10 FinTech Stocks to Buy According to Cathie Wood

In this article, we discuss the 10 fintech stocks to buy according to Cathie Wood.

Cathie Wood’s ARK Investment Management is the fund to watch on Wall Street when it comes to disruptive tech. Wood started her own hedge fund in 2014 after her idea for innovation-focused disruptive tech ETFs was rejected by AllianceBernstein, where she worked as chief investment officer of global thematic strategies. Her early bullish call on Tesla, Inc. (NASDAQ:TSLA), along with choosing pandemic trailblazers such as Zoom Video Communications, Inc. (NASDAQ:ZM) and Teladoc Health, Inc (NYSE:TDOC), made her investment choices the talk of the town. Her flagship ARK Innovation ETF (NYSE:ARKK) returned 170% in 2020, even though it initially received plenty of criticism for the unusual style of investing. The critics had their day in 2021 and the start of 2022, as the growth-oriented fund lost more than $13 billion in value, falling over 60%. This is because inflation, soaring energy prices, and the geopolitical tensions resulting from the Russian invasion of Ukraine left investors with little appetite for risky, growth stocks. But come May 2022, and investors are again warming up to Wood’s Innovative ETF, recording more than $450 million of inflows in the first week of May.

FinTech combines two very crucial sectors of the economy: financial and technology. Tech is transforming the traditional banking and finance industry by moving it towards digital platforms which provide better, more inclusive financial services for everyday citizens.

Analyst Jeff Cantwell at research firm Wells Fargo says there’s a $1.5 trillion growth market opportunity for fintech companies, with annualized growth of 6% over the coming decade. This growth will be driven by the increased adoption of digital payment methods, for both consumers and merchants alike. Another trend is the transition of some firms towards a cloud-based model of ‘as-a-service’, where subscription fees are charged for e-wallets, account processing and related services.

Not only that, increased relevance of cryptocurrencies in the global payments industry will also lead to growth in the fintech sector. Among the 14 stocks in his coverage which includes Paypal Holdings, Inc. (NASDAQ:PYPL), Fiserv, Inc. (NASDAQ:FISV) and Global Payments Inc. (NYSE:GPN), Cantwell believes fintech stocks can raise profits by 15% in 2022 and 17% in the coming year, figures which are above the yearly growth projections for the S&P 500.

Cathie Wood of ARK Investment Management

With all this hype around fintech, disruptive tech and Cathie Wood’s latest portfolio, let’s take a look at the top 10 fintech stocks to buy according to the famed investor’s ARK Investment Management.

Our Methodology

We went through Cathie Wood’s 13 portfolio for the first quarter of 2022, and picked her top 10 holdings in the fintech sector.

FinTech Stocks to Buy According to Cathie Wood

10. Kaspi.kz JSC

ARK Investment Management’s 13 Portfolio: 0.06% 

ARK Investment Management’s Stake Value: $14.9 million

Number of Hedge Fund Holders: N/A

Starting off the list of fintech stocks to buy according to ARK Investment Management is Kaspi.kz JSC, which is Kazakhstan’s largest marketplace, payments, and fintech ecosystem. According to regulatory filings for first quarter of 2022, Cathie Wood owned 212,000 shares of Kaspi.kz JSC at a value of $14.9 million, representing 0.06% of the fund’s total holdings. In comparison, the hedge fund owned 221,000 shares of the Kazakhstani firm a quarter ago.

Kaspi.kz JSC has developed an all-in-one platform known as its Super App, which allows users to make mobile payments, browse the company’s online marketplace, make P2P payments, get access to personal finance and loans, as well as a personal finance app called My Bank.

For the first quarter of 2022, Kaspi.kz JSC recorded 7.2 million daily average users for its Super App, an increase of 34% year-on-year. The average monthly transactions of each active consumer also increased 63% from the year-ago quarter to come in at 53.1. The company also recorded strong growth in the number of active merchants, growing 233% year-on-year to reach 292,000.

In addition to Paypal Holdings, Inc., Fiserv, Inc. and Global Payments Inc., Kaspi.kz JSC is one of the best fintech stocks to buy now.

