Katie Wood on those, who bets on the fall of its shares: « Short Innovation? It's just ridiculous.!»

17 February Kathy Wood gave an interview to CNBC. ARK fund manager commented on the fall of her shares and criticized shortists, who bet against her.

"Outdated guidelines - that's where the risk"

Investors often contrast Kathy Wood and Warren Buffett because of their different approach to stock selection.. Buffett invests in large and reliable companies - leaders in their industries. And Wood invests in so-called disruptors - fast-growing and innovative startups., that can change the industry and consumer habits.

In 2020 against the background of soft policy FED Cathy Wood's flagship fund ARK Innovation has generated huge returns in 150%. Later, the value of many shares from the fund broke away from the fundamental indicators of the business, and so the paper began to fall in price. The fall of overvalued companies worsened in 2022, as investors fear a Fed rate hike due to high inflation.

As a result, over the past year, ARK Innovation sank by 56%. And over the last couple of years, that is, since the beginning of the pandemic, gave returns below S&P 500: 15 against 30%.

Kathy Wood thinks, that stocks from her fund are undervalued, the sale ends soon: "It was a significant fall. But we believe, that innovation will start to grow. Stocks are grossly undervalued compared to their potential. Give our portfolio five years.".

The manager said, what does not invest in established technology corporations like Microsoft. It relies on breakthrough technologies in various industries, from DNA to robotics and artificial intelligence.

“Today, some investors don’t behave like this, like in the late nineties. They avoid risk, fear of inflation and interest rates. But they run into the past. If we are right, innovation will disrupt the established order. Outdated guidelines - that's where the risk is, not in our promotions", Wood said..

According to the investor, Inflation pressure on growth stocks will eventually end. Prices rise due to supply chain disruptions and COVID-19 restrictions, added by Katie Wood.

“The psychology of investors is a pendulum”

In recent months, some funds have begun shorting stocks in Wood's portfolio., that is, bet on their fall. For example, Tuttle Capital Short Innovation ETF, which opened in November 2021. Even his exchange ticker SARK is a reference to Katie Wood's foundations.

And it's an unreasonable bet, considers the manager: « Short Innovation? It's just ridiculous.. Investor psychology - pendulum. He deviated a lot, but if we are right, the reward will be huge".

“They are just missing out on innovation. And don't do research. If they could explain, why our companies will not create a new world order, then we would talk", Kathy Wood criticized the shortists.

The manager also commented on part of her positions.. And that's what she said.

Zoom

Video calling app developer faces slowdown, as many workers and schoolchildren returned to offices and schools. Wood believes, that Zoom has potential: For the first time since the early nineties, when the Internet was developing, we see a revolution in corporate communications. We believe, that Zoom and Microsoft are helping to change lives and redefine your communications stack. And this time in the cloud.”.

17 February, Zoom shares were worth 129 $ - on 77% below historical high.

Roblox

16 February, the company's shares fell by 26%: Roblox's quarterly revenue falls short of consensus forecast, and the net loss was twice the analysts' expectations.

"We are thinking, this is one of the best bets on the metaverse. Shares sank amid short-term indicators, but we were impressed by the growth of the user base on 33%. More than half of the users were older 13 years. And the fifth part of the audience was aged 17-24 years old", Wood said..

17 February, Roblox shares were worth 54 $ - on 61% below historical high.

Year

17 February post-market shares of the developer of media players fell by 22%, as quarterly results and guidance came in below expectations. TV sales plummet due to supply disruptions, What has affected Roku's ad revenue?.

Roku faces challenges on the TV front, but, I guess, the company will solve them. All this is short term., and our investment horizon is five years.”, Katie reminded me.

17 February, Roku shares were worth 113 $ - on 77% below historical high.

Major positions in ARK Innovation. Share prices for 17 February and drawdown from the high

876 $ (−29%)