Why Cathie Wood SOLD Tesla Stock (and KEEPS selling)

TL;DR

ARK Invest actively manages its ETF portfolios by selling stocks after they reach 10% of the fund value.

Transcript

uh our highest positions uh we i can buy up to 10 uh position in any one fund uh but and then let it run we'll let it run to 12 or 13 at which point we'll we'll take profits we get a lot of questions about how can you be so positive on tesla and be selling it well i i sold it just in the way i described but it never uh lost the number one position ... Read More

Key Insights

• 👟 ARK Invest actively manages its ETF portfolios by buying, letting positions run, trimming profits, and redeploying funds.
• ❓ Selling Tesla stock is a strategic move to prevent over-exposure and maintain portfolio diversification.
• 🔉 Mainstream media often misinterprets ARK's actions, causing unnecessary confusion and panic among investors.
• ❓ ARK Invest's trading strategies around volatility contribute significantly to their portfolio performance.

Questions & Answers

Q: Why does ARK Invest sell Tesla stock despite being bullish on the company?

ARK Invest sells Tesla stock after it reaches 10% of the fund value to manage position sizes and take profits, not because they are bearish on Tesla.

Q: How does ARK Invest determine stock weightings in their ETFs?

ARK Invest uses top-down modeling, bottom-up modeling, and a six-metric scoring system to assess stock weightings based on various factors like visionary management and market share leadership.

Q: How does ARK Invest trade around volatility to drive alpha?

ARK Invest actively trades around stock volatility, contributing meaningfully to their portfolio performance, as evidenced by the 175 basis points contribution from their Tesla trading activity in 2018.

Q: How does Cathie Wood address misconceptions about selling Tesla stock?

Cathie Wood explains that selling Tesla stock is part of their portfolio management strategy to control position sizes and take profits, not an indication of their view on Tesla as a company.

Summary & Key Takeaways

• ARK Invest, led by Cathie Wood, actively manages their ETF portfolios by buying stocks, letting them run to 12-13% of the fund value, and then taking profits.

• Selling Tesla stock doesn't indicate bearishness, but is part of their portfolio management strategy.

• Mainstream media often misconstrues ARK Invest's actions, creating unnecessary panic among investors.