The Passion of Cathie Wood: Why the ‘Wackiest Portfolio Manager on Earth’ Isn’t Losing Faith

Cathie Wood was sitting in a phone booth in the New York office of Ark Invest when she heard Tasha Keeney, one of the firm’s analysts, let out a scream—“a happy scream,” Wood recalled. It was Feb. 1, 2019, and Keeney had just received a direct message on Twitter from Elon Musk—the first time the Tesla CEO had privately reached out to anyone at Ark. “This is really good,” Musk messaged Keeney, referencing comments she had made about Tesla that day on Fox Business.

Less than two weeks later, Wood and Keeney arrived at Tesla’s Fremont, Calif., headquarters to record a podcast with Musk, excited to meet the iconic CEO in person. For Ark, the podcast was a breakthrough event. “We were nothing,” Wood told me during a recent Zoom interview. “Nobody knew who we were.”

Today, everyone in the financial world knows who Cathie Wood is. The founder, CEO and chief investment officer of Ark has been both revered and ridiculed for her staunch belief in Musk—and for her pie-in-the-sky forecasts for a wide variety of pandemic-boom companies, including Tesla. “Many were saying he’s going to run out of cash, he can’t scale Model 3 and…he’s going to go bankrupt,” said Wood of Musk’s early doubters. “And we just kept our eye on the prize.”

In 2020, Tesla helped Ark’s flagship exchange-traded fund, Ark Innovation, soar more than  150%. Money poured in as Ark became a way for retail investors to double down on pandemic winners, with the firm’s emphasis on disruption and innovation stocks. By February 2021, Ark had amassed $50 billion in investments, up from $3.6 billion just before the pandemic took hold in 2020, taking in more money than giants like BlackRock and State Street.

Wood was christened the queen of the bull market—with the financial media gushing over her every word, comparing her favorably to Fidelity star manager Peter Lynch. (CNBC’s Jim Cramer famously called her a “genius.”) But the adulation did not last long. Wood’s flagship ETF, Ark Innovation, has fallen to $38 per share, down more than 75% from its peak of $157 in February 2021. It has now lost nearly all the gains it made over the past five years. Even Cramer has turned on Wood, calling her “the kiss of death.”

Much of Ark’s recent decline is due to Tesla, Wood’s top holding. Tesla’s stock is down more than 50% from its peak in October 2021, when it traded above Wood’s lofty price target of $4,000 per share, seemingly confirming her bold analysis of the controversial electric car company. Taking into account the two stock splits since then, the $4,000 equates to $267 per share today; Tesla was trading at under $200 on December 1.

But Wood, who has become well practiced at dismissing critics, has not lost faith in Musk, whose “antics” (her words) have arguably become more unhinged since he paid $44 billion for Twitter in late October. Thus far, Wood has gone along for the ride, buying $1 million worth of  private shares of Twitter in a new crossover venture fund she launched in September with the assistance of venture capital firm Andreesen Horowitz. (Ark Venture Fund, which lets retail investors buy stakes in private companies, is marketed through an Andreessen-backed investment app called Titan.) Even though Musk has acknowledged that he overpaid for Twitter, and the place has been in a state of chaos since his takeover, Wood is convinced Musk can transform the company.

You can read the full profile on The Information here: https://www.theinformation.com/articles/the-passion-of-cathie-wood-why-the-wackiest-portfolio-manager-on-earth-isnt-losing-faith

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