The newest superstar investor, Cathie Wood has leveraged a zealous belief in innovation into a $29 billion-in-assets firm and a $250 million net worth. Among her predictions: Elon Musk's car company is vastly undervalued
esla shares were limping along around $200 in May 2019, about where they had traded five years earlier, when Elon Musk’s biggest Wall Street booster tried a gutsy experiment. Cathie Wood and her Ark Investment Management were already well-known for their way-out-there predictions that Tesla would build a fleet of robo-taxis worth $1 trillion and that its shares would soar 20- or 30-fold by 2023. Now she stirred the pot again by publishing online Ark’s new bull’s-case valuation of $1.
Meanwhile, Wood, 64, is perfectly happy to have a chorus of critics: “It almost makes me feel comfortable, to be honest, because it means if we’re right, then the rewards will be pretty enormous.” Its Tesla position and a pandemic that has accelerated adoption of the technologies embedded in the 35 to 55 companies in each Ark ETF have helped its assets nearly triple in 2020, to $29 billion. “Coronavirus has catapulted our innovative platforms into high gear because they solve problems,” Wood says. “Innovation solves problems.” conservatively values Ark at $500 million, or about 2% of assets under management, roughly the same multiple as publicly traded T. Rowe Price commands.
Two years later, she launched Ark in New York. Success wasn’t immediate. In the firm’s first two years, its flagship fund placed in the bottom quartile of its peer group, according to Morningstar. By the end of 2016, Wood had attracted just $307 million in assets, and Ark’s 0.75% management fee wasn’t covering overhead. To keep going, she dug deep in her savings, sold minority stakes and struck partnerships with larger firms to build distribution.
The tumult of 2020 has been good for Ark. In March, when the pandemic emerged and stocks plunged, Wood correctly predicted fast-growing tech companies would lead the world to recovery. She concentrated Ark portfolios in Tesla and other top picks including education-software company 2U and real estate platform Zillow. Then, in late summer, when Tesla soared, she trimmed her holdings and built a large position in the battered shares of Slack.
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