Investor Daniel Loeb Unleashes Criticism of Ark's Cathie Wood

(TheStreet) - Star investor Daniel Loeb, chief executive of Third Point, is none too impressed with his counterpart Cathie Wood, chief executive of Ark Investment Management.

Ark’s exchange-traded funds (ETFs) have hit the skids this year, as earnings weakness has battered their holdings of young technology companies.

Wood’s flagship Ark Innovation ETF  (ARKK) - Get Free Report has plunged 66% so far in 2022, and is down 80% from its February 2021 peak.

Wood has defended herself by noting that she has a five-year investment horizon. But the five-year annualized return of Ark Innovation totaled a negative 1.95% through Dec. 20, a far cry from the S&P 500’s positive return of 9.28%.

The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.

Has Investor Exodus Begun?

Ark Innovation’s subpar returns may finally be starting to push investors away. The $6.4 billion fund registered a net investment outflow of $391 million in the past month, according to ETF research firm VettaFi.

But it has still notched a $1.4 billion inflow for the year to date as a whole.

You might wonder why so many investors have stuck with Wood, despite her mediocre returns. The fact that she had one spectacular year certainly helps. Ark Innovation ETF skyrocketed 153% in 2020.

Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She is clearly intelligent and articulate, explaining financial concepts in ways that novice investors can understand.

Stonk Hodler Accusation

Loeb, however, isn’t singing her praises. After Wood wrote a commentary defending her investment philosophy, he let fly on Twitter.

“Anyone teaching a value investing class or one on investment psychology should use this memo as a treatise to study the mindset of stonk hodlers,” he wrote. Stonk hodlers is slang for investors who hold (hodl) onto stocks (stonks) too long.

By Dan Weil
December 21, 2022


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