In this article, we discuss the 10 stocks Cathie Wood is doubling down on.
Cathie Wood, the chief of New York-based ARK Investment Management, is a trail-blazing investor on Wall Street, who continues to gain attention in investor circles amid her eccentric stock-picking strategies. Wood, whose flagship ARK Innovation ETF returned more than 152% last year, manages more than $53.7 billion in assets with holdings concentrated in the technology, consumer goods, and healthcare sectors.
On Thursday, Wood spoke on Tech Check by news platform CNBC and defended her growth-focused portfolio that has been the subject of short-selling attempts in recent weeks. Amid a broader drawdown in growth stocks on the back of valuation concerns and uncertainty regarding crypto regulation – ARK Innovation ETF was up 9% in the second quarter but still down 7% year-to-date – Wood dismissed the notion that there was a technology bubble dominating the stock market, stressing that the market could not be further away from a bubble.
Wood, who champions an investing strategy she likes to call “disruptive innovation”, is the largest institutional holder of crypto through her fund and has doubled down on tech-related bets, according to latest filings. Some of the top holdings in the ARK Investment Management portfolio at the end of the second quarter of 2021 were Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB), among others discussed in detail below.
It remains to be seen how Wood deals with these short-selling attempts moving forward, though it is fair to say that her disruptive innovation strategy has ruffled more than a few feathers in the finance world. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Cathie Wood of ARK Investment Management
Our Methodology
With this context in mind, here is our list of the 10 stocks Cathie Wood is doubling down on. These were listed according to the investment portfolio of ARK Investment Management at the end of the second quarter of 2021. Only equities in which the hedge fund has increased stake by 200% or more, when compared to the portfolio at the end of the first quarter of 2021, were selected. These are ranked according to the percentage increases in ascending order. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. Data from the 873 funds tracked by Insider Monkey was used to gauge hedge fund sentiment around each stock.
Cathie Wood is Doubling Down on These 10 Stocks
10. DraftKings Inc. (NASDAQ: DKNG)
Number of Hedge Fund Holders: 26
Percentage Increase in Stake in Q2: 212%
DraftKings Inc. (NASDAQ: DKNG) is placed tenth on our list of 10 stocks Cathie Wood is doubling down on. The company operates from Boston as a digital sports entertainment provider. According to the latest filings, ARK Investment Management owned more than 13.6 million shares in the company at the end of June 2021, representing 1.32% of the portfolio. The shares are worth $710 million and Wood has increased ARK’s stake in the digital entertainment firm by 212% compared to the first quarter of 2021.
On August 9, investment advisory Northland maintained an Outperform rating on DraftKings Inc. stock and raised the price target to $75 from $70, appreciating the strong second quarter results of the firm that featured top and bottom line beats.
At the end of the second quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $927 million in DraftKings Inc., down from 43 the preceding quarter worth $966 million.
Just like Twitter, Inc., Square, Inc., JD.com, Inc., Tesla, Inc., and Facebook, Inc., DraftKings Inc. is one of the best stocks to buy according to Cathie Wood.
In its Q2 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and DraftKings Inc. (NASDAQ: DKNG) was one of them. Here is what the fund said:
“DraftKings is an online gaming operator. Its legacy Daily Fantasy Sports (DFS) allows users to virtually draft teams of players from professional sports leagues and potentially earn a payout based on how athletes perform. DraftKings Online Sports Betting (OSB) involves the company taking wagers or bets from customers on sporting events. The company’s third offering, Online Casino (iGaming), involves customers betting real money when playing casino games like slots and blackjack online.
DFS is legal in most states, while approximately 25% of the country’s population has access to OSB and approximately 10% has access to iGaming. Within a year, we expect approximately 40% or more of the population to have access to OSB as legalization moves rapidly.
