- Cathie Wood's ARK Invest has sold around 90% of its holdings in Twitter since the start of the year.
- So it missed out on the huge rally after Tesla boss Elon Musk revealed a majority stake in Twitter this week.
- Wood's stake in Twitter would now be worth $700 million if she had held onto all of it.
Star stock-picker Cathie Wood has not had a great start to 2022. Her flagship ARK Innovation fund that won her fame and fortune in 2020 has lost 40% so far this year, compounding the 24% drop last year.
Wood's funds shot to prominence in the pandemic, when tidal waves of cheap cash sent the kind of cutting-edge, speculative technology stocks she invests in into the stratosphere.
Since then, as money conditions have tightened, interest rates have gone up and the tech sector has lost some of its luster, Wood's funds have struggled.
Like any asset manager, ARK Invest regularly buys and sells stocks to manage its portfolio. This year, the company has sold around 90% of its holdings of micro-blogging platform Twitter — missing out on the huge rally that ensued after entrepreneur and Tesla boss Elon Musk revealed a majority stake in the company earlier this week.
A filing with the securities regulator on April 4 showed Musk had bought a 9.2% stake in Twitter for around $3 billion, making him the company's largest shareholder. He subsequently joined the board.
The news sent Twitter's shares up a full 27% on the day, to three-month highs near $55. The stock has since drifted back to around $47.
But ARK had already sold most of its holdings even before Musk's revelation.
ARK's funds held around 15.4 million Twitter shares at the very start of 2022, according to data from trading tracker Cathie's Ark. By April 7, that holding was closer to 1.3 million shares.
Had ARK retained the stake in Twitter that it held at December 31, which accounted for about 2% of its portfolio, that holding would now be worth over $700 million, versus its current holdings' $62 million.
Wood had previously invested heavily in Twitter. ARK notably bought more than 1 million shares worth almost $49 million after then-chief executive Jack Dorsey resigned at the end of November.
Although she's whittled down ARK's holdings of Tesla, too, Wood remains a fan of the electric vehicle company, and believes Musk — the ultimate disruptor — has the potential to shake up Twitter's board.
"This could be setting up for another leadership change," she told Bloomberg Radio this week.
The ARK Innovation fund experienced its worst drawdown in its history in January, when tech stocks got hammered and the Nasdaq 100 saw its biggest monthly drop in three years.
The undervaluation in Ark's portfolio holdings "reached an extreme I've never experienced in my career," Wood told ETF Trends at the time.
But she remained optimistic. "We truly believe that that rubber band will snap, and the performance will rebound," she said.