In this article, we discuss the top 11 stock picks of ARK Invest. If you want to see the top 5 holdings of the hedge fund and skip our detailed discussion on Cathie Wood, head directly to Ark Invest Stock Portfolio: Top 5 Picks.
On July 12, Cathie Wood’s stock portfolio reached its highest levels in 11 months, continuing a rally driven by her anticipation of a swift decline in inflation, which would bolster the innovative technology stocks she is known for favoring. In 2022, Wood’s ARK Innovation ETF ranked among the worst U.S. equity funds overall. During this period, she consistently downplayed the impact of inflation and instead emphasized that deflation would be the primary factor shaping the markets.
Cathie Wood, the CEO of ARK Invest, announced on July 21 that her core innovation fund has altogether eliminated its exposure to China, given the economic deceleration witnessed in that emerging market. Wood’s ARK Innovation ETF manages approximately $9 billion in assets according to Morningstar, and it has exited stocks that generate income from China. This move is part of her strategy to consolidate the portfolio around her favored choices such as Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Roku, Inc. (NASDAQ:ROKU), among others. CNBC cited Cathie Wood from a recent webinar:
“As we always do during bear markets, we concentrated our strategies towards our highest conviction names and the Chinese names, in particular, came out one by one as we were concentrating so that now, at least in the flagship strategy, we do have no exposure to China.”
Don’t Miss: 15 Worst Stock Picks of Cathie Wood
Cathie Wood is big on the concept of bargain hunting. Following Palantir Technologies Inc. (NYSE:PLTR)’s Q2 2023 earnings report, which was in-line with market expectations, Cathie Wood made an investment of approximately $12.5 million, acquiring a total of 741,989 Palantir shares on August 9, 2023. This transaction was split between the ARK Innovation ETF and ARK Next Generation Internet ETF. This purchase highlights a notable shift within ARK’s funds, as Palantir Technologies Inc. (NYSE:PLTR) had not held much importance in the fund’s portfolios previously.
Wood is also a huge proponent of the cryptoverse. On August 8, Wood expressed her optimistic outlook on the impending approval of a bitcoin exchange traded fund by the SEC. ARK Invest, along with Invesco and BlackRock, is one of the firms that submitted applications for a spot bitcoin ETF. This type of fund would enable both individual and institutional investors to gain bitcoin exposure without the need to directly purchase or sell the cryptocurrency themselves. Wood told Bloomberg TV:
“I think the SEC (Securities and Exchange Commission), if it’s going to approve a bitcoin ETF, will approve more than one at once.”
In this article, we discuss the 11 largest stock holdings from the Cathie Wood stock portfolio as of the second quarter of 2023.
Our Methodology
We selected the following stocks from Cathie Wood’s ARK Invest portfolio as of Q2 2023. We have also mentioned the hedge fund sentiment towards each stock, which was assessed from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of ARK Invest’s stake value in each holding.
Cathie Wood of ARK Investment Management
Ark Invest Stock Portfolio: Top Picks
11. DraftKings Inc. (NASDAQ:DKNG)
ARK Invest’s Stake Value: $479,866,490
Number of Hedge Fund Holders: 37
DraftKings Inc. (NASDAQ:DKNG) offers technology for sports betting and gaming across multiple platforms. On August 3, DraftKings Inc. (NASDAQ:DKNG) reported a Q2 non-GAAP EPS of $0.14 and a revenue of $875 million, outperforming Wall Street estimates by $0.28 and $112.16 million, respectively. Revenue in the second quarter of 2023 increased 87.8% on a year-over-year basis.
Securities filings for the second quarter of 2023 reveal that Cathie Wood’s ARK Investment Management held 18 million shares of DraftKings Inc. (NASDAQ:DKNG) worth approximately $480 million. However, Wood trimmed her stake in the company by 25%.
According to Insider Monkey’s first quarter database, DraftKings Inc. (NASDAQ:DKNG) was part of 37 hedge fund portfolios, compared to 32 in the prior quarter.
