In this article, we discuss 10 stocks to watch as Cathie Wood’s fund starts to rebound. If you want to read about some more stocks in the Wood portfolio, go directly to Cathie Wood’s Fund Starts to Rebound: 5 Stocks to Watch.
Growth investors who profited from the tech-led disruption of the market at the height of the pandemic, like Cathie Wood of ARK Investment Management, have had a dreadful 2022 so far as soaring inflation and rising interest rates lead to recession fears and force investors away from growth equities. The flagship ARK Innovation ETF offered by her fund, which was one of the best-performing funds of 2020 with a gain of over 152%, has registered eight straight months of decline and is down by more than 62% in the past year.
Wood, who has stuck by her growth-focused investment strategy despite tremendous pressure to sell, recently claimed in a webinar that the central bank is making “a mistake” in monetary policy by sticking to a plan for rate hikes. Wood pointed to bloated inventories of retailers as an example to make her point, predicting that “there are all kinds of deflationary signals” which will eventually force the Fed “to pivot and reverse policy”. Wood’s predictions carry weight, as her flagship fund is up over 18% this month compared to a 1.7% gain for the S&P 500 Index.
Some of the top stocks to watch out for in the Wood portfolio as deflationary pressures increase include Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Tesla, Inc. (NASDAQ:TSLA). Inflows into the ARK Innovation ETF, which did not drop in tandem with the drawdown of the market, are also up this month, with Bloomberg reporting that the fund has amassed over $300 million in capital in July. So far this year, even though the fund is down over 50%, it has recorded inflows of close to $2 billion, highlighting that investors still trust Wood.
Our Methodology
The following stocks were picked from the investment portfolio of ARK Investment Management as of the end of the first quarter of 2022. Only equities that have registered a more than 5% increase in share price in the past month were selected. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey was used to quantify the popularity of each stock in the hedge fund universe.
Cathie Wood of ARK Investment Management
Cathie Wood’s Fund Starts to Rebound: Stocks to Watch
10. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Fund Holders: 19
Gain in Share Price Over Past Month as of July 14: 15.63%
Robinhood Markets, Inc. (NASDAQ:HOOD) owns and runs a financial services platform. ARK owned over 33 million shares of Robinhood Markets, Inc. (NASDAQ:HOOD) at the end of the first quarter of 2022 worth $337 million, representing 1.99% of the portfolio. Robinhood stock has soared since late June on the back of reports that cryptocurrency exchange FTX is exploring a possible takeover of the company. Sam Bankman-Fried, the CEO of FTX, has recently disclosed that an FTX-related unit has a 7.6% stake in Robinhood.
On July 12, JMP Securities analyst Devin Ryan maintained an ‘Outperform’ rating on Robinhood Markets, Inc. (NASDAQ:HOOD) stock and lowered the price target to $28 from $36, noting that the “upside now far outweighs the downside” in the alternative asset management space.
At the end of the first quarter of 2022, 19 hedge funds tracked by the database of Insider Monkey held stakes worth $947 million in Robinhood Markets, Inc. (NASDAQ:HOOD), compared to 34 positions in the previous quarter worth $1.5 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Tesla, Inc. (NASDAQ:TSLA), Robinhood Markets, Inc. (NASDAQ:HOOD) is one of the stocks in the limelight as growth stocks undergo a broad correction in value.
In its Q4 2021 investor letter, Claret Asset Management, an asset management firm, highlighted a few stocks and Robinhood Markets, Inc. (NASDAQ:HOOD) was one of them. Here is what the fund said:
“Robinhood Markets, Inc. (NASDAQ:HOOD) went public at $38 a share at the end of July of this year. After a oneday decline of 8%, it proceeded to rise to a peak of $85 in a matter of 4 days before settling down around $40 in September. Then, we found out that Robinhood Markets, Inc. (NASDAQ:HOOD) does not appear to understand the margin rules that apply to their client’s trades… and got fined by the Securities Exchange Commission. As of today, Robinhood Markets, Inc. (NASDAQ:HOOD) is trading below $20, at 57 times earnings, approximately half of its IPO price. Caveat emptor… Buyer beware.”
9. Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Number of Hedge Fund Holders: 35
Gain in Share Price Over Past Month as of July 14: 64.67%
Intellia Therapeutics, Inc. (NASDAQ:NTLA) operates as a genome editing firm. Securities filings show that ARK owned over 9.5 million shares in Intellia Therapeutics, Inc. (NASDAQ:NTLA) at the end of the first quarter of 2022 worth $439 million, representing 2.59% of the portfolio’s value. In late June, the company announced that an experimental in vivo gene editing treatment, NTLA-2001, was found to have a lasting therapeutic effect over 12 months in transthyretin amyloidosis. Regeneron Pharmaceuticals is collaborating with Intellia on the study.
