Cathie Wood bets on struggling fintech firm

Cathie Wood, Ark Investment Management’s CEO, recently diverted from her usual strategy of investing in small, innovative businesses and has instead directed her attention to a fintech company that experienced a significant decrease in value. This shift marks a shift towards larger, more established technology firms.

Despite some inconsistency in her three-year performance, Wood’s previous year saw a return of 153%, earning her the nickname ‘Mama Cathie’. This return, coupled with her reputation for precise investment practices and her dedication to the craft, has solidified her standing in the world of investments. Always forward-thinking, Wood keeps her focus on potential growth stocks.

However, despite recent successes, a closer look at the Ark Innovation ETF’s long-term performance shows a decrease of 27.26% over three years and a small improvement of 1.11% over five years. This indicates that, despite short-term triumphs, the fund has been largely underperforming in the long term.

Wood’s investment approach is targeted at emerging companies in advanced tech sectors such as artificial intelligence, DNA sequencing, and robotics. Not usually part of standard brokerage portfolios, these companies are seen as potentially industry-disrupting.

However, investment in these sectors doesn’t come without risks.

Wood’s unexpected shift to larger fintech

Unpredictable fluctuations are common, leading to volatile performances. Furthermore, Woods’ investment decisions have been criticized. Some, like Morningstar analyst Robby Greengold, question Ark’s ability to predict profitable investments.

There’s also the argument that Ark’s focus on innovation-heavy investments could backfire if traditional, slow-growing industries regain momentum. Likewise, a lack of diversification in Ark’s portfolio potentially places too much risk in portfolio concentration.

Despite these criticisms, Wood remains unfazed. Most recently, she directed the Ark Fintech Innovation ETF to purchase over 100,000 shares in a significant fintech company despite an 80% dip from their peak value in July 2021. Experts attribute this decrease to competition from companies like Block and Mastercard.

Wood’s decision to invest may indicate confidence in the fintech company’s potential for recovery. In the trading world, actions speak louder than words, and ‘Mama Cathie,’ it appears, is betting on a bounce-back.