ARK Invest Stock Portfolio: Top 10 Picks

In this article, we discuss the top 10 stock picks from the ARK Invest stock portfolio.

ARK Investment Management’s Cathie Wood wrote an open letter to the central bank on October 10, saying that the Federal Reserve is mistaken in its aggressive stance against inflation. Instead of focusing on employment and price indexes from past months, the Fed should look towards commodity prices as economic indicators. Commodity prices suggest that the US economy is barreling towards deflation, which should be the bigger concern rather than inflation, as per Wood. She said in the open letter: 

“The Fed seems focused on two variables that, in our view, are lagging indicators – downstream inflation and employment – both of which have been sending conflicting signals and should be calling into question the Fed’s unanimous call for higher interest rates. ”

While CPI rose 0.1% in August and was up 8.3% year-over-year and the unemployment rate fell to 3.5% in September, Cathie Wood reiterated that declining prices for commodities such as lumber and copper, as well as the housing slump, are narrating a different story. She criticized the rate hikes by the Fed, noting that the risk of deflation is running high. In her letter, she wrote:

“Could it be that the unprecedented 13-fold increase in interest rates during the last six months – likely 16-fold come November 2 – has shocked not just the US but the world and raised the risks of a deflationary bust?”

Cathie Wood owns multiple ETFs under the ARK umbrella and manages more than $14 billion in client money. She has always appreciated innovative and disruptive growth names, and to navigate the current macro environment, some of the top stocks in the Cathie Wood stock portfolio include Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU). 

Our Methodology 

We selected the top stock picks of Cathie Wood’s ARK Invest portfolio as of the end of the third quarter of 2022 for this analysis. The securities are ranked according to Wood’s stake value in each holding. 

Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022 was used to assess the hedge fund sentiment around the securities. 

ARK Invest Stock Portfolio: Top Picks

10. Coinbase Global, Inc. (NASDAQ:COIN)

Number of Hedge Fund Holders: 29

Coinbase Global, Inc. (NASDAQ:COIN) is an American company providing financial infrastructure and technology for the crypto economy. In the third quarter of 2022, the Cathie Wood stock portfolio featured 7.71 million shares of Coinbase Global, Inc. worth close to $498 million, representing 3.46% of the total portfolio. Cathie Wood has owned a position in Coinbase Global, Inc. since Q2 2021. 

On October 11, JMP Securities analyst Devin Ryan maintained an Outperform rating on Coinbase Global, Inc. but lowered the price target on the shares to $155 from $195 as part of a broader research note on Investment Banks & Brokers, Asset Managers, and Financial Technology. The analyst added that the changes to his estimate factor in ongoing weakness in the operating environment in Q3 2022, but his longer-term forecasts are only slightly changed despite the shifting macro environment.

According to Insider Monkey’s data, 29 hedge funds were bullish on Coinbase Global, Inc. at the end of the second quarter of 2022, compared to 46 funds in the prior quarter. Jim Simons’ Renaissance Technologies is a prominent stakeholder of the company, with 4.25 million shares worth $200 million. 

In addition to Tesla, Inc., Zoom Video Communications, Inc., and Roku, Inc., Coinbase Global, Inc. is one of the top stocks in Cathie Wood’s portfolio. 

In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. was one of them. Here is what the fund said:

“Coinbase Global Inc. Ordinary Shares fell during the quarter as the crypto markets continued to suffer. While the company reported disappointing results, it committed to capping EBITDA losses at $500M even in the event of “a prolonged market downturn”. COIN’s ample liquidity ($6b in cash on hand) should enable them to survive a prolonged “crypto winter” and invest to strengthen the business in the downturn. While the crypto market is early in its adoption, Coinbase is focused on building the platform for crypto not only supporting trading, and cold storage, but moving into NFTs, staking, and crypto derivatives. We see tremendous upside potential for COIN over the next decade if they are able to successfully execute on their platform strategy.” 

9. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 72

Block, Inc. (NYSE:SQ) is a California-based multinational technology conglomerate that offers financial services, as well as mobile payment and point of sale products. The Cathie Wood stock portfolio held nearly 9.2 million Block, Inc. shares in the third quarter of 2022, worth $505.45 million and representing 3.52% of the total 13F securities. Cathie Wood added 56,211 shares of Block, Inc. to her portfolio in Q3 2022. 

