Ark's Cathie Wood on 'deep value' stocks

let me ask you about palantir which we just found out you you've added to can you tell our viewers why you added rather significantly to your stake in palantir yes they reported yesterday and the stock was uh down on the report um it's interesting to listen to the ceo um he was speaking our language he he essentially said to investors you know we are playing in a massive space here and we're going to invest aggressively now in order to capitalize on the exponential changes that are taking place here so if you are short-term in your focus you probably don't want to spend too much time investing in palantir uh so that's music to our ears because and we do believe more and more companies are going to start behaving in this way instead of catering to short-term time horizons and short-term short we would say in some cases short-sighted shareholders who are much more interested in profits now dividends now share repurchases now then they are in a company investing aggressively for going short-term profitability in order to really to catch some very big waves out there so i'm astonished their their work they their uh revenues are still 61 government but i've learned and i think most people in the innovation space have learned over time that some of the most important innovations uh in our lifetimes have started in the government especially in the in the defense sector and in the intelligence sector so we think in many ways and they won't talk about how uh but they're certainly garnering a lot of business which tells us that they are uh seeing in the future and investing in the future in in ways that companies governments uh but but increasingly companies are going to uh need uh especially as we're competing against china i think we've been uh again with this short-term time horizon we have not been spending enough in innovation and so you know palantir's attitude is refreshing it's exactly how we invest we want our companies to invest aggressively we don't want profits now we want them to invest aggressively because we're moving into many winner take most markets and the autonomous taxi world is a very good example of that that is why our confidence confidence in tesla going back to the largest position in our portfolio is so high i'm going to ask you about more stocks in just a moment you spoke of a lot of the stocks in the in the the flagship fund as having a longer runway than maybe you know some would suggest the the pandemic would would say it seems undeniable to me though that you must be thinking about the impact of higher rates on the kinds of stocks that have been tried and true winners for you all throughout whether it's the signature fund the fintech innovation fund and even other areas of the etfs that you have are you worried that as rates go up those stocks could come down well i i do believe if rates were to take a sharp turn up uh that we would uh we would see a valuation reset and our portfolios would uh would be um prime candidates for that valuation reset of course now one of the things that i found interesting over the last uh over the last really 20 years is that the the s p's p e ratio tends to peak out in the 20 to 25 times range of the forward forward earnings and i think the reason for that is most portfolio managers and maybe quantitative research researchers are looking at normalized nominal gdp growth in the four to five percent range which is where long-term interest rates should be normalized uh we actually think normalized gdp growth is probably closer to three now if you think uh and and that's where long-term interest rates uh should stabilize if you think of 20 to 25 times uh that's one over four to five percent growth so it's the inverse of the growth rate the nominal gdp growth and that's where it seemed to be peaking out we think there's actually longer term uh i agree with you scott there will be a valuation reset there will be fear i'm sure and we will use it to our benefit concentrating our portfolio to our highest conviction names uh but i think longer term especially given the the powerful growth trajectories that the five innovation platforms around which we revolve all of our research uh that that those trajectories are so powerful uh that these multiples that they these companies are going to grow into their multiples a lot faster than most uh investors are now expecting and so that's a source of confidence for us steve weiss has a question for you kathy nice to see you kathy good to see you again uh so so my my question plays off what scott just asked you do you take into account or do you have any type of forecast in terms of rates and adjust the portfolio to that forecast or do you keep cash there and etfs are kind of interesting in terms of the level of cash you're allowed to keep or not keep um so so how do you do it so rates right now they're moving up do you say okay we may be in a little trouble here with this valuation reset they're going to jump up another whatever up to you know maybe two percent do you get in front of it or do you just take it as it comes no we we use it actually uh and so what we've been doing for the last six months is expanding the number of names in our portfolio and we do that as a bull market extends because in some ways it's a tax efficient strategy what we will do during a correction especially a severe correction like the coronavirus crisis presented we will sell names in which which are creating losses now