The newest superstar investor has leveraged a zealous belief in innovation into a $29 billion-in-assets firm and a $250 million net worth. Among her predictions: Elon Musk&#8217;s car company is vastly undervalued.



Tesla shares were limping along around $200 in May 2019, about where they had traded five years earlier, when Elon Musk’s biggest Wall Street booster tried a gutsy experiment. Cathie Wood and her Ark Investment Management were already well-known for their way-out-there predictions that Tesla would build a fleet of robo-taxis worth $1 trillion and that its shares would soar 20- or 30-fold by 2023. Now she stirred the pot again by publishing online Ark’s new bull’s-case valuation of $1.4 trillion, implying a share price above $6,000, complete with every Excel calculation and assumption behind those estimates. 



Criticism came fast and furious. Tesla short seller Jim Chanos, famed for uncovering Enron’s fraud, took Wood to task over Ark’s forecasts of Tesla’s gross margins. “[W]hat Ark has produced is a forward pricing for Tesla, not a valuation,’’ sniffed valuation expert Aswath Damodaran, a finance professor at New York University. The model, he noted, didn’t include a discounted cash-flow analysis and carried incomplete forecasts on the costs Tesla would incur to scale its vehicle production. That $1 trillion value Ark was placing on Tesla’s nonexistent robo-taxi fleet? “Strikes me as more fairy tale than valuation,’’ Damodaran opined.&nbsp;



Sixteen months later, Tesla shares—after a five-for-one August stock split—were trading at $400. In other words, they’d risen tenfold, driven up by speculation and excitement over Musk’s autonomous-driving and battery technologies and Tesla’s stronger-than-expected financial performance. Musk’s car company is now worth five times more than Ford and General Motors combined, and Wood has made a fortune. The nitpicking skeptics, she believes, have missed the big picture: As electric cars go increasingly mainstream, production efficiencies and advances in batteries and other technologies will cut what it costs to make them. And as sticker prices fall, demand will surge, including from businesses like ride-sharing companies. In September, Musk promised a $25,000 car within three years.&nbsp;



Meanwhile, Wood, 64, is perfectly happy to have a chorus of critics: “It almost makes me feel comfortable, to be honest, because it means if we’re right, then the rewards will be pretty enormous.”&nbsp;



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<h1 class="has-text-align-center wp-block-heading">Loaded on the Ark</h1>



Cathie Wood’s ETFs bet on big ideas and industry disruptors. Here are some of her top holdings.



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td>ETF</td><td>Stock</td><td>1-Year Gain</td><td>Bullish Case</td></tr><tr><td>ARKK (Innovation)</td><td>Invitae Corp.</td><td>109%</td><td>Genetic-testing innovators could cut health-care costs.</td></tr><tr><td>ARKW (Next-gen internet)</td><td>Roku</td><td>68%</td><td>Consumer operating system for streaming media. </td></tr><tr><td>ARKQ (Robotics) </td><td>Proto Labs </td><td>26%</td><td>3D printer lowering costs in industries like aerospace. </td></tr><tr><td>ARKG (Genomics)</td><td>CRISPR Therapeutics</td><td>81%</td><td>Gene editor developing treatments for cancer and diabetes. </td></tr><tr><td>ARKF(Fintech)</td><td>Square </td><td>185%</td><td>The payment processor is becoming a digital bank. </td></tr></tbody></table></figure>



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Wood’s comfort with going her own way has helped her turn Ark into one of the fastest-growing and top-performing investment firms in the world. Its flagship $8.6 billion Ark Innovation Fund is up a staggering 75% in 2020 and has returned an annual average of 36% over the past five years, nearly triple that of the S&amp;P 500.&nbsp;



While most star stock pickers treat their work like state secrets, Wood makes Ark’s research freely available online and posts real-time logs of her firm’s trades. Instead of hiring MBAs, she prefers to bring onboard young analysts with backgrounds in subjects like molecular biology or computer engineering, figuring they’re more likely to spot the next trend. Even the structure of Ark, an acronym for Active Research Knowledge, is original. Wood manages seven portfolios designed to capitalize on breakthroughs in robotics, energy storage, DNA sequencing and financial and blockchain technology, and makes them available to investors, particularly Millennials trading on Robinhood, as tax-efficient exchange-traded funds.&nbsp;



Its Tesla position and a pandemic that has accelerated adoption of the technologies embedded in the 35 to 55 companies in each Ark ETF have helped its assets nearly triple in 2020, to $29 billion. “Coronavirus has catapulted our innovative platforms into high gear because they solve problems,” Wood says. “Innovation solves problems.”&nbsp;



