In this article, we will take a detailed look at the 10 Cathie Wood Stocks Insiders are Selling. For a quick overview of such stocks, read our article 5 Cathie Wood Stocks Insiders are Selling.
There was a time Cathie Wood talked about her famous “five-year investment horizon” with confidence, giving investors hope that the high-growth, cash-burning companies she was betting on would pay off in the future. But those profits remain elusive as the innovation-focused investor’s funds bleed assets and experience brutal exodus of investors. Cathie Wood’s flagship ARK Innovation ETF (ARKK) is down about 12% so far this year through April 26, compared to S&P 500’s 7% gain in the same period.
ARK ETFs See Funds Exodus as Investors Begin to Get “Frustrated”
Once a Wall Street darling that saw total assets under management swell to as much as $60 billion in February 2021, Ark Investment Management ETFs continue to see massive investor exodus as uncertainty about the future, dimming chances of rate cuts and an overall market shift towards safer, defensive stocks keep crushing risk appetite of retail as well as institutional investors. Data from FactSet shows that ARK Investment Management bled a whopping $2.2 billion from its six actively managed ETFs this year. Total funds under management at these ETFs declined by 30% in less than four months to $11.1 billion, according to FactSet data cited by Wall Street Journal. The report also quoted Todd Rosenbluth, head of research at industry data and analytics company VettaFi, who said even loyal customers of ARK funds are getting “frustrated” since 2024 should have been a better year for them given ARK’s emphasis on growth and innovation.
ARK’s Paradox: Losses in an Era of High Innovation
For years, Cathie Wood repeatedly talked about innovation, growth, technology disruption and how futuristic technology is set to change everything in human societies. Amid the AI revolution, hedge funds and retail investors left and right started making top dollar by investing in companies working on the AI frontiers. But Cathie Wood’s funds were laggards According to many, ARK’s burgeoning losses explain its paradox: it is probably invested in the wrong companies. It missed out on Nvidia. It’s heavily invested in Tesla (down 31% YTD) which is getting clobbered amid rising competition in the US and China (Cathie Wood reiterated her $2000 price target on TSLA recently). Half of ARK’s innovation fund is invested in just seven stocks. Roku and UiPath, which are part of ARK Investment Management’s top five holdings, are down 35% and 18% year to date through April 26, respectively.
ARK Fintech Innovation ETF Also Suffers Losses
Losses aren’t limited to the innovation fund. ARK Fintech Innovation ETF failed to see net inflows this year on any single day, according to a Bloomberg report, with its total assets under management falling below $1 billion. Some of the top holdings of the fund are Coinbase, Block and Shopify.
Cathie Wood Warns “Reality Check” Is Coming for AI Investors
Cathie Wood went all-in on genetics, 3D printing, biotechnology, self-driving and electric cars over the past few years. However, when it comes to AI, she seems too cautious and keeps warning investors of valuations. In her March 2024 letter to investors, Cathie Wood said investors enthusiastic about AI could get a “reality check” soon, as she expects future events to “separate winners from losers in the years ahead.” She drew an analogy between Nvidia of today and Cisco of 1994 which saw massive stock gains on the back of the market’s belief that the company would see strong demand for its products amid internet penetration. However, the stock suffered devastating losses as investors came to terms with realities.
“Today, Nvidia is guiding expectations to a sequential deceleration in growth and, reportedly, the lead time for its GPUs has dropped from 8-11 months to 3-4 months, suggesting that supply is increasing relative to demand. Without an explosion in software revenue to justify the overbuilding of GPU capacity, we would not be surprised to see a pause in spending, compounding a correction in excess inventories, particularly among the cloud customers that account for more than half of Nvidia’s data center sales. Longer term, unlike the history with Cisco, competition could intensify, not only because AMD is finding success but also because Nvidia’s customers—cloud service providers and companies like Tesla—are designing their own AI chips. That said, since 2019 futurists have collapsed the time to AGI[10] (Artificial General Intelligence) from 80 years to 8 years, so anything is possible,” Cathie Wood wrote.
Cathie Wood of ARK Investment Management
Methodology
In this article we wanted to see which stocks in Cathie Wood’s portfolio are seeing insider selling activity from corporate officers, executives and directors. For that we scanned Cathie Wood’s Q1’2024 portfolio and picked 10 stocks that saw insider selling over the past few months. Insider Monkey’s monthly newsletter and portfolio that focuses on activist hedge funds, insider trading and stock picks from hedge fund investor newsletters and conferences returned 199.2% between March 2017 and March 12, 2024 and outperformed the S&P 500 ETFs’ 144.9% gain by more than 54 percentage points.
10. Accolade Inc (NASDAQ:ACCD)
Cathie Wood’s Stake: $58,824,690
Number of Hedge Fund Investors: 15
Healthcare technology solutions company Accolade Inc (NASDAQ:ACCD) is one of the stocks in Cathie Wood portfolio that saw insider selling this year. Accolade Inc’s (NASDAQ:ACCD) CEO Rajeev Singh on April 18 sold 355 shares of Accolade Inc (NASDAQ:ACCD) at $8.82 per share. On the same day Accolade Inc’s (NASDAQ:ACCD) President Robert N. Cavanaugh, the President sold 141 shares of Accolade Inc (NASDAQ:ACCD) at $8.82 per share. Accolade Inc (NASDAQ:ACCD) also saw insider selling activity from its Chief Financial Officer and General Counsel earlier this month.
