In this article, we will take a look at the 5 tech stocks to sell now according to Cathie Wood. To see more such companies, go directly to 10 Tech Stocks To Sell Now According to Cathie Wood.
5. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 55
ARK Investment Management had been cutting its stake in Singapore-based tech company Sea Limited (NYSE:SE) since the first quarter of 2022. The stake selling continued in last quarter of 2022 as the hedge fund cut its position in Sea Limited (NYSE:SE) by 91% during the December quarter. At the end of the period, the hedge fund reported owning over 24,000 shares of Sea Limited (NYSE:SE). Over the last 12 months Sea Limited (NYSE:SE) shares have lost about 61% in value.
In January, Sea Limited (NYSE:SE) shares fell after BofA analyst Sachin Salgaonkar downgraded the stock’s rating to Neutral from Buy, citing expected slowness in the company’s e-commerce business.
Here is what Hayden Capital has to say about Sea Limited (NYSE:SE) in its Q3 2022 investor letter:
“Sea Limited (NYSE:SE) reported earnings last week, after which the share price rebounded +36% in a single day. The most obvious question that comes to mind, is why didn’t we sell more last year, when prices were still high? The truth is that we did sell a significant amount, but in hindsight obviously wish we were more aggressive with the sales.
For example, we owned the peak number of shares of Sea Ltd in Q1 2020, and steadily trimmed over the next two years. From Q1 2020 to Q1 2022, we trimmed ~39% of our shares over that period. However, the issue was that the investment continued to grow as a percentage of the overall portfolio, since the share price appreciated much faster than our sales (+620% from 1Q20 to 3Q21). This was a similar case for our other long-tenured positions as well.
So why didn’t we trim more aggressively and just hold cash? The answer is that at its core, I believe that holding cash is implicitly a market timing call. I certainly didn’t foresee a likely recession on the horizon so quickly after the turbulence of Covid already had on the economy. Even in late 2021, after it was clear interest rates would start rising, we were still operating under the assumption that rates would cause valuations to compress, but likely wouldn’t have an impact on the overall earnings trajectory. Given our expectations for strong earnings growth, we thought this could more than offset the valuation compression over time, and would still generate strong IRRs over a 3 – 5 year timeframe…” (Click here to see the full text)
4. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 57
ARK Investment Management reduced 98% of its stake in Spotify Technology S.A. (NYSE:SPOT) during the fourth quarter of 2022. The hedge fund still owns over 21,000 shares of the music-streaming company. Spotify Technology S.A. (NYSE:SPOT) shares have been performing pretty well in 2023, having gained about 52% in value so far in the year through February 10. Spotify Technology S.A. (NYSE:SPOT) shares were rising after it was reported that activist hedge fund ValueAct Capital has initiated a stake in Spotify Technology S.A. (NYSE:SPOT). According to Bloomberg, the stake was revealed during an event at Columbia University, where ValueAct’s CEO Mason Morfit said that he wants Spotify Technology S.A. (NYSE:SPOT) to cut its spending and increase efficiency.
Insider Monkey’s database of 920 hedge funds shows that 57 hedge funds had stakes in Spotify Technology S.A. (NYSE:SPOT) at the end of the third quarter of 2022, compared to 49 funds in the previous quarter.
Rowan Street Capital made the following comment about Spotify Technology S.A. (NYSE:SPOT) in its Q4 2022 investor letter:
“We have written a few times (Q2 ‘20 Letter, Q2 ‘21 Letter, Q2 ‘22 Letter) about Spotify Technology S.A. (NYSE:SPOT) and it still remains our favorite idea that is currently extremely mispriced by the market, in our view.
Spotify is estimated to end 2022 with 479 million monthly subscribers. Management thinks that their subscribers can get 1 billion over the next 4-5 years. The paid subscribers are estimated to end 2022 at 202 million. Therefore, based on today’s price, we are paying only $74 per paid subscriber. Now, let’s assume that Spotify can get to only 5 euros in ARPU (they are at 4.63 euros currently), then they would be collecting 60 euros per paid subscriber over a 12 months period, which makes our current payback period of only 1.2 years. This may not be an ideal comparison, but just for some context, Netflix is currently selling for $590 per user and traded as high as $1,400 per user in 2021. According to the “Netflixed: the epic battle for America’s eyeballs” book by Gina Keating, the founder/CEO of Netflix Reed Hastings offered $200 per subscriber to Blockbuster back in 2007. Blockbuster’s management was insulted by such a low-ball figure and rejected his acquisition offer — the rest was history…” (Click here to read the full text)
3. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 35
Cathie Wood’s hedge fund had been gradually cutting its stake in Palantir Technologies Inc. (NYSE:PLTR) over the past few quarters. As of the end of the third quarter of 2022, ARK Investment Management reported owning over 220,000 shares of Palantir Technologies Inc. (NYSE:PLTR). The hedge fund sold these shares during the fourth quarter of 2022.
In January, Palantir Technologies Inc. (NYSE:PLTR) shares rose after investment firm Mizuho started covering the stock, saying that the company could provide “significant” value for its customers. Mizuho’s analyst Matthew Broome, who has a Neutral rating and a $7 price target for Palantir Technologies Inc. (NYSE:PLTR), said that “ongoing global disruptions” could boost the company’s business. However, the analyst noted short-term challenges amid slowing spending in commercial and government sectors.
2. Editas Medicine, Inc. (NASDAQ:EDIT)
Number of Hedge Fund Holders: 21
Massachusetts-based Editas Medicine, Inc. (NASDAQ:EDIT) ranks second in our list of the tech stocks that were sold by Cathie Wood during the fourth quarter of 2022. It’s a clinical-stage biotech company that is developing therapies for rare diseases based on CRISPR gene editing technology. Cathie Wood’s ARK had over 145,000 shares of Editas Medicine, Inc. (NASDAQ:EDIT) as of the end of the third quarter of 2022. These shares were sold by the hedge fund during the fourth quarter of 2022.
Earlier this month, investment firm Cantor Fitzgerald gave an Overweight rating to Editas Medicine (NASDAQ:EDIT) as the firm’s analyst Rick Bienkowski gave bullish comments for gene editing companies. The analyst has a $15 price target for Editas Medicine, Inc. (NASDAQ:EDIT). He said that Editas Medicine, Inc. (NASDAQ:EDIT) is positioned well to appreciate in the coming year amid favorable intellectual property positioning and expected clinical data updates.
1. TuSimple Holdings Inc. (NASDAQ:TSP)
Number of Hedge Fund Holders: 16
TuSimple Holdings Inc. (NASDAQ:TSP) is a California-based autonomous trucking company. Over the past 12 months, TuSimple Holdings Inc. (NASDAQ:TSP) has lost about 86% in value. As of the end of the third quarter of 2022, Cathie Wood’s ARK had reported owning about 16 million shares of TuSimple Holdings Inc. (NASDAQ:TSP). That position was sold during the fourth quarter of 2022, according to ARK’s latest 13F filings. In December, Bank of America reiterated its Underperform rating for TuSimple Holdings Inc. (NASDAQ:TSP) despite the company’s announcement related to restructuring according to which the company would cut its workforce by 25%.
You can also take a peek at 10 Hot Tech Stocks To Buy Now and 10 Hot Healthcare Stocks To Buy Now.
