Cathie Wood, the chief executive officer (CEO) of Ark Invest, is a polarizing figure in the world of finance. Her early investments in disruptive businesses have netted impressive returns. Ark’s flagship exchange-traded fund (ETF) — the Ark Innovation ETF (ARKK), was the best-performing ETF of 2020.
However, since that time, it has failed to replicate a similar level of performance. By press time on February 26, ARKK was trading at $56.90, having marked a meager 0.23% gain since the start of the year, after a significant pullback over the past two weeks.
As of late, Wood and Ark have demonstrated a pattern of selling well-performing tech stocks and redirecting the funds toward safer equities. In a stark departure from this approach, ARKK has recently doubled down on one of its previous bets — which also happens to be a recent addition to Nancy Pelosi’s portfolio.
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Cathie Wood doubles down on Tempus AI
On February 25, Cathie Wood’s flagship fund purchased 367,388 Tempus AI (NASDAQ: TEM) shares. In addition, the Ark Genomic Revolution ETF (ARKG) bought 78,570 units of TEM stock.
Nancy Pelosi invested between $50,001 and $100,000 in the medtech company on January 14. At the time, Tempus AI stock was changing hands at a price of $31.83. After news of her acquisition broke, TEM shares went on a steep upward trajectory. By February 14, Tempus AI shares had reached an all-time high (ATH) of $89.44 — equating to a 180.99% rise.
By the time of publication, the price of TEM stock had dropped to $60.99. With the recent dip factored in, the stock is still up 72.55% since the start of the year.
Wall Street quickly took notice of the purchase — but most price targets assumed that a valuation above $50 was unsustainable. In tandem with this, the pace of insider selling was steadily accelerating. This culminated on February 20, when 6 company insiders collectively dumped roughly $26 million worth of Tempus AI stock.
On February 24, the business held its Q4 and FY 2024 earnings call. Both revenues and earnings per share (EPS) came in below consensus forecasts. The report did little to slow down the fall, in spite of impressive sequential and year-over-year (YoY) growth metrics and increased guidance for 2025.
Is it wise to follow Wood’s lead on Tempus AI stock?
Readers should also note that Nancy Pelosi’s investment didn’t actually entail the purchase of Tempus AI stock. Rather, the Congresswoman bought 50 call options. Those options contracts will expire on January 1, 2026, hinting that the Representative’s original intention was always to play the long game.
Despite not being able to sustain the post-rally valuation, with a promising earnings call, significantly increased publicity, and raised guidance, following Pelosi’s move seems to be a wise choice — particularly at the current price point.
Featured image via Shutterstock
