Cathie Wood’s Stock Shuffle: 1 Stock She’s Loving, 1 She’s Leaving

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Investors either love Cathie Wood or hate her. The founder of the Ark Invest family of exchange-traded funds can either be phenomenally successful or a dismal failure.

While Wood formed her investment company in 2014, she burst onto the investing public's consciousness when she obliterated the S&P 500 's performance in 2020. Her flagship ARK Innovation ETF ( NYSEARCA:ARKK ) hit it out of the park that year, returning 153% for investors compared to a 16% return by the benchmark index. However, the next year when the index generated better than 26% returns, ARK Innovation lost 23%.

Last year was the start of the big bull market run and the S&P 500 soared 24% but ARKK nearly tripled those returns with a 68% gain. It's this hot-and-cold performance that creates the polarizing view of Wood.

So if you can stomach the roller coaster ride her family of ETFs provide, you might want to hop on. Wood likes to identify big ideas that she believes are trends for the future and bets big on stocks that can achieve those goals. Sometimes she crushes it; other times she gets crushed. Below is one stock she is loving right now and buying hand over fist. The other is one she previously had a love affair with but turned cold on and is dumping its stock as fast as she can.

Key Points About This Article:

• Investing guru Cathie Wood likes to swing for the fences with her Ark Invest family of ETFs, but that means she will strike out often as much as she connects for a home run.
• The two stocks below reflect her views on the future of science and technology, though she has turned cold on one even as she embraces the other.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report . It features a software stock we’re confident has 10X potential.

Recursion Pharmaceuticals (RXRX)

Pink liquid being placed into test tube

Biotechnology is not a field typically associated with artificial intelligence, but Recursion Pharmaceuticals (NASDAQ:RXRX) is using AI in combination with biological data to discover new drugs.

Wood views both AI and biotech as transformative technologies that can change the world for the better. She anticipates AI can give the global economy a $200 trillion boost in productivity by 2030. She also undoubtedly agrees with Recursion Pharmaceuticals' belief that "the digitization of biology and chemistry will enable us to predict ways to map and navigate (a broad transformation in society), allowing us to design rather than discover better medicines faster with less failure."

Recursion attempts to do this by using its AI-powered operating system to test and analyze disease models and drug compound effects based on massive biological and chemical datasets. It also notes it entered into a partnership with Nvidia ( NASDAQ:NVDA ) to help build its models and that the chipmaker invested $50 million in the biotech through a private placement.

Wood is investing big, too. In August, she acquired nearly 2.9 million shares of RXRX stock for her ARK Genomic Revolution ETF ( NYSEARCA:ARKG ). Even so, the stock only accounts for just 0.01% of the portfolio.

Unity Software (U)

Lines of computer code on screen

Wood used to similarly scoop up shares of Unity Software ( NYSE:U ), the game engine maker responsible for powering most of the world's mobile games . It was also going to lead the metaverse as its Unity Engine is a leader in virtual and augmented reality. Unfortunately, the metaverse failed to pan out as planned. While it has not disappeared, the metaverse seems to be on an indefinite hold for much of the world.

Unity Software faced the twin problem of the gaming market cooling off after a meteoric rise during the pandemic and Apple ( NASDAQ:AAPL ) changing its privacy policies. The latter in particular disrupted Unity's advertising business sending U stock into a deep dive.

From its 52-week peak of nearly $44 per share at the end of 2023, Unity has lost nearly two-thirds of its value. The stock is down over 90% from its all-time high in 2021.

Wood held large positions in Unity in her ARK Space Exploration & Innovation ETF ( NYSEARCA:ARKX ) and ARK Autonomous Technology & Robotics ETF ( NYSEARCA:ARKQ ) but has all but gotten rid of them. She does still own some stock in the ARK Next Generation Internet ETF ( NYSEARCA:ARKW ) where it accounts for about 4% of the portfolio .

As Unity Software has never been profitable, suffers from severe margin erosion, and faces stiff competition, this is a stock investors should dump or avoid as well.

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