In this article, we discuss the best green energy stocks in Cathie Wood’s portfolio. You can skip our detailed analysis of Cathie Wood’s hedge fund, and go directly and read Cathie Wood Portfolio: 5 Green Energy Stock Picks.
Catherine Wood is one of the most prominent stock-pickers in the investment world. She is currently serving as the CEO and CIO of ARK Investment Management, the hedge fund she founded in 2014. As of 2021, Wood’s real-time net worth stands at around $250 million.
Cathie Wood’s investment strategy revolves around investing in stocks that adapt to the changing world efficiently. Following these strategies, the hedge fund managed to deliver a 450% return to shareholders since 2014, compared with a 115% return of S&P 500 during the same period, as reported by Reuters. However, with the recent selloff in the tech stocks, ARK Invest’s flagship Innovation ETF plunged 10% in December and is down 23.7% for the year, as the ETF invested heavily in the future technological stocks. However, Wood believes this as a temporary fall.
Along with artificial intelligence, robotics, DNA sequencing, and blockchain technology, Wood invests in energy stocks, focusing on renewable energy. Earlier this year, she asserted that cryptocurrency mining will help generate more renewable energy, as mining will help solar and batteries supply over 90% of what the grid needs. As of Q3, ARK Investment Management’s 13F portfolio has a value of over $41.6 billion.
In this article, we will focus on green energy stocks in Cathie Wood’s portfolio as of Q3. Some of the notable names in this regard are Tesla, Inc. (NASDAQ:TSLA), Square, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL).
Our Methodology:
Let’s analyze our list of the best green energy stocks in Cathie Wood’s portfolio. The stocks mentioned below are not the traditional energy companies but those that utilize renewable sources of energy in their operations. We considered ARK Investment Management’s 13F portfolio of Q3 for this list.
Cathie Wood Portfolio: Green Energy Stock Picks
10. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 15
AeroVironment, Inc. (NASDAQ:AVAV) is an American defense contractor and aircraft company. It carries out operations in an environmentally sensitive manner and aims to conserve natural resources and minimize waste through recycling.
As of Q3, ARK Investment Management increased its stake in AeroVironment, Inc. (NASDAQ:AVAV) by 97% and now holds shares worth $75.4 million. The company represents 0.18% of Cathie Wood’s portfolio. In its fiscal Q2 2022 report, AeroVironment, Inc. (NASDAQ:AVAV) posted an EPS of $0.78, beating the estimates by $0.14. This October, RBC Capital initiated its coverage on AeroVironment, Inc. (NASDAQ:AVAV) with a Sector Perform rating and a $95 price target, highlighting concerns regarding the defense budget.
The number of hedge funds tracked by Insider Monkey having stakes in AeroVironment, Inc. (NASDAQ:AVAV) fell to 15 in Q3, from 20 in the previous quarter. However, the total value of these stakes stood at $134.2 million, up significantly from $100 million in Q2.
Like famous stocks, such as Tesla, Inc. (NASDAQ:TSLA), Square, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL), AeroVironment, Inc. (NASDAQ:AVAV) is also grabbing investors’ attention in 2021.
9. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 54
An American manufacturing company, Deere & Company (NYSE:DE) develops agricultural machinery, heavy equipment, forestry machinery, and related products. Cathie Wood’s hedge fund started investing in the company sometime during the first quarter of 2018, with shares worth over $2 million. In Q3 2021, Deere & Company (NYSE:DE) represents 0.21% of Cathie Wood’s portfolio as the hedge fund increased its stake in the company by 8% during the quarter.
Insider Monkey’s Q3 data shows that the hedge fund interest is increasing in Deere & Company (NYSE:DE), as 54 hedge funds reported owning stakes in the company, up from 52 in the previous quarter. The total value of these stakes is over $2.53 billion. Among these hedge funds, First Eagle Investment Management was the company’s leading shareholder in Q3, holding over 1.4 million shares.
In its sustainability report, Deere & Company (NYSE:DE) mentioned that its energy consumption relative to production decreased by 44% in the past 7 years. Moreover, the company’s factory sites use electricity and heat that is produced with renewable energy. After Deere & Company (NYSE:DE) topped fiscal Q4 2021 estimates, Wall Street analysts provided a positive outlook on the company. Recently, both Stifel and Evercore ISI lifted their price targets on the stock, to $445 and $415, respectively.
Harding Loevner mentioned Deere & Company (NYSE:DE) in its Q2 2021 investor letter. Here is what the firm has to say:
“In the US, where we increased our weight as part of our recent portfolio manager transition, two of our industrial holdings stood out (one is) John Deere. John Deere delivered stronger-than-expected quarterly earnings and raised its guidance for the full-year. Sales of Deere’s tractors and combine harvesters are underpinned by Chinese demand for agriculture products and the bioethanol market rebounding with oil prices.”
