When you think of the smartest person in the investments world, you likely think of Warren Buffett. But today, Cathie Wood has staked a claim to the title of “Oracle” of the investing world.
Her ARK Innovation (ARKK) ETF crushed the market’s overall average returns, posting gains of over 150%. She created ARKK in 2014, and in the past five years, her collection of exchange-traded funds have posted returns that have smoked Warren Buffett’s.
How Cathie Wood Rose To Fame
Ms. Wood started her career in the early 80s as a Jennison portfolio manager. By 2001, she connected with AllianceBernstein, overseeing $5 billion worth of assets at the top of her game.
It hasn’t always been roses, though. She made a bad call once at Jennison and AllianceBernstein had its ups and downs, too. It might not have been entirely her fault at Alliance, as she took over a growth fund in the middle of 2008 when not much of anything was growing except the national deficit. That year saw the Global Thematic Growth Fund lose 45%. But under her direction, it turned around and rose 55% in 2009.
She left AllianceBernstein in 2013 and the following January, she founded ARK Innovation.
With 40 years of investment research under her belt, she created ARK to package stock portfolios into ETF formats. ARKK concentrates on innovative and disruptive tech, investing in companies that have the potential for both mind-blowing growth in the short-term and relevance in the long run. Cathie Wood is ARK’s CIO and its portfolio manager, so investment decisions must get her seal of approval.
And those decisions have earned her plenty of accolades, including:
- 2016, 2017: Featured speaker in China at the World Economic Forum
- 2018: Bloomberg’s Top 50 People Defining Business globally
- 2019: Included in Fortune’s annual publication Fortune Investors Guide
As of 2021, Cathie Wood’s has an estimated net worth of $400 million.
How Does Cathie Wood Approach Investing?
Cathie Wood and her firm has a unique investment approach, combining visionary bets with see-through transparency.
She believes in making her views ultra-clear and producing exceptionally high ROI with what she calls “disruptive innovation.” With this philosophy, she’s connected with investors old and new in a way that the industry could only have once imagined.
By the end of 2019, Wood was managing under $10 billion – she now manages almost $85 billion. That’s where her risk-seeking appetite philosophy paid off. ARK Innovation bought up shares of tech and service stocks like Roku (ROKU) and Square (SQ) – disruptive innovators.
In a matter of months during the worst of the lockdowns, the ETF bolted 150% skyward, leaving the S&P 500 (SPY) in the dust with its meager 16% gains.
On the ARK website, Wood is quoted as saying that other investment firms are all “about what has worked” in the past. “We’re about what’s going to work” in the future.
Wood’s stock picks have certainly worked.
And even though recently both ARKK and ARKG have experienced a bit of sluggishness, both ETFs have still crushed the overall market in the last five years.
The largest holdings of ARKK include:
The ARKK share price has risen by around 450% since 2016.
ARKG holdings include:
This ETF, too, has seen tremendous growth of 340% over the past five years.
What Stocks Did Cathie Wood Just Buy?
The three stocks Cathie Wood just bought are:
Coinbase (COIN) went public in April, and ARK Invest has continued buying shares. In fact, Coinbase is the fourth-biggest holding across all ETFs Wood operates. The ETF currently holds about $1.5 billion of Coinbase stock.
Coinbase has felt the pressure recently though, as its plans went asunder regarding a 4% yield for a Coinbase LEND program – the SEC stepped in to prevent the launch. Plus, crypto has been feeling the pinch lately, trading lower than in the spring. Coinbase currently trades for under its key price level of $250, arguably a bargain.
The internals are much more positive. Coinbase is actually seeing four-digit growth, to the tune of 1,042% in just the last quarter. Growth will eventually stabilize and dramatically slow down as the crypto market cools, but current growth is still heady as it capitalizes on volatile trading volume spikes.
This is one of the ETF’s smallest wagers, but it’s playing along nicely with the current uptick in online sports betting outfits. The funny thing is, Genius Sports (GENI) isn’t a wagering book at all. It’s basically just a data management service for the sites running online wagers.
Genius went public as part of a SPAC in April 2021 and it’s currently trading over 20% lower than its initial peak in May.
Genius Sports is, however, seeing three-digit growth percentages. Just in the last quarter, Genius saw $55.8 million in revenue representing 108% growth. The greatest part of its business is the technology and services segments, which soared 122% in the last year, accounting for 73% of overall revenue.
This is among the smallest companies in Wood’s portfolio (by size) with a market capitalization of only $3.8 billion, but it’s still a company to watch as it smartly plays on the popularity of sports betting.
If you’ve bet on DraftKings (DKNG) – as a stock – recently, you’re probably scratching your head why Cathie Wood buying DraftKings is even news. Yep, shares of this fantasy sports and betting site plunged 13% in the last week of September 2021. While other stocks bounced back after a rough week on Wall Street, DraftKings kept sliding.
It would seem the market isn’t too happy with one of DraftKing’s most recent moves – they made an offer to buy out Europe’s Entain (GMVHF & GMVHY), the country’s huge online gambling site. If they get to make the purchase, it’s worth around $22 billion in shares and cash.
Well, sure – but DraftKings itself only has a market capitalization of around $20 billion. How exactly would they pull it off?
But the bigger question here is why no one actually “gets” the brave, bright idea here: buying Entain would skyrocket DraftKings around the world. The new, meshed company could propel DraftKings into the online wagering stratosphere.
But, that said – DraftKings does quite nicely all on its own. The company’s revenue bolted 320% in the most recent quarter, in line with unique monthly users jumping 281%. Every so many days, it seems DraftKings inks a new deal with a league, team, or network, expanding its reach and awareness. Growing a sports betting book online has never been easier.
Cathie Wood is the consummate investor, giving even Buffett a run for his money. She’s definitely one to watch – and imitate, if you’re so inclined.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.