From Reuters' "Cathie Wood's ARK Innovation fund hits 13-month low in tech selloff" posted Friday:
Star stock picker Cathie Wood's ARK Innovation tumbled more than 7% and hit its lowest level since November 2020 on Friday as bets on a more aggressive Federal Reserve pushed investors to sell the high-growth, high-valuation stocks that rallied during the early stages of the pandemic.
The declines in ARK's portfolio were widespread, with nine out of its 10 top holdings falling as a selloff in technology stocks pushed the benchmark S&P 500 down 1.3%. Tesla Inc (TSLA.O), its largest holding, shed nearly 4%, while Teladoc Health Inc (TDOC.N), its second-largest holding, dropped 5.2%.
From Daniel Martin's "What Cathie Wood’s Position in AAPL Says About The Market" posted Oct. 25 on TheStreet:
ARK Invest’s CEO Cathie Wood is one of the most admired and followed growth investors in “mainstream asset management”. Recently, her company dumped whatever Apple stock its portfolios still owned, fully unwinding a position that had already been dwindling since earlier in 2021...
I have written a couple of articles outlining Cathie Wood’s investment philosophy. First, she is certainly a growth investor. But her definition of “growth stock” is probably different from what most of us would think about.
For instance, Amazon is projected to increase earnings per share 320% in the next five years. That sounds great to me! However, Cathie Wood would likely not be too impressed. Her idea of growth is better defined by this quote that she offered a few months ago:
“We are not saying that [the likes of Amazon and Apple] are bad stocks at all, and they were a part of our portfolios in the early days. But as they were scaling into the trillion-dollar category, we believed that our research would be focused better on ‘the next set of FAAMGs’.”
My take: Remind me never to follow Cathie Wood's advice.
See also: Bullish Tesla hedge fund manager takes pot shots at Apple’s project Titan (video)
If someone on this forum can elucidate for me how the above statement of the Fed’s action of raising interest rates would weigh on Apple with its humongous FCF and piles of cash, would you be so kind as to do so. It would seem to me that Apple would be the exception for the reasons I denoted.
Apple has pricing power in inflationary times. So Apple is well positioned to raise prices if need be and in that case future cash flows will grow accordingly. So I think the standard analysis of higher interest rates make stock less valuable ignores those companies that have the ability to Increase prices in inflationary times. Makes me sleep easier with my Apple holdings because I know inflation is going to be worse than whatever the official prognostications are.
Yep. Also, there’s Moore’s Law, which, looked at another way, says that, as tech advances, prices for a given capability drop. Apple is cutting edge when it comes to tech advancement, and that will counterbalance cost increases.
Yes you could make a few thousand percent in a new meme stock or crypto, but over 20 years, the return on AAPL has been … [cue any long term investor to fill in the blank since the low after the Cracked Cube Fiasco]…?
Cathie, not so much.
Why purchase a company that isn’t making money but holds out hope that years down the road it will become profitable? Or not. When % rates go up those outfits get hurt. Then they dilute their stock by raising capital and issuing more shares.
Apple buys back its shares and that’s comforting on so many levels for me as an investor in their stock. Cathie Wood has an investment philosophy that doesn’t work for me, but I wish her well.
“Ark taking on water as Star Stock Picker Dumps FANG, Gets Bitten.”