Cathie Wood: In 8 years I will be worth US$210 trillion of global equity markets more than you
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Disruptive tech enthusiast and Elon Musk pumper (that came out wrong), Cathie Wood specialises in a thematic investing approach which is all about fire-starting long-term capital growth by going all in on the names she calculates are the top dogs, the enablers, and the standapart beneficiaries of disruptive innovation.
Until she met 2022, that was all working out pretty well.
As the founder of the tech-touting, genomics-gunning ARK Invest – the home to some US$60 billion in equity assets – Wood picked Musk from the outset and has been among the die-hardest Tesla boosters outside of Elon.
Ark runs eight exchange-traded funds (ETFs) focused on different areas of the tech sector from robotics to space exploration, and they hold a total of 34 different stocks.
After setting up shop in 2014, Wood’s flagship Ark Innovation Fund (ETF ARKK) was returning circa 45% annually over the past five years.
Since the new year, Wood’s ETF ARKK has been scuppered by well over 60% and her ARK Autonomous Technology & Robotics (ETF ARKQ) is down by heaps more than 42% year-to-date.
With more than a little of the biblical Noah about her self-possession, Wood is nothing if not convinced of her own direct line with providence.
While the downfall of FTX, itself a victim of modern billionaire/entrepreneur hubris, might have startled a few crypto-backers, Wood has been on the blower to US media non-stop retreading one of her fav narratives that Bitcoin could hit US$1 million by 2030.
Since FTX, the former crypto exchange managed by a bunch of polyamorous teens living out of a castle in the Bahamas, imploded a few days back in a puff of bankruptcy, Wood has blithely ignored the spreading crypto contagion and snapped up 1.3m shares of neighbouring exchange Coinbase Global (COIN).
The November purchases take Ark’s stake in COIN to 8.4m shares, circa 4.7% of the exchange’s entire outstanding stock.
Still on the hustings, Wood this week has told CNBC that her famed disruptive strategy could see the combined value of Ark invest’s eight ETfs grow x30 in the next eight years.
The folk-market-hero daughter of an Irish-born US Air Force engineer, Wood says that disruptive innovation currently takes up US$7 trillion in global equity markets and, should her disruptive calculations prove correct, she reckons that number will look more like US$210 trillion in less than eight years.
“People say impossible, but that’s what happened to Tesla from our early days.”
“If we’re right, that will represent more than half of the traditional benchmarks and the global public equity markets and so what that tells us is a lot of the benchmarks are going to be in harm’s way,” she told CNBC.
The greater focus of the flagship (ARKK) fund lives in around 30 key companies led by Tesla, Roku, Exact Sciences and Zoom. And while the fund has taken those heavy losses year to date, the flagship itself has added US$1.5bn in new money for the year so far.
Wood says this is no surprise. The fund’s asset retention isn’t just good, it’s “shockingly good”.
Largely because Ark investors don’t mind the ups and downs of the current environment but because innovation doesn’t go out of fashion and that truly disruptive stocks aren’t to be found hidden within the usual benchmarks.
“We do see many of our investors averaging down as they rebalance their portfolios to maintain a weighting in our innovation stocks… We’re seeing others basically taking a look at Nasdaq and saying, ‘wait, these are not going to be the stocks that disrupt in the future.’”
Naturally and despite his recent attempts to look like some insane merger of Willy Wonka and Donald Trump, Ms Wood is standing shoulder to shoulder with Tesla boss Elon Musk with some might say self-serving research like this one below from April.
She said the market share for EVs by then would be somewhere between 85% and 95% of all vehicles sold.
As for the currents taking much of crypto’s confidence out to sea, a peek at Ark’s daily transaction receipts confirm that aside from the Coinbase purchases, Ark has gone hard into the crypto bank Silvergate and the BTC-buying Grayscale Bitcoin Trust.
Those moves have come on or around Armistace Day – November 11 – probably better known now as the day FTX founder and destroyer SBF put his hand up about its death-wobble liquidity situation.