The taGMan Portfolio has Better Performance than the AARK Fund

Cathie Wood might be the most well-known Tesla investor. She’s the founder of Ark Investment and its flagship fund, (ticker: AARK), which has returned 38% per year for the past five years according to the Financial Times. AARK is a fund that invests in companies with disruptive technologies. The disruptive company that put Wood on the map is her investment in Tesla. Wood predicted in February 2018 that Tesla would trade at a pre-split stock price of $4,000 per share, which then was equivalent to an unimaginable $700 billion valuation. Today, Tesla is valued at $840 billion, over 8X more than General Motors. Wood’s conviction in Tesla increased in January 2020 when she raised her price target again to $6,000 (equivalent to $1,200 post the August 2020 five-for-one stock split). As of yesterday’s market close, Tesla’s stock was priced at $824 per share, down from $1,222 on November 5, 2021.

While the five year performance of AARK has been phenomenal, the fund is down 63% from its all-time high on February 12, 2021. AARK lost 24% of its value in 2021. And the fund is down 40% this year. As I wrote in a recent newsletter update, most investors are geniuses during a bull market. I fit that description. But so does Cathie Wood. It’s been difficult to lose as a tech investor since the beginning of the bull market on March 9, 2009. Recently, however, the market’s easy growth environment has changed dramatically.

The critical difference between AARK, and my taGMan portfolio is in the performance! All of my taGMan companies are developing disruptive technologies, while much of the portfolio is not dramatically out of fashion with investors in this current environment. Over the past five years, the taGMan portfolio is beating AARK by a comfortable margin. While ARKK returned 38% per year over the past five years, taGMan has returned 51% per year (dollar weighted compound annual growth rate calculated using Sharesight). Like AARK, taGMan also is focused on companies with disruptive technologies. Unlike AARK, taGMan is narrowly focused on an industry some believe could be a $10 trillion global market - a market that will become a combination of electric vehicles, autonomous technology and mobility solutions. Additionally, taGMan companies not only generate substantial revenue, but also are very profitable today. The taGMan portfolio companies consist of:

I believe each of these companies will generate substantial revenue and profit from the technology and business models central to a future transportation-as-a-service market. While Cathie Wood and I might disagree on what constitutes companies with disruptive technologies, Tim Cook (CEO of Apple) has publicly described autonomous vehicle systems as the “mother of all AI projects and probably one of the most difficult AI projects to work on.” Similarly, the CEO of Nvidia (Jensen Huang) recently said “autonomous vehicles [are] the most intense machine learning and robotics challenge.” And similar to how Wood CEO favorite, Elon Musk might think, Huang has commented that “there are too many components in cars.” He believes that vehicles “have to be re-architected, with a few centralized components, perhaps four components instead of thousands.” These are just two examples of CEOs running companies with a history of disruption essentially telegraphing their focus on specific new disruptions worthy of investor attention.

Why might Wood only bet on Tesla to win the future world of EVs and autonomous vehicles? Some believe Wood is good at understanding technology trends, but too influenced by stories. She’s also a good story teller as well. During the current market technology stock downturn, Wood recently commented that “innovation is on sale.” To me, that’s like saying in 2000, as the dot-com bubble was bursting, that “the internet is on sale.” The harder challenge is selecting which companies are actually innovative and can endure the inevitable challenges of scaling during bad economic times. Will AARK companies like Zoom, Coinbase, Shopify, and Roku be better disruptors than technology firms with a history of disruption like Apple, Amazon, Nvidia and Microsoft? Maybe. But why not consider including technology companies with an actual history of disruption?

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TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.