Cathie Wood’s Portfolio: ARK Selling TSLA buying PLTR

If you follow the latest investment buzz, you’ve probably heard of Cathie Wood and her ARK Innovation ETF (ARKK).

Known for making brave moves in the stock market, ARK is back in the spotlight with some intriguing changes to its portfolio. While the core philosophy of the fund has not changed, changes are needed to turn around its fortunes.

Let's break down these modifications and understand their potential implications.

Key Portfolio Adjustments

Tesla (TSLA)

Tesla is always a big focus. ARK has been cutting back on its Tesla holdings, a move that might raise eyebrows given Tesla’s significant role in ARK’s past portfolio. The electric vehicle giant’s stock is down but still plays a substantial role in ARK's holdings. Amidst selling, Tesla remains ARK’s largest holding, indicating a complex, multifaceted strategy rather than a straightforward pullback. ARK remains overall bullish on Tesla with a ‘bull case’ targeting $2,500 and a ‘bear case’ with a target of $1,400, implying gains of 448% and 878%, respectively.

Palantir Technologies (PLTR)

ARK has increased its stake in Palantir Technologies. This move is worth noting because, while some are backing out of Palantir, ARK is leaning in. Palantir has caught attention for its capability to turn big data into profit, marking its third profitable quarter recently. Despite being down from its peak, the stock is still considerably higher than it was at the start of the year. Wood has shown a pattern of buying and selling Palantir, demonstrating her dynamic approach to this particular asset.

Other Notable Adjustments

ARK’s portfolio reshuffling isn’t limited to these two stocks. There’s a clear pattern of strategic buying and selling aimed at optimizing the portfolio’s performance amidst the market’s volatility. For instance, ARK has also been reducing its stake in DraftKings despite its rising value, a move that showcases the fund’s intricate strategy beyond surface-level trends.

ARRK Price Chart

Source: TradingView

ARKK remains down substantially from its 2021 peak with early signs of a possible inverse Head and Shoulders bullish reversal pattern. A close above $53 would complete the pattern.

Palantir as an AI investment

Wood’s decision to increase ARK’s stake in Palantir is rooted in a broader perspective on AI’s role in the global economy. ARK’s Big Ideas 2023 report accentuates AI as a catalyst poised to propel other technologies and disruptive platforms. The report anticipates that these AI-driven platforms could grow exponentially in the coming years, further solidifying AI’s centrality in ARK’s investment philosophy.

ARK’s European Expansion

ARK’s sphere of influence is stretching, and Europe is the next stop! The acquisition of Rize ETF, a London-based exchange-traded fund company, is ARK’s first significant European venture.

This move into the European market is a response to the growing interest in thematic ETFs locally. With a quarter of subscriptions to ARK’s research coming from Europe, it’s clear there’s a budding interest in the strategies and insights ARK offers.

Rize ETF will be rebranded as ARK Invest Europe, marking a formal establishment of ARK’s presence in the European investment landscape. This move isn’t just about geographical expansion; it represents a mingling of investment approaches and strategies, offering European investors a closer look at ARK’s dynamic, responsive investment style.

Future Outlook and Challenges

Wood’s strategies are attuned to harnessing the potential of disruptive technologies that are expected to redefine industries and consumer behaviours. However, her navigational compass in the volatile financial seas is also influenced by external economic variables, such as interest rates and macroeconomic trends.

In an environment where interest rates can significantly impact the valuation of tech companies, the ARK fund's adaptability and responsiveness to these economic signals are crucial. Moreover, investor appetite for tech stocks, often swayed by market sentiments, regulatory changes, and global economic outlook, plays a pivotal role.

The synergy between ARK's intrinsic value propositions, characterized by its focus on AI and disruptive technologies, and the external economic and market dynamics will be instrumental in carving the trajectory of Wood’s long-term success.

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