Hedge Fund Billionaire Loeb Slams ‘Stonk’ Picker Cathie Wood

Topline

Daniel Loeb, the billionaire founder of the hedge fund Third Point, took to Twitter Wednesday to criticize famed investor Cathie Wood for her investing strategies, piling onto recent pushback against Wood, who rose to fame for her signature, tech-heavy Ark Innovation ETF’s historical performance against the market but has famously tanked in 2022.

Key Facts

Wood’s recent note defending “underlying profitability of ARKK’s portfolio companies” should be used as a “treatise to study the mindset of stonk hodlers,” Loeb wrote, classifying Wood among retail investors who cashed in on meme trading, often intentionally misspelling stocks as “stonks” (Loeb took the liberty of also misspelling holders to complete the phrase stock holders).

In the memo, Wood railed against long-trusted stock fundamentals and used some dubious accounting to claim three times more of companies held by ARKK are profitable, suggesting some marketing costs and all research and development expenditures should not count against the profitability measures of “truly innovative companies.”

Loeb took issue with Wood’s “disparaging comments on luddites who look at archaic measures of value like cash flow as short term traders” in his recent tweet.

Key Background

Wood’s Ark Innovation ETF is down 66% year-to-date, compared to a 19% loss for the S&P 500 and a 32% loss for the tech-heavy Nasdaq. Unbelievably, four of ARKK’s five largest holdings—Block, Roku, Square and Tesla—are down 60% or more in 2022. Like Wood, Loeb has also made unconventional bets, including taking a 6% stake in embattled retailer Bath & Body Works he disclosed earlier this month. The stock has been struggling amid a broader retail rout, down more than 40% year-to-date, and shares are down 3.4% since Third Point announced its investment.

Forbes Valuations

Loeb is worth $3.5 billion, according to Forbes’ real-time billionaire tracker. Forbes estimated Wood to be worth $140 million in June, down from $400 million in 2021. Third Point has $27.8 billion assets under management compared to Ark Invest’s $24.8 billion, according to the most recent Securities and Exchange Commission filings.

Tangent

Third Point made $72 million on its 5.5 million Twitter shares purchased in months leading up to Tesla CEO Elon Musk’s $44 billion takeover of the company. Musk’s devotion to Twitter has helped fuel the electric vehicle titan’s dismal stock performance.

Further Reading

Billionaire Loeb Blasts Cathie Wood for ‘Stonk Hodlers’ Mentality (Bloomberg)

Ark Invest CEO Cathie Wood’s Net Worth Slashed By 65% As Tech Bets Sour In 2022 (Forbes)

Elon Musk’s Twitter Buyout Was A Billion Dollar Windfall For These 13 Hedge Funds (Forbes)