Like ACCD, Cathie Wood is also holding onto Tesla Inc (NASDAQ:TSLA), Coinbase Global Inc (NASDAQ:COIN) and UiPath Inc (NYSE:PATH).
9. Trimble Inc (NASDAQ:TRMB)
Cathie Wood’s Stake: $84,686,883
Number of Hedge Fund Investors: 29
Pete Large, Senior Vice President of Trimble Inc (NASDAQ:TRMB), sold 1,447 shares of Trimble Inc (NASDAQ:TRMB) at $59.10 per share on April 16. Since then Trimble Inc (NASDAQ:TRMB) stock is up 1.3%.
Out of the 933 funds tracked by Insider Monkey, 29 hedge funds reported owning stakes in Trimble Inc (NASDAQ:TRMB).
8. Pure Storage Inc (NYSE:PSTG)
Cathie Wood’s Stake: $22,915,320
Number of Hedge Fund Investors: 37
Cathie Wood owns a $23 million stake in Pure Storage Inc (NYSE:PSTG) as of the end of the first quarter of 2024. The stock recently saw insider selling activity when Scott Dietzen, a director at Pure Storage Inc (NYSE:PSTG), on April 4 dumped 272,541 shares at $53.33 per share. Since then the stock is down 1.5%. In addition to PSTG, Cathie Wood also likes Tesla Inc (NASDAQ:TSLA), Coinbase Global Inc (NASDAQ:COIN) and UiPath Inc (NYSE:PATH).
7. Natera Inc (NASDAQ:NTRA)
Cathie Wood’s Stake: $29,485,220
Number of Hedge Fund Investors: 50
Clinical genetic testing solutions company Natera Inc (NASDAQ:NTRA) is one of the rewarding investments of Cathie Wood as the stock is up 47% year to date through April 23. However, the stock saw insider selling on March 5 when Jonathan Sheena, the Co-founder of Natera Inc (NASDAQ:NTRA), sold 6,028 shares at a price of $88.64 per share. Since this transaction the stock is up 4%.
Baron Health Care Fund stated the following regarding Natera, Inc. (NASDAQ:NTRA) in its first quarter 2024 investor letter:
“Solid stock selection in life sciences tools & services was mainly due to double-digit gains from clinical genetic testing company Natera, Inc. (NASDAQ:NTRA) and global contract research organization ICON Plc. Natera’s stock was bolstered by significant momentum in the oncology market, where its personalized blood-based DNA test Signatera is driving strong testing volume growth. The test detects and quantifies how much residual cancer DNA remains in the body after surgery. Signatera helps physicians determine whether chemotherapy is necessary after surgery and monitor for cancer recurrence before the cancer is detectable with standard imaging. We think Natera has a long runway for growth with expanding margins and profitability.”
6. Cloudflare Inc (NYSE:NET)
Cathie Wood’s Stake: $38,090,985
Number of Hedge Fund Investors: 44
Cloudflare Inc (NYSE:NET) ranks sixth in our list of the Cathie Wood stocks seeing insider selling activity. On February 15, 2024, Cloudflare Inc’s (NYSE:NET) President and COO Michelle Zatlyn sold 461,540 shares of the Cloud computing company at $100.27 per share. Since then through April 23 Cloudflare Inc (NYSE:NET) shares have lost about 14% in value.
In addition to NET, Tesla Inc (NASDAQ:TSLA), Coinbase Global Inc (NASDAQ:COIN) and UiPath Inc (NYSE:PATH) are also important names in Cathie Wood’s portfolio.
As of the end of the fourth quarter of 2023, 44 hedge funds reported owning stakes in Cloudflare Inc (NYSE:NET).
Baron Fifth Avenue Growth Fund stated the following regarding Cloudflare, Inc. (NYSE:NET) in its fourth quarter 2023 investor letter:
“Most of our portfolio companies have seen stabilization and modest improvements in short-term business fundamentals as the year progressed. More importantly in our view, many have been able to drive significant improvement in long-term Key Performance Indicators (KPIs) such as share gains, meaningful expansion of their total addressable market, and improvement in unit economics. These KPIs are significantly more important in driving the intrinsic values of our businesses, which we believe have increased noticeably during 2023. In the meantime, disruptive changes that we expect will benefit many of our businesses have also continued to pick up steam. Some examples include: • Another example is the leading cloud networking and cybersecurity solution provider, Cloudflare, Inc. (NYSE:NET), who described market share gains and customers consolidating from multiple point solutions to Cloudflare’s platform: “And so we’re the one vendor that is able to give people that vendor consolidation, that single pane of glass… that comes through in a lot of customer examples…. people want to buy the entire Cloudflare platform. They want to protect their entire business with that, and that’s driving more interest in both our network security, as well as our Zero Trust products.”
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Disclosure. None. 10 Cathie Wood Stocks Insiders are Selling was initially published on Insider Monkey.
