Cathie Wood, chief of Ark Investment Management, believes in tech stocks that will have a “disruptive” impact in the future. She often trims her stakes to lock up profits.
Sometimes, her strategy works: The flagship ARK Innovation ETF (ARKK) has returned 10.75% this year as of Jan. 31 while the Standard & Poor's 500 Index and the Nasdaq Composite Index each have gained roughly 3% and 2%, respectively.
Wood just sold two of her favorite tech stocks before their earnings.
Opinions on Wood are divided. Supporters view her as a tech visionary, while critics say she’s just an average fund manager.
Wood delivered an extraordinary 153% return in 2020. However, her longer-term performance has raised questions about the sustainability of her high-risk, high-reward strategy.
As of Jan. 31, 2025, ARK Innovation ETF, with $6.3 billion under management, has delivered an annualized three-year return of negative 5.89% and a five-year return of just 4.46%.
In comparison, the Nasdaq Composite has a three-year annualized return of 12.18% and a five-year return of 17.41%.
Over the past year, ARK Innovation ETF has seen a net outflow of nearly $3 billion, with $330 million exiting the fund in the past month, according to ETF research firm VettaFi.SOPA Images/Getty Images
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is straightforward: Her ARK ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology, and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in ARK funds' values.
Amy Arnott, portfolio strategist at Morningstar Research Services, calculated that ARK Innovation ETF wiped $7.1 billion of shareholder wealth from its launch in 2014 through 2023.
That put the ETF third on the list of the biggest wealth-destroying mutual funds and ETFs for the decade ending in 2023. The analyst hasn’t updated the list for 2024.
But things might get different as Donald Trump returns office.
Todd Sohn, an ETF and technical strategist at Strategas Securities, noted that the ARK Next Generation Internet ETF (ARKW) is up 30% since Trump's 2024 re-election.
"We still strongly believe that ARKW is about as good a proxy for Trump 2.0 as one might find, with heavy exposure to Bitcoin, Crypto derivatives, Tesla, and Defense," Cohn said to MarketWatch.
Wood recently shared optimism about a shift to looser regulation under Trump’s presidency.
“What the new administration is doing is changing fear with optimism,” Wood said on Bloomberg on Jan. 22. It’s “highly underestimated how important deregulation is going to be to unleashing animal spirits. We are pretty excited about this. Our strategies are starting to break out.”
Not all investors echo Wood's confidence. Over the past year, ARK Innovation ETF has seen a net outflow of nearly $3 billion, with $330 million exiting the fund in the past month, according to ETF research firm VettaFi.
Cathie Wood sold $8.6 million of Roblox and $10.4 million of Palantir before earnings
From Jan. 28 to Jan. 31, Wood’s ARK Innovation ETF sold 121,696 shares of Roblox (RBLX) for four consecutive sessions.
That chunk of stocks was valued at roughly $8.6 million.
Roblox gained a mild 26.6% in 2024, just short of the Nasdaq Composite’s 30% growth. However, the stock experienced a significant surge in early 2025, reaching its highest since January 2022.
Roblox is a California-based gaming company that operates an online platform where users can create, share, and play games developed by other users.
The company reported strong Q3 results in October 2024, with a 29% year-over-year increase in revenue and a 34% rise in bookings.
Roblox will release its Q4 2024 financials on Feb.6. Several analysts have raised their stock price targets ahead of the earnings.
For instance, Roth MKM raised its price target on Roblox to $70 from $54 with a neutral rating. The firm believes that Roblox will report better-than-expected Q4 results and adds that the stock is "priced for perfection," according to thefly.com.
In addition to selling Roblox, Wood continued to offload shares in Palantir Technologies (PLTR) .
On Jan. 30, the ARK Innovation ETF sold 127,969 Palantir shares valued at approximately $10.4 million.
Palantir stock quadrupled (up 340%) in 2024 and was one of the biggest Nasdaq winners of the year. The rally was driven by strong demand for the company’s AI-powered data analytics.
Governments widely use Palantir for intelligence and defense, while businesses use it for data-driven operations. Its products help them spot patterns and discover key insights in large datasets.
Palantir will release its Q4 earnings on Feb. 3. The company’s last reported Q3 earnings were well above expectations.
“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down,” Palantir CEO Alex Karp wrote in the company’s Q3 earnings release.
Wood has been dumping her Palantir shares in the past few months. On Jan. 13, she sold 140,518 shares worth approximately $9.1 million. Between Jan. 3 and Jan. 7, she unloaded 221,950 shares valued at $16.9 million. She also sold Palantir stock five times in December and eight times in November.
Despite the selling, the two tech stocks remain a significant weight in Wood’s portfolio.
As of Jan. 31, Roblox ranks No. 4 in the top 10 holdings of the ARK Innovation EFT, accounting for 6.7% with a total value of $464.8 million. While Palantir ranks the 6th, accounting for 5.1% with a total market value of $356.3 million.
