Catherine Wood is the chief executive officer and chief investment officer of Ark Invest.
Patrick T. Fallon is a photographer.
Ark Invest's innovation stocks are in deep value territory according to Cathie Wood.
She expects the group of stocks to return 40% over the next five years.
Ark Invest's flagship fund is down over 20% year-to-date due to a steep sell-off in unprofitable tech companies.
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The founder of Ark Invest expects her disruptive innovation investment strategy to return 40% over the next five years.
She said in a Friday post that the innovation stocks owned by Ark are in deep value territory. Ark Invest's flagship fund is down 24% year-to-date, with some top holdings down as much as 70% from record highs.
"After nearly 11 months of correction, innovation stocks seem to have entered deep value territory, their valuations a fraction of peak levels," Wood said. Despite the steep declines, companies like Teladoc are still growing their revenues.
The first major product replacement cycle since the emergence of the internet roughly 30 years ago can be attributed to the improving business metrics in the enterprise communications space.
She thinks the stocks held by Ark Invest are a bargain.
The average price-to- earnings ratio of the ARK Disruptive InnovationETF is negative, which indicates that the average stock in the portfolio is not yet profitable. The S&P 500's P/S ratio is about 3x, but the average price-to-sales ratio of the ETFs is almost double that.
Wood said that a big wall of worry built on the back of high-multiple stocks boded well for equities in the innovation space. There was no wall of worry in 1999. The wall of worry has grown larger.
She expects Ark's innovation strategy to return 40% over the next five years. "If our research is correct, our strategies will triple to quintuple in value over the next five years," Wood said.
Ark Invest has delivered strong returns before. Over the past five years, Ark Invest's flagship fund has delivered a compounded annual growth rate of 37%.
Wood expects innovation sectors to scale to $200 trillion in value over the next decade. The total market value of the global stock market is just over $100 trillion.
Business Insider has an original article.