Atlantic Equities analyst Kunaal Malde on October 13 reiterated an Overweight rating on Block, Inc. but slashed the price target on the shares to $75 from $110. The analyst said that due to the heightened likelihood that the U.S. and global economies will enter recession, he is now forecasting a modest economic downturn in 2023. Payments stocks are beginning to discount this scenario, but in the short-term “we prefer high quality stocks with attractive valuations and limited downside to consensus earnings forecasts,” such as Visa Inc. (NYSE:V), the analyst told investors in a research note.

According to the second quarter database of Insider Monkey, 72 hedge funds held stakes worth $3.5 billion in Block, Inc., compared to 84 funds in the prior quarter worth $6.18 billion. Brian Bares’ Bares Capital Management is a significant position holder in the company, with 6.63 million shares worth $408 million. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. was one of them. Here is what the fund said:

“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund include Wells Fargo.”

8. Teladoc Health, Inc. (NYSE:TDOC)

Number of Hedge Fund Holders: 32

Teladoc Health, Inc. (NYSE:TDOC) is a New York-based provider of virtual healthcare services in the United States and internationally. At the end of September 2022, the Cathie Wood stock portfolio had 20.85 million shares of Teladoc Health, Inc., worth $528.75 million and representing 3.68% of the 13F securities. ARK Invest strengthened its hold on Teladoc Health, Inc. by 3% in Q3 2022.

On October 11, Barclays analyst Steve Valiquette lowered the price target on Teladoc Health, Inc. to $33 from $40 and kept an Equal Weight rating on the shares. Given both macro and company-specific risks for healthcare information technology, the analyst sees more limited upside for Q3 earnings. His Q3 hospital survey indicated an ongoing positive outlook for revenue cycle spend in 2022 and 2023. However, the survey is “more muted for other HCIT trends,” the analyst told investors.

Among the hedge funds tracked by Insider Monkey, 32 funds reported owning stakes worth $1.20 billion in Teladoc Health, Inc. at the end of Q2 2022, compared to 36 funds in the prior quarter worth nearly $2 billion.

Here is what Greenhaven Road Capital has to say about Teladoc Health, Inc. in its Q1 2022 investor letter:

“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).

Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch, a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”

7. CRISPR Therapeutics AG (NASDAQ:CRSP)

Number of Hedge Fund Holders: 25

CRISPR Therapeutics AG (NASDAQ:CRSP) is a gene editing company focused on developing gene-based medicines using its proprietary CRISPR-associated protein 9 (Cas9) platform. At the end of the September quarter, Cathie Wood owned 8.2 million CRISPR Therapeutics AG shares worth $538.3 million, representing 3.75% of the total portfolio. CRISPR Therapeutics AG has been part of the Cathie Wood stock portfolio since Q2 2017, with minor breaks over the years. 

On October 11, Morgan Stanley analyst Terence Flynn initiated coverage of CRISPR Therapeutics AG with an Underweight rating and a $37 price target. Though the analyst is confident in the ultimate FDA approval for CRISPR Therapeutics AG’s primary drug exa-cel, he sees commercial hindrances so his estimates are behind consensus. He also sees limited short-term pipeline optionality.

According to Insider Monkey’s second quarter database, 25 hedge funds were long CRISPR Therapeutics AG, down from 37 funds in the earlier quarter. Steven Boyd’s Armistice Capital is a notable position holder in the company, with 1 million shares valued at nearly $61 million. 

6. Intellia Therapeutics, Inc. (NASDAQ:NTLA)

Number of Hedge Fund Holders: 27

Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a Massachusetts-based genome editing company that develops multiple therapeutics. Cathie Wood boosted her Intellia Therapeutics, Inc. stake by 2% in Q3 2022, and held 9.65 million shares worth $540.4 million. The Cathie Wood stock portfolio has had a position in Intellia Therapeutics, Inc. since the last quarter of 2016, apart from minor breaks over the years. 

On October 11, Morgan Stanley analyst Terence Flynn initiated coverage of Intellia Therapeutics, Inc. with an Overweight rating and an $84 price target. Categorizing it as “one of the leading genome editing companies,” the analyst observed that Intellia Therapeutics, Inc. was the first company to demonstrate the ability to edit a gene in the body, or “in vivo,” as opposed to outside of the body, or “ex vivo.” 

