3. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 84
Decline in Hedge Fund Holders: 12
ARK Investment Management’s Stake Value: $1.12 billion
Percentage of ARK Investment Management’s Portfolio: 4.7%
Block, Inc. (NYSE:SQ) is a fintech company headquartered out of California. It operates popular digital payments platforms including Cash App, and Square. ARK Investment Management was the leading shareholder of the company, with a $1.12 billion stake consisting of 8.3 million shares reported at the end of the first quarter of 2022. This is up 35% over the previous quarter where Wood held 6.18 million shares of Block, Inc. (NYSE:SQ).
On May 23, Truist analyst Andrew Jeffrey reiterated a ‘Buy’ rating on Block, Inc. (NYSE:SQ) shares, and slashed the price target to $145 from $165. He sees an attractive buying opportunity for long-term investors, given that the market has a poor understanding of the firm’s underlying business fundamentals. The analyst feels Block, Inc. (NYSE:SQ) has potential to become one of the most important fintech companies in the world, rivalling giants such as Visa (NYSE:V).
12 hedge funds sold off their positions in Block, Inc. (NYSE:SQ) during the first quarter, with the total number of bullish hedge fund bets coming in at 84 at the close of the first quarter. The company’s EPS for the first quarter missed estimates by $0.02. Quarterly revenue was also below forecasts by $179.56 million, registering at $3.96 billion.
Farrer Wealth Advisors, an investment firm, mentioned Block, Inc. (NYSE:SQ) in its Q1 2022 investor letter. The fund said:
“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”
