Ark Investment Management founder Cathie Wood has been dominating headlines for seeing massive inflows into her ETF lineup. In fact, it has managed a spot among the top 10 issuers in the $5.5-trillion ETF industry, thanks to solid asset gains in 2020, per a BloombergQuint article.
Despite taking a beating (down 3%) this year, Ark Investment’s star product Ark Innovation ETF (ARKK) has gained 27.5% in the past year. Meanwhile, ARK Next Generation Internet ETF (ARKW) has gained about 35% past year and 5% this year.
In short, Cathie Wood, famous for the success of Ark Investment’s winning products, has created a great fan following. Many want to follow her investing style. In this regard, we highlight below a few stocks and ETF investing strategies.
Book Profit on Tesla?
Who doesn’t know Tesla’s (TSLA) success and Wood’s love for the electric vehicle giant? Tesla has become a one-trillion company lately. Its shares have gained 155% past year and 51.5% this year. Cathie Wood has long been a proponent of the company.
Still, Wood’s Ark sold 46,414 shares of Tesla Thursday last week and 80,354 shares on Friday last week — a total haul estimated at $114 million. On Monday, she offloaded another 22,598 shares of the company. So, one may follow suit.
Tap the Social Media ETF
Wood is buying-the-dip in Twitter (TWTR) and Snap (SNAP) . The camera and social media company SNAP reported disappointing Q3 results. While revenues grew 57% year over year to $1.07 billion, it missed Wall Street’s expectation of $1.1 billion. Investors largely focused on on the iOS platform policy changes, supply chain disruptions and labor shortages. SNAP dropped about 26.7% om Oct 22.
Twitter reported third-quarter 2021 adjusted loss of 54 cents per share in contrast to the Zacks Consensus Estimate of earnings of 17 cents per share. Revenues increased 37% year over year to $1.28 billion that missed the Zacks Consensus Estimate by 0.3%. In response to earnings and revenue miss, the stock lost about 10.8% in the key trading session on Oct 28. Twitter also suffered due to Apple’s (AAPL) iOS 14.5 privacy change.
Wood has bought 230,323 shares of Snap on Friday last week and 448,944 shares of Twitter on the same day as Snap earnings weighed on several social media players. This opens up an opportunity for Global X Social Media ETF (SOCL) . Twitter takes about 6.25% of SOCL, holding the fifth position. Investors should note that SOCL puts 11.68% on Facebook (FB), 7.60% weight on Snap and 6.95% focus on Alphabet.
Play Skillz (SKLZ) and its ETF
Mobile gaming company Skillz is also Wood’s favorite. The company has generated 22 consecutive quarters of top-line growth. Its Q2 revenues of $89.5 million represented a 52% increase from a year ago. Last Thursday, Ark Invest bought over 2.1 million shares of the company, per a yahoo finance article. The stock has exposure to De-Spac ETF (DSPC) with a 5.15% weight.
No Inflation After Holiday Season?
Going opposite to the ongoing talks over surging inflation, Wood believes that prices are likely to cool down after holiday season. This is because many pandemic-suffered businesses are ordering much higher their needs. This will leave those companies with excess supplies post holidays.
Wood said in a Twitter thread that instead of creating high inflation in 2008-09 when the Fed started its QE policy, velocity — the rate at which money turns over per year — declined. This actually marred inflation. This very velocity “still is falling."
Hence, growth stocks will continue to rule higher in the coming days as lower inflation would pull down bond yields. Growth ETFs like SPDR Portfolio S&P 500 Growth ETF (SPYG) would continue its rally. However, Wood indicated that the energy rally is an exception. Energy price inflation may be in the cards. So, investors should continue tracking United States Brent Oil ETF (BNO) for gains.