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Economy

Investor Cathie Wood, a Wall Street darling, is now criticized as a one-trick pony

STEVE INSKEEP, HOST:

The world of investing has a handful of star portfolio managers, like Warren Buffett. But nobody is quite like Cathie Wood. She has more than a million followers on Twitter and YouTube. She's been on magazine covers. She's headlined conferences.

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UNIDENTIFIED PERSON: Please, help me welcome to the stage Cathie Wood, the founder, CEO, CIO of ARK Invest.

INSKEEP: Her funds saw astronomical returns during the early parts of the pandemic, and now they're doing worse. So was she brilliant or just lucky? NPR's David Gura spoke with her.

DAVID GURA, BYLINE: To her millions of fans, Cathie Wood is a visionary. She believes huge technological changes will soon reshape the world. And during a recent interview, she told me she thinks most of Wall Street is too timid to bet on that future.

CATHIE WOOD: I really do believe that it borders on one of the greatest misallocations of capital in the history of mankind.

GURA: Wood is always on the lookout for companies she says are innovative, that will help define the future even if many of them are not profitable. And in 2020, Wood's bets paid off big time. COVID-19 was spreading. The economy was spiraling. And her ARK Innovation Fund returned a whopping 150%. That made Wood the toast of Wall Street.

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ERIK SCHATZKER: You're having one of the best years in the history of professional money management. What's it like?

WOOD: Oh, it's been unbelievable.

GURA: But today, it's a different story. Wood's portfolios are packed with high growth technology companies, including Roku and Zoom. But lately, those stocks have been crashing hard. The ARK Innovation Fund has also gotten crushed. It's down 60% this year. On Wall Street, the knives are out. And the pundits have put away the champagne.

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ADAM SHAPIRO: I would imagine a lot of people that have invested with her are pulling an old Ricky Ricardo, saying, you got some explaining to do.

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JIM CRAMER: I am shocked at what she buys and how she buys. She buys like someone who just started yesterday.

GURA: But Wood, who's 66 years old, has been a professional investor for decades. And she says her strategy is going to pay off. She says she's dealt with downturns and doubters before.

WOOD: I'm pretty battle-tested on that score. And, you know, as I say to anyone who will listen, just keep your eye on that prize.

GURA: The pursuit of that prize has led Wood down an unconventional path. In 2014, when many of her colleagues' careers were winding down, Wood, who is a devout Christian, decided to strike out on her own after decades working on Wall Street.

WOOD: A lot of prayer went into that. And I was 57 at the time. So I - you know, it was a choice. Do I retire? Or do I start this business? So that was a big leap of faith and has been very important.

GURA: And soon, she started making a name for herself. One of her best-known buys was Tesla. Wood first invested in the carmaker when many on Wall Street were skeptical. And today, it's worth three quarters of $1 trillion.

WOOD: We think there are a lot more Teslas evolving out there, meaning these companies that are enabling the convergence of technologies and various sectors and are going to enjoy explosive growth opportunities.

GURA: And something else that sets Wood apart is how she's embraced the power of social media. Wood gives away her research for free. And she's amassed a following on YouTube, where her videos have millions of views. That online outreach appeals to younger investors in particular, who have helped ARK Invest grow from managing just over $10 million to more than 40 billion, like Kevin Paffrath, who's a YouTube star in his own right. Like a lot of her followers, he calls her Cathie, just Cathie.

KEVIN PAFFRATH: About a year into me being on YouTube, we heard Cathie's bold theses. I had just bought a Tesla myself, so it seemed like somebody very easy to align with and, I have to say, I completely agreed with.

GURA: Paffrath hears the criticism. And he sees how badly her funds have performed recently. But he hasn't lost faith in Wood. Paffrath has his eye on that prize.

PAFFRATH: One of the things that I really love about Cathie is she really stays stern on her convictions.

GURA: But increasingly, Wall Street sees the steadfastness Paffrath so admires as stubbornness. Critics say Wood's funds are too risky and that she's a one-trick pony. In fact, there's even a fund that's six months old set up specifically to bet against her. It's brought in more than half a billion dollars from investors. But Wood tells her followers to tune out the noise. And in her latest YouTube videos, she is characteristically upbeat.

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WOOD: Read our research for hope, optimism and, really, a thrilling look at what the future is going to hold.

GURA: Despite everything, Wood has something else that gives her comfort and quiets her critics, also puzzles them. The money keeps flowing in from new investors, all betting Wood's vision for the future will come to pass.

David Gura, NPR News, New York. Transcript provided by NPR, Copyright NPR.