Cathie Wood Spent Over $40 Million Buying These Plunging Tech Stocks During Inflation-Spurred Market Crash

Topline

Ark Invest, the firm led by famed investor Cathie Wood, bought up about $41.9 million in tech stocks during Tuesday’s market collapse, as she doubled down on her largest bets amid the market downturn.

Cathie Wood speaks at the Milken Institute Global Conference in May.

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Key Facts

Ark disclosed in its daily transaction report that it bought 250,537 shares of the streamer Roku for $17 million and 208,535 shares of video communications company Zoom for $16.4 million in its flagship Ark Innovation ETF, based on Tuesday’s closing prices.

Roku and Zoom now make up 7.2% and 7.9% of the fund, respectively, although the company’s shares are each down by more than 55% year-to-date, contributing to the tech-focused fund’s subpar 2022 performance.

Across its Innovation ETF and other funds, Ark bought 15,115 shares of chip maker Nvidia for $2 million, 148,434 shares of sports betting giant Draftkings for $2.6 million and 54,299 shares of communications platform Twilio for $3.8 million.

Wood completed her spending spree with $24.1 million on mostly healthcare stocks, including $5.3 million worth of biotechnology firm Verve Therapeutics.

To fund the purchases, Ark sold $45 million worth of Signify Health stock and $900,000 in other smaller positions.

Key Background

The Ark Innovation ETF fell 6.8% in Tuesday trading, outpacing the 4.3% drop in the S&P 500 and 5.2% drop in the tech-heavy Nasdaq composite as investors proved bearish on how the Federal Reserve may respond to Tuesday’s inflation data. Although it far outperformed the market during the pandemic’s early days in 2020, Wood’s fund has struggled mightily in 2022 as tech stocks drive the market downturn. The Ark Innovation ETF is down 55% year-to-date compared to a 17.5% drop for the S&P. Ark’s rise was largely tied to Wood’s early investment in Tesla, which remains the fund’s top holding, although Wood has sold off some of her fund’s position.

Crucial Quote

Wood said Tuesday the Fed is “overdoing” it with its hawkish monetary policy, saying ongoing rate hikes “will prove a mistake,” having previously warned about the risk of deflation. The Fed has raised rates three times this year and another hike is expected later this month, which some analysts predict could be 100 basis points.

Surprising Fact

Wood’s net worth fell 65% to $140 million between June 2021 and June 2022 as her funds crashed back down to earth, according to Forbes‘estimates.