Cathie Wood is Giving Up on These 9 Tech Stocks

In this article, we discuss 9 tech stocks that Cathie Wood is giving up on. If you want to see more stocks in this list, click Cathie Wood is Giving Up on These 5 Tech Stocks

Despite the tech selloff hammering her flagship ARK Innovation ETF, investors seem to be steadfast in their conviction that Cathie Wood of ARK Investment Management can generate long-term returns. In the first half of 2022, although her ARK ETF plummeted about 70% from its peak, investors pledged $1.5 billion to the fund. Cathie Wood has time and again reiterated that her disruptive innovation strategies will take at least five years to generate returns, and her fund is thus suitable for medium and long-term investors. 

As per reports from early July, ARK’s assets under management have contracted from about $28 billion to less than $9 billion amid the battering of growth stocks. However, Todd Rosenbluth, head of research at the New York-based consultancy VettaFi, reported that ARK has garnered solid interest from US financial advisers as they look towards “disruptive innovation” as a long-term investment idea and take the market selloff as an attractive entry point into the fund. 

Although Cathie Wood remains a vocal tech bull regardless of the rising rates crushing growth equities, she notably reduced holdings in some tech names in the second quarter of 2022. The ARK portfolio was adjusted by Wood in Q2, who sold off 12 equities entirely and trimmed positions in 223 companies. While the information technology sector remains her largest bet in 2022, some of the most notable tech stocks that Cathie Wood gave up on included Baidu, Inc. (NASDAQ:BIDU), Spotify Technology S.A. (NYSE:SPOT), and Twitter, Inc. (NYSE:TWTR). 

Cathie Wood is Giving Up on These 10 Tech Stocks

Cathie Wood of ARK Investment Management

Our Methodology 

These tech stocks were selected from Cathie Wood’s Q2 2022 portfolio. We included tech names where she disposed of at least 30% of her stakes or more in the June quarter. 

9. Thermo Fisher Scientific Inc. (NYSE:TMO)

Number of Hedge Fund Holders: 101

Percentage Decline in the Stake: 64%

Thermo Fisher Scientific Inc. (NYSE:TMO) is an American supplier of scientific instruments and related software services. Cathie Wood’s ARK Investment Management dumped 64% of its Thermo Fisher Scientific Inc. (NYSE:TMO) stake in the second quarter of 2022, holding only 290 shares of the company worth $165,000.

On July 13, Barclays analyst Luke Sergott lowered the price target on Thermo Fisher Scientific Inc. (NYSE:TMO) to $630 from $675 and kept an Overweight rating on the shares. The analyst cited macro environment pressuring the life science sector for the slashed price target, but noted that tools companies are well positioned for recession/inflationary backdrops.

According to Insider Monkey’s data, 101 hedge funds were bullish on Thermo Fisher Scientific Inc. (NYSE:TMO) at the end of Q1 2022, up from 95 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company in the March quarter, comprising 2.25 million shares worth $1.3 billion.

Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q4 2021 investor letter:

“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of Thermo Fisher Scientific, a leading health care tools company, a leading provider of fertility benefit management services to self-insured employers that offers a rare win-win-win for employers, employees, health systems, and doctors, with clear savings and quality improvements.”

8. LendingClub Corporation (NYSE:LC)

Number of Hedge Fund Holders: 27

Percentage Decline in the Stake: 100%

LendingClub Corporation (NYSE:LC) is a California-based company that offers financial products and services via its technology-enabled platform. Cathie Wood added LendingClub Corporation (NYSE:LC) to her portfolio in Q2 2019, and in the second quarter of 2022, Wood dumped almost all of her stake in the company.

On July 8, after Upstart Holdings, Inc. (NASDAQ:UPST) announced that Q2 results would fall short of estimates, Keefe Bruyette analyst Michael Perito said that he would not be surprised if LendingClub Corporation (NYSE:LC) shares see some pressure too. However, he believes that earnings for LendingClub Corporation (NYSE:LC) would not be impacted significantly and maintained a Market Perform rating on the stock.

Among the hedge funds tracked by Insider Monkey, David Rosen’s Rubric Capital Management held the biggest stake in LendingClub Corporation (NYSE:LC) at the end of Q1 2022, with 2.80 million shares worth over $44 million. Overall, 27 hedge funds were bullish on the stock in the March quarter.

