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Cathie Wood’s 2022 Portfolio: 10 Small-Cap Stock Picks

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·10 min read
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In this article, we discuss the 10 small-cap stock picks of Cathie Wood's 2022 portfolio. If you want to skip our detailed analysis of Wood's hedge fund performance, stock selection and history, go directly to Cathie Wood's 2022 Portfolio: 5 Small-Cap Stock Picks.

Cathie Wood is the brains behind ARK Investment Management, a Florida-based hedge fund which manages a number of exchange-traded-funds (ETFs). The most notable among these is the ARK Innovation ETF (NYSE:ARKK) which became the world's largest actively managed ETF in 2020 with around $17 billion in assets under management (AUM). It posted extraordinary returns of 170% in 2020, establishing Cathie Wood as the name to watch in the space of disruptive tech.

But the global trends around inflation and the Russia-Ukraine tensions led investors to abandon risky, growth stocks in favor of defensive plays. This led to Wood's Innovation ETF losing 60% in the last 12 months. However, she has refused to be drawn into the anxious investor sentiment, and instead doubled down on her growth picks, noting that these stocks were now in 'deep value territory'.

Investors are now flocking back towards Wood's ARK Innovation ETF, recording the biggest inflows the fund has seen in a year. In the first week of May, the ETF received investments of $447.4 million, registering the third consecutive week of inflows. Money-watchers realize that fringe picks in Wood's portfolio could very well become the next FAANG stocks, and therefore it would be wise to know which small-cap stocks the famed investor is bullish on. In the first quarter of 2022, Cathie Wood made new purchases in 38 stocks, made additional purchases in 140 equities, completely sold out of 46 firms, and decreased stakes in 167 stocks. Some of the most exciting stocks in Cathie Wood's portfolio include Tesla, Inc. (NASDAQ:TSLA), Roblox Corporation (NYSE:RBLX), and Sea Limited (NYSE:SE).

Cathie Wood's 2022 Portfolio: 10 Small-Cap Stock Picks
Cathie Wood's 2022 Portfolio: 10 Small-Cap Stock Picks

Cathie Wood of ARK Investment Management

Let's take a look at the top 10 small-cap stocks to buy according to Cathie Wood.

Our Methodology

After scouring Cathie Wood's 13F portfolio for the first quarter of 2022, we chose her top 10 small-cap stock picks. Hedge fund data around each stock has been provided to give readers better context for their investment choices, and has been derived Insider Monkey's database of 924 elite hedge funds tracked at the end of the fourth quarter of 2021.

Cathie Wood's 2022 Portfolio: 10 Small-Cap Stock Picks

10. CareDx, Inc (NASDAQ:CDNA)

ARK Investment Management's 13 Portfolio: 0.54% ARK Investment Management's Stake Value: $129.88 million Number of Hedge Fund Holders: 26 Market Cap: $1.15 billion

CareDx, Inc (NASDAQ:CDNA) starts off our list of the top small-cap stocks in the portfolio of Cathie Wood's ARK Investment Management. The fund owned 3.51 million shares of CareDx, Inc (NASDAQ:CDNA) worth $129.88 million at the end of the first quarter of 2022, representing 0.54% of its total portfolio.

Based in San Francisco, CareDx, Inc (NASDAQ:CDNA) offers diagnostic solutions for transplant patients, such as AlloSure Kidney for kidney transplant patients, as well as solutions for heart and lung transplants.

Stephens analyst Mason Carrico in late April initiated coverage of CareDx, Inc (NASDAQ:CDNA) with an 'Overweight' rating and a $50 price target. The analyst notes that the firm has established itself as the leader in transplant diagnostics over the last twenty years, which has resulted in its presence within the majority of US transplant centers. He sees the firm capturing the majority share of the market as it continues expanding.

Reporting its first quarter earnings on May 5, CareDx, Inc (NASDAQ:CDNA) posted an EPS of -$0.13, missing estimates by $0.11. Revenue of $79.4 million for the quarter outperformed estimates by $303,000 and grew 17.8% year-on-year.

