Cathie Wood Says Innovation Stocks Are In 'Deep Value' Territory, Tweets 'Truth Will Win Out', Musk Says Interesting

In a recent blog post Cathie Wood, the founder and CEO of Ark Investment Management, said that innovation stocks are in “deep value territory”. 

What Happened: “After correcting for nearly 11 months, innovation stocks seem to have entered deep value territory, their valuations a fraction of peak levels. Many skeptics attributed our outsized returns last year to “stay at home” stocks and expected their fundamentals to deteriorate this year,” Wood said. 

Wood added that Ark continues to focus on its five-year investment time horizon and indicated that year-to-date inflows have outweighed outflows significantly.

“With a five-year investment time horizon, our forecasts for these platforms suggest that our strategies today could deliver a 30-40% compound annual rate of return during the next five years,” she added.

Why It Matters: ARK’s seven ETFs returned an average of 141% in 2020. Although the actively managed fund is down nearly 22% in the year to date, as the broader S&P 500, Dow Jones Industrial Average and Nasdaq Composite Index have experienced dramatic price swings.

Citing ARK’s market movement, Wood tweeted saying, “For those who have been unsettled by the volatility of ARK's strategies in recent months, I would like to share this deeper dive into the thoughts we have been sharing regularly. Remember: truth wins out!”

Soon after her tweet, Tesla Inc TSLA CEO Elon Musk responded,  “Interesting.”

“We won’t let benchmarks and tracking errors hold our strategies hostage to the existing world order,” Wood wrote. 

 She described the success of the ARK ETFs and said much like the early years of ARK’s investments in Tesla and Bitcoin BTC/USD, disruptive innovation seems to be priced at a deep discount. 

“These Pavlovian responses will prove just as wrong as those in the early days of the coronavirus crisis,” she wrote. “They are backward-looking and do not recognize that companies investing aggressively today are sacrificing short-term profitability for an important reason: to capitalize on an innovation age the likes of which the world has never witnessed.”

Also Read: Markets Suggest Further Selloff Of Cathie Wood's ARK Innovation ETF Coming