Renowned investor Cathie Wood, chief executive of Ark Investment Management, on May 26 bought into one of the world’s biggest and most prominent semiconductor makers, for the first time in at least several months.
Ark also purchased an organ-transplant-services firm along with some familiar names. All valuations below are as of Thursday’s close.
Ark funds snagged 245,286 shares of graphics chip specialist Nvidia (NVDA) – Get NVIDIA Corporation Reportvalued at $ 43.8 million.
In its earnings report for the April quarter, Nvidia beat sales and earnings per share estimates, thanks to above-consensus data center and gaming revenue.
But it issued below-consensus July quarter sales guidance, and said it expects about a $ 500 million impact from China’s Covid lockdowns and from exiting Russia.
Ark Genomic Revolution ETF (ARKG) – Get ARK Genomic Revolution ETF Report snatched 84,795 shares of CareDX (CDNA) – Get CareDx, Inc. Reportan organ transplant services firm, valued at $ 2 million.
CareDX stock is trading at a bit more than a quarter of its 52-week high near $ 97, set late last June.
Ark funds snagged 127,210 shares of Coinbase (COIN) , the country’s largest cryptocurrency exchange, valued at $ 8.9 million. The stock has given up 71% so far this year.
On the selling side, Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Reportdumped 260,407 shares of audio-streaming service Spotify (SPOT) – Get Spotify Technology SA Report, valued at $ 28.3 million. The stock has slumped 53% year to date.
And Ark funds unloaded 169,195 shares of Singapore-based digital entertainment company SEA (SEE) – Get Sea Ltd. (Singapore) Report, valued at $ 13.5 million. The stock has dropped 63% so far this year.
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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 could indeed give investors comfort until May 9. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled 10.61% through May 26, behind the S&P 500’s 12.94% return.
Ark Innovation has lost 52% so far this year, as Wood’s disruptive technology companies have hit the skids. And it’s down 72% 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 here. Ark Innovation enjoyed a net inflow of $ 1.4 billion so far this year, as of the week of May 16, The Wall Street Journal reported.
And short interest in the $ 8.4 billion fund dropped to 9.2% of shares outstanding in the week of May 23, down 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.
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.”