Earlier this week, and for no obvious reason, Cathie Wood’s $ 23 billion flagship investment innovation fund Ark rose 10 percent in one day. On Wall Street, that kind of rebound is usually a warning sign of foamy markets, especially given Ark’s recent price drops. Not for wood. “Buy the dip, ”Is a slogan.
Timber is the public face of a speculative tech boom that many equate to the dot.com boom and collapse of the early 2000s. The success of Tesla and other tech stocks owned by Ark, along with massive entry investors, have propelled the combined value of the five exchange-traded funds it manages to $ 60 billion from $ 3 billion just a year ago.
This extraordinary performance made Wood a cult figure among some investors. The doubters say its bull run is due to a mixture of self-advertising and investor mania fueled by plentiful financial liquidity. The supporters are fearless: an image of his face with the slogan “invest with conviction” adorns a clothing range created for fans, with proceeds donated to charity.
“What happened last year was recognition among asset managers and advisors that they lacked innovation in their portfolios,” Wood explained this week during Ark’s monthly webinar. , where she touted the shares of companies she owns, such as the music streaming service. Spotify and telemedicine provider Teladoc Health. “Innovation. . . finally got some recognition.
The secret to Wood’s investment beliefs lies in the name of his fund – a direct reference to the gold-covered chest described in the Book of Exodus as containing the two stone tablets of the Ten Commandments.
Indeed, the 65-year-old divorced mother of three is a fervent Christian who begins every day by reading the Bible while her coffee is brewed, and who relies on her faith during trying times, such as the many upheavals in the market. which she experienced during a four-decade career in finance. “Each of these moments has been a moment of deepening my faith,” Wood said.
Born in 1955, Wood is the oldest Irish can-do immigrant – her father joined the United States Air Force as an engineer. At the height of her career, she now shines sympathetically with her colleagues, most of them young researchers who follow technological innovation and fervently wonder why investors should “stay on the good side of change”.
She got her start in finance when her longtime mentor, Arthur Laffer, helped her get her first job. The Reagan-era economist taught Wood at the University of Southern California and recommended her to Capital Group, where she worked as an economist before graduating in 1981. She then moved to New York City. to work at Jennison Associates, a equity portfolio manager. This is where the penny fell for her.
Wood covered data-publishing companies, such as Reuters and Telerate, that “nobody wanted,” like her later. recalled. Yet the concept they incorporated “eventually became the World Wide Web”. It made him realize how underrated innovation is and “how exponentially explosive growth can be.” They also shaped the investment philosophy that made its name and its fortune.
“Cathie is an expansive dreamer and a tireless research consumer,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, who was Wood’s boss when she moved in the early 2000s to AllianceBernstein, a manager of funds. “She can see the big trend and has no problem being very patient, which is not a typical quality of most growth investors.”
This patience also applies to his career. Wood did not retire on her own until 2014, at age 58, when she founded Ark with her own money. The first few years were tough, but she stuck to her investing style, focusing on disruptive companies that could shape the future. “This is where the world is going and innovation will be in core investment portfolios in the next 10 to 15 years,” she said. Told the Financial Times last month.
Tesla is a bet that went very well. In early 2018, when the automaker’s share price hovered around $ 300, Wood shocked Wall Street when she projected a share price of $ 4,000 in five years. Based on its five-for-one stock split last year, Tesla broke the adjusted target of $ 800 in January.
The last few weeks have been difficult. Markets have moved against tech stocks, betting instead that companies beaten during the pandemic will rebound as the vaccination spreads. At one point this week, the Ark Innovation fund was down 30% from its peak in mid-February.
Skeptics believe Ark’s tech holdings are hugely overvalued, an inevitable math will burn retail investors and see Ark replay of the Janus Twenty Fund, which experienced a huge surge in the 1990s but hit a wall after the 2000 crash. “These companies have to exceed high expectations and this is where it gets tough,” says Peter Garnry, head of equity strategy at Saxo Bank.
The wood is unrepentant. She rejects talk of a bubble and is open to investors that her bets are long term. After all, Amazon’s stock price took a decade to recover from its 1990s dot-com bubble – but investors who held on finally made huge gains.
According to Wood, this is all of God’s work anyway. “It’s not so much about me and my promise. It’s about allocating capital to God’s creation in the most innovative and creative way possible. “