Adobe shares have slid sharply since the graphics-software specialist said Sept. 15 that it has agreed to buy Figma for about $20 billion.
Investor Cathie Wood, chief executive of Ark Investment Management, has taken advantage of Adobe’s (ADBE) – Get Adobe Inc. Report stock plunge to snap up some shares.
On Monday, Ark Next Generation Internet ETF (ARKW) – Get ARK Next Generation Internet ETF Report bought 23,605 shares of the design software titan, valued at $6.7 million as of Monday’s close.
That follows the fund’s purchase of 22,874 shares on Sept. 19, valued at $4.5 million as of that day’s close.
Adobe shares have dropped sharply since it said Sept. 15 that it had agreed to purchase peer Figma for about $20 billion. Investors are concerned that Adobe is overpaying in the deal. The stock has stumbled 23% since Sept. 14 and 50% year to date.
Wood has said throughout the year that the fall of disruptive technology stocks — which make up her funds — presents buying opportunities.
Soaring interest rates and weaker earnings have pushed down the stocks, and that slump has depressed Ark funds markedly this year.
Wood’s Underperformance
The share price of Wood’s flagship Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Report has dropped 62% year to date, and it’s down 77% from its February 2021 peak.
Wood has defended her strategy by noting that she has a five-year investment horizon.
Until May 9, the fund’s five-year return had beaten that of the S&P 500. But through Oct. 10 the five-year annualized return of Ark Innovation totaled 2.41%, behind the S&P 500’s 9.13% return.
In an indication of Wood’s popularity, the $7.1 billion fund has enjoyed a net inflow of $360 million over the past month, according to VettaFi, an ETF research firm. To be sure, over the past three months Ark Innovation has seen a $355 million outflow.
Wood Criticizes Fed Policy
Meanwhile, Wood wrote in an open letter to the Federal Reserve Monday that it’s “making a policy error that will cause deflation,” referring to the Fed’s interest rate increases.
The Fed has raised rates by 3 percentage points since March and has indicated that plenty more is to come. Experts anticipate a 75-basis-point move at the central bank’s next meeting, Nov. 1-2.
Wood has argued for months that the economy is suffering from deflation and is already in a recession.
The consumer price index jumped 8.3% in the 12 months through August, but she maintains that CPI is a lagging indicator.
“Commodity prices are leading indicators, upstream in the stages of processing,” Wood said.
“Most commodity prices have peaked and, except for food and energy, are falling on a year-over-year basis.”