Forbes&nbsp;conservatively values Ark at $500 million, or about 2% of assets under management, roughly the same multiple as publicly traded T. Rowe Price commands. Wood’s 50%-plus ownership gives her a net worth of $250 million, good for the No. 80 spot on&nbsp;Forbes’&nbsp;sixth annual list of America’s Richest Self-Made Women.&nbsp;



It’s easy to dismiss Wood as the face of a stock-market bubble created by the Federal Reserve’s easy-money policies. But she has survived her share of both bubbles and bear markets. While an economics student at the University of Southern California, she studied under supply-side guru Arthur Laffer and apprenticed from 1977 to 1980 at Los Angeles fund giant Capital Group, watching as interest rates approaching 20% crushed the economy and the market. After graduating in 1981, she joined Jennison Associates, now an equity investment arm of Prudential, as an economist in New York. There she made an early call that inflation and interest rates had peaked. That garnered eye rolls from her superiors, but Wood was right—and the experience inculcated in her an appreciation for the potentially big upside of going against consensus. 



<blockquote class="wp-block-quote has-text-align-center is-style-large is-layout-flow wp-block-quote-is-layout-flow">As the pandemic took hold, Cathie Wood loaded up on tech stocks that she correctly predicted would lead the recovery—and bought herself a house in ritzy Hilton Head, South Carolina, from which to work.</blockquote>



Frustrated with her career path at Jennison and wanting to research individual companies, one Friday Wood up and quit. Her mentor at the firm persuaded her to return the following Monday and moved her into equity research. She covered nascent wireless telecom companies in the late 1980s and early ’90s, getting a ground-floor view of the huge economic and societal changes coming as cellphones grew ubiquitous. In 2001, she moved to New York–based AllianceBernstein as chief investment officer for thematic portfolios. But the 2008 financial crisis ushered in an era in which active managers underperformed the S&amp;P 500 and trillions flooded into low-cost index funds. Wood decided a fresh approach was needed. In 2012, she proposed putting actively managed portfolios of innovative companies inside an ETF structure. The idea got nowhere at AllianceBernstein.&nbsp;



Two years later, she launched Ark in New York. Success wasn’t immediate. In the firm’s first two years, its flagship fund placed in the bottom quartile of its peer group, according to Morningstar. By the end of 2016, Wood had attracted just $307 million in assets, and Ark’s 0.75% management fee wasn’t covering overhead. To keep going, she dug deep in her savings, sold minority stakes and struck partnerships with larger firms to build distribution. Japan’s Nikko Asset Management and the mutual fund firm American Beacon now own 39% of the company. Almost 10% is owned by the firm’s two dozen employees.



In 2017, Ark took off, buoyed by surging prices for stocks like Netflix, Salesforce, DNA sequencer Illumina, digital-payments processor Square and digital health provider Athenahealth. Assets rose tenfold, and Ark began to build its brand on the back of bold predictions, an active Twitter presence and the free research it put online. (It also attracted notice for a cryptocurrency fund available only to accredited investors; Wood started buying Bitcoin, which she calls an “insurance policy” against inflation, in 2015 at $250 a coin.) &nbsp;



Wood takes a top-down approach to building portfolios, first identifying disruptions by any means possible, including crowdsourcing—she even opens the firm’s Friday afternoon research meetings to outsiders, who can call in via Lifesize. Economics is central. Wood is most bullish on innovations if she believes their costs will decline over time, creating real demand. When scoring potential holdings, Ark looks at corporate culture and management execution on growth initiatives. Only at the end of the process does Wood value a company, refusing to buy anything she doesn’t expect will rise by 15% annually over five years, Ark’s minimum expected holding period. 



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The tumult of 2020 has been good for Ark. In March, when the pandemic emerged and stocks plunged, Wood correctly predicted fast-growing tech companies would lead the world (and financial markets) to recovery. She concentrated Ark portfolios in Tesla and other top picks including education-software company 2U and real estate platform Zillow. Then, in late summer, when Tesla soared, she trimmed her holdings and built a large position in the battered shares of Slack.



With all successful innovations, of course, come copycats. Gimmicky themed ETFs have proliferated in everything from pets to sports gambling to work-from-home. Fund giants Dimensional Fund Advisors, Fidelity Investments and T. Rowe Price have all recently launched their own slates of actively managed ETFs.&nbsp;



An optimist by nature, Wood nonetheless offers some unsettling predictions for the next five years. She expects a broad swath of large industries—banking, energy, transportation, health care—to be disrupted by technological change, with many workers displaced. The result, she believes, is that economic growth, inflation and broad market indexes will all fall persistently short of expectations, providing an opportunity for active managers to pick the innovative winners that will continue to drive market-cap gains.



