ARK's Cathie vision: Worth $1.2 Billion Blind Spot?
A Mistake is a mistake - Big or Small.
Cathie Wood's decision to sell the bulk of Ark Invest's $NVIDIA Corp(NVDA)$ stocks when it was trading below $150 per share has proven to be costly.
To put a number on it, the famed money manager's firm has been left out of a rally that would have netted it a $1.2 billion return, according to Business Insider calculations. (see below)
Based on the 13F filings with the Securities and Exchange Commission (SEC), Ark Invest has sold 1.3 million shares of Nvidia across its suite of investment products since Q4 2022.
Bulk of those sales occurred in November 2022.
This was just before the release of ChatGPT, that sparked a massive artificial intelligence-fueled rally.
In Q4 2022, Nvidia stock traded at an average price of about $146 per share.
By Thu, 30 May 2024 afternoon, the stock has gained +682% to $1,141 per share (approx.).
Ark Invest's decision to sell 859,000 Nvidia shares in Q4 2022 alone cost the disruptive innovation-focused investment company $854 million in missed returns had it held onto the stock.
In February 2023, Wood told CNBC that while she likes Nvidia, it's valuation was too high.
"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".
In February 2023, Nvidia had a market valuation of about $575 billion. Today, Nvidia is worth about $2.8 trillion.
At the rate Nvidia’s valuation is increasing, it could displaced $Apple(AAPL)$ as the 2nd most valuable company after $Microsoft(MSFT)$.
Selling Spree Cont’d.
ARK Invest continued to sell Nvidia, liquidating:
109,000 shares in Q1 2023.
118,587 shares in Q2 2023.
A combined 147,651 shares in H2 2023.
81,239 shares in Q1 2024.
As of 31 Mar 2024, ARK Invest still holds 67,000 shares of Nvidia worth about $75 million.
According to data from Stockcircle, ARK Invest first purchased its stake in Nvidia in Q4 2016 at an estimated average price of about $81.
Defiance at its best?
In an interview with the Wall Street Journal earlier this year (2024), Wood indicated that she is still not on board with Nvidia's sky-high valuation.
"I've watched Nvidia all my career, actually, since it's gone public. It's a very cyclical stock," Wood said, adding that over ordering of Nvidia's GPUs could create a painful inventory correction for the company.
"Everyone's excited, trying to get in at the same time, so there's double ordering, triple ordering, quadruple ordering, and then there is an inventory correction.
We think that will happen again," Wood said.
ARK Invest has redeployed its proceeds from selling Nvidia stock into other potential AI companies, though few of those investments have panned out.
ARK Invest did not respond to a request for comment.
My viewpoints: (mine only)
After Morningstar’s scathing report that Ms Wood is the Worst Wealth Destroyer, she defiantly retorted “
“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.”
Adding up all the Nvidia shares that ARK Invest sold between 2022 and 2024. (see above)
It is evident that Cathie Wood lost a lot of money on Nvidia’s investment due to her lack of vision and bad decisions.
Her ears are glued to her forehead instead of the grounds because she has totally missed out on news or rumours or whatever, through the grapevine about Nvidia’s potentials.
How could a professional funds manager’s performance be so tangent and off the chart?
Nvidia has announced a 10-for-1 stock split, after the quarterly results were out. (see above)
Hypothetically, if Ms Cathie Wood did not sell her Nvidia holdings:
She would still have the 1,315,477 shares (already sold off)
ARK Invest would have received “additional” 11,839,293 shares, upon stock split.
Post stock split, Nvidia stock price is expected to hover around $109.50 per share.
As the AI chip-leader is still sizzling hot, every $1 dollar increase in stock price, will be additional $11.84 million in ARK Invest’s pocket.
Could Ms Cathie Wood afford the lost “opportunity” costs suffered as a result of a lack of vision ?
After all that has been said and done, do you still believe in Ms Woods’ tunnel vision?
Her strong conviction of $Tesla Motors(TSLA)$ reaching $2,000 per share in a few years time, will be a very expensive lesson for her legion of newly minted believers.
To that I say, run from her and her investment funds, as far away as possible.
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Do you think Ms Cathie Wood will sell off her remainder stake in Nvidia, anytime soon ?
Do you think Ms Cathie Wood will buy more Nvidia stocks going forward, especially when it dips?
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Buy buy buy
Cathy just refused to buy NVDA last year…..Pride comes before the fall…….instead she poured money into this years losers,,,,,,shame on her ! AMD in deep red today, NVDA deep green…..
Cathy says many things that make sense, but she lacks risk management entirely. Her analysts are people with little experience and for the most part don't have anything out of the ordinary to offer.
Is Kathie the new Jim Crammer ?
Pls help to "Re-post". Tks! Rating is important (to me).
Would you consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!
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