In addition to Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Roku, Inc. (NASDAQ:ROKU), DraftKings Inc. (NASDAQ:DKNG) is one of Cathie Wood’s top stock picks.
Baron Discovery Fund made the following comment about DraftKings Inc. (NASDAQ:DKNG) in its Q1 2023 investor letter:
“We re-initiated a position in the former Fund holding DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook, digital casino, and daily fantasy sports operator. DraftKings’ mobile applications offer consumers the ability to wager on a wide variety of sporting events and play hundreds of real-money casino games. The company has spent the past three years building a proprietary technology stack that improves the customer experience and delivers best-in-class breadth of bet types (such as parlays, same-game parlays, and player props). State-level online sports betting (OSB) and iCasino legalization, along with a multi-year consumer adoption timeline in active states, has supported a 90% revenue growth rate for DraftKings since 2020. The opportunity for OSB legalization remains significant, with under 50% of the U.S. population currently having legal mobile sports betting. We expect 65% to 80% of the population will eventually have access to OSB. ICasino is currently legal in just seven states representing roughly 13% of the population. ICasino product adoption in legalized states has been robust, with the average user spending twice as much as a sports bettor. While the pace of legalization for iCasino has been slower, we believe additional states will pass regulation in the coming years.
As U.S. states began to legalize sports betting, the DraftKings management team moved quickly to build widespread brand awareness. DraftKings is the #2 operator in both OSB and iCasino by a wide margin, and has demonstrated improving market share trends across almost all states. When a new state legalizes sports betting, DraftKings has a first mover advantage as many of its customers are converted from the DraftKings daily fantasy sports offering. The quality of their sportsbook product along with increasingly targeted promotional spending results in strong customer retention and high lifetime values. In states where iCasino is legal, DraftKings can cross-sell OSB customers. DraftKings’ scale and product advantages are creating a flywheel that will enable the company to continue to out-invest the competition in acquisition marketing, retention, and research and development. The high barriers to entry are resulting in a consolidated industry that will eventually lead to a highly profitable business. This is evidenced by older-vintage state contribution margins that are already approaching 40%. Longer term, we believe DraftKings can generate EBITDA margins between 20% and 30% with strong free-cash-flow conversion.”
10. Teladoc Health, Inc. (NYSE:TDOC)
ARK Invest’s Stake Value: $515,112,626
Number of Hedge Fund Holders: 30
Teladoc Health, Inc. (NYSE:TDOC) delivers virtual healthcare solutions worldwide. The company’s operations are divided into two segments – Integrated Care and BetterHelp. On July 25, Teladoc Health, Inc. (NYSE:TDOC) reported a Q2 GAAP EPS of -$0.40, in line with market estimates. The revenue increased 10.1% year-over-year to $652.4 million, topping Wall Street estimates by $3.22 million. For FY 2023, Teladoc Health, Inc. (NYSE:TDOC) expects revenue to fall between $2.6 billion to 2.675 billion, versus a consensus of $2.62 billion.
In the second quarter of 2022, 20.3 million Teladoc Health, Inc. (NYSE:TDOC) shares worth over $515 million were found in Cathie Wood stock portfolio, representing 3.41% of the 13F securities.
According to Insider Monkey’s first quarter database, 30 hedge funds were bullish on Teladoc Health, Inc. (NYSE:TDOC), compared to 33 funds in the earlier quarter. Jay Chen’s Himension Capital is a prominent shareholder of the company, with 2.24 million shares worth $58 million.
Greenhaven Road Capital made the following comment about Teladoc Health, Inc. (NYSE:TDOC) in its Q3 2022 investor letter:
“At the end of last year and the beginning of this year, I sold two of our highest multiple holdings and invested in Teladoc Health, Inc. (NYSE:TDOC), believing that swapping out of the highest multiple holdings into a lower multiple holding would provide protection in the event of multiple compression. However, the reality is that the multiple compression on currently loss-making (unprofitable) companies has been severe regardless of starting multiple, and TDOC’s lower relative starting point afforded us far less protection than I expected. We are no longer shareholders today but continue to follow the business and may return someday given its market size, product portfolio, and valuation.”
