According to Cathie Wood, founder and chief executive officer of ARK Investment Management, private markets seem to understand opportunity better than the stock market when it comes to evaluating disruptive innovation.
“Private markets understand it,” Wood said on stage at the Exchange ETF conference in Miami on Tuesday, referring to company valuations observed in venture capital deals. But ARK’s stock market bets on disruptive innovation have fallen this year, even as Wood claims fundamentals have “not deteriorated” for the most part.
“During periods of low risk, we always concentrate our portfolios,” she said, preferring the “highest conviction names” identified by ARK. Some of the “consolidation” candidates that have emerged are “floating” while other bets are being “crushed,” she said.
Shares in the ARK Innovation ETF ARKK closed flat on Tuesday, down nearly 37% so far this year, according to FactSet data. The exchange-traded fund suffered a bruise last week, falling about 10%, data shows.
See: Cathie Wood’s ARK Innovation ETF slipped in the stock market sell-off on Wednesday
On stage at the conference, Wood was asked how often she speaks with Elon Musk, CEO of Tesla Inc. TSLA, +1.13%, as well as his relationship with Twitter, the social media company he recently owned Holding has acquired its largest single shareholder.
Read: Twitter CEO Says Elon Musk Won’t Join His Board
“I think people would be surprised at how little Elon and I talk,” Wood said. ARK, which owns Tesla stock, is interested in the company’s technologies, including its strategy for artificial intelligence, robotics, and battery technology, as well as Musk’s “vision.”
As for Twitter TWTR, -5.38% where musk has more than 81 million followers, Wood said that “for Elon, any publicity is good publicity.” Tesla spends “zero” on advertising, she said.
According to Wood, ARK supports “radical transparency” in the financial services industry. “We’re giving away our research,” she said. “We share our ideas”
Wood also said that “we will publish our models on GitHub”. Investors can change the variables in the models “if they think we’re too aggressive or not aggressive enough,” she said.
Also, ARK discloses its holdings every day, Wood said. She said ARK’s transparency can help build shareholder confidence in the money manager’s investment strategy, while some investors may use the information for their own personal investment portfolios.
“Innovation is happening faster and faster,” Wood said. “Tesla and Bitcoin BTCUSD, +1.44% alone, have changed people’s lives.”