innovation posted a net loss of $121 million in the three months to November 10, according to VettaFi, an ETF research firm. But it still registers cash flows of $1.39 billion per year to date.
You might wonder why so many investors stick with Wood, despite her mediocre returns. The fact that she’s had such a spectacular year certainly helps. The Ark Innovation ETF has skyrocketed 153% in 2020.
In addition, Wood has become a rock star in the investment world, appearing frequently in the media. She is clearly intelligent and articulate, explaining financial concepts in a way that novice investors can understand.
