Ark Invest’s Cathie Wood vindicated by revved-up Tesla

A little under a year ago, Cathie Wood named Tesla as her top stock pick for 2020. Speaking at the Sohn Hearts & Minds Investment Leaders Conference in Sydney last November, Ms Wood, who runs US technology-focused investment firm Ark Invest, said her bearish case was that the stock price would double by 2024. It hit that milestone less than three months later.

Ms Wood was one of a handful of top investors and global thought leaders to present at the annual conference last year, which has to date raised $10m for Australian medical research.

This year, activist investor Bill Ackman, the founder and CEO of hedge fund Pershing Square Capital, will be the keynote speaker at the event, which is being held virtually for the first time in November.‍

Taking place just 10 days after the US election, the timing of the conference couldn’t be better, according to Rory Lucas, who runs the Hearts & Minds fund, which invests in 25-30 high conviction stocks, including the top 12 picks from the event each year.

“This presidential election is going to be controversial and it’s going to have big ramifications for markets and the world. A lot of people will want to know what the brains of the US market thinks about who the next president is,” Mr Lucas said.

While Mr Ackman has long been on the wishlist of speakers, it was the shift to a virtual event that allowed Hearts& Minds to secure him, as well as others who ordinarily wouldn’t have been able to attend a conference in Australia, Mr Lucas said.

“We’ve also asked Cathie Wood to come back because everyone’s going to want to know what she thinks. Everyone’s going to want to know what she thinks about Tesla now that it’s up 600 per cent.

“Everyone’s also going to want to know what else she’s doing. Her funds are just fascinating; she’s got five different disruptive technologies that she focuses her investments on. So people are going to want to know about it.”

Now in its fifth year, the conference gave people access to fund managers and investors they’d normally never get to hear from, Mr Lucas said.

“At TDM Growth Partners, Hamish Corlett and Tom Cowan have been extremely successful fund managers. They’ve only got 20 investors. If you rang them up and said, ‘I want to invest my money with you’, they’d say, ‘thanks, but no thanks’. They’re closed to investors, closed to money.”

Shifting it to a virtual event, meanwhile, made it more accessible to a wider audience, conference co-founder and former UBS Australia head Matthew Grounds said.

“We have, once again, a great line-up of fund managers and keynotes this year from both the US and the local community and we will be streaming the conference a week after the US election, so the timing couldn’t be better.

“This year’s conference will be more accessible as it will be virtual, so it provides an opportunity for a much wider audience and we are looking forward to sharing some of the best ideas from the brightest minds, all in benefit of Australian medical research.”

While the conference has raised $10m to date for medical research, Hearts & Minds Investments, a listed investment company, has raised another $10m. The fund managers involved waive their fees, allowing it to donate 1.5 per cent of net tangible assets each year.

Listed on the ASX in November 2018, Hearts & Minds has returned 51 per cent since inception, 26 per cent over the past 12 months, and 15 per cent since March.

There are two parts to the portfolio: the core portion, which accounts for 65 per cent and is made up of six managers, including Hamish Douglass and Peter Cooper, who each nominate their three best high-conviction stock picks; and the conference portion, which accounts for the remaining 35 per cent and is made up of the annual recommendations from the conference run each November.

The conference picks were held for a maximum of 12 months, with $20m being the standard investment in each, Mr Lucas said.

If a stock does really well, as Tesla did this year, the fund trims the position to take profits.

“We trimmed it as it rallied, then it fell all the way back when COVID-19 hit, so we were actually able to redeploy a full-sized position. Then it doubled again, and so we trimmed it again. It rose some more so we trimmed some more.”

Working with famous investors brought diversity to the fund, he said.

The Sohn Hearts & MindsInvestment Leaders conference will be held online on November 13.


This article was originally posted on The Australian here.

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