Catherine Wood, chief executive officer of ARK Investment Management LLC, speaks during the Milken Institute Global Conference in Beverly Hills, California, on Monday, October 18, 2021.
Kyle Grillot | Bloomberg | beautiful pictures
Cathie Wood’s flagship fund Improvements to ARK is at the heart of this week’s tech selling, and some analysts see the stock behind her strategies falling even deeper before bottoming out.
At an intraday low on Thursday, the innovation-focused exchange-traded fund is down more than 48% from its all-time high for the month in February 2021. That’s a worse drop than levels the fund saw in March 2020 during the pandemic market low.
ARK Unstable renewal was last on the day.
Ark Innovation (ARKK) intraday top to bottom
FactSet
“This is worse than March 2020 for that market segment,” said Josh Brown, co-founder and CEO of Ritholtz Wealth Management. “Midtime report.” “That was remarkable to me.”
This week’s selling, which sent the ETF down 9% this week, was largely due to a spike in interest rates. Higher rates often penalize market growth pockets that rely on low interest rates to borrow to invest in innovation. And their future earnings look less attractive when rates are rising.
Yields on 10-year Treasuries jumped as high as 1.75% on Thursday, as interest rates spiked at the start of the year with the Federal Reserve signaling faster-than-expected policy tightening. this year.
“I still don’t believe Cathie Wood’s stock is low enough,” said Stephen Weiss, chief investment officer and managing partner at Short Hills Capital Partners. “There will continue to be pressure.”
“Inflation is here. I think the Fed is going to be aggressive. The Fed wants you out of risk assets,” he added.
Of the 43 holdings at ARK Innovation, 36 are down more than 40% from their 52-week high. Tesla, Roku, Teladoc Health, and Zoom Video are some of ARK Innovation’s top holdings.
“Cathie Woods ARKK’s performance was so bad that while it wasn’t a hedge fund and couldn’t stand it, it was a bore for every hold. Fascinating to discuss the opportunity but it’s hard to find… It’s been a tough sequence…”, CNBC’s Jim Cramer said on Twitter Thursday.
This week’s underperformance prompted more than $280 million in outflows from Wood’s flagship ETF since Monday, according to FactSet.
ARK Innovation’s tumultuous start to 2022 after a tough year for ARK Innovation, down 24% in 2021.
However, Wood’s stock price drop since mid-February 2021 hasn’t changed Ark’s forecast. Wood said she’s just getting her most valuable stock at a lower price. This number will quadruple in the next five years, she said.
Wood has continued to buy with dips in her favorite stocks this week. She soliciting shares of DraftKings, Block and Roblox.
