In this article, we discuss Cathie Wood’s top 5 buys in July. If you want to see more stocks that Cathie Wood bought this month, click Cathie Wood’s Top 10 Buys in July.
5. Guardant Health, Inc. (NASDAQ:GH)
Number of Hedge Fund Holders: 33
Guardant Health, Inc. (NASDAQ:GH) was incorporated in 2011 and is headquartered in Redwood City, California. It is a precision oncology company that specializes in blood tests, data sets, and analytics in the United States and internationally. In July, ARK Genomic Revolution ETF purchased 428,788 shares of Guardant Health, Inc. (NASDAQ:GH).
On June 2, Piper Sandler analyst David Westenberg initiated coverage of Guardant Health, Inc. (NASDAQ:GH) with an Overweight rating and a $65 price target. According to the analyst, Guardant Health, Inc. (NASDAQ:GH) is the market leader in liquid biopsy and he believes investors often forget that Guardant Health, Inc. (NASDAQ:GH)’s expertise in liquid biopsy should give it “a piece of all these markets with better scale”.
Among the hedge funds tracked by Insider Monkey, 33 funds reported owning stakes in Guardant Health, Inc. (NASDAQ:GH) at the end of Q1 2022, compared to 36 funds in the last quarter. Andreas Halvorsen’s Viking Global held the largest stake in the company, with 5.8 million shares worth $385 million.
Here is what ClearBridge Multi Cap Growth Strategy has to say about Guardant Health, Inc. (NASDAQ:GH) in its Q3 2021 investor letter:
“Innovation within the health care sector has long been an area of focus in the Strategy and we plan to continue to maintain a meaningful overweight to the sector. That said, we expect this will be reflected in more diversified exposures beyond therapeutics companies. Some of the emerging areas of interest include diagnostics, life science tools, labs and other related services, where we own liquid biopsy leader Guardant Health and are working to build new holdings.”
4. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 34
Roku, Inc. (NASDAQ:ROKU) is a California-based company that operates a TV streaming platform. On July 26, three of Cathie Wood’s funds invested in Roku, Inc. (NASDAQ:ROKU), buying a total of 585,540 shares of the company. Roku, Inc. (NASDAQ:ROKU) was part of ARK Innovation ETF, Ark Fintech Innovation ETF, and ARK Next Generation Internet ETF. Cathie Wood expects the stock to soar approximately 550% in 4 years.
On July 27, Benchmark analyst Daniel Kurnos reiterated a Buy rating on Roku, Inc. (NASDAQ:ROKU) and lowered the price target on the shares to $150 ahead of the company’s Q2 results. The “general consensus at this point is that 2022 revenue guidance needs to come down”, the analyst told investors. He is adopting a more conservative outlook with regards to 2023 and is now predicting modest growth in his base scenario, the analyst reaffirmed.
According to Insider Monkey’s data, 34 hedge funds were bullish on Roku, Inc. (NASDAQ:ROKU) at the end of March 2022, compared to 43 funds in the prior quarter. Jim Simons’ Renaissance Technologies held a significant position in the company, comprising 2.80 million shares worth $351.7 million.
Here is what RGA Investment Advisors has to say about Roku, Inc. (NASDAQ:ROKU) in its Q4 2021 investor letter:
“Since we bought Roku, no stock has contributed more to our returns and no stock has been more volatile in our portfolio. This is now our third drawdown in the stock of over 30% and our second of over 60%. Fortunately (or tactically) before the two 60% drawdowns we had trimmed our positions by at least a third, though unfortunately that meant we still held large slices of the stock on the way down. Despite the stock having soared too far, too fast and thinking it was due for a period of digestion, we believe over our timeframe even the former highs will be rewarded with a good result. We have often pointed out that volatility in companies like Roku is the market’s way of grappling with a really wide range of potential outcomes and that remains as true today as ever, though the range of outcomes continues to narrow for the better for Roku.
