The rise of Cathie Wood, the rockstar stock-picker whose ETFs are dominating 2021

cathie wood ceo ark invest profile 2x1
Ark Invest’s Cathie Wood.

So far, this year has belonged to Cathie Wood. You could argue last year did too.

The founder of ARK Invest has seen flows into her active exchange-traded funds beat those of massive franchises like BlackRock’s iShares, thanks to her blockbuster 2020 performance, which was driven by bets into mega-growth stocks like Tesla.

Her funds have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.

Wood has built such a large following that an announcement about a new ARK fund moved markets. Her podcast has landed big-name guests such as Elon Musk. She’s become a favorite of the r/WallStreetBets crowd.

Insider spoke with investors in both Wood’s business and funds, longtime colleagues, analysts at her firm, and fans who chart her rise through newsletters and memes. They describe her leadership, which comes with four decades of investing experience, and her curiosity, which keeps her analysts on their toes.

But threats are also looming: Talk of a stock-market bubble and an impending correction are brewing; the easy conditions created by massive fiscal and monetary stimulus could taper off as the economy recovers from the pandemic; and Wood’s highly concentrated funds have ballooned, which has raised concerns about capacity.

SUBSCRIBE NOW TO READ THE FULL STORY: Cathie Wood made a career betting on the future. Insiders discuss how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

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Cathie Wood says digital wallets will ‘gut’ traditional banks – and expects bitcoin to rise by as much as $400,000

cathie wood ceo ark invest profile 2x1

Ark Invest’s Cathie Wood said on Benzinga’s “Raz Report” show Wednesday that the growth of digital wallets will “gut” traditional banks, and she remains bullish on bitcoin and Tesla.

Wood, who is known for her strategy of investing in highly disruptive companies, counts Tesla as one of the major stock picks in her $24.4 billion ARK Innovation exchange-traded fund. The automaker accounts for roughly 10% of the fund’s portfolio. Earlier this month, Tesla pulled off its biggest bitcoin endorsement yet by revealing a $1.5 billion investment in the digital asset.  

Jack Dorsey’s payments firm Square also disclosed an additional $170 million investment, bringing its total bitcoin holdings to 5% of its balance sheet. If other US companies follow this trend, the price of bitcoin could rise by between $40,000 and $400,000, according to Wood.

Bitcoin fell 2%, to $49.311, on Thursday, but its price is up 70% year-to-date.

Wood is convinced Tesla’s head-start in autonomous driving remains attractive. Companies that outperformed in the stay-at-home environment during the pandemic, such as Roku and Zoom, are other attractive stocks, owing to their expected growth rate over the next five years, she said. 

She said shares in Zoom are “probably undervalued” and that Roku and Amazon “will take the lion’s share of the connected TV market.”

Wood said her fund remains “opportunistic” despite recent decline in the S&P 500 that has been driven by  concerns about lofty valuations and chances of higher inflation. “The benchmarks are filling up with value traps” due to growing innovation in fields including artificial intelligence and robotics, she said. “We think the big risk is in the benchmarks, not what we’re doing.” 

The Nasdaq Compose closed 2.7% lower on Wednesday as tech stocks plummeted after disappointing labor-market data and a rise in Treasury yields, while the S&P 500 fell 1.3%.

Reuters first reported Wood’s comments from the show.

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Cathie Wood’s flagship ETF has tumbled 25% in just 3 weeks amid a sharp tech sell-off

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  • A correction in technology stocks has taken its toll on the performance of Cathie Wood’s flagship fund.
  • The ARK Disruptive Innovation ETF has tumbled 25% in just three weeks as a spike in interest rates helped spark a rotation out of high-growth sectors like tech and into cyclical stocks.
  • The ETF continued its decline on Thursday, falling as much as 6% as top holdings Tesla and Square sold off.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investors in Cathie Wood’s Ark Invest ETFs have had a rough few weeks as a broad sell-off in technology stocks took a toll on performance.

Wood’s flagship fund, the ARK Disruptive Innovation ETF, has fallen 25% since its record close on February 12, based on Thursday’s low of $118. A bulk of the decline has been sparked by a rapid rise in interest rates and the subsequent rotation out of high-growth tech stocks and into more cyclical stocks in the energy and financials sector. 

