When a popular stock drops, some investors flee — but Cathie Wood does just the opposite. The founder and chief executive officer of Ark Invest instead takes a closer look at the down but probably not out player, and in many cases, she will pick up shares at a bargain price. This is all part of the famous investor’s strategy. She aims to get in on innovative companies at reasonable or cheap prices and hold on for the long term to benefit from their growth.
This technique has helped Wood’s flagship Ark Innovation fund advance more than 50% over the past three years. And considering that the fund includes many of tomorrow’s potential winners, this could be just the beginning of Ark Innovation’s long-term growth story.
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In recent days, artificial intelligence (AI) stocks have faltered, and that hasn’t escaped Wood’s eye. It was the perfect opportunity for this savvy investor to go bargain hunting, and as she did, she bought a stock that recently crashed 17% in one trading session and a stock that’s dropped 50% from its peak. Let’s zoom in for a closer look.
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Cathie Wood bought shares of Advanced Micro Devices (NASDAQ: AMD) as it tumbled 17% on Feb. 4. This was in the trading session after the company announced earnings that beat analysts’ estimates — but investors were disappointed that, considering demand for AI chips, the company’s forecast for the first quarter wasn’t even higher. AMD expects $9.8 billion in revenue for that quarter.
Wood loaded up on AMD shares, adding them to five of her funds: Ark Innovation, Ark Autonomous Technology, Ark Next Generation Internet, Ark Blockchain and Fintech, and Ark Space & Defense. AMD is the sixth-biggest holding in Ark Innovation, representing nearly 3.9% of the fund.
AMD is a rival of AI chip leader Nvidia, as it makes graphics processing…
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