ARK Invest’s CEO and CIO Cathie Wood said that the technology stocks in the company’s flagship fund “are way undervalued,” but she trusts that they’ll rebound. Speaking on CNBC’s “Halftime Report,” Wood admitted that the ARK Innovation ETF (NYSEArca: ARKK) has “had a significant decline,” adding that she believes “that innovation is in bargain basement territory.”
Over the past six months, most of the stocks that Wood is most identified with have plummeted to new lows. All the stocks in ARKK are in a bear market, while 87% are down more than 40% from their peaks.
“Our technology stocks are way undervalued relative to their potential,” she said, but added that this will turn around. “Give us five years, we’re running a deep value portfolio.”
Some of the fund’s big holdings, including Zoom, Teladoc Health, and Roku, have dropped as much as 70% this year, following expectations of rising interest rates.
Wood said that her “biggest concern is that our investors turn what we believe are temporary losses into permanent losses.”
“Today we have investors doing the opposite of what they did in the late ’90s. They are running for the hills,” Wood said. “It’s risk-off because of inflation and interest rates. And the hills are their benchmarks. They are running to the past.”
Added Wood: “If we are right and the disruptive innovation that is evolving is going to disintermediate and disrupt the traditional world order, those benchmarks are where the risk is. Not our portfolios.” Wood also believes that “a lot of what’s going on is supply chain-related,” and that “the deflationary forces building in the economy are pretty strong.”
Despite ARKK’s underperformance, the fund has brought in more than $70 million in net inflows year-to-date.
For more news, information, and strategy, visit the Disruptive Technology Channel.