9. LendingClub Corporation (NYSE:LC)

ARK Investment Management’s 13 Portfolio: 0.06% 

ARK Investment Management’s Stake Value: $14.9 million

Number of Hedge Fund Holders: 31

LendingClub Corporation (NYSE:LC) deals in the provision of loans to customers in the categories of auto, education, medical, real estate and commercial. It operates through its tech-driven online platform lendingclub.com. Cathie Wood’s portfolio at the end of the first quarter of 2022 consisted of approximately 944,000 shares of LendingClub Corporation worth $14.9 million, representing 0.06% of her total holdings.

On February 7, Wedbush analyst David Chiaverini kept an ‘Outperform’ rating on LendingClub Corporation shares, and decreased the price target to $30 from $35. The analyst lowered his EPS estimates as he took into account an increasingly competitive market for consumer lenders which could put pressure on expenses.

For the fourth quarter of 2021, LendingClub Corporation posted revenue of $262.2 million, showing an impressive increase of 245.45% from the year-ago quarter. EPS of $0.27 also outperformed estimates by $0.05.

31 out of the 924 elite hedge funds tracked by Insider Monkey held positions in LendingClub Corporation at the end of the fourth quarter, with a combined value of $360.4 million. This shows a positive trend from the previous quarter where 25 hedge funds held $437 million worth of stakes in the company.

8. Intuit Inc. (NASDAQ:INTU)

ARK Investment Management’s 13 Portfolio: 0.07% 

ARK Investment Management’s Stake Value: $18.34 million

Number of Hedge Fund Holders: 82

Intuit Inc. (NASDAQ:INTU) ranks next on the list of fintech stocks to buy according to Cathie Wood. The firm provides a range of financial management and compliance products, including QuickBooks, a platform for accounting and business management, and Credit Karma, a personal finance platform which provides personalized information regarding credit cards, insurance products and loans. Cathie Wood’s ARK Investment Trust owned 38,000 shares of Intuit Inc. worth $18.3 million at the end of the first quarter of 2022.

On May 2, analyst Daniel Jester of research firm BMO Capital maintained an ‘Outperform’ rating on Intuit Inc. shares, and reduced the price target to $550 from $600 to reflect the on-going compression in software multiples. The analyst notes that shares of the firm have lagged its competitors in the current market situation, thus creating an attractive entry point for investors with a long-term horizon.

Investors were seen piling into Intuit Inc. at the close of the fourth quarter of 2021, where 82 hedge funds reported owning $7.99 billion worth of stakes in the company. In comparison, 64 hedge funds held $6.15 billion worth of positions in the company a quarter earlier. The largest shareholder in Intuit Inc. at the end of Q1 2022 was Fisher Asset Management, which held a stake in the firm worth $1.04 billion.

Investment firm Baron Funds talked about many stocks in its Q4 2021 investor letter, and Intuit Inc. was one of them. The fund said:

“Intuit Inc. is the leading provider of accounting and tax preparation software. Shares increased after the company reported quarterly results that beat Street estimates, with 22% revenue growth in the Small Business segment and record-high revenue from Credit Karma. The company closed the acquisition of MailChimp, which expands its product offering and is accretive to EPS. Management increased full-year guidance to reflect better organic growth and the contribution from MailChimp. We continue to own the stock due to Intuit’s strong competitive position and numerous growth opportunities. We have several investments in software companies that help businesses manage their financial processes and operations. Intuit Inc. provides accounting and payroll solutions for small businesses as well as tax preparation software for consumers and tax professionals.”

7. Adyen N.V. (OTC:ADYEY)

ARK Investment Management’s 13 Portfolio: 0.09% 

ARK Investment Management’s Stake Value: $23.6 million

Number of Hedge Fund Holders: N/A

Adyen N.V. (OTC:ADYEY) is a Dutch fintech company which provides technologies and services related to e-commerce, mobile, and point-of-sale payments. It allows merchants to send and accept online payments and connect to the global payment infrastructure through international credit cards, local cash-based methods, and internet banking methods.

ARK Investment Management of Cathie Wood owned a $23.6 million stake in Adyen N.V. at the close of the first quarter of 2022, consisting of 1.19 million shares and representing 0.09% of its total holdings.

On April 14, Piper Sandler analyst Christopher Donat initiated coverage of Adyen N.V. with an Overweight rating and a €1,810 price target. The analyst feels the firm is “best positioned to take market share from legacy merchant acquirers,” and he believes the four next-gen payments companies in his coverage have only penetrated a small portion of their addressable markets, and therefore boast significant revenue-growth opportunity in the coming years.

