Cathie Wood says her innovation stocks are ‘way undervalued’ and recent fund losses temporary

Cathie Wood of Ark Invest said Thursday the technology companies in her innovation-focused portfolio are drastically undervalued.

“We’ve had a significant decline,” Wood said Thursday on CNBC’s “Halftime Report.” “We do believe innovation is in the bargain basement territory… Our technology stocks are way undervalued relative to their potential… Give us five years, we’re running a deep value portfolio.”

Her flagship fund ARK Innovation ETF was caught in the epicenter of tech-driven sell-off in 2022, down 26% year to date. ARKK bets on companies in the forefront of disruptive technology in a variety of industries from DNA to automation, robotics, and artificial intelligence. Her top holdings include Tesla, Telodoc Health, Roku, Zoom and Coinbase.

Some of her big holdings suffered a steep decline this year on expectations of rising interest rates. Higher rates typically punishes growth pockets of the market that rely on low rates to borrow for investing in innovation. And their future earnings look less attractive when rates are on the rise.

“Today we have investors doing the opposite of what they did in the late 90s. They are running for the hills. It’s risk off because of inflation and interest rates. And the hills are their benchmarks. They are running to the past,” Wood said.

“If we are right and the disruptive innovation that is evolving is going to disintermediate and disrupt the traditional world order, those benchmarks are where the risk is. Not our portfolios,” she added.

She said she doesn’t invest in any of those mature Big Tech companies like Microsoft.

Despite the big underperformance, her ARKK attracted more than $70 million in net inflows year to date, according to FactSet.

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