The ARK ETF has no exposure to the energy sector, and just 4% exposure in the financials sector as of December 31.

The volatility in ARK has led to back-to-back record swings in both fund outflows and inflows.

The decline in the Ark’s flagship ETF continued on Thursday, falling as much as 6% as its top holdings Tesla and Square saw declines that outpaced the broader market. Combined, the two holdings make up 16% of the fund, according to data from Bloomberg. 

Tesla fell as much as 5% after billionaire investor Ron Baron told CNBC that he sold nearly 2 million shares for clients as the position became too concentrated in his mutual funds. Meanwhile, Square dropped as much as 6% after the company said it acquired music-streaming service Tidal for nearly $300 million. 

But Wood is not concerned about the recent decline in her portfolio, evidenced by both the recent trading activity of the firm and recent comments she made about the market volatility.

Amid the tech decline, Ark has been selling more stable mega-cap tech names like Apple, Amazon and Alphabet, and has been using the proceeds to buy more shares in less profitable and more volatile stocks like Tesla and Palantir.

In a video posted to Ark’s YouTube channel last week, Wood said she views the recent rotation out of technology stocks and into cyclical stocks as a broadening of the bull market, which is bullish for the long-term. If the market rally were to continue to be solely driven by a narrow rise in technology stocks, similar to what happened during the dot-com bubble, Wood would be more worried.

Whether investors will be able to hold on to Ark’s ETFs amid the heightened volatility is the ultimate question, and fund flow data will provide the answer. Ark Invest has seen its assets under management balloon to more than $60 billion as of mid-February.

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Cathie Wood’s Ark ETFs added over 2.6 million shares of Palantir on Wednesday amid falling share prices

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood’s ARK Innovation ETF and ARK Next Generation Internet ETF added 2.6 million shares of Palantir on Wednesday.
  • At Wednesday’s closing price the shares were worth over $62.7 million.
  • The move continues a trend of buying the dip in big tech names for ETFs run by the famed fund manager.
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Cathie Wood’s ARK Innovation ETF (ARKK) and ARK Next Generation Internet ETF (ARKW) picked up a combined 2,658,800 shares of Palantir on Wednesday amid falling share prices.

At Wednesday’s closing price of $23.59, the shares were worth roughly $62.7 million.

The move made Palantir the 37th largest holding of the ARK Innovation ETF and the 20th largest holding of the ARK Next Generation Internet ETF.

Palantir’s stock has slumped in recent week, after a lockup expiration and a surprise quarterly loss led to considerable insider profit taking at the big data firm. Share prices have fallen over 26% in the past month and a recent tech stock pullback hasn’t helped.

The Invesco QQQ Trust Series 1 ETF, which tracks tech names in the Nasdaq, has fallen nearly 10% since the beginning of February. Much of the move down was caused by a bond sell-off that rocked markets last week, something Cathie Wood said she was “very comfortable” with given her funds’ long-term bias.

Wood has been using the recent tech rout to ‘buy the dip’ in many of her favorite names. The fund manager known as ‘money tree’ doubled down on her Tesla bet (1) (2) amid falling share prices at the EV maker, and now she’s taking another bite at Palantir.

Wood’s big Palantir buy follows a trend for the ARK Innovation ETF and ARK Next Generation Internet ETF which acquired a combined 6.8 million shares of Palantir in February.

Despite Palantir’s recent slide, a number of analysts still believe in the company’s prospects. Goldman Sachs analysts last month upgraded Palantir to a buy and placed a $34 price target on the firm after earnings.

Analysts, led by Christopher D. Merwin, CFA, argued Palantir now has a clear path to “sustainable growth” as the company continues to win contracts for their Foundry, Gotham, and Apollo software.

Palantir traded up 4.87% during premarket hours on Thursday.

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Cathie Wood’s Ark Invest snaps back with near record inflows following a week of outflows amid tech decline

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood’s Ark Invest bounced back from record outflows last week with near record inflows, according to data compiled by Bloomberg.
  • The Ark Innovation Fund saw $464 million in inflows on Friday, representing the second-biggest day of inflows on record.
  • Wood has stuck to her high-growth strategy amid the recent market volatility, selling shares of large cap names like Apple and Amazon to fund purchases of higher-risk stocks like Tesla.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investors aren’t abandoning Cathie Wood’s Ark Invest following a volatile week in the stock market, according to recent fund flow data compiled by Bloomberg.

