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Cathie Wood, president of Ark Investment Management, is known for her active buying and selling of big-name stocks.
It did so on June 25, dumping stocks that had received criticism for selling months earlier, before a significant price rise.
Opinions are mixed about Wood, perhaps the country’s most famous investor after Warren Buffett. Supporters say she’s a technology visionary, while critics say she’s just a middling money manager.
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Wood (or Mama Kathy to her followers) has gained notoriety after posting a staggering 153% return in 2020 and making clear presentations of her investment philosophy in numerous media appearances.
But its long-term performance is less impressive. Wood’s leading Ark Innovation ETF (Bound) General Electric, with assets of $6.1 billion, has generated annual returns of 1.59% over the past twelve months, -29.28% over the past three years, and -0.16% for five years.
RELATED: Katie Wood Buys $4.4 Million of Distressed Tech Stocks
This is very unfortunate compared to the S&P 500. The benchmark index recorded positive annual returns of 27.13% for one year, 10.31% for three years, and 15.27% for five years. Arc Innovation’s numbers are also far short of Wood’s goal of achieving annual returns of at least 15% over five years.
Cathie Wood’s Investment Strategy
Its investment philosophy is pretty simple. Ark ETFs typically buy shares of startups in high-tech categories like artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood argues that companies in those categories will change the world.
Naturally, these stocks are very volatile, so the values of Ark’s funds often go up and down. Wood frequently adds to and subtracts from its top names.
Investment research giant Morningstar offers a harsh assessment of the Wood and Ark Innovation ETF. Investing in startups with meager earnings “requires talent forecasting, which ARK Investment Management lacks,” Morningstar analyst Robbie Greengold wrote last March.
The fund manager buys and sells:
- Veteran fund manager sounds alarm on stocks
- Katie Wood Sells $11 Million in Rising Fintech Stocks
- Veteran analyst just bought this under-the-radar housing stock
The potential of the five technology platforms Wood mentioned is “compelling,” he said. “But the company’s ability to identify winners and manage the many risks it faces is far less so… It has not proven to be worth the risks it is taking.”
This is not your father’s investment portfolio. “The results range from tremendous to horrific” for Wood’s young stocks, which are often unprofitable, Greengold said.
Wood defended herself from Morningstar’s criticism. “I know there are companies like this [Morningstar] “Who don’t understand what we do,” she told Magnifi Media by Tifin in 2022.
“We don’t fit into their stereotypes. I think their stereotypes will become a thing of the past, as technology blurs the lines between different sectors.”
However, some of Wood’s clients appear to agree with Morningstar. During Arc Innovation’s stock rally over the past 12 months, the company experienced net investment outflows of $2 billion, according to exchange-traded fund research firm Vitafy.
Katie Wood dumps some Nvidia shares
On June 25, the Ark Autonomous Technology & Robotics ETF was launched. (I am tired) It sold 33,834 shares of semiconductor giant Nvidia (NVDA program) Worth $4.3 million as of that day’s close.
Related: Analysts Reboot Nvidia Stock Forecasts After Shares Drop
Nvidia is, of course, the largest maker of the graphics processing units (GPUs) that fuel AI operations. The AI craze has led to the company’s stock price tripling over the past year.
Wood was under pressure to sell Nvidia shares from April 8-11, with the stock rising 33% over the next two months.
“There are some reasons why we are taking a pause,” she said in a May interview about Nvidia. Interview on Bloomberg ChannelWhen she hears “a shortage or shortage of GPUs or whatever, I start thinking about group patrol,” she said.
Wood has not yet given up on Nvidia. “We’re now moving towards another group of games that most people haven’t discovered yet,” she said.
Ark Funds still owns $52.7 million in Nvidia stock.
Related: Nvidia Stock Targets $4 Trillion Valuation Based on AI Chip Forecast
Many analysts are more optimistic than Wood about Nvidia. “We are encouraged by management’s comments [in May] This application is for upcoming Blackwell [GPU] “Products should exceed supply in calendar 2025,” Morningstar analyst Brian Colello wrote in a commentary.
“We don’t see any signs of demand for AI slowing down either.”
The Blackwell platform promises generative AI at a cost and power consumption that is up to 25 times lower than Nvidia’s less advanced Hopper architecture.
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