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10 Stocks Jim Cramer and Cathie Wood Love the Most

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·8 min read
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In this article, we examine Jim Cramer and Cathie Wood's portfolio management strategies. We also reviewed 10 stocks Jim Cramer and Cathie Wood love the most. You can skip our detailed discussion and jump directly to 5 Stocks Jim Cramer and Cathie Wood Love The Most.

CNBC's Jim Cramer, who dubs Ark Invest's top stock holdings as "WoodStocks," said earlier this year that the Ark Invest phenomenon is no longer relevant. Afterward, he clarified that he doesn't dislike the founder of the $55 billion New York-based hedge fund, stating that his intention was to inform investors that stocks with high growth also carry risks.

Known for investing exclusively in hypergrowth and disruptive technology companies, Cathie Wood's investment strategy produced impressive returns last year as five out of six Ark Invest funds recorded returns of over 100%. However, investors' rotation toward value stocks negatively impacted Wood's funds during the first half of this year. In spite of this, Ark Investment Management's founder continues to invest heavily in high-growth technology stocks.

In fact, Jim Cramer endorses Cathie Wood's philosophy of investing in high-growth tech stocks, but he suggests investors select high-quality tech companies that can even flourish in a rising inflationary and interest rate environment. Some of the high growth tech stocks Jim Cramer and Cathie Wood love the most include Palantir Technologies Inc. (NASDAQ:PLTR), Twitter, Inc. (NYSE:TWTR), Zillow Group, Inc. (NASDAQ:Z), Unity Software Inc. (NYSE:U) and Spotify Technology S.A. (NYSE:SPOT).

Additionally, Jim Cramer recommends buying Square, Inc. (NYSE:SQ), Roku, Inc. (NASDAQ:ROKU), and Tesla, Inc. (NASDAQ:TSLA), some of Cathie Wood's top stock holdings.

San Francisco-based financial services and digital payments company Square, Inc. (NYSE:SQ) is the fourth largest stock holding of Cathie Wood’s 13F portfolio, according to the latest filings for the second quarter. Square, Inc. (NYSE:SQ) stock performed well both in the pandemic and post-pandemic situations. Further bolstering Jack Dorsey’s Square, Inc. (NYSE:SQ) fundamentals is its strategy of diving deeper into the crypto business.

Elon Musk’s Tesla, Inc. (NASDAQ:TSLA) is the largest stock holding of Ark Investment Management's 13F portfolio. At the end of the second quarter, Cathie Wood held $3.6 billion worth of position in Tesla, Inc. (NASDAQ:TSLA).

Why should we pay attention to Cathie Wood and Jim Cramer’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Cathie Wood ARK Investment Management
Cathie Wood ARK Investment Management

Cathie Wood of ARK Investment Management

Let’s start our list of the 10 stocks Jim Cramer and Cathie Wood love the most. We analyzed Jim Cramer’s stock recommendations and Ark Investment Management’s second-quarter holdings for this article.

10 Stocks Jim Cramer and Cathie Wood Love The Most

10. Palantir Technologies Inc. (NASDAQ:PLTR)

Ark Investment Management’s Stake Value: $808 million

Ark Investment Management’s 13F Portfolio: 1.50%

Number of Hedge Fund Holders: 26

Palantir Technologies Inc. (NASDAQ:PLTR) is among the 10 stocks Jim Cramer and Cathie Wood love the most. Wood's Ark Investment Management increased its stake in Palantir Technologies Inc. (NASDAQ:PLTR) by 64% in the second quarter, while Jim Cramer recently rated a software company's stock a Buy

In the second quarter investor letter, Guardian Fund mentioned Palantir Technologies Inc. (NYSE:PLTR), and discussed its stance on the firm. Here is what the Guardian Fund stated about Palantir Technologies Inc. (NYSE:PLTR):

“The success of the private sector to innovate in order to help people through the lockdowns and to produce vaccines at record speed at scale has been impressive. The fact that almost every public institution was struggling to be effective no matter how hard some of the people worked, shows the fundamental need of the public sector to become data-driven and invest in data infrastructure. Government institutions have to partner with enterprises such as Palantir to become digitalnative. The public sector will always struggle to attract the most talented engineers as compensations cannot be justified with tax money and therefore this must be a partnership with specialized private enterprises. This is a great opportunity for Palantir especially as it has already shown to be capable of working with demanding and complex public institutions entrusting it to work on the most critical and sensitive matters. The news section of Palantir’s website gives insight in where new business is coming from. The main opportunity is in enterprise software and the faster onboarding time and increased self-service of clients is a positive sign. We believe Palantir is becoming one of the more important global software companies. In addition, Palantir has quietly become a significant investor, investing well over USD 200 million in eight companies. Therefore, it is following the lead of companies like Tencent, Alphabet, and Shopify in establishing valuable investment portfolios.”

