U.S. Markets closed

Cathie Wood Is Selling These 13 Stocks, Should You Too?

In this article, we discuss the 13 stocks which Cathie Wood is selling. If you want to skip our detailed analysis of these stocks, go directly to Cathie Wood Is Selling These 5 Stocks. 

Cathie Wood has been really optimistic about her bets over the past few months. However, the massive losses suffered by her fund had forced her to have second thoughts about some growth stocks. In the third quarter of this year, Cathie Wood unloaded several stocks from her portfolio. In her latest video Cathie Wood talked about how FAANG stocks are getting disrupted by Tik Tok. Here is an excerpt from that video:

FAANGs became the biggest parts of the benchmarks like the S&P and the NASDAQ, especially the NASDAQ 100 and again that was very backwards looking. Those stocks rose to the top because of past success and then Tik Tok came along and talk about disruption and then a recession comes along as exemplified by the advertising crash that is taking place and hurting many of these companies. And we're seeing layoffs and freezes, something we've never seen from these companies but that's distinguished from the kind of innovation in our strategies. We are very early stage and while our stocks may have suffered as much as the FAANGs have, that what we're seeing right now is very early stage growth so we can talk about that in a little while. I just wanted to set that up. It has been one heck of a rough time for innovation of all kinds in the last 18 months but if we are right if we are right and of course we could be wrong but if we're right truly disruptive innovation is going to move into a growth trajectory that we believe will make what has happened recently to their stocks look like a blip in hindsight given the great strides ahead.

Cathie Wood Is Selling These 10 Stocks
Cathie Wood Is Selling These 10 Stocks

Cathie Wood of ARK Investment Management

As you can see Wood is still very optimistic but also a little bit cautious at the moment. We believe the stock market isn't very cheap as long-term interest rates still hover above the 4% threshold and corporate earnings haven't taken a hit yet. We believe over the next 6 months the stock market will decline another 10-15% which is why we wanted to take a look at the stocks Cathie Wood is selling. If Cathies Wood can't hold her nose and stay invested in these stocks, other less patient investors may be dumping these stocks in the coming months as well, especially the once high flying but unprofitable stocks like Spotify Technology SA (SPOT), Palantir Technologies (PLTR) and Sea Ltd (SE).

Our Methodology

We used the third quarter portfolio of Cathie Wood for this article and picked the stocks in which she sold her entire or significant stakes.

Cathie Wood Is Selling These 10 Stocks

13. Spotify Technology SA (NYSE:SPOT)

One of the most notable sells from Cathie Wood during the third quarter was Spotify Technology SA (NYSE:SPOT). ARK sold about 60% of its stake in the music streaming company. However, it still owns a $69 million stake in the company. Spotify Technology SA (NYSE:SPOT) shares have lost more than 60% year to date. The stock recently dipped further after several media reports suggested TikTok parent ByteDance (BDNCE) is planning to expand its music streaming service globally.

As of the end of the second quarter, 49 hedge funds tracked by Insider Monkey had stakes in the company.

12. Palantir Technologies Inc (NYSE:PLTR)

Palantir Technologies Inc (NYSE:PLTR) was another important sell from Cathie Wood during the third quarter of this year. The growth investor cut her stake in the company by 60%, ending the quarter with just $1.8 million stake in the company. Hedge funds started fleeing Palantir Technologies Inc (NYSE:PLTR) in 2022 as growth stocks plummeted. Our database shows that 26 hedge funds had stakes in the company at the end of the June quarter, compared to 36 funds in the previous quarter.

11. Sea Ltd (NYSE:SE)

Cathie Wood cut her stake in Sea Ltd (NYSE:SE) by 70% during the September quarter. ARK now owns just 268,486 shares of the company, which have a total worth of about $15 million. Sea Ltd (NYSE:SE) was trading near its 52-week lows as the stock is struggling to find a bottom.

As of the end of the second quarter, 65 hedge funds tracked by Insider Monkey had stakes in the company, compared to 77 funds in the previous quarter.

