Ark Invest’s Cathie Wood has been facing harsh criticism about her investing style, partially because she is an easy target as she elects to disclose portfolio moves on a daily basis, but also because she has arguably shown an unwillingness to admit analysis that misfired despite outsized declines in a majority of her top holdings over the last year.
She also continues to increase her exposure to some of her highest-conviction holdings, most recently in Teladoc Health Inc TDOC.
The Ark Invest founder and CEO picked up more than 600,000 shares of the virtual health company following the sell-off on earnings. She defended that move Friday on CNBC’s “The Exchange.”
Wood Takes The Stand: “Our point of view is that Teladoc is becoming the health care information backbone of the United States,” Wood said.
Sixteen percent of Americans are already paid users of the service, she said. When looking for s-curve growth, Ark seeks out companies with 15%-20% market penetration as a new market trend progresses, but that’s not the main story.
“The story is not direct-to-consumer for Teladoc — certainly that was a big booster during COVID — the story here is much bigger, it’s business-to-business,” Wood said.
She acknowledged the company’s quarter had its flaws, but she maintains that most analysts are missing the bigger picture. There were not any questions about the recent partnership with Amazon.com Inc AMZN or the company’s contract with a large state hospital on the conference call, she added.
Teladoc recently won the contract to serve Northwell Center’s telemedicine efforts, Wood said.
“What was also not mentioned is Amazon’s decision to partner with Teladoc as opposed to compete with it.”
Teladoc shares sold off several times over the last year on concerns about increasing competition from Amazon, but the e-commerce giant decided to partner with Teladoc for at least some of its health care services, Wood said.
Wood maintains her expectations for significant price appreciation in disruptive innovation stocks over a five-year period, and there’s no exception for Teladoc.
“We’re looking at one of the biggest stories in health care,” Wood said. “A category killer during the next five to 10 years.”
TDOC Price Action: Teladoc shares have traded between $28.75 and $189.65 over a 52-week period.
According to data from Benzinga Pro, the stock gained 0.75% in Friday’s session, closing at $33.76.
Photo: courtesy of Teladoc.