In this article we discuss the 10 best tech stocks to buy according to Cathie Wood.
Catherine Wood, the legendary investor who runs ARK Investment Management, has disclosed several key details about the holdings of her hedge fund at the end of the first quarter of 2021, including surprises such as the trimming of Apple Inc. (NASDAQ: AAPL) stock by 36% compared to the previous quarter and 56% increased stock activity on Square, Inc. (NYSE: SQ).
Although Wood is widely famous for aggressively pursuing disruptive technology stocks, her drastic selling of Apple Inc. (NASDAQ: AAPL) stock does come as a bit of a surprise. At the end of March, the company also no longer held more than 20% of the stock in any company, compared to three such firms previously. Tesla, Inc. (NASDAQ: TSLA) still represents the largest holding for the firm.
ARK Investment holds more than 5.7 million shares in Tesla, Inc. (NASDAQ: TSLA) worth over $3.8 billion, representing more than 7.6% of their investment portfolio. Other major companies on the investment list for ARK include Spotify Technology S.A. (NYSE: SPOT) and Baidu, Inc. (NASDAQ: BIDU). ARK activity on Spotify Technology S.A. (NYSE: SPOT) stock increased 66% in the past three months. The increase was even more apparent on Baidu, Inc. (NASDAQ: BIDU) stock, which represents 2.2% of the ARK portfolio, clocking in at 127%.
Even though these famous companies make up a large portion of ARK Investment holdings, Wood has doubled down on her bets on cheap tech stocks in recent months, increasing her stakes in companies like Palantir Technologies Inc. (NYSE: PLTR) and Opendoor Technologies Inc. (NASDAQ: OPEN). According to the latest info, Ark Investment increased their holdings in Palantir Technologies Inc. (NYSE: PLTR) by a whopping 1,135% in the past few months. Their increased activity on Opendoor Technologies Inc. (NASDAQ: OPEN) stock was close to 200%.
Wood has a history of averaging handsome returns by selling stakes in bigger firms during crisis periods and buying up chunks in lesser known, cheaper growth stocks. Last year, one of her growth funds offered investors 152% in returns. Investors looked eager to jump on the bandwagon, pouring money into her firm that was managing over $60 billion in assets at one point this year. However, a lull in tech-related growth stocks and inflation worries have stoked market volatility, leading to a 32% drop in the flagship fund of ARK Investment since February.
Wood isn’t alone. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Cathie Wood of ARK Investment Management
With this context in mind, here is our list of the 10 best cheap tech stocks to buy according to Cathie Wood.
Best Cheap Tech Stocks to Buy According to Cathie Wood
10. Cellectis S.A. (NASDAQ: CLLS)
Number of Hedge Fund Holders: 8
Cellectis S.A. (NASDAQ: CLLS) is a France-based biotechnology company founded in 1999. It is ranked tenth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. The company primarily deals with cancer-related therapies, including the development and marketing of genome-edited chimeric antigen receptor T-cell technologies. ARK Investment owns more than 5 million shares in the company worth over $103 million, representing 0.2% of their investment portfolio.
Cellectis S.A. (NASDAQ: CLLS) reported earnings per share of -$0.26 for the first quarter of 2021, beating market predictions by $0.52. The revenue for the first three months of 2021 was over $27 million, beating market estimates by close to $20 million.
At the end of the first quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $112 million in Cellectis S.A. (NASDAQ: CLLS), up from 6 the preceding quarter worth $191 million.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), and Baidu, Inc. (NASDAQ: BIDU), Cellectis S.A. (NASDAQ: CLLS) is one of the best stocks to buy according to Cathie Wood.
9. Nano Dimension Ltd. (NASDAQ: NNDM)
Number of Hedge Fund Holders: 11
Nano Dimension Ltd. (NASDAQ: NNDM) is an Israel-based 3D printing company founded in 2012. It is placed ninth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. The company stock has returned more than 150% to investors over the course of the past twelve months. ARK Investment holds close to 13 million shares in the company worth over $111 million. This represents 0.22% of their portfolio. Nano Dimension primarily focuses on research and development related to 3D printed electronics.
In earnings results for the first three months of 2021, posted on May 20, Nano Dimension Ltd. (NASDAQ: NNDM) reported earnings per share of -$0.05 and a revenue of $0.8 million. The revenue was up over 15% compared to the same period last year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Nano Dimension Ltd. (NASDAQ: NNDM) with 6.6 million shares worth more than $57 million.
8. Skillz Inc. (NYSE: SKLZ)
Number of Hedge Fund Holders: 26
Skillz Inc. (NYSE: SKLZ) is a California-based video game competition platform founded in 2012. It is ranked eighth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Skillz stock has offered investors returns exceeding 57% over the past year. ARK Investment holds more than 6 million shares in the company worth over $114 million, representing 0.22% of their portfolio. The Skillz platform has been integrated into mobile software like Android and iOS for global gamer connectivity.
On May 4, Skillz Inc. (NYSE: SKLZ) reported earnings results for the first three months of 2021, posting earnings per share of -$0.15, just missing market estimates by $0.02. The revenue over the period was over $83 million, up 92% year-on-year.
