In this article, we will take a look at the 16 best stocks to buy and hold for the next 15 years according to Cathie Wood’s portfolio.
Cathie Wood’s hedge fund has taken a lot of hammering over the past couple of years as her bets on innovative, disruptive companies don’t seem to play out as planned. Talking to Bloomberg, Cathie Wood recently called rising interest rates the biggest reason behind her fund’s underperformance. She said that all was going well until the Fed started to increase interest rates to record highs. In that environment all assets fell and there was “no way” ARK’s strategy could have worked, said Wood. Cathie Wood said that her hedge fund started to feel the heat near the end of 2021 when the markets began to anticipate an increase in interest rates. Wood however noted that investors have started to look over the rising interest rates and into rate cuts.
Cathie Wood Ready for “Prime Time”
Cathie Wood said that innovation, one of the core values of her investment philosophy, does well during tough times. That’s why, according to her, ARK funds have been outperforming this year. She said that “one by one” ARK’s investments would earn their way back and it’s all about margin expansion and revenue growth.
Wood again voiced her strong optimism around tech and innovation and said that she’s ready for the “prime time” as she thinks the Fed might start to cut interest rates sometime next year. She said that we are looking at beyond the rate-hike period and when interest rates would begin to fall, tech and innovation bets would rebound.
In January this year Cathie Wood penned some words of optimism and said that there was a “wall of worry” stopping investors from betting on the future amid the panic and market declines. She said that the market overlooked many futuristic themes in 2022, including social commerce, AI, blockchain, robotics, 3D printing, etc. Cathie Wood said:
“…Plagued by fears of entrenched inflation and higher interest rates, the wall of worry in the equity markets has scaled to enormous heights, historically a positive backdrop for equities. According to the latest BofA Fund Manager Survey, investors currently are holding high levels of cash, levels not seen since the 9/11 crisis in 2001, and are overweight in bonds for the first time since April 2009. In December, the Chicago Board Options Exchange (CBOE) equity put/call ratio[3] reached a record high, surpassing levels seen during the tech and telecom bubble and the Global Financial Crisis. In hindsight, both of those times were terrific opportunities to put funds to work in highly differentiated strategies. I believe that the current market dislocation presents an opportunity for innovation strategies to thrive when equity markets recover. Fear of the future is palpable, but crisis can create opportunities.”
Cathie Wood of ARK Investment Management
Our Methodology
For this article, we scoured Cathie Wood’s ARK Invest’s portfolio and picked 16 stocks the fund has been bullish on since as far back as 2016. We believe having exposure to a company for eight years is enough to show that the fund is bullish on the company’s growth prospects for several years to come. Cathie Wood’s core thesis and investment rationale have always been innovation and disruption. The companies listed in this article have the full confidence and backing of Cathie Wood. Some of these stocks have performed well, while some have been battered. Only time will tell how these companies perform in the future. Some of the top names Cathie Wood likes include Tesla, Inc. (NASDAQ:TSLA), Shopify Inc. (NYSE:SHOP) and Twilio Inc. (NYSE:TWLO).
Best Stocks to Buy and Hold for the Next 15 Years According to Cathie Wood’s Portfolio
16. 3D Systems Corporation (NYSE:DDD)
Number of Hedge Fund Holders: 13
Cathie Wood’s hedge fund first bought a stake in 3D printing company 3D Systems Corporation (NYSE:DDD) back in the fourth quarter of 2016. In the second quarter of 2023, the fund upped its stake in 3D Systems Corporation by 3%, ending the period with a $37.4 million stake in the company.
As of the end of the second quarter of 2023, 13 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in 3D Systems Corporation. The biggest stakeholder of 3D Systems Corporation after Cathie Wood was D. E. Shaw which had an $18 million stake in the company.
Like DDD, Tesla, Inc., Shopify Inc. and Twilio Inc. are some of the stocks Cathie Wood is bullish on.
15. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 16
Unmanned aerial vehicle company AeroVironment, Inc. (NASDAQ:AVAV) ranks 15th in our list of the best stocks to buy and hold for the next 15 years according to Cathie Wood’s portfolio. ARK first bought a stake in AeroVironment, Inc. back in the fourth quarter of 2016. In September, Baird upgraded AeroVironment, Inc. to Outperform from Neutral, praising the company’s strong guidance. AeroVironment, Inc. in fiscal Q1 posted an adjusted EPS of $1.00 beating estimates by $0.70. Revenue in the quarter jumped 40.4% year over year to $152.35 million, beating estimates by $21.35 million. AeroVironment, Inc. also upped its 2024 guidance. It now expects revenue in the range of $645 million and $675 million, while net income is expected to come in between $51 million and $59 million.
As of the end of the second quarter of 2023, 16 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in AeroVironment, Inc..
14. 2U, Inc. (NASDAQ:TWOU)
Number of Hedge Fund Holders: 17
Cathie Wood bought a stake in the New York-based education technology company 2U, Inc. (NASDAQ:TWOU) for the first time in the last quarter of 2016. As of the end of the second quarter of 2023, ARK had a $35.4 million stake in 2U, Inc..
As of the end of the second quarter of 2023, 17 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in 2U, Inc.. The biggest stakeholder of 2U, Inc. during this period after Cathie Wood was Bruce Emery’s Greenvale Capital which owns a $23 million stake in the company.
13. Twist Bioscience Corporation (NASDAQ:TWST)
Number of Hedge Fund Holders: 20
Biotechnology company Twist Bioscience Corporation (NASDAQ:TWST) ranks 13th in our list of the best stocks to buy and hold for the next 15 years according to Cathie Wood’s hedge fund.
Cathie Wood’s ARK Invest first bought into Twist Bioscience Corporation in the second quarter of 2019. As of the end of the June quarter this year the fund had a $142 million stake in Twist Bioscience Corporation.
During its fiscal Q3 earnings call Twist Bioscience Corporation talked in detail about its guidance and future plans:
“CapEx for the year is projected to be $35 million, and that’s a decrease from $40 million previously. And ending cash is projected to be approximately $325 million compared to previous guidance of $320 million. Before concluding, I want to briefly recap the impact of restructuring activities we announced in May. We estimate overall annual savings to be approximately $40 million, including $23 million from operations due to the transition of our SynBio operations to the Factory of the Future and approximately $17 million in R&D. And we have built these savings into the guidance we provided. In summary, we’re commercially shipping from the Factory of the Future. We continue to gain market share, agile customer base and are focused on managing our cost structure as we scale.
We anticipate exiting the fourth quarter of fiscal ‘24 at adjusted EBITDA breakeven for the core business with adjusted EBITDA breakeven for Biopharma and no delay, so we continue to manage all our business areas actively. We define adjusted EBITDA as EBITDA excluding stock-based compensation.”
Read the full earnings call transcript here.
Artisan Small Cap Fund made the following comment about Twist Bioscience Corporation in its second quarter 2023 investor letter:
“Along with Exact Sciences, notable adds in the quarter included Twist Bioscience Corporation (NASDAQ:TWST), Saia and Crocs. Twist Bioscience is a life sciences company with a proprietary silicon-based platform for writing DNA. Synthetic biology is used by biotech companies looking to extend drug discovery and development capabilities as well as diagnostics companies developing methods of detecting diseases at earlier stages. Other applications include creating disease-resistant food crops (with higher yields per acre) and the creation of biofuels (from citrus peel, sawdust, straw, rice husks, etc.) as alternatives to fossil fuels. Synthetic biology is a large and rapidly growing market, and Twist is currently in the pole position. We added to the position as management’s cost-cutting achieved breakeven sooner than expected. We view guidance as conservative given potential end-market demand and market share gains. Its planned fast genes offering (premium pricing for a 5-day turnaround, instead of 10) in 2024 could further accelerate business momentum.”