Out of all the hedge funds tracked by Insider Monkey at the close of the fourth quarter, 26 reported owning stakes in CareDx, Inc (NASDAQ:CDNA) with a combined value of $360.6 million. This is down from 29 hedge funds with $637.9 million worth of positions in the company a quarter ago.

Just like Tesla, Inc. (NASDAQ:TSLA), Roblox Corporation (NYSE:RBLX), and Sea Limited (NYSE:SE), CareDx, Inc (NASDAQ:CDNA) is an exciting stock in the portfolio of Cathie Wood.

9. TuSimple Holdings Inc. (NASDAQ:TSP)

ARK Investment Management's 13 Portfolio: 0.66% ARK Investment Management's Stake Value: $158.79 million Number of Hedge Fund Holders: 15 Market Cap: $1.63 billion

TuSimple Holdings Inc. (NASDAQ:TSP) deals in the provision of technology that enables autonomous driving for semi-trucks in the United States and internationally. According to regulatory filings for the first quarter of 2022, ARK Investment Management owned 13.01 million shares of TuSimple Holdings Inc. (NASDAQ:TSP) with a price tag of $158.8 million, which represented 0.66% of its overall portfolio.

On May 13, RBC Capital analyst Joseph Spak downgraded TuSimple Holdings Inc. (NASDAQ:TSP) to 'Sector Perform' from 'Outperform' and revised the price target to $7 from $14. The analyst is bullish on the firm's tech following its first investor day since its IPO in April 2021. He noted that while the firm remains one of the leaders in autonomous trucking, the tech milestones in the market are not enough to attract incremental investors, as the opportunity shall be rewarding by at least 2025 or longer.

For the first quarter of 2022, TuSimple Holdings Inc. (NASDAQ:TSP) posted an EPS of -$0.50, outperforming estimates by $0.04. The company raked in $2.26 million in revenue for the quarter, beating estimates by $247,000 and showing a boost of 139.83% year-on-year.

Of the 900+ hedge funds in the database of Insider Monkey at the close of Q4 2021, 15 held stakes in TuSimple Holdings Inc. (NASDAQ:TSP) with a combined worth of $747.8 million. This shows growing investor confidence in the company over the previous quarter where 12 hedge funds were long on the company shares.

8. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)

ARK Investment Management's 13 Portfolio: 0.73% ARK Investment Management's Stake Value: $175.55 million Number of Hedge Fund Holders: 18 Market Cap: $1.63 billion

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is next on the list of small-cap stocks to buy according to Cathie Wood. It operates as a government contractor for the US Department of Defense, providing sensitive technology such as space and satellite communications, cybersecurity/warfare, as well as unmanned aerial, ground and seaborne systems. Wood owned 8.57 million shares of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) at the close of Q1 2022, making it the firm's largest shareholder.

Baird analyst Peter Arment on May 12 upgraded Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) to 'Outperform' from 'Neutral' and kept a price target of $20. The analyst feels the stock price has significantly reset in the last 15 months as shares are down 61% from last year's highs, presenting long-term investors an attractive buying opportunity.

18 hedge funds reported owning positions in Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) at the end of the fourth quarter, with a total value of $214.9 million. This shows a positive trend from the preceding quarter where 15 hedge funds held $232.8 million worth of stakes in the defense firm.

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) recorded an EPS of $0.04 for the first quarter, outperforming estimates by $0.03. Its revenue for the quarter was recorded at $196.2 million, falling slightly below analysts' expectations by $1.5 million.

7. Stratasys, Ltd. (NASDAQ:SSYS)

ARK Investment Management's 13 Portfolio: 0.82% ARK Investment Management's Stake Value: $197.16 million Number of Hedge Fund Holders: 22 Market Cap: $1.10 billion

Stratasys, Ltd. (NASDAQ:SSYS) deals in the provision of 3D printing technology. It is based in Minnesota, and offers products such as polyjet printers, stereolithography printing systems, as well as material used in the processes of 3D printing. In early May, the Biden administration launched the Additive Manufacturing Forward, or 'AM Forward' plan, under which leading manufacturers in the US will support the additive manufacturing capabilities of smaller US companies specializing in the technology, thereby helping revolutionize manufacturing across the country. Stratasys, Ltd. (NASDAQ:SSYS) stands to benefit from this government initiative as one of the main players in the additive manufacturing space.

