In this article, we discuss Cathie Wood’s latest thoughts on inflation and her 10 worst-performing stock picks.
Cathie Wood of ARK Investment Management has come under fire in recent months after she refused to back down from her growth-focused investing strategy in the face of rapidly changing market conditions that have already pummeled her portfolio, resulting in losses worth billions to her clients. Her flagship ARK Innovation Fund is down over 57% so far this year. A large number of stocks in her portfolio, which boasts famous names like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Tesla, Inc. (NASDAQ:TSLA), are also down.
Wood recently sat down for an interview with news platform CNBC in which she outlined her thoughts on rising inflation and addressed the recession fears sweeping Wall Street. In an apparent softening of her previous stance, the chief of ARK Investment acknowledged that she may have “underestimated the severity and lasting power of inflation” and admitted that the United States economy was in a recession. Wood blamed “supply chain disruptions and geopolitical risks” for inflation that had been hotter than she expected.
Wood candidly claimed that she had been “wrong” about the sustained impact of inflation in the past few months, but claimed that the crisis had set the economy up for “deflation” as well. Wood thanked her investors for sticking with her through this difficult period. Inflows into her hedge fund have increased, climbing by $180 million in June, even as the overall innovation-focused portfolio gets battered. Wood attributed the inflows to a diversification away from broad-based benchmarks and stressed she was still dedicated to “disruptive innovation”.
Our Methodology
These were picked from the investment portfolio of ARK Investment Management at the end of the first quarter of 2022. Only equities that have registered a more than 35% decline in share price since the start of the year were selected. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in Q1 2022 was used to quantify the popularity of each stock in the hedge fund universe.
Cathie Wood of ARK Investment Management
Cathie Wood’s Latest Thoughts on Inflation and Her Worst-Performing Stock Picks
10. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 43
Loss in Share Price Year-to-Date as of June 30: 39.29%
Zoom Video Communications, Inc. (NASDAQ:ZM) owns and runs a video communications platform. ARK owned 8.4 million shares of Zoom Video Communications, Inc. at the end of the first quarter of 2022 worth $986 million, representing 4.18% of the portfolio. On June 6, the firm announced that it was expanding a collaboration with software firm Genesys under which the Zoom Phone of the former is being integrated with the Cloud CX product of the latter for a more unified communications experience.
On May 24, Stifel analyst J. Parker Lane maintained a Hold rating on Zoom Video Communications, Inc. stock and lowered the price target to $120 from $150, noting that tough comps would continue to weigh on growth of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Zoom Video Communications, Inc., with 6.4 million shares worth more than $756 million.
Just like Amazon.com, Inc., Sea Limited, and Tesla, Inc., Zoom Video Communications, Inc. is one of the stocks feeling the heat of an economic slowdown.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Zoom Video Communications, Inc. was one of them. Here is what the fund said:
“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications, Inc. (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.
Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”
9. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 36
Loss in Share Price Year-to-Date as of June 30: 50.19%
Palantir Technologies Inc. (NYSE:PLTR) operates as an application software firm. Securities filings show that ARK owned over 612,000 shares in Palantir Technologies Inc. at the end of the first quarter of 2022 worth $8.4 million, representing 0.03% of the portfolio. In late May, the firm announced that it had signed a deal with automaker Stellantis under which the latter will deploy the Foundry operating system of the former across different brands as part of a digital transformation.
On June 23, Goldman Sachs analyst Gabriela Borges initiated coverage of Palantir Technologies Inc. stock with a Neutral rating and a price target of $10, noting that the business of the firm had limited visibility in the macro environment.
At the end of the first quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $611 million in Palantir Technologies Inc., compared to 33 in the preceding quarter worth $1.2 billion.
In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Palantir Technologies Inc. was one of them. Here is what the fund said:
“We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir Technologies Inc. as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.”
8. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 27
Loss in Share Price Year-to-Date as of June 30: 55.31%
DraftKings Inc. (NASDAQ:DKNG) is a digital entertainment and gaming firm. The hedge fund chaired by Wood owned close to 23 million shares of DraftKings Inc. at the end of March 2022 worth $455 million, representing 1.90% of the portfolio. On June 10, the company revealed that it was expanding a partnership with mixed martial arts firm UFC to include gamified non-fungible tokens (NFTs). Under the deal, the former will launch new digital collectibles for UFC fans.
