In this article, we will take a look at Cathie Wood selling these 12 stocks in 2023.
After a bruising 2022, Cathie Wood’s funds slowly started to recover this year, thanks to the broader rally in the stock market amid hopes that the Federal Reserve could pause its rate-hike spree which according to Ms. Wood contributed to the collapse of regional banks. Cathie Wood in her latest quarterly commentary said that authorities were quick to blame crypto for the banking crisis. But the 67-year old hedge fund manager said the regulators should “focus on the central points of failure in the traditional banking system instead of blocking the decentralized, transparent, and auditable financial platforms that have no central points of failure.”
The stock market collapse that started in 2022 amid interest rate hikes especially hammered growth investors like Cathie Wood, who invest in small, often loss-making companies promising returns far into the future. It was all rose and sunshine for ARK investors when money-lending policies were easy and economy was thriving. But as inflation started to rise and the Federal Reserve’s hawkish policies made it difficult for growth companies to borrow money, Wood’s portfolio started to take a hit. Relentless losses made it difficult for Cathie Wood to stick to her unprofitable bets for long.
The net portfolio worth of ARK Innovation ETF in March 2022 stood at $13 billion. As of the end of March 2023, the ETF’s portfolio worth fell to $7.4 billion, as Cathie Wood started to sell stocks last year. According to a Bloomberg report, because of selling stocks at a loss, Wood suffered a whopping $2 billion in losses. However, the report added that these losses could lighten the tax bills Wood would receive on future capital gains.
Talking to Bloomberg, Wood said that her flagship fund ARK Innovation ETF reduced its holdings to just 28 stocks from 50 stocks as it started to suffer losses after hitting its peak in February 2021.
Despite the losses, ARK reiterated its optimism in its report for the first quarter of 2023. The firm said that during difficult times, consumers and businesses adopt new technologies faster than they do in normal times, causing a boom for innovative companies. Here’s what the firm said:
“If we are correct in our assessment that growth, inflation, or both will surprise on the low side of expectations, scarce double-digit growth opportunities should be rewarded accordingly. The adoption of new technologies typically accelerates during tumultuous times as concerned businesses and consumers change their behavior much more rapidly than otherwise would be the case. As a result, stocks of innovation-oriented companies tend to perform better and emerge as new market leaders toward the end of a bear market. We believe the coronavirus crisis and Russia’s invasion of Ukraine have transformed the world significantly and permanently, suggesting that many innovation-driven strategies and stocks could be productive holdings during the next five to ten years.”
ARK Invest said that five of its actively-managed ETFs and one indexed ETF outperformed in the first quarter relative to the broad-based global equity indexes, while one actively managed ETF and one indexed ETF underperformed.
The ARK Autonomous Technology and Robotics ETF outperformed broad-based global equity indexes in the March quarter. Some of the ETF’s top holdings include Tesla (TSLA) and UiPath (PATH). The ARK Next Generation Internet ETF (ARKW) also outperformed broad-based global equity indexes in the March quarter, with notable contributors being Grayscale Bitcoin Trust (GBTC) and Coinbase Global Inc (COIN).
On the other hand The ARK Genomic Revolution ETF (ARKG) underperformed the broad-based global equity indexes.
Cathie Wood of ARK Investment Management
Investor Exodus at ARK
But despite this outperformance, it seems consistent losses, uncertainty about the Federal Reserve’s future path and the global macro backdrop have spooked ARK investors who are now taking back their funds. All ARK ETFs except ARK Innovation Fund (ARKK) have seen outflows in 2023. To retain investors, Wood even had to offer discounts on fees for the ARK Venture Fund (ARKVX).
Some notable names in the Q1 portfolio of Wood are Tesla Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM) and Coinbase Global, Inc. (NASDAQ:COIN).
Our Methodology:
For this article, we scanned the first quarter of 2023 portfolio of Cathie Wood’s ARK Investment Management and picked 12 important stocks in which Cathie Wood either completely sold off her stakes or reduced her positions significantly. To give our readers an insight into what other hedge funds think of these companies, we mentioned the number of hedge funds that had stakes in these companies as of the end of 2022 and sorted the list on this metric.
