Summary

We will discuss the investment styles of Warren Buffett and Cathie Wood and highlight some of their largest positions with Seeking Alpha Quant grades. BRK.B had 41.4% of their portfolio in Apple and ARRK had a 10.7% allocation to Tesla.

YTD, BRK.B is up 24.4% vs. ARKK down 1.77%. Performance could be driven by value vs. growth, fundamentals vs. innovation, and a rotation to inflation-proof stocks vs. lack of earnings power. Sometimes funds aren’t what you think, as we will uncover when looking at Buffett vs Wood’s holdings.

Over the last 5 years, ARKK is up 535% vs. BRK.B up 102%. Buffett and Wood are opposites when it comes to investing. You can assess their portfolios using SA’s unbiased Quant grades and determine what style works for you.

Both offer different expertise and returns that are not correlated – which is a good thing because they perform differently based on the current cycle of the economy and markets.

phongphan5922/iStock via Getty Images Introduction to Warren Buffett and Cathie Wood

We’ve heard about the clash of the Titans throughout time; Hamilton vs. Burr; Rocky vs. Apollo Creed; now Warren Buffett and Cathie Wood. Buffett and Wood are opposites when it comes to investing. But are they? Warren Buffett has been seen as a conservative, value investor – looking for underappreciated and underpriced stocks by some fundamental analysis. Buffett believes in investing for the long-term and investing in companies that he can reasonably estimate will make money over the next few years. However, he also takes on colossal concentration risk, as evident from the large 41% allocation to Apple (NASDAQ: AAPL ) as of June 2021.

Cathie Wood invests in innovative companies, seeking the latest, shiny new companies to hit it big. Considered a growth investor, Wood has taken the investment world by storm, investing in what many consider fun companies and is persuasive in her beliefs about her stock picks. However, she does not take on nearly the same concentration risk as Buffett. Her most significant position is Tesla (NASDAQ: TSLA ), at 10.7% as of September 2021. Which investment style is better for you? Cathie Wood and ARK Innovation’s Aim

Cathie Wood is an American investor and founder of Ark Invest, a $42B AUM firm focused on disruptive innovation investments with solid revenue growth rates. ARKK is an alternative to passive growth ETFs and invests in stocks with innovative business models. Many SA Authors have written about Cathie Wood and ARK Innovation. Recently, JR Research wrote an excellent article about the fund’s recent history, down -1.77% YTD, and as of Sept 30, it is down over 11%. Over the last five years, the ETF has risen 535%. However, the thematic investment style also carries a fair dash of speculation on future earnings.

In many cases, the companies have no earnings (25 stocks in the portfolio have negative earnings, to be precise). In February of 2018, Wood garnered media attention after hinting on CNBC that she believed Tesla’s stock could reach $4,000 in five years, a 1,100% price increase at the time; Tesla has yet to get $1,300/share, but to be fair there is still time. So what companies or stocks are considered disruptors?

1-Yr. ARKK AND BUFFETT PERFORMANCE: IS IT A ROTATION TO VALUE? Source: Seeking Alpha Premium

5-Yr. ARKK AND BUFFETT PERFORMANCE: WAS IT A BULL MARKET ON STEROIDS? Source: Seeking Alpha Premium A Strategy Designed for Long-term Growth & Negative A Correlation to Value

Some of the largest businesses in the world are disruptors. They introduce innovative business models, change established industries – create something new. Disruption is a subcategory of thematic investing where you can gain exposure to these types of companies and themes. Let’s observe Cathie Wood’s and Ark Invest’s holdings. ARKK has 50% of the portfolio in the following ten stocks.

ARK INNOVATION ETF: EXTRAORDINARY GROWTH GRADES, NOT PASSING ON VALUE Source: Seeking Alpha Premium

When you look at the concentration of holdings like Tesla in Cathie Wood’s portfolio compared to BRK.B, expectations are everything. Take a look at Tesla’s market capitalization between the two. Tesla’s market capitalization is $588B higher than Berkshire Hathaway’s; Net Income (TTM) for TSLA is approximately $3.5B compared to BRK.B ~$106B.

TESLA VS BERKSHIRE MARKET CAPITALIZATION (10YR) Source: Seeking Alpha Premium

ARK TOP 10 STOCKS PERFORMANCE THIS YEAR – NOT STELLAR

Quantitative analysis is a process that uses mathematical and statistical modeling, measurement, and research to compare metrics of peer stocks. Factor Grades provide investors with an instant […]

source Warren Buffett Vs. Cathie Wood: Is It Really About Apple Vs. Tesla?

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