Cathie Wood, head of Ark Investment Management, does not panic when the prices of her favorite tech stocks fall. She in fact buys the dip.
And the prominent asset manager just bought into a tech stock that has lost nearly a quarter of its market value over the past month.
Wood’s flagship fund, Ark Innovation ETF (ARKK) , underperformed the market in 2024.
Although it briefly outpaced the Nasdaq Composite and the S&P 500 in January and early February, ARKK is down more than 7% year-to-date as of March 5. The Nasdaq Composite and S&P lost 5% and 1.4% respectively during the same period.
The fund’s recent struggles stem largely from Tesla’s (TSLA) 32% decline this year, its biggest holding.
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Opinions on Wood vary. To her supporters, she is a visionary with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive approach.
As of Mar. 4, Ark Innovation ETF, with $6.8 billion under management, has delivered an annualized three-year return of negative 4.07% and a five-year return of negative 0.11%.
In comparison, the S&P 500 index has a three-year annualized return of 11.81% and a five-year return of 14.82%.
Cathie Wood’s investment strategy explained
Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds’ values.
Investment research firm Morningstar criticized Wood and her ETFs last year.
Investing in young companies with slim earnings “demands forecasting talent, which Ark Investment Management lacks,” wrote Morningstar analyst Robby Greengold. “Results range from tremendous to horrendous.”
Although the recent tariffs have weighed heavily on stock markets, Wood expressed optimism about a shift to looser regulations under Donald Trump’s presidency.
She said on March 4 that the Trump administration could be even better for investors than Ronald Reagan’s pro-business era, according to Bloomberg.
“The Reagan revolution — and I was there and it was so enjoyable — it was the heyday, the golden age of active equity management,” Wood said. “That’s coming back. I think it’s coming back big time. I think this will dwarf that, and that was pretty good.”
Not all investors share Wood’s confidence. Data from ETF research firm VettaFi shows that the Ark Innovation ETF has seen $2.5 billion in net outflows over the past 12 months through March 3, including an outflow of $41.7 million in the past month.
Coinbase runs the largest U.S. cryptocurrency exchange. It generates revenue through transaction fees from cryptocurrency trading on its platform.
On Feb. 13 the company reported stronger-than-expected Q4 earnings and its biggest quarterly revenue in three years.
For the fourth quarter, the company earned $4.68 a share, more than double the consensus estimate of $1.81. Revenue reached $2.27 billion, a year-over-year increase of 138%, and surpassed analysts’ forecast of $1.88 billion.
In a shareholder letter, the company said the growth was “driven by higher crypto asset prices, average native unit inflows across staking, custody, and USDC assets in our product suite — as well as continued Coinbase One subscriber growth.”
Coinbase posted $6.6 billion in total revenue for 2024, up 111% from 2023, with transaction revenue soaring 162% to $4 billion.
Coinbase’s stock price is closely related to crypto prices. The stock lost 24% over the past month among as cryptocurrencies sold off.
Bitcoin peaked at nearly $110,000 on Jan. 20 — Inauguration Day. But it has since dropped 20%.
Trump’s announcement of tariffs has raised concerns about economic growth and inflation, which could push back interest rate cuts and make riskier assets like bitcoin less appealing to investors.
On March 2 Trump said on social media that his administration is working toward creating a Crypto Strategic Reserve that will include five cryptocurrencies: bitcoin, ether, XRP, solana and cardano.
The announcement caused crypto prices to bump after the recent declines.
Fund manager buys and sells:
Wood’s latest Coinbase buy came after that announcement. She also bought $8.6 million of that stock last week, adding 41,032 shares during the selloff.
Coinbase is one of Wood’s biggest holdings in her portfolio. As of Dec. 31, 2024, she held $753.5 million in Coinbase, making up 6.24% among all the Ark funds. The stock ranked as the third-largest position, according to 13-F filings tracked by WhaleWisdom.
