Famed investor Cathie Wood, chief executive of Ark Investment Management, on Jan. 6 trimmed her position in Nvidia (NVDA) while continuing to amass Tesla (TSLA) shares.
Ark funds had bought more than 700,000 shares of the graphics-chip giant in May and August combined. But on Jan. 6, Ark Innovation ETF (ARKK) sold 31,758 Nvidia shares, valued at $4.7 million as of that day’s close. Nvidia has dropped 42% in the past year amid the semiconductor industry’s slump.
As for Tesla, Wood in recent weeks has been snatching up shares as the stock plunged amid concern about production and demand. Investors also aren’t thrilled that Chief Executive Elon Musk has been distracted with his recent purchase, the microblogging platform Twitter.
Tesla has dropped by two-thirds (66%) over the past year. Ark funds bought 58,044 shares Jan. 6, valued at $6.6 million as of that day’s close.
Tesla is the No. 3 holding in Wood’s flagship Ark Innovation ETF, behind No. 1 Zoom Video Communications (ZM) and Exact Sciences, (EXAS) the cancer-screening-tech provider.
Wood’s Returns Tumble
Meanwhile, Wood’s investment performance hasn’t exactly wowed the investment world over the past year, as her tech stocks have slumped. Ark Innovation ETF has fallen 61% over the past year and 79% from its February 2021 peak.
Wood has defended her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of Ark Innovation was negative 3.3% through Jan. 6, compared with the S&P 500’s positive return of 9.2%.
The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation’s subpar returns may finally be starting to push investors away. The $5.9 billion fund registered a net investment outflow of $447 million in the past month, according to ETF research firm VettaFi. But it still notched a $1.17 billion inflow over the last year.
What Draws Investors to Wood
You might wonder why so many investors have stuck with Wood, despite her mediocre returns. The fact that she had one spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She explains financial concepts in ways that novice investors can understand.
Still, Wood has her detractors. Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation last year.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood, of course, begged to differ. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said in an interview with Magnifi Media by Tifin.
