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Cathie Wood’s Ark Investment Management sold more than 340,000 Tesla shares through its three exchange-traded funds (ETFs).
Cathie Wood sold nearly $270 million of Tesla’s shares because the bond sell-off hit interest rate-sensitive technology stocks and stimulated the outflow of funds from her growth-focused fund.
According to the company’s daily trading updates, Wood’s Ark Investment Management sold more than 340,000 Tesla shares in three exchange-traded funds on Tuesday.
According to data compiled by Bloomberg, about 11% of the well-known ARK Innovation ETF (stock code ARKK) are still betting on Elon Musk’s company. The company tends to reduce its holdings when its shareholding ratio exceeds 10%. Tesla has generally outperformed its interest rate-sensitive investment style in the global plunge, and ARKK announced on Tuesday one of its worst trading days in months.
At the same time, overnight data showed that fund managers withdrew US$297 million from growth-focused funds on Monday, the most since March, resulting in an outflow of more than US$660 million in four days.
Since the Fed hinted last week that it would gradually reduce pandemic stimulus measures, U.S. Treasury yields have soared and sent shock waves through growth stocks. Because Wood focuses on disruptive innovation and technology, the Ark Fund uses such names extensively.
As the flagship ARKK fund and the company’s largest holding, Tesla is still Wood’s biggest bet. She predicts that its stock price will rise from around US$778 to US$3,000. However, when Ark performs very well or grows too much in its portfolio, it often cuts its stake in the automaker.
The automaker rose 5.7% this month, while the Nasdaq 100 technology index fell 5.2%. ARKK fell 8.2%.
Read more: As Tesla pushes the Momentum ETF, chasing the return of the winner
The Ark ETF’s trading arrangement means that the arrival of the flow data is one day behind, but given that ARKK fell 4.2% on Tuesday, there may be more outflows in the latest trading day. If so, the number of Teslas sold by the company may exceed $270 million, because the daily transaction update only shows the actions of the Ark team and does not include redemption activities caused by investor flows.
As of 7 a.m. New York time, ARKK was up 1.4% in early trading, while Nasdaq 100 index futures were up 0.9% and Tesla was up 0.9%.
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