In this article, we discuss the 10 stocks that Cathie Wood is doubling down on despite losses.
The prospect of rising interest rates has pushed investors to sell risky offerings in their portfolios. As a result, there has been a massive sell-off in high growth sectors like technology, space, and biotech in the past few weeks. Amid the panic, growth-focused portfolios, like that of Cathie Wood at ARK Investment Management, have suffered. The flagship ARK Innovation ETF is down over 33% year-to-date. Nearly all the stocks in the ARK portfolio, worth over $33 billion at the end of the fourth quarter of 2021, are in the bear market.
Some of the top names in the portfolio that have been battered recently include Tesla, Inc. (NASDAQ:TSLA), Roku, Inc. (NASDAQ:ROKU), and Teladoc Health, Inc. (NYSE:TDOC), among others discussed in detail below. Wood has doubled down on her bets as the sell-off continues. In a recent interview with news platform CNBC, she defended her recent moves at the market, claiming that the technology stocks in her portfolio were “way undervalued relative to their potential” and that her fund was operating in the “deep value” territory.
Wood also addressed the mass investor exodus from her flagship Innovation ETF, saying that her biggest concern at the moment was investors who could turn temporary losses into permanent ones. Wood also said that a lot of the present panic was supply chain-related and there were some deflationary forces building up in the market that were pretty strong. She also noted that the “disruptive innovation that is evolving is going to disintermediate and disrupt the traditional world order”.
Our Methodology
The stocks were picked from the fourth quarter regulatory filings of ARK Investment Management. The losses for each stock over the past year are mentioned alongside other details for further clarity. The companies in which the fund increased a previously-held stake feature on the list.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Cathie Wood of ARK Investment Management
Cathie Wood is Doubling Down on These Stocks Despite Losses
10. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 56
Loss in Share Price Over Past Year: 69%
Percentage Increase in Stake During Q4: 21%
Zoom Video Communications, Inc. (NASDAQ:ZM) owns and runs a video communications platform. ARK owned 4.1 million shares of Zoom Video Communications, Inc. at the end of the fourth quarter of 2021 worth $1.1 billion, representing 2.77% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Tiger Global Management LLC is a leading shareholder in Zoom Video Communications, Inc. with 4.7 million shares worth more than $1.2 billion.
Just like Tesla, Inc., Roku, Inc., and Teladoc Health, Inc., Zoom Video Communications, Inc. is one of the stocks that growth investors have their eye on.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Zoom Video Communications, Inc. was one of them. Here is what the fund said:
“We concluded our campaigns in Zoom Video Communications, Inc.. We have been paring our position in Zoom Video Communications, Inc. for several quarters, anticipating the reduced need for video conferencing as vaccination rates climb and people return to their workplaces. That said, we believe there is a strong case to be made that the pandemic has prompted a permanent inflection in videoconferencing’s importance—sustainably higher remote work arrangements, more online learning and less business travel. Furthermore, the company’s dramatically expanded user base (up 485% YoY in Q3) positions it well to cross sell additional services, Zoom Phone in particular. The long-term future remains bright, but we decided to end our successful investment campaign in favor of opportunities in our pipeline with more attractive near-term growth prospects.”
9. Invitae Corporation (NYSE:NVTA)
Number of Hedge Fund Holders: 24
Loss in Share Price Over Past Year: 38%
Percentage Increase in Stake During Q4: 22%
Invitae Corporation (NYSE:NVTA) operates as a medical genetics firm. Top hedge funds hold large stakes in the company. At the end of the third quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Invitae Corporation, down from 31 in the preceding quarter worth $2.1 billion.
Latest data shows that ARK owned close to 26 million shares of Invitae Corporation at the end of December 2021 worth $736 million, representing 1.76% of the total portfolio.
8. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 35
Loss in Share Price Over Past Year: 60%
Percentage Increase in Stake During Q4: 22%
Palantir Technologies Inc. (NYSE:PLTR) operates as an application software firm. Securities filings show that ARK owned over 37 million shares in Palantir Technologies Inc. at the end of the fourth quarter of 2021 worth $895 million, representing 2.14% of the portfolio.
At the end of the third quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Palantir Technologies Inc., up from 26 in the preceding quarter worth $1.3 billion.
In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks andPalantir Technologies Inc. was one of them. Here is what the fund said:
“In October, we bought a stake in Palantir Technologies Inc.. Earlier, in June, our concentrated Tech Fund, which has a mandate to also buy shares in the secondary market, bought shares of Palantir from insiders, before the direct listing. At the price we bought, the equity had much more upside than downside. Palantir Technologies Inc. is operating a software platform that functions as the digital infrastructure for data-driven operations and decision making. The software helps to structure and capture context in data of large corporations. Governments are increasingly realizing that they have to deal with serious data challenges and cyber risk. As most governments cannot attract the most talented software engineers, they need private enterprises such as Palantir to help them build solid infrastructure. Foundry, Palantir’s software for enterprises, is used by companies to make safer cars and airplanes or to accelerate cancer research. The speed to bring new clients on board is improving and revenues will grow faster than expenses. Palantir Technologies Inc. has a long runway of growth ahead.”
