In this article, we discuss 10 stocks that Cathie Wood and Steve Cohen love. If you want to see more favorite stocks of the prominent hedge fund managers, click Cathie Wood and Steve Cohen Love These 5 Stocks.
Cathie Wood, the chief of ARK Investment Management, and Steve Cohen of Point72 Asset Management are perhaps some of the most well known Wall Street money managers. Cathie Wood is famous for her bold bets on innovation and disruptive technology. Despite her flagship ARK ETF falling over 75% from its 2021 highs, investors keep pouring money into her hedge fund. This year, ARK reported inflows of $167 million as of June 12.
At the end of June, Cathie Wood shared her thoughts on the current macro environment in an interview with CNBC’s Squawk Box, stating that the economy is already in a recession and it has just not officially been declared by the Fed. She cited prominent US retailers like Walmart and Target, saying that even they are facing inventory and supply chain problems in the current macro backdrop, which suggests that there might be a lot more problems with other companies that don’t even have the same market standing, scale, and resources as these giants.
While Wood believes the US is in the grips of a recession, Point72 Asset Management’s Steve Cohen announced in the beginning of June that despite the market crash that decimated $2 trillion in crypto value, his New York-based Point72 Ventures invested in its fifth crypto firm. It is a DeFi company that offers trade execution services and data. Cohen’s customers are demanding crypto, believing it to be a futuristic theme.
Both Cathie Wood and Steve Cohen are interested in innovative and revolutionary ideas, and they have many common stocks in their portfolios like Spotify Technology S.A. (NYSE:SPOT), Teladoc Health, Inc. (NYSE:TDOC), and DraftKings Inc. (NASDAQ:DKNG).
Our Methodology
We used the Q1 2022 portfolios of Cathie Wood’s ARK Investment Management and Steve Cohen’s Point72 Asset Management for this analysis, selecting the most prominent common stocks of the hedge funds. The hedge fund sentiment around the holdings as of the first quarter of 2022 is mentioned.
Cathie Wood and Steve Cohen Love These Stocks
10. Teladoc Health, Inc. (NYSE:TDOC)
ARK Investment Management’s Stake Value: $1,404,150,000
Point72 Asset Management’s Stake Value: $1,021,000
Number of Hedge Fund Holders: 36
Teladoc Health, Inc. (NYSE:TDOC) is a New York-based multinational telemedicine and virtual healthcare company. Cathie Wood’s ARK Investment Management boosted its stake in Teladoc Health, Inc. (NYSE:TDOC) by 3% in Q1 2022, holding about 19.5 million shares worth $1.40 billion, representing 5.86% of the total portfolio. Teladoc Health, Inc. (NYSE:TDOC) is a new arrival in Steve Cohen’s Point72 Asset Management Q1 portfolio, with the hedge fund buying a $1 million stake in the company.
On June 29, Stifel analyst David Grossman reiterated a Hold rating on Teladoc Health, Inc. (NYSE:TDOC) and lowered the price target on the shares to $36 from $45. Due to the normalization of growth forecasts after the pandemic and uncertainty around the interest rates, his base case factors in little to no multiple expansion from current levels, wrote the analyst, who sees Teladoc Health, Inc. (NYSE:TDOC) grappling with higher competition and market penetration, deteriorating growth, and excessive commoditization after the pandemic.
According to Insider Monkey’s Q1 data, 36 hedge funds were bullish on Teladoc Health, Inc. (NYSE:TDOC), down from 39 funds in the earlier quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is one of the leading shareholders of the company, with 1.5 million shares worth about $112 million.
Here is what Greenhaven Road Capital has to say about Teladoc Health, Inc. (NYSE:TDOC) 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.”
9. Exact Sciences Corporation (NASDAQ:EXAS)
ARK Investment Management’s Stake Value: $1,001,531,000
Point72 Asset Management’s Stake Value: $1,685,000
Number of Hedge Fund Holders: 32
Exact Sciences Corporation (NASDAQ:EXAS) is a Massachusetts-based company that specializes in molecular diagnostics. The company helps detect early stage cancers. Cathie Wood owns a $1 billion stake in Exact Sciences Corporation (NASDAQ:EXAS) as of Q1 2022, and Steve Cohen’s fund added the stock to its Q1 portfolio by buying 24,100 shares worth $1.68 million.
Evercore ISI analyst Vijay Kumar on July 5 reiterated an Outperform rating on Exact Sciences Corporation (NASDAQ:EXAS) but lowered the price target on the shares to $60 from $100. The analyst also added Exact Sciences Corporation (NASDAQ:EXAS) to the firm’s “Tactical Outperform” list ahead of earnings season for the Life Science Tools and MedTech sectors.
Among the hedge funds tracked by Insider Monkey, 32 funds were long Exact Sciences Corporation (NASDAQ:EXAS) at the end of Q1 2022, compared to 34 funds in the prior quarter. Ricky Sandler’s Eminence Capital is a prominent shareholder of the company, with 2.24 million shares worth over $157 million.
Like Spotify Technology S.A. (NYSE:SPOT), Teladoc Health, Inc. (NYSE:TDOC), and DraftKings Inc. (NASDAQ:DKNG), Exact Sciences Corporation (NASDAQ:EXAS) is one of the favorite stocks of Cathie Wood and Steve Cohen.
Here is what RiverPark Large Growth Fund has to say about Exact Sciences Corporation (NASDAQ:EXAS) 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.”