Cathie Wood is Selling These 12 Stocks in 2023
12. Organovo Holdings Inc. (NYSE:ONVO)
Number of Hedge Fund Holders: 2
Medical laboratory company Organovo Holdings Inc. (NYSE:ONVO) is a penny stock that was dumped by Cathie Wood’s hedge fund during the first quarter as ARK sold 214,302 shares of the company. Insider Monkey’s database shows that in addition to ARK, just one hedge fund had stakes in Organovo Holdings Inc. in the last quarter of 2022.
11. Magic Software Enterprises Ltd. (NASDAQ:MGIC)
Number of Hedge Fund Holders: 3
Israel-based enterprise software company Magic Software Enterprises Ltd. (NASDAQ:MGIC) was one of the stocks sold by Cathie Wood during the first quarter as her hedge fund let go of 136,848 shares of the company in the period.
Magic Software Enterprises Ltd. recently posted its first quarter results which missed estimates on both revenue and earnings.
As of the end of the last quarter of 2022, 7 hedge funds had stakes in Magic Software Enterprises Ltd..
10. Compugen Ltd. (NASDAQ:CGEN)
Number of Hedge Fund Holders: 6
Cathie Wood’s hedge fund owned about 2.4 million shares of penny stock Compugen Ltd. (NASDAQ:CGEN) in the fourth quarter of 2022. The fund sold all of these shares during the first quarter. Compugen Ltd. is a clinical-stage drug discovery platform company. Earlier this month Compugen Ltd. posted its first-quarter results. GAAP EPS in the period came in at -$0.11, beating estimates by $0.01.
Insider Monkey’s database of hedge funds shows that 10 hedge funds had stakes in Compugen Ltd. during the last quarter of 2022.
9. Niu Technologies (NASDAQ:NIU)
Number of Hedge Fund Holders: 9
ARK Investment sold about 2.14 million shares of Chinese electric scooter company Niu Technologies (NASDAQ:NIU) in the first quarter of 2023. The fund entered the second quarter with just 6,138 shares of the firm. Niu Technologies has lost about 20% in value so far in 2023 through May 23.
Citi recently cut its rating for Niu Technologies to Neutral from Buy, citing weak Q1 results.
Citi analysts are concerned about the higher costs of lithium batteries that affected Niu Technologies. Citi analysts recently said:
“We believe the sales weakness continues to be driven by the escalated lithium battery cost which weighed on the competitiveness of the company’s products when compared with peers that mainly used lead acid batteries.”
8. Atai Life Sciences N.V. (NASDAQ:ATAI)
Number of Hedge Fund Holders: 10
Cathie Wood’s hedge fund dumped a whopping 5.6 million shares of Germany-based Atai Life Sciences N.V. (NASDAQ:ATAI) in the first quarter of 2023. The fund still owns about 13,000 shares of Atai Life Sciences N.V..
Atai Life Sciences N.V. recently posted its first quarter results. GAAP EPS in the period came in at -$0.21, meeting estimates.
Out of the 943 hedge funds tracked by Insider Monkey as of the end of 2022, 15 hedge funds had stakes in Atai Life Sciences N.V.. Unlike ATAI, Cathie Wood is bullish on Tesla Inc., Zoom Video Communications, Inc. and Coinbase Global, Inc..
7. Fate Therapeutics Inc. (NASDAQ:FATE)
Number of Hedge Fund Holders: 18
As of the end of the fourth quarter of 2022, Cathie Wood’s hedge fund had owned 4.2 million shares of Fate Therapeutics Inc. (NASDAQ:FATE). The hedge fund sold its entire position in the first quarter.
Earlier this month Fate Therapeutics Inc. posted its first-quarter results, according to which its GAAP EPS came in at -$0.19, beating estimates by $0.47. Revenue in the period increased by 220.5% year over year to $58.98 million, surpassing estimates by $25.45 million.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 18
Cathie Wood finally gave up on Chinese EV company NIO Inc. (NYSE:NIO) in the first quarter of 2023. ARK sold 336,347 shares of NIO Inc. during the period. NIO Inc. has lost about 45% over the past year and it seems Cathie Wood was not ready to take any more losses. But while she has give up on NIO, Wood is still bullish on Tesla Inc., Zoom Video Communications, Inc. and Coinbase Global, Inc..
Insider Monkey’s database of 943 hedge funds shows that 25 hedge funds had stakes in NIO Inc. at the end of 2022.
NIO Inc. is up 21% year to date through May 23.
5. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 20
Cathie Wood’s ARK had owned 996,000 shares of Chinese EV company XPeng Inc. (NYSE:XPEV) in the fourth quarter of 2022. The fund sold almost its entire stake in XPeng Inc. in the first quarter, retaining just 297 shares of the company. XPeng Inc. has lost about 57% over the past one year.
As of the end of the fourth quarter of 2022, 17 hedge funds had stakes in XPeng Inc.. The total worth of these hedge funds’ stakes was $171 million.
4. monday.com Ltd. (NASDAQ:MNDY)
Number of Hedge Fund Holders: 37
ARK Investment Management cut its stake in project management software company monday.com Ltd. (NASDAQ:MNDY) by 93% in the first quarter of 2023. However, the fund still owns a $2.7 million stake in monday.com Ltd. as of the end of March.
monday.com Ltd. recently jumped after the company posted upbeat Q1 results and boosted its 2023 outlook. Monday.com’s adjusted EPS in the quarter came in at $0.15, surpassing estimates by $0.44. Revenue in the quarter jumped about 50% year over year to $162.3 million, surpassing estimates by $7.01 million.
According to Insider Monkey’s database of 943 hedge funds, 25 hedge funds have stakes in monday.com Ltd. as of the end of the fourth quarter of 2022, down from 31 funds in the previous quarter. This shows monday.com Ltd. saw a decline in hedge fund sentiment in the last quarter of 2022.
3. Farfetch Limited (NYSE:FTCH)
Number of Hedge Fund Holders: 39
UK-based luxury fashion ecommerce company Farfetch Limited (NYSE:FTCH) is one of the stocks Cathie Wood is selling in 2023. ARK Investment sold 650,158 shares of Farfetch Limited during the March quarter.
But Farfetch Limited shares posted a strong rally recently after the company posted impressive Q1 results. Bank of America analyst Geoffroy de Mendez said in a note that the “fundamental thesis that Farfetch Limited is best positioned to win the online luxury market keeps gaining ground.” The analyst reiterated a Buy rating on the stock and gave a price target of $13.
Out of the 943 hedge funds tracked by Insider Monkey, 44 hedge funds had stakes in Farfetch Limited at the end of 2022. The biggest stakeholder of Farfetch Limited was Miller Value Partners of Bill Miller which had a $32.4 million stake in the company.
Polen U.S. SMID Company Growth Strategy made the following comment about Farfetch Limited in its Q4 2022 investor letter:
“Farfetch Limited (NYSE:FTCH) is an online marketplace for luxury goods. The stock was down -35% on the back of an investor day where management issued targets that implied decelerating growth. While this is a disappointing development in what has shaped into a disappointing year for the stock, we are maintaining our position with a focus on the long-term opportunity. Luxury fashion is still in a very nascent stage of migrating online. Farfetch—through partnerships and deep relationships it has built over many years— remains very well positioned to benefit from this trend.”
2. Endeavor Group Holdings, Inc. (NYSE:EDR)
Number of Hedge Fund Holders: 52
Media and marketing company Endeavor Group Holdings, Inc. (NYSE:EDR) ranks 2nd in our list of the stocks sold by Cathie Wood earlier this year. Cathie Wood sold almost her entire stake in Endeavor Group Holdings, Inc. in the first quarter, selling 508,483 shares.
Earlier this month Endeavor Group Holdings, Inc. posted its first quarter results, which show that its GAAP EPS in the period came in at $0.03 missing estimates by $0.07. Revenue in the quarter jumped 8.8% year over year to $1.6 billion, surpassing estimates by $30 million. For 2023 Endeavor Group Holdings, Inc. expects its revenue to be between $5.665 billion and $5.815 billion, versus the consensus estimate of $5.90 billion.
1. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 99
Adobe Inc. (NASDAQ:ADBE) was one of the stocks dumped by Cathie Wood during the first quarter of this year as her hedge fund sold over 43,000 shares of the company, entirely exiting its position held in the fourth quarter of 2022. Adobe Inc. shares recently fell after regulators in the UK announced to investigate the company’s $20 billion deal to buy interface design tool company Figma over competition concerns.
As of the end of the fourth quarter of 2022, 99 hedge funds (including ARK) tracked by Insider Monkey had stakes in Adobe Inc., up from 93 funds in the previous quarter.
Polen Focus Growth Strategy made the following comment about Adobe Inc. in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet and Adobe Inc. (NASDAQ:ADBE) is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizeable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
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This article is originally published at Insider Monkey.
