Cathie Wood
ARK Investment Management LLC CEO Cathie Wood remains bullish on the new Twitter, now called X, and its leader Elon Musk's future, according to a wide-ranging Spaces interview with Pensions & Investments on Wednesday.
Ms. Wood said the rebrand is indicative of Mr. Musk's big-picture thinking for the future of the platform.
"He sees an opportunity to go back to the future. He started in the payments industry and sold his company to PayPal, and I do think he's serious about an 'everything app' where we do all of our financial services, all of our shopping, and our interacting on an app like X," Ms. Wood said. "Never underestimate Elon, is what we've learned over the last decade."
ARK Investment holds both Twitter and Tesla stock in its funds, and is one of the largest shareholders of Tesla. Despite her large positions, Ms. Wood said she doesn't often speak with Mr. Musk, and when she does she's careful not to speak about his companies.
The funds did mark down ARK's Twitter holdings; the company, which Mr. Musk purchased for $44 billion last October, is now valued at approximately $4 billion after the rebrand to X. Ms. Wood said she'd buy more, given the opportunity.
"We can't find any stock on the secondary exchanges out there. We'd love to buy more, but I don't think anyone else is letting any go either," Ms. Wood said.
Ms. Wood, a long-time vocal proponent of bitcoin, is also bullish about crypto, and forecast a valuation of $25 trillion for the entire crypto asset world by 2030.
Speaking about the recent ruling in the Securities and Exchange Commission's lawsuit against Ripple, a cryptocurrency company, Ms. Wood said regulatory developments have been encouraging.
"The courts and the legislature are weighing in, and basically saying to the SEC, 'You're out of line, you're overstepping your bounds, and we need to get new rules and regulations in place for this new asset class,'" Ms. Wood said. "We're quite encouraged by that because for a long time it seemed like the SEC was going to grab share and chase innovation out of the United States."
Though Ms. Wood suspects both sides will appeal the case — something the SEC has already signaled its intention of doing — she called judge's decision to side with Ripple a "victory" for the digital assets space.
"If you would have asked me two years ago, I would have said Ripple is going to lose this (lawsuit), but two years later to get that kind of ruling was gratifying," Ms. Wood said.
While the SEC weighs whether or not to sink more resources into filing an appeal, it is also considering a handful of applications — including one from ARK Investment — for a spot bitcoin ETF.
Though Bloomberg ETF analyst Eric Balchunas has upped his odds of an approval to 65%, Ms. Wood appeared to be open to a number of possible outcomes.
"My guess is, if there's an approval it will be a number at the same time," she said. "But I will say, Gary Gensler has been so — I'm gonna say stubborn — that there's actually thinking that he might say, "OK, you know that bitcoin futures ETF? Maybe in order to convince the markets that we mean business we'll take away that approval.' I think that's a billion-dollar fund. I don't know if that's gonna happen, but that's the sentiment I think out there — that that's how much he's digging in his feet."
ARK Investment, which runs $15.1 billion as of June 30, has seen a number of pension funds using the firm's exchange-traded funds as tactical instruments to gain exposure to innovation "in a diversified way."
"I think everyone has focused on how large the Magnificent Seven (Tesla, Apple, Amazon, Microsoft, Nvidia, Google and Meta) have become as a part of the Nasdaq 100, and I think a lot of large-cap growth portfolios are looking very much alike because of that and because of the benchmark sensitivity of the market at large," Ms. Wood explained.
"We look very different as an exposure to innovation, and we are seeing some pension funds — they show up in our ETFs at the end of the quarter and we haven't even talked to them. So they're definitely gaining exposure to another source of innovation that doesn't look anything like what they have in their traditional portfolios," she added.
Ms. Wood and her firm have been blasted in the media for "failing" on Nvidia, after selling and missing a nearly 25% single-day rally in May, but she's unfazed by the criticism.
"We rode it all the way up into the mid-to-high $300s in the flagship, we sold it and actually did very well selling it," Ms. Wood said. "Someone could say, 'Of course you missed it …' but what did we buy with those proceeds? We bought Coinbase and Tesla when they were both sinking and have since tripled or more — so did we miss Nvidia? Yes, that last move. But we moved into Tesla and Coinbase and others that have had very nice moves."
Ms. Wood added that after years of "pounding the table on Nvidia," which ARK bought at $5 per share in 2014, she's simply moved on to the next thing to catch the artificial intelligence wave.
"We're looking for companies with domain expertise, AI expertise, good distribution meaning wide and global, preferably, and probably after that the most important variable is proprietary data," she added. "Tesla is probably the biggest play out there with more data on real-world driving miles than all of the auto companies and tech companies focused on autonomous (vehicles) put together."
Ms. Wood gave examples such as Twilio, an American technology company whose communication software powers Uber, and Exact Sciences, molecular diagnostics company that specializes in the early detection of certain cancers, which are the kind of data-heavy companies she's looking for.
