It’s been a tough year for Cathie Wood. And her naysayers are piling on.
The founder of Ark Investment Management, who could seemingly do no wrong during the run-up in asset values during the pandemic, has seen soaring inflation and elevated interest rates crush her exchange-traded funds in 2022. The flagship Ark Innovation ETF, once a byword for market-beating returns, has tumbled more than 65% this year because of a bruising selloff in tech stocks like Tesla Inc. and Zoom Video Communications Inc.
Wood’s defense has long been that her firm backs companies poised to change the world and doesn’t invest in mature ones catering to “short-term investors.”
Dan Loeb, a long-time value investor, isn’t impressed.
The billionaire, who runs New York-based Third Point, said in a tweet Wednesday that Wood’s memo should be used in classes to study the “mindset of stonk hodlers”—a term used to poke fun at online traders who cling to their positions regardless of what’s happening in the market.
Anyone teaching a value investing class or one on investment psychology should use this memo as a treatise to study the mindset of stonk hodlers. Note the disparaging comments on luddites who look at archaic measures of value like cash flow as short term traders. @mjmauboussin https://twitter.com/CathieDWood/status/1605201557854846977
@DanielSLoeb1
Wood’s memo, published earlier this month, defended her firm’s strategy against criticism that it invests in “concept capital” and companies that can’t turn a profit. Wood also took aim at firms that add leverage to their balance sheets to pay dividends or repurchase shares without investing in innovation.
“The companies in which we invest are sacrificing short-term profits to capitalize on the exponential growth and highly profitable opportunities that a number of innovation platforms are creating,” she wrote.
Loeb’s biggest stock holdings in the past quarter include Colgate-Palmolive Co., utility PG&E Corp. and conglomerate Danaher Corp.
This article was provided by Bloomberg News.