7. Splunk Inc. (NASDAQ:SPLK)

Number of Hedge Fund Holders: 42

Percentage Decline in the Stake: 60%

Splunk Inc. (NASDAQ:SPLK) is a California-based software and cloud solutions company that provides insights from the data delivered by digital systems in the United States and internationally. Cathie Wood’s hedge fund dumped 60% of her previously held Splunk Inc. (NASDAQ:SPLK) shares in Q2 2022. The Wood portfolio had 1,189 shares of the company worth $122,000 at the end of June. 

On July 18, Truist analyst Joel Fishbein lowered the price target on Splunk Inc. (NASDAQ:SPLK) to $150 from $175 but maintained a Buy rating on the shares as part of a broader research note on Infrastructure Software and the Observability Market. The analyst said he continues to see opportunities for the companies in the sector as several legacy markets converge in light of the global digital transformation. The analyst added that his latest conversations with customers and channel partners show some softness in the growing momentum seen in the industry last year.

Among the hedge funds tracked by Insider Monkey, 42 funds were bullish on Splunk Inc. (NASDAQ:SPLK) at the conclusion of Q1 2022, down from 44 funds in the preceding quarter. Alex Sacerdote’s Whale Rock Capital Management is the leading position holder in the company, with 1.6 million shares valued at $242.3 million. 

Here is what Carillon Eagle Mid Cap Growth Fund has to say about Splunk Inc. (NASDAQ:SPLK) in its Q1 2022 investor letter:

“Splunk’s (NASDAQ:SPLK) software analyzes data from servers and network equipment, from which insights can be gleaned about business trends, security, and operations. The company delivered revenue above expectations for the quarter and provided an outlook for cash flow generation above expectations. Splunk also announced the hiring of a new CEO with cloud and security software experience, indicating a favorable shift toward a customer-centric sales approach. The stock also benefited late in the quarter from a more general bounce in beaten-down software stocks.”

6. Etsy, Inc. (NASDAQ:ETSY)

Number of Hedge Fund Holders: 43

Percentage Decline in the Stake: 58%

Etsy, Inc. (NASDAQ:ETSY) was founded in 2005 and is headquartered in Brooklyn, New York. The company offers online marketplaces that connect buyers and sellers in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. Securities filings for Q2 2022 reveal that Cathie Wood’s fund trimmed its Etsy, Inc. (NASDAQ:ETSY) stake by 58%, holding 59,545 shares worth $4.83 million.

On July 15, Stifel analyst Scott Devitt lowered the price target on Etsy, Inc. (NASDAQ:ETSY) to $125 from $130 and kept a Buy rating on the shares ahead of the company’s Q2 earnings. He is taking a more careful approach for the rest of 2022 due to a challenging macroeconomic backdrop, changing consumer spending patterns, EU weakness, and the discretionary nature of goods on the platform. The analyst is also “moderately” cutting his Q2 and FY22 estimates.

Among the hedge funds tracked by Insider Monkey, 43 funds were long Etsy, Inc. (NASDAQ:ETSY) at the end of March 2022, down from 47 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder of the company, with 1.3 million shares worth over $163 million. 

In Q2 2022, Cathie Wood gave up on Etsy, Inc. (NASDAQ:ETSY), just like Baidu, Inc. (NASDAQ:BIDU), Spotify Technology S.A. (NYSE:SPOT), and Twitter, Inc. (NYSE:TWTR). 

Here is what ClearBridge All Cap Growth Strategy has to say about Etsy, Inc. (NASDAQ:ETSY) in its Q4 2021 investor letter:

“We took advantage of market volatility in the fourth quarter, using pullbacks to initiate eight new positions and add to recently established ones while closing another eight positions Seeding the Strategy with disruptive growth companies and broadening out the portfolio’s industry weightings have been central to our repositioning efforts in 2021. To this end, we added two new disruptors in the quarter: Etsy and CrowdStrike Holdings.

Etsy operates a number of online marketplaces with its flagship brand, Etsy.com, an e-commerce destination for craft and artisan goods. We see the company’s scaled, two-sided network and focus on unique and special goods as competitive advantages. We believe Etsy has a long runway for growth ahead as it captures a greater share of the very large and growing global retail market. We view Etsy as a differentiated, early stage way to participate in the secular growth of e-commerce. We are also attracted to the company’s capital light business model and strong and improving profitability profile. Furthermore, our position increases our exposure to the consumer discretionary sector, where we have historically had less exposure.”

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Disclosure: None. Cathie Wood is Giving Up on These 9 Tech Stocks is originally published on Insider Monkey.