Cathie Wood Watch: Ark Buys Coinbase After Rout

Cathie Wood, chief executive of Ark Investment Management, traded familiar names Thursday, purchasing a cryptocurrency exchange and selling a digital entertainment company.

All the valuations below are as of Thursday’s close.

Ark funds bought a whopping 546,579 shares of Coinbase  (COIN)  the largest U.S. cryptocurrency exchange, valued at $29.3 million.

The stock has cratered in recent days amid the weakness in cryptocurrencies. It has dropped 83% year to date. Wood frequently doubles down on her holdings when they fall. Coinbase is the 10^th biggest holding in Ark’s flagship Ark Innovation ETF  (ARKK) – Get ARK Innovation ETF Report.

Ark funds purchased 563,322 shares of Velo3D  (VLD)  a provider of metal 3D printing solutions, valued at $1.4 million. Ark Genomic Revolution ETF  (ARKG) – Get ARK Genomic Revolution ETF Report snagged 163,412 shares of Burning Rock Biotech  (BNR) , valued at $576,844.

On the selling side, Ark funds unloaded 455,972 shares of digital entertainment company SEA  (SE) – Get Sea Ltd. (Singapore) Report, valued at $26 million. Ark Next Generation Internet ETF  (ARKW) – Get ARK Next Generation Internet ETF Report dumped 83,940 shares of electronics provider Nano Dimension  (NNDM) – Get Nano Dimension Ltd. Report, valued at $190,543.

Ark Genomic sold 74,830 shares of Editas Medicine  (EDIT) – Get Editas Medicine, Inc. Report, a biotechnology company, valued at $750,545.

Ark Is Trailing the S&P 500

As Ark funds have tumbled in recent months, Wood has defended herself by noting that she has a five-year investment horizon.

And the five-year track record of her flagship fund Ark Innovation ETF ARKK could indeed give investors comfort until Monday. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled 8.8% through May 11, compared to 12.44% for the S&P 500.

Ark Innovation has plunged 63% so far this year, as Wood’s young, disruptive technology companies have hit the skids. And it’s down 78% from its February 2021 peak. Raging inflation and soaring interest rates have helped put the kibosh on tech stocks.

Still, Wood’s investors aren’t deserting her. Ark Innovation has enjoyed net inflows so far this year, taking in $41 million last Friday, Bloomberg reports.

Morningstar’s View on Ark

Meanwhile, on March 29, Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation.

“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.

“Since its meteoric rise in 2020, the strategy has been one of the worst-performing U.S.-sold funds.… Wood’s reliance on her instincts to construct the portfolio is a liability.”

Wood countered Greengold’s points in a recent interview with Magnifi Media by Tifin. “I do know there are companies like that one [Morningstar] that do not understand what we’re doing,” she said.

“We do not fit into their style boxes. And I think style boxes will become a thing of the past, as technology blurs the lines between and among sectors.”