Roku today is trading at lower multiples than at any point as a public company, meanwhile its revenue and margin composition has evolved from majority hardware to vast majority platform– in other words, each $1 of revenue is much more valuable today than ever before for Roku. Roku today is a profitable company for the first time in its history. Roku today has a multitude of investment opportunities within its own platform that can drive considerable value. Early in 2021 at higher prices, one had to believe the company would grow accounts internationally to justify valuations. This was so, because the company has so quickly achieved substantial penetration of the US market with 56.4m reported household customers of the ~130m total US households, that further growth in the US household count will be challenging and because prices were so high. Today, one merely needs to believe that with around 60 million households (the expectation for the yet reported year-end 2021 number), ARPU has a strong enough growth tailwind to reach $100 within a reasonable time, without relying on any incremental account growth. For context, as of Q3 this year, ARPU was $40, up 49% year-over-year and we know it will be higher in Q4. Growth in ARPU is underpinned by the continuing migration of viewer hours to CTV. The subforces behind this are increasing the penetration of Roku devices within households (go from one Roku to TV to 2-4), increasing the hours that each house watches (getting from shy of 4 hours to the nearly 8 hours an average American household watches TV) and broadening the content on the platform, increasing the share of inventory with content companies and more hours (like live sports viewing) shifting from linear to CTV. We further believe the opportunity to become the bundler and/or hub of household content subscriptions is growing, as evidenced by the rise in credit card pings per user from 1 to 1.3 per month and its continuing ascension. In this respect, Roku has the right to win with their installed base, because the experience is exponentially better than legacy and competing offerings…” (Click here to see the full text)
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.”
2. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 72
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company. On July 26, Ark Fintech Innovation ETF purchased 238,088 shares of Shopify Inc. (NYSE:SHOP), ARK Innovation ETF bought 1.326 million shares and ARK Next Generation Internet ETF acquired 201,546 shares of the company.
On July 27, Jefferies analyst Samad Samana maintained a Buy rating on Shopify Inc. (NYSE:SHOP) and lowered the firm’s price target on the stock to $40 from $47.50 after the company’s GMV growth in Q2 dropped to 11% from 16% in Q1, primarily due to consumer spending shifting from online channels to in-store. While “bad news was expected, and more may be yet to come for GMV” in the second half, according to the analyst, Shopify Inc. (NYSE:SHOP) has continued to solidify its position as a platform for vendors to build on. The analyst slashed 2022 total revenue and GMV estimates by about 2% each and for 2023 has cut the GMV estimate by roughly 7% and revenue by 8%.
According to Insider Monkey’s data, 72 hedge funds were bullish on Shopify Inc. (NYSE:SHOP) at the end of March 2022, compared to 86 funds in the earlier quarter. Stephen Mandel’s Lone Pine Capital is a prominent stakeholder of the company, with more than 1 million shares worth $699 million.
Here is what Rowan Street has to say about Shopify Inc. (NYSE:SHOP) in its Q2 2022 investor letter:
“Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO
When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify – a platform that made it easy for anyone to open up an online store.
Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just lightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Market is offering us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO.”
1. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) is a California-based company that specializes in financial management and compliance products and services. On July 25, Ark Fintech Innovation ETF purchased 6,534 shares of Intuit Inc. (NASDAQ:INTU). The company declared on July 7 a $0.68 per share quarterly dividend, in line with previous. The dividend was distributed on July 18.
On May 25, Stifel analyst Brad Reback reaffirmed a Buy recommendation on Intuit Inc. (NASDAQ:INTU) but lowered the price target on the shares to $465 from $580, noting that the company posted “solid” fiscal Q3 results despite “a somewhat lackluster tax season” as it was supported by solid growth from Credit Karma and Mailchimp.
According to Insider Monkey’s data, 82 hedge funds were bullish on Intuit Inc. (NASDAQ:INTU) at the end of Q1 2022, with collective stakes worth $6.10 billion. Terry Smith’s Fundsmith LLP featured as the largest stakeholder of the company, with more than 3 million shares worth $1.4 billion.
Here is what Baron Durable Advantage Fund has to say about Intuit Inc. (NASDAQ:INTU) in its Q1 2022 investor letter:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this draw-down did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit (NASDAQ:INTU), the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”
You can also take a look at 10 Most Shorted Stocks to Watch in July and 10 Semiconductor Stocks that Analysts Are Slashing Price Targets Of.