The ARK Innovation ETF saw near-record inflows of $464 million on Friday, signalling that investors were willing to buy the near 20% dip in the ETF. The best day of inflows for the ARK Innovation ETF was more than $600 million in early January, according to Bloomberg.

The second-largest day of inflows for ARK came after record outflows, with the ARK Innovation ETF losing $465 million last Monday. Altogether, Ark Invest shed about $5 billion in assets under management last week, which is just a fraction of the firm’s more than $60 billion in ETF assets, according to Bloomberg.

The ARK funds struggled last week amid a tech-heavy sell-off that was spurred by a spike in interest rates and concerns about rising inflation. Wood’s most concentrated bets, Tesla and Bitcoin, traded down more than 20% amid the decline.

But Wood hasn’t backed down from her strategy of investing in highly disruptive companies amid the decline. Based on the firm’s daily trading activity, Ark Invest was consistently selling large-cap names like Apple and Amazon to fund purchases of riskier companies like Tesla and Palantir

Investors who bought the dip in the ARK Innovation ETF were rewarded on Monday, when the ETF surged nearly 5% amid a broad rally in the stock market. The Ark Innovation ETF is up 10% year-to-date as of Monday’s close.

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A complete guide to Cathie Wood’s mind-blowing success, her firm’s investing strategies, and the stock picks she’s betting on for the future

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood has earned cult-like status on Wall Street due to her firm’s investing outperformance.
  • Her firm’s ETFs are attracting inflows that rival industry legends like Vanguard and BlackRock.
  • Insider is covering every angle of her career, investing strategies, and market outlook. 
  • Visit the Business section of Insider for more stories.

Cathie Wood emerged as the breakout star investor during one of the most chaotic years in Wall Street history. 

While her career dates back to 1981, 2020 was the year when her performance and fund inflows earned her a cult-like following in the industry. 

The $24.5 billion ARK Innovation ETF, her flagship exchange-traded fund, rose 150% last year, thanks partly to Tesla’s 730% gain. Her other funds that cover the fintech, genomic, and internet industries all landed on the list of the 10 best-performing ETFs of 2020. 

Retail and professional investors alike took notice of Wood’s performance: Last year, Ark’s family of ETFs grew at the fastest proportional growth rate of any ETF or mutual-fund manager in a Morningstar database that goes back to 2000.

Ark ETFs continue to command the industry’s attention in 2021 by attracting new investor money at a pace that rivals stalwarts like BlackRock’s iShares and Vanguard. Even her less-popular index funds are in the top 10% of flows year-to-date, according to Bloomberg data.  

Following Wood’s rapid rise over the past few years, there are questions about whether, and for how much longer, she can sustain her outperformance. The recent sell-off in high-growth stocks triggered a record one-day outflow of $465 million from her flagship innovation ETF. But in a sign of her staying power, investors poured a near-record $464 million back into the fund on the final trading day of February, Bloomberg data shows.

Insider will continue covering every angle of her cult-like status, from her ascendancy to the biggest investing bets she is making and the corners of the market she’s exploring next. 

Subscribe now to read Insider’s full coverage of Cathie Wood.  

Inside her meteoric rise: Cathie Wood made a career betting on the future. Insiders reveal how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Inside Ark Invest’s workplace, and what it’s like to work for Wood: Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.

Inside her stock-picking process: Cathie Wood’s firm built 3 of the world’s best ETFs, which all doubled in value within 3 years. She told us her 3-part process for spotting underappreciated technologies before they explode.

