Mon, 09/28/2020 – 13:00
The fund manager told Bloomberg this week that her firm’s success comes from the fact that almost none of her analysts have a finance background (hence the constantly overweight position in Tesla). In fact, the previous work careers of her analysts include things like sailboat captain, gaming engineer and AI expert.
ARK is up 81% in its main fund this year. Wood told Bloomberg: “You’re probably not going to find a more diversified group of people. They already have one foot in the new world, and they are extremely creative in terms of figuring out how the world is going to work.”
Yes, but do they know how to read a cash flow statement yet?
Sam Korus is a former sailboat captain who works for ARK as an analyst for autonomous technology and robotics. Because apparently sailboating and the forefront of autonomous technology go perfect together: one is based solely on the efficiency of manual labor out at sea, the other is based on digital artificial intelligence in a server room somewhere.
In fact, Wood even admitted she would have never known what CRISPR gene editing technology was if she hadn’t hired analysts who had “experimented” with it.
Analyst James Wang said: “If we all came from a financial background, we would inevitability have views that are much more similar and more aligned with the current price expectations set by the market.” In other words, we are happily disconnected from the reality of financial statements.
And in today’s market, that disconnect pays big. Wood’s funds have been top performers this year; ARKK and ARKW have returned more than 78% so far in 2020. But if we may interject for a moment, if almost no one comes from a financial background, how is that “diverse”?
The company’s Chief Compliance Officer, Kellen Carter, said: “It’s an example of how diversity can make companies more efficient and productive because of the diversity of experience that we all bring to the table.”
Recall, about a week ago, we noted that the “diverse” group decided to do what they do best: add more Tesla on any and all dips regardless of the company’s valuation. Wood said last week she was “happy” to see Tesla shares “get slapped” and was, of course, buying more.
“We wait for those sorts of days where there is outright fear,” she said of a company participating in an index that has doubled off its lows in less than 6 months thanks to a Fed and Softbank induced manipulation frenzy. “If we think the stock has dropped enough, we’ll move in, and we did.”
“I was happy to see it get slapped,” she commented.
Tesla was, in fact, slapped this month, falling 21% after it was announced that the company was snubbed for entry into the S&P 500. Wood says she used that as an “opportunity” to boost ARKK’s $8.4 billion ETF’s position in the name to 10.7% from 9.9%.
Shares are up almost 35% since then, once again validating Wood’s investment strategy, which appears to be betting that economic reality as it relates to public companies no longer exists.
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Author: Tyler Durden