In this article, we discuss Cathie Wood’s optimism and her 10 most ambitious stock picks. If you want to see more stocks in this selection, click Cathie Wood’s 5 Most Ambitious Stock Picks.
Cathie Wood, founder and chief executive officer of ARK Investment Management, joined Bloomberg on June 9 and defended her ARK Innovation ETF, which has been notably battered from its peak in the COVID-19 period as the market selloff destroyed growth equities.
Cathie Wood and Her Thoughts on Inflation
Cathie Wood mentioned that the economic volatility cannot solely be blamed on inflation and consequently rising rates. Wood observed that the economy is battered equally due to supply chain constraints, the ongoing COVID-19 crisis in China, and the Russian invasion of Ukraine. The stock markets remained afloat in the pandemic years due to artificial fiscal boosts and loose monetary policies, but she believes that the current inventory trends at huge retailers like Target and Walmart suggest that inflation might not be as large a headwind as investors are fearing.
Cathie Wood told Bloomberg that her clients have confidence in her investment philosophy, because they can see the world changing in front of their eyes. The ARK fund reached record highs in the pandemic years, when innovation was needed to deal with the unexpected and uncertain macro factors that were thrown at the global economy. Her clientele, especially the younger generation, understands that innovation is not an easily acceptable idea to many, but it is profitable in the long-term all the same. She once again indicated to her Tesla, Inc. (NASDAQ:TSLA) and Bitcoin long bets that were the highlight of her career, and remained adamant on her disruptive innovation path.
‘We Will Shine’
According to the ARK CEO, if you allocate 5-10% of your equity portfolio towards innovation, the returns per unit of risk will increase over a five-year period. She stressed that at least a five-year investment horizon is needed for innovation to generate profitable returns. She believes that with her ARK portfolio down significantly, her investments have entered deep value territory and are now bargain stocks. Wood, who is known for her bold market predictions, has forecasted that artificial intelligence will drive 50% of the GDP growth over a 10-year horizon. Similarly, she reminisced how she saw the potential in Tesla, Inc. (NASDAQ:TSLA) when the stock was still in its early growth stages, and now the entire market realizes the need for advanced battery technology, and there are competitors in the field that did not exist before, pointing towards Chinese Xpeng and Nio.
Wood observed that retail investors are more insightful than most institutional investors, and they are excited to invest in innovation because they are eager for a new world and want to be part of the revolution. Despite being down 75% from its highs, the ARK Innovation ETF continues to gain new investors, because they know that her ideas are built for the long-term and these retail investors are ready to invest in their futures, the ARK CEO reiterated. She remains optimistic about the future of her fund, and that the ARK ETF will peak and shine again.
Cathie Wood categorizes space, DNA sequencing, aeronautics, and battery technology as some of the hottest innovative areas that she is bullish on. Some of the most notable stocks from the ARK portfolio as of the first quarter of 2022 include Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Block, Inc. (NYSE:SQ).
We used Cathie Wood’s Q1 portfolio to choose innovative stocks for this list. We selected the disruptive companies in which she increased her position during the first quarter of 2022.
10. TuSimple Holdings Inc. (NASDAQ:TSP)
Number of Hedge Fund Holders: 17
TuSimple Holdings Inc. (NASDAQ:TSP) is a California-based autonomous technology company that designs purpose-built L4 autonomous semi-trucks for the North American market. TuSimple Holdings Inc. (NASDAQ:TSP)’s ecosystem comprises high definition digital mapped routes, terminals, and TuSimple Connect, a cloud-based autonomous operations oversight system.
Securities filings for Q1 2022 reveal that Cathie Wood’s ARK Investment Management held more than 13 million shares of TuSimple Holdings Inc. (NASDAQ:TSP) worth $158.7 million, representing 0.66% of the total 13F holdings. The hedge fund boosted its position in TuSimple Holdings Inc. (NASDAQ:TSP) by 32% in Q1.
On May 4, TuSimple Holdings Inc. (NASDAQ:TSP) reported earnings for Q1 2022. The company posted a loss per share of $0.50, above estimates by $0.04. The revenue of $2.26 million also outperformed market estimates by $304,000. The revenue increased 140% year-over-year.