“I think the benchmarks and the indexes are going to go through a terrible period. We’re already seeing it,” she says. “We believe they are being increasingly populated by value traps.”&nbsp;



Does she think the market is now in a bubble? Nope. Uncertainty over the pandemic and the election (Wood supports President Trump “unabashedly”) means money has been flowing out of stocks and into the safety of bonds, she notes. “The fact that people are fearful now that we’re back at the S&amp;P 500 trading at 25 times earnings tells me that we are not in a bubble at all.” 



-By Antoine Gara, Forbes Staff

Key Speakers At The Sooner Than You Think Technology Conference

How Cathie Wood Beat Wall Street By Betting Tesla Is Worth More Than $1 Trillion

Renowned New York-based futurist Faith Popcorn was in South Africa recently when she also spoke to FORBES AFRICA about the trends that will shape the future. Here are some of her mind-boggling predictions.



She is the TREND-SPOTTER who famously coined the word
‘cocooning’ in 1981, and got most of her predictions right. Faith Popcorn was
in South Africa in November at a Virgin Atlantic and Investec event titled
‘Business Is An Adventure’. As the founder &amp; CEO of Faith Popcorn’s
BrainReserve, a future-focused trend consultancy, she applies her foresight to
reposition established brands and create the products and services of tomorrow.
The best-selling author lives in Manhattan and Wainscott, New York, with her
two Chinese daughters. We ask her to tell us more:



What are the Top 5 trends for the future?



Being Alive: We are a wellness-obsessed culture – it’s our way of feeling in control in an out-of-control world. The era of the ‘quantified self’ means we can parse our biometric data to find out exactly what will optimize our health, and emotional and spiritual wellness are becoming critical. Tech and AI – ‘embeddables’, ‘swallowables’ and AI – will anticipate our needs and help us achieve optimal health. A little chip will sense, ‘oh, bad mood coming… let me dose you with CBD or change your brainwaves to get rid of that’.”



Save Our Society and AtmosFear: This pairing of trends recognizes that our planet is in peril – beyond peril, it’s dying – and says we must do anything and everything to save it. Values are the ‘new value’. No person, brand or business can survive in the coming years without a commitment to heal our earth. If that means solving for fossil fuels or building an asparagus farm on Mars – just do it.



EVEolution: I thought this would have accelerated beyond where it is today, but in the years ahead, it will be absolutely primary. The biggest wealth transfer in history – over $20 trillion – will mostly benefit women. Women are earning more degrees than men at every educational level, are starting businesses at two times that of men and refusing to put up with oppression – look at #metoo and #timesup as the seeds of this. In the future, the discussion won’t be about parity and closing the gender gap. It will be about women superseding and leading men.



Vigilante consumer: If you thought the consumer was already at its peak demanding accountability and transparency, brace yourselves. Companies will have to divulge everything. Your consumer will demand to know about your inclusivity policies on staff; what your political values are; they will know your recycling and plant-friendly policies in full detail – and when you’re green-washing. Many conglomerates will flounder and fail due to this… and disruptors will be waiting to dive in and take their business.



What do the terms ‘gender fluidity’ and ‘gender-free’ mean to you?



Gender fluidity means the person, regardless of what gender
they were assigned at birth, feels that their identity fluctuates from the old,
binary norm. So maybe you are a man who one day feels feminine, wears earrings
and nail polish; another day, you feel macho and wear a suit. Or maybe you feel
somewhat feminine all the time… but you do not adhere to the old-school gender
norms. This is not about sexual orientation, to whom you are attracted. It’s
about how you feel in your own skin, relating to the world. Gender-free is the
response to gender fluidity. It’s why P&amp;G removed the female Venus symbol
from menstrual products to be inclusive of trans-men. It’s why Mr. Smith makes
haircare for all; Jecca makes cosmetics for all; and the Phluid Project in New
York sells clothing for all. Doesn’t matter what your chromosomes say – express
yourself however you like. I think we need to stop thinking of the ‘male’ and
‘female’ product aisles and recognize a third, gender-free aisle will soon rise
and take their place.



How will robots evolve?



Right now, robots are fairly limited and clunky. They are not the intuitive, anticipatory, seamless partners, friends, advisors and care-givers they will be soon. Their form will become miniaturized and ultra-mobile, with articulated limbs that can complete all kinds of chores. Thanks to AI and what i call Emo-Surveillance (they will read our expressions and body-language cues), they will be able to comprehend our moods and respond before we articulate our needs. IoT and biometric data will let them know if we are stressed, sad or sleepy, and they will be there with a kind word, an elixir, a pep talk, a nap programmed with a fabulous, uplifting dream. They will become the curator of our best futures.

Tag: Future Predictions

FORBES AFRICA SOCIAL MEDIA

How Cathie Wood Beat Wall Street By Betting Tesla Is Worth More Than $1 Trillion

‘Robots Will Curate Our Best Futures’