In this piece, we will take a look at the top twelve stocks that are on Cathie Wood’s radar. For more stocks, head on over to Cathie Wood Is Loading Up On These 5 Stocks.
If there’s one thing that can be said for certain in today’s highly volatile environment, it’s that 2022 has not been a good year for Cathie Wood. Ms. Wood, who heads the hedge fund Ark Investment Management, is one of the most dynamic managers you’re likely to come across. Her bets focus on the highest growth stocks in the industry, which are often those companies that are disrupting the industries they are in. Whether it’s 3D printing, biotechnology, or electric cars, Ms. Wood is right at the front of identifying firms that she believes are truly poised to explode.
Naturally, this aggressive approach, which can very well be categorized as being disruptive to the hedge fund world as well, has come under criticism from more conservative investors who believe that high risk companies should be balanced out with stable players. Ms. Wood is aware of this criticism. In a research paper that she wrote at the start of this month, Cathie Wood used quantitative data to hit back at the critics.
She criticized the approach of simply using the operating income (EBITDA) to value growth companies that are investing heavily in research and development. The hedge fund boss explained that purely focusing on EBITDA — just 27.8% of her Innovation ETF’s holdings are EBITDA positive — is not a reliable indicator of performance since research and development ends up adding to the long term value of a firm. Ms. Wood added that for startups and early stage companies, deferred revenue, which is revenue that it will earn beyond one accounting period, is also a source of “validation” and is more important for valuation purposes than it would be if a mature company was being analyzed. To bolster her claim of R&D costs being a relevant valuation metric for Ark’s investments, she quoted that for the firms that her fund has invested in, these costs are 28.6% of total revenues as opposed to 12% for the NASDAQ 100 index. Should these and some other costs be removed from the operating income, then, as opposed to the 27.8% positive EBITDA percentage shared above, the percentage of firms in the Ark Innovation fund that are profitable jumps to 84.9%.
Finally, she concluded her criticism by sharing an example of Tesla, Inc. (NASDAQ:TSLA). Ms. Wood is one of Tesla’s biggest investors, and she has a whopping $1,530 price target for the company whose shares have taken a beating on the stock market this year due to what some believe is an effect of Mr. Elon Musk’s Twitter tryst, with Musk himself countering by pointing out that a higher benchmark interest rate leaves little incentive for people to invest in risky stocks when they have the comfort of bonds instead. Ms. Wood shares that while Tesla’s EBITDA based profitability was negative as early as 2016, it was actually positive based on her adjusted EBITDA metrics and ended up being positive in 2015, five years before the company entered the S&P 500 index.
Ark Investment’s portfolio is one of the largest in the industry right now, and by the end of this year’s third quarter, it was worth a whopping $14 billion. Unlike some other hedge funds, it also shares daily trading data with anyone who signs up for the service on its website, with details of the shares that it has bought as part of its managed funds sent out regularly a little over three hours after markets have closed. The hedge fund has six different funds. These are the ARK Space Exploration & Innovation ETF, ARK Fintech Innovation ETF, ARK Next Generation Internet ETF, ARK Genomic Revolution ETF, ARK Autonomous Tech. & Robotics ETF, and the flagship ARK Innovation ETF. The top additions to Cathie Wood’s investment portfolio are Coinbase Global, Inc. (NASDAQ:COIN), Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), and Roblox Corporation (NYSE:RBLX).
Cathie Wood of ARK Investment Management
Our Methodology
We used Ark’s daily trading data for December 22 and December 21 to sift out the largest number of shares purchased and the companies that they represented. The shares bought earlier are listed first, and the firms are ranked through the number of shares bought by Ark.
Cathie Wood Is Loading Up On These 12 Stocks
12. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Shares Bought By Ark Investment on December 21, 2022: 486
Zoom Video Communications, Inc. (NASDAQ:ZM) is a video communications platform provider that enables companies and everyday users to communicate with their relatives, workers, and others all over the globe from the comfort of their homes. It is headquartered in San Jose, California, the United States.
Cathie Wood bought 486 Zoom Video Communications, Inc. (NASDAQ:ZM) shares on December 21, 2022, adding to her massive $801 million stake which made her the company’s largest investor in Q3 2022. During the same time period, 50 out of the 920 hedge funds polled by Insider Monkey had invested in Zoom Video Communications, Inc. (NASDAQ:ZM).
Along with Coinbase Global, Inc. (NASDAQ:COIN), Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), and Roblox Corporation (NYSE:RBLX), Zoom Video Communications, Inc. (NASDAQ:ZM) is one company that’s on Cathie Wood’s keen stock picking radar.
11. Roku, Inc. (NASDAQ:ROKU)
Number of Shares Bought By Ark Investments on December 21, 2022: 8,004
Roku, Inc. (NASDAQ:ROKU) is an American entertainment platform provider that is headquartered in San Jose, California. It provides a streaming platform that lets users watch television shows, movies, and other channels. The firm also sells hardware products such as media players. It is headquartered in San Jose, California.
As has been the case with other high growth, high technology stocks, Roku, Inc. (NASDAQ:ROKU)’s shares have also taken a beating on the stock market this year. They are down a painful 82% year to date. It looks like Cathie Wood thinks it’s the perfect buying opportunity. Data shared by her firm revealed that it had bought 8,004 shares of the firm on December 21, 2022, as part of its Ark Innovation ETF.
