Cathie Wood is Doubling Down on These 10 Stocks
In this article, we discuss the 10 stocks Cathie Wood is doubling down on. If you want to skip our detailed analysis of these stocks, go directly to Cathie Wood is Doubling Down on These 5 Stocks.
Cathie Wood, the chief of New York-based ARK Investment Management, is a trail-blazing investor on Wall Street, who continues to gain attention in investor circles amid her eccentric stock-picking strategies. Wood, whose flagship ARK Innovation ETF returned more than 152% last year, manages more than $53.7 billion in assets with holdings concentrated in the technology, consumer goods, and healthcare sectors.
On Thursday, Wood spoke on Tech Check by news platform CNBC and defended her growth-focused portfolio that has been the subject of short-selling attempts in recent weeks. Amid a broader drawdown in growth stocks on the back of valuation concerns and uncertainty regarding crypto regulation - ARK Innovation ETF was up 9% in the second quarter but still down 7% year-to-date - Wood dismissed the notion that there was a technology bubble dominating the stock market, stressing that the market could not be further away from a bubble.
Wood, who champions an investing strategy she likes to call “disruptive innovation”, is the largest institutional holder of crypto through her fund and has doubled down on tech-related bets, according to latest filings. Some of the top holdings in the ARK Investment Management portfolio at the end of the second quarter of 2021 were Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB), among others discussed in detail below.
It remains to be seen how Wood deals with these short-selling attempts moving forward, though it is fair to say that her disruptive innovation strategy has ruffled more than a few feathers in the finance world. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 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 more than 115 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 of ARK Investment Management
Our Methodology
With this context in mind, here is our list of the 10 stocks Cathie Wood is doubling down on. These were listed according to the investment portfolio of ARK Investment Management at the end of the second quarter of 2021. Only equities in which the hedge fund has increased stake by 200% or more, when compared to the portfolio at the end of the first quarter of 2021, were selected. These are ranked according to the percentage increases in ascending order. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. Data from the 873 funds tracked by Insider Monkey was used to gauge hedge fund sentiment around each stock.
Cathie Wood is Doubling Down on These 10 Stocks
10. DraftKings Inc. (NASDAQ: DKNG)
Number of Hedge Fund Holders: 26
Percentage Increase in Stake in Q2: 212%
DraftKings Inc. (NASDAQ: DKNG) is placed tenth on our list of 10 stocks Cathie Wood is doubling down on. The company operates from Boston as a digital sports entertainment provider. According to the latest filings, ARK Investment Management owned more than 13.6 million shares in the company at the end of June 2021, representing 1.32% of the portfolio. The shares are worth $710 million and Wood has increased ARK’s stake in the digital entertainment firm by 212% compared to the first quarter of 2021.
On August 9, investment advisory Northland maintained an Outperform rating on DraftKings Inc. (NASDAQ: DKNG) stock and raised the price target to $75 from $70, appreciating the strong second quarter results of the firm that featured top and bottom line beats.
At the end of the second quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $927 million in DraftKings Inc. (NASDAQ: DKNG), down from 43 the preceding quarter worth $966 million.
Just like Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB), DraftKings Inc. (NASDAQ: DKNG) is one of the best stocks to buy according to Cathie Wood.
In its Q2 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and DraftKings Inc. (NASDAQ: DKNG) was one of them. Here is what the fund said:
“DraftKings is an online gaming operator. Its legacy Daily Fantasy Sports (DFS) allows users to virtually draft teams of players from professional sports leagues and potentially earn a payout based on how athletes perform. DraftKings Online Sports Betting (OSB) involves the company taking wagers or bets from customers on sporting events. The company’s third offering, Online Casino (iGaming), involves customers betting real money when playing casino games like slots and blackjack online.
DFS is legal in most states, while approximately 25% of the country’s population has access to OSB and approximately 10% has access to iGaming. Within a year, we expect approximately 40% or more of the population to have access to OSB as legalization moves rapidly.
The company reported a strong quarter, with revenues exceeding expectations by more than 30%. We think the stock underperformed due to the time period between the conclusion of March Madness and the start of the NFL season being a weaker betting period and concerns about more intense competition. Concerns around tough comps have also hindered performance of DraftKings shares. We note that monthly state data continues to be robust, showing no signs of slowing from reopening. We also believe DraftKings is increasing its potential to gain market share by moving its tech-platform to SBTech, which is a sports betting platform the company acquired as part of a SPAC deal. Legalization of sports betting by states has also been robust.”