12. Veracyte, Inc. (NASDAQ:VCYT)
Number of Hedge Fund Holders: 23
Cathie Wood first bought a stake in the diagnostics company Veracyte, Inc. (NASDAQ:VCYT) in the fourth quarter of 2016. As of the end of the June quarter ARK owns a $199 million stake in Veracyte, Inc..
11. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)
Number of Hedge Fund Holders: 27
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) shares have gained about 23.4% year to date through October 9. Cathie Wood’s hedge fund first piled into Ionis Pharmaceuticals, Inc. in the last quarter of 2016. As of the end of the June quarter this year, the fund had a $99 million stake in Ionis Pharmaceuticals, Inc..
As of the end of the second quarter of 2023, 27 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported owning stakes in Ionis Pharmaceuticals, Inc.. The most significant stakeholder of Ionis Pharmaceuticals, Inc. during this period was Mark Lampert’s Biotechnology Value Fund / BVF Inc which owns an $117 million stake in the company.
10. Pacific Biosciences of California, Inc. (NASDAQ:PACB)
Number of Hedge Fund Holders: 28
Pacific Biosciences of California, Inc. (NASDAQ:PACB) ranks 10th in our list of the best stocks to buy and hold for the next 15 years. Cathie Wood first bought into Pacific Biosciences of California, Inc. in the third quarter of 2019.
As of the end of the second quarter of 2023, 28 hedge funds tracked by Insider Monkey had stakes in Pacific Biosciences of California, Inc..
Jackson Square Partners made the following comment about Pacific Biosciences of California, Inc. in its Q3 2022 investor letter:
“Pacific Biosciences of California, Inc. (NASDAQ:PACB): emerging player in genomic sequencing with its highly differentiated long-read technology; poised to unlock a multi-year share shift towards long-read sequencing as new products dramatically improve throughput and cost to competitively advantaged levels.”
9. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 29
Cathie Wood’s ARK bought a small stake in Roku, Inc. (NASDAQ:ROKU) back in the second quarter of 2019. The fund has since added to its stakes and as of the end of the June quarter this year it had a massive $765 million stake in Roku, Inc.. Roku, Inc. has indeed rewarded the fund as it’s up about 77% in 2023 through October 9.
Here is what Saga Partners has to say about Roku, Inc. in its Q2 2022 investor letter:
“The Portfolio first bought Roku in Q3’20. It was a company we followed closely given our investment in The Trade Desk and its importance in connected television (CTV). Roku continued to impressively grow its CTV market share and it took some extra work to understand the underlying dynamics causing Roku’s success. I think there is some misunderstanding surrounding the connected television landscape. Since I haven’t written extensively on the topic in past letters, I thought it would be helpful to provide a little more background on the underlying dynamics of the space below…” (Click here to see the full text)
8. Trimble Inc. (NASDAQ:TRMB)
Number of Hedge Fund Holders: 29
Industrial technology company Trimble Inc. (NASDAQ:TRMB) ranks 8th in our list of the best stocks to buy and holding for the next 15 years according to Cathie Wood’s portfolio. In August Trimble Inc. posted second quarter results. Adjusted EPS in the quarter came in at $0.64 beating estimates by $0.04. Revenue in the period jumped 5.6% year over year to $993.6 million.
ARK Invest first bought Trimble Inc. shares back in the fourth quarter of 2016. As of the end of the second quarter of 2023, ARK had a $103 million stake in Trimble Inc..
Artisan Partners made the following comment about Trimble Inc. in its Q4 2022 investor letter:
“Trimble Inc. (NASDAQ:TRMB) is an industrial technology company that is bringing software, sensor and device solutions to areas of the economy that have been historically relatively slower to adopt new technology—such as agriculture, transportation and construction. While Trimble has made progress shifting its business toward software, its remaining hardware business is beginning to come under cyclical pressure. In addition, the company is taking on additional debt to fund an acquisition in its transportation technology segment, which is an area of the business we find less attractive. We believe Bentley System’s greater focus on civil construction software leaves it better positioned for the next few years, so we decided to harvest Trimble to fund this new investment.”
7. Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Number of Hedge Fund Holders: 29
Cathie Wood has been holding stakes in clinical-stage biotech company Intellia Therapeutics, Inc. (NASDAQ:NTLA) since 2016. As of the end of the second quarter of 2023, ARK Invest had a $388 million stake in the company. Intellia Therapeutics, Inc. shares have lost about 13% in value year to date.
6. CRISPR Therapeutics AG (NASDAQ:CRSP)
Number of Hedge Fund Holders: 30
Cathie Wood has been a big fan of gene editing companies and CRISPR Therapeutics AG (NASDAQ:CRSP) tops her list of favorite gene tech stocks. ARK Invest bought a stake in CRISPR Therapeutics AG in the second quarter of 2017. The fund now owns a $411 million stake in CRISPR Therapeutics AG.
Some other stocks Cathie Wood likes include Tesla, Inc., Shopify Inc. and Twilio Inc.. We’ll discuss these stocks in the next part of this article.
5. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 41
Testing solutions company Teradyne, Inc. (NASDAQ:TER) is one of the top stocks to buy and hold for the next 15 years according to Cathie Wood. ARK Invest first bought stakes in Teradyne, Inc. during the fourth quarter of 2016. As of the end of the second quarter of 2023, the fund had a $131 million stake in Teradyne, Inc..
Insider Monkey’s database of 910 hedge funds shows that 41 hedge funds had stakes in Teradyne, Inc. as of the June quarter, up from 33 hedge funds in the previous quarter. This shows a massive jump in hedge fund sentiment for Teradyne, Inc..
4. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 49
Communications platform and technology company Twilio Inc. came on ARK’s radar back in 2018 when the fund bought a stake in the company during the last quarter of the year. As of the second quarter of this year, the fund owns a $448 million stake in Twilio Inc..
Aristotle Atlantic Focus Growth Strategy made the following comment about Twilio Inc. in its Q4 2022 investor letter:
“We sold Twilio Inc. (NYSE:TWLO) and thereby reduced our subsector weight in software. The company reported a decent third quarter, but disappointed on fourth quarter 2022, full year 2023, and long-term guidance. The company is seeing macroeconomic headwinds and a slowdown spreading from technology, social media and cryptocurrency to retail and e-commerce. The other negative disclosure and a driver of this gross margin “miss” was that Twilio’s software sales are not accelerating at the rate that we expected. We are disappointed with this lower topline and low operating margin improvement guidance. The business transformation is taking longer than expected, and there is the heightened possibility that the new software growth could be stifled by more formidable competition as Twilio has made too many missteps.”
3. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 74
Shopify Inc. is one of the most favorite stocks of Cathie Wood. Cathie Wood’s hedge fund bought a stake in Shopify Inc. back in the second quarter of 2017. The fund had a $573 million stake in Shopify Inc. as of the end of the second quarter of 2023. Shopify Inc. shares have gained about 50% year to date. Analysts are praising Shopify Inc.’s deal with Amazon that would allow Shopify merchants to offer a Buy with Prime option for payment processing and fulfillment.
ARK Invest’s Andrew Kim also commented on the deal:
“Now, having sold Shopify Logistics to Flexport, Shopify no longer competes with Amazon in fulfillment, which has paved the way for compromise. Although Shopify now owns 6% of Flexport, the lower priced logistics service, the introduction of Amazon’s fulfillment services does erode its moat as Shopify’s official logistics provider.”