because again we've bought them we've diversified and bought them more recently sell those names creating losses to buy our highest conviction names some of the names we've been moving in to you'll notice are names like some of the bigger biotech names regeneron novartis uh cicada and what we will do during and and we we think of them as cash-like but there's also a reason an investment reason we are moving into them uh ironically we think they're deep value names because these companies the ones we are choosing are uh they are able to use the convergence of technologies that is taking place today in the genomic revolution so dna sequencing artificial intelligence once again and gene therapies new technologies new ways of doing things they are investing aggressively now they have to because they've lost a lot of their pipelines or will soon do so and we think the returns on investment in the biotech space and i'm talking big biotechs if they're doing this correctly could move from the high single digits today back into the golden age of healthcare so in the 80s we saw 20 to 30 percent so we're using them as cash like instruments in in some some way because we will move back into our pure play names uh if we get into a severe correction but we also see the investment merit in these names they're just not pure play names so we we use corrections toggling back and forth and so right now our flagship uh our flagship portfolio has roughly 52 names in it at the low point in the coronavirus last year it was as low as 33 i believe kathy bob's going to wrap it up with you i have one quick question for what do you view of the spax right now would you ever invest in in these specs we are investing in them which ones not all of them we think there's well draftkings skills butterfly that that merger was just consummated today blade which i think is still going under the name experience so that uh that uh acquisition has not been consummated yet so yes we're but we're being very careful uh we don't like the opacity in some of these uh in some of these specs and uh nor the uh incentive system in some of them uh but this is a way for venture capital uh to uh to uh have liquidity events uh sooner than might otherwise have been the case giving the public markets an uh an opportunity to invest in some innovation-oriented names much sooner than than uh might have been the case with just the ipo process uh we understand that nature of the the compensation schemes and some of them interesting kathy we've only got a couple minutes left so i'll need a quick answer we want to ask you about something that's exciting a lot of us here at cnbc and that's the mars landing tomorrow it's going to be one of the great technology feats of all time i know you filed for a space etf can you tell us what excites us about space you said earlier in december it's important to get on the right side of change and stay on the right side of change because it's hit escape velocity is that what this is about is space another part of that whole change paradigm that you keep talking about yeah we do put space into that category we will not uh i can't say anything we're in the quiet period when it comes to the fund itself you have to wait until the sec deems it effective but yes the right side of change and the reason is always the same the costs associated with launching with rockets themselves with antenna they're all coming down dramatically thanks to you know both the private and the public sector but i think the private sector has really helped nasa out here you've got elon musk you've got jeff bezos you've got richard branson uh in another way and on the technology technology side we see spacex and blue origin pushing the envelope so costs are coming down and the technologies are finally ready i think the reusable rocket that uh elon you know many people were saying why is he doing that why is he doing that uh and of course now we know the only way he's going to be able to get to mars or whoever the first people are we are going to need re reusable rockets to do that uh and so again it's always about cost right costs are cool thing and it's always about technology being ready so yes we can't wait to find out the names that are going to be in that etf when the time is right to do that kathy wood can't thank you enough for spending the time with us

Channel: CNBC Television

Views: 844,513

Rating: 4.8680477 out of 5

Keywords: Fast Money Halftime Report, CNBC, business news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, financial news, stock market news, stocks

Id: atjQcRXX-NI

Length: 11min 54sec (714 seconds)

Published: Wed Feb 17 2021

Reddit Comments

[u/JakeSkellington]

ALL HAIL LORD CATHIE

[u/bearjewDonowitz]

My tiny Dick just got so hard

Bought 300 more shares $28

[u/GiMmEmoreGME]

Cathie is all the dd i need

[u/[deleted]]

i would pay literally anything (except my pltr stocks) to have cathie be my mom.

[u/impulsiveinvestor]

Fire the fucking idiot with the god damn pen. Jesus.

[u/dyarart]

Auntie Cathie coming through

[u/thespiffydentist]

That’s amazing news!!! Well that means PLTR is going to $20!

[u/melayaraja]

Have heard about Ms. Cathy Wood for a long time in this sub. Never google searched about her. Good to see her finally.

[u/flowbiewankenobi]

Sold at 37, bought a put, sold that yesterday for 100% gainz. Bought 6k more shares and plan to add more! Long on this breezy but doesn’t hurt to swing trade when you know the dips are coming