Cathie Wood of Ark Invest stated Thursday the innovation business in her innovation-focused portfolio are considerably underestimated, and she thinks that her fund’s current sell-off is short-term.
“We’ve had a significant decline,” Wood stated 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 captured in the center of the tech-driven sell-off in 2022, down 26% year to date. Some of her huge holdings, consisting of Zoom, Teladoc Health and Roku, have actually toppled as much as 70% this year on expectations of increasing rates of interest.
“Our biggest concern is that our investors turn what we believe are temporary losses into permanent losses,” Wood stated.
Higher rates normally penalize development pockets of the marketplace that count on low rates to obtain for buying development. And their future profits look less appealing when rates are on the increase.
Wood stated she does not purchase any of those fully grown Big Tech business likeMicrosoft ARKK bets on business in the leading edge of disruptive innovation in a range of markets from DNA to automation, robotics and expert system. Her leading holdings consist of Tesla, Exact Sciences, UiPath and Coinbase.
“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 stated.
“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 included.
Despite the huge underperformance, her ARKK has actually drawn in more than $70 million in net inflows year to date, according to FactSet.
The development financier stated she thinks the inflationary drag on development stocks will end eventually which deflationary forces will return.
“A lot of what’s going on is supply chain related,” Wood stated. “I do think the deflationary forces building in the economy are pretty strong.”