9. Unity Software Inc. (NYSE:U)
ARK Invest’s Stake Value: $518,249,846
Number of Hedge Fund Holders: 24
Unity Software Inc. (NYSE:U) manages a platform that offers software solutions for generating, operating, and earning from interactive, real-time 2D, and 3D content designed for mobile phones, tablets, PCs, consoles, and AR/VR devices. Unity Software Inc. (NYSE:U) is one of the top stocks in the Cathie Wood portfolio. On August 2, the company reported a Q2 GAAP EPS of -$0.51 and a revenue of $533.48 million, topping Wall Street estimates by $0.11 and $16.13 million, respectively.
As per the 13F filings for the second quarter of 2023, Cathie Wood owns 11.93 million shares of Unity Software Inc. (NYSE:U) worth $518.2 million, representing 3.43% of the total securities.
According to Insider Monkey’s first quarter database, 24 hedge funds were long Unity Software Inc. (NYSE:U), compared to 23 funds in the prior quarter. Jim Davidson, Dave Roux, and Glenn Hutchins’ Silver Lake Partners is the leading position holder in the company, with approximately 35 million shares worth $1.13 billion.
White Brook Capital Partners made the following comment about Unity Software Inc. (NYSE:U) in its second quarter 2023 investor letter:
“Unity Software Inc. (NYSE:U): We took a trading position in Unity Software during the quarter. A trading position is one where I expect the duration of the investment to be relatively short at the time of investment. During the first quarter, I completed much of the work and viewed Unity as attractive based on valuation, but decided to pass. Behind that decision were fundamental questions around corporate governance and the probability that Apple, at the unveiling of their headset, would either go alone in providing tools for developers to produce content for their new augmented and virtual reality efforts or also announce a wide settlement with Unity’s primary competitor, Epic Games, of all outstanding legal matters and a new partnership. Instead, Unity is being relied upon to help developers. Due to continuing concerns around their incentive plan and the strength of the board, it is unlikely that the position will prove to be a multiyear holding, but they are very likely beneficiaries of growth in artificial intelligence and virtual reality in the short term.
Unity theoretically benefits from several trends coming together at once.
Augmented and virtual reality were unveiled too early, they’re not permanent busts. Artificial Intelligence advances should improve automation efforts that make it easier for developers to produce more intricate and complex environments and games in three-dimensional space. Improvements in chip development, notably Apple Silicon, but also by competitive chip manufacturers like NVidia and AMD, should also improve playback and interaction of three-dimensional worlds…” (Click here to read the full text)
8. Shopify Inc. (NYSE:SHOP)
ARK Invest’s Stake Value: $573,311,793
Number of Hedge Fund Holders: 66
Shopify Inc. (NYSE:SHOP) offers a platform for commerce and related services across Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. On August 2, Shopify Inc. (NYSE:SHOP) reported a Q2 non-GAAP EPS of $0.14 and a revenue of $1.69 billion, outperforming Wall Street estimates by $0.09 and $70 million, respectively. Shopify Inc. (NYSE:SHOP) is one of the top names in the Cathie Wood stock portfolio.
Securities filings for Q2 2023 reveal that Cathie Wood’s ARK Invest held 8.87 million shares of Shopify Inc. (NYSE:SHOP) worth $573.3 million. However, the fund cut its stake in the company by 37% in Q2 2023.
According to Insider Monkey’s first quarter database, Shopify Inc. (NYSE:SHOP) was part of 66 hedge fund portfolios. Christopher Lyle’s SCGE Management is a prominent stakeholder of the company, with 8.40 million shares worth $403 million.
