In this article, we discuss 10 technology stocks to sell now according to Cathie Wood. If you want to skip our detailed analysis of these stocks, go directly to 5 Technology Stocks to Sell Now According to Cathie Wood.
The technology sector is undergoing a massive correction in value as inflation wreaks havoc within the stock market. The famed Cathie Wood of ARK Investment Management is one of those hardest-hit by this criss on Wall Street. Wood, whose top ten holdings comprise close to 40% of the total portfolio of her fund and are concentrated in high growth sectors like technology and healthcare, has hit back at critics of her “disruptive innovation” strategy, claiming that “innovation is on sale” as investors shed unprofitable firms for safer havens.
ARK Investment Management had lost close to $8 billion in value from its growth-focused equity portfolio in the past few months. Wood, speaking at the Big Ideas Summit organized by her fund in January, said that most people were viewing the increased market volatility as a risk but her fund had turned it into an asset. Wood urged panicked investors to “keep their eye on the prize” amid a “difficult market” and focus on long-term innovation. Even as Wood defends her growth investments, she has been forced to sell some of these to cover her compounding losses.
Some of the top technology stocks that Wood sold during the fourth quarter of 2021 include NXP Semiconductors N.V. (NASDAQ:NXPI), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), among others discussed in detail below.
Our Methodology
The stocks were picked from the fourth quarter regulatory filings of ARK Investment Management. The companies in which the fund trimmed a previously-held stake or sold it off completely feature on the list.
Data from 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Cathie Wood of ARK Investment Management
Technology Stocks to Sell Now According to Cathie Wood
10. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 53
Percentage Decrease in Stake in Q4: 13%
Spotify Technology S.A. (NYSE:SPOT) provides audio streaming services. It is one of the top streaming stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Spotify Technology S.A. (NYSE:SPOT), with 2.5 shares worth more than $603 million.
Latest data shows that ARK owned over 4 million shares of Spotify Technology S.A. (NYSE:SPOT) at the end of the fourth quarter of 2021 worth $939 million, representing 2.84% of the portfolio. The company has been in the ARK portfolio since the second quarter of 2018.
Just like NXP Semiconductors N.V. (NASDAQ:NXPI), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), Spotify Technology S.A. (NYSE:SPOT) is one of the stocks feeling the heat of an economic slowdown.
In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks and Spotify Technology S.A. (NYSE:SPOT) was one of them. Here is what the fund said:
“At the current share price, Spotify Technology S.A. (NYSE:SPOT) basically only represents a fraction of the value they will be able to unlock in the growing market of audio entertainment. The key for Spotify Technology S.A. (NYSE:SPOT) is to change a variable cost base into a fixed cost base just like Netflix has. As the market share of the big labels, measured by the daily hours of engagement of the big labels, is declining, Spotify Technology S.A. (NYSE:SPOT) will be able to adjust its business model and create enormous operational leverage meaning that profitability will grow faster than expenses.
The music catalogue is not the business model. The value lies in the machine learning that drives discovery and engagement, the original content from people like Michelle Obama, Kim Kardashian, and Joe Rogan, the data analytics and distribution for artists, the direct and social relations artists can have with fans through music and videos. We believe that Spotify will be worth at least five times more in 2030.”
9. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 40
Percentage Decrease in Stake in Q4: 18%
Teradyne, Inc. (NASDAQ:TER) makes and sells automatic test equipment. Securities filings show that ARK owned 464,446 shares of Teradyne, Inc. (NASDAQ:TER) at the end of December 2021 worth $75 million, representing 0.22% of the portfolio. The company has been in the ARK portfolio since the first quarter of 2018.
Other hedge funds have also been selling Teradyne, Inc. (NASDAQ:TER) stock. At the end of the fourth quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Teradyne, Inc. (NASDAQ:TER), compared to 42 in the previous quarter worth $1.3 billion.
8. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 262
Percentage Decrease in Stake in Q4: 19%
Microsoft Corporation (NASDAQ:MSFT) is a tech giant based in Washington. Regulatory filings reveal that ARK owned 51,509 shares of Microsoft Corporation (NASDAQ:MSFT) at the end of the fourth quarter of 2021 worth $17 million, representing 0.05% of the portfolio. The company has been in the ARK portfolio since the first quarter of 2018.
