5 Tech Stocks To Sell Now According to Cathie Wood

In this article, we will take a look at the 5 tech stocks to sell now according to Cathie Wood. To see more such companies, go directly to 10 Tech Stocks To Sell Now According to Cathie Wood.

5. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 55

ARK Investment Management had been cutting its stake in Singapore-based tech company Sea Limited (NYSE:SE) since the first quarter of 2022. The stake selling continued in last quarter of 2022 as the hedge fund cut its position in Sea Limited (NYSE:SE) by 91% during the December quarter. At the end of the period, the hedge fund reported owning over 24,000 shares of Sea Limited (NYSE:SE). Over the last 12 months Sea Limited (NYSE:SE) shares have lost about 61% in value.

In January, Sea Limited (NYSE:SE) shares fell after BofA analyst Sachin Salgaonkar downgraded the stock’s rating to Neutral from Buy, citing expected slowness in the company’s e-commerce business.

Here is what Hayden Capital has to say about Sea Limited (NYSE:SE) in its Q3 2022 investor letter:

“Sea Limited (NYSE:SE) reported earnings last week, after which the share price rebounded +36% in a single day. The most obvious question that comes to mind, is why didn’t we sell more last year, when prices were still high? The truth is that we did sell a significant amount, but in hindsight obviously wish we were more aggressive with the sales.

For example, we owned the peak number of shares of Sea Ltd in Q1 2020, and steadily trimmed over the next two years. From Q1 2020 to Q1 2022, we trimmed ~39% of our shares over that period. However, the issue was that the investment continued to grow as a percentage of the overall portfolio, since the share price appreciated much faster than our sales (+620% from 1Q20 to 3Q21). This was a similar case for our other long-tenured positions as well.

So why didn’t we trim more aggressively and just hold cash? The answer is that at its core, I believe that holding cash is implicitly a market timing call. I certainly didn’t foresee a likely recession on the horizon so quickly after the turbulence of Covid already had on the economy. Even in late 2021, after it was clear interest rates would start rising, we were still operating under the assumption that rates would cause valuations to compress, but likely wouldn’t have an impact on the overall earnings trajectory. Given our expectations for strong earnings growth, we thought this could more than offset the valuation compression over time, and would still generate strong IRRs over a 3 – 5 year timeframe…” (Click here to see the full text)