- Cathie Wood’s Ark Invest sold most of its stake in Nvidia just before the company embarked on a massive rally.
- Ark owned 1.3 million Nvidia shares across its ETFs at the start of October, but that position has since shrunk to just 390,000 shares.
- Wood said in February that Nvidia’s valuation was “very high” and that it was focused on higher conviction stocks.
Cathie Wood’s Ark Invest probably wishes it hadn’t sold nearly a million Nvidia shares between the start of October and today, following the chipmaker’s surge of more than 160% year-to-date.
Nvidia stock soared as much as 30% on Thursday after the company announced jaw-dropping guidance as it benefits from a surge in demand for its chipsets that support AI tech platforms generatives like OpenAI’s ChatGPT and Alphabet’s Bard.
But the active investment manager, who has owned Nvidia on and off since the flagship fund was founded in 2014, missed out on massive gains as it began to trim its position in Nvidia before hitting a 52-week low in mid -october.
Since Ark Invest’s first sale on October 5, when it held 1.3 million Nvidia shares across its ETFs, the stock has soared 190% and added $620 billion to its value. Merchant. At the end of November, Nvidia held just over 500,000 shares of the company.
Today, Ark Invest holds just 390,000 shares in its suite of next-generation tech ETFs. The stock is not part of its flagship Disruptive Innovation fund.
Rough Insider calculations suggest Ark Invest left more than $200 million in potential profits on the table when it sold its stake in Nvidia late last year.
Ark’s untimely sale of Nvidia shares highlights the difficulties of actively managing a portfolio of disruption-focused investments, because even if you pick the right theme to invest in, there’s no guarantee you’ll choose the right companies on which ones to bet.
In February, Wood said Nvidia’s wave of Ark sales was partly due to its valuation being “very high” and consolidating its portfolio into more compelling names.
“We like Nvidia, we think it’s going to be a good move. Its prize is the ‘check-the-box’ AI company. For a flagship fund, where we’re consolidated to our strongest names, part of it has to do with valuation,” she told CNBC on Feb. 27.
Wood instead relies on UiPath for Ark Invest’s exposure to artificial intelligence, which is its second-largest position among all of its ETFs. Meanwhile, Tesla remains the main holding of Ark Invest, which is also working on artificial intelligence to help enable its self-driving technology.
But despite the AI hype this year, these two stocks have captured only part of the year-to-date gains seen in the space. UIPath shares are up just 14% year-to-date, while Tesla shares are up 50%.
Shares of Ark Invest’s Disruptive Innovation ETF fell 2.7% on Thursday, despite the Nasdaq 100 jumping 1.7%.