At the end of the first quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $672 million in Skillz Inc. (NYSE: SKLZ), down from 33 in the previous quarter worth $719 million.
7. Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS)
Number of Hedge Fund Holders: 16
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a California-based company that specializes in direct energy weapons and satellite communications. It was founded in 1994 and is placed seventh on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Wood, through ARK Investment, holds more than 5 million shares in the company worth over $143 million. This represents 0.28% of her portfolio at ARK. Kratos has increased investment in cyber warfare solutions in recent years, looking to capitalize on the growing technology market.
On May 5, Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) posted earnings per share of $0.06 for the first quarter of 2021, beating market estimates by $0.01. The revenue over the period was over $194 million, up 15% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Washington Harbour Partners is a leading shareholder in Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) with 475,989 shares worth more than $12 million.
6. Codexis, Inc. (NASDAQ: CDXS)
Number of Hedge Fund Holders: 13
Codexis, Inc. (NASDAQ: CDXS) is a California-based technology company that concentrates on the development and marketing of enzymes for pharmaceutical, food and medical applications. It was founded in 2002 and is ranked sixth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. ARK Investment holds more than 6.2 million shares in the company worth over $143 million. This represents 0.28% of their investment portfolio. Codexis stock has returned more than 60% to investors in the past year.
In earnings results for the first quarter of 2021, Codexis, Inc. (NASDAQ: CDXS) reported earnings per share of -$0.14, beating market predictions by $0.07. The revenue for the first three months of 2021 was over $18 million, beating market estimates by over $3.6 million.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $418 million in Codexis, Inc. (NASDAQ: CDXS), down from 14 in the previous quarter worth $367 million.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR) and Baidu, Inc. (NASDAQ: BIDU), Codexis, Inc. (NASDAQ: CDXS) is one of the best stocks to buy according to Cathie Wood.
In its Q4 2020 investor letter, Roubaix Capital LLC, an asset management firm, highlighted a few stocks and Codexis, Inc. (NASDAQ: CDXS) was one of them. Here is what the fund said:
“The largest contributor to fourth quarter long performance was Codexis (CDXS), a truly unique investment story. The company engineers enzymes that enhance productivity of the manufacturing processes of major industries including pharmaceutical, food and other companies. The high-performance enzymes identified by Codexis enable higher levels of production, which in turn drives profits for customers. The story does not stop here. Codexis’ proprietary platform, Code Evolver, has also demonstrated early success in identifying proteins to develop novel protein and gene therapies. This adds another layer of upside optionality to the company and has validation from partnerships with Nestle and Takeda. In these instances, the company earns milestone driven incentives and royalty payments. We see Codexis’ API business generating increasing scale at the same time the pipeline around licenses and royalties has never been larger, and as a result we maintain our position.”
5. HUYA Inc. (NYSE: HUYA)
Number of Hedge Fund Holders: 13
HUYA Inc. (NYSE: HUYA) is a China-based company that operates game live streaming platforms. It was founded in 2014 and is placed fifth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. ARK Investment holds close to 11 million shares in the company worth over $214 million. This represents 0.42% of their investment portfolio. HUYA offers streaming services for over 4,000 games, as well as for other sectors such as talent shows, anime, outdoor activities, live chats, and online theatre, among others.
On May 18, HUYA Inc. (NYSE: HUYA) posted earnings results for the first quarter of 2021, reporting earnings per share of $0.17, beating market predictions by $0.03. The revenue for the first three months of 2021 was close to $400 million, up 16% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Hong Kong-based investment firm Segantii Capital is a leading shareholder in HUYA Inc. (NYSE: HUYA) with 2.2 million shares worth more than $44 million.
4. Opendoor Technologies Inc. (NASDAQ: OPEN)
Number of Hedge Fund Holders: 33
Opendoor Technologies Inc. (NASDAQ: OPEN) is a California-based company that offers clients the ability to transact in residential real estate online. It was founded in 2014 and is ranked fourth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Opendoor stock has returned more than 1.15 to investors in the past week. ARK Investment holds 11 million shares in the company worth over $246 million, representing 0.48% of their investment portfolio.
Opendoor Technologies Inc. (NASDAQ: OPEN) reported earnings per share of -$0.48 for the first three months of 2021, beating market predictions by $0.01. The revenue for the first quarter was close to $750 million, beating market estimates by $127 million.
At the end of the first quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $1.04 billion in Opendoor Technologies Inc. (NASDAQ: OPEN), up from 28 in the preceding quarter worth $1.02 billion.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR) and Baidu, Inc. (NASDAQ: BIDU), Opendoor Technologies Inc. (NASDAQ: OPEN) is one of the best stocks to buy according to Cathie Wood.
In its Q1 2021 investor letter, Baron Fund, an asset management firm, highlighted a few stocks and Opendoor Technologies Inc. (NASDAQ: OPEN) was one of them. Here is what the fund said:
“The sales of Opendoor Technologies Inc. was a trim for position-sizing purposes after orders-of-magnitude type stock returns over the last year for these investments. We continue to believe the company is a disruptive innovator with open-ended long-term opportunities.”
