Cathie Wood, head of Ark Investment Management, follows an active trading strategy, making investment decisions based on market momentum.
She will buy when a stock rises, aiming to ride the rally. If a stock falls, she sometimes sells to cut losses rather than holding through the downturn.
That’s what she did last week. She sold a tech stock that is down 16% over the past month.
Wood’s flagship fund, Ark Innovation ETF (ARKK) , underperformed the market in 2024.
And although it briefly outpaced the Nasdaq Composite and the S&P 500 in January and early February, ARKK is down 17% year-to-date as of March 10. The Nasdaq Composite and S&P 500 lost 9.5% and 4.5% respectively during the same period.
The fund’s recent struggles stem largely from its biggest holding, electric-vehicle producer Tesla (TSLA) , which has declined more than 40% this year.
Opinions on Wood vary. To her supporters, she is a visionary with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive, opportunistic approach.
As of March 7 Ark Innovation ETF, with $6.8 billion under management, has delivered an annualized three-year return of negative 3.32% and a five-year return of positive 0.62%.
In comparison, the S&P 500 index has a three-year annualized return of 12.89% and a five-year return of 15.98%.
Ark Innovation ETF has seen $2.5 billion in net outflows over the 12 months through March 7, including an outflow of $511.07 million in the past three months.
Cathie Wood’s investment strategy explained
Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds’ values.
Related: Cathie Wood’s net worth: The Ark Invest CEO’s wealth & income
Amy Arnott, portfolio strategist at Morningstar Research Services, calculated that ARK Innovation ETF wiped $7.1 billion of shareholder wealth from its launch in 2014 through 2023.
That put the ETF third on the list of the biggest wealth-destroying mutual funds and ETFs for the decade ending in 2023. The analyst hasn’t updated the list for 2024.
Although the recent tariffs have weighed heavily on stock markets, Wood expressed optimism about a shift to looser regulation under Donald Trump’s presidency.
She said on March 4 that the Trump administration could be even better for investors than Ronald Reagan’s pro-business era, according to Bloomberg.
“The Reagan revolution — and I was there and it was so enjoyable — it was the heyday, the golden age of active equity management,” Wood said. “That’s coming back. I think it’s coming back big time. I think this will dwarf that, and that was pretty good.”
Not all investors share Wood’s confidence. Data from ETF research firm VettaFi show that Ark Innovation ETF has seen $2.5 billion in net outflows over the 12 months through March 7, including an outflow of $511.07 million in the past three months.
Cathie Wood sold $10 million of Roku
On March 4, 6, and 7 Wood’s Ark funds sold 122,779 shares of Roku (ROKU) . That chunk of stock was valued at roughly $9.73 million.
Roku stock reached a one-year peak of $104.96 on Feb. 14 after it reported earnings, but it has given back more than 20% since then.
In 2020 and 2021 Roku was one of the biggest winners of the streaming boom. With pandemic lockdowns driving demand for at-home entertainment, the San Jose, Calif., streaming-tech company’s stock soared and hit a $479 all-time peak in July 2021.
Wood first purchased Roku shares in 2019. As the stock surged during the pandemic-driven rally, she increased her holdings significantly.
During Roku’s peak in 2021, she sold a portion of the stake to secure gains. As Roku’s price declined from its highs, Wood continued buying aggressively all the way down.
According to stockcircle.com, Ark’s estimated purchase cost for Roku is $131 a share, resulting in an unrealized loss of about 46% as of Q4 2024.
Related: Cathie Wood sells $4 million of tumbling tech stock
Roku’s Q4 report beat analysts’ estimates
On Feb. 13 Roku released better-than-expected Q4 results. It reported a loss of 24 cents a share, narrower than the expected 40-cent loss. Revenue surged 22% year over year to $1.2 billion, surpassing forecasts of $1.14 billion.
Analysts’ opinions were mixed after the earnings. Jefferies upgraded Roku to hold from underperform, nearly doubling its price target to $100 from $55.
The investment firm said Roku outgrew many advertising peers in the fourth quarter and its profitability improved, thefly.com reported.
Meanwhile, Morgan Stanley raised its price target on Roku to $75 from $67 and maintained an underweight rating. It viewed the stock as fully valued and saw continued rising competition from Amazon Prime Video (AMZN) and Netflix (NFLX) in 2025.
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Roku is one of Wood’s biggest holdings in her portfolio. As of March 10 the stock accounted for 8.53% of Ark Innovation ETF and ranked as the second-largest position.
Roku closed at $71.15 a share on March 10.
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