Cathie Wood, CEO of ARK Investment Management, continues to execute her active trading strategy, recently selling 164,595 shares of Tesla (TSLA), valued at approximately $70 million, between December 11 and 13. This move aligns with her approach of buying stocks when they dip and selling them when they rise, a strategy that has garnered both praise and criticism over the years.
Wood, a well-known advocate of disruptive technologies, has long been a supporter of Tesla, with her bold predictions about the electric vehicle maker earning her both admiration and skepticism in the investment community. In 2018, she predicted Tesla’s pre-split shares would hit $4,000 by 2023, a forecast considered overly optimistic by many at the time. However, Tesla met this target in 2021 after its stock split, validating Wood’s foresight.
Despite Tesla’s recent surge—up 68% since November 6, following Donald Trump’s presidential win—Wood decided to reduce her position. Tesla has continued to perform well, with the stock up 10% after Wood’s sale, reflecting strong growth in deliveries and earnings for Q3 2024. Tesla’s earnings per share of 72 cents surpassed analyst forecasts, though revenue of $25.18 billion slightly missed expectations. The company’s forecast of 20-30% vehicle growth next year adds to the optimism surrounding the stock.
Wood’s sale is consistent with her broader investment philosophy, which emphasizes high-risk, high-reward ventures in emerging sectors like artificial intelligence, blockchain, and robotics. ARK’s flagship fund, the ARK Innovation ETF (ARKK), holds Tesla as one of its largest positions, with the total value of its Tesla holdings amounting to $1.2 billion, or 16.7% of the portfolio.
The ARK Innovation ETF, however, has faced criticism for its performance. While it has returned 20.18% year-to-date as of December 16, its three-year annualized return stands at -11.60%, and its five-year return is just 5.29%. In contrast, the S&P 500 has seen a 29.06% increase in 2024, with a stronger three- and five-year performance.
Despite the underperformance in recent years, Wood remains confident in her investment approach. She recently reiterated her belief in the potential of disruptive technologies and the market’s shift toward companies on the cutting edge of innovation. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation,” Wood said during a interview on December 1.
However, some investors remain skeptical. The ARK Innovation ETF has seen nearly $3 billion in net outflows over the past year, according to data from ETF research firm VettaFi. Despite these challenges, Wood continues to defend her strategy, emphasizing her commitment to long-term growth in transformative industries.
As ARK’s flagship fund navigates these ups and downs, Wood’s active trading and focus on emerging technologies are likely to remain central to her investment philosophy.
Related topic:
