Cathie Wood Watch: Ark Continues to Lose Exact Sciences

Cathie Wood, CEO of Ark Investment Management and a well-known investor, continues to sell shares of what is still the third largest holding in Ark’s flagship fund.

Exact Sciences (EXAS) – Get Free Report: Ark funds sold 228,235 shares of the company.

Jan. 27, valued at $15.4 million at the time of closing. It is a medical diagnostics company that is well-known for its at-home colon cancer test.

Wood appears to be attempting to capitalize on the stock’s recent rally. Exact Sciences’ stock has dropped 6% in the last year, but it has risen 118% since October 14, boosted by strong earnings and the market’s rally.

Wood also sold 959,515 shares of Exact Sciences last week for $63.5 million. Exact Sciences became the No. 1 holding in the flagship Ark Innovation ETF (ARKK) – Get Free Report last week. Zoom Video Communications is currently the market leader, followed by Tesla.

Wood’s Returns Fall

Meanwhile, Wood’s recent performance hasn’t exactly wowed the investment world, as her young technology stocks have plummeted. Ark Innovation has fallen 48% during that time period and 75% since its peak in February 2021.

To be sure, the fund has recovered 26% this year, joining the surge in technology stocks.

Wood has defended her strategy by stating that her investment horizon is five years. However, Ark Innovation’s five-year annualized return was only 0.47% as of Jan. 27, compared to 9.13% for the S&P 500.

The fund’s performance also falls short of Wood’s goal of 15% annualized returns over five years.

Ark Innovation’s subpar returns do not appear to be deterring investors. According to ETF research firm VettaFi, the $7.7 billion fund has received a net investment inflow of $32 million in the last five days and $1.07 billion over the last year.

What Motivates Investors to Invest in Wood?

You may be wondering why so many investors have remained loyal to Wood. It certainly helps that she had one spectacular year. In 2020, Ark Innovation increased by 153%.

In addition, Wood has become something of a rock star in the investment world, frequently appearing in the media. She explains financial concepts in simple terms that even inexperienced investors can grasp.

Wood is not without her detractors. Last year, Morningstar analyst Robby Greengold delivered a scathing critique of Ark Innovation.

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

Wood, of course, was adamantly opposed. “I know there are companies like that one [Morningstar] that don’t understand what we’re doing,” she said in a Magnifi Media interview conducted by Tifin.

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