ARK Invest CEO Cathie Wood.
Alex Flynn/Bloomberg
The flagship exchange-traded fund of ARK Invest’s Cathie Wood jumped 4.2% on Monday to hit its highest level in two months.
ARK Innovation ETF (ticker: ARKK), which focuses on companies with disruptive technologies or innovative business models, plunged nearly 37% from February to mid-May. After the drop, the ETF had roughly $21 billion in assets; now the number is $24 billion.
The rising 10-year Treasury yields and inflation fears have discounted growth stocks’ future cash flow—and the group jittered, including all of ARK’s ETFs. But the ARK funds have been recovering, lifted as investors get a grip on their inflation fears and put their money back into innovation stocks.
ARK Invest’s six actively managed ETFs have gained an average of 22% since May 13, with ARK Innovation leading the chart, up by 31.3%, and the ARK Space Exploration & Innovation ETF (ARKX) lagging with just 9.3% gains.
At midday, ARK Innovation was trading around $130 a share, surpassing its previous high of $127.73 reached on April 26. It is now more than 4% above where it started the year, although still down 17% from its February peak.
In a newsletter last week, Woods shared her view on inflation.
“While others extrapolated those trends into the future, ARK has maintained that inflation would prove temporary thanks both to the base effects caused by the price collapses last year and to supply chain bottlenecks that will cause double- and triple-ordering of supplies, a massive inventory overhang, and a commodity price collapse,” she wrote.
Woods noted that both lumber and copper prices have been dropping in the past six weeks.
“We believe oil prices will not be far behind, despite the significant cutbacks in energy-related capital spending, particularly if drivers in the ride-sharing space take advantage of the lower total cost of EV ownership,” she wrote.
During the pullback of growth stocks, Wood has been buying dips in companies that she likes. Most recently, she decided to take advantage of the latest crypto correction: Bitcoin nosedived 20% in seven days to below $30,000 last Tuesday, the lowest level since late January.
Trading records suggest that Wood added 1 million shares of the Grayscale Bitcoin Trust (GBTC) to the ARK Next Generation Internet ETF (ARKW), boosting the cryptocurrency’s weight in the fund by a half-percentage point. Bitcoin has bounced back 18% and was trading around $34,200 on Monday.
Wood is a longtime crypto bull. With no Bitcoin ETF in the U.S. market, the fund manager has been investing in the digital currency through the closed-end trust and has been steadily growing her positions. The Grayscale Bitcoin Trust is now the eighth largest holding of the ARK Next Generation Internet ETF, making up 3.9% of its assets.
Wood also has been building her position in cryptocurrency exchange Coinbase Global (COIN) since the stock went public in April. The stock now has more than 3% weight in both ARK Innovation and ARK Next Generation Internet ETF. Coinbase shares jumped 8.1% on Monday, but are still priced 26% below the $328.28 at the close of their first trading day.
Write to Evie Liu at [email protected]