7. Berkeley Lights, Inc. (NASDAQ:BLI)
Number of Hedge Fund Holders: 18
Loss in Share Price Over Past Year: 90%
Percentage Increase in Stake During Q4: 24%
Berkeley Lights, Inc. (NASDAQ:BLI) is a digital cell biology company. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Berkeley Lights, Inc. with 1.1 million shares worth more than $23 million.
Regulatory filings reveal that ARK owned over 8.5 million shares of Berkeley Lights, Inc. at the end of December 2021 worth $166 million, representing 0.39% of the total portfolio.
6. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 50
Loss in Share Price Over Past Year: 47%
Percentage Increase in Stake During Q4: 25%
Coinbase Global, Inc. (NASDAQ:COIN) owns and runs a cryptocurrency exchange platform. The hedge fund chaired by Wood owned close to 7 million shares of Coinbase Global, Inc. at the end of December 2021 worth $1.5 billion.
Coinbase Global, Inc. is one of the top crypto stocks in the finance world. Among the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management is a leading shareholder in Coinbase Global, Inc. with 6.9 million shares worth more than $1.5 billion.
Along with Tesla, Inc., Roku, Inc., and Teladoc Health, Inc., Coinbase Global, Inc. is one of the stocks on the radar of elite investors.
In its Q3 2021 investor letter, Hayden Capital, 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.: We established a new position in Coinbase, the dominant US crypto exchange and brokerage, this quarter. Given the misperceptions and early-stage nature of the industry, I thought it would be helpful for our partners’ understanding to share a report outlining our thesis, which we published on October 31st.
At a high level, we believe the crypto economy is in the middle of “crossing the chasm” into mainstream adoption & use cases, which will result in millions of mainstream users needing to transact in crypto in some form.
Coinbase Global, Inc. is well positioned in the Western, regulated markets to capture this influx – considering their dominant market share / mindshare, their focus on the casual user and thus superior user experience compared to alternatives, and their position as a “toll-booth” for this industry. Longer-term, we also believe Coinbase Global, Inc. has “super-app” ambitions, and will be the primary gateway for both the general population and institutions to interact with the crypto economy…” (Click here to see the full text)
5. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 28
Loss in Share Price Over Past Year: 62%
Percentage Increase in Stake During Q4: 29%
DraftKings Inc. (NASDAQ:DKNG) is a digital entertainment and gaming firm. Elite hedge funds have been piling into the stock in recent months. At the end of the third quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in DraftKings Inc., up from 26 the preceding quarter worth $927 million.
The hedge fund chaired by Wood owned close to 17 million shares of DraftKings Inc. at the end of December 2021 worth $844 million, representing 2.02% of the portfolio.
In its Q2 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and DraftKings Inc. 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.”
4. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 50
Loss in Share Price Over Past Year: 21%
Percentage Increase in Stake During Q4: 34%
Roblox Corporation (NYSE:RBLX) owns and runs an online entertainment platform. Regulatory filings reveal that ARK owned over 1.2 million shares of Roblox Corporation at the end of December 2021 worth $97 million, representing 0.23% of the total portfolio.
Roblox Corporation is a top metaverse play on Wall Street. At the end of the third quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Roblox Corporation, up from 49 in the previous quarter worth $4.9 billion.
In its Q2 2021 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks and Roblox Corporation was one of them. Here is what the fund said:
“The wonder-tale stories of children’s books show us that there are infinite possibilities of stories and worlds. The metaverse, the idea that describes the shared 3D spaces in a virtual universe, is enabling people to create fiction. Over the past six months, we initiated a new investment in Roblox. The firm was founded in 1989 by David Baszucki and Erik Kassel when they programmed a physics lab where students could study how cars would crash.
Today, Roblox has become a leading platform with a mission to build a human co-experience that enables billions of users to play, learn, and build friendships in the metaverse. Recent advances in cloud computing, computing devices, and machine learning, enable the materialization of the metaverse. Take what we have in virtual reality today and fast-forward a few decades. Humans will be able to experience unimaginable things and in a couple of millennia virtual economies are likely to become bigger than the physical trade on planet Earth.
Over the first quarter of 2021, Roblox reported 140% revenue growth, 42.1 million daily active users, and 9.7 billion engaged hours. The opportunity for this platform is massive.”
3. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 27
Loss in Share Price Over Past Year: 47%
Percentage Increase in Stake During Q4: 102%
UiPath Inc. (NYSE:PATH) provides robotic process automation. Hedge funds have been selling the stock in recent months. At the end of the third quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $3.6 billion in UiPath Inc., down from 46 the preceding quarter worth $3.4 billion.