10. Cboe Global Markets, Inc. (BATS:CBOE)

Cboe Global Markets provides market infrastructure and tradable products. As of the end of the second quarter, Cathie Wood had a small stake in the company valued at around $166,000 which she sold during the third quarter. In September, Goldman Sachs analyst Alexander Blostein upgraded Cboe Global Markets to Neutral from Sell rating, citing expectations that the company’s SPX options will drive growth. The analyst also likes Cboe’s increasing market share in Europe and strengths in its FX business. However, Blostein said that Cboe’s top-line in 2023 could remain “challenged” due to tougher comps.

Cboe stock also saw an overall decline in hedge fund sentiment in the second quarter. At the end of June, 36 hedge funds in our database reported owning stakes in the company, compared to 43 funds a quarter earlier.

Here is what Upslope Capital Management has to say about Cboe Global Markets, Inc. in its Q4 2021 investor letter:

“Cboe Global Markets (CBOE) – Exited Long

CBOE is a diversified, global exchange (equity, derivative, FX) operator with dominant positions in index and volatility (VIX) derivatives. After 3.5 years, we effectively exited the position in early 2022. Ultimately, the two key pillars of the investment thesis – improving fundamentals and a potential take-out – broke by year-end. While I believe we came very close to seeing CBOE get acquired, it appears to be off the table for the foreseeable future (an uptick in insider selling and a very sharp acceleration in acquisition and strategic activity are notable). Additionally, while 2021 saw a nice improvement in fundamentals, the rebound in CBOE’s key VIX product appears to have stalled. On the options front, CBOE also appears to face notable risk should retail interest fade (this seems likely, given what’s happened to many retail-favorite stocks in recent months).”

9. CME Group Inc. (NASDAQ:CME)

With a market cap of over $60 billion, CME Group Inc. (NASDAQ:CME) is one of the biggest financial services platform providers known for its financial derivatives exchange and cryptocurrencies futures. In October, Deutsche Bank analyst Brian Bedell upgraded the stock to Buy from Hold. The analyst said that with an estimated dividend yield of 5%, the stock is attractive due to its “solid income stream”. The analyst thinks that the stock could become more tempting if the current challenging market environment persists for some time.

Despite all of this, Cathie Wood lost hope in the stock, which is down 21% in the past 12 months. Cathie Wood’s hedge fund sold 718 CME Group Inc. (NASDAQ:CME) shares during the third quarter, which were worth $143,000.

Here is what Baron Durable Advantage Fund has to say about CME Group Inc. (NASDAQ:CME) in its Q1 2022 investor letter:

“CME Group, Inc. (NASDAQ:CME) operates the world’s largest and most diversified derivatives marketplace. Shares rose 4.6%, contributing to results as elevated market volatility and rising interest rates led to higher trading activity on CME’s exchanges. Average daily trading volume increased 19% year-over-year with notable strength in Interest Rates and Equities products. We continue to own the stock due to CME’s strong competitive moats, underpinned by its product breadth and liquidity depth, as well as its sustainable growth characteristics driven by the secular shift from uncleared over-the-counter trading to exchange-traded futures while also benefiting from the rising rate environment.”

8. Corsair Gaming, Inc. (NASDAQ:CRSR)

Cathie Wood’s hedge fund sold 8,098 shares of Corsair Gaming, Inc. (NASDAQ:CRSR) during the third quarter of this year, ending its stake in the company which was worth $130,000 at the end of June.

In August, the company posted second-quarter non-GAAP EPS of -$0.20, missing the consensus estimate by $0.21. Revenue in the period fell 40% on a year-over-year basis and came in at $283.91 million. Gaming companies are facing headwinds as spending in the sector slows down due to inflation. Supply chain problems and a stronger dollar are also affecting gaming revenues in the sector.