According to Insider Monkey’s data, 27 hedge funds were long Intellia Therapeutics, Inc. at the end of June 2022, compared to 35 funds in the preceding quarter. Andreas Halvorsen’s Viking Global is a prominent stakeholder of the company, with 2.2 million shares worth $115.3 million. 

Like Tesla, Inc., Zoom Video Communications, Inc., and Roku, Inc., Cathie Wood is bullish on Intellia Therapeutics, Inc. as of Q3 2022. 

Carillon Tower Advisers discussed its stance on Intellia Therapeutics, Inc. in its Q2 2021 investor letter.

“Intellia Therapeutics is a clinical-stage genome editing company focused on the development of proprietary, potentially curative therapeutics. The company’s stock soared after announcing positive interim data from an ongoing phase 1 clinical study of its in vivo gene editing candidate, which is being developed as a single-dose treatment for hereditary transthyretin (ATTR) amyloidosis. This specific form of therapy would be the first of its kind resulting in the precision editing of a gene in a target tissue in the human body.”

5. Exact Sciences Corporation (NASDAQ:EXAS)

Number of Hedge Fund Holders: 28

Exact Sciences Corporation (NASDAQ:EXAS) is a Wisconsin-based company that provides cancer screening and diagnostic test products in the United States and internationally. ARK Invest lifted its Exact Sciences Corporation stake by 18% in Q3 2022. The Cathie Wood stock portfolio held more than 17.5 million million shares of the company worth $570.5 million, representing 3.97% of the total securities. 

On August 24, Credit Suisse analyst Dan Leonard initiated coverage of Exact Sciences Corporation with an Outperform rating and a $55 price target. The company’s leadership role in non-invasive colorectal cancer screening is “durable”, while upcoming pipeline catalysts could “de-risk future large opportunities” like multi-cancer testing and minimal residual disease monitoring, the analyst told investors in a research note.

According to Insider Monkey’s Q2 data, 28 hedge funds were long Exact Sciences Corporation, compared to 32 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a significant position holder in the company, with 2.5 million shares worth nearly $100 million. 

Here is what RiverPark Large Growth Fund has to say about Exact Sciences Corporation in its Q4 2021 investor letter:

“Exact Sciences: EXAS shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.

In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact has tripled its market opportunity from $20 billion to $60 billion.”

4. UiPath Inc. (NYSE:PATH)

Number of Hedge Fund Holders: 24

UiPath Inc. (NYSE:PATH) is a New York-based company that provides an end-to-end automation platform offering a range of robotic process automation (RPA) solutions primarily in the United States, Romania, and Japan. Cathie Wood raised her stake in UiPath Inc. by 23% in Q3 2022, holding over 46 million shares worth $581 million, representing 4.05% of the total 13F securities. 

On October 18, Barclays analyst Raimo Lenschow downgraded UiPath Inc. to Equal Weight from Overweight and trimmed the price target to $15 from $17. UiPath Inc. is in a “digestive phase” from leadership changes and its go-to market restructuring that will create hindrances for the company in terms of becoming a notable outperformer in the short-term, the analyst told investors in a research note. 

According to Insider Monkey’s Q2 data, 24 hedge funds held stakes worth $1.26 billion in UiPath Inc., compared to 33 funds in the prior quarter worth $1.31 billion. Alkeon Capital Management is a prominent stakeholder of the company, with 15.5 million shares valued at $281.6 million. 

Here is what ClearBridge Investments has to say about UiPath Inc. in its Q2 2021 investor letter:

“We participated in the IPO of UiPath, a developer of software for robotic process automation that uses AI, natural language processing and design to streamline complex processes across a variety of technology environments. The company is an industry leader with a superior solution for leveraging software to optimize workloads. Organizations around the world are beginning to understand the power of automation, with momentum picking up toward fully automating business processes, a $60 billion market today that could grow to $200 billion or more by 2030. UiPath has a unique pricing model, broad partner ecosystem and thoughtful management team supporting one of the strongest growth profiles in technology. Risks we are watching include a partial cloud transition ahead and increased competition from larger software platforms over time.”

