Here's How Much Cathie Wood, Ark Invest Missed Out On By Selling Nvidia Early

Zinger Key Points
  • Cathie Wood and Ark Invest bought shares of Nvidia in previous years before exiting the position in the flagship fund in 2023.
  • The position would be worth significantly more today if Ark had held onto the shares.

Ark Invest CEO Cathie Wood has gained fame for her ability to identify innovative companies poised for significant growth over the next five years. Recognizing the potential in artificial intelligence, Ark Invest made an early investment in NVIDIA Corp NVDA.

While Nvidia was a great stock for the flagship Ark Innovation ETF ARKK, the Wood-led ETF sold out of its position too early and missed the current huge increase in valuation for the semiconductor company.

What Happened: Artificial intelligence has been a major investment theme for Ark Invest in recent years.

The Ark Innovation ETF invested in Nvidia on several occasions before selling out of its position completely in January 2023 after selling a large portion beginning in November 2022.

Today, those original shares would be worth significantly more than when sold.

Wood recalled investing in Nvidia early during an interview on Benzinga's "The Raz Report." Wood said Ark Invest was "there" when Nvidia was in the early growth stages and mentioned a brainstorming session that led to buying shares in 2014 back at a price point of around $5.

“I remember in 2015, Tasha Keeney comes into our brainstorm and says ‘you know, it seems like the brains or the central nervous system of an autonomous vehicle is going to be a GPU,’" Wood said.

Ark was early to Nvidia and sold their shares for a profit, but missed out on additional profits if they had continued holding shares of the company that is now the third most valuable company in the world.

In November 2022, the Ark Innovation ETF held 772,884 shares of Nvidia according to data from CathiesArk. The fund sold a sizable chunk of Nvidia shares from this fund and several other Ark ETFs on Nov. 9 of that year.

For the purpose of this exercise, let's use 772,884 shares as a starting point and use a price point of $142.11, which was the intraday high on Nov. 9, 2022.

The shares held on Nov. 9 would have been worth $109,834,545.20 at the time based on these prices. Ark sold all the shares from the flagship fund between November and January.

Today, the same 772,884 shares would be worth $887,464,053. This means Ark Invest may have missed out on potential profits of $777.6 million by selling the Nvidia shares early.

Keep in mind, this is only the Nvidia shares in the Ark Innovation ETF and also doesn’t account for shares of Nvidia that were previously bought in 2014 and then sold.

Related Link: Nancy Pelosi’s Nvidia Payday: Cashed In Big, But Missed Out By Selling Early

Why It's Important: After selling the complete position of Nvidia in the flagship ETF, Wood said the company's valuation was "very high."

"We like Nvidia, we think it's going to be a good stock," Wood said at the time.

The Ark Invest CEO said the company's flagship fund had consolidated to its highest conviction names at the time, including analyzing the valuation of stocks.

Selling winners isn't new for Wood and she shared that sometimes it's smart to take profits.

"If we see one of our stocks up 20, 30, 50, 100, 200% in a short period of time, we will take profits," Wood said.

Today, Ark Invest holds Nvidia shares in several of the smaller ETFs, listed below with the holding amounts from May 28:

  • Ark Autonomous Technology & Robotics ETF ARKQ: 18,651 shares, $21.2 million, 12th largest holding, 2.5% of assets
  • Ark Next Generation Internet ETF ARKW: 17,224 shares, $19.6 million, 23rd largest holding, 1.3% of assets
  • Ark Fintech Innovation ETF ARKF: 11,793 shares, $13.4 million, 25th largest holding, 1.4% of assets

While Ark has sold its Nvidia shares in the flagship fund, the company and Wood still see AI as a major theme going forward. Wood has said that Tesla Inc TSLA could be the best way to play the artificial intelligence revolution.

Wood has also highlighted companies like Twilio Inc TWLO and UiPath PATH as ways to play the AI sector with lower revenue multiples and the potential for exponential growth.

Tesla is currently the largest holding in the Ark Innovation ETF at 11.7% of assets.

This article was previously published by Benzinga and has been updated.

Read Next: When Will Nvidia Be The Most Valuable Company In The World?

Watch Benzinga’s interview with Wood below:

Image created using photos from Ark Invest and Shutterstock.

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