8. Komatsu Ltd. (OTC:KMTUY)
Number of Hedge Fund Holders: 2
Komatsu Ltd. (OTC:KMTUY) is a Japanese manufacturing company that deals in construction, mining, forestry, and military equipment. The company’s assembly plant in Japan uses renewable energy and aims to cut electric power consumption by half. Moreover, in 2020, Komatsu Ltd. (OTC:KMTUY) issued a ‘green bond’ that would raise funds to solve environmental problems.
ARK Investment Management started building its position in Komatsu Ltd. (OTC:KMTUY) during the third quarter of 2019, with shares worth $2.2 million. In Q3 2021, the hedge fund increased its stake in the company by 39% and now holds 3.8 million shares. Komatsu Ltd. (OTC:KMTUY) represents 0.22% of Cathie Wood’s portfolio.
This October, JP Morgan upgraded Komatsu Ltd. (OTC:KMTUY) to Overweight, with a 4,000 yen price target. At the end of Q3, 2 hedge funds in Insider Monkey’s database reported owning stakes in Komatsu Ltd. (OTC:KMTUY), up from 1 in the previous quarter. The total value of these stakes is more than $93.3 million.
In addition to Komatsu, major companies like Tesla, Inc. (NASDAQ:TSLA), Square, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL) are ramping up their ESG efforts to tackle climate change.
First Eagle Investment Management mentioned Komatsu Ltd. (OTC:KMTUY) in its Q2 2021 investor letter. Here is what the firm has to say:
“The leading detractors in the quarter (includes) Komatsu Ltd. Komatsu has been among the machinery companies buffeted by news flow around infrastructure spending in the US. While a bipartisan Senate group, with the support of President Biden, reached an agreement on an eight-year, $1.2 trillion bill, its future is murky. The infrastructure bill appears to be linked to a broader economic agenda that likely will require a thorny budget reconciliation process in order to bypass a Republican filibuster and pass both chambers of Congress.”
7. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 51
Lockheed Martin Corporation (NYSE:LMT) is an American aerospace and technology company. According to the Q3 data, ARK Investment Management has increased its stake in the company by 22% and now owns $122 million worth of shares. Lockheed Martin Corporation (NYSE:LMT) accounts for 0.29% of the hedge fund’s 13F portfolio.
In its Q3 results, Lockheed Martin Corporation (NYSE:LMT) posted an EPS of $6.93, which beat the estimates by $0.13. Following the company’s solid quarterly earnings, recently, Morgan Stanley set a $430 price target on Lockheed Martin Corporation (NYSE:LMT), while maintaining an Overweight rating on the shares. The company integrates renewable energy into its operations and has recently developed a GridStar Flow battery, which will be used for large-capacity energy storage applications.
At the end of Q3 2021, 51 hedge funds tracked by Insider Monkey reported owning a $1.28 billion stake in Lockheed Martin Corporation (NYSE:LMT). In the previous quarter, 58 hedge funds held positions in the company.
6. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 62
Peloton Interactive, Inc. (NASDAQ:PTON), an American exercise equipment company, plans to incorporate renewable energy sources to power its operations in its factory that will be functional in 2023. Deutsche Bank initiated its coverage on Peloton Interactive, Inc. (NASDAQ:PTON) in November with a Buy rating and a $76 price target.
At the end of Q3 2021, 62 hedge funds in Insider Monkey’s database reported owning stakes in Peloton Interactive, Inc. (NASDAQ:PTON), down from 67 in the previous quarter. The total value of these stakes is over $4.6 billion. Tiger Global Management LLC held the largest stake in Peloton Interactive, Inc. (NASDAQ:PTON) in Q3, worth $626.4 million.
ARK Investment Management increased its activity in Peloton Interactive, Inc. (NASDAQ:PTON) by 3% in Q3. The company now represents 0.36% of the hedge fund’s 13F portfolio. In its fiscal Q1 2022 results, Peloton Interactive, Inc. (NASDAQ:PTON) earned $805.2 million in revenues, presenting a 6.2% year-over-year growth.
Peloton Interactive, Inc. (NASDAQ:PTON) is also favored by investors and analysts, like Tesla, Inc. (NASDAQ:TSLA), Square, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL).
Carillon Tower Advisers mentioned Peloton Interactive, Inc. (NASDAQ:PTON) in its Q2 investor letter. Here is what the firm has to say:
“Peloton Interactive operates a connected fitness platform offering live and on-demand classes allowing users to exercise at home. The firm’s shares were pressured in the quarter after Peloton announced a voluntary recall for both its legacy treadmill (Peloton Tread+) and its newly-launched base model treadmill (Peloton Tread). The issue surrounding the latter is somewhat troubling, as it appears it may be the result of an engineering flaw. This new treadmill offering was expected to be a key growth driver in the second half of 2021, and this development reduces our confidence in Peloton’s product pipeline. Therefore, we sold the stock.”
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Disclosure. None. Cathie Wood Portfolio: Green Energy Stock Picks is originally published on Insider Monkey.
