In this article, we talk about the 5 biggest losers in Cathie Wood’s latest portfolio. If you want to read our detailed analysis of Wood’s hedge fund performance, history and stock selection, go directly to 10 Biggest Losers in Cathie Wood’s Latest Portfolio.
5. UiPath Inc. (NYSE:PATH)
ARK Investment Management’s 13 Portfolio: 3.02%
ARK Investment Management’s Stake Value: $725.44 million
Number of Hedge Fund Holders: 28
Year-To-Date Share Price Loss : 61.36%
UiPath Inc. (NYSE:PATH) ranks next on the list of the biggest losers in Cathie Wood’s portfolio. The stock has tanked 61.4% in the year to date, and 75.07% in the last 12 months. The firm deals in the development of a software platform which automates business processes, and is used by the telecommunication, healthcare, finance, and banking industries around the globe.
Cathie Wood’s stake in the firm at the close of the first quarter of 2022 consisted of 33.6 million shares worth $725 million, representing 3.02% of her overall portfolio. Out of all the hedge funds tracked by Insider Monkey, 28 reported owning positions in UiPath Inc. (NYSE:PATH) at the end of Q4 2021. This is in contrast to 27 hedge funds with stakes in the firm a quarter ago.
On March 31, RBC Capital analyst Matthew Hedberg lowered the firm’s price target on UiPath Inc. (NYSE:PATH) to $32 from $37, and maintained a ‘Sector Perform’ rating on the company shares. The analyst sees the firm well positioned for the sizeable opportunity around automation in the long term, but sees macro uncertainty and management changes impacting its initial FY23 outlook.
4. Unity Software Inc. (NYSE:U)
ARK Investment Management’s 13 Portfolio: 3.41%
ARK Investment Management’s Stake Value: $817.90 million
Number of Hedge Fund Holders: 36
Year-To-Date Share Price Loss : 72.87%
Unity Software Inc. (NYSE:U) is a video game software company which lets content creators and developers create real-time 2D and 3D content. It has lost 72.87% in the year to date, and 56.47% in the last 12 months. ARK Investment Management owned a $817.9 million stake in Unity Software Inc. (NYSE:U) at the close of Q1 2022, representing 3.41% of its total portfolio. Silver Lake Partners was the firm’s largest shareholder with a $3.47 billion stake reported at the end of March.
On May 11, Wedbush analyst Michael Pachter kept an ‘Outperform’ rating on Unity Software Inc. (NYSE:U) shares, and changed the price target to $70 from $125. Shares of Unity slumped after temporary data engineering issues in its tech stack led to a loss in the first quarter, forcing the firm to lower its FY2022 guidance. The analyst believes this self-inflicted wound should be resolved by end of Q4 2022, and allow the firm to regain its trajectory of 30% or higher growth in annual revenue.
Unity Software Inc. (NYSE:U) posted an EPS for the first quarter at -$0.08, which was in-line with estimates. Revenue of $320.1 million was below estimates by $1.02 million, but increased 36.4% year-on-year.
36 hedge funds out of 924 tracked by Insider Monkey reported owning positions in Unity Software Inc. (NYSE:U) at the end of the fourth quarter, the same as reported in the quarter before.
ClearBridge Investments mentioned Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter, stating:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.
3. Twilio Inc. (NYSE:TWLO)
ARK Investment Management’s 13 Portfolio: 3.45%
ARK Investment Management’s Stake Value: $827.55 million
Number of Hedge Fund Holders: 80
Year-To-Date Share Price Loss : 61.13%
Twilio Inc. (NYSE:TWLO) represents 3.45% of Cathie Wood’s Q1 2022 portfolio, with a stake consisting of 5.02 million shares valued at $827.6 million. The firm deals in the operation of a cloud communications platform.
As at the end of the fourth quarter, 80 hedge funds reported bullish bets on Twilio Inc. (NYSE:TWLO) shares with a collective price tag of $5.13 billion. This shows a downward trend from the previous quarter, where 96 hedge funds held combined stakes worth $6.36 billion in the firm.
On May 16, Baird analyst William Power downgraded Twilio Inc. (NYSE:TWLO) to ‘Neutral’ from ‘Outperform’ with a price target of $120, down from $155. The analyst noted that in the current risky market climate, he’s shifting his software focus to companies that boast global platforms, competitive moats, and strong free cash flow and balance sheets.
