Cathie Wood sold $12.8 million of soaring fintech stock
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Following Donald Trump's recent election win, Cathie Wood's ARK funds experienced a big surge.
In the past week, ARK Invest's flagship fund, the ARK Innovation ETF (ARKK) is up 15.93%, compared with the S&P 500’s 4.66% gain.
Wood often sells shares of companies that surge after strong earnings reports.
That's exactly what she did this week. This enables her to secure profits and rebalance her portfolios.
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Investors and analysts have mixed views on Cathie Wood. Supporters see her as a visionary in tech investing, while critics say she’s an average fund manager.
Nicknamed “Mama Cathie” by her followers, Wood gained widespread attention with an impressive 153% return in 2020, driven by her transparent, accessible discussions of strategy in the media.
Related: Cathie Wood buys $15.7 million of tumbling tech stock
However, Wood’s longer-term performance isn’t so rosy.
The flagship ARK Innovation ETF, with $5.8 billion under management, has returned 3.25% year-to-date, with an annualized three-year return of -23.84% and a five-year return of 4.02%.
Meanwhile, the S&P 500 has gained 27.17% this year through Nov. 8, with an annualized three-year return of 10.14% and a five-year return of 15.99%.
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Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is simple: ARK ETFs typically buy shares in emerging, high-tech companies across fields like artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood believes companies in these areas will revolutionize industries, though the stocks are notoriously volatile, leading to substantial swings in the ARK funds’ values.
Investment research firm Morningstar has criticized Wood and the Ark Innovation ETF significantly.
"Investing in young companies with slim earnings 'demands forecasting talent, which ARK Investment Management lacks," Morningstar analyst Robby Greengold wrote. He described the ETF’s performance as ranging from “tremendous to horrendous.”
While Wood’s five high-tech platforms are “compelling,” he noted, "the firm’s ability to spot winners and manage their myriad risks is less so…. It has not proved it is worth the risks it takes.”
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
Wood defended herself in a July 2024 posting on Ark’s website. She acknowledged that “the macro environment and some stock picks have challenged our recent performance” but reaffirmed her “commitment to investing in disruptive innovation.”