Cathie Wood, the CEO of Ark Investment Management (ARKK) is one of the biggest names in tech investing.
At times, the exchange-traded funds (ETFs) under her management have made spectacular moves — getting in early on revolutionary, disruptive businesses like Tesla (NASDAQ: TSLA).
However, Wood has her fair share of critics — while ARKK was the best-performing fund of 2020, it has failed to replicate that standout performance since then.
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A higher interest rate environment was disproportionately hard on the tech sector — with investors flocking to value investing and income-generating assets and several crucial misjudgments like Zoom (NASDAQ: ZM), ARKK is currently trading prices just 13.09% higher than five years ago.
Most recently, ARKK has demonstrated a pattern of selling shares in well-performing tech companies and redirecting the funds toward assets with more reasonable valuations.
Only time will tell whether or not this latest pivot from Cathie Wood will pay off. For now, let’s take a closer look at the trades that ARKK has been making lately.
Wood trims TSLA and PLTR stake
On Monday, November 25, ARKK had quite an active trading day. Despite the standout performances of both Tesla and Palantir (NYSE: PLTR), Wood’s funds cut their holdings in both companies.
Her flagship fund, the Ark Innovation ETF (ARKK) sold 13,136 Tesla stocks — simultaneously, the ARK Autonomous Technology & Robotics ETF (ARKQ) sold an additional 7,416 shares, for a grand total of 20,552.
Put together, the value of Wood’s TSLA selloff is approximately $7 million. On the whole, Tesla remains ARKK’s largest holding — but this reduction in stake could be a reaction to the news that Tesla might not be eligible for EV rebates in California going forward.
At press time, TSLA stock was trading at $337.02 — down 4.59% from the previous trading day, bringing year-to-date (YTD) returns down to 36.40%.
In addition to this, ARKK dumped 26,047 Palantir shares, worth roughly $1.7 million at the time of the sale. At the time of publication, PLTR shares were trading at $64.48 — over the course of the last thirty days, prices have increased by 43.38%, with YTD gains standing at 288.65%. Institutional investors and hedge funds are quite bullish on the stock — but plenty of analysts have noted that the current valuation and steep price trajectory likely aren’t sustainable.
ARKK shores up AMD and AMZN positions
Cathie Wood and ARKK redirected their attention to two tech giants that have seen less impressive returns over the course of the year. The fund purchased 10,753 Advanced Micro Devices (NASDAQ: AMD) stocks worth approximately $1.5 million, as well as 19,747 Amazon (NASDAQ: AMZN) shares worth roughly $4 million.
Since the beginning of the year, AMZN has seen returns of 34.61% — AMD, on the other hand, is barely in the green, with gains currently standing at a meager 2.58%.
However, both stocks are trading at significantly more favorable price-to-earnings (P/E) ratios — and both have seen positive developments lately.
Amazon doubled its investment in AI startup Anthropic to $8 billion, while also securing a lucrative $158 million defense contract.
AMD is rumored to be eyeing the smartphone market — a move that could see the business both expand and diversify its revenue streams at a critical juncture.
Featured image via Shutterstock
