Cathie Wood Testing ‘ARK On Steroids’ As ARK Funds Struggle

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Ark Invest’s Cathie Wood said her firm is internally testing out a strategy in which it would short stocks that are in the big benchmark indexes — a more aggressive bet on the old guard being upended by new technology in the years ahead.




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The remarks, made in an interview with CNBC, came as ARK funds struggle to replicate the massive gains made last year, led by a big bet on electric vehicle maker Tesla (TLSA).

In the interview on Wednesday, Wood likened the approach to “Ark on steroids” and said the test portfolio was currently available for employees.

She said she believed those benchmarks were where the bigger risks were longer-term.

“They are filling up with value traps — those companies that have done very well historically, but are going to be disintermediated and disrupted by the massive amount of innovation that’s taking place,” she said.

She said that when market conditions warrant more caution, portfolio managers and analysts typically fall back on stocks in the benchmark indexes, and dump the stocks that her ARK funds invest in, which are either small parts of benchmarks or not in them.

Wood also said that the new strategy, as with Ark’s other plays, would come with its share of volatility. But she said that as technologies like DNA sequencing, robotics, energy storage, AI and blockchain converge, the bigger wins were still several years out.

“In five years, the world will look nothing like it looks today,” she said. “And we’re invested in all of the disrupters, the winners, that are going to disrupt the traditional world order.”

ARK Funds Mixed

Wood’s ARK funds offered up a mixed showing on Wednesday. Wood’s ARK Innovation (ARKK) fund was up 0.3% in the stock market today. ARK Fintech Innovation (ARKF) rose 0.3% on Wednesday. The ARK Genomic Revolution (ARKG) ETF climbed 0.4%, reversing higher.

Year to date, those funds are down 14%, 4% and 32%, respectively, with ARKG hitting 52-week lows.

Tesla stock remains ARK Innovation’s top holding. But ARK has been selling more shares in Tesla recently. Tesla stock was flat in Wednesday’s trading.

In turn, the investment firm has scooped up more stocks like Zoom Video Communications (ZM) and Roku (ROKU), that have fallen sharply in recent months.

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