Warren Buffett is losing money – Cathie Wood of ARK Invest is becoming the stock picker to watch. And she is placing big bets on a series of shares that Buffett does not own and cannot match – even in the financial sector.
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Three shares that are the 10 largest holdings in the ARK Invest ETF family, including financial Silvergate Capital (SI), healthcare Pacific Biosciences of California (PACB) and communication services company Sea (SE) has at least tripled the return of Warren Buffett’s best-listed US stocks in the past 12 months, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Wood, increasingly dubbed “Queen Cathie” by Reddit traders, is becoming the new Oracle in the stock market. More than 30 of the 45 largest holdings in ARK Invest’s five active ETFs in the past 12 months outperformed the biggest US listed winner in Buffett’s Berkshire Hathaway portfolio: home decor retailer HR (HR). UR increased by 116.8% in 12 months.
Warren Buffett: Make room for a new oracle
Wood is becoming a household name among investors. Hundreds of millions of dollars poured into his family of five ETFs this year. ARK has about $ 60 billion in assets now, says ETF.com.
And the stocks that Wood is buying for ETFs, including flagship ARK Innovation (ARKK), tend to skyrocket in the news. Meanwhile, the ETF has risen 145% in the past 12 months. Buffett’s Berkshire Hathaway shares fell 4.3%.
There are 12 salient months to compare performance as well, as last year put the two money managers at a peak in 2020, a brutal fall from the pandemic shock and a powerful recovery.
“I know that many people are fascinated by Cathie Wood’s ARK Innovation ETF, which I expect will increase by around 250% in one year by the end of the quarter,” said Dan Wiener, editor of “The Independent Adviser For Vanguard Investors”.
Cathie Wood showing Buffett the future of finance
Surprisingly, Wood seems to be teaching Buffett in his traditionally favorite sector: finance.
Two of ARK Invest’s three holdings at the top of Buffett’s top US listed stocks are on the ARK Fintech Innovation ETF (ARKF). In fact, although Wood is famous for his longstanding optimism in Tesla (TSLA), its best performing stock in the past 12 months is Silvergate Capital, a finance company. It is an increase of more than 880% in the last 12 months.
And Silvergate, a bank holding company in La Jolla, California, is a 4.3% stake in ARK’s financial ETF. It is the fourth largest share of the ETF. The value of the ETF ARK Fintech Innovation increased by more than 125% in 12 months.
Buffett’s best-performing financial stock, on the other hand, is a credit card company Synchrony (SYF). But it has only increased by 17.1% in the last 12 months. Meanwhile, Buffett’s biggest financial position, a $ 34 billion stake in Bank of America (BAC), grew only 2.3% in 12 months. This is even lower than the 16.6% increase in the S&P 500 in that period.
Not to mention Sea, which is the seventh participation in the ETF ARK Fintech Innovation with 3.5% of the portfolio. The company provides digital financial services and e-commerce in Asia and Latin America. It also shames all of Buffett’s financial moves. Sea stocks have increased by almost 400% in one year.
Buffett fails to match Wood’s health insurance winner
Buffett is worrying about some healthcare names. He increased his positions in the health sector in late 2020. Specifically, Berkshire increased its holdings in Merck (MRK) by 28% and AbbVie (ABBV) by 20%. But they hardly stand out. Merck fell 9.2% in 12 months, while AbbVie rose 14%. Should you buy AbbVie shares now?
In the meantime, look at Pacific Biosciences of California. The shares of the molecule sequencing equipment manufacturer rose more than 800% in 12 months. Wood is expected to expect big gains in the future not yet apparent to analysts. Wall St. analysts expect the company to lose 96 cents per share in 2021, even more than the 62 cents per share it lost in 2020.
Buffett vs. Wood: who wins in the future?
But never exclude Buffett.
The S&P 500 is changing and cyclical stocks are rebounding. This could play in Buffett’s favor. Buffett’s first US listed stock that has been traded for a year is a household goods retailer.
The shares of traditional banks are also rising and bringing value shares. The financial sector accounts for a quarter of Buffett’s public investment portfolio. And stocks of discretionary consumption reach 5%.
In the meantime, some of the best stocks are cooling, like Tesla. And Tesla is one of the 10 largest holdings in three ARK Invest ETFs. Tesla fell 39.68, or 5.1%, to 741.62 on Monday. Tesla alone accounts for almost 9% of ARK Innovation. In contrast, Buffett’s No. 1 financial holding, Bank of America, rose 64 cents on Monday, or 1.9%, to 35.16. Should you buy Tesla shares now?
But Buffett is also highly exposed to large stocks of technology. He lit up Apple (AAPL) last year, but it is still, by far, the No. 1 position in its portfolio. The technology now represents 46% of its portfolio, including the acquisition of shares in Snowflake (SNOW), which has not yet negotiated an entire year.
And it’s always a bad idea to dismiss Buffett. He knows how to survive decades of market cycles, something ARK Invest has yet to prove.
Best performing ARK Invest shares
Biggest gains among the top 10 holdings in ARK’s five active ETFs in the past 12 months
| Company | Symbol | 10 largest holdings in the ARK ETF | 12 months% ch. | Sector |
|---|---|---|---|---|
| Silvergate Capital | (SI) | (ARKF) | 878.4% | Finance |
| Pacific Biosciences of California | (PACB) | (ARKG) | 793.6% | Health care |
| Sea Limited | (SE) | (ARKF) | 387.9% | Communication services |
| Grayscale Bitcoin background | (GBTC) | (ARKW) | 326.8% | Finance |
| Twist Bioscience | (TWST) | (ARKG) | 315.2% | Health care |
Sources: ARK, S&P Global Market Intelligence, ARKF = Fintech Innovation, ARKG = Genomic Revolution, ARKW = Next Generation
Follow Matt Krantz on Twitter @Mattkrantz