In this article, we will take a look at Cathie Wood selling these 12 stocks in 2023. To see more such companies, go directly to Cathie Wood is Selling These 5 Stocks in 2023.
After a bruising 2022, Cathie Wood’s funds slowly started to recover this year, thanks to the broader rally in the stock market amid hopes that the Federal Reserve could pause its rate-hike spree which according to Ms. Wood contributed to the collapse of regional banks. Cathie Wood in her latest quarterly commentary said that authorities were quick to blame crypto for the banking crisis. But the 67-year old hedge fund manager said the regulators should “focus on the central points of failure in the traditional banking system instead of blocking the decentralized, transparent, and auditable financial platforms that have no central points of failure.”
The stock market collapse that started in 2022 amid interest rate hikes especially hammered growth investors like Cathie Wood, who invest in small, often loss-making companies promising returns far into the future. It was all rose and sunshine for ARK investors when money-lending policies were easy and economy was thriving. But as inflation started to rise and the Federal Reserve’s hawkish policies made it difficult for growth companies to borrow money, Wood’s portfolio started to take a hit. Relentless losses made it difficult for Cathie Wood to stick to her unprofitable bets for long.
The net portfolio worth of ARK Innovation ETF in March 2022 stood at $13 billion. As of the end of March 2023, the ETF’s portfolio worth fell to $7.4 billion, as Cathie Wood started to sell stocks last year. According to a Bloomberg report, because of selling stocks at a loss, Wood suffered a whopping $2 billion in losses. However, the report added that these losses could lighten the tax bills Wood would receive on future capital gains.
Talking to Bloomberg, Wood said that her flagship fund ARK Innovation ETF reduced its holdings to just 28 stocks from 50 stocks as it started to suffer losses after hitting its peak in February 2021.
Despite the losses, ARK reiterated its optimism in its report for the first quarter of 2023. The firm said that during difficult times, consumers and businesses adopt new technologies faster than they do in normal times, causing a boom for innovative companies. Here’s what the firm said:
“If we are correct in our assessment that growth, inflation, or both will surprise on the low side of expectations, scarce double-digit growth opportunities should be rewarded accordingly. The adoption of new technologies typically accelerates during tumultuous times as concerned businesses and consumers change their behavior much more rapidly than otherwise would be the case. As a result, stocks of innovation-oriented companies tend to perform better and emerge as new market leaders toward the end of a bear market. We believe the coronavirus crisis and Russia’s invasion of Ukraine have transformed the world significantly and permanently, suggesting that many innovation-driven strategies and stocks could be productive holdings during the next five to ten years.”
ARK Invest said that five of its actively-managed ETFs and one indexed ETF outperformed in the first quarter relative to the broad-based global equity indexes, while one actively managed ETF and one indexed ETF underperformed.
The ARK Autonomous Technology and Robotics ETF outperformed broad-based global equity indexes in the March quarter. Some of the ETF’s top holdings include Tesla (TSLA) and UiPath (PATH). The ARK Next Generation Internet ETF (ARKW) also outperformed broad-based global equity indexes in the March quarter, with notable contributors being Grayscale Bitcoin Trust (GBTC) and Coinbase Global Inc (COIN).
On the other hand The ARK Genomic Revolution ETF (ARKG) underperformed the broad-based global equity indexes.
Cathie Wood of ARK Investment Management
Investor Exodus at ARK
But despite this outperformance, it seems consistent losses, uncertainty about the Federal Reserve’s future path and the global macro backdrop have spooked ARK investors who are now taking back their funds. All ARK ETFs except ARK Innovation Fund (ARKK) have seen outflows in 2023. To retain investors, Wood even had to offer discounts on fees for the ARK Venture Fund (ARKVX).
Some notable names in the Q1 portfolio of Wood are Tesla Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM) and Coinbase Global, Inc. (NASDAQ:COIN).
Our Methodology:
For this article, we scanned the first quarter of 2023 portfolio of Cathie Wood’s ARK Investment Management and picked 12 important stocks in which Cathie Wood either completely sold off her stakes or reduced her positions significantly. To give our readers an insight into what other hedge funds think of these companies, we mentioned the number of hedge funds that had stakes in these companies as of the end of 2022 and sorted the list on this metric.
Cathie Wood is Selling These 12 Stocks in 2023
12. Organovo Holdings Inc. (NYSE:ONVO)
Number of Hedge Fund Holders: 2
Medical laboratory company Organovo Holdings Inc. (NYSE:ONVO) is a penny stock that was dumped by Cathie Wood’s hedge fund during the first quarter as ARK sold 214,302 shares of the company. Insider Monkey’s database shows that in addition to ARK, just one hedge fund had stakes in Organovo Holdings Inc. (NYSE:ONVO) in the last quarter of 2022.
