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Cathie Wood Watch: Ark Piles Into Nvidia, Buys an AI Biotech

Ark Innovation has dropped 54% this year but has enjoyed inflow of $1.2 billion over the past six months.
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Renowned investor Cathie Wood, chief executive of Ark Investment Management, for a second day bought big into one of the world’s biggest semiconductor makers after staying away from it for at least several months.

Ark on May 27 also purchased shares in a biotechnology company that combines molecular biology, data science, automation, and genomics to design molecules, microbes and materials.

Wood bought and sold some other familiar names, too. All valuations below are as of Friday’s close.

The chip company is graphics-processing specialist Nvidia,  (NVDA) . Ark funds snagged 361,995 shares of it, valued at $68.1 million. Nvidia has slid 37% year to date.

The biotech company is Zymergen  (ZY) . Ark Genomic Revolution ETF  (ARKG)  snatched 225,259 shares, valued at $310,857. Zymergen has slumped 79% year to date.

Ark funds snapped up 42,274 shares of video-streaming platform Roku  (ROKU) , valued at $4.1 million.

On the selling side, Ark Innovation ETF  (ARKK)  unloaded 502,863 shares of audio-streaming provider Spotify Technology  (SPOT) , valued at $56.8 million. Spotify has lost 52% so far this year.

Ark Genomic dumped 184,123 shares of Ionis Pharmaceuticals  (IONS) , valued at $6.9 million. Ark Next Generation Internet ETF  (ARKW)  shed 25,996 shares of identity-management company Okta  (OKTA) , valued at $2.2 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.

And the five-year track record of Ark Innovation indeed gave investors comfort, until May 9. Until then, the fund’s five-year return had beaten that of the S&P 500. But the five-year annualized return of Ark Innovation totaled 12.1% through May 27, behind the S&P 500’s 13.49% return.

Ark Innovation has fallen 54% so far this year, as Wood’s 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 enjoyed a net inflow of $1.2 billion in the six months through May 27, according to VettaFi, an ETF research firm.

Stagdeflation Coming

Meanwhile, Wood discussed her macroeconomic views in a recent webinar.

While many experts expect a bout of stagflation -- sluggish economic growth combined with rising inflation -- she sees stagdeflation. That’s slow growth combined with falling inflation.

“We are probably going to see more deflationary forces at the end of all this than inflationary forces,” Wood said. “We are in the early stages of seeing this.” Consumer prices soared 8.3% in the 12 months through April.

Naturally, Wood says this will be a good time for her “disruptive” technology stocks: “During tough times, innovation gains traction.”