In this article, we discuss the top 5 stock picks from the ARK Invest stock portfolio. If you want to see more stocks in this selection, check out ARK Invest Stock Portfolio: Top 10 Picks.
5. Exact Sciences Corporation (NASDAQ:EXAS)
Number of Hedge Fund Holders: 28
Exact Sciences Corporation (NASDAQ:EXAS) is a Wisconsin-based company that provides cancer screening and diagnostic test products in the United States and internationally. ARK Invest lifted its Exact Sciences Corporation (NASDAQ:EXAS) stake by 18% in Q3 2022. The Cathie Wood stock portfolio held more than 17.5 million million shares of the company worth $570.5 million, representing 3.97% of the total securities.
On August 24, Credit Suisse analyst Dan Leonard initiated coverage of Exact Sciences Corporation (NASDAQ:EXAS) with an Outperform rating and a $55 price target. The company’s leadership role in non-invasive colorectal cancer screening is “durable”, while upcoming pipeline catalysts could “de-risk future large opportunities” like multi-cancer testing and minimal residual disease monitoring, the analyst told investors in a research note.
According to Insider Monkey’s Q2 data, 28 hedge funds were long Exact Sciences Corporation (NASDAQ:EXAS), compared to 32 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a significant position holder in the company, with 2.5 million shares worth nearly $100 million.
Here is what RiverPark Large Growth Fund has to say about Exact Sciences Corporation (NASDAQ:EXAS) in its Q4 2021 investor letter:
“Exact Sciences: EXAS shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.
In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact has tripled its market opportunity from $20 billion to $60 billion.”
4. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 24
UiPath Inc. (NYSE:PATH) is a New York-based company that provides an end-to-end automation platform offering a range of robotic process automation (RPA) solutions primarily in the United States, Romania, and Japan. Cathie Wood raised her stake in UiPath Inc. (NYSE:PATH) by 23% in Q3 2022, holding over 46 million shares worth $581 million, representing 4.05% of the total 13F securities.
On October 18, Barclays analyst Raimo Lenschow downgraded UiPath Inc. (NYSE:PATH) to Equal Weight from Overweight and trimmed the price target to $15 from $17. UiPath Inc. (NYSE:PATH) is in a “digestive phase” from leadership changes and its go-to market restructuring that will create hindrances for the company in terms of becoming a notable outperformer in the short-term, the analyst told investors in a research note.
According to Insider Monkey’s Q2 data, 24 hedge funds held stakes worth $1.26 billion in UiPath Inc. (NYSE:PATH), compared to 33 funds in the prior quarter worth $1.31 billion. Alkeon Capital Management is a prominent stakeholder of the company, with 15.5 million shares valued at $281.6 million.
Here is what ClearBridge Investments has to say about UiPath Inc. (NASDAQ:PATH) in its Q2 2021 investor letter:
“We participated in the IPO of UiPath, a developer of software for robotic process automation that uses AI, natural language processing and design to streamline complex processes across a variety of technology environments. The company is an industry leader with a superior solution for leveraging software to optimize workloads. Organizations around the world are beginning to understand the power of automation, with momentum picking up toward fully automating business processes, a $60 billion market today that could grow to $200 billion or more by 2030. UiPath has a unique pricing model, broad partner ecosystem and thoughtful management team supporting one of the strongest growth profiles in technology. Risks we are watching include a partial cloud transition ahead and increased competition from larger software platforms over time.”
3. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 34
Roku, Inc. (NASDAQ:ROKU) is a California-based company that operates a TV streaming platform. Cathie Wood’s stock portfolio holds nearly 12 million Roku, Inc. (NASDAQ:ROKU) shares as of the third quarter of 2022, worth more than $672 million and representing 4.68% of the total 13F portfolio. Roku, Inc. (NASDAQ:ROKU) stock has featured in the ARK portfolio since Q2 2019 and the hedge fund lifted its position by 18% in the September quarter.
On September 8, Pivotal Research analyst Jeffrey Wlodarczak upgraded Roku, Inc. (NASDAQ:ROKU) to Hold from Sell with an unchanged price target of $60. The shares have reached an appropriately balanced risk/reward level and profits should be taken on short positions, the analyst told investors in a research note. The analyst believes that Roku, Inc. (NASDAQ:ROKU) is “getting hit materially harder than its advertising peers.”
