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Cathie Wood’s decision to sell more than 1 million shares of Nvidia came as the stock shot to astronomical highs.
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Ark Invest missed out on more than $1 billion in returns by selling Nvidia stock too early.
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Ark Invest sold 859,000 Nvidia shares in the fourth quarter of 2022, when the stock was trading below $150 per share.
Cathie Wood’s decision to sell most of Ark Invest’s Nvidia stock when the stock was trading below $150 per share has proven costly.
To put a number on it, the famed money manager’s firm has been left out of a rally that Business Insider calculates would have delivered a return of $1.2 billion.
According to 13F filings with the Securities and Exchange Commission, Ark Invest has sold 1.3 million shares of Nvidia across its line of investment products since the fourth quarter of 2022.
The bulk of these sales occurred in November 2022, before the release of ChatGPT sparked a massive AI-powered rally in the stock market.
Nvidia stock traded at an average price of about $146 in the fourth quarter of 2022. The stock has since risen 682% to around $1,141 as of Thursday afternoon.
Ark Invest’s decision to sell 859,000 Nvidia shares in the fourth quarter of 2022 alone cost the disruptive, innovation-focused investment firm $854 million in missed returns if it had held on to the shares.
In February 2023, Wood told CNBC that while she likes Nvidia stock, its valuation was too high.
“We like Nvidia, we think it will be a good stock. It’s priced, it’s the ‘check-the-box’ AI company. For a flagship fund, where we’re consolidated towards our names with the highest conviction, part of that has to do with valuation,” she told CNBC at the time.
Nvidia had a market value of approximately $575 billion as of February 2023. Today, Nvidia is worth about $2.8 trillion.
ARK Invest continued to sell its stake in Nvidia, liquidating 109,000 shares in the first quarter of 2023, 118,587 shares in the second quarter of 2023 and a total of 147,651 shares in the second half of 2023.
In the first quarter of 2024, ARK Invest continued to reduce its stake in Nvidia, selling 81,239 shares. As of March 31, ARK Invest still owns 67,000 Nvidia shares worth about $75 million.
ARK Invest first bought its stake in Nvidia in the fourth quarter of 2016 at an estimated average price of about $81, according to Stockcircle data.
In an interview with the Wall Street Journal earlier this year, Wood indicated that she still disagrees with Nvidia’s sky-high valuation.
“I’ve been watching Nvidia basically my entire career, since it went public. It’s a very cyclical stock,” Wood said, adding that too much ordering of Nvidia’s GPUs could trigger a painful stock correction for the company cause.
“Everyone’s excited and trying to get in at the same time, so there’s double orders, triple orders, quadruple orders, and then there’s an inventory correction. We think this will happen again,” Wood said.
ARK Invest has redistributed proceeds from the sale of Nvidia shares into other potential AI companies, although few of those investments have materialized.
ARK Invest did not respond to a request for comment.
Read the original article on Business Insider
