Tesla perma-bull Cathie Wood shocked investors on Tuesday after it emerged she had trimmed her holdings in Elon Musk’s electric vehicle manufacturer to buy stock in legacy rival General Motors.
Wood has become something of a tech industry oracle for retail investors thanks to her early and aggressive bets on disruptive technologies like EVs, and Tesla has traditionally been her top holding.
On Monday, however, the ARK Invest firm she manages as CEO and chief investment officer revealed it had sold 15,862 shares in Musk’s company, worth about $12.7 million, while buying 158,157 shares in GM for nearly $6.1 million, among other portfolio adjustments.
While Wood occasionally takes profits on Tesla, also to ensure the fund doesn’t become too top-heavy from the trillion-dollar megacap, the move is striking as even a high-quality name like Tesla has found itself in a slump owing to Musk’s planned acquisition of Twitter.
Moreover, ARK Invest itself released research last month that included an extremely bullish price target of $4,600 per share for Tesla in 2026—hardly a signal to markets Wood might shift some of her portfolio toward an incumbent like General Motors.
“Hell has officially frozen over,” tweeted Stanphyl Capital fund manager Mark Spiegel, one of the fiercest critics of both Tesla and Wood.
Wood however didn’t buy shares in GM because of its exposure to the growing EV market.
The company has in fact been heavily mocked by Tesla fans for selling just 483 electric vehicles in its domestic U.S. market over a six-month period through the end of March.
In fact, GM shares were added not to the flagship ARK Innovation ETF, but to her ARK Autonomous Technology and Robotics ETF. That’s because the Detroit carmaker is at the forefront of robotaxi development thanks to its 80% stake in Cruise.
Wood however continues to concentrate some of the highest risk, highest return stocks in one portfolio, undeterred by market weakness.
‘Deep value territory’
In December she claimed that some of her favorite names, such as telemedicine service provider Teladoc, were poised for an eventual rebound after recent routs.
“Innovation stocks are not in a bubble: We believe they are in deep value territory,” she wrote at the time.
Unfortunately for Wood, an inflation-fighting Federal Reserve has for the moment proved otherwise. Its aggressive preparations for a tightening cycle have turned out to be kryptonite for growth-stock–heavy funds like her own.
On top of the Fed poisoning über-bullish market sentiment on Wall Street, her reputation for stock picking has also suffered despite her long-term conviction in Tesla.
In the run-up to Teladoc’s Q1 results, she added to her position in the company, which already counted her as its largest investor.
The bet blew up in her face when the stock promptly lost half its value. The company revealed a larger than expected quarterly loss after effectively admitting it had overpaid $6.6 billion for the takeover of Livongo.
As a result, ARK Innovation is trading at levels not seen since the March 2020 lows when the pandemic first erupted. Currently it’s trading down 5% on Tuesday.
A deeply religious Christian known for her close friendship with Bill Hwang, Wood recently revealed she had founded ARK Invest with the help of the convicted Archegos hedge fund manager.
This story was originally featured on Fortune.com
Source: https://finance.yahoo.com/news/cathie-wood-shocks-market-dumping-160835730.html