RiverPark Large Growth Fund made the following comment about Shopify Inc. (NYSE:SHOP) in its Q1 2023 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter as the market focused on the company’s recent price increases and its ongoing market share gains in e-commerce gross merchandise volumes (GMV). Earlier in the quarter the company reported better-than-expected 4Q results, with 26% revenue growth and $248 million of FCF (at a 14% margin), significantly better than the Street consensus of -$109 million.
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 and its pick, pack and ship Shopify Fulfillment Network, should continue to drive revenue growth of about 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
7. Exact Sciences Corporation (NASDAQ:EXAS)
ARK Invest’s Stake Value: $671,863,679
Number of Hedge Fund Holders: 38
Exact Sciences Corporation (NASDAQ:EXAS) provides cancer screening and diagnostic testing products worldwide. In the second quarter of 2023, Cathie Wood held 7.15 million shares of Exact Sciences Corporation (NASDAQ:EXAS) worth $671.8 million, representing 4.44% of the total 13F securities. Exact Sciences Corporation (NASDAQ:EXAS) is one of the top plays in the Cathie Wood stock portfolio.
On August 1, Exact Sciences Corporation (NASDAQ:EXAS) reported a Q2 GAAP EPS of -$0.45 and a revenue of $622.1 million, outperforming Wall Street estimates by $0.06 and $20.97 million, respectively. For full-year 2023, the company expects revenue to fall between $2.441 billion to $2.466 billion, compared to a $2.42 billion consensus.
According to Insider Monkey’s first quarter database, 38 hedge funds were bullish on Exact Sciences Corporation (NASDAQ:EXAS), compared to 39 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 1.68 million shares worth approximately $114 million.
Baron Health Care Fund made the following comment about Exact Sciences Corporation (NASDAQ:EXAS) in its second quarter 2023 investor letter:
“We added to our position in Exact Sciences Corporation (NASDAQ:EXAS), a cancer diagnostics company whose flagship product is Cologuard, a stool-based DNA colon cancer screening test. We wrote about Exact Sciences in the first quarter. The company’s core Cologuard business has strong momentum, as confirmed by the company’s recent first quarter financial results. Exact also demonstrated better-than-expected profitability, and management accelerated its timeline to be free cash flow positive to 2023, one year ahead of schedule. The company recently announced that its next generation Cologuard test demonstrated improved sensitivity and specificity for colorectal cancer compared with the first-generation Cologuard test. Once approved and commercialized, the second-generation Cologuard test should result in lower false positives, which should benefit Exact by boosting its gross margins. We continue to believe Exact has a long runway for growth in the Cologuard business. In addition, we think Exact’s initiatives in minimal residual disease testing and multi-cancer early detection represent significant optionality.”
6. Zoom Video Communications, Inc. (NASDAQ:ZM)
ARK Invest’s Stake Value: $710,181,329
Number of Hedge Fund Holders: 37
Next on Cathie Wood’s stock portfolio is Zoom Video Communications, Inc. (NASDAQ:ZM), one of the top communications companies in the world. Securities filings for Q2 2023 reveal that ARK Invest holds 10.4 million shares of Zoom Video Communications, Inc. (NASDAQ:ZM) worth just over $710 million.
On May 22, Zoom Video Communications, Inc. (NASDAQ:ZM) reported a Q1 non-GAAP EPS of $1.16 and a revenue of $1.11 billion, outperforming Wall Street estimates by $0.17 and $30 million, respectively.
According to Insider Monkey’s first quarter database, Zoom Video Communications, Inc. (NASDAQ:ZM) was part of 37 hedge fund portfolios, compared to 36 in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder of the company, with 3.37 million shares worth $249.45 million.
Like Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Roku, Inc. (NASDAQ:ROKU), Zoom Video Communications, Inc. (NASDAQ:ZM) is one of the top stock picks of Cathie Wood.
Here is what Horos Asset Management had to say about Zoom Video Communications, Inc. (NASDAQ:ZM) 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).”
Click to continue reading and see Ark Invest Stock Portfolio: Top 5 Picks.
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Disclosure: None. Ark Invest Stock Portfolio: Top 11 Picks is originally published on Insider Monkey.