8. UiPath Inc. (NYSE:PATH)
ARK Investment Management’s Stake Value: $725,444,000
Point72 Asset Management’s Stake Value: $3,105,000
Number of Hedge Fund Holders: 33
UiPath Inc. (NYSE:PATH) is a New York-based company that develops robotic process automation software. On June 27, the company raised full year non-GAAP operating income guidance. For FY23, revenue is expected to fall between $1,085 million to $1,090 million, while ARR will range between $1,220 million to $1,225 million as of January 31, 2023.
Cathie Wood’s ARK Investment Management held a $725.4 million position in UiPath Inc. (NYSE:PATH) in Q1 2022, boosting its stake by 25% during the quarter. Wood first opened a position in the company in Q2 2021. Steve Cohen’s Point72 Asset Management purchased 143,800 shares of UiPath Inc. (NYSE:PATH) in the first quarter of 2022, worth $3.10 million.
Truist analyst Terry Tillman reaffirmed a Buy rating on UiPath Inc. (NYSE:PATH) with a $45 price target on June 27. This came in light of the company announcing a restructuring and 5% reduction of its global workforce. The analyst observed that UiPath Inc. (NYSE:PATH) also reassured investors about its guidance for yearly recurring revenue and lifted its guidance for non-GAAP operating income for fiscal 2023.
Among the hedge funds tracked by Insider Monkey, 33 funds were long UiPath Inc. (NYSE:PATH) at the end of the first quarter of 2022, up from 28 funds in the previous quarter. Alkeon Capital Management is a significant shareholder of the company, with 13 million shares valued at $281.7 million.
Here is what ClearBridge Investments has to say about UiPath Inc. (NYSE:PATH) 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.”
7. StoneCo Ltd. (NASDAQ:STNE)
ARK Investment Management’s Stake Value: $31,309,000
Point72 Asset Management’s Stake Value: $26,650,000
Number of Hedge Fund Holders: 43
StoneCo Ltd. (NASDAQ:STNE) is a financial technology company that assists merchants with e-commerce, in-store, online, and mobile transactions in Brazil. Cathie Wood’s hedge fund owned a $31.30 million position in StoneCo Ltd. (NASDAQ:STNE) in the first quarter of 2022, while Steve Cohen’s fund held a $26.65 million stake in the company.
Cantor Fitzgerald analyst Josh Siegler on April 8 initiated coverage of StoneCo Ltd. (NASDAQ:STNE) with an Overweight rating and a $15 price target. While the analyst believes inflation in Brazil will remain high in 2022, he thinks the stock has overcorrected, and the market may be ignoring StoneCo Ltd. (NASDAQ:STNE)’s ability to control its expenses by increasing prepayment fees.
According to Insider Monkey’s database, 43 hedge funds were long StoneCo Ltd. (NASDAQ:STNE) at the end of Q1 2022, up from 35 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest shareholder of the company, with roughly 10.70 million shares worth over $125 million.
In addition to Spotify Technology S.A. (NYSE:SPOT), Teladoc Health, Inc. (NYSE:TDOC), and DraftKings Inc. (NASDAQ:DKNG), Cathie Wood and Steve Cohen are bullish on StoneCo Ltd. (NASDAQ:STNE).
Here is what Argosy Investors has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q1 2022 investor letter:
“StoneCo (NASDAQ:STNE) has, like Vizio, seen a dramatic decline in value since adding to the investment during the first quarter. I added to the position early in the year after STNE had dropped significantly due to challenges in their credit portfolio, which they have changed, as well as increasing interest rates in Brazil, which the company was slow to incorporate into their pricing. Despite these changes which should benefit STNE later in the year, the market in general has obviously continued to struggle and emerging markets stocks have been hit even harder in many cases. Expectations are very low for the company now, and there is a good case to be made that the business could be worth much more than current prices a couple of years from now.”
6. DraftKings Inc. (NASDAQ:DKNG)
ARK Investment Management’s Stake Value: $455,919,000
Point72 Asset Management’s Stake Value: $1,023,000
Number of Hedge Fund Holders: 27
DraftKings Inc. (NASDAQ:DKNG) is a Boston-based digital sports entertainment and gaming company. Cathie Wood’s ARK Investment Management strengthened its position in DraftKings Inc. (NASDAQ:DKNG) by 12% in Q1 2022, holding 23.4 million shares worth about $456 million. Steve Cohen added the stock to his portfolio in the first quarter of 2022 by purchasing 52,568 shares worth over $1 million.
On June 28, JMP Securities analyst Jordan Bender initiated coverage of DraftKings Inc. (NASDAQ:DKNG) with an Outperform rating and a $25 price target. The analyst thinks the stock will see an upwards re-rating as DraftKings Inc. (NASDAQ:DKNG) reaches profitability. According to the analyst, DraftKings Inc. (NASDAQ:DKNG) is a high-growth gaming technology firm that is placed within the top three companies of its type in the US. He sees DraftKings Inc. (NASDAQ:DKNG) increasing revenue at a 19% annual rate through 2030.
According to Insider Monkey’s Q1 data, 27 hedge funds were bullish on DraftKings Inc. (NASDAQ:DKNG), compared to 34 funds in the earlier quarter. Joseph Ravitch and Jeffrey Sine’s Raine Capital is a prominent shareholder of the company, with 11.2 million shares worth $218.4 million.
Here is what Baron Small Cap Fund has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q4 2021 investor letter:
“Shares of DraftKings, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as a worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, and that DraftKings will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
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