The company reported a strong quarter, with revenues exceeding expectations by more than 30%. We think the stock underperformed due to the time period between the conclusion of March Madness and the start of the NFL season being a weaker betting period and concerns about more intense competition. Concerns around tough comps have also hindered performance of DraftKings shares. We note that monthly state data continues to be robust, showing no signs of slowing from reopening. We also believe DraftKings is increasing its potential to gain market share by moving its tech-platform to SBTech, which is a sports betting platform the company acquired as part of a SPAC deal. Legalization of sports betting by states has also been robust.”
9. Skillz Inc. (NYSE: SKLZ)
Number of Hedge Fund Holders: 20
Percentage Increase in Stake in Q2: 310%
Skillz Inc. (NYSE: SKLZ) is ranked ninth on our list of 10 stocks Cathie Wood is doubling down on. The company is headquartered in California and operates as a technology platform offering game developers the chance to monetize their content. Latest data shows that ARK Investment Management owned 24.6 million shares in the firm at the end of the second quarter of 2021, representing 0.99% of the portfolio. These are valued at over $534 million and Wood has increased the hedge fund’s stake in the firm by 310% compared to the first quarter.
On July 28, investment advisory RBC Capital initiated coverage of Skillz Inc. stock with a Sector Perform rating and a price target of $17, noting that a new player incentive strategy by the firm may be subject to investor scrutiny in the near term.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Skillz Inc., down from 26 in the previous quarter worth $672 million.
In addition to Twitter, Inc., Square, Inc., JD.com, Inc., Tesla, Inc., and Facebook, Inc., Skillz Inc. is one of the best stocks to buy according to Cathie Wood.
8. Garmin Ltd. (NASDAQ: GRMN)
Number of Hedge Fund Holders: 25
Percentage Increase in Stake in Q2: 352%
Garmin Ltd. (NASDAQ: GRMN) is a Switzerland-based company that makes and sells communication and navigation devices. It is placed eighth on our list of 10 stocks Cathie Wood is doubling down on. Regulatory filings reveal that ARK Investment Management owned 44,236 shares in the firm at the end of June 2021, representing 0.01% of the portfolio. Wood has increased ARK’s stake in the firm by 352% compared to the first quarter of 2021.
On August 4, investment advisory Tigress Financial maintained a Strong Buy rating on Garmin Ltd. stock and raised the price target to $198 from $174, underlining that the demand for all the products of the firm remained strong.
At the end of the second quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $477 million in Garmin Ltd., up from 23 in the previous quarter worth $513 million.
Along with Twitter, Inc., Square, Inc., JD.com, Inc., Tesla, Inc., and Facebook, Inc., Garmin Ltd. is one of the best stocks to buy according to Cathie Wood.
7. HEICO Corporation (NYSE: HEI)
Number of Hedge Fund Holders: 41
Percentage Increase in Stake in Q2: 679%
HEICO Corporation (NYSE: HEI) is a Florida-based aerospace and defense firm. It is ranked seventh on our list of 10 stocks Cathie Wood is doubling down on. ARK Investment Management owned 44,790 shares in the company at the end of the second quarter of 2021, representing 0.01% of the portfolio. The shares are valued at $6.2 million. Wood has increased ARK’s stake in the aerospace and defense company by 679% compared to the first quarter.
In May, investment advisory Canaccord maintained a Buy rating on HEICO Corporation stock with a price target of $150. Ken Herbert, an analyst at the investment advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, China-based investment firm Gobi Capital is a leading shareholder in HEICO Corporation with 929,879 shares worth more than $115 million.
Twitter, Inc., Square, Inc., JD.com, Inc., Tesla, Inc., and Facebook, Inc. are some of the best stocks to buy according to Cathie Wood, just like HEICO Corporation.
6. Spirit AeroSystems Holdings, Inc. (NYSE: SPR)
Number of Hedge Fund Holders: 35
Percentage Increase in Stake in Q2: 723%
Spirit AeroSystems Holdings, Inc. (NYSE: SPR) is placed sixth on our list of 10 stocks Cathie Wood is doubling down on. The company markets commercial aerostructures and is headquartered in Kansas. Wood, through her hedge fund, owned 346,164 shares in the company at the end of June 2021, representing 0.03% of the portfolio. The shares are worth $16.3 million. ARK Investment Management has increased stake in the firm by 723% compared to the first quarter of 2021.
