top stocks they believe are and will continue to be successful and grow for thenext five to 10 years. This includes firmslike Square, a provider of digital walletsand payments, which represents about5% of its Innovation ETF portfolio.
“It all starts with sizing [up] theseopportunities at the technology level,”said Ark Client Portfolio Manager RenatoLeggi in an interview. “As we’re sizing [up]these opportunities, we develop a forecastor thesis around the total adjustable market for each of these technologies, basedon our expectations of what they will looklike in five or maybe 10 years out.”
From here, the team starts the bottom-up process and identifies the winners ineach of these industry segments. But itdoesn’t take a “scattershot” approach.
Using a scoring system with six metrics, Ark determines its conviction foreach of the top stocks in these segments. It’s very committed to firms likeTesla, which “is disrupting the internal-combustion [engine] traditional auto,”adds Leggi, who joined Ark in 2018.
The Ark Method
The staff of 29 works closely with Wood on a day-to-day basis,he points out. Every morning, members of the investmentteam — including Research Director Brett Winton, leader ofArk’s nine analysts — meet to discuss business, as well as theirresearch findings and stock updates.
Based on the information collected at these gatherings,Wood — who worked in the bullpen with the analysts and traders before the pandemic shutdowns — makes trading decisionsas the traders listen in.
Friday “is when it all comes together in what we call ourbrainstorming session,” Leggi explained. The meeting is led byWinton and features each analyst’s research breakthroughs forthe week. The event includes about 80 invited guests, such asacademics, early-stage venture capitalists and entrepreneurs(some of whom are building the types of technology that Arkinvests in). Everyone contributes to the discussion.
“It is very helpful in the ideation process, and [guests] provide different vantage points [vs.] what we’re looking at from aresearch perspective,” Leggi said. “Those are valuable insightsour analysts can [use].”
The daughter of Irish immigrants, Wood graduated from
University of Southern California in 1981 with a degree in
finance and economics. She was a mentee of famed economist
Arthur Laffer at the school.
She went on to Wall Street, where she spent 18 yearswith Jennison Associates in various roles: chief economist,analyst, portfolio manager and director. When she moved toAllianceBernstein, she became CIO of global thematic strategies. She started Ark in 2014 with the Innovation ETF.
“We wanted to dedicate a portfolio to innovation that didn’t
exist in the marketplace,” she told Benzinga. “Again, innova-
tion was out of favor. It was too volatile. In fact, when we
started the firm in 2014, it took a lot to get people’s attention,
because they thought we were too risky, too crazy. And I see
now it’s coming full circle, because I hear that again.”
Arnott says this approach allows Wood to “really [be] able
to tap into market trends and be at the right place at the right
time. There’s definitely a momentum element in her strategy,
but she’s not just buying the same stocks as everyone else.”
Ark’s long-term view also sets it apart, Wood explained to
Raznick: “If you talk to most analysts and managers, they’re
really focused on the next year or 18 months in terms of guid-
ing their buy-and-sell decisions. We are not. In fact, we want
our companies to sacrifice short-term profits to be in the pole
position to win [long term].”
This long-term horizon means its Innovation ETF has been
able to hold onto its holdings since the fund launched. “Even
“[Wood and the Ark team] are doing what they
said they were going to do since they started the
firm — running an aggressive high conviction
innovation next generation economically styled
portfolio. ... It’s hard not to admire somebody
who calls their shot and then lands it.”
—ETF Trends and ETF Database’s David Nadig