Asymmetric Investor’s first profile article has to be someone special. And so, we turn to none other than the winner of Bloomberg News’ best stock picker of 2020, CEO and Chief Investment Officer of ARK Invest, Cathie Wood.
Coming out to start ARK Invest as an actively managed ETF whilst the rest of the world were leaning on passive and index based investing was a bold and interesting decision to say the least. And the results speak for themselves.
ARKK, their flagship fund, has annualized returns of 44.8% over the past 5 years!
Who is Cathie Wood?
Cathie Wood was born November 26, 1955 in Los Angeles. She graduated from the University of Southern California with a Bachelor of Science degree in Economics and Finance. Economist Arthur Laffer, who was one of her professor, also became her mentor.
After various stints at Jennison Associates, Tupelo Capital Management (which she fo-counded), and AllianceBernstein, she started ARK Invest after her idea for an actively managed ETF based on disruptive innovation was deemed too risky at AllianceBernstein.
Her claim to fame came when she stated on CNBC in 2018 that she believed that Tesla was way undervalued, and predicted the price could reach $4,000 within 5 years. Largely ridiculed at the time, Tesla reached her price target in January 2021, amidst the backdrop of the global covid pandemic.
Her other high conviction belief was that Bitcoin could hit the price target of $500,000. Although this is not as controversial, as many other bitcoin industry folks have iterated similarly bullish price targets. Below is a video of her talking about bitcoin among other things.
ARK Invest ETFs
The ARK in ARK Invest stands for:
ACTIVE management to capture alpha that rapid innovation creates
an open RESEARCH ecosystem to capture the convergence of technology
The sharing of KNOWLEDGE to gain a deeper understanding of the areas of investment
The way Cathie has managed ARK has been a refreshing change from other hedge funds. Whilst they have been secretive and protective over their IP, ARK openly shares their research and investment thesis with the public.
Via their website at the research center, there’s a ton of content anyone can dig into. From videos, articles to whitepapers, you’re invited to look into their research and come to your own conclusions.
At ARK, their investments and ETFs are split into several thematic pillars. These include:
- Disruptive Innovation
- Genomic Innovation
- Fintech Innovation
- Space Exploration
- Israel Innovation
- Next Generation Internet
- Autonomous Technology
- Cryptocurrencies
- 3D Printing
They are then allocated into the different ETFs that ARK Invest provides:
| Ticker | Actively Managed Innovation ETFs |
| ARKK | ARK Innovation ETF |
| ARKQ | Autonomous Technology & Robotics ETF |
| ARKW | Next Generation Internet ETF |
| ARKG | Genomic Revolution ETF |
| ARKF | Fintech Innovation ETF |
| ARKX | Space Exploration and Innovation ETF |
Next Generation Internet ETF
One of the biggest creators of value over the last decade has been the evolution and scale the internet has brought on businesses run on it.
Looking at the top 10 companies by market cap, you can see the impact that access over the internet has had on the markets. Aside from Saudi Aramco and Berkshire, the remaining 8 companies will not be where they are, if not for the proliferation of the internet. Many of them are in fact, borne from the internet boom.
So for us, it is especially interesting to have a sneak peek into the mind of Cathie Wood, and see what companies she and her team has handpicked to drive the next generation of internet.
Her love of Tesla shows up as the top holding for the ARKW ETF, weighing in at close to 10%. To view the complete ARKW ETF holdings, click on the image below.
Most of the companies in there would not be surprising. I’m personally surprised Twitter is the #2 holding. But others such as Square, Grayscale, Teladoc, Spotify, Coinbase and Zoom all makes sense from a growth perspective.
For growth investors, and investors seeking to future-proof their capital, Cathie’s ETF offerings provide a great way to diversify into innovation focused companies.
If you personally believe or subscribe to certain industries, and they happen to match with ARK’s thematic investments such as Genomics or Space exploration, then their suite of products, along with stellar returns over the past 5 years or more, should prove to be a good investment idea.
If you want to get on the right side of change, follow Cathie Wood on Twitter.