Elite hedge funds are exceedingly bullish on Microsoft Corporation (NASDAQ:MSFT) stock. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 26 million shares worth more than $9 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft Corporation (NASDAQ:MSFT) in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and Microsoft Corporation (NASDAQ:MSFT) stock continues to reflect the fundamentals.”
7. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 57
Percentage Decrease in Stake in Q4: 23%
Coinbase Global, Inc. (NASDAQ:COIN) provides financial infrastructure and technology solutions for the crypto industry. Latest 13F filings show that ARK owned over 5.4 million shares of Coinbase Global, Inc. (NASDAQ:COIN) at the end of December 2021 worth $1.3 million, representing 4.16% of the portfolio. The firm has been in the ARK portfolio since the second quarter of 2021.
Hedge funds have been piling into Coinbase Global, Inc. (NASDAQ:COIN) stock as Wood sells it. At the end of the fourth quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Coinbase Global, Inc. (NASDAQ:COIN), up from 50 the preceding quarter worth $2.9 billion.
In its Q3 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. (NASDAQ:COIN) was one of them. Here is what the fund said:
“Coinbase Global, Inc. (NASDAQ:COIN): We established a new position in Coinbase, the dominant US crypto exchange and brokerage, this quarter. Given the misperceptions and early-stage nature of the industry, I thought it would be helpful for our partners’ understanding to share a report outlining our thesis, which we published on October 31st.
At a high level, we believe the crypto economy is in the middle of “crossing the chasm” into mainstream adoption & use cases, which will result in millions of mainstream users needing to transact in crypto in some form.
Coinbase Global, Inc. (NASDAQ:COIN) is well positioned in the Western, regulated markets to capture this influx – considering their dominant market share / mindshare, their focus on the casual user and thus superior user experience compared to alternatives, and their position as a “toll-booth” for this industry. Longer-term, we also believe Coinbase Global, Inc. (NASDAQ:COIN) has “super-app” ambitions, and will be the primary gateway for both the general population and institutions to interact with the crypto economy…” (Click here to see the full text)
6. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 108
Percentage Decrease in Stake in Q4: 32%
Sea Limited (NYSE:SE) is a diversified technology company. Hedge funds have been selling the stock in recent months. At the end of the fourth quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Sea Limited (NYSE:SE), compared to 117 in the previous quarter worth $14 billion.
Latest 13F filings show that ARK owned 654,834 shares of Sea Limited (NYSE:SE) at the end of December 2021 worth $146 million, representing 0.44% of the portfolio of the fund. The tech firm has been in the ARK portfolio since the fourth quarter of 2019.
Along with NXP Semiconductors N.V. (NASDAQ:NXPI), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), Sea Limited (NYSE:SE) is one of the stocks on the radar of elite investors.
In its Q4 2020 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:
“Sea Limited (NYSE:SE): When I wrote our Q4 2019 letter about Shopee launching a Brazilian business, it seemed very few investors or competitors knew or cared.
A year ago, I wrote: “This is the first test for the ecommerce marketplace outside of its Southeast Asia home base. Will the platform’s fun and addicting features overcome a lack of local knowledge and presence? It’s hard to predict consumer behavior and how accepting users will be to a platform – especially one that’s a foreign culture and 10,000 miles away. The only way to know is to experiment and watch the results closely.
Empirically though, it seems that what consumers find entertaining in Asia, generally translates well to Brazil (and Shopee really is as much an entertainment platform, as an ecommerce one).
For example, just look at the top 10 free apps in Brazil. Two are utility messaging apps, so we’ll ignore those (WhatsApp and
Facebook Messenger). But among the remaining eight apps, they’re all entertainment based and overwhelmingly Asian. Four are from China (Kwai, TikTok, VStatus, TikTok Lite), two from Singapore (Free Fire and Shopee, both Sea Ltd apps), and one from the US (Instagram). The commonality is that all these apps are experts at creating addictive habits, as evidenced by their personalized recommendations, avg usage time, number of logins per day per user, etc.” (LINK)
I distinctly remember having conversations with several Brazilian hedge funds as recently as last summer who were investors in Sea Limited (NYSE:SE). When the topic of Brazil came up, many of them didn’t even know Shopee was operating in their own backyard!
Part of this stems from the fact that Shopee..”[read the entire letter here]
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Disclosure. None. 10 Technology Stocks to Sell Now According to Cathie Wood is originally published on Insider Monkey.
