In this article, we discuss Cathie Wood’s 5 favorite stock picks for the rest of 2022. If you want to see more stocks in this selection, click Cathie Wood’s 10 Favorite Stock Picks for the Rest of 2022.
5. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 27
DraftKings Inc. (NASDAQ:DKNG) is a Massachusetts-based digital sports entertainment and gaming company. Cathie Wood’s ARK Investment Management added DraftKings Inc. (NASDAQ:DKNG) to its portfolio by purchasing more than 25 million shares, worth about $342.5 million, representing 2.02% of the total holdings.
On July 20, Truist analyst Barry Jonas maintained a Hold rating on DraftKings Inc. (NASDAQ:DKNG) and slashed the firm’s price target on the shares to $16 from $18 in light of the Q2 results in the Gaming industry. The analyst noted that the recent quarter should be “fine”, the outlook looks “less certain”, and adopting a more conservative view is important.
According to Insider Monkey’s data, DraftKings Inc. (NASDAQ:DKNG) was part of 27 hedge fund portfolios at the end of March 2022, compared to 34 funds in the previous quarter. Raine Capital is a notable stakeholder of the company, with 11.2 million shares worth $218.4 million.
Here is what Baron Small Cap Fund has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q4 2021 investor letter:
“Shares of DraftKings, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as a worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, and that DraftKings will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
4. McCormick & Company, Incorporated (NYSE:MKC)
Number of Hedge Fund Holders: 34
McCormick & Company, Incorporated (NYSE:MKC) was founded in 1889 and is headquartered in Hunt Valley, Maryland. The company manufactures and distributes spices, seasoning mixes, condiments, and other products to the food industry. Cathie Wood’s ARK Investment Management added McCormick & Company, Incorporated (NYSE:MKC) to its portfolio in the second quarter of 2022.
Argus analyst John Staszak downgraded McCormick & Company, Incorporated (NYSE:MKC) on July 6 to Hold from Buy. The downgrade was due to McCormick & Company, Incorporated (NYSE:MKC)’s high input costs and modest earnings guidance for the next year, in addition to the stock’s comparatively high valuation, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 34 funds were bullish on McCormick & Company, Incorporated (NYSE:MKC) at the end of the first quarter of 2022, up from 25 funds in the earlier quarter. Terry Smith’s Fundsmith LLP is the biggest stakeholder of the company, with roughly 15.5 million shares worth $1.5 billion.
Here is what ClearBridge Sustainability Leaders Strategy has to say about McCormick & Company, Incorporated (NYSE:MKC) in its Q3 2021 investor letter:
“Within consumer staples, we sold out of Unilever, a great company and sustainability leader that we believe faces margin headwinds as it invests to promote growth, and replaced it with McCormick, a leader in food seasonings and flavors. McCormick is a high-quality business that has lagged recently due to the negative COVID-19 impacts on the business, which provided us with an attractive entry point. The company is also levered to the healthy eating trend, as seasonings are a healthier substitute for sugar and fat.”
3. SomaLogic, Inc. (NASDAQ:SLGC)
Number of Hedge Fund Holders: 37
SomaLogic, Inc. (NASDAQ:SLGC) was incorporated in 1999 and is headquartered in Boulder, Colorado. It operates as a protein biomarker discovery and clinical diagnostics company in the United States. Cathie Wood’s hedge fund added SomaLogic, Inc. (NASDAQ:SLGC) to its portfolio in Q2 2022 by purchasing 300,000 shares of the company worth $274,000.
On June 23, Cowen analyst Dan Brennan reiterated an Outperform rating on SomaLogic, Inc. (NASDAQ:SLGC) and lowered the firm’s price target on the stock to $11 from $14. The analyst said that SomaLogic, Inc. (NASDAQ:SLGC) is positioned to survive bottlenecks created by existing tools to analyze the proteome. He sees the resilience of growth since the massive market for SomaLogic, Inc. (NASDAQ:SLGC) is underappreciated.
According to Insider Monkey’s data, 37 hedge funds were bullish on SomaLogic, Inc. (NASDAQ:SLGC) at the end of March 2022, with collective stakes worth $434.5 million. Eli Casdin’s Casdin Capital is the biggest shareholder of the company, with 12.3 million shares worth $99.3 million.
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 76
General Motors Company (NYSE:GM) was founded in 1908 and is headquartered in Detroit, Michigan. The company manufactures and sells automobiles in North America, the Asia Pacific, the Middle East, Africa, South America, the United States, and China. Securities filings for Q2 2022 disclose that Cathie Wood added General Motors Company (NYSE:GM) to her portfolio by purchasing 151,065 shares worth $5.8 million.
Deutsche Bank analyst Emmanuel Rosner on July 18 downgraded General Motors Company (NYSE:GM) to Hold from Buy with a price target of $36, down from $57. The analyst contended that automakers will experience favorable conditions in the second quarter but face increasing earnings risk.
Among the hedge funds tracked by Insider Monkey, 76 funds were long General Motors Company (NYSE:GM) at the conclusion of Q1 2022, down from 90 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with 62 million shares worth $2.7 billion.
Here is what Oakmark Global Fund has to say about General Motors Company (NYSE:GM) in its Q1 2022 investor letter:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are under-appreciated.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) is a California-based company that specializes in graphics, semiconductors, and networking solutions in the United States, Taiwan, China, and internationally. In the second quarter of 2022, Cathie Wood’s ARK Investment Management strengthened its hold significantly in NVIDIA Corporation (NASDAQ:NVDA). As of the end of Q1, Cathie Wood’s fund had owned just 653 shares of NVIDIA. However, at the end of the second quarter, the fund reported owning 675,886 shares of the company worth $126.20 million, representing 0.74% of the total portfolio.
On July 20, Deutsche Bank analyst Ross Seymore reiterated a Hold rating on NVIDIA Corporation (NASDAQ:NVDA) and lowered the firm’s price target on the shares to $175 from $190. The current “purgatory” stage of the semiconductor cycle continues heading into the Q2 earnings season, the analyst told investors. The analyst is now “more actively factoring in accelerating macro/sector headwinds” into his 2023 estimates, and he reduced revenue, earnings, and price targets on average by 4%, 10%, and 14%.
Among the hedge funds tracked by Insider Monkey, 102 funds were bullish on NVIDIA Corporation (NASDAQ:NVDA) at the end of March, compared to 110 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is a significant position holder in the company, with 7.3 million shares worth about $2 billion.
Here is what RiverPark Long/Short Opportunity Fund has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
You can also take a look at 10 Hedge Funds That the Economic Recession is Crushing and 10 New Stock Picks of Bruce Kovner’s Caxton Associates.