China Renaissance analyst Yiming Wang upgraded TuSimple Holdings Inc. (NASDAQ:TSP) on May 26 to Buy from Hold with a price target of $15.50, down from $39.10. While the company delayed autonomous truck mass production to 2025 from 2024 due to supply chain issues, its regulatory risk has been lowered since the National Security Agreement was signed, the analyst told investors. The analyst sees a more focused business model after the management was restructured, as well as an attractive valuation at present share levels.
Among the hedge funds tracked by Insider Monkey, 17 funds reported long positions in TuSimple Holdings Inc. (NASDAQ:TSP) at the end of Q1 2022, up from 15 funds in the earlier quarter. David Ma’s Composite Capital is one of the leading stakeholders of the company, with 9.2 million shares worth $112.5 million.
In addition to Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Block, Inc. (NYSE:SQ), Cathie Wood is bullish on TuSimple Holdings Inc. (NASDAQ:TSP).
9. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 10
AeroVironment, Inc. (NASDAQ:AVAV) was incorporated in 1971 and is headquartered in Arlington, Virginia. The company designs and manufactures robotic systems and tactical missile systems for government agencies and businesses. AeroVironment, Inc. (NASDAQ:AVAV) serves the U.S. Department of Defense and international allied governments. Cathie Wood increased her hold on AeroVironment, Inc. (NASDAQ:AVAV) by 21% in Q1 2022, with 1.10 million shares worth over $104 million.
RBC Capital analyst Ken Herbert upgraded AeroVironment, Inc. (NASDAQ:AVAV) on May 18 to Outperform from Sector Perform with a price target of $100, up from $95. The stock has climbed 44% since the war broke out in Ukraine and the rise in demand for AeroVironment, Inc. (NASDAQ:AVAV)’s Switchblade drone represents a positive inflection that should be sustained, the analyst told investors. The swift reopening of other international markets presents further upside as possibly more than the estimated $50 million in Ukraine shipments, the analyst added.
According to Insider Monkey’s Q1 data, 10 hedge funds were bullish on AeroVironment, Inc. (NASDAQ:AVAV), compared to 14 funds in the preceding quarter. William Heard’s Heard Capital is one of the leading shareholders of the company, with 425,035 shares worth $40 million.
8. Velo3D, Inc. (NYSE:VLD)
Number of Hedge Fund Holders: 21
Velo3D, Inc. (NYSE:VLD) was founded in 2014 and is headquartered in Campbell, California. The company produces metal additive three dimensional printers that are used in the manufacturing of components for space rockets, jet engines, fuel delivery systems, and other high value metal parts.
Securities filings for Q1 2022 reveal that Cathie Wood’s hedge fund elevated its Velo3D, Inc. (NYSE:VLD) stake by 47%, holding about 9.20 million shares worth $85.5 million. The stock represents 0.35% of the total 13F portfolio.
On May 10, the company reported its Q1 revenue of $12.2 million, up 916.7% compared to the same quarter in the prior year. Velo3D, Inc. (NYSE:VLD) closed Q1 with $186 million in cash. In its guidance for 2022, the company expects full-year revenue of $89 million and total bookings of 47 to 49, with 23 to 25 new customer additions.
Needham analyst James Ricchiuti on May 11 reiterated a Buy rating on Velo3D, Inc. (NYSE:VLD) but lowered the price target on the shares to $6 from $15 after its Q1 earnings miss. According to the analyst, the company’s top-line growth of 17% and bookings were “strong”, while backlog jumped 55% year-over-year, illustrating robust demand for the new large-format XC printer. He added that the optimistic developments at the conclusion of Q1 2022 include solid acceptance to the latest Sapphire XC machine, rising momentum in Europe, and the continued progress in building Velo3D, Inc. (NYSE:VLD)’s infrastructure.
According to Insider Monkey’s data, 21 hedge funds were bullish on Velo3D, Inc. (NYSE:VLD) at the end of Q1 2022, with collective stakes worth $119.4 million. This is compared to the same number of funds in the earlier quarter, holding stakes in the company worth $69.4 million.
Here is what Baron Growth Fund has to say about Velo3D, Inc. (NYSE:VLD) in its Q4 2021 investor letter:
“Our Disruptive Growth investments are pursuing idiosyncratic opportunities across the entirety of the global economy. Companies such as Velo3D, Inc. are seeking to disrupt the traditional product development and manufacturing cycle by offering engineers and manufacturers cutting edge software and hardware. Velo is disrupting the manufacturing end of the process by inventing and productizing high-end additive manufacturing techniques.”
