Ark’s Cathie Wood just traded 3 popular tech stocks

Feb 16, 2024

Cathie Wood, head of Ark Investment Management, is one of the country’s most prominent money managers.

Unfortunately for her investors, Wood’s steak doesn’t match her sizzle. “Volatility” is her funds’ watchword.

While Wood’s flagship Ark Innovation ETF  (ARKK) , with $8 billion in assets, has generated a return of 24% for the past 12 months, the annualized return is negative 31% for the past three years and all of positive 3% for five years.

Over the same periods, the S&P 500 posted positive returns of 23%, 10% and 15%. Wood’s goal is for at least 15% annual returns over five-year periods.

Cathie Wood, Getty

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Cathie Wood, “Mama Cathie,” is one of the biggest names in investing.


Cathie Wood’s Golden Year

Mama Cathie, as she’s known by her followers, did have one huge year, leading Ark Innovation to a return of 153% in 2020. That and clear presentations of her investment philosophy in ubiquitous media appearances help explain her popularity.

Related: Data shows Cathie Wood’s Ark is one of the worst funds

Wood’s investment strategy isn’t hard to understand. Ark’s ETFs buy largely young, small stocks in the high-technology categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. She sees those sectors as game changers for the global economy.

As you can imagine, these stocks are quite volatile, so the Ark funds are subject to a rollercoaster ride.

Investment research standout Morningstar isn’t impressed with Wood and Ark Innovation ETF.

“ARK Innovation has dubious ability to successfully navigate the challenging territory it explores,” Morningstar analyst Robby Greengold wrote last year.

The potential of Wood’s five high-tech platforms listed above is “compelling,” he said.

“But Ark’s ability to spot the winners among them and navigate their myriad risks is less so. The strategy’s booms and busts have culminated in middling total returns and extreme volatility since its 2014 inception.”

Greengold isn’t impressed with Wood’s investment style. “Her reliance on her instincts to construct the portfolio is a liability,” he said.

It’s not an investing 101 mix. “The strategy narrowly invests in stocks with paltry current earnings, elevated valuations, and highly correlated prices,” Greengold said. “Their extreme volatility underscores their highly uncertain futures.”

Wood has defended herself from Morningstar’s criticism. “I do know there are companies like that one [Morningstar] that do not understand what we’re doing,” she told Magnifi Media by Tifin in 2022.

“We do not fit into their style boxes. And I think style boxes will become a thing of the past, as technology blurs the lines between and among sectors.”

Cathie Wood’s big tech buys and sells

Wood regularly moves in and out of her top names, and Tesla  (TSLA)  was among them Wednesday. Ark funds bought 145,455 shares of the top-selling U.S. electric vehicle maker, valued at $27.4 million as of Wednesday’s close.

More Wall Street Analysts:

Tesla shares have sunk 22% over the past month amid weak earnings, production problems and controversy surrounding Chief Executive Elon’s Musk’s compensation.

Wood has repeatedly purchased Tesla shares when they have dropped in recent years, voicing support for Musk and his mission to provide nonpolluting autos. Tesla is the second biggest holding in Ark Innovation ETF, after Coinbase  (COIN) .

On the sell side, ARK Autonomous Technology & Robotics ETF  (ARKQ)  unloaded 10,601 shares of semiconductor stalwart Nvidia  (NVDA) , valued at $7.8 million as of Wednesday’s close.

This year, the stock has soared 48% amid investor enthusiasm over Nvidia’s participation in the artificial intelligence industry. The company is the largest producer of highly powerful and energy-efficient graphic processing units used to train and run AI apps.

Related: Analysts unveil Robinhood stock price target after shares surge

Wood uses established technology stocks like Nvidia to provide some ballast in her funds amid the volatile moves of her more speculative plays.

Alphabet  (GOOG)  is another established name that Wood sold Wednesday. Ark Autonomous Technology shed 17,827 shares of the technology titan, valued at $2.6 million as of Wednesday’s close.

The stock has slid 8% since Jan. 29, as Alphabet’s fourth-quarter search revenue and profit margin fell short of analysts’ expectations.

Ark Funds also purchased 305,674 shares of online securities brokerage Robinhood Markets Wednesday, valued at $3.3 million as of that day’s close.

Robinhood stock has slid 15% over the past month. It has had plenty of ups and downs since going public in July 2021, with the stock sagging 71% during that period.

Related: Veteran fund manager picks favorite stocks for 2024

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