RiverPark Large Growth Fund made the following comment about Shopify Inc. in its Q2 2023 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter following strong 1Q results and the announced divestiture of its logistics business. Gross Merchandise Volume (GMV) grew 15% year over year as e-commerce sales broadly rebounded and Shopify continued to take market share. Revenue grew 25% driven by increased merchant adoption of multiple products, especially Shop Pay. The company generated $86 million of free cash flow, up from a $46 million loss last year, and announced expectations to be free cash flow positive for each quarter for the rest of the year. The company had previously announced several cost savings plans, which are driving margin and free cash flow improvement, and now plans to divest its capital-intensive logistics arm. Faster growing revenue, lower operating expenses, and a less capital-intensive future were all cheered on by the market.
Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 79
Tesla, Inc. is among the top stocks to buy and hold for the next 15 years according to Cathie Wood’s portfolio. Cathie Wood first bought a stake in Tesla, Inc. back in 2016. ARK now owns a $1.27 billion stake in Tesla, Inc.. Cathie Wood believes Tesla, Inc. stock would hit $2000 by 2027.
Baron Partners Fund made the following comment about Tesla, Inc. in its Q2 2023 investor letter:
Many factors contributed to the strong performance of our largest Disruptive Growth position, Tesla, Inc. (NASDAQ:TSLA), in the period. Investors’ concerns regarding Tesla in 2022 continue to dissipate, and the company’s business has continued to grow materially, although at below peak margins. Tesla’s deliveries in China are recovering. The company’s newest factory in Texas has ramped production and should contribute to improved domestic sales and margins. U.S. government policies have lowered the cost to own Tesla vehicles, while also reducing the company’s battery production expenses.
We continue to believe that Tesla is only scratching the surface of its potential. We regard announced partnerships between Tesla and its competitors in the quarter as important. In early June, Tesla agreed to provide Ford Motors access to Tesla’s electric vehicle (EV) charging technology and network. Other traditional and pure EV manufacturers, including General Motors, Rivian, and Volvo, quickly followed suit. We expect additional charging partnerships to ensue. In our view, these relationships validate Tesla’s charging technology and infrastructure as superior to other standards. Consolidation around a single technology should accelerate charging infrastructure deployment, diminish the risk of Tesla’s technology becoming obsolete, and lessen a key concern of hesitant EV purchasers. EV adoption is at a tipping point. And Tesla, with its approximately 60% domestic market share of EVs, should be the most important beneficiary of this shift…” (Click here to read the full text)
1. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 86
Cathie Wood first bought a stake in Intuit Inc. (NASDAQ:INTU) in the second quarter of 2017. Over the years she’s trimmed and upped her stake in Intuit Inc.. As of the end of the second quarter of 2023, ARK Invest had a $33 million stake in Intuit Inc..
In August Intuit Inc. posted fiscal Q4 results. Adjusted EPS in the period came in at $1.65 beating estimates by $0.21. Revenue in the quarter came in at $2.7 billion, beating estimates by $60 million.
Artisan Global Opportunities Fund made the following comment about Intuit Inc. in its Q2 2023 investor letter:
“Intuit Inc. (NASDAQ:INTU) has dominant market share positions in its two largest brands. QuickBooks has 75%–80% share in small business accounting, and TurboTax has 60%–65% share in tax prep software and 30% share of overall tax filings. And Intuit is driving growth within each platform. The recently launched QuickBooks Advanced is serving as a new customer acquisition funnel in the middle market and a retention tool for the 10%–15% of customers who “graduate” off the QuickBooks platform each year. Also, the company is experiencing accelerating growth within its underpenetrated payroll and payments offerings, which will drive higher average revenues per customer and higher margins. With TurboTax, the company is focusing on moving more people to live-assisted and full-service offerings. The do-it-yourself tax market is gaining 1%–2% of market share per year against CPA/accountants who control about 40% market share. And the overall market should continue to grow 1%–2% per year just based on growth in total IRS returns. While the company has sizable exposure to the small- and medium-sized business market, we believe it would be insulated from an economic slowdown given the mission-critical nature of these two offerings. We are also encouraged by the company’s plans to improve the platform by utilizing AI, which would drive an enhanced customer experience.”
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This article is originally published at Insider Monkey.
