The ARK Invest ETFs, which are operated by Cathie Wood, are leading the market in schadenfreude. Schadenfreude is the German word for taking pleasure in the misfortune of others. In this miserable market, many people are happy to see someone who has received the inordinate amount of attention that Wood has, not performing well.
The flagship Ark Innovation ETF (ARKK) peaked at $159.70 in February and is hitting a new low Thursday morning of $47.27 for a decline of around 70%.
The second-biggest holding of the ARK ETFs after Tesla (TSLA) is Teladoc Health (TDOC) , which is down 44% Thursday morning following a very ugly earnings report and poor guidance.
There is no question that the management of the holdings in the various ARK ETFs has been a disaster, but are Wood’s stock choices that bad or is she mainly a victim of being in the wrong asset class at the wrong time? This has been an absolutely brutal period for high-P/E growth stocks that have little in the way of earnings and aren’t looking at any major results for years. In a different environment, these stocks can fly but not when inflation is raging.
ARK has been saved to some degree by its very large holding of Tesla, which is still the best looking of the stocks in the portfolio.
As of Wednesday night, the top-10 holdings in the ARK ETFs were: Tesla, Teladoc, Coinbase (COIN) , Zoom Video (ZM) , Exact Sciences (EXAS) , Block (SQ) , Roku (ROKU) , UiPath (PATH) , Unity Software (U) , and Twilio (TWLO) .
Not a single one of these stocks has a good chart. TSLA is marginally good but is breaking down Thursday morning.
Are any of these stocks great values? Maybe but that doesn’t matter right now. What matters is price action, and, unfortunately, the Wood methodology is to focus on fundamentals and not technical action. That is why the ARK ETFs are such a disaster.
I’ll be watching Wood’s top positions to see if the price action eventually improves. It is likely that her research has identified at least a couple of winners, and when market conditions shift, the price action should help to highlight the winners. However, at this juncture, I would not touch anything that Wood owns.
We have lackluster market action once again as the positive reaction to earnings from Meta Platforms (FB) fails to generate any energy for the broader market. It isn’t bad action, but there is no energy or interest, and there continue to be very few pockets of strength.