11. Magic Software Enterprises Ltd. (NASDAQ:MGIC)
Number of Hedge Fund Holders: 3
Israel-based enterprise software company Magic Software Enterprises Ltd. (NASDAQ:MGIC) was one of the stocks sold by Cathie Wood during the first quarter as her hedge fund let go of 136,848 shares of the company in the period.
Magic Software Enterprises Ltd. (NASDAQ:MGIC) recently posted its first quarter results which missed estimates on both revenue and earnings.
As of the end of the last quarter of 2022, 7 hedge funds had stakes in Magic Software Enterprises Ltd. (NASDAQ:MGIC).
10. Compugen Ltd. (NASDAQ:CGEN)
Number of Hedge Fund Holders: 6
Cathie Wood’s hedge fund owned about 2.4 million shares of penny stock Compugen Ltd. (NASDAQ:CGEN) in the fourth quarter of 2022. The fund sold all of these shares during the first quarter. Compugen Ltd. (NASDAQ:CGEN) is a clinical-stage drug discovery platform company. Earlier this month Compugen Ltd. (NASDAQ:CGEN) posted its first-quarter results. GAAP EPS in the period came in at -$0.11, beating estimates by $0.01.
Insider Monkey’s database of hedge funds shows that 10 hedge funds had stakes in Compugen Ltd. (NASDAQ:CGEN) during the last quarter of 2022.
9. Niu Technologies (NASDAQ:NIU)
Number of Hedge Fund Holders: 9
ARK Investment sold about 2.14 million shares of Chinese electric scooter company Niu Technologies (NASDAQ:NIU) in the first quarter of 2023. The fund entered the second quarter with just 6,138 shares of the firm. Niu Technologies (NASDAQ:NIU) has lost about 20% in value so far in 2023 through May 23.
Citi recently cut its rating for Niu Technologies (NASDAQ:NIU) to Neutral from Buy, citing weak Q1 results.
Citi analysts are concerned about the higher costs of lithium batteries that affected Niu Technologies (NASDAQ:NIU). Citi analysts recently said:
“We believe the sales weakness continues to be driven by the escalated lithium battery cost which weighed on the competitiveness of the company’s products when compared with peers that mainly used lead acid batteries.”
8. Atai Life Sciences N.V. (NASDAQ:ATAI)
Number of Hedge Fund Holders: 10
Cathie Wood’s hedge fund dumped a whopping 5.6 million shares of Germany-based Atai Life Sciences N.V. (NASDAQ:ATAI) in the first quarter of 2023. The fund still owns about 13,000 shares of Atai Life Sciences N.V. (NASDAQ:ATAI).
Atai Life Sciences N.V. (NASDAQ:ATAI) recently posted its first quarter results. GAAP EPS in the period came in at -$0.21, meeting estimates.
Out of the 943 hedge funds tracked by Insider Monkey as of the end of 2022, 15 hedge funds had stakes in Atai Life Sciences N.V. (NASDAQ:ATAI). Unlike ATAI, Cathie Wood is bullish on Tesla Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM) and Coinbase Global, Inc. (NASDAQ:COIN).
7. Fate Therapeutics Inc. (NASDAQ:FATE)
Number of Hedge Fund Holders: 18
As of the end of the fourth quarter of 2022, Cathie Wood’s hedge fund had owned 4.2 million shares of Fate Therapeutics Inc. (NASDAQ:FATE). The hedge fund sold its entire position in the first quarter.
Earlier this month Fate Therapeutics Inc. (NASDAQ:FATE) posted its first-quarter results, according to which its GAAP EPS came in at -$0.19, beating estimates by $0.47. Revenue in the period increased by 220.5% year over year to $58.98 million, surpassing estimates by $25.45 million.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 18
Cathie Wood finally gave up on Chinese EV company NIO Inc. (NYSE:NIO) in the first quarter of 2023. ARK sold 336,347 shares of NIO Inc. (NYSE:NIO) during the period. NIO Inc. (NYSE:NIO) has lost about 45% over the past year and it seems Cathie Wood was not ready to take any more losses. But while she has give up on NIO, Wood is still bullish on Tesla Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM) and Coinbase Global, Inc. (NASDAQ:COIN).
Insider Monkey’s database of 943 hedge funds shows that 25 hedge funds had stakes in NIO Inc. (NYSE:NIO) at the end of 2022.
NIO Inc. (NYSE:NIO) is up 21% year to date through May 23.
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Disclosure: None. Cathie Wood is Selling These 12 Stocks in 2023 is originally published on Insider Monkey.
