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Cathie Wood dumps shares of top cryptocurrency stock
PATRICIO T. FALLON/AFP via Getty Images
Cathie Wood's Investment Philosophy
Wood's investment strategy is not difficult to understand. Ark ETFs typically buy stocks of young small companies in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage and robotics. She sees those areas as game-changers for the global economy.
Related: Cathie Wood Sells Nearly 135,000 Shares of a Top Crypto Stock
These stocks are quite volatile, of course, so the Ark funds are subject to rollercoaster rides. And Wood frequently swaps his main names.
Investment research titan Morningstar is quite critical of the Wood and Ark Innovation ETF. "ARK Innovation has a dubious ability to successfully navigate the challenging territory it explores," Morningstar analyst Robby Greengold wrote last year.
The potential of Wood's five high-tech platforms listed above is "compelling," he said. “But Ark's ability to detect the winners among them and navigate their countless risks is less so. The strategy’s booms and busts have culminated in lackluster total returns and extreme volatility since its inception in 2014.”
It's not an investment portfolio 101. "The strategy invests closely in stocks with negligible current earnings, lofty valuations, and highly correlated stock prices," Greengold said. "Its extreme volatility underscores its highly uncertain future."
Wood has defended himself against Morningstar's criticism. “I know there are companies like that. [Morningstar] that they do not understand what we are doing,” he told Magnifi Media by Tifin in 2022.
“We don't fit into their style boxes. And I think style barriers will become a thing of the past, as technology blurs the lines between sectors.”
But some of Wood's clients apparently agree with Morningstar. During Ark Innovation's rally over the past 12 months, he recorded a net investment outflow of $1.3 billion.
Lumber Operations Tuesday
On Tuesday, Ark funds sold 106,000 shares of Coinbase Global (CURRENCY) the largest cryptocurrency exchange in the country, worth $27.2 million at the close of that day.
The fund manager buys and sells:
The stock has nearly quintupled in the past 12 months as cryptocurrencies have soared. Therefore, Wood may have felt it was time to make some profits. He has sold Coinbase frequently in recent weeks.
But it still represents by far the largest holding in the Ark Innovation ETF. And Wood is a major cryptocurrency advocate.
On the buy side, Ark funds snapped up 45,758 shares of popular social media company Pinterest. (PAWS) Tuesday, valued at $1.6 million at the close of that day.
The stock has fallen 16% since February 6, so Wood may view the drop as a buying opportunity. For Pinterest, Morningstar is on the same side as Wood.
"While we don't expect it to displace online advertising giants Google and Facebook or the up-and-coming Amazon, we do expect it to attract a small portion of digital ad spending," Morningstar analyst Michael Hodel wrote about the company.
Ark funds also bought 24,024 Roku shares (YEAR) the largest streaming platform in the US, worth $1.5 million at the close of Tuesday.
Shares have plunged about a third since Feb. 15 amid news that Walmart is buying TV maker Vizio, a major Roku competitor. Strong competition in the broader streaming industry is also weighing on Roku.
Related: A veteran fund manager picks his favorite stocks for 2024