Cathie Wood is Getting Rid of These 5 Stocks

4. Baidu, Inc. (NASDAQ: BIDU)

Number of Hedge Fund Holders: 59   

Percentage Decline in Stake in Q2: 87%

Baidu, Inc. (NASDAQ: BIDU) is a China-based company in the internet-related services business. It is placed fourth on our list of 10 stocks Cathie Wood is getting rid of. ARK Investment Management owned 680,236 shares in the company at the end of June 2021, representing 0.25% of the portfolio. The shares are valued over $138 million. The fund has trimmed stake in the company by 87% compared to the first quarter of the year. 

On August 13, investment advisory Benchmark reiterated a Buy rating on Baidu, Inc. (NASDAQ: BIDU) stock but lowered the price target to $357 from $370, underlining that the firm was well placed for market opportunities in the artificial intelligence sector. 

At the end of the second quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Baidu, Inc. (NASDAQ: BIDU), down from 89 in the preceding quarter worth $6.5 billion.

In its Q1 2021 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ: BIDU) was one of them. Here is what the fund said:

“We have also fully exited our stake in Baidu, following their outstanding performance during the period and their lower relative upside potential compared to other investment alternatives, which we will discuss below.

The Chinese technology platform company Baidu has also been held in the portfolios managed by Alejandro, Miguel and myself for several years. During this period, we have seen very high volatility in its share price, which we have taken advantage of to make significant rebalancing moves in our position (in fact, we even sold our entire position once, when we thought the stock’s upside potential was exhausted). After several years of instability, market sentiment turned very positive, putting an end to the historical advertising problems in the healthcare sector, the divestments in O2O (Online-to-Offline) businesses that continued to weigh on the company’s margins, the IPO of part of the iQiyi streaming business (which hid Baidu’s underlying cash generation capacity) and the tough competition from other industry giants such as Tencent and Alibaba, as well as the entry of new players with disruptive business models (ByteDance). At the same time, the company’s recent commitment to electric vehicles contributed even more to this change of narrative. Baidu’s share price rose almost fourfold from the March 2020 lows to all-time highs and reached a valuation where the margin of safety, in our view, was too narrow.”