In this article we discuss the 10 best tech stocks to buy according to Cathie Wood. If you want to read our detailed analysis of Wood's history, and hedge fund performance, go directly to the 5 Best Cheap Tech Stocks to Buy According to Cathie Wood.
Catherine Wood, the legendary investor who runs ARK Investment Management, has disclosed several key details about the holdings of her hedge fund at the end of the first quarter of 2021, including surprises such as the trimming of Apple Inc. (NASDAQ: AAPL) stock by 36% compared to the previous quarter and 56% increased stock activity on Square, Inc. (NYSE: SQ).
Although Wood is widely famous