Cathie Wood, who leads Ark Investment Management, usually targets tech stocks that she believes have disruptive potential, even if their valuations are high.
Sometimes, she’ll cash in on stocks that have climbed for a while to secure gains, and that’s what she did last week.
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Investors and analysts have mixed opinions on Cathie Wood. Supporters see her as a visionary in tech investing, while critics say she’s a mediocre fund manager.
Wood's followers nicknamed her “Mama Cathie.” She gained widespread attention with an impressive 153% return in 2020.
However, her longer-term performance isn’t so hot.
The flagship Ark Innovation ETF ( ARKK ) , with $5.4 billion under management, has returned 18.03% year-to-date, with an annualized three-year return of -13.46% and a five-year return of 5.44%.
In comparison, the S&P 500 is up 29.24% this year through Dec. 11, with a three-year annualized return of 10.6% and a five-year return of 15.96%. The Nasdaq Composite is up 33.5% this year.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is simple: Her ARK ETFs typically buy shares in emerging, high-tech companies in fields such as artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood says these companies will transform industries, but their volatility causes significant swings in Ark funds' values.
Related: Cathie Wood buys $22.1 million of battered tech stock
Investment research firm Morningstar is highly critical of Wood and Ark Innovation ETF.
Morningstar portfolio strategist Amy Arnott calculated that Ark Innovation destroyed $7.1 billion of shareholder wealth from its 2014 inception through 2023. That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs for the past decade.
Wood defended herself in a July posting on Ark’s website. She acknowledged that “the macro environment and some stock picks have challenged our recent performance” while affirming her “commitment to investing in disruptive innovation.”
Wood recently expressed optimism about a shift to looser regulations under Donald Trump’s presidency, particularly regarding technology, cryptocurrencies and digital assets.
“In the last four years, we saw massive concentration toward very few stocks,” Wood said on CNN’s Inside Politics Sunday on Dec. 1. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation.”
But that didn’t stop investors echoing Morningstar's concerns. Ark Innovation ETF saw a net outflow of $2.68 billion over the past year, according to data from ETF research firm VettaFi.
Cathie Wood sold 95,000 shares of Palantir last week
On Dec. 6, ARK Innovation ETF sold 95,570 shares of Palantir Technologies ( PLTR ) .
That chunk of stock was valued at roughly $7.3 million as of Dec. 6’s close.
Palantir provides software platforms for big-data analytics. The stock more than quadrupled in 2024 through Dec. 11, driven by the company’s expanding role in AI and increased demand for the technology and its applications.
In November, the company posted third-quarter earnings that were well above Wall Street expectations. PLTR shares surged 23% on the next trading day following the results.
Related: Here's what a veteran trader who forecast Palantir's stock rally says now
Palantir’s Q3 net income doubled to $143.5 million, or 6 cents per share, from $71.5 million, or 3 cents, in the year-earlier quarter. Revenue grew 30% year over year.
“The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers,” Palantir Chief Executive Alex Karp said in a shareholder letter.
On Nov. 26, Palantir shifted its stock listing to the Nasdaq Global Select Market from the New York Stock Exchange. The move made Palantir shares eligible for inclusion in the Nasdaq 100, which is broadly tracked by passive funds.
TheStreet’s veteran analyst Stephen "Sarge" Guilfoyle said Palantir’s shift to Nasdaq could mean that the company’s management is pursuing broader appeal and better prices for the stock, he wrote on Dec. 10.
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Guilfoyle has a target price of $90 on PLTR stock, the highest among Wall Street analysts. He warns, however, that the shares could be volatile in the short term.
Palantir closed at $72.51 on Dec. 11. The stock ranks fifth among Ark Innovation ETF's top 10 holdings as of Dec. 12, accounting for 5.26% of the total portfolio. The total value of the PLTR holding is $370.6 million.
Related: Veteran fund manager delivers alarming S&P 500 forecast