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Morningstar article on ARK

Sorry in advance if this has already been linked....

M*starts coverage of the ARKK ETF with a rating of neutral. IMO The writer of the article doesn't seem to be a fan of Cathie Wood and her investment process:

"But ARK’s team of inexperienced analysts, go-with-your-gut risk management approach, and bloated asset base raise doubts about whether this fund’s outstanding historical results can continue."

I did see an interview a couple of weeks ago where she responded to direct criticisms from Jim Cramer and it was pretty strong counter.

https://www.morningstar.com/articles/1031702/ark-innovations-thematic-approach-is-ill-prepared-for-a-major-twist

Comments

  • edited April 1
    Bud said:

    ”... an interview a couple of weeks ago where she responded to direct criticisms from Jim Cramer and it was pretty strong counter.”

    I’d love to see Louis Rukeyser interview her. Alas - 15 years too late.

    @Bud - Here’s a thread on ARK started by @LewisBrahm in February you might be interested in.
    https://www.mutualfundobserver.com/discuss/discussion/57784/digging-into-ark-innovation-s-portfolio

    Added - Thanks to Bud for the interesting Morningstar story. While I don’t get “good vibes” from this fund or its public profile, I’ll agree some exposure in the ARK companies / style would enhance many portfolios. Not sure if ETF investors are capable of “stampeding out” of an ETF the way those in open end funds can, but that type of rapid exodus would be perhaps my biggest concern.
  • The whole thing w 'escape velocity' of tech companies = 'no stopping them', quite aside from the Trump support, religious devotion, Laffer influence, makes for a challenge for my moneys. Looking at etf Moon in lieu.

    These, from a while ago, are fun to read:

    https://www.reddit.com/r/ArkInvestorsClub/comments/lqugs1/cathie_wood_reveals_starting_ark_was_fulfilling/

    https://www.coindesk.com/cathie-wood-most-influential-2020
  • Thanks for those links, @davidmoran. Views differ on what the Ark people are doing and how qualified they are, to say the least. How do you find this stuff?

    I don’t know what to make of the “religious” influence cited by Cathie Wood. I have read through materials offered by the Eventide funds in an effort to grasp how “faith-based” investing influences their choice of very risky biotech stocks and I have come away empty handed. Eventide’s results, however, are quite impressive for the Gilead and the Healthcare funds.
  • Ms. Woods should just convert all her funds into hedge funds and then no one will give a crap. (See Archegos)
  • I don’t know what to make of the “religious” influence cited by Cathie Wood.
    Isn't that just a way of saying the returns are good lately and I really want them no matter how weird or nutty the ideas behind them sound? If this were a Christian drama, wouldn't the angel on your shoulder be telling you to resist temptation?
  • https://www.barrons.com/articles/arks-cathie-wood-disrupted-investment-management-shes-not-done-yet-51614992508?mod=past_editions

    I am not sure if this article on Wood is available without a Barron's account ( but if you dont have one you should, although it is a shadow of it's former self), but it is a fairly lightweight interview with Wood. The references to her faith seem a little contrived. I dont mean that she is not sincerely a person of faith, but the lessons Barron's claims she draws from Christianity to apply to investing seem a bit weak.

    It is not surprising that M* thinks poorly of ARRK. Wood violates practically every one of the principles M* claims is necessary for "success". Over concentration, asset bloat, lack of "investing background" holding a significant portion of the float of a lot of companies, etc etc. Of course, if you only make hammers, everything that is not a nail in useless!

    I think it is up to everyone to make up their own minds about her process. However, some of the principles that have made her so successful are clearly not ones that Wall Street wants people to buy into ( Investing is left up to professionals with advanced degrees, high fees, lack of transparency etc) hence the negative articles.

    I would be a lot more enthusiastic about ARRK if they didn't own as much as 20% of some of their positions ( and recently eliminated this limit).
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