“I’ll have what she’s having.”
That, of course, is the memorable line from the 1989 movie, When Harry Met Sally, which was uttered by a fellow diner in response to Meg Ryan’s character faking an orgasm in a deli. It’s a comedy classic.
If only it were that easy when it comes to seeking investment guidance.
Well, maybe it is…
— Bob Bogda, Editor
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Imagine if you had had the foresight – along with the sheer genius and prodigious sense of timing – to have bought shares of Apple, Inc. (AAPL) back in 1981 when it was trading at an all-time low, at a split-adjusted price of just $0.55 per share? If you had, a simple $10,000 investment would now be worth nearly $2,000,000, not including dividends!
Or how about buying Amazon (AMZN) back in 1997 when Jeff Bezos took his brainchild public? You could have bought shares on opening day at a split-adjusted price of just $2.44. Today, each share of AMZN goes for around $3,050. A $10,000 investment in the world’s largest online retailer way back then would now be worth $12,500,000!
How about buying Microsoft on day one of its IPO, back in 1986? Adjusting for splits, your $10,000 stake at the launch price of just $0.10 per share would now be worth over $20,000,000!
Of course, buying the next big tech IPO and holding on to those shares for the next 30 years or more is a gamble that is much more likely to lead to your $10k stake dwindling to zero than turning into a multi-million dollar nest egg. Not only is it nearly impossible to determine the market’s next huge, multi-decade winner (except in hindsight) — especially in the tech sector when things change so quickly — but it is also difficult to know when to buy and when to sell.
What if there were someone who not only knew the technology arena extremely well, but also had a nearly prophetic gift for picking the market’s next big winners before they balloon up in price? And what if that person also were skilled in knowing when to buy and when to sell? And what if that same person surrounded herself with a top-notch team of super-talented brainiacs who were constantly bringing to the table only the best opportunities in tech, companies whose tech is so innovative, so disruptive, that they have above-average potential to become the next AAPL or MSFT?
Good news: there is such a person. Her name is Catherine Wood, CEO of ARK Investment Management, a fund management and equity analyst firm whose track record is second to none. AI only invests in the market’s best and fastest growing innovators, disruptors, and future market leaders. It seeks diversification across market caps and subsectors, and even looks outside of traditional tech venues to find the unique, perhaps unknown, future market leaders. AI’s approach is designed to get investors in early, to hold on through the inevitable ups and downs, and to sell only when something better comes along.
AI can prove this approach is the best in the business by simply showing its performance. With Catherine Wood at the helm, AI’s flagship product, ARK Innovation ETF (ARKK), is up +101% over the past six months, including 27% this past quarter despite the recent market pullback. The fund was launched in October 2014 and, to date, shares are up over 330% (vs. 85% for the S&P 500 over the same period).
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Let’s look at some of Wood’s holdings. She first bought shares of Tesla back in the fourth quarter of 2016, and it is currently her largest holding. Wood has been an outspoken bull on Tesla, despite a lot of pushback for her view that the stock is ultimately heading to $7,000 ($1,400 split-adjusted). She is currently up over 530% on those early shares, which now comprise 8.3% of the full portfolio.
Wood’s second and third-largest holdings are Invitae Corp. (NVTA), a medtech company, and Squarespace (SQ), the online payments processor. Both positions were also launched back in the fourth quarter of 2016 – SQ was bought at the IPO launch — and they are currently up over 500% and a massive 1,200%, respectively.
Woods most recent purchase is the new IPO, Unity Software (U), a platform-as-a-service (PaaS) company that specializes in 3D applications development. It serves clients like Disney and Pixar, car makers like Audi and Toyota, and several large gaming companies that use the Unity platform to create a 3D animated product. According to HedgeMind.com, on September 21 to 23, Wood went on a shopping spree, adding close to 700,000 shares of Unity Software to the ARKK portfolio of holdings. This is unusually aggressive buying, so it would indicate a strong conviction for the newly public company.
Action to Take: Clearly, Catherine Wood knows what she is doing when it comes to investing in innovative tech. The good news is that you can trade alongside her, buying every share she buys and selling whenever she sells. Simply buy ARKK, the exchange-traded fund Wood manages. While the expense ratio at 0.75% is a bit steeper than most mutual funds, its concentrated holdings of 30 to 50 stocks and the fund’s outstanding track record – thanks to Catherine Wood and her strong team of analysts – make this a small price to pay. I like shares of ARKK up to a price of $95, adding shares on major dips, and with the intention of holding three to five years or more without selling.
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