7. Codexis, Inc. (NASDAQ:CDXS)
Number of Hedge Fund Holders: 23
Codexis, Inc. (NASDAQ:CDXS) develops and sells enzymes, biocatalyst products, and intermediate chemicals products. In addition to that, the company also specializes in biocatalyst screening and protein engineering services. Cathie Wood’s ARK Investment Management increased its position in Codexis, Inc. (NASDAQ:CDXS) by 22% in Q1 2022, holding approximately 4 million shares worth $81.2 million.
Codexis, Inc. (NASDAQ:CDXS) announced that its partner, Molecular Assemblies, will offer a soft launch of MAI’s DNA synthesis platform. Piper Sandler analyst Do Kim thinks early access to MAI’s Key Customer Program, beginning in late 2022, will offer credibility to the enhanced DNA synthesis process and reaffirm its demand in the fast growing gene editing, next-generation sequencing, and gene assembly markets. The analyst maintained an Overweight rating and a price target of $35 on Codexis, Inc. (NASDAQ:CDXS) shares on April 12.
Among the hedge funds tracked by Insider Monkey, 23 funds were bullish on Codexis, Inc. (NASDAQ:CDXS) at the end of March 2022, up from 20 funds in the last quarter. Nantahala Capital Management is a prominent position holder in the company, with 3.3 million shares worth about $70 million.
Here is what Roubaix Capital has to say about Codexis, Inc. (NASDAQ:CDXS) in its Q4 2020 investor letter:
“The largest contributor to fourth quarter long performance was Codexis (CDXS), a truly unique investment story. The company engineers enzymes that enhance productivity of the manufacturing processes of major industries including pharmaceutical, food and other companies. The high-performance enzymes identified by Codexis enable higher levels of production, which in turn drives profits for customers. The story does not stop here. Codexis’ proprietary platform, Code Evolver, has also demonstrated early success in identifying proteins to develop novel protein and gene therapies. This adds another layer of upside optionality to the company and has validation from partnerships with Nestle and Takeda. In these instances, the company earns milestone driven incentives and royalty payments. We see Codexis’ API business generating increasing scale at the same time the pipeline around licenses and royalties has never been larger, and as a result we maintain our position.”
6. 908 Devices Inc. (NASDAQ:MASS)
Number of Hedge Fund Holders: 12
908 Devices Inc. (NASDAQ:MASS) was incorporated in 2012 and is headquartered in Boston, Massachusetts. It is a commercial-stage technology company that specializes in purpose-built handheld and desktop mass spectrometry devices to investigate unknown and invisible substances in life sciences research, bioprocessing, industrial biotech, forensics, and related industries.
In the first quarter of 2022, Cathie Wood’s ARK Investment Management boosted its stake in 908 Devices Inc. (NASDAQ:MASS) by 17%, holding approximately 3.5 million shares worth $66.2 million. The stock represents 0.27% of the total 13F holdings.
On May 10, the company reported its Q1 revenue of $8.31 million, up 50.0% on a year-over-year basis. In its outlook for the full-year 2022, 908 Devices Inc. (NASDAQ:MASS) continues to forecast the revenue to be in the range of $52 million to $55 million, representing 23% to 30% growth compared to the prior year.
According to Insider Monkey’s Q1 data, 908 Devices Inc. (NASDAQ:MASS) was part of 12 hedge fund portfolios, with collective stakes worth $136.6 million. Billionaire Israel Englander’s Millennium Management is one of the leading shareholders of the company, with 752,431 shares worth $14.30 million.
Like Tesla, Inc. (NASDAQ:TSLA), Coinbase Global, Inc. (NASDAQ:COIN), and Block, Inc. (NYSE:SQ), 908 Devices Inc. (NASDAQ:MASS) is gaining the attention of elite investors.
To see rest of the stocks in this list click and go to Cathie Wood’s 5 Most Ambitious Stock Picks.
Disclosure: None. ‘We Will Shine’: Cathie Wood’s Optimism and Her 10 Most Ambitious Stock Picks is originally published on Insider Monkey.