In a decade defined by tech, Cathie Wood has been one of the most forward-thinking investors. The CEO of Ark Investment Management (ARKK) is renowned for her focus on disruptive technologies — but her bets haven’t always paid off.
ARKK was the best-performing actively-managed fund of 2020 — it has fallen from grace significantly since. Down from a February 2021 peak of $156.58, shares of the fund are now trading at just $51.11, although the fund has marked a modest 6.38% year-to-date (YTD) gain.
One of Wood’s favorite companies is electric vehicle maker Tesla (NASDAQ: TSLA), which is also ARKK’s largest holding. As of late, the fund has been selling the stock in spite of its impressive performance over the last month — leading to concerns as to whether or not the rise in TSLA share price is sustainable.
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Wood trims TSLA stock holdings amidst price upswing
The automaker’s stock has spent most of 2024 in the red — increased competition, production bottlenecks, and concerns regarding valuation drew skepticism from a wide range of investors. The standout Q3 2024 earnings call released on October 23 brought renewed interest in TSLA stock — as did CEO Elon Musk’s support of President-elect Donald Trump.
At press time, Tesla shares were trading at $339.86, having opened at $342.97 on Monday, November 18, for a 7% surge that has brought YTD returns up to 35.25%.
On the very same day, Wood’s fund sold 30,939 TSLA shares, worth roughly $10.5 million. ARKK had previously offloaded 404,400 Tesla stocks in the past few weeks — refocusing the funds toward Amazon (NASDAQ: AMZN).
However, looking at the bigger picture, the trade wasn’t all that significant — as TSLA is still ARKK’s largest holding — at present, the EV trailblazer makes up 15.33% of the fund, with 2,842,408 shares worth approximately $962,837,285.
Is ARKK’s sale of Tesla stock a bearish signal?
While investors tend to take any sale at face value, ultimately, this latest transaction was a minor trimming of ARKK’s stake in Tesla. Wood has previously predicted that TSLA stock would reach prices as high as $2,600 in five years — and she has not walked back her optimistic appraisal of the business since.
It’s also worth remembering that her fund is actively managed — its preferred asset allocation could have drifted, management could have identified other, more appealing opportunities in undervalued companies, or it could simply be locking in gains at an opportune time.
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