On June 24, Piper Sandler analyst Swapnil Malekar maintained an ‘Overweight’ rating on Intellia Therapeutics, Inc. (NASDAQ:NTLA) stock with a price target of $171, noting that an upcoming drug candidate of the firm was showing “durability across all four dose cohorts”.
At the end of the first quarter of 2022, 35 hedge funds monitored by the database of Insider Monkey held stakes worth $1.1 billion in Intellia Therapeutics, Inc. (NASDAQ:NTLA), compared to 31 in the preceding quarter with positions worth $1.5 billion.
8. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 72
Gain in Share Price Over Past Month as of July 14: 5.93%
Shopify Inc. (NYSE:SHOP) provides an ecommerce platform and related services. The hedge fund chaired by Wood owned close to 1.2 million shares of Shopify Inc. (NYSE:SHOP) at the end of March 2022 worth $455 million, representing 2.69% of the value of ARK’s 13F portfolio. In early July, the company announced that it was delaying an employee compensation overhaul package. As part of the package, employees would be given the choice to get part of their salary in cash and part in stock. The package, per reports, is being pushed back until September.
On July 7, Evercore ISI analyst Mark Mahaney maintained an ‘Outperform’ rating on Shopify Inc. (NYSE:SHOP) stock and lowered the price target to $560 from $660, noting that consumer demand was softening and recession fears were rising.
At the end of the first quarter of 2022, 72 hedge funds tracked by Insider Monkey’s database held stakes worth $5.7 billion in Shopify Inc. (NYSE:SHOP), compared to 86 funds in the preceding quarter with stakes worth $12 billion.
In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE:SHOP) was one of them. Here is what the fund said:
“We added to the Portfolio’s position in e-commerce company Shopify Inc. (NYSE:SHOP) in the first quarter after a sharp share-price decline. This brought the Portfolio’s weighting in the company to 2%. We believe Shopify provides a uniquely positioned platform, and we like the company’s strategy of continuing to invest in its business in an effort to strengthen its competitive advantages. The market’s affinity for businesses like Shopify Inc. (NYSE:SHOP) may have changed, which created an opportunity for us to build our position in the company at what we believed to be compelling valuations.”
7. CRISPR Therapeutics AG (NASDAQ:CRSP)
Number of Hedge Fund Holders: 37
Gain in Share Price Over Past Month as of July 14: 38.87%
CRISPR Therapeutics AG (NASDAQ:CRSP) operates as a gene-editing firm. Securities filings show that ARK owned over 9.7 million shares in CRISPR Therapeutics AG (NASDAQ:CRSP) at the end of the first quarter of 2022 worth $564 million, representing 3.33% of its 13F portfolio. The firm recently held an Innovation Day to showcase its entire drug pipeline. The details given by the firm indicate that it will be able to commercialize the first ever CRISPR gene therapy, a functional cure for TDT and Sickle Cell Disease, in the coming months.
On July 23, Oppenheimer analyst Jay Olson maintained an ‘Outperform’ rating on CRISPR Therapeutics AG (NASDAQ:CRSP) stock and lowered the price target to $122 from $150, noting the firm had a “promising tool to achieve a functional cure for many diseases”.
At the end of the first quarter of 2022, 37 hedge funds held stakes worth $821 million in CRISPR Therapeutics AG (NASDAQ:CRSP), compared to 34 in the preceding quarter with $994 million in holdings.
6. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 33
Gain in Share Price Over Past Month as of July 14: 7.04%
UiPath Inc. (NYSE:PATH) provides robotic process automation services. The latest data shows that ARK owned close to 37 million shares of UiPath Inc. (NYSE:PATH) at the end of March 2022 worth $641 million, representing 3.79% of the value of its 13F portfolio. The firm posted earnings for the first quarter of 2022 on June 1, reporting revenue of $245 million, up more than 31% over the same period last year and beating market estimates by more than $19 million.
On July 7, Canaccord analyst Kingsley Crane assumed coverage of UiPath Inc. (NYSE:PATH) stock with a ‘Buy’ rating and a price target of $25, noting that the firm has the ability to leverage its automation capabilities across a broad set of use cases, while its partners should provide it with critical sales leverage.
At the end of the first quarter of 2022, 33 hedge funds tracked by the database of Insider Monkey held stakes worth $1.3 billion in UiPath Inc. (NYSE:PATH), compared to 28 funds in the preceding quarter with stakes worth $2.5 billion.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Tesla, Inc. (NASDAQ:TSLA), UiPath Inc. (NYSE:PATH) is one of the stocks that hedge funds are monitoring as buying opportunities open up in the growth sector.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and UiPath Inc. (NYSE:PATH) was one of them. Here is what the fund said:
“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.”
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Disclosure. None. Cathie Wood’s Fund Starts to Rebound: 10 Stocks to Watch is originally published on Insider Monkey.
