ARK fund manager Cathie Wood has had a consistent message: Innovation stocks are on sale.
Alex Flynn/Bloomberg
Cathie Wood ‘s flagship fund may be down, but it’s certainly not out.
The $21 billion ARK Innovation ETF (ARKK) has bounced back 13% in the past two weeks from a nearly 37% plunge from February to mid-May. The S&P 500 gained 2% during the same period.
ARK Innovation, which focuses on companies with disruptive technologies, isn’t the only ARK fund catching a breath from three months of free-falling. The firm’s six actively managed ETFs, which tend to be highly correlated, have gained an average of 10.3% since May 13, with ARK Innovation leading the chart and the ARK Space Exploration & Innovation ETF (ARKX) bringing up the rear with 5.4% gains. Still, all these funds are far from their peak in mid-February.
Wood stood firm throughout the nosedive, insisting repeatedly in interviews that innovation stocks were on sale. She made good on her word and went on a shopping spree. Over the past three months, ARK Innovation bought a lot of stocks on the dip—and not merely top holdings like Tesla (TSLA) and Teladoc (TDOC). The popular high-profile fund manager snapped up shares in companies just coming into their own.
ARK Innovation bought over 3 million shares of the newly listed cryptocurrency exchange Coinbase (COIN), now worth about $765 million. And the fund has a new position in sports betting firm DraftKings (DKNG), buying 8 million shares now worth $397 million. As of Wednesday, the two stocks make up 3.6% and 1.9% in the portfolio, respectively.
Other newly added names include videogame platform Skillz (SKLZ) and software company UiPath (PATH), which each now has more than 1% weight in the fund.
Another notable name is software company Palantir Technologies (PLTR). Wood quadrupled ARK Innovation’s holdings from 5 million to 22 million shares. The stock now makes up 2.4% of the fund’s portfolio.
DraftKings and Palantir are both up 23% since May 13, though still down from their February levels. Skillz and UiPath surged 26% during the same period. Tracking with sharp Bitcoin selloffs, Coinbase stock continued to slide for a few more days than the other innovation stocks, but also started picking up since last week.
ARK Innovation also more than doubled its holdings in two biotech firms, Beam Therapeutics (BEAM) and Fate Therapeutics (FATE), as well as the beaten-down tech names Twitter (TWTR) and Zoom Video Communications (ZM). All have jumped higher over the past two weeks, with gains ranging from 7% to 21%.
On the other hand, ARK Innovation has sold all of its shares in fintechs PayPal (PYPL) and LendingTree (TREE), Chinese tech firm Baidu (BIDU), truck maker PACCAR (PCAR), Regeneron Pharmaceuticals (REGN), and Taiwan Semiconductor Manufacturing (TSM). Just three months ago, Baidu and PayPal were the fund’s fifth and 11th largest holdings.
So far, Cathie Wood’s bargain hunting for innovation stocks seems to be paying off. If the group’s pullback really turns out to be short-term and the rebounce keeps going, maybe ARK Innovation investors can smile again soon.
Write to Evie Liu at [email protected]