According to Insider Monkey’s second quarter database, 34 hedge funds were long Roku, Inc. (NASDAQ:ROKU), and Jim Simons’ Renaissance Technologies is a significant stakeholder of the company, with approximately 2 million shares worth $162 million.
Here is what Saga Partners has to say about Roku, Inc. (NASDAQ:ROKU) in its Q2 2022 investor letter:
“The Portfolio first bought Roku in Q3’20. It was a company we followed closely given our investment in The Trade Desk and its importance in connected television (CTV). Roku continued to impressively grow its CTV market share and it took some extra work to understand the underlying dynamics causing Roku’s success. I think there is some misunderstanding surrounding the connected television landscape. Since I haven’t written extensively on the topic in past letters, I thought it would be helpful to provide a little more background on the underlying dynamics of the space below…” (Click here to see the full text)
2. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 44
Zoom Video Communications, Inc. (NASDAQ:ZM) is a California-based company that provides a unified communications platform worldwide. Cathie Wood boosted her stake in Zoom Video Communications, Inc. (NASDAQ:ZM) by 14% in the third quarter of 2022. The ARK Invest portfolio had approximately 11 million shares of Zoom Video Communications, Inc. (NASDAQ:ZM) worth $801.5 million at the end of September, representing 5.58% of the total 13F securities. Cathie Wood has held a position in Zoom since Q4 2020.
Morgan Stanley analyst Meta Marshall on October 11 downgraded Zoom Video Communications, Inc. (NASDAQ:ZM) to Equal Weight from Overweight with a price target of $90, down from $130. The analyst finds short-term catalysts to be lacking for the stock. Zoom Video Communications, Inc. (NASDAQ:ZM)’s online business is not expected to stabilize until early next year, creating an “overhang” on the stock for the next six months, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 44 funds reported owning stakes worth $2.96 billion in Zoom Video Communications, Inc. (NASDAQ:ZM) at the end of Q2 2022, compared to 43 funds in the prior quarter worth $3.16 billion. Ken Fisher’s Fisher Asset Management is a notable position holder in the company, with 4.71 million shares valued at $508.8 million.
Here is what Horos Asset Management had to say about Zoom Video Communications, Inc. (NASDAQ:ZM) in its Q1 2022 investor letter:
“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 (“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).”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is the largest holding in the Cathie Wood stock portfolio. Wood owns more than 4 million shares of Tesla, Inc. (NASDAQ:TSLA) as of the third quarter of 2022, worth $1 billion and representing 7.54% of the total 13F securities. Cathie Wood elevated her stake in Tesla by 183% in the September quarter. She has consistently held a stake in Tesla, Inc. (NASDAQ:TSLA) since the last quarter of 2016, apart from a few minor breaks over the years.
On October 14, Wells Fargo analyst Colin Langan lowered the price target on Tesla, Inc. (NASDAQ:TSLA) to $230 from $280 and kept an Equal Weight rating on the shares ahead of the Q3 results. The analyst expects a “slight” earnings beat, noting that the higher pricing will potentially be offset by currency headwinds. However, Tesla, Inc. (NASDAQ:TSLA) remains the biggest beneficiary of the Inflation Reduction Act and the analyst raised his 2023 through 2026 earnings estimates by 33% to factor in the bill’s benefits.
According to Insider Monkey’s data, Tesla, Inc. (NASDAQ:TSLA) was part of 72 hedge fund portfolios at the end of Q2 2022, compared to 80 funds in the preceding quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 1.40 million shares worth $949 million.
Here is what Carillon Tower Advisers specifically said about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2022 investor letter:
“Tesla, Inc. (NASDAQ:TSLA), the electric vehicle and clean energy company, is set to recall more than 100,000 cars in China over a potential safety risk and is reportedly delaying a plan to restore production at its Shanghai plant. CEO Elon Musk was reported to have said that the company would cut 10% of salaried staff and freeze hiring due to a bad feeling he has about the economy.”
You can also take a look at 10 Best Italian Stocks To Buy Now and 11 Best Dividend Stocks To Buy According To Warren Buffett.
