Cathie Wood’s Top 5 Buys in July

3. Unity Software Inc. (NYSE:U)

Number of Hedge Fund Holders: 39

Unity Software Inc. (NYSE:U) is headquartered in San Francisco, California, and the company operates an interactive real-time 3D content platform. ARK Autonomous Technology & Robotics ETF purchased 62,320 shares of Unity Software Inc. (NYSE:U) on July 13. The stock also became a part of ARK Next Generation Internet ETF, ARK Space Exploration & Innovation ETF, and ARK Innovation ETF in July. 

On July 13, Unity Software Inc. (NYSE:U) announced that it would acquire ironSource Ltd. (NYSE:IS) for $4.4 billion in an all-stock transaction, and also slashed its full-year revenue outlook. The company now forecasts sales for the year to fall between $1.3 billion and $1.35 billion, compared to its prior estimate of between $1.35 billion and $1.42 billion. Unity Software Inc. (NYSE:U) also announced a share buyback program of up to $2.5 billion, which would commence when the ironSource acquisition concludes. On July 14, DA Davidson analyst Franco Granda reiterated a Buy rating on Unity Software Inc. (NYSE:U) but lowered the firm’s price target on the stock to $60 from $85, citing cost synergies and attractive valuation following the ironSource deal.

Among the hedge funds tracked by Insider Monkey, Unity Software Inc. (NYSE:U) was part of 39 public stock portfolios at the end of March 2022, up from 36 funds in the preceding quarter. Silver Lake Partners is the leading shareholder of the company, with about 35 million shares worth $3.5 billion. 

Here is what ClearBridge Investments All Cap Growth Strategy has to say about Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter:

“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still under penetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”