In May, Adyen N.V. expanded its 2018 partnership with Afterpay, a leader in Buy Now Pay Later financial services. The partnership will now work to process payments in the markets of UK, France, Italy, Spain, New Zealand and Australia.

6. StoneCo Ltd. (NASDAQ:STNE)

ARK Investment Management’s 13 Portfolio: 0.13% 

ARK Investment Management’s Stake Value: $31.30 million

Number of Hedge Fund Holders: 35

Then there’s StoneCo Ltd. (NASDAQ:STNE), a provider of integrated fintech services to small-and-medium businesses, e-commerce platforms and integrated software vendors. The firm is based in the Cayman Islands, and serves approximately 1.75 million customers primarily in Brazil.

According to regulatory data for the first quarter of 2022, Cathie Wood owned 2.67 million shares of StoneCo Ltd. worth $31.3 million, representing 0.13% of her overall portfolio. Tybourne Capital Management was the largest shareholder of the firm at the close of the first quarter, with a stake worth more than $45 million.

On April 8, Cantor Fitzgerald analyst Josh Siegler initiated coverage of StoneCo Ltd. with an ‘Overweight’ rating and a price target of $15. The analyst feels that inflation in Brazil will remain high for the year, but the market may be overlooking the company’s ability limit the financial expense impact through higher prepayment fees. He holds that the stock has overcorrected. As of May 12, it is down 62.42% year to date.

Of the 900+ elite hedge funds tracked by Insider Monkey at the close of the fourth quarter, 35 held positions in StoneCo Ltd. with a combined price tag of $892.5 million. This is in comparison to 37 hedge funds a quarter earlier with $2.21 billion worth of positions in the company.

Here is what investment firm ClearBridge Investments had to say about StoneCo Ltd. in its Q4 2021 investor letter:

“We also sold and trimmed several names in the emerging market and emerging growth areas, to manage risk and pursue growth companies with a better long-term risk/reward. These included Brazilian payments provider StoneCo. Having expected a rebound in their performance post a profit warning earlier in the year, rising interest rates in Brazil and investments in newly acquired companies increased operating costs and depressed earnings.”

In addition to Paypal Holdings, Inc., Fiserv, Inc. and Global Payments Inc., StoneCo Ltd. is an exciting fintech stock to consider.

5. Bill.com Holdings, Inc. (NYSE:BILL)

ARK Investment Management’s 13 Portfolio: 0.15% 

ARK Investment Management’s Stake Value: $35.94 million

Number of Hedge Fund Holders: 65

Up next on the list of best fintech stocks to buy according to Cathie Wood is Bill.com Holdings, Inc. (NYSE:BILL). The firm operates a cloud-based software which digitizes and automates financial operations for small and medium-sized companies around the world. The company’s list of clients also includes financial institutions and accounting firms.

ARK Investment Management owned roughly 158,000 shares of Bill.com Holdings, Inc. worth $35.9 million at the close of the first quarter of 2022, representing 0.15% of its total portfolio.

On May 6, BTIG analyst Matt VanVliet maintained a ‘Buy’ rating on Bill.com Holdings, Inc. shares and lowered the firm’s price target to $300 from $375. The analyst noted that the firm’s business performance is better than nearly every company in the market, with a 179% growth in revenue, 74% organic core growth, and above expectations cash flow and customer additions reported in the quarter.

Bill.com Holdings, Inc. reported its first quarter earnings on May 5, recording EPS at -$0.08 which beat estimates by $0.08. Revenue stood at $166.9 million for the quarter, above estimates by $9 million and up 179% year-on-year.

Out of all the hedge funds tracked by Insider Monkey, 65 were long Bill.com Holdings, Inc. at the close of Q4 2021, with combined stakes worth $3.8 billion. The same number of hedge funds were bullish on the company shares a quarter earlier as well.

4. Silvergate Capital Corporation (NYSE:SI)

ARK Investment Management’s 13 Portfolio: 0.3% 

ARK Investment Management’s Stake Value: $72.04 million

Number of Hedge Fund Holders: 37

Silvergate Capital Corporation (NYSE:SI) operates as a bank holding firm with sizeable interests in fintech products and services. It enjoys a unique dominance in the bitcoin trading market, and recently acquired blockchain-based payment system project called Diem.

B. Riley analyst Steve Moss on May 12 reiterated a ‘Buy’ rating on Silvergate Capital Corporation shares and revised the price target to $235 from $260. The Diem acquisition has the potential to drive substantial growth in earnings, and the analyst holds that the recent sell-off creates an attractive entry point as the current valuation assigns limited value to the Diem acquisition.

