Cathie Wood's Ark Rose To Prominence with Tesla Bet in 2020, But Did ARKK Miss Out Big On Other 'Magnificent 7' Opportunities?
Portfolio Pulse from Shanthi Rexaline
Cathie Wood's Ark Innovation ETF (ARKK) has underperformed compared to the 'Magnificent Seven' tech stocks, which have led the market rebound. ARKK's holdings include Tesla and Microsoft but exited Nvidia in January 2023, considering it overvalued. The Magnificent Seven, including Meta, Apple, Alphabet, Amazon, Nvidia, Microsoft, and Tesla, have shown significant returns, with Nvidia being the top performer due to its AI technology. In contrast, ARKK saw a negative return of 7.80%.
February 08, 2024 | 6:14 am
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NEGATIVE IMPACT
ARKK has underperformed compared to the Magnificent Seven, with a negative return of 7.80%. It holds Tesla and Microsoft but exited Nvidia in January 2023.
ARKK's underperformance is highlighted by its negative return and decision to exit Nvidia, which has seen significant gains. Its holdings in Tesla and Microsoft, despite being part of the Magnificent Seven, have not offset the overall negative performance.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Tesla, a key holding in ARKK's portfolio, saw a decline in 2022 but made a comeback in the first half of 2023, despite price cuts impacting margins.
Tesla's recovery in 2023, despite margin impacts from price cuts, is significant for ARKK given its substantial holding in the company.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 80
POSITIVE IMPACT
Microsoft, another ARKK holding, became the top company by capitalization in 2023, benefiting from its partnership with OpenAI and cloud services.
Microsoft's rise to the top in market capitalization, driven by its AI and cloud initiatives, is a positive aspect for ARKK, which holds the stock.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 70
POSITIVE IMPACT
Nvidia, part of the Magnificent Seven, was the best-performing S&P 500 stock in 2023 due to its AI technology, but ARKK exited its position in January 2023.
Nvidia's significant performance in 2023, driven by its AI technology, contrasts with ARKK's decision to exit its position, potentially missing out on substantial gains.
CONFIDENCE 90
IMPORTANCE 95
RELEVANCE 90