Cathie Wooden says Apple ought to’ve purchased Tesla, however ‘we’re completely happy they did not’

The closely watched finance manager Cathie Wood told CNBC on Wednesday that Apple could have owned the driverless vehicle market by buying it Tesla if they get the chance during the problematic start-up of the electric vehicle manufacturer Model 3.

“We’ve been watching Apple very closely for years. Because what is an autonomous vehicle? It’s the ultimate mobile device,” she said in a broader sense “Squawk Box” Interview in which she also talked about them Ark Invest strategies, the She expects returns long term and Purchase of Zoom after its recent decline.

Apple stocks All-time highs reached last Friday and then again on Monday – market value rose solidly above 2.5 trillion US dollars – afterwards Last week’s Bloomberg report about the tech giant accelerating efforts to introduce a self-driving vehicle. Apple was not immediately available to respond to CNBC’s request for comment on its autonomous ambitions. Tesla was also not immediately available to comment on Wood’s comments.

“It’s very hard work – and with all the turnover in management, we’d be surprised if they could do it that quickly,” Wood said, referring to Bloomberg report in June on the departures from Apple’s autonomous unit of three top managers. In 2018, Apple lured Doug Field, then Tesla’s senior vice president of engineering, back to the company he had previously worked for. Apple has also hired countless other former Tesla employees.

Wood – a longtime Tesla Uber bull and shareholder and supporter of the CEO Elon Musk – CNBC said, “This should have been Apple’s market. Apple should have bought Tesla when they were given the opportunity. We’re glad they didn’t. “

Musk revealed, in a December 2020 tweet for reaching out to Apple’s CEO Tim cook “During the darkest days for the Model 3 program” on the possibility of selling Tesla “(for 1/10 of our current value).” Musk said Cook refused to attend the meeting.

The first Model 3s, a lower-priced EV sedan for mass-market car buyers, shipped in 2017 after increasing production to meet demand was problematic. In 2018, Musk tweeted that the auto business was “Hell” and it was him Sleep in the factory to try to solve the problems.

Today, Tesla joined the $ 1 trillion market cap club, and Musk, the EV company’s largest shareholder, has sold billions of its stock holdings.

Wood told CNBC that she saw “nothing wrong” with Musk selling stocks, taking profits and paying billions of dollars in tax bills related to stock option subsidies.

Applications for admission Late Tuesday, Musk revealed he was exercising options to buy 2.15 million Tesla shares and selling 934,091 shares valued at just over $ 1 billion. Since his Twitter poll on November 6thWhen asked if he should sell shares, Musk dumped 9.2 million shares valued at $ 9.9 billion.

– Reuters contributed to this report.

God, Cash, YOLO: How Cathie Wooden Discovered Her Flock

The first of four children of Irish immigrants, Ms. Wood spent much of her childhood traveling – her father was an Air Force radar technician – before the family settled in Culver City, California. In 1974, he attended the University of Southern California with a major in business administration.

There she found a mentor in Arthur Laffer, one of the patron saints of the economy on offer, after she had applied for admission to one of his graduate courses.

“It took a lot of chutzpah,” said 81-year-old Laffer.

He found Ms. Wood to be an impressive student who was unwilling to give up any subject until she fully understood it.

“I’ve never seen anyone in my life who is so thorough, so meticulous, and so research-oriented, which makes them pretty confident,” he said.

Ms. Wood’s work ethic and insatiable information consumption are recurring themes among former employees. She often woke up long before dawn to catch one of the first trains to Grand Central Terminal each day, and viewed the nearly two-hour journey from Connecticut as a kind of perpetual gathering on rails.

In the days before smartphones, tablets, and laptops, colleagues remembered dragging bags full of research reports into and out of the office every day.

Sig Segalas co-founded Jennison Associates, a New York money management business where Ms. Wood worked as an economist, then an analyst and fund manager, from the early 1980s to 1998. For many of those years his office was next to hers, and he remembers her as one of the last people to leave the office each day.

Cathie Wooden’s ARK Finds Positive aspects and Ache in Cash-Dropping Corporations

More than half of the companies in Cathie Wood’s five popular publicly traded funds at ARK Investment Management LLC were unprofitable over the past year. Analysts believe this will increase the volatility of these funds in the months ahead.

