On Tuesday, “Cathie Wood” Cathy Wood's flagship fund, Ark Innovation Fund ($ARK Innovation ETF (ARKK.US)$) It fell further to its lowest point in five months because Tesla, its largest shareholder, plummeted after announcing the latest round of layoffs. And as people are increasingly concerned about Tesla's future, “Cathie Wood”, who has continued to increase positions in Tesla over the past few months, has once again become a major “controversial figure” in the industry.

As more and more capital flows out of ARKK, many market participants have begun to increasingly question: Can this “influencer” fund manager who missed out on Nvidia's boom during the year, but bought more and more at Tesla, hit the South Wall and never looked back, bear the past reputation of Wall Street's “female stock god”?

Market data shows that although the decline in the US stock market subsided after two consecutive days of sharp declines, ARKK fell sharply by 2.8% on Tuesday, a new low since November last year.

Judging from the trend comparison during the year, ARKK's poor performance is obvious — this actively managed ETF fell by more than 16% this year, while in comparison, the S&P 500 index rose 6%, and the Nasdaq 100 index also rose more than 5%.

Undoubtedly, ARKK's performance has clearly been seriously hampered by Tesla to some extent. Although Tesla's stock price continues to weaken, Cathie Wood, who persists, has gone the “buy and buy” process again this year — buying Tesla as ARKK's top stock, accounting for nearly 10% of the fund's investment portfolio.

On Tuesday, Tesla's stock price has been falling for three consecutive trading days, setting a new closing low since April 26, 2023. The cumulative decline so far this year has reached 36.7%, and the 500 billion dollar mark has become precarious after the market capitalization continues to evaporate.

In addition to Tesla, some other heavy-held stocks held by ARKK have also been extremely weak recently: although Coinbase, its second-largest stock, has risen by about 20% so far this year, Coinbase's declines in the past two trading days have reached 9% and 8% respectively due to Bitcoin's significant decline; other heavy stocks — Roku and UiPath — also declined on Tuesday.

Cathie Wood “hit the south wall and didn't look back”

Judging from the capital flow situation, ARKK's recent sharp decline has prompted many Ark investors to withdraw one after another. ARKK has now experienced capital outflows for the fourth month in a row, and has withdrawn a total of 1.4 billion US dollars this year.

This situation is in stark contrast to its heyday, when the fund attracted as much as $3 billion in capital inflows in just one month during the tech stock boom due to the pandemic.

What is quite interesting is that although Tesla's stock price continues to weaken, “Cathie Wood” still doesn't seem to want to go back. On Tuesday, Cathie Wood three funds, ARKK, ARKQ, and ARKW, each of their “sole buying operations”, increased their positions on Tesla — even though the number of shares recently purchased was small.

In an interview with the media this week, Cathie Wood recently stated that since Tesla dominates autonomous driving and robotics projects, she is still firmly optimistic about the long-term future of the electric vehicle manufacturer.

Cathie Wood pointed out, “Tesla is carrying out the world's largest artificial intelligence project through autonomous driving, and it has more realistic driving data than other companies. We believe that by 2030, the entire autonomous taxi ecosystem will generate 8 trillion to 10 trillion US dollars in revenue, and platform vendors like Tesla will receive half of that revenue.”

Cathie Wood also mentioned Tesla's potential in humanoid robots. She pointed out that Tesla will use Optimus to become one of the leaders in the humanoid robot field. Many jobs in automobile factories require very precise operation of bolts and nuts. Currently, robots cannot do this, but when humanoid robots are ready, they will help car factories expand their scale at a faster rate.

Industry insiders taunt: she is a “good seller”

What is clear, however, is that whether the sluggish performance can convince people of Cathie Wood's investment philosophy already needs to be put on a big question mark.

ARKK's rate is 0.75%. Although this purchase rate is not very high for active funds, it is obviously quite expensive compared to many passive funds, such as tracking the Nasdaq 100 Invesco QQQ Trust Series (QQQ) — the rate is only 0.2%. Obviously, ARKK's performance this year fell far short of this benchmark technology stock index.

George Cipolloni, portfolio manager at Penn Mutual Asset Management, ironically stated, “Cathy is an excellent 'marketer. ' She proposed some very high return goals, which attracted significant capital inflows, but ARKK really fell short of these expectations.”

In fact, the current overall environment in the US stock market is also quite unfavorable to Cathie Wood to a certain extent.

Cathie Wood and the ARKK Foundation became famous during the pandemic because she made big bets on companies in cutting-edge technological innovation fields such as artificial intelligence, genomics, and games. She manages most of the funds in the Ark Fund series, favoring industries that make investors willing to pay higher valuations to look forward to explosive growth in the future.

But this strategy is currently under pressure, because in an environment of high interest rates, overvalued companies that have failed to achieve profits are losing their appeal.

The following comparison chart may also be a relatively intuitive picture of Cathie Wood's embarrassing situation: the ratio of large technology companies to those that have failed to achieve profits perfectly follows the rising pace of US 10-year Treasury yields. Although they are technology stocks, many of the speculative stocks that Cathie Wood has taken heavy positions in are actually not a good choice right now.

Chris Zaccarelli, Chief Investment Officer of the Independent Advisors Alliance (Independent Advisor Alliance), said, “One of the signs of excessive liquidity and irrational prosperity is that speculative stocks hit new highs, but vice versa. As liquidity surged out of the market, people became fearful, and speculative stocks led the decline.”

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