In a recent letter to investors, Cathie Wood, the CEO of ARK Invest, highlighted the potential of the company’s flagship fund, ARK Innovation ETF (NYSE:ARKK), despite its recent underperformance.
What Happened: Wood, in her letter, acknowledged that ARKK’s performance has been impacted by the shift in focus from the “Magnificent Six” to multiomics stocks, which have been adversely affected by the prospect of prolonged high interest rates.
Despite this, ARKK’s valuation has dropped to a level that Wood believes is indicative of “deep value territory” over a five-year investment horizon.
Wood pointed out that ARKK’s valuation, as of June, was 25.5x, the lowest it has been since February 2021. She also noted that the fund’s valuation based on Price-to-Book (P/B) and Price-to-Sales (P/S) ratios is surprisingly low.
“Important to recognize, however, is that in 2023 ARKK appreciated 68% as the bull market started to broaden out based on just the "whiff" of lower interest rates,” Wood wrote in the ...