Brendan McDermid/Reuters
- Cathie Wood explains her stance on Tesla, China stocks, and where the next Apple will come from.
- The founder of Ark Invest spoke at the Milken Institute conference this past week.
- Her comments came days before Tesla stock hit a new all-time record on Friday.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Cathie Wood, founder and CEO of Ark Investment Management, offered some insights into her investing strategies – including recent moves with Tesla and Chinese stocks – and predicted what will be the next big thing to shake up markets.
The fund manager shot to prominence in 2020 thanks to her blockbuster performance driven by bets on mega-growth stocks. Her exchange-traded funds last year have delivered eye-popping returns, with her flagship ETF up more than 150% in 2020.
During an appearance at the Milken Institute's 2021 global conference in California this past week, Wood offered perspectives on a broad array of topics. Here are some key points.
Tesla stock buying and selling
Wood is known for her bullish stance on Tesla stock – and has never wavered in that regard, even during the electric-car makers early days.
"For us it was easy," she said, referring to her decision to invest in the company. "Tesla's battery technology is unlike any other … Tesla is riding down the cost curve of the consumer electronics industry."
She reiterated her $3,000 base case price target for Tesla by 2025, an eye-popping prediction first revealed in March 2021. It comes as shares set a new intraday Friday, hitting $910 for the first time, days after reporting strong earnings.
Despite her bullish long-term view, she sold some Tesla stock in September. At the Milken conference, Wood noted how EVs have been taking away massive market share from traditional gas-powered vehicles, and Tesla stock is "finally" responding to that.
Meanwhile, other parts of the Ark portfolio have been weaker. "This is called portfolio management. That's all this is," she said.
Where she stands on China investing now
Wood has caused some confusion with her vacillating stance towards the Asian superpower. She moved into Chinese stocks during the height of the pandemic, citing China's "disciplined" monetary and fiscal policies during the crisis.
But in July she sold top China tech stocks as Beijing ramped up its wide-ranging regulatory clampdown. Then a month later, Wood bought them again.
Wood's flagship Ark Innovation Fund still does not hold any China stocks, though the ARK Autonomous Tech & Robotics ETF holds some, such as JD.com.
Her stance now is to be "very particular" on which China stocks to own. Referring to Beijing's "common prosperity" campaign to rein in outsized wealth and profits, Wood said she is targeting "very low-margin companies because margin is clearly not appreciated by the government anymore."
Next Apple?
Toward the end of the discussion at Milken, Wood was asked "What is the Tesla of tomorrow? What is the Apple of tomorrow? Obviously we don't know, but what is it in terms of the general technologies?"
She did not name a specific company, but she said artificial intelligence software is the "big, new frontier," saying it cuts across fields like genomics, robotics, blockchain and transportation.
"AI is going to be a part of every industry," she predicted, adding that companies that have not invested in enough innovation will be negatively impacted.
"I do believe when we rotate out value, we will come back into innovation," she said.