For the first quarter, Twilio Inc. (NYSE:TWLO) posted EPS of $0.00, which outperformed estimates by $0.21. Quarterly revenue of $875.4 million showed an increase of 48.37% year-on-year, and also beat estimates by $11.6 million.
RiverPark Funds, an investment firm, mentioned many stocks in its Q4 2021 investor letter, and Twilio Inc. (NYSE:TWLO) was one of them. The fund said:
“Twilio: TWLO shares were also down sharply to end the year. Just like after 1Q and 2Q, despite another quarterly beat in 3Q, management guidance–which we believe to be conservative– disappointed some investors. Third quarter revenue of $740 million was up 65% year over year, significantly exceeding management’s guidance of 50%-52% revenue growth. Management guided 4Q21 revenue to +40% revenue growth, which was ahead of sell side expectations, but likely below buy side expectations. Investors were also troubled by the departure of COO George Hu, who has been credited with rebuilding Twilio’s sales and marketing teams after arriving from SaleForce.com shortly after the company’s IPO in 2016.
The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”
2. Coinbase Global, Inc. (NASDAQ:COIN)
ARK Investment Management’s 13 Portfolio: 5.53%
ARK Investment Management’s Stake Value: $1.32 billion
Number of Hedge Fund Holders: 57
Year-To-Date Share Price Loss : 73.94%
Coinbase Global, Inc. (NASDAQ:COIN) is an important pillar of the global crypto-economy, operating a secure, hosted platform where users can buy, sell and trade with cryptocurrencies. Cathie Wood increased her stake in the firm by 29% to come in at 6.98 million shares worth $1.32 billion at the end of March.
On May 11, Goldman Sachs analyst Will Nance downgraded Coinbase Global, Inc. (NASDAQ:COIN) to ‘Neutral’ from ‘Buy’ and massively decreased the price target to $80 from $240. Although he still thinks Coinbase is the “blue chip way to gain exposure to the crypto native ecosystem’, he doesn’t see it returning to recent levels of profitability in the near-term without a significant increase in cryptocurrency prices. The analyst updated his estimates to reflect the firm’s Q1 results and future guidance, and the recent crash in cryptocurrency valuations.
57 hedge funds owned $3.46 billion worth of positions in Coinbase Global, Inc. (NASDAQ:COIN) at the close of the fourth quarter. This shows improving hedge fund sentiment over the previous quarter where 50 hedge funds were long on the company shares.
Longleaf Partners Fund talked about Coinbase Global, Inc. (NASDAQ:COIN) in its Q4 2021 investor letter. Here’s 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 is a prime example.”
1. Teladoc Health, Inc (NYSE:TDOC)
ARK Investment Management’s 13 Portfolio: 5.86%
ARK Investment Management’s Stake Value: $1.40 billion
Number of Hedge Fund Holders: 39
Year-To-Date Share Price Loss : 66.51%
Teladoc Health, Inc (NYSE:TDOC) is Cathie Wood’s second largest holding, with 19.46 million shares worth $1.40 billion, representing 5.86% of her Q1 2022 portfolio. The New York-based firm offers virtual healthcare services. It was a star-performer during Wood’s blockbuster 2020 as the pandemic pushed people towards online platforms. However, the stock has lost 89% from its all-time high in February 2021 where it traded at $293, and is currently priced at $31.89.
Out of all the hedge funds in the database of Insider Monkey, 39 reported bullish bets on Teladoc Health, Inc (NYSE:TDOC) shares at the end of Q4 2021 with an aggregate value of $2.45 billion. This is down from 40 hedge funds a quarter ago.
Argus analyst David Toung on May 5 downgraded Teladoc Health, Inc (NYSE:TDOC) to ‘Hold’ from ‘Buy’, noting that the firm is now paying more to acquire new members, and is facing increased competition in the direct-to-consumer market for behavioral health services. The analyst projects operating losses for the firm in 2022 and 2023 after its disappointing Q1 results showed declining gross and EBITDA margins.
Investment firm RiverPark Funds talked about Teladoc Health, Inc. (NYSE:TDOC) in its Q1 2022 investor letter, stating:
“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).
Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”
You can also take a look at 10 Best Cheap Stocks To Buy Now and 10 Best Chinese Stocks To Buy Now
