Cathie Wood's ARK Invest missed out on more than $1 billion in returns by selling Nvidia stock too early

• Cathie Wood's decision to sell more than 1 million shares of Nvidia came as the stock rocketed to astronomical highs. 
• Ark Invest has missed out on more than $1 billion in returns by selling Nvidia stock too early.
• Ark Invest sold 859,000 Nvidia shares in the fourth quarter of 2022, when the stock was trading below $150 per share.

Cathie Wood's decision to sell the bulk of Ark Invest's Nvidia holdings when the stock was trading below $150 per share has proven to be costly. 

To put a number on it, the famed money manager's firm has been left out of a rally that would have netted it a $1.2 billion return, according to Business Insider calculations.

According to 13F filings with the Securities and Exchange Commission, Ark Invest has sold 1.3 million shares of Nvidia across its suite of investment products since the fourth quarter of 2022.

The bulk of those sales occurred in November 2022, before the release of ChatGPT helped spark a massive artificial intelligence-fueled rally in the stock market.

Nvidia stock traded at an average price of about $146 in the fourth quarter of 2022. The stock has since soared 682% to about $1,141 on Thursday afternoon.  

Ark Invest's decision to sell 859,000 Nvidia shares in the fourth quarter of 2022 alone cost the disruptive innovation-focused investment company $854 million in missed returns had it held onto the stock.

In February 2023, Wood told CNBC that while she likes Nvidia stock, it's valuation was too high.

"We like Nvidia, we think it's going to be a good stock. It's priced, it's the 'check-the-box' AI company. For a flagship fund, where we're consolidated towards our highest conviction names, part of that has to do with the valuation," she told CNBC at the time. 

Nvidia had a market valuation of about $575 billion in February 2023. Today, Nvidia is worth about $2.8 trillion.

ARK Invest continued to sell down its stake in Nvidia, liquidating 109,000 shares in the first quarter of 2023, 118,587 shares in the second quarter of 2023, and a combined 147,651 shares in the second half of 2023.

In the first quarter of 2024, ARK Invest continued to pare down its Nvidia stake, selling 81,239 shares. As of March 31, ARK Invest still holds 67,000 shares of Nvidia worth about $75 million.

ARK Invest first purchased its stake in Nvidia in the fourth quarter of 2016 at an estimated average price of about $81, according to data from Stockcircle. 

In an interview with the Wall Street Journal earlier this year, Wood indicated that she is still not on board with Nvidia's sky-high valuation. 

"I've watched Nvidia all my career, actually, since it's gone public. It's a very cyclical stock," Wood said, adding that over ordering of Nvidia's GPUs could create a painful inventory correction for the company.

"Everyone's excited, trying to get in at the same time, so there's double ordering, triple ordering, quadruple ordering, and then there is an inventory correction. We think that will happen again," Wood said. 

ARK Invest has redeployed its proceeds from selling Nvidia stock into other potential AI companies, though few of those investments have panned out.

ARK Invest did not respond to a request for comment.