Just 10 hedge funds in our database of 895 funds as of the end of the second quarter had stakes in Corsair Gaming, Inc. (NASDAQ:CRSR), compared to 12 funds in the previous quarter.

Here is what Sterling Partners Equity Advisors has to say about Corsair Gaming, Inc. (NASDAQ:CRSR) in its Q4 2021 investor letter:

“Corsair Gaming, Inc. (NASDAQ:CRSR) is a global developer and manufacturer of high-performance gear and technology for gamers, content creators, and PC enthusiasts. Corsair delivers a full ecosystem of products; PC Components, Peripherals, Premium Streaming Equipment, and Smart Ambient Lighting. Corsair responded to the difficult sourcing and shipping environment by building inventory closer to its customers. Management believes that once this difficult supply chain is behind them their targeted growth and profitability targets will return. We believe in the growing gaming market globally and Corsair is positioned well to support this growing customer base with a platter of products.”

7. Dropbox, Inc. (NASDAQ:DBX)

Cloud data storage company Dropbox, Inc. (NASDAQ:DBX) was exited from Cathie Wood’s portfolio during the third quarter. ARK sold 7,379 shares of the company during the period. These shares had a total value of $154,000. Cathie Wood’s wasn’t the only hedge fund which lost hope in the stock. Dropbox, Inc. (NASDAQ:DBX) saw a sharp decline in hedge fund sentiment during the second quarter, according to our database. 32 funds out of the 895 tracked by Insider Monkey reported having stakes in the company at the end of June, compared to 44 funds in the previous quarter.

Dropbox (NASDAQ:DBX) shares in September jumped after Bank of America analyst Michael Funk started covering the stock with a Buy rating, citing strong free cash flows. The analyst set a $34 price target on Dropbox, Inc. (NASDAQ:DBX). He also added that Dropbox stock can deliver “incremental returns” to shareholders.

Here is what Arch Capital specifically said about Dropbox, Inc. (NASDAQ:DBX):

“In March, we decided to buy Dropbox, Inc. (NASDAQ:DBX) with some of our cash position. We had sold the stock in 2021 due solely to valuation concerns, but with the stock cratering in early 2022, we decided to revisit the company. It turns out, the business was still as strong as ever. If you want more detail on why we like Dropbox, you can read our report from back in Q1 here.”

6. Matterport, Inc. (NASDAQ:MTTR)

Cathie Wood lost her patience with Matterport, Inc. (NASDAQ:MTTR) during the third quarter and dumped her entire $5.7 million stake in the spatial data company. Matterport, Inc. (NASDAQ:MTTR) has already lost 80% of its value over the past 12 months. Cathie Wood’s hedge fund bought its stake in the company in the first quarter of 2022. The stock last showed signs of life back in August when it jumped 3% following the release of Matterport, Inc. (NASDAQ:MTTR)’s new Pro3 Camera. The hedge fund sentiment for the stock is also tanking. Just 7 funds in the database of Insider Monkey have stakes in the company as of the end of the second quarter, compared to 12 funds in the previous quarter.

Here is what Miller Opportunity Equity has to say about Matterport, Inc. in its Q4 2021 investor letter:

“Matterport Inc. (MTTR) continued to be a strong contributor during the quarter after Matterport’s ability to contribute to the building of the metaverse was brought to light. The company reported 3Q results that missed consensus due to unexpected supply constraints and labor shortage in its capture services. The company reported total sales of $27.7M below consensus of $29.1M but with gross profit beating coming in at $15.2M versus $15.1M expected leading to an EPS loss of -$0.06 slightly better than consensus of -$0.07. The company lowered full-year revenue guidance to $107-110M down from $120-126M previously while also lowering FY22 topline guidance to 50% growth from 65% at the time of the PIPE transaction due to continuing supply constraints and labor shortage.”

 

Click to continue reading and see Cathie Wood Is Selling These 5 Stocks

 

Suggested articles:

Disclosure: None. Cathie Wood Is Selling These 13 Stocks is originally published on Insider Monkey.