Why she was unfazed by the bond-induced sell-off in stocks: Cathie Wood breaks down why she was ‘very comfortable’ as the stock market got rocked by last week’s bond sell-off – and shares her outlook for what happens after the tech rout

Her views on the biggest market events of 2021 so far: Cathie Wood and her analysts discuss why Tesla’s $1.5 billion bitcoin purchase could trigger a wave of corporate investments, the fallout of the GameStop-AMC phenomenon, and their bullish views on the Chinese stock behind Clubhouse

Ark Invest’s 2021 outlook: Cathie Wood’s ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

The investment case for TeslaArk Invest, Tesla’s biggest bull, broke down its thesis on the electric-car maker ahead of its inclusion in the S&P 500

Her stock picks that crushed the market in 2020: We’re very surprised we didn’t underperform in the 4th quarter’: Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020

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5 ways to hedge against an inflation spike, plus what it’s like to work for Cathie Wood

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through what’s been happening in markets, as well as what to expect in the coming weeks. Here’s what’s on the docket:

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Your weekly recap/outlook

This past week was a total throwback. GameStop traders ran rampant. The US stimulus outlook caused significant market gyrations. It felt like the last week January all over again.

GameStop surged 104% in the final 30 minutes of trading on Wednesday and extended those gains to 311% at Thursday intraday highs. The spike was enough to cost short-sellers – apparently gluttons for punishment – another $1.9 billion in mark-to-market losses. The rally petered out on Friday, but it was refreshing for everyone’s favorite brick-and-mortar game retailer to get another couple days in the sun.

Strangely enough, the latest GameStop frenzy was largely overshadowed by a bond-market tantrum that saw 10-year Treasury yields climb to a more than one-year high. The culprit was renewed inflation fears stemming from President Biden’s proposed $1.9 trillion stimulus bill.

The worry is that consumer prices will overheat as the US economy snaps back into shape, and the Fed’s assurance that it will keep a loose monetary policy for the foreseeable future did nothing to soothe nerves. The most overvalued segments of the stock market – most notably mega-cap tech – sold off swiftly as the skyrocketing yields suddenly made bonds an attractive alternative.

At the center of all this going forward, per usual, is the economic recovery. The degree of progress will inform ongoing stimulus negotiations, which will stoke further debate about inflation risk. The narrative that prevails will determine whether the bond-market outburst was a flash in the pan, or a longer-term development that could upend portfolios and send stocks into another tailspin. Stay tuned.


5 ways to guard against inflation

Traders in the S&P 500 stock index futures pit signal offers near the close of trading at the Chicago Mercantile Exchange May 23, 2007

John Normand of JPMorgan is keeping a close eye on rates, and says a small increase could make a huge difference because the economy is so leveraged. Normand says he’s still “comfortable” investing today, but that might change if real rates pick up. He laid out five asset classes that will protect investors if inflation ramps up.

Read the full story here:

JPMorgan says these 5 cross-asset hedges are the best ways to protect portfolios from stimulus-driven inflation


Working at Cathie Wood’s Ark Invest

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All eyes were on Cathie Wood’s Ark Invest this past week amid volatility in tech stocks. In recent interviews, two Ark analysts share how Wood has built the firm to weather pullbacks – and their responses provide insights into what it’s like to work at the reputed firm.

Read the full story here:

Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.


SPAC winners and losers 

Traders and clerks at the CME Group toss confetti to celebrate the final trading session of the year December 31, 2010

The red-hot SPAC craze isn’t slowing as 154 SPACs have raised $48.5 billion so far this year. JPMorgan’s Michael Cembalest studied 85 SPACs to examine the winners and losers in the ecosystem. He also shared why it will be important to monitor the SPAC market over the next two years.

Read the full story here:

The chairman of investment strategy at JPMorgan’s $2.2 trillion asset management arm studied 85 completed SPAC IPOs – and lays out the winners and losers in the ‘significant wealth transfers’ within the ecosystem


Stock pick central

Seeking experts who are willing to name names? Look no further:

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Workhorse jumps as Cathie Wood’s Ark Invest buys the dip following more than 50% decline on USPS contract loss

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood’s Ark Invest was not fazed by the more than 50% decline in shares of Workhorse Group this week.
  • The ARK Autonomous Technology and Robotics ETF bought 660,500 shares of Workhorse on Wednesday.
  • Workhorse rallied as much as 9% in Thursday trades, but shares are still down significantly after the company lost out on a contract with the US Postal Service to rival Oshkosh.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cathie Wood’s Ark Invest viewed the more than 50% decline in shares of Workhorse Group this week as a an opportunity to buy the dip, evidenced by the firm’s purchase of shares on Wednesday.

