Cathie Wood sells $4.3 million of Nvidia stock

Cathie Wood, head of Ark Investment Management, is well known for actively buying and selling big-name stocks.

She did so on June 25, dumping a stock she received criticism for selling months ago, just before a major rally.

Views are mixed on Wood, who may be the country’s best-known investor after Warren Buffett. Boosters say she’s a technology visionary, while detractors say she’s just a mediocre money manager.

Wood (Mama Cathie to her followers) soared to acclaim after a stupendous return of 153% in 2020 and lucid presentations of her investment philosophy in numerous media appearances.

But her longer-term performance is less impressive. Wood’s flagship Ark Innovation ETF ( ARKK ) , with $6.1 billion in assets, produced annualized returns of 1.59% for the last 12 months, negative 29.28% for the past three years, and negative 0.16% for five years.

Related: Cathie Wood buys $4.4 million of embattled tech stock

That’s quite woeful compared to the S&P 500. The benchmark index posted positive annualized returns of 27.13% for one year, 10.31% for three years, and 15.27% for five years. Ark Innovation’s numbers also fall well short of Wood's goal for at least 15% annual returns over five years.

Cathie Wood’s investment strategy

Her investment philosophy is pretty simple. Ark ETFs usually purchase emerging-company stocks in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood maintains that companies in those categories will change the world.

Of course, these stocks are quite volatile, so the Ark funds’ values frequently fluctuate up and down. Wood frequently adds to and subtracts from her top names.

Investment research titan Morningstar offers a harsh assessment of Wood and Ark Innovation ETF. Investing in young companies with slim earnings “demands forecasting talent, which ARK Investment Management lacks,” Morningstar analyst Robby Greengold wrote in March.

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The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But 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.”

This isn’t your father’s investment portfolio. “Results range from tremendous to horrendous” for Wood’s young, often unprofitable stocks, Greengold said.

Wood has defended herself from Morningstar’s criticism. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she told Magnifi Media by Tifin in 2022.

“We do not fit into their style boxes. And I think style boxes will become a thing of the past, as technology blurs the lines between and among sectors.”

However, some of Wood’s customers apparently agree with Morningstar. During Ark Innovation’s rally of the past 12 months, it suffered a net investment outflow of $2 billion, according to ETF research firm VettaFi.

Cathie Wood unloads some Nvidia stock

On June 25, Ark Autonomous Technology & Robotics ETF ( ARKQ ) sold 33,834 shares of semiconductor titan Nvidia ( NVDA ) , worth $4.3 million as of that day’s close.

Related: Analysts reboot Nvidia stock forecasts after shares dip

Nvidia, of course, is the biggest maker of the graphic processing units (GPUs) that fuel artificial intelligence operations. AI mania has sparked a tripling of the company’s share price over the past year.

Wood took heat for selling Nvidia shares from April 8-11, as the stock soared 33% over the next two months.

“There are a few reasons we take some pause,” she said about Nvidia in a May interview on Bloomberg TV . She said when she hears “shortages, shortages, shortages about GPUs or anything, I begin to think about the cyclicality of a group.”

Wood hasn’t given up on Nvidia. “We’re just pivoting to another set of plays that most people have not discovered yet,” she said.

Ark funds still have $52.7 million of Nvidia shares.

Related: Nvidia stock targets $4 trillion valuation on AI chip outlook

Many analysts are more bullish than Wood on Nvidia. “We’re encouraged by management’s commentary [in May] that demand for its upcoming Blackwell [GPU] products should exceed supply into calendar 2025,” Morningstar analyst Brian Colello wrote in a commentary.

“We see no signs of AI demand slowing either.”

The Blackwell platform promises generative AI at up to 25 times less cost and energy consumption than Nvidia’s less-advanced Hopper architecture.

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