Ark Invest, the firm known for its $7,000 price target on the stock of Tesla, has faced some disbelief for selling shares of the electric auto maker.
Though Tesla remains the firm’s top holding, Ark has slashed its stake in the company over the last several quarters, which included a more than 17% reduction in ownership as of March 31, according to filings.
Not doing so, however, “would not be wise portfolio management,” Cathie Wood, CEO and chief investment officer at Ark, told CNBC’s “ETF Edge” on Monday.
“We get a lot of questions about, ‘How can you be so positive on Tesla and be selling it?'” Wood said.
The answer lies in Tesla’s exceptionally volatile trading patterns, she said.
“It never lost the number one position in our funds. If we had not taken profits in its ride up from [$]178 to 900 or nearly 1,000, it would’ve been … maybe over 20% of the fund,” she said. “That would not be wise portfolio management. We like to control our position sizes.”
Wood recalled that Tesla…