Insider Monkey’s Q3 2022 data of 920 hedge funds revealed that 33 had held a stake in Roku, Inc. (NASDAQ:ROKU).
Roku, Inc. (NASDAQ:ROKU)’s largest investor in our database is also Catherine D. Wood’s ARK Investment Management which owns 11.9 million shares that are worth $672 million.
Saga Partners mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“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)
10. Block, Inc. (NYSE:SQ)
Number of Shares Bought By Ark Investments on December 21, 2022: 1,932
Block, Inc. (NYSE:SQ) is a payments platform provider that sells both hardware and software. Its hardware products let merchants accept payments from plastic cards, through both chip and near field verification. Additionally, its software platform enables users to make payments.
When trading ended on December 21, 2022, Ark Investment had bought 1,932 Block, Inc. (NYSE:SQ) shares as part of its ARK Innovation ETF. It is already the company’s largest investor as it owns 9.1 million shares that are worth $505 million as of Q3 2022 end. During the same quarter, 75 out of the 920 hedge funds polled by Insider Monkey had also invested in Block, Inc. (NYSE:SQ).
Baron Funds’ Q2 2022 investor letter mentioned the company and outlined that:
“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Shares Bought By Ark Investments on December 21, 2022: 9,952
Tesla, Inc. (NASDAQ:TSLA) is one of the world’s largest manufacturers of electric vehicles, and one that is also credited with having pioneered the industry. The firm is headquartered in Austin, Texas, the United States, and it also sells other energy products such as battery packs.
Cathie Wood scooped up 9,952 Tesla, Inc. (NASDAQ:TSLA) shares on December 22, 2022, even as the wider market was sharing its concerns about Tesla chief Mr. Elon Musk not paying enough attention to the company. For instance, Canaccord lowered its share price target to $275 from $304 for the company in December 2022, outlining that future growth can reverse current losses.
By the end of this year’s third quarter, 88 out of the 920 hedge funds covered by Insider Monkey had bought Tesla, Inc. (NASDAQ:TSLA)’s shares.
As was the case with Roku, Ms. Wood is Tesla, Inc. (NASDAQ:TSLA)’s largest hedge fund shareholder with a $1 billion stake that comes via four million shares.
8. Verve Therapeutics, Inc. (NASDAQ:VERV)
Number of Shares Bought By Ark Investments on December 22, 2022: 484
Verve Therapeutics, Inc. (NASDAQ:VERV) is a quintessential Cathie Wood investment. The firm is a gene editing company that is headquartered in Cambridge, Massachusetts. It is developing treatments for liver diseases.
Ms. Wood believes that Verve Therapeutics, Inc. (NASDAQ:VERV) can deliver “explosive growth” if its gene editing technologies for heart problems are successful. The company’s main product is the VERVE-101 treatment which focuses on manipulating liver genes. December 2022 has been a mixed bag for Verve Therapeutics, Inc. (NASDAQ:VERV), as while VERVE-101 continues to be on FDA hold, the data requested by the agency is not limitless, and the firm stands the chance of clearing regulatory hurdles.
Insider Monkey’s Q3 2022 survey of 920 hedge funds revealed that 18 had invested in Verve Therapeutics, Inc. (NASDAQ:VERV). Ms. Wood bought 484 shares on December 22, adding to the 3.3 million that she had owned during the third quarter, making her Verve Therapeutics, Inc. (NASDAQ:VERV)’s largest investor with a $116 million stake.
7. Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Number of Shares Bought By Ark Investment on December 22, 2022: 5,992
Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a biotechnology company that is developing treatments for liver diseases such as hemophilia. Alongside these, it also focuses on developing cures for cancer. The firm is headquartered in Cambridge, Massachusetts.
Cathie Wood bought 5,992 Intellia Therapeutics, Inc. (NASDAQ:NTLA) shares on December 22, 2022. During the third quarter, her hedge fund was already the company’s largest investor as it owned a massive $540 million stake in the company. During the same time period, 36 out of the 920 hedge funds polled by Insider Monkey had invested in Intellia Therapeutics, Inc. (NASDAQ:NTLA).
6. Beam Therapeutics Inc. (NASDAQ:BEAM)
Number of Shares Bought By Ark Investment on December 22, 2022: 6,991
Beam Therapeutics Inc. (NASDAQ:BEAM) develops gene edited treatments for sickle cell anemia, leukemia, eye diseases, nervous system disorders, and other ailments. The firm is headquartered in Cambridge, Massachusetts.
Beam Therapeutics Inc. (NASDAQ:BEAM) scored a big win in December 2022 when the FDA lifted its hold on the company’s BEAM-201 treatment. BMO Capital raised the company’s share price target to $66 from $61 in December 2022, stating that the company has a strong treatment pipeline.
27 out of the 920 hedge funds polled by Insider Monkey for their September quarter of 2022 investments had held a stake in Beam Therapeutics Inc. (NASDAQ:BEAM). Cathie Wood bought 6,991 shares of the company on December 22, 2022, and she is also the company’s largest investor as it owns a $404 million stake.
Beam Therapeutics Inc. (NASDAQ:BEAM), Coinbase Global, Inc. (NASDAQ:COIN), Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), and Roblox Corporation (NYSE:RBLX) are some of Cathie Wood’s latest stock picks.
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Disclosure: None. Cathie Wood Is Loading Up On These 12 Stocks is originally published on Insider Monkey.