Shares of Workhorse jumped as much as 9% in Thursday trades as Ark Invest disclosed in its daily trading e-mail that the firm’s Autonomous Technology and Robotics ETF purchased 660,500 shares of the EV company.

Workhorse Group plunged on Tuesday after it was revealed that a US Postal Service contract to electrify its fleet of trucks was awarded to rival Oshkosh. The contract could have represented more than $5 billion in potential revenue for Workhorse, according to an analysis from Bloomberg.

For a time, the electric vehicle maker Workhorse was thought to be a leader in the competition for the lucrative contract. The USPS commissioned five prototype postal service vehicles and Workhorse partnered with truck builder VT Hackney to produce their own.

But the ARK ETF’s purchase, worth about $10 million on Thursday, is a small bet relative to the fund’s other positions. Workhorse represents 0.25% of the fund, while top holding Tesla had a 10.5% weight in the ETF.

Workhorse has since pared gains and is trading up 2% as of 11:05 a.m.

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Tesla climbs 4% as Cathie Wood and others buy the dip after a multi-day skid

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Elon Musk’s Tesla soared in 2020

  • Tesla rose as much as 4% on Wednesday as investors bought the stock’s recent dip.
  • Ark Invest CEO Cathie Wood said her firm “bought a lot” of Tesla shares on Tuesday, when the electric automakers stock dropped as much as 13%.
  • Tesla closed Tuesday 11% lower over a two-day period.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Tesla shares recovered on Wednesday as investors bought a recent dip in the stock that saw the electric automaker’s 2021 gains wiped out.

The firm’s shares climbed as much as 4%, paring an 11% loss over the prior two trading days. 

The rebound came after Ark Investment Management CEO Cathie Wood said on Tuesday that she had “bought the dip” on Tuesday, or purchased shares at a discounted price after a decline. Tesla stock tumbled as much as 13% at intraday lows during the session.

“We bought a lot of Tesla today across any strategy that holds Tesla,” Wood told Bloomberg Radio.

She added: “All I know is we are keeping our eyes on the prize and the prize just got a little bit more interesting.”

Tesla soared more than 670% in 2020 as investors wagered heavily that it will be one of the foremost winners of the electric-car revolution as global institutions increasingly focus on climate change. Yet investors have gone off Elon Musk’s car company in recent days amid worries about sky-high valuations and the scaling-back of certain production lines.

Rising inflation expectations and bond yields have also made expensive tech stocks look less attractive – especially those that are yet to produce much in the way of profits.

Tesla rose 2.1%, to $713.65 per share, at 9:55 a.m. ET.

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Inside the rise of Cathie Wood, the rockstar stock-picker whose ETFs are dominating 2021

cathie wood ceo ark invest profile 2x1
Ark Invest’s Cathie Wood

  • Cathie Wood has reached a cult-like status with day traders and professional investors alike.
  • In 2020, ARK’s ETFs grew at the fastest proportional rate of any ETF or mutual-fund manager.
  • Insider spoke with investors, analysts, and fans about whether ARK’s rise is sustainable.
  • Visit the Business section of Insider for more stories.

So far, this year has belonged to Cathie Wood. You could argue last year did too.

The founder of ARK Invest has seen flows into her active exchange-traded funds beat those of massive franchises like BlackRock’s iShares, thanks to her blockbuster 2020 performance, which was driven by bets into mega-growth stocks like Tesla.

Her funds have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.

Wood has built such a large following that an announcement about a new ARK fund moved markets. Her podcast has landed big-name guests such as Elon Musk. She’s become a favorite of the r/WallStreetBets crowd.

Insider spoke with investors in both Wood’s business and funds, longtime colleagues, analysts at her firm, and fans who chart her rise through newsletters and memes. They describe her leadership, which comes with four decades of investing experience, and her curiosity, which keeps her analysts on their toes.

But threats are also looming: Talk of a stock-market bubble and an impending correction are brewing; the easy conditions created by massive fiscal and monetary stimulus could taper off as the economy recovers from the pandemic; and Wood’s highly concentrated funds have ballooned, which has raised concerns about capacity.

SUBSCRIBE NOW TO READ THE FULL STORY: Cathie Wood made a career betting on the future. Insiders discuss how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Read the original article on Business Insider