Cathie Wood divests $23 million of surging tech stocks

Cathie Wood, chief of Ark Investment Management, on a normal basis adjusts her top positions, adding to a holding when the stock falls and selling when it rises.

Last week she did some notable buying. This week she became selling, as the S&P five hundred index hit its 39^th record close of the year Thursday.

Investors and analysts are split in their opinions of Wood, per chance the u . s . a .’s best-known investor after Warren Buffett. Boosters argue she’s a technology guru, while critics argue she’s merely a mediocre money manager.

Wood (Mama Cathie to her acolytes) exploded to fame after a whopping return of 153% in 2020 and clear explanations of her investment strategy in a variety of media appearances.

But her longer-term performance doesn’t exactly challenge Buffett. Wood’s flagship Ark Innovation ETF (ARKK) , with $5.9 billion in assets, produced annualized returns of 14% for the past 300 and sixty five days, negative 27% for the past three years and positive 2% for 5 years.

That doesn’t come when it involves the S&P five hundred. The index registered positive annualized returns of 30% for twelve months, eleven% for three years, and 16% for 5 years.

Cathie Wood’s straightforward strategy

Her investment philosophy is without problems understood. Ark ETFs most often purchase emerging-company stocks inside of the high-tech categories of synthetic intelligence, blockchain, DNA sequencing, energy storage, and robotics.

Wood maintains that companies in those categories will change the field. Of course, these stocks are quite volatile, so Ark funds’ values often oscillate widely.

Renowned investment research firm Morningstar is highly important of Wood and Ark Innovation ETF.

Related: Cathie Wood buys $40 million of four beat up tech stocks

Investing in young companies with slim earnings “demands forecasting talent, which Ark Investment Management lacks,” Morningstar analyst Robby Greengold wrote in a commentary. “Results range from tremendous to horrendous.”

Morningstar portfolio strategist Amy Arnott 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 at some point soon of the last decade.

David Loeb’s criticism of Wood

Superstar investor David Loeb, chief executive of Third Point, isn’t so high on Wood either. After she wrote a commentary defending her investment philosophy in 2022, he let fly on Twitter.

“Anyone teaching a worth investing class or one on investment psychology should use this memo as a treatise to examine the mindset of stonk hodlers,” he wrote. “Stonk hodlers” is slang for investors who hold (hodl) onto stocks (stonks) too long.

“Note the disparaging comments on luddites who have a have a take a look at archaic measures of value like cash float as short term traders,” Loeb continued.

Related: Cathie Wood snatches $eight million of battered tech stock

Wood defended herself in a July 2024 posting on Ark’s webpage. She acknowledged that “the macro environment and a variety of stock picks have challenged our recent performance.”

But her “commitment to investing in disruptive innovation has not wavered,” Wood said. Tons of Ark’s stocks are in “rare, deep value territory,” she said.

And if rates of interest fall, as has begun, her “disruptive innovation strategies should benefit disproportionately, as they did inside of the fourth quarter of 2023 and at some point soon of the coronavirus crisis,” Wood said.

A spread of her customers it appears agree with the critics. Within the course of the last 300 and sixty five days, Ark Innovation ETF suffered a net investment outflow of $2.Four billion, in accordance with ETF research firm VettaFi.

Cathie Wood sheds shares of streaming platform Roku

Ark funds sold 189,990 shares of streaming platform Roku (ROKU) on Monday, valued at $14.1 million as of that day’s close.

The move likely just represents position-trimming, as Roku remains to be the 2nd biggest holding in Ark Innovation. The stock has jumped forty six% at some point soon of the last three months.

Morningstar analyst Matthew Dolgin doesn’t share Wood’s enthusiasm for Roku. He’s unimpressed by its business model.

Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income

“Roku’s strategy is to stay a number one provider of streaming devices by asserting low prices and accepting losses in its devices segment,” he wrote in a commentary. “It intends to then drive profits from Roku user accounts.”

So may well this work? “We're skeptical that this may be a viable strategy,” Dolgin said. “That’s because we don’t see competitive advantages which are at risk of show the firm toward sufficient profit after a history of generating losses.”

Dolgin assigns Roku no moat, that means he sees no sustainable competitive advantages for the corporate.

Cathie Wood jettisons Roblox, Robinhood, Palantir

In other trades this week, Ark funds sold 117,884 shares of videogame platform Roblox (RBLX) , valued at $5.5 million as of Thursday’s close.

The stock is Ark Innovation’s 1/3 biggest holding and has climbed 27% over the last three months.

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Ark Fintech Innovation ETF (ARKF) sold 62,718 shares of online securities brokerage Robinhood Markets (HOOD) , valued at $1.Four million as of Wednesday's close.

The stock is Ark Innovation’s sixth biggest holding and has gained eleven% at some point soon of the last month.

And Ark Innovation unloaded fifty two,895 shares of information analytics software provider Palantir (PLTR) , valued at $1.9 million as of Thursday’s close.

The stock is Ark Innovation’s seventh biggest holding and has soared Forty one% inside of the past three months.

Related: Veteran fund manager who as it'll be forecast stock drop updates outlook