‘Big Short’ Investor Bets Cathie Wood’s $85 Billion Ark Funds

Meet Cathie Wood, the American fund manager who is quickly becoming as famous as Warren Buffett, but already twice as controversial.

Millions loyally follow Buffett’s investment rules. But Wood, the outspoken, telegenic and social media savvy founder and chief executive of Ark Investment Management, is also gaining a significant fan base.

Acolytes are drawn to its stock-selection doctrines, which are based on the profits and social well-being that will result from the disruptive power of technological innovation. She likens this revolution to the introduction of electricity into industry at the end of the 19th century.

Star Fund boss: Cathie Wood (pictured), is the outspoken, telegenic and social media-focused founder and CEO of Ark Investment Management

Some of the Wood faithful even wear T-shirts with her portrait in the style of the Barack Obama Hope poster, although the 65-year-old investment star is a Republican who supported Donald Trump.

This “mother, economist and women’s advocate,” as her Twitter biography puts it, claims that the Biden administration’s spending and tax policies will stifle innovation and its ability to drive change.

Although Ark was only founded in 2014, it has attracted $85 billion in savings for its range of ETFs, including flagship Ark Innovation, which has stakes in a range of tech names such as Roku, which makes digital media players for streaming, Twilio, the cloud computing giant. , and Tesla, probably Wood’s favorite stock.

These funds can be traded on a daily basis and the positions are also announced every day. Wood isn’t just the CEO, she’s chief investment officer — and (albeit unofficially) chief publicist.

Her politics make the news less so than her enthusiasm for Tesla, which she predicts will rise to $3,000 in 2025, from $711 today, and bitcoin.

She believes that the crypto currency will reach $500,000. Right now the price is $48,000. She rejects environmental concerns and claims it will help economic empowerment in developing countries.

But Wood is pessimistic about the prospects for legacy industries such as traditional auto manufacturing, financial services and retail.

They are in the ‘harm’s way’ and ill-equipped to cope in the age of artificial intelligence and robotics.

The latter are two of the five pillars of disruptive innovation on which Ark is built. The others are blockchain, DNA sequencing, and energy storage.

The attention paid to Wood’s stock purchases can move the markets. Last week, JD.com, the Chinese e-commerce group, reported better-than-expected second-quarter earnings.

But the jump in stock price seems more related to Ark’s decision to acquire the stock.

Critics, bemoaning Wood’s dedication to unprofitable tech companies, liken her influence to a cult.

But managing money in America can be a branch of show business and Wood keeps her center stage on Youtube and CNBC, with her polished look of large glasses, pearl studs and black shoulder-length hair.

Michael Burry, who was played by Christian Bale (pictured) in the movie The Big Short, has joined investors who short Ark funds

Michael Burry, who was played by Christian Bale (pictured) in the movie The Big Short, has joined investors who short Ark funds

She seems proud to confuse the assumption that women of her generation should distrust technology. In her statements she is candid to an extent that is baffling to British investors, who are largely unaware of which companies are getting their money back.

Wood loves transparency and shares her views on the economy, cryptocurrencies and stocks through daily customer emails, Ark’s podcasts and Twitter, where she has a million followers. At the moment, for example, she thinks that “inflation will surprise on the low side.”

Another reason why innovation is an undivided good, according to Wood, is that it is deflationary.

The UK may have star fund managers such as Terry Smith and Nick Train. But neither has his face on a T-shirt (as far as we know), or talks openly about religion – unlike Wood.

The child of Irish parents who immigrated to Los Angeles, she reads the Bible daily and says she was inspired by the Holy Spirit to set up her business one summer day when she was alone in her house, her three children left for the camp .

The name Ark may represent active research knowledge (Wood does extensive research), but it is also a biblical reference to the Ark of the Covenant.

Silicon Valley executives tend not to talk much about the Almighty, which makes you wonder what they think of Wood’s statement that she’s “allocating capital to God’s creation in the most innovative and creative way possible.”

Of late, Wood has had to rely more than usual on her eloquence to defend her strategy, which she developed during a 12-year stint as Chief Investment Officer at Alliance Bernstein, beginning in 2001.

The University of California economics and finance graduate worked first as an economist and then moved on to portfolio management.

In 2020, Ark Innovation rose 149 percent, thanks to its portfolio of lockdown stocks such as Teladoc, the payment system Square and Zoom.

This year’s performance was mediocre. The fund fell between February and May and is 0.14 percent lower since January. Over the same period, the Nasdaq is up 21 percent and the S&P 500 is up 23 percent.

As a result, $944 million flowed out in July and Wood’s opponents are circling. Matthew Tuttle, of Tuttle Capital, another fund manager, proposes a fund that “short” the Ark ETF, using options to bet against its interests.

Last month there were about $2.7 billion in bets against the fund, with Scion Asset Management’s Michael Burry joining the short sellers, a celebrity thanks to his role in Michael Lewis’s book on the housing bubble, The Big Short. of the early 2000s, which was made into a movie.

Wood has said Burry doesn’t understand the “foundations that create explosive growth and investment opportunities in the innovation space.”

Aswath Damodaran, a professor of finance at New York University, says the shortsellers are jealous of Wood’s wealth and success.

The appeal of the Ark ETFs has prompted major fund managers to offer Ark-type ETFs.

Also in the 21st century it is unusual for a woman to run such a company and make important decisions about stock choices. In the UK, Anne Richards is CEO of Fidelity International, but no one else approaches Wood’s status.

In the coming months, she will fight to show that her approach is the right one. She calls on savers ‘to keep the faith’.

If this fight between Wood and Burry gets really ugly, it could even be a movie. Christian Bale played Burry in The Big Short. Maybe Demi Moore Wood can play?

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