ARK’s Cathie Wood: ‘Private markets get it,’ but disruptive tech takes a hit in the stock market

When it comes to valuing disruptive innovation, private markets seem to understand the opportunity better than the stock market, according to Cathie Wood, founder and CEO of ARK Investment Management.

“Private markets get it,” Wood said Tuesday while on stage at the Exchange ETF conference in Miami, referring to company valuations seen in venture capital deals. But ARK’s stock market bets on disruptive innovation tanked this year, even as Wood maintains that the fundamentals, for the most part, “have not deteriorated.”

“During periods of risk aversion, we always concentrate our portfolios,” he said, favoring the “higher conviction names” identified by ARK. Some of the “consolidation” candidates that emerged were “levitating” while other bets were being “squashed,” she said.

ARK Innovation ETF ARKK Stock,
-4.44%
they closed flat on Tuesday and have plunged nearly 37% so far this year, according to data from FactSet. The exchange-traded fund took a hit last week, falling about 10%, the data shows.

Watch: Cathie Wood’s ARK Innovation ETF Slips in Stock Market Sell-Off on Wednesday

While on stage at the conference, Wood was asked how often he speaks with Elon Musk, CEO of Tesla Inc. TSLA,
-3.66%,
as well as his relationship with Twitter, the social media company in which he recently acquired a stake to become its largest single shareholder.

Read: Twitter CEO Says Elon Musk Won’t Join Its Board of Directors

“I think people would be surprised how little Elon and I talk,” Wood said. ARK, which owns shares of Tesla, is interested in the company’s technologies, including its AI strategy, robotics and battery technology, he said, as well as Musk’s “vision.”

As for Twitter TWTR,
-1.68%,
where Musk has more than 81 million followers, Wood said that “for Elon, all publicity is good publicity.” Tesla spends “zero” on advertising, he said.

ARK supports “radical transparency” in the financial services industry, according to Wood. “We give away our research,” she said. “We share our ideas.”

Wood also said that “we are going to publish our models” on GitHub. Investors will be able to change variables in the models “if they think we’re being too aggressive or not aggressive enough,” he said.

In addition, ARK discloses its holdings every day, Wood said. He said ARK’s transparency may help increase shareholder conviction in the asset manager’s investment strategy, while some investors may be using the information for their own personal investment portfolios.

“Innovation is happening at a rapid rate,” Wood said. “Tesla and bitcoin BTCUSD,
+0.15%
They alone have changed people’s lives.”

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