Cathie Wood Sold Palantir and AMD, Then Poured $3.35 Million Into Archer Aviation. Is ARK Betting Big on Flying Taxis?

All companies that have more than $100 million in investments are required to submit quarterly 13F filings that disclose their holdings. Additionally, individuals and funds have to submit filings when their ownership stakes cross 5% and 10%. When holdings reach the 10% threshold, each subsequent trade must be disclosed. Meanwhile, Cathie Wood's Ark Invest firm takes things to another level when it comes to transparency.

Ark Invest publishes regular updates disclosing all trades for the exchange traded funds (ETFs) that it manages, giving investors a clear look at all the moves made by Wood and her team of analysts and managers. Ark recently disclosed that it made some notable moves, selling shares of Palantir and Advanced Micro Devices and buying roughly $3.35 million worth of Archer Aviation (NYSE: ACHR) for its flagship Ark Innovation ETF.

Ark Invest CEO Cathie Wood:Image source:Getty Images.

What do Ark's moves mean for investors?

Ark Invest tends to take a very active approach to portfolio management, and Wood and her team will regularly trim holdings when they feel that stocks have posted big gains and present worthwhile profit-taking opportunities -- or simply no longer offer sufficient upside potential to justify the associated risks. Palantir and AMD have generated significant wins for Ark, and recent sales of these stocks look like profit taking rather than a fundamental loss of confidence in the companies.

Coming in as the Ark Innovation ETF's 11th- and 12th-largest holdings, respectively, Palantir and AMD are larger positions in the fund than Archer Aviation, which ranks as the fund's 30th-largest holding and accounts for roughly 1.2% of the portfolio by weight. On the other hand, Ark's move to increase its holdings in Archer Aviation, the maker of the electric vertical take-off and landing (eVTOL) aircraft, clearly reflects growing confidence in the company.

Archer has been making some interesting moves lately, most notably entering into a deal with Boeing to acquire its Insitu, SkyGrid, and Wisk Aero subsidiaries. Integrating these companies could significantly improve Archer's positioning in eVTOLs, drones, and autonomous aerial navigation. While the deal will result in Boeing receiving a 16.5% stake in Archer, it will also bring the aerospace and defense giant on board as a partner -- a development that could prove a substantial boon to the eVTOL company in ways beyond the subsidiary purchase.

Archer Aviation stock saw a substantial pop following the announcement of the Boeing deal, but it has now given up much of those gains. With the company's share price down roughly 31% year to date and 62% from its high, the stock could deliver big upside if the business continues to make progress with next-gen aviation technologies. Archer stock fits into the high-risk, high-reward category that Wood and Ark are known for, and big valuation pullbacks this year have shifted the risk-reward dynamic in more favorable directions.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Boeing, and Palantir Technologies. The Motley Fool has a disclosure policy.