For the first quarter of 2022, Silvergate Capital Corporation recorded an EPS of $0.80, outperforming estimates by $0.33. Quarterly revenue grew 92.7% year-on-year to come in at roughly $60 million, beating estimates by $5.1 million.

Cathie Wood, according to the 13F filings for the first quarter of 2022, owned approximately 479,000 shares of Silvergate Capital Corporation worth $72 million, showing an increase of 17% in holding from the previous quarter. In total, 37 hedge funds were long on the company shares at the close of Q4 2021, showing a positive trend from the preceding quarter where 32 hedge funds held positions in the company.

Investment firm Artisan Partners mentioned Silvergate Capital Corporation in its Q3 2021 investor letter. The fund said:

“Silvergate Capital is the leading regulated provider of traditional banking solutions to the digital currency industry (DCI). Notable customers include Coinbase, Paxos, Circle, Binance, Gemini, Jane Street, Fidelity, ICE, PayPal and the CME Group. We believe the company is well positioned to grow as digital assets become an increasing part of the economy. As a bridge between regulated financial markets and the crypto industry, Silvergate has established itself as a core infrastructure layer for trading digital assets. The company provides regulated banking services to the DCI to capture low-cost funding deposits, which can be monetized through its securities and loan portfolio. As of Q3, the company had $11 billion of deposits from over 1,300 digital currency customers and processed $600 million in transaction volumes over the last 12 months through the Silvergate Exchange Network (SEN). Today, the majority of SEN transactions are not being monetized to reduce friction of growing the network; however, we believe this could become an additional profit cycle driver over time as new products are launched or if the technology is adopted for use cases such as cross-border remittance or commerce.”

3. Sea Limited (NYSE:SE)

ARK Investment Management’s 13 Portfolio: 1.31% 

ARK Investment Management’s Stake Value: $315.05 million

Number of Hedge Fund Holders: 108

Sea Limited (NYSE:SE) is based in Singapore and deals in the provision of digital financial services, e-commerce and digital entertainment services in Asia, Latin America and around the world. The firm offers payment processing and digital bank services to customers through its brands ShopeePay, SPayLater, and SeaBank. It also owns and operates the e-commerce platform Shopee.

As of the end of the first quarter of 2022, Cathie Wood owned 2.63 million shares of Sea Limited valued at $315 million. This signals a jump of 302% from the previous quarter where ARK Investment Management owned roughly 655,000 shares of the firm.

On May 4, HSBC analyst Piyush Choudhary maintained a ‘Buy’ rating on Sea Limited shares and lowered the price target to $145 from $150. The analyst forecasts the firm’s adjusted revenue to grow 32% year-over-year in the first quarter and expects Shopee’s gross merchandise volume to rise by 40% from last year. The firm’s revenue for the fourth quarter was recorded at $3.22 billion, a jump of 105.68% year-on-year and above estimates by $234.4 million.

108 hedge funds out of the 900+ tracked by Insider Monkey were long Sea Limited at the close of the fourth quarter of 2022. The total value of these holdings stood at $10.05 billion. In contrast, 117 hedge funds held $14.13 billion worth of positions in the firm a quarter ago.

Farrer Wealth Advisors, an investment firm, talked about many stocks in its Q1 2022 investor letter, and Sea Limited was one of them. The fund said:

“Sea Limited had been selling off since its peak in early November of ~$363/share. This was driven by both a general sell off in tech, especially non-profitable tech, and a general belief that its gaming arm (Garena) was experiencing a slowdown due to its flagship game Free Fire. Free Fire has experienced a slowdown for three reasons: it is a victim of its own success, and by the end of Q321, nearly 10% of the world’s population already played the game, and thus reaching new users was difficult; A return to normal with people traveling/going out more and spending less time playing games; and the Indian market imposed a ban on the game due to anti-Chinese sentiment (Tencent is a large shareholder in Sea). We believed that these issues, while worth considering, were a bit overblown, and some of the data we saw from 3rd party sources showed that though Free Fire usage was dipping, it wasn’t too drastic. Thus, we marginally added to the position throughout the quarter. This was a mistake. During Sea’s earnings report in early March, the company guidance for Garena (down nearly 35% yoy) showed that the slowdown was far worse than predicted. Secondly, Shopee (Sea’s ecommerce arm) has pulled out of certain markets (in Europe and India), which long-term is probably the right strategy, but short-term hampers the optionality of the business. After considering this information and the guidance from earnings, we decided to significantly trim the position. In our opinion, management does have a bit of egg on its face from an overly aggressive expansion or as one investor called it, “bull market hubris.” We think management’s moves were mostly logical, it’s just that their failures came during an unforgiving market. While we believe that Sea’s future is still bright (especially with regards to their e-commerce and financial services), it will take a few quarters of strong earnings for them to regain their momentum, and for now the capital can be better spent elsewhere.”