3. Roku, Inc. (NASDAQ:ROKU)

Number of Hedge Fund Holders: 34

Roku, Inc. is a California-based company that operates a TV streaming platform. Cathie Wood’s stock portfolio holds nearly 12 million Roku, Inc. shares as of the third quarter of 2022, worth more than $672 million and representing 4.68% of the total 13F portfolio. Roku, Inc. stock has featured in the ARK portfolio since Q2 2019 and the hedge fund lifted its position by 18% in the September quarter. 

On September 8, Pivotal Research analyst Jeffrey Wlodarczak upgraded Roku, Inc. to Hold from Sell with an unchanged price target of $60. The shares have reached an appropriately balanced risk/reward level and profits should be taken on short positions, the analyst told investors in a research note. The analyst believes that Roku, Inc. is “getting hit materially harder than its advertising peers.”

According to Insider Monkey’s second quarter database, 34 hedge funds were long Roku, Inc., and Jim Simons’ Renaissance Technologies is a significant stakeholder of the company, with approximately 2 million shares worth $162 million. 

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)

2. Zoom Video Communications, Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders: 44

Zoom Video Communications, Inc. is a California-based company that provides a unified communications platform worldwide. Cathie Wood boosted her stake in Zoom Video Communications, Inc. by 14% in the third quarter of 2022. The ARK Invest portfolio had approximately 11 million shares of Zoom Video Communications, Inc. worth $801.5 million at the end of September, representing 5.58% of the total 13F securities. Cathie Wood has held a position in Zoom since Q4 2020. 

Morgan Stanley analyst Meta Marshall on October 11 downgraded Zoom Video Communications, Inc. to Equal Weight from Overweight with a price target of $90, down from $130. The analyst finds short-term catalysts to be lacking for the stock. Zoom Video Communications, Inc.’s online business is not expected to stabilize until early next year, creating an “overhang” on the stock for the next six months, the analyst told investors.

Among the hedge funds tracked by Insider Monkey, 44 funds reported owning stakes worth $2.96 billion in Zoom Video Communications, Inc. at the end of Q2 2022, compared to 43 funds in the prior quarter worth $3.16 billion. Ken Fisher’s Fisher Asset Management is a notable position holder in the company, with 4.71 million shares valued at $508.8 million. 

Here is what Horos Asset Management had to say about Zoom Video Communications, Inc. in its Q1 2022 investor letter:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72

Tesla, Inc. is the largest holding in the Cathie Wood stock portfolio. Wood owns more than 4 million shares of Tesla, Inc. as of the third quarter of 2022, worth $1 billion and representing 7.54% of the total 13F securities. Cathie Wood elevated her stake in Tesla by 183% in the September quarter. She has consistently held a stake in Tesla, Inc. since the last quarter of 2016, apart from a few minor breaks over the years. 

On October 14, Wells Fargo analyst Colin Langan lowered the price target on Tesla, Inc. to $230 from $280 and kept an Equal Weight rating on the shares ahead of the Q3 results. The analyst expects a “slight” earnings beat, noting that the higher pricing will potentially be offset by currency headwinds. However, Tesla, Inc. remains the biggest beneficiary of the Inflation Reduction Act and the analyst raised his 2023 through 2026 earnings estimates by 33% to factor in the bill’s benefits. 

According to Insider Monkey’s data, Tesla, Inc. was part of 72 hedge fund portfolios at the end of Q2 2022, compared to 80 funds in the preceding quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 1.40 million shares worth $949 million. 

Here is what Carillon Tower Advisers specifically said about Tesla, Inc. in its Q2 2022 investor letter:

“Tesla, Inc., the electric vehicle and clean energy company, is set to recall more than 100,000 cars in China over a potential safety risk and is reportedly delaying a plan to restore production at its Shanghai plant. CEO Elon Musk was reported to have said that the company would cut 10% of salaried staff and freeze hiring due to a bad feeling he has about the economy.”

You can also take a look at 10 Best Italian Stocks To Buy Now and 11 Best Dividend Stocks To Buy According To Warren Buffett. 

Follow Insider Monkey on Twitter

Suggested articles:

• 10 Best FTSE Dividend Stocks To Buy
• 10 Best Home Builder Stocks To Invest In
• 12 Best Undervalued Stocks To Invest In

This article is originally published at Insider Monkey.