There is a new star in the investment space, and her name is Cathie Wood. The founder of the ARK Invest family of actively managed exchange-traded funds revolutionized the industry, avoiding passive index tracking in favor of good old stock selection. All of Wood’s five ETFs more than doubled in the past year, and all five have diverse portfolios with several dozen shares among their holdings.
However, there is one action that Wood praised more than any other. He has been an integral part of his ETF holdings for the past year, and his performance has been crucial to the success of ARK Invest. Next, we’ll share what Wood said about this company and whether it thinks it still has good growth prospects in the future.
The only bull in a room full of bears
Once a stock has triggered, it is easy to be optimistic. But Wood was excited about his favorite action long before she was hot – and even when many believed she was on the verge of collapse.
Image source: Getty Images.
For some context, look back until August 2019. The price of Wood’s favorite stock had dropped by a third since the beginning of the year. Many were skeptical about his ability to recover from one of the many controversies surrounding the company and its CEO. The company even cut prices on its main product line, and some even feared that bankruptcy could be imminent.
The stock, of course, is Tesla (NASDAQ: TSLA), and nothing happening to the company for a year and a half prevented Wood from his optimistic views. “We think the negative feeling is quite unbelievable,” she said in an interview with CNBC. Wood saw the company’s gross product margins increase over time and pointed to the auxiliary potential of autonomous vehicle technology as a major technological asset that no one at the time was placing much value on.
In terms of competition, Wood noted, Tesla was building its own competitive advantage by building the ideal workplace for those interested in innovation. “This is getting all really great software engineers,” she told CityWireUSA. “Tesla is taking all the oxygen out of the room for the other automakers.”
It was long before that, in early 2018, when Wood set a seemingly bizarre price target of $ 4,000 per share in shares. By early 2020, it had increased the call to $ 15,000 per share, with a 2024 term.
Despite all his critics, Wood was right. His upbeat calls were made before Tesla split his 5-by-1, so the old $ 4,000 and $ 15,000 price targets work for $ 800 and $ 3,000, respectively, after the split. Tesla reached $ 800 per share earlier this year and remains close to that level. This took $ 10,000 invested last year to a level closer to $ 160 per share adjusted by the division and transformed it to almost $ 50,000.
TSLA data by YCharts.
As for Tesla reaching $ 3,000 a share, that could take a few more years. But Wood did not withdraw that call and is still adding to what is already a broad position at Tesla in its ARK Invest ETFs.
Big bets on Tesla
You will not find a stock among the ARK Invest ETFs that has more money invested in it than Tesla. The following ETFs have positions:
- The flagship ARK Innovation ETF (NYSEMKT: ARKK) is ARK Invest’s largest active ETF and holds 3.1 million shares worth nearly $ 2.48 billion at recent prices. Tesla represents almost 9% of the fund’s total assets.
- ARK Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ) is much smaller, but has an even greater concentration on Tesla shares. The fund holds about 511,000 shares valued at more than $ 400 million, representing just under 10% of ETF assets.
- Another 1 million Tesla shares are in the hands of ARK Next Generation Internet ETF (NYSEMKT: ARKW). These shares have a timid value of US $ 800 million, representing 8.5% of the assets under management.
At least for now, Wood has found no way to include Tesla in the holdings of the genome ARK Invest or fintech ETFs. However, with the company led by Elon Musk, you never know what might be in store.
Buying more Tesla
Despite these great positions, Wood remains optimistic about Tesla. Just this week, she said that ARK Invest has been buying shares. Wood pointed to the potential value of the greeting as yet another market for Tesla to enter.
Tesla continues to inspire both bullish and bearish options across the investment community. But two things are certain: Wood’s belief in the EV pioneer has not wavered and, so far, his calls about his favorite shares have been extremely good for ARK Invest shareholders.