On August 6, investment advisory Bank of America upgraded Spirit AeroSystems Holdings, Inc. stock to Buy from Underperform with a price target of $50, noting that the firm had focused on restructuring and improved the liquidity profile.
At the end of the second quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $853 million in Spirit AeroSystems Holdings, Inc., down from 44 in the previous quarter worth $1.1 billion.
Twitter, Inc., Square, Inc., JD.com, Inc., Tesla, Inc., and Facebook, Inc. are some of the best stocks to buy according to Cathie Wood, along with Spirit AeroSystems Holdings, Inc..
5. The Boeing Company (NYSE: BA)
Number of Hedge Fund Holders: 59
Percentage Increase in Stake in Q2: 724%
The Boeing Company (NYSE: BA) is ranked fifth on our list of 10 stocks Cathie Wood is doubling down on. The company operates from Illinois and makes and sells aerospace and defense-related products. According to the latest filings, ARK Investment Management owned 74.056 shares in the company worth $17.7 million at the end of June 2021. These represented 0.03% of the portfolio. Wood has increased ARK’s stake in the company by 724% compared to the first quarter.
On August 19, investment advisory Cowen maintained an Outperform rating on The Boeing Company stock with a price target of $290, noting that the fiscal year estimates on the earnings per share for the firm in 2022 looked “high”.
At the end of the second quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in The Boeing Company, the same as in the preceding quarter worth $1.4 billion.
In its Q1 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The Boeing Company (NYSE: BA) was one of them. Here is what the fund said:
“We’ve known Boeing for a long time. It’s always been a high quality company that’s traded for a premium valuation owing to its position as a global duopoly. We’d looked at it recently after weakness due to its highly publicized Max 737 issues, but it never got cheap enough for us to pull the trigger. After the pandemic, the stock went into freefall as its customer bases’ business dried up and people worried about its liquidity. The stock fell from $338 on February 19th when the S&P hit its high to a low of $89. We bought the stock after the new CEO Dave Calhoun said publicly that it would not take government capital if it required equity dilution because it had many other options. Our average price is just above $120 where it was trading for less than 7x what it earned in 2018. It will likely take a while to normalize to those earnings levels, but this business will survive and ultimately we will own a leader in a global duopoly. Even on depressed forecasts, the company currently has about a 10-15% free cash flow yield. If and when the economy normalizes, we think Boeing could be worth more than double its current price.”
4. Honeywell International Inc. (NASDAQ: HON)
Number of Hedge Fund Holders: 57
Percentage Increase in Stake in Q2: 859%
Honeywell International Inc. (NASDAQ: HON) is a North Carolina-based technology and manufacturing company. It is placed fourth on our list of 10 stocks Cathie Wood is doubling down on. Wood, through her hedge fund, owned 31,092 shares in the firm at the end of the second quarter of 2021, representing 0.01% of the portfolio. These are worth $6.8 million. The hedge fund has increased stakes in the company by 859% compared to the first quarter.
On July 26, investment advisory Deutsche Bank kept a Buy rating on Honeywell International Inc. stock and raised the price target to $251 from $245, appreciating the earnings result of the firm in the second quarter of 2021.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Honeywell International Inc., up from 56 the preceding quarter worth $1.7 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Honeywell International Inc. (NASDAQ: HON) was one of them. Here is what the fund said:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included industrials, Honeywell also lagged in the quarter after previously generating strong returns over extended periods.”