On June 29, investment advisory Barclays initiated coverage of DraftKings Inc. stock with an Equal Weight rating and a price target of $14. Analyst Brandt Montour issued the ratings update.
At the end of the first quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in DraftKings Inc., compared to 34 the preceding quarter worth $1.3 billion.
In its Q3 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and DraftKings Inc. was one of them. Here is what the fund said:
“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 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, that DraftKings Inc. 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.”
7. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 33
Loss in Share Price Year-to-Date as of June 30: 54.98%
UiPath Inc. (NYSE:PATH) provides robotic process automation. Securities filings show that ARK owned over 33 million shares in UiPath Inc. at the end of the first quarter of 2022 worth $725 million, representing 3.02% of the portfolio. The firm posted earnings for the first quarter of 2022 on June 1, reporting a revenue of $245 million, up more than 31% compared to the revenue over the same period last year and beating analyst expectations by $19.7 million.
On June 2, BMO Capital analyst Keith Bachman maintained a Market Perform rating on UiPath Inc. stock and lowered the price target to $21 from $29, noting that investors prefer firms with better free cash flow generation and valuation metrics in the sector.
At the end of the first quarter of 2022, 33 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in UiPath Inc., compared to 28 the preceding quarter worth $2.5 billion.
6. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 43
Loss in Share Price Year-to-Date as of June 30: 58.18%
StoneCo Ltd. (NASDAQ:STNE) provides financial technology solutions. Latest data shows that ARK owned close to 2.6 million shares of StoneCo Ltd. at the end of March 2022 worth $31 million, representing 0.13% of the total portfolio. On June 2, the firm posted earnings for the first quarter of 2022, reporting a revenue of more than R$2 billion, up over 138% compared to the revenue over the same period last year. The adjusted earnings in the first quarter were up 116% year-on-year.
On April 4, Wells Fargo analyst Jeff Cantwell initiated coverage of StoneCo Ltd. stock with an Equal Weight rating and a price target of $13, noting the firm remained a “show me story” after credit issues and margin headwinds in 2021.
At the end of the first quarter of 2022, 43 hedge funds in the database of Insider Monkey held stakes worth $686 million in StoneCo Ltd., compared to 45 the preceding quarter worth $892 million.
In addition to Amazon.com, Inc., Sea Limited, and Tesla, Inc., StoneCo Ltd. is one of the growth stocks in the limelight as recession fears mount.
In its Q1 2022 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and StoneCo Ltd. was one of them. Here is what the fund said:
“StoneCo Ltd. has, like Vizio, seen a dramatic decline in value since adding to the investment during the first quarter. I added to the position early in the year after STNE had dropped significantly due to challenges in their credit portfolio, which they have changed, as well as increasing interest rates in Brazil, which the company was slow to incorporate into their pricing. Despite these changes which should benefit StoneCo Ltd. later in the year, the market in general has obviously continued to struggle and emerging markets stocks have been hit even harder in many cases. Expectations are very low for the company now, and there is a good case to be made that the business could be worth much more than current prices a couple of years from now.”
5. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 40
Loss in Share Price Year-to-Date as of June 30: 65.57%
Roblox Corporation (NYSE:RBLX) owns and runs an online entertainment platform. Regulatory filings reveal that ARK owned over 6 million shares of Roblox Corporation at the end of March 2022 worth $281 million, representing 1.17% of the total portfolio. On June 15, the company reported a more than 17% year-on-year rise in daily active users for the month of May, sending the shares surging more than 7%. The revenue during the month also grew by around 30% compared to May 2021.
On June 17, Truist analyst Matthew Thornton downgraded Roblox Corporation stock to Hold from Buy and lowered the price target to $29 from $36, noting the firm screened “least favorably” among the digital entertainment group on revision trends and valuation.
At the end of the first quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Roblox Corporation, compared to 61 in the previous quarter worth $4 billion.
In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Roblox Corporation was one of them. Here is what the fund said:
“Roblox Corporation got significant more attention from both institutional & retail investors after Facebook announced to rename itself as Meta Platforms. I believe the price appreciation is largely attributed to the increased attention. On business side, Roblox Corporation rolled out a few successful music events and also partnered with Netflix on testing long-form media consumption in virtual world. Apple in its iOS 14.5 rolled out an impactful change for digital advertising landscape by requiring all apps to ask users to “opt in”.
4. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 77
Loss in Share Price Year-to-Date as of June 30: 69.15%
Sea Limited is a diversified technology company. Latest data shows that ARK owned close to 2.6 million shares of Sea Limited at the end of March 2022 worth $315 million, representing 1.31% of the total portfolio. In mid-May, the firm posted earnings for the first quarter of 2022, reporting a revenue of $2.9 billion, up over 61% compared to the revenue over the same period last year and beating analyst expectations by $40 million. The total gross profit in the quarter was $1.2 billion, up 81% year-on-year.
On May 19, Barclays analyst Jiong Shao maintained an Overweight rating on Sea Limited stock and lowered the price target to $157 from $201, noting that the firm was delivering despite reopening headwinds in Southeast Asia and tough competition.
At the end of the first quarter of 2022, 77 hedge funds in the database of Insider Monkey held stakes worth $5 billion in Sea Limited, compared to 108 in the previous quarter worth $10 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Sea Limited was one of them. Here is what the fund said:
“Sea Limited, a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea Limited faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long- term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”
3. Berkeley Lights, Inc. (NASDAQ:BLI)
Number of Hedge Fund Holders: 16
Loss in Share Price Year-to-Date as of June 30: 74.92%
Berkeley Lights, Inc. (NASDAQ:BLI) is a digital cell biology company. Regulatory filings reveal that ARK owned over 8.3 million shares of Berkeley Lights, Inc. at the end of March 2022 worth $59 million, representing 0.24% of the total portfolio. On June 6, contract development firm Curia announced that it would adopt the Beacon Optofluidic system offered by Berkeley to “accelerate antibody-based drug discovery capabilities”. Curia will be able to deliver antibody sequences with data analysis within weeks through the adoption.
On May 9, Berkeley Lights, Inc. posted earnings for the first quarter of 2022, missing market estimates on earnings per share by $0.01. The revenue over the period was $20 million, roughly in line with market expectations.
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 million shares worth more than $7.8 million.
2. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 46
Loss in Share Price Year-to-Date as of June 30: 80.18%
Coinbase Global, Inc. (NASDAQ:COIN) owns and runs a cryptocurrency exchange platform. The hedge fund chaired by Wood owned close to 6.9 million shares of Coinbase Global, Inc. at the end of March 2022, worth $1.3 billion. On June 24, the firm announced that it would be rolling out nano bitcoin futures. The move is seen as part of a larger plan by the firm to attract more retail traders to the platform amid a large drop in the prices of crypto assets in the past few weeks.
On June 27, Goldman Sachs analyst Will Nance downgraded Coinbase Global, Inc. stock to Sell from Neutral and lowered the price target to $45 from $70, noting that crypto asset levels and trading volumes imply further degradation in revenue for the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Coinbase Global, Inc., with 1 million shares worth more than $199 million.
In its Q4 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. was one of them. Here is what the fund said:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase Global, Inc. is a prime example.”
1. Invitae Corporation (NYSE:NVTA)
Number of Hedge Fund Holders: 29
Loss in Share Price Year-to-Date as of June 30: 83.71%
Invitae Corporation (NYSE:NVTA) operates as a medical genetics firm. Latest data shows that ARK owned close to 27 million shares of Invitae Corporation at the end of March 2022 worth $220 million, representing 0.92% of the total portfolio. In earnings results for the first quarter of 2022, posted in early May, the firm reported that net losses had widened 66% due to a rise in research and development, marketing, and sales costs. The firm said it will reduce cash burn in 2022 to extend the cash runway to 2023.
On June 13, Benchmark analyst Bruce Jackson maintained a Buy rating on Invitae Corporation stock and lowered the price target to $6 from $13. The analyst also slashed the revenue expectations for the firm in 2022.
At the end of the first quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $545 million in Invitae Corporation, compared to 24 in the preceding quarter worth $958 million.
You can also take a peek at 12 Best Environmental Stocks to Invest In and 10 Best Nickel Stocks to Buy Now.
Follow Insider Monkey on Twitter
Suggested Articles:
- 10 Best Automotive Stocks to Invest in Now
- 10 Best Self Driving Car Stocks to Invest In
- 10 Best Renewable Energy Stocks to Buy According to Hedge Funds
This article is originally published at Insider Monkey.