9. Twitter, Inc. (NYSE:TWTR)

Ark Investment Management’s Stake Value: $854 million

Ark Investment Management’s 13F Portfolio: 1.58%

Number of Hedge Fund Holders: 89

During the pandemic year and in 2021, Jack Dorsey's social media platform Twitter, Inc. (NYSE:TWTR) performed well. Twitter, Inc. (NYSE:TWTR) shares are up 12% so far this year. Strong revenue growth trends are supporting its share price upside momentum.

ClearBridge Investments, an investment management firm, highlighted a few stocks including Twitter, Inc. (NYSE:TWTR) in the second quarter investor letter. Here is what ClearBridge Investments stated:

“Not every portfolio company will neatly fit into one of these four growth segments and some may move from one to another over time. Social media platform Twitter could be considered an improving growth story due to the initiatives put in place to grow and better monetize its user base. With the global return of live events and sports causing a rebound in advertising, combined with other new services beginning to thrive, this is a company with the fundamentals to be categorized as a disruptor.”

8. Zillow Group, Inc. (NASDAQ:Z)

Ark Investment Management’s Stake Value: $1.24 billion

Ark Investment Management’s 13F Portfolio: 2.30%

Number of Hedge Fund Holders: 76

A digital real estate company, Zillow Group, Inc. (NASDAQ:Z) is ranked eighth in the list of 10 stocks Jim Cramer and Cathie Wood love the most. Jim Cramer believes the dip in Zillow Group, Inc. (NASDAQ:Z) share price is presenting an attractive buying opportunity. Zillow Group, Inc. (NASDAQ:Z) stock price is down 26% since the beginning of this year.

In the second quarter investor letter, Baron Funds mentioned Zillow Group, Inc. (NASDAQ:Z) and discussed its stance on the firm. Here is what Baron Funds stated:

“Zillow Group, Inc. operates leading U.S. real estate websites, a mortgage marketplace, and the Zillow Offers home-buying business. Shares were down due to rising mortgage rates and the potential adverse effects on the housing environment. Zillow also issued second-quarter revenue guidance that was slightly below Street expectations. Despite this intra-quarter volatility, we continue to believe that Zillow has substantial upside in mortgages and Offers, which can grow its addressable market not only in houses bought/sold but also in leads provided to Zillow Premier Agents.”

7. Unity Software Inc. (NYSE:U)

Ark Investment Management’s Stake Value: $1.29 billion

Ark Investment Management’s 13F Portfolio: 2.41%

Number of Hedge Fund Holders: 29

Founded in 2004 and headquartered in San Francisco, California, a real-time 3D development platform, Unity Software Inc. (NYSE:U) is likely to gain more upside momentum in the months ahead, according to Jim Cramer. Unity Software Inc. (NYSE:U) stock price bounced back strongly in the past six months after experiencing volatility early this year. June quarter revenues of Unity Software Inc. (NYSE:U) jumped 48% to $273.6 million.

Unity Software Inc. (NYSE:U) investors should be aware of a decrease in enthusiasm from the smart money of late. Unity Software Inc. (NYSE:U) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021 compared to 39 positions in the prior quarter.

6. Spotify Technology S.A. (NYSE:SPOT).

Ark Investment Management’s Stake Value: $1.32 billion

Ark Investment Management’s 13F Portfolio: 2.45%

Number of Hedge Fund Holders: 48

Audio streaming services provider Spotify Technology S.A. (NYSE:SPOT) is ranked fifth in the list of 10 stocks Jim Cramer and Cathie Wood love the most. Spotify Technology S.A. (NYSE:SPOT) stock fell sharply in the past few months due to easing social distancing policies. However, Jim Cramer sees Spotify Technology S.A. (NYSE:SPOT) shares as a Buy at current levels.

Other market analysts also appear optimistic about the future performance of Spotify Technology S.A. (NYSE:SPOT). KeyBanc analyst Justin Patterson sets a $340 price target for Spotify Technology S.A. (NYSE:SPOT) stock, with overweight ratings.

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Disclosure: None. 10 Best Stocks Jim Cramer and Cathie Wood Love the Most is originally published on Insider Monkey.