Cathie Wood, the renowned fund manager behind Ark Invest, made waves again this week by selling a significant portion of Robinhood Markets (HOOD) stock. Known for her bold investment in disruptive technologies, Wood offloaded 391,668 shares of the trading app provider, a sale valued at roughly $10.5 million as of October 18.
This move underscores her strategy of capitalizing on surging stock prices, a hallmark of her investment philosophy that focuses on high-growth, innovative sectors such as AI, genomics, and blockchain. While Wood’s supporters see her as a visionary in the tech world, her detractors argue that her performance has been inconsistent, with her flagship Ark Innovation ETF (ARKK) struggling in recent years.
A Mixed Investment Legacy
Wood, often affectionately called “Mama Cathie” by her followers, skyrocketed to fame after her Ark Innovation ETF returned an astonishing 153% in 2020. Her accessible media presence further amplified her reputation, leading many to view her as a modern-day tech oracle. However, her longer-term performance hasn’t matched the likes of Warren Buffett. The Ark Innovation ETF is down 10% in 2024 and has posted negative returns of 26% over the past three years, trailing far behind the S&P 500’s positive annualized returns of 36% for one year, 11% for three years, and 16% for five years.
Despite these figures, Wood remains steadfast in her strategy, which emphasizes long-term growth potential. She has doubled down on investing in cutting-edge technologies, arguing that they will be game-changers in the future, even if they bring volatility in the short term.
Robinhood: A Volatile Investment
Wood’s sale of Robinhood stock comes as the platform continues to ride a wave of market volatility. Robinhood, which went public in 2021 at $38 per share, saw its value soar to an all-time high of $85 soon after its IPO. Despite this early success, the stock has been highly volatile, reflecting both the broader tech sector’s fluctuations and the challenges Robinhood faces in maintaining investor confidence.
The sale of Robinhood stock by Ark Invest has raised some eyebrows, especially given Wood’s well-documented commitment to disruptive companies. Robinhood, which revolutionized retail trading with its commission-free model, seemed a perfect fit for her portfolio. However, the recent sale suggests that even Wood, known for holding onto high-growth companies through thick and thin, is willing to lock in gains when the timing is right.
A Divisive Investment Approach
Cathie Wood’s approach has always drawn both admiration and criticism. While her supporters credit her for being a forward-thinking investor in the world of disruptive tech, critics argue that her results are too volatile and inconsistent. Robby Greengold, a Morningstar analyst, has been particularly harsh in his assessment of Ark Invest’s performance, claiming the firm lacks the “forecasting talent” required to consistently succeed in high-risk sectors.
In response to such criticisms, Wood has remained defiant. In a post on Ark Invest’s website earlier this year, she acknowledged that the macroeconomic environment and some poor stock picks have affected her recent performance but maintained that her belief in disruptive innovation remains unwavering. She also pointed out that many of Ark’s stocks are now in what she calls “deep value territory,” suggesting that there is still significant upside potential in the long run.
A Test of Faith
Despite Wood’s confidence, the Ark Innovation ETF has experienced a net outflow of $2.55 billion over the past year, signaling that some investors are losing faith. As Wood continues to navigate the volatile waters of disruptive tech, the sale of Robinhood stock could be seen as either a strategic move or a sign of growing caution.
In the end, Cathie Wood’s latest decision to sell a portion of Robinhood stock offers a glimpse into her evolving investment strategy. While she remains committed to her vision of the future, even the most optimistic investor knows when it’s time to take profits off the table.