3. The Trade Desk, Inc. (NASDAQ: TTD)
Number of Hedge Fund Holders: 25
Percentage Increase in Stake in Q2: 1,073%
The Trade Desk, Inc. (NASDAQ: TTD) is a California-based technology company. It is ranked third on our list of 10 stocks Cathie Wood is doubling down on. Latest data shows that ARK Investment Management owned more than 2.1 million shares in the company at the end of June 2021, representing 0.31% of the portfolio. The shares are valued at over $168 million. Wood has increased stake in the company 1,073% compared to the first quarter of 2021.
On August 17, investment advisory Citi reiterated a Neutral rating on The Trade Desk, Inc. stock and raised the price target to $85 from $60, noting that the estimates for the firm had been pushed higher following the second quarter results.
At the end of the second quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $719 million in The Trade Desk, Inc., down from 35 in the preceding quarter worth $812 million.
In its Q2 2021 investor letter, Richie Capital Group, an asset management firm, highlighted a few stocks and The Trade Desk, Inc. (NASDAQ: TTD) was one of them. Here is what the fund said:
“The Trade Desk (TTD – up 26.3%) – Shares in the programmatic advertising specialist rebounded during the quarter after selling off in Q1. The selloff was part of the previously mentioned market move away from higher priced technology names. The rebound in Q2 was due to Google delaying its phase out of third-party cookies in its Chrome browser to mid to late 2023. This is positive news, but TTD is prepared for the inevitable transition away from cookies. The company has built an industry alternative called UID 2.0 which asks users’ permission to receive targeted ads on websites.
UID 2.0 has gained more traction in the digital ad industry vs competing alternatives with many major publishers and advertisers on board. Additionally, TTD’s business is diversified across numerous channels including video, audio, in-app, native and social. Connected TV is currently their fastest growing business, and cookies are meaningless on that platform as ads are based on first-party data.”
2. Reinvent Technology Partners Y (NASDAQ: RTPY)
Number of Hedge Fund Holders: 38
Percentage Increase in Stake in Q2: 2,547%
Reinvent Technology Partners Y (NASDAQ: RTPY) is placed second on our list of 10 stocks Cathie Wood is doubling down on. The company operates from New York. It is a special purpose acquisition firm. According to regulatory filings, ARK Investment Management owned more than 1.1 million shares in the firm worth $11.8 million at the end of June 2021, representing 0.02% of the portfolio. The hedge fund has increased stake in the company by 2,547% compared to the first quarter of 2021.
On July 15, Reinvent Technology Partners Y announced that it agreed to a deal with self-driving firm Aurora to take the latter public via the SPAC. Aurora is valued at more than $10 billion, according to reports.
At the end of the second quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $326 million in Reinvent Technology Partners Y, down from 39 in the preceding quarter worth $321 million.
1. Splunk Inc. (NASDAQ: SPLK)
Number of Hedge Fund Holders: 47
Percentage Increase in Stake in Q2: 4,772%
Splunk Inc. (NASDAQ: SPLK) is ranked first on our list of 10 stocks Cathie Wood is doubling down on. The company provides software and cloud platform solutions. It is headquartered in California. ARK Investment Management owned 429,357 shares in the company at the end of June 2021, representing 0.11% of the portfolio. The shares are worth more than $62 million and Wood has increased ARK’s stake in the firm by 4,772% compared to the filings for the first quarter of the year.
On August 11, investment advisory UBS upgraded Splunk Inc. stock to Buy from Neutral and raised the price target to $175 from $137, underlining the potential for upside in the security-related demand as a growth catalyst for the firm.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Splunk Inc. with 1.9 million shares worth more than $283 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Splunk Inc. (NASDAQ: SPLK) was one of them. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Splunk.”
You can also take a peek at 10 Best Stocks to Buy According to Warren Buffett and 11 Biotech Stocks Popular On Reddit.
Follow Insider Monkey on Twitter
Suggested Articles:
- 10 Best Dividend Stocks with Over 5% Yield According to Hedge Funds
- 10 Best Stocks to Buy According to Billionaire Mario Gabelli
- ‘The Next Amazon’: 10 Undervalued Ecommerce Stocks with Huge Upside
This article is originally published at Insider Monkey.