According to an analysis by Dow Jones Market Data, 85 of the 165 stocks in ARK’s actively managed ETFs caused net losses in recent fiscal years. That made the money particularly prone to dramatic fluctuations when investors turned their backs on growth stocks in favor of stocks that shine when the economy thrives.

In spite of Tech stocks rebound this weekAll five of ARK’s ETFs are down at least 18% from their mid-February highs, trailing the Nasdaq Composite, which is down 7.3% from the February 12 record.

Performance of the holdings of the five actively managed ETFs from ARK

The pain was greatest with stocks of unprofitable companies in ARK’s funds. According to a DJMD analysis of ARK’s holdings and FactSet data, these stocks fell an average of 23% over the past month, while profitable stocks fell 10% over the same period.

“These stocks are inherently riskier than the broader market,” said Ben Johnson, director of global ETF research at Morningstar.

A spokeswoman for ARK declined to comment. However, Ms. Wood has chosen television and YouTube to reassure her investors and stresses that the company continues to stick to its strategy.

“We’re as excited as always about everything we’re doing. The past few weeks have done nothing but increase the returns we expect from each of our stocks as they have fallen, ”Ms. Wood said in a video posted on YouTube last week and over Has received 700,000 views.

ARK’s high profile positions include streaming companies

year Inc.,

Home sales website

Zillow group Inc.

and music service

Spotify technology TO,

None of them made a profit in their most recent annual reports. The stocks of these and many other unprofitable companies include several ARK funds.

Teladoc health Inc.,

For example, four of the five ETFs have a combined position worth $ 2.3 billion. The virtual medical service provider has reported losses every year since it went public in 2015, including a loss of $ 485 million last year.

Of the 56 stocks in the flagship innovation fund, 36 did not generate any profits in the last few financial years, according to an analysis of company holdings. ARK’s Genomics Fund, which is down 5.4% so far this year, has even more exposure to unprofitable companies. 43 of its 57 holdings reported losses last year. In the three other ARK funds, at least around a quarter of the companies represented achieved no results in the past year.

Investors have long relied on valuation metrics like price-to-earnings ratio to gauge a stock’s prospects. However, such metrics are irrelevant for companies that are not making a profit. Instead, ARK relies on a mix of fantasy and discounted cash flow models, based on near zero interest rates, to justify the high valuations of stocks that have great potential to grow and enter their respective industries, such as cash and cash equivalents

alphabet Inc.’s

Search dominance and Facebook Inc.’s moat around social media.

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Do you think ARK’s funds will continue to be vulnerable to further losses and outflows? Why or why not? Join the following conversation.

Many of ARK’s “disruptive” stocks became gangbusters in 2020 during the Covid-19 pandemic. The innovation ETF has risen by more than 150% in the past year alone and has tripled since its debut in 2014. A flurry of investor inflows followed, allowing ARK to place even bigger bets on the next wave of revolutionary companies.

Another potential problem with ARK investors is the high concentration of funds. For example, the company has a 15% stake in two of its $ 156 million funds in a biomedical products company

Cerus Corp.

The company has not been profitable in more than a decade, most recently recording an annual loss of nearly $ 60 million.

The more an investor owns a particular stock, the harder it is to add or sell stocks without changing prices. Morningstar released the numbers, noting that it would take more than 52 trading days for the ARK to sell its Cerus shares to get out of the position entirely to avoid a material shift in the share price to the detriment of its own investors.

Cerus’ shares are down 17% over the past month. According to Cathiesark.com, a website that tracks ARK’s trading activity and tracks ARK’s trading activity, the redemptions appear to have resulted in ARK’s funds losing more than 2 million shares between February 22nd and March 9th possibly exacerbating the decline in Cerus.

“That is the primary concern in portfolio management,” said Saumen Chattopadhyay, chief investment officer at asset management firm Carson Group, regarding the concentration. “If the bubble bursts, such funds can be made up.”

ARK doesn’t change its approach. Executives, including Ms. Wood, said volatility is hitting the market and their funds will be short-lived. Over the past few weeks, the company has been selling more liquid stocks to buy stocks of companies it claims to have higher convictions about, including smaller, harder-to-trade, and in some cases, unprofitable stocks. These purchases include Roku and

908 devices Inc.,

a chemical analysis company valued at just over $ 1 billion.

Ms. Wood said on her video last week that the funds had no trading or liquidity issues.

“We’re not in a bubble,” she added.

Write to Michael Wursthorn Michael.Wursthorn@wsj.com

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