9. Skillz Inc. (NYSE: SKLZ)
Number of Hedge Fund Holders: 20
Percentage Increase in Stake in Q2: 310%
Skillz Inc. (NYSE: SKLZ) is ranked ninth on our list of 10 stocks Cathie Wood is doubling down on. The company is headquartered in California and operates as a technology platform offering game developers the chance to monetize their content. Latest data shows that ARK Investment Management owned 24.6 million shares in the firm at the end of the second quarter of 2021, representing 0.99% of the portfolio. These are valued at over $534 million and Wood has increased the hedge fund’s stake in the firm by 310% compared to the first quarter.
On July 28, investment advisory RBC Capital initiated coverage of Skillz Inc. (NYSE: SKLZ) stock with a Sector Perform rating and a price target of $17, noting that a new player incentive strategy by the firm may be subject to investor scrutiny in the near term.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Skillz Inc. (NYSE: SKLZ), down from 26 in the previous quarter worth $672 million.
In addition to Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB), Skillz Inc. (NYSE: SKLZ) is one of the best stocks to buy according to Cathie Wood.
8. Garmin Ltd. (NASDAQ: GRMN)
Number of Hedge Fund Holders: 25
Percentage Increase in Stake in Q2: 352%
Garmin Ltd. (NASDAQ: GRMN) is a Switzerland-based company that makes and sells communication and navigation devices. It is placed eighth on our list of 10 stocks Cathie Wood is doubling down on. Regulatory filings reveal that ARK Investment Management owned 44,236 shares in the firm at the end of June 2021, representing 0.01% of the portfolio. Wood has increased ARK’s stake in the firm by 352% compared to the first quarter of 2021.
On August 4, investment advisory Tigress Financial maintained a Strong Buy rating on Garmin Ltd. (NASDAQ: GRMN) stock and raised the price target to $198 from $174, underlining that the demand for all the products of the firm remained strong.
At the end of the second quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $477 million in Garmin Ltd. (NASDAQ: GRMN), up from 23 in the previous quarter worth $513 million.
Along with Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB), Garmin Ltd. (NASDAQ: GRMN) is one of the best stocks to buy according to Cathie Wood.
7. HEICO Corporation (NYSE: HEI)
Number of Hedge Fund Holders: 41
Percentage Increase in Stake in Q2: 679%
HEICO Corporation (NYSE: HEI) is a Florida-based aerospace and defense firm. It is ranked seventh on our list of 10 stocks Cathie Wood is doubling down on. ARK Investment Management owned 44,790 shares in the company at the end of the second quarter of 2021, representing 0.01% of the portfolio. The shares are valued at $6.2 million. Wood has increased ARK’s stake in the aerospace and defense company by 679% compared to the first quarter.
In May, investment advisory Canaccord maintained a Buy rating on HEICO Corporation (NYSE: HEI) stock with a price target of $150. Ken Herbert, an analyst at the investment advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, China-based investment firm Gobi Capital is a leading shareholder in HEICO Corporation (NYSE: HEI) with 929,879 shares worth more than $115 million.
Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB) are some of the best stocks to buy according to Cathie Wood, just like HEICO Corporation (NYSE: HEI).
6. Spirit AeroSystems Holdings, Inc. (NYSE: SPR)
Number of Hedge Fund Holders: 35
Percentage Increase in Stake in Q2: 723%
Spirit AeroSystems Holdings, Inc. (NYSE: SPR) is placed sixth on our list of 10 stocks Cathie Wood is doubling down on. The company markets commercial aerostructures and is headquartered in Kansas. Wood, through her hedge fund, owned 346,164 shares in the company at the end of June 2021, representing 0.03% of the portfolio. The shares are worth $16.3 million. ARK Investment Management has increased stake in the firm by 723% compared to the first quarter of 2021.
On August 6, investment advisory Bank of America upgraded Spirit AeroSystems Holdings, Inc. (NYSE: SPR) stock to Buy from Underperform with a price target of $50, noting that the firm had focused on restructuring and improved the liquidity profile.
At the end of the second quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $853 million in Spirit AeroSystems Holdings, Inc. (NYSE: SPR), down from 44 in the previous quarter worth $1.1 billion.
Twitter, Inc. (NYSE: TWTR), Square, Inc. (NYSE: SQ), JD.com, Inc. (NASDAQ: JD), Tesla, Inc. (NASDAQ: TSLA), and Facebook, Inc. (NASDAQ: FB) are some of the best stocks to buy according to Cathie Wood, along with Spirit AeroSystems Holdings, Inc. (NYSE: SPR).
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Disclosure. None. Cathie Wood is Doubling Down on These 10 Stocks is originally published on Insider Monkey.
