Catherine Wood believes that the economy is about to be turned upside down by new technologies that are tearing the past apart. “You have to go back to the era of electricity, telephone and car to see so many innovative sectors at once,” she said.
His firm, Ark Investmement, is trying to determine the winners in five sectors: genomic sequencing, adaptive control, energy storage, artificial intelligence and blockchain.
Catherine Wood believes that innovative companies have great potential for their shareholders. She estimates they are worth $ 7,000 billion (G $). “That $ 7,000 billion will reach $ 200,000 billion by 2030,” she predicts. These companies, which represent less than 10% of the world market, will account for half of this. »
This optimistic forecast contrasts with the gloom of investors fleeing technology companies and rising stocks due to rising interest rates, which means that the theoretical value of future earnings growth is lower. The value of its exchange-traded fund Ark Innovation (ETF), which owns companies such as Tesla, Coinbase and Teladoc Health, has fallen 75% since its peak in January 2021.
Despite the fall, what the American media portrays as the “evangelist of innovation” remains and is signed. She believes that her investment universe is in the territory of “significant agreements”.
She acknowledges that the evaluation of innovative companies is high. The ratio of value to earnings to interest, taxes, depreciation and amortization (EBITDA) in the sector is on average about four times higher than in the S&P 500, the flagship index of large capitalization in the United States. She believes that the growth prospects of innovative companies justify this assessment. “We have never seen our strategy so underestimated. »
On the contrary, according to Ms. Wood, betting on well-known companies is more risky than one might think. She notes that traditional portfolio managers tend to draw inspiration from major stock indexes. “Traditional stock indices will be ineffective because they represent the established order. We focus on the New World. »
So for Bitcoin and Tesla, nor for Celsius Network
Catherine Wood reaffirms her optimism about major cryptocurrencies, bitcoin and etherium, at a time when the market has been undergoing a sharp correction since early May. By eliminating intermediaries in the financial sector, the blockchain would have the potential to make the market more transparent and stable, “even if it doesn’t appear today,” she admits.
It is more critical of cryptocurrency interest and loan platforms, such as the Celsius Network, which has just suspended its transactions and in which the Caisse de dépôt has invested $ 150 million. “These promises of interest rates from 5% to 30%, when the distribution of traditional markets was almost nothing, created excesses. There were unstable platforms. »
Tesla is one of the company’s largest investments. The manager also defended its founder, Elon Musk, when asked if his crusade to take over Twitter distracts him from leading the electric car maker. If Elon Musk gets on Twitter, Catherine Wood predicts that day-to-day operations will be handed over to an experienced lieutenant.
Catherine Wood compares Ilona Mask to the great inventors of the Renaissance. “There are people with a strong mind who want to make the world a better place. He is one of them. »
Catherine Wood’s macroeconomic forecasts also contradict those of her colleagues. At a time when economists, central banks and households are watching inflation with apprehension, Ms. Wood instead fears the specter of deflation, a general decline in prices that is slowing the economy.
She explains that American retailers Target and Walmart have noticed a sharp increase in stocks. Their managers claimed that they did not have the necessary products in stock because they arrived late and because consumer habits changed due to the exclusion and rising inflation. In May, Walmart claimed that nearly 20 percent of its inventory was products the company no longer wanted.
“Walmart is one of the most run companies,” says Catherine Wood. If it happened in a well-run company, I think it means it happened everywhere. “
“Retailers have problems with stocks,” she added. The way to solve this problem is huge discounts. When people expect discounts, they don’t buy now, they wait. This will create even more weakness in the short term. »
In the long run, breakthroughs of innovative companies will lead to “positive” deflation, she predicts. “Deflation related to innovation is good. This means lower costs, higher productivity and lower prices. This could lead to a deflationary boom in those sectors where we have identified strong innovations. »