Cathie Wood Sells Nvidia, Buys Tesla
ARKK Holds Companies Benefiting from Global AI Boom
Main ETF Down 7% in Bull Market... Negative Returns
Despite the asset market rally driven by the artificial intelligence (AI) boom, the AI-related exchange-traded fund (ETF) managed by Ark Investment, led by CEO Cathie Wood?known domestically as the 'Money Tree Sister'?has continued to underperform this year.
Ark Investment's flagship ETF is the 'ARK Innovation ETF' (ticker ARKK). This ETF holds stocks of companies expected to benefit from the global AI craze. It has fallen 7.4% so far this year.
Despite the surge of AI leader Nvidia, ARKK's stock price has lagged, causing dissatisfaction among investors. Nvidia soared 16% on the 22nd (local time), rising 63% year-to-date. The Nasdaq index also climbed 8.6% up to that day. Since it has been a bull market, investing was not particularly difficult, yet significant losses were incurred. Bloomberg reported, "This happened amid CEO Wood's outrageous prediction two years ago that groundbreaking developments in the AI world could accelerate annual economic growth rates by up to 50%." According to Bloomberg, investors withdrew $769 million from ARKK this year.
In fact, CEO Wood is known to have sold most of her Nvidia shares before the sharp rise from 2021 to early 2022. According to Business Insider, she sold over $4.5 million worth of Nvidia shares this year (as of the 20th). On the 18th, Wood said on a Wall Street Journal (WSJ) podcast, "In a sense, Nvidia can be seen as having created the AI era," but added, "However, when everyone was buying shares simultaneously and enjoying it, a correction came. I believe such a thing will happen again." Wood had also pointed out last year that Nvidia's stock was overvalued.
Rather, she has steadily bought Tesla shares whenever they fell this year. Tesla accounts for 8% of ARKK's holdings, second only to Coinbase at 9%. She purchased about $141 million worth of Tesla shares last month. Tesla's stock price has fallen 21% so far this year.
Bloomberg stated, "Managers running concentrated active portfolios like CEO Wood are at high risk of falling behind in an investment environment where a few large-cap stocks dominate gains," adding, "In any case, Ark Investment's failure to benefit from Nvidia highlights the challenge of determining which stocks will profit and when to jump in."
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