Cathie Wood, chief of Ark Investment Management, frequently adjusts her top positions, adding to a holding when the stock falls and selling when it rises.
Sometimes, this strategy pays off – her flagship ARK Innovation ETF (ARKK) has gained 5% this year, temporarily outperforming the S&P 500 and the Nasdaq Composite.
Last week, she sold two high-tech defense stocks.
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Investors and analysts have mixed feelings about Cathie Wood.
Supporters view Wood as a visionary in tech investing. Her fans, who affectionately nicknamed her “Mama Cathie,” were drawn to her after she delivered an extraordinary 153% return in 2020.
Related: Fidelity analyst unveils market forecast for 2025
But critics say she’s only an average asset manager as her longer-term performance tells a less attractive story:
Between Jan 17, 2024 and Jan. 17, 2025, the flagship ARK Innovation ETF (ARKK) , with $6.3 billion under management, returned 29.81%, with an annualized three-year return of -9.43% and a five-year return of just 2.63%.
In comparison, the Nasdaq Composite gained 33.10% over the same stretch, with a three-year annualized return of 10.52% and a five-year return of 16.81%.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is straightforward: Her ARK ETFs typically buy shares in emerging, high-tech companies in fields such as artificial intelligence, blockchain, biotechnology, and robotics.
Wood believes these companies have the potential to reshape industries, but their volatility leads to major fluctuations in the values of ARK funds.
Amy Arnott, portfolio strategist at Morningstar Research Services, calculated that Ark Innovation wiped $7.1 billion of shareholder wealth from its launch in 2014 through 2023.
Related: Cathie Wood’s net worth: The Ark Invest CEO’s wealth & income
That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs for the past decade.
Wood recently shared her optimism about a potential shift toward fewer regulations under Donald Trump’s future presidency, especially in technology, cryptocurrencies, and digital assets. Trump takes office again on Jan. 20.
“In the last four years, we saw massive concentration toward very few stocks,” Wood told CNN in December 2024. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation.”
However, not all investors are persuaded by Wood’s confidence. Over the past year, the ARK Innovation ETF has seen a net outflow of $3 billion, with $320 million exiting the fund in the past month, according to ETF research firm VettaFi.
Cathie Wood sells $9.1 of Palantir and $2.7 of Kratos Defense
On Jan. 13, Wood’s ARK Innovation ETF ARKK sold 140,518 shares of Palantir Technologies (PLTR) .
That chunk of stocks was valued at roughly $9.1 million.
This follows her recent Palantir sales, including selling 221,950 shares worth $16.9 million from Jan. 3 to Jan. 7
Palantir quadrupled (up 340%) in 2024, making it one of the biggest Nasdaq winners of the year. The rally was driven by the company’s expanding role in and strong demand for AI-powered data analytics.
Governments widely use Palantir for intelligence and defense, while businesses use it for data-driven operations. Its products help them spot patterns and discover key insights in large datasets.
Wood’s decision to sell likely reflects a strategy to lock in profits following Palantir’s substantial rally while addressing growing concerns about its elevated valuation.
However, some analysts remain highly positive about Palantir stock in 2025. Wedbush said in December that Palantir could be a winner as software could lead the next AI boom this year.
Despite recent sales, Palantir remains the sixth-largest holding in the ARK Innovation ETF. It represents approximately 4.9% of the fund, with a market value of $307.9 million as of Jan. 17.
Palantir stock has lost roughly 7% since the start of 2025.
Last week, Wood sold another defense stock, Kratos Defense & Security Solutions (KTOS) .
On Jan. 15, her ARK Space Exploration & Innovation ETF (ARKX) sold 78,481 shares of Kratos. That chunk of stocks was valued at $2.7 million.
Related: Analyst who forecast Palantir’s rally unveils another defense stock pick
Kratos develops technologies for U.S. military and government applications. The company specializes in unmanned aerial systems, advanced defense technologies, and high-performance satellite communications.
It has integrated AI into its systems, such as enabling drones to operate autonomously and adapt to changing missions.
Kratos stock has surged 26% since 2025 began. The recent stock rally was driven primarily by a five-year contract with the Pentagon that could be worth $1.45 billion.
TheStreet’s veteran trader Stephen “Sarge” Guilfoyle, who had successfully predicted Palantir’s growth, is bullish on Kratos stock in 2025 with a price target of $35 after reviewing the company’s recent contracts and financials.
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Kratos closed at $33.62 on Jan. 17, approaching Guilfoyle’s earlier goal.
Kratos is ARK Space Exploration & Innovation ETF’s largest holding, accounting for approximately 10% of the fund with a market value of $29.7 million as of Jan. 17.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