2. Robinhood Markets, Inc. (NASDAQ:HOOD)

ARK Investment Management’s 13 Portfolio: 1.71% 

ARK Investment Management’s Stake Value: $410.07 million

Number of Hedge Fund Holders: 24

Next up is Robinhood Markets, Inc. (NASDAQ:HOOD), in which Cathie Wood owns 30.35 million shares valued at roughly $410 million as of the end of the first quarter of 2022. The financial services company operates a popular platform which enables amateur investors to buy and invest in stocks, cryptocurrencies, gold and exchange-traded funds (ETFs).

On May 12, shares of Robinhood Markets, Inc. jumped 5.03% in a single day after news broke that the CEO of crypto exchange platform FTX Sam Bankman-Fried acquired a 7.6% stake in the firm worth approximately $648 million. FTX is one of the world’s largest cryptocurrency trading platforms and is a competitor to Coinbase and Binance.

Mizuho analyst Dan Dolev on May 2 lowered the firm’s price target on Robinhood Markets, Inc. to $14 from $19 and maintained a ‘Buy’ rating on the company shares. The analyst attributed the price target decrease to reflect lower market multiples, a cut in guidance, and disappointing execution. The company’s EPS for Q1 2022 was -$0.45, missing estimates by $0.09. Revenue of $299 million for the quarter was also under analysts’ forecasts by $58.2 million.

Hedge fund sentiment was up on Robinhood Markets, Inc. at the close of the fourth quarter of 2021, where 24 hedge funds were long on the company shares. In comparison, 20 hedge funds held stakes in the firm a quarter ago.

Here is what Claret Asset Management had to say about Robinhood Markets, Inc. in its Q4 2021 investor letter:

“Robinhood went public at $38 a share at the end of July of this year. After a oneday decline of 8%, it proceeded to rise to a peak of $85 in a matter of 4 days before settling down around $40 in September. Then, we found out that the company does not appear to understand the margin rules that apply to their client’s trades… and got fined by the Securities Exchange Commission. As of today, it is trading below $20, at 57 times earnings, approximately half of its IPO price. Caveat emptor… Buyer beware.”

1. Block, Inc. (NYSE:SQ)

ARK Investment Management’s 13 Portfolio: 4.7% 

ARK Investment Management’s Stake Value: $1.12 billion

Number of Hedge Fund Holders: 96

Block, Inc. (NYSE:SQ) is a California-based fintech firm founded by Twitter boss Jack Dorsey in 2009. It provides the technology that enables small and medium businesses to accept credit cards and use tablets as POS (Point of Sale) systems. The company was formerly named Square Inc. Cathie Wood upped her stake in Block, Inc. by 35% over the previous quarter, and as of the end of the first quarter of 2022, owned 8.3 million shares of the firm valued at $1.12 billion. This makes Wood the largest shareholder of the fintech firm.

On May 12, Mizuho analyst Dan Dolev maintained a ‘Buy’ rating on Block, Inc. shares and lowered the firm’s price target to $135 from $215. Bitcoin represents less than 5% of the firm’s gross profit, and the analyst feels that identifying Block as a ‘crypto stock’ has prevented it from benefiting from strengthening fundamentals. As of May 12, shares of Block, Inc. are down 53.81% year to date.

96 hedge funds were long Block, Inc. at the close of the fourth quarter of 2021, as compared to 98 hedge funds a quarter earlier. The company posted revenue of $3.96 billion for Q1 2022, missing estimates by $179.6 million. EPS of $0.18 was also below consensus estimates by $0.02.

Investment firm Farrer Wealth Advisors talked about the prospects of Block, Inc. in its Q1 2022 investor letter, stating:

“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”

You can also take a look at 15 Best Technology Stocks To Buy Now and 10 Best Cybersecurity Stocks To Buy Now

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