Cathie Wood, CEO of Ark Investment Management, is an active trader.
She often buys her favorite tech stocks when they fall and sells them when they rise.
This is what she did last week.
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Investors and analysts have mixed opinions on Cathie Wood. Supporters see her as a visionary in tech investing, but critics say she’s only a mediocre fund manager.
Wood’s followers affectionately dubbed her “Mama Cathie” after she drew widespread attention with a remarkable 153% return in 2020.
However, her longer-term performance isn’t so hot.
The flagship ARK Innovation ETFÂ (ARKK) , with $5.4 billion under management, has returned 20.18% year-to-date through Dec. 16, with an annualized three-year return of -11.60% and a five-year return of 5.29%.
In comparison, the S&P 500 is up 29.06% this year, with a three-year annualized return of 10.88% and a five-year return of 15.55%.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is straightforward: Her ARK ETFs typically buy shares in emerging, high-tech companies in fields such as artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood believes these companies will transform industries, but their volatility causes significant swings in ARK funds’ values.
Investment research firm Morningstar has sharply criticized Cathie Wood and the ARK Innovation ETF.
Related: Cathie Wood buys $30 million of under-the-radar AI stock
Amy Arnott, Morningstar portfolio strategist, has calculated that Ark Innovation destroyed $7.1 billion of shareholder wealth from its 2014 inception through 2023. That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs for the past decade.
Wood defended herself in a July posting on Ark’s website. She acknowledged that “the macro environment and some stock picks have challenged our recent performance” while reaffirming her “commitment to investing in disruptive innovation.”
Wood recently expressed optimism about a shift to looser regulations under Donald Trump’s presidency, particularly regarding technology, cryptocurrencies, and digital assets.
“In the last four years, we saw massive concentration toward very few stocks,” Wood said on CNN’s Inside Politics Sunday on Dec. 1. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation.”
Despite Wood’s confidence, some investors appear unconvinced. The ARK Innovation ETF saw a net outflow of nearly $3 billion over the past year, according to data from ETF research firm VettaFi.
Cathie Wood sold 165K shares of Tesla this week
From Dec. 11 to Dec. 13, ARK Funds sold 164,595 shares of Tesla (TSLA) .
That chunk of stock was valued at roughly $70 million.
Tesla has been surging since Donald Trump’s presidency win in November. The stock is up 68 since Nov. 6 and is up 10% after Wood sold the shares.
Cathie Wood has been a strong Tesla advocate for years.
Related: Analyst revamps Tesla stock price target after EV-outlook review
In 2018, she predicted Tesla’s pre-split shares would hit $4,000 by 2023, a target many analysts deemed overly optimistic. However, Tesla hit the split-adjusted equivalent in 2021, proving her right.
In Apr. 2024, Wood said she still has a price target of $2,000 a share for Tesla despite the company’s troubles earlier this year caused by weakening demand, increased competition from Chinese electric vehicle makers, and production challenges.
Tesla began to shift upward in Q3 as it delivered year-over-year growth in quarterly deliveries for 2024, reported better-than-expected earnings and shared bold growth targets.
Adjusted earnings per share reached 72 cents, topping forecasts of 58 cents, which CEO Elon Musk described as a “record Q3.” However, revenue slightly missed estimates at $25.18 billion versus the expected $25.37 billion.
Tesla expects to see vehicle growth of 20% to 30% next year, Musk said in the Q3 earnings call.
Some analysts recently shared confidence in Tesla stock.
Mizuho analyst Vijay Rakesh believes Tesla’s autonomous software is advancing toward commercialization, aided by a more flexible regulatory environment.
It also argues that Trump’s proposed rollback of EV subsidies, which would mean higher costs for buyers, could reshape EV-market dynamics as it would give Tesla an edge with a lower cost structure compared to rivals.
More on Cathie Wood:
- Cathie Wood buys $30 million of under-the-radar AI stock
- Cathie Wood sells $7 million of surging stock
- Cathie Wood sells $5 million of 2 surging tech stocks
Rakesh has upgraded Tesla from neutral to outperform with a price target of $515, up from $230. Tesla closed at $479.86 on Dec. 17.
Wood’s move aligns with her strategy of trimming positions as they grow. Despite this sale, Tesla remains one of ARK’s largest holdings, accounting for 16.7% of the total portfolio. The total value of the TSLA is $1.2 billion.
Related: Veteran fund manager delivers alarming S&P 500 forecast
