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Cathie Wood Watch: Buys Tesla, Roku, Coinbase, Gene-Editing Firm

Ark Innovation ETF has slumped, along with the disruptive tech companies asset manager Cathie Wood favors.
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Renowned investor Cathie Wood, chief executive of Ark Investment Management, on May 25 bought and sold some familiar names.

All valuations below are as of Thursday’s close.

For the third straight day, Ark funds purchased shares of electric-vehicle titan Tesla  (TSLA) - Get Tesla Inc. Report, this time 1,343 shares valued at $885,000.

Wood had sold Tesla shares for months, but she said the sales reflected profit-taking and that she still believed in the Austin company.

Wood may see Tesla stock as a good value now, given its 38% drop year to date through Wednesday. An Ark spokeswoman said the firm doesn’t comment on daily trading activity.

Tesla is the second biggest holding for Wood’s flagship Ark Innovation ETF  (ARKK) - Get ARK Innovation ETF Report, and was No. 1 until last week. Now video-meeting service Zoom Video Communications  (ZM) - Get Zoom Video Communications Inc. Report occupies the top spot.

Ark funds snatched 35,499 shares of video-streaming platform Roku  (ROKU) - Get Roku Inc. Report, valued at $3 million. Ark funds snapped up 24,350 shares of financial-services company Block (formerly Square)  (SQ) - Get Block Inc. Class A Report, valued at $1.9 million.

They snagged 27,230 shares of Coinbase  (COIN) - Get Coinbase Global Inc Report, the country’s largest cryptocurrency exchange, valued at $1.8 million. That's the third day in a row that Ark bought Coinbase.

And Ark Genomic Revolution ETF  (ARKG) - Get ARK Genomic Revolution ETF Report bought 114,834 shares of Verve Therapeutics  (VERV) , the Cambridge, Mass., biotechnology company specializing in gene editing to treat heart disease, valued at $1.6 million. The stock at last check was around $14.50; that's less than a fifth of its 52-week high $78, set last August.

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On the selling side, Ark funds unloaded 306,907 shares of audio-streaming service Spotify Technology  (SPOT) - Get Spotify Technology S.A. Report, valued at $33.4 million.

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.

Until May 9 that five-year track record beat that of the S&P 500. But through May 25 the five-year annualized return of Ark Innovation totaled 9.49%, behind the S&P 500’s 12.5% return.

Ark Innovation has slumped 57% this year, as Wood’s disruptive technology companies have hit the skids. And it’s down 75% from its February 2021 peak. Raging inflation and soaring interest rates have slammed tech stocks.

Still, Wood’s investors aren’t deserting her. Ark Innovation enjoyed a net inflow of $1.4 billion this year, as of the week of May 16, The Wall Street Journal reported.

And short interest in the $8 billion fund has dropped to 9.2% of shares outstanding, from an April peak of 17%, according to IHS Markit, as cited by Bloomberg. Short sales are bets that a stock's price will drop.

Morningstar’s View

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.

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.