Cathie Wood’s Ark Invest sold the bulk of its Nvidia stake just before the company went on a massive rally.
Ark owned 1.3 million shares of Nvidia across all of its ETFs in early October, but that position has since dwindled 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 is probably wishing it didn’t sell nearly 1 million shares of Nvidia between early October and today following the chipmaker’s massive year-to-date surge of more than 160%.
Nvidia stock soared as much as 30% on Thursday after the company announced jaw-dropping guidance as it benefits from a wave of demand for its chipsets that support generative AI technology platforms like OpenAI’s ChatGPT and Alphabet’s Bard.
But the active investment manager, who has owned Nvidia on and off since the flagship fund’s inception in 2014, missed out on massive gains as it started to pare down its position in Nvidia heading into a 52-week low in mid-October.
Since Ark Invest’s first sale on October 5, when it held 1.3 million shares of Nvidia across all of its ETFs, the stock has soared 190% and added $620 billion to its market value. By late November, Nvidia owned just over 500,000 shares of the company.
Today, Ark Invest holds just 390,000 shares across its suite of next-generation technology ETFs. The stock is not in its flagship Disruptive Innovation fund.
Rough calculations by Insider suggest Ark Invest left more than $200 million in potential profits on the table when it sold down its Nvidia stake throughout the end of last year.
Ark’s ill-timed share sale of Nvidia 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 pick the right companies to bet on.
In February, Wood said Ark’s wave of Nvidia sales was in part because its valuation was “very high” and that it was consolidating its portfolio into higher conviction names.
“We like Nvidia, we think it’s going to be a good stock. It’s priced, it’s the ‘check-the-box’ AI company. For a flagship fund, where we’re consolidated towards our highest conviction names, part of that has to do with the valuation,” she told CNBC on February 27.
Wood is instead counting on UiPath for Ark Invest’s exposure to artificial intelligence, which is its second largest position across all of its ETFs. Meanwhile, Tesla remains Ark Invest’s top holding, which is also working on artificial intelligence to help enable its self-driving technology.
But despite the hype in AI this year, those two stocks have only captured some of the year-to-date gains seen across the space. Shares of UIPath are up just 14% year-to-date, while Tesla stock is up an impressive 50%.
Shares of Ark Invest’s Disruptive Innovation ETF were down 2.7% on Thursday, despite the Nasdaq 100 jumping 1.7%.
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