On February 24, Lake Street analyst Troy Jensen kept a 'Buy' rating on Stratasys, Ltd. (NASDAQ:SSYS) shares and lowered the firm's price target to $40 from $48. He holds that accelerating revenue growth will drive profitability for the firm going forward, and he sees its shares trading at a significant discount to peers.

At the close of the first quarter of 2022, Cathie Wood's 13 filings showed that her hedge fund owned 7.76 million shares of Stratasys, Ltd. (NASDAQ:SSYS) with a price tag of $197 million. She also stands as the largest shareholder of the 3D printing firm.

Of the 924 elite hedge funds tracked by Insider Monkey at the end of December, Stratasys, Ltd. (NASDAQ:SSYS) shares were found in the portfolios of 22 hedge funds with a combined value of $336.3 million. This is up from 21 hedge funds with $270 worth of positions in the company a quarter ago.

Alger, an investment firm, talked about Stratasys, Ltd. (NASDAQ:SSYS) in its Q1 2021 investor letter, stating:

“Short position Stratasys also contributed to performance. Stratasys is one of the larger 3D printing companies. While additive manufacturing (3D printing) is a revolutionary concept, it has only seen its primary adoption for manufacturing prototypes and test parts, not high-volume end-use parts. Unfortunately for incumbents like Stratasys, additive manufacturing has continued to attract capital and dozens of new entrants have emerged with new technologies targeting specific applications. Industry pioneers like Stratasys have seen key patents expire and have lost market share to new competition. As a result of these factors, Stratasys has not grown for five years. Some industry participants believe that Stratasys’ plastic extrusion technology is simply too slow to be an acceptable solution for higher volume manufacturing. The short position contributed to portfolio returns when Stratasys’ shares declined due to year-over-year revenue contraction, continuing market share losses, a talent exodus, the issuance of new shares via a secondary offering, and no significant progress on developing new opportunities in promising additive verticals like metal and dental.”

6. InVitae Corporation (NYSE:NVTA)

ARK Investment Management's 13 Portfolio: 0.92% ARK Investment Management's Stake Value: $220.62 million Number of Hedge Fund Holders: 24 Market Cap: $862.12 million

Then there's InVitae Corporation (NYSE:NVTA), a medical genomics company which combines genetic information with mainstream medical practice by developing genetic tests that gauge hereditary conditions in cancer, neurology, cardiology, pediatric, and other rare diseases.

A longstanding fan and investor of such disruptive tech, Cathie Wood owned 27.68 million shares of the firm at a value of $220.6 million, representing 0.92% of her total holdings and setting her up as the firm's largest shareholder at the end of Q1 2022.

On May 4, Raymond James analyst Andrew Cooper lowered the firm's price target on InVitae Corporation (NYSE:NVTA) to $8.50 from $10.50 and reiterated an 'Outperform' rating on the company shares. He is bullish on the pace of the firm's revenue growth in the near and long term, and also likes its improving cash burn.

For the first quarter of 2022, InVitae Corporation (NYSE:NVTA) reported EPS of -$0.78, falling below estimates by $0.02. Revenue of $123.7 million for the quarter also fell below estimates by $5.62 million, but registered a growth of 19.37% year-on-year.

24 hedge funds held positions in InVitae Corporation (NYSE:NVTA) at the end of the fourth quarter of 2021. The combined value of these holdings stood at $958.9 million. In the quarter before, the same number of hedge funds were long on the company shares.

In addition to Tesla, Inc. (NASDAQ:TSLA), Roblox Corporation (NYSE:RBLX), and Sea Limited (NYSE:SE), InVitae Corporation (NYSE:NVTA) is attracting the attention of investors on Wall Street.

Click to continue reading and see Cathie Wood's 2022 Portfolio: 5 Small-Cap Stock Picks.

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Disclosure. None. Cathie Wood's 2022 Portfolio: 10 Small-Cap Stock Picks is originally published on Insider Monkey.