Securities filings show that ARK owned over 23.9 million shares in UiPath Inc. at the end of the fourth quarter of 2021 worth $1.2 billion, representing 3.02% of the portfolio.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and UiPath Inc. was one of them. Here is what the fund said:
“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.”
2. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 37
Loss in Share Price Over Past Year: 87%
Percentage Increase in Stake During Q4: 211%
StoneCo Ltd. (NASDAQ: STNE) provides financial technology solutions. Latest data shows thark ARK owned close to 1.8 million shares of StoneCo Ltd. at the end of December 2021 worth $63 million, representing 0.15% of the total portfolio.
Hedge funds have been offloading StoneCo Ltd. as inflation climbs. At the end of the third quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in StoneCo Ltd., compared to 44 the preceding quarter worth $2.7 billion.
In its Q2 2021 investor letter, JDP Capital Management, an asset management firm, highlighted a few stocks and StoneCo Ltd. was one of them. Here is what the fund said:
“StoneCo has been in our portfolio since early 2019 and has appreciated 225% since. In the first half of 2021 the stock was down nearly 20% and was a drag on the fund’s performance.
Stone is a leading fintec company in Brazil that provides back-office software, loans and other financial services to small and medium sized businesses (SMBs). We have discussed Stone in past letters and the company’s “ladder up” from a card processor to a supplier of enterprise software used to sell financial products on top of such as working capital loans.
The company generates a lot of cash that it reinvests to acquire or build new financial products for its customer base. Since we invested, the company has grown the number of SMB clients by 3x, revenue by 2.3x, and net income by 2.2×11.
The pandemic’s impact on SMBs in Brazil has been severe, especially for the many retailers who are only now adopting an e-commerce strategy. In the first half of 2021 Stone increased loss provisions on its lending product, and overall growth has slowed somewhat. The stock’s decline earlier this year was not surprising, but investors are now ignoring progress that has enhanced Stone’s position for coming out much stronger when the recovery begins.
StoneCo Q1 2021 Earnings Call: “Based on (i) our learnings with lockdowns last year, (ii) recent client transactional data and (iii) learnings from the dynamics of countries where vaccines are widespread, we expect that once vaccination scale (which we think will happen in the second half of 2021), the economic recovery will be fast and – although delayed – Brazil is moving in the right direction. For these reasons, we have made an informed decision to be ready for recovery by investing in growth…”
“…In the first quarter, we decided to increase our salesforce headcount by 24%, marketing investments by 33%, customer service and logistics headcount by 32% and technology headcount by 20% in order to be the fastest player when our economy comes back to normal levels.”
“I want to start our presentation by highlighting that Brazil went through a second wave of COVID in the first quarter of ’21, which imposed commerce restrictions in several cities throughout the country. Those restrictions were felt by our clients with average TVP reaching a low in the end of March…
…But similar to the behavior we saw in the comeback from the first lockdown in 2020, we already observed significant and quick recovery with average TPV in May achieving levels above January 2021. As Thiago mentioned, we expect that once vaccinations are scaled, the economy recovery of the country will be fast.”
In terms of COVID recovery opportunities within our portfolio, Stone might be the most “coiled” because the impact on Brazilian small businesses has been so traumatic. In addition, Stone is part of a much larger and fast-moving transition happening in Brazil around the digitalization of financial services. The speed of this transition is unique to Brazil because the Central Bank is actively trying to reduce the country’s previous dependency on a small handful of large banks. Important progress in the first half of 2021 included closing on the long-awaited acquisition of Linx, a mature provider of enterprise software with a large footprint across Brazil. The acquisition will provide Stone meaningful cross-selling opportunities and a more diversified customer base.”
1. Zymergen Inc. (NASDAQ:ZY)
Number of Hedge Fund Holders: 9
Loss in Share Price Over Past Year: 89%
Percentage Increase in Stake During Q4: 245%
Zymergen Inc. (NASDAQ:ZY) is a commodity chemicals firm. At the end of the third quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $96 million in Zymergen Inc., compared to 15 the preceding quarter worth $241 million.
ARK owned 3.7 million shares of Zymergen Inc. at the end of the fourth quarter of 2021 worth $49 million, representing 0.11% of the portfolio.
In its Q3 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Zymergen Inc. was one of them. Here is what the fund said:
“Zymergen Inc. is a company dedicated to biofacturing, or harnessing bacteria to manufacture materials. Zymergen was a detractor following an unexpected update announcing both a major delay in the launch of lead product Hyaline and the removal of CEO Josh Hoffman, who was replaced by company chairman and former Illumina CEO Jay Flatley. We exited our position given material impacts to the business.”
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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This article is originally published at Insider Monkey.
