Still Betting on Innovation, 'Donnamu Unni' Holds $400 Million Worth of Growth Stocks

Despite US Tightening Concerns, Maintaining Investment Focus on Innovative Companies in a Down Market
Concentrated Investment in High-Growth Stocks like Roblox, Block, Robinhood

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Cathie Wood, CEO of ARK Investment, known domestically as the 'Donnamu Sister,' invested approximately $400 million in innovative companies during the sharp market downturn at the start of the new year, the Wall Street Journal (WSJ) reported on the 13th (local time).

According to the report, the company's flagship exchange-traded fund (ETF), ARK Innovation (ARKK), purchased more than $400 million (about 479.8 billion KRW) worth of high-growth stocks over the past two weeks, including the metaverse gaming platform Roblox, mobile payment company Block (formerly Square), and online stock trading platform Robinhood.

Roblox, Block, and Robinhood have all fallen at least 25% over the past six weeks this year. Financial information provider FactSet reported that more than half of the stocks comprising ARKK have dropped over 20% since the beginning of the year.

ARK was considered one of the biggest winners during the era of low interest rates when stocks and virtual assets like Bitcoin surged in popularity, but such aggressive investments now face a rising interest rate environment. In fact, the ARKK ETF has fallen 24% so far this year, matching last year's decline. The S&P 500 and Nasdaq indices recorded double-digit gains last year but have dropped 7.3% and 12%, respectively, this year.

Nevertheless, ARK continues to maintain a strategy of actively investing in companies focused on change and innovation. As of the 5th, Tesla, Roku, and Teladoc Health are the top three companies in this innovation fund. These companies have each fallen at least 19% this year.

Regarding this, CEO Wood stated in a recent video message to investors, "Today, we still hold a different perspective from the majority on inflation, interest rates, and most importantly, innovation," analyzing that the U.S. Treasury yield reaching the 3% range poses more problems for mature, already grown companies than for her preferred 'super growth companies.' She compared the current situation to the early 2000s, mentioning Amazon's double-digit revenue growth during that period.

Wood's perspective has garnered support from some investors. According to FactSet, ARKK recorded net inflows of $350 million over the past week, including $300 million on the 10th.

On the other hand, criticism against her remains in some quarters. According to S3 Partners data, the short-selling ratio on ARK stands at 16%, slightly down from last month's peak of 17.3%, but still significantly above the average of previous years. The 'Turtle Capital Short Innovation' ETF, which inversely tracks ARKK's performance, has seen nearly $200 million in net inflows this year, growing its assets to $309.8 million. This product has risen 24% so far this year.

This content was produced with the assistance of AI translation services.