ATLANTA – Cathie Wood has made a name for herself on Wall Street with her unconventional investment style focused on disruptive technology stocks. As the founder and CEO of Ark Investment Management, Wood oversees nearly $17 billion in assets under management. Her suite of Ark Invest exchange-traded funds (ETFs) have produced market-beating returns by betting big on high-growth tech companies.
However, Wood’s aggressive approach has also drawn plenty of criticism from those who believe her investments are overvalued and too speculative. Her recent stock picks have faced heavy selling pressure as rising interest rates weigh on tech valuations. Still, Wood remains a staunch believer in her innovative approach to investing.
“I don’t mind being controversial at all,” Wood said at a recent conference. “In fact, I think it goes with the territory of being a disrupter.”
Wood’s Rise to Prominence
Cathie Wood spent over 30 years honing her craft in the investment industry before founding Ark in 2014. She began her career in Los Angeles at Capital Group, rose to become chief economist at Jennison Associates, and later served as CIO of global thematic strategies at AllianceBernstein.
Her initial success at Ark came from Concentrating the firm’s ETFs in a handful of high-growth areas like genomics, fintech, and autonomous vehicles. The flagship Ark Innovation ETF (ARKK) gained a stunning 149% in 2020 as her bets on companies like Tesla, Roku and Teladoc paid off big.
Assets under management ballooned from $3 billion to over $60 billion in just one year. Wood became a rock star of sorts in the investment community, making numerous media appearances to discuss her strategies. She was named the best stock picker of 2020 by Bloomberg.
Controversial Investing Approach
Cathie Wood believes that innovation is the key driving force behind long-term growth and rising productivity. Her investment approach focuses on disruptive technologies that she believes will transform the world over the next 5-10 years. This leads her to concentrate her ETFs in high-risk, high-reward stocks.
“We think through a longer time horizon than most,” Wood said. “Our strategies are very research intensive, getting to the bottom, fundamentals of what’s going on in technology and how it’s going to change the world.”
Rather than tracking benchmark indexes, Wood actively manages her funds using a combination of top-down macro research and bottom-up stock analysis. She oversees a team of analysts with expertise across research areas like artificial intelligence, energy storage, blockchain, and genomic sequencing.
While Wood’s bold tactics delivered blockbuster returns during the pandemic recovery, they have also proven controversial. Her funds are prone to huge swings based on sentiment around high-growth tech stocks. Last year, ARKK plunged 67% as rising rates weighed on valuations.
Some critics believe Wood’s approach is simply too aggressive for most investors. She always picked the right stocks at the right time going up, but the same approach doesn’t work as well on the way down,” said one hedge fund manager. Now we’re seeing the flip side of Cathie Wood’s high-wire act.
Wood’s Latest Stock Picks
Despite the criticism, Cathie Wood has stuck to her guns, maintaining her unwavering long-term optimism around disruptive innovation stocks. While the market is focused on the here and now, we keep our eye on the future,” she often tells investors.
Wood publishes all of Ark’s holdings and trades daily on the firm’s website, offering transparency around her investment decisions. Lately, she has been buying the dip in beaten-down growth names she still believes in.
Here are six stocks that Cathie Wood is buying now, according to Ark’s trading updates:
Recursion Pharmaceuticals (RXRX) – This clinical-stage biotech uses artificial intelligence and machine learning to discover and develop new drugs. Wood believes its computational approach represents the future of drug discovery.
Ginkgo Bioworks (DNA) – Through genetic engineering, Gingko designs custom microbes to produce proteins for use in industries like pharmaceuticals, agriculture, and energy. Wood sees its synthetic biology platform as revolutionary.
Ansys (ANSS) – Ansys produces advanced simulation software used by engineers across industries like auto, aerospace, and construction. Wood believes its simulation-driven approach enables superior design and safety.
Nu Holdings (NU) – The Latin American fintech company operates a popular digital banking platform across Brazil, Mexico, and Colombia. Wood sees huge potential in bringing mobile banking to the region.
Cerus Corporation (CERS) – Cerus produces the INTERCEPT blood safety system, which inactivates pathogens in donated blood components. Wood believes its products will transform blood transfusions.
10x Genomics (TXG) – This life sciences company develops tools for high-throughput genetic analysis using next-generation sequencing and single cell analysis. Wood sees its genomic tech as essential for breakthrough research.
The Road Ahead
Cathie Wood has staked her reputation on high-growth innovation stocks, remaining steadfast despite recent volatility. “My confidence is rising,” she stated in a recent interview. “We know how rapidly innovation is changing our lives, and I think our strategies are on the right side of change.”
Her critics argue Wood’s approach is too risky for ordinary investors. But she urges tuning out the skeptics and noise, instead focusing on the long-term transformative potential of disruptive technologies.
Only time will tell if Wood’s controversial investing style will continue generating market-beating returns. But one thing is clear – with $17 billion under management, this tech-focused fund manager will continue making big, bold bets on innovation.