Cathie Wood’s ARK Invest sold its majority stake in Nvidia just before the chipmaker kicked off a rally that added $585 billion in market value

Cathie's Wooden Box

Wooden Cathie.David Swanson/Reuters

  • Cathie Wood’s Ark Invest sold a majority stake in Nvidia shortly before the company launched a mass rally.

  • Ark owned 1.3 million Nvidia shares across all of its ETFs as of early October, but that position has dwindled to just 390,000 shares.

  • Wood said in February that Nvidia’s valuation is “very high” and that it focuses on more convincing stocks.

Cathie Wood’s Ark Invest is probably wishing she hadn’t sold nearly 1 million shares of Nvidia from early October to today after the chipmaker’s surge of more than 160% year-to-date.

Nvidia stock jumped as much as 30% on Thursday after the company published the incredible guide as it benefited from the wave of demand for chipsets that support general AI technology platforms such as OpenAI’s ChatGPT and Alphabet’s Bard.

But the active investment manager, who has owned Nvidia since founding the flagship fund in 2014, missed out on huge profits when it began to decrease its place in Nvidia headed for a 52-week low in mid-October.

As of Ark Invest’s first sale on October 5, while holding 1.3 million shares of Nvidia Across all of its ETFs, the stock has gained 190% and added $620 billion to its market value. By the end of November, Nvidia owned just over 500,000 shares of the company.

Today, Ark Invest holds just 390,000 shares on a suite of next-generation technology ETFs. The stock is not in its flagship Disruptive Innovation fund.

Preliminary calculations by Insider show that Ark Invest left more than $200 million in potential profits on the table when it sold off its Nvidia stake over the course of late last year.

Ark’s ill-timed Nvidia share sale highlights the difficulties of actively managing a portfolio focused on disruption, because even if you choose the right topics to invest in, nothing make sure you choose the right company to bet with.

In February, Wood said Ark’s wave of Nvidia sales was partly due to its “very high” valuation and that it was consolidating its portfolio into more convincing names.

“We like Nvidia, we think it’s going to be a good stock. It’s valued, it’s an AI company that ‘checks the box.’ For a top fund where we merge with names. most convincing, part of that has to do with pricing,” she told CNBC on Feb.

Instead, wood is counting on UiPath for Ark Invest’s exposure to artificial intelligence, which is the second largest of all its ETFs. Meanwhile, Tesla is still Ark Invest’s top stock, which is also work on artificial intelligence to help enable its self-driving technology.

But despite the AI ​​hype this year, those two stocks only posted some of the year-to-date gains seen across the space. Shares of UIPath are up just 14% year-to-date, while Tesla shares are up an impressive 50%.

Shares of Ark Invest’s breakout innovation ETF fell 2.7% on Thursday, although the Nasdaq 100 gained 1.7%.

Read the original post on Business Insider


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