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Cathie Wood Watch: Ark Piles Into Coinbase and a Videogame Platform

Wood's flagship Ark Innovation ETF has plunged 54% so far this year, as its young technology companies have slumped.
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Investment hotshot Cathie Wood, chief executive of Ark Investment Management, on Thursday continued to gobble up beleaguered stocks.

That included a cryptocurrency exchange and a videogame-development platform. She did some selling, too. All valuations below are based on the May 12 close.

Ark funds bought 240,791 shares of Coinbase  (COIN) , the largest U.S. cryptocurrency exchange, valued at $14.1 million. The stock has plunged 72% year to date amid weakness in the cryptocurrency market. To be sure, Coinbase has rebounded on May 13.

Ark funds purchased 331,588 shares of Unity Software  (U) - Get Unity Software, Inc. Report, the San Francisco provider of a videogame-development platform, valued at $11.6 million. The stock has dropped 73% year to date and rebounded a bit on May 13.

On the selling side, Ark funds dumped 533,061 shares of Sea  (SE) - Get Sea Ltd. (Singapore) Report, the Singapore-based digital entertainment company, valued at $32.8 million. 

Ark Genomic Revolution ETF,  (ARKG) - Get ARK Genomic Revolution ETF Report, unloaded 111,446 shares of Editas Medicine  (EDIT) - Get Editas Medicine, Inc. Report, a biotechnology company, valued at $1.2 million.

Ark Next Generation Internet ETF  (ARKW) - Get ARK Next Generation Internet ETF Report sold 116,812 shares of Nano Dimension  (NNDM) - Get Nano Dimension Ltd. Report, a provider of equipment for electronics manufacturing, valued at $273,340. 

And Ark Next Generation also shed 52,800 shares of Burning Rock Biotech  (BNR) , valued at $185,856.

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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) - Get ARK Innovation ETF Report could indeed give investors comfort until May 9. 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 9.87% through May 12, compared to 12.45% for the S&P 500.

Ark Innovation has slumped 54% this year, as Wood’s young, disruptive technology companies have hit the skids. And it’s down 73% 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, as of May 9, taking in $41 million May 6, Bloomberg reports.

Morningstar’s View

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.”