Cathie Wood's Funds Deliver Mixed Q3 Results: Ark Founder's Shares Take On Zoom, Roku, Teladoc And Blockchain

by Bhavik Nair Benzinga Staff Writer

Zinger Key Points

The flagship ARKK outperformed the MSCI World Index but underperformed the S&P 500 Index.
Wood maintains high conviction in Zoom’s potential to share with Microsoft a majority of the enterprise communications platform space.
Roku’s long term growth story remains intact, Wood said.

Cathie Wood-led ARK Investment Management’s flagship fund ARK Innovation ETF’s ARKK performance during the third quarter was mixed relative to broad-based indexes, as it outperformed the MSCI World Index but underperformed the S&P 500 Index.

Among the top drags were Zoom Video Communications Inc ZM and Roku ROKU, the company’s third-quarter report pointed out.

“We maintain high conviction in Zoom’s potential to share with Microsoft Corporation MSFT a majority of the enterprise communications platform space,” Wood said in her commentary.

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Wood said despite Roku's disappointing quarter and weak guidance, Ark research indicates its long-term growth story remains intact as consumers appear to be adopting connected TV and abandoning linear TV. ARKK has lost over 5% in the three months to September, compared with the S&P 500’s fall of 4.88%.

The ARK Autonomous Technology and Robotics ETF ARKQ underperformed broad-based market indexes during the quarter, with the top detractors being Kratos Defense & Security Solutions, Inc KTOS and UiPath Inc PATH. The top contributors to ARKQ’s performance were Velo3D Inc VLD and Tesla Inc TSLA. The fund has lost 10% in three months to September.

The ARK Next Generation Internet ETF ARKW, too, underperformed broad-based market indexes during the quarter. Among the top contributors to ARKW’s performance were

Coinbase Global Inc COIN and Tesla. “ARK maintains conviction in blockchain technology’s ability to disrupt traditional business models, especially in financial services,” Wood said. The fund is down by over 6% in Q3.

The ARK Genomic Revolution ETF ARKG outperformed the indexes during the period and among the top contributors were Signify Health Inc SGFY and 1life Healthcare Inc ONEM, also known as One Medical. Among top drags to ARKG’s performance were EXACT Sciences Corporation EXAS and Teladoc Health Inc TDOC.

“Consumer sentiment, discretionary spending, and paid search yields do seem to have impacted Teladoc’s EBITDA margin, but, in our view, those forces are transient, certainly in the context of ARK’s five-year investment time horizon,” Wood said. ARKG gained 4% during the third quarter.

The ARK Fintech Innovation ETF ARKF, too, outperformed broad-based market indexes during the quarter. However, the ARK Space Exploration & Innovation ETF ARKX underperformed the indexes during the period, with Kratos Defense & Security and Alphabet Inc GOOG being the top drags. The fund lost 0.65% during the quarter.