3. Stratasys Ltd. (NASDAQ: SSYS)
Number of hedge fund holders: 24
Stratasys Ltd. (NASDAQ: SSYS) is a Minnesota-based company that makes 3D printers and production systems for offices. It was founded in 1989 and is placed third on our list of 10 best cheap tech stocks to buy according to Cathie Wood. ARK Investment holds 10.4 million shares in the firm worth over $269 million, representing 0.53% of their portfolio. The company stock has offered investors returns exceeding 16% over the course of the past twelve months. The firm serves several markets like automotive, aerospace, medical, and education, among others.
In earnings results for the first quarter of 2021, posted on May 5, Stratasys Ltd. (NASDAQ: SSYS) reported earnings per share of -$0.06, missing market predictions by $0.06. The revenue for the first three months of the year was over $134 million, up 1% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Stratasys Ltd. (NASDAQ: SSYS) with 3.1 million shares worth more than $80 million.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR) and Baidu, Inc. (NASDAQ: BIDU), Stratasys Ltd. (NASDAQ: SSYS) is one of the best stocks to buy according to Cathie Wood.
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Stratasys Ltd. (NASDAQ: SSYS) was one of them. Here is what the fund said:
“Short position Stratasys also contributed to performance. Stratasys is one of the larger 3D printing companies. While additive manufacturing (3D printing) is a revolutionary concept, it has only seen its primary adoption for manufacturing prototypes and test parts, not high-volume end-use parts. Unfortunately for incumbents like Stratasys, additive manufacturing has continued to attract capital and dozens of new entrants have emerged with new technologies targeting specific applications. Industry pioneers like Stratasys have seen key patents expire and have lost market share to new competition. As a result of these factors, Stratasys has not grown for five years. Some industry participants believe that Stratasys’ plastic extrusion technology is simply too slow to be an acceptable solution for higher volume manufacturing. The short position contributed to portfolio returns when Stratasys’ shares declined due to year-over-year revenue contraction, continuing market share losses, a talent exodus, the issuance of new shares via a secondary offering, and no significant progress on developing new opportunities in promising additive verticals like metal and dental.”
2. Palantir Technologies Inc. (NYSE: PLTR)
Number of hedge fund holders: 32
Palantir Technologies Inc. (NYSE: PLTR) is a Colorado-based company that focuses on big data analytics. It was founded in 2003 and is ranked second on our list of 10 best cheap tech stocks to buy according to Cathie Wood. ARK Investment holds more than 18.6 million shares in the company worth over $433 million, representing 0.86% of their portfolio. Palantir stock has returned close to 4% to investors over the past week. One of the famous products of the firm is Palantir Gotham, a software for government operatives in the defense and intelligence sectors.
In earnings results for the first quarter of 2021, posted on May 11, Palantir Technologies Inc. (NYSE: PLTR) reported earnings per share of $0.04 and a revenue of $341 million. For the second quarter of the year, the firm projects $360 million in revenue.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Palantir Technologies Inc. (NYSE: PLTR), down from 38 in the preceding quarter worth $1.9 billion.
In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks and Palantir Technologies Inc. (NYSE: PLTR) was one of them. Here is what the fund said:
“In October, we bought a stake in Palantir. Earlier, in June, our concentrated Tech Fund, which has a mandate to also buy shares in the secondary market, bought shares of Palantir from insiders, before the direct listing. At the price we bought, the equity had much more upside than downside. Palantir is operating a software platform that functions as the digital infrastructure for data-driven operations and decision making. The software helps to structure and capture context in data of large corporations. Governments are increasingly realizing that they have to deal with serious data challenges and cyber risk. As most governments cannot attract the most talented software engineers, they need private enterprises such as Palantir to help them build solid infrastructure. Foundry, Palantir’s software for enterprises, is used by companies to make safer cars and airplanes or to accelerate cancer research. The speed to bring new clients on board is improving and revenues will grow faster than expenses. Palantir has a long runway of growth ahead.”
1. Pure Storage, Inc. (NYSE: PSTG)
Number of Hedge Fund Holders: 30
Pure Storage, Inc. (NYSE: PSTG) is a California-based technology firm that focuses on data storage solutions. It was founded in 2009 and is placed first on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Pure Storage stock has offered investors returns exceeding 8.5% in the past year. ARK Investment holds more than 32.8 million shares in the data storage company worth over $708 million, representing 1.4% of their portfolio. Pure Storage was formerly known as OS76.
On May 13, investment advisory Evercore upgraded Pure Storage, Inc. (NYSE: PSTG) storage stock to Outperform from In Line on the back of expected accelerating top-line growth for the data firm as enterprise spending continued to improve in the post pandemic economy.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eminence Capital is a leading shareholder in Pure Storage, Inc. (NYSE: PSTG) with 6 million shares worth more than $130 million.
You can also take a peek at 10 Cheap Stocks To Invest In February 2021 and Top 10 Stocks to Invest in For Beginner Investors.
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Disclosure: None. 10 Best Cheap Tech Stocks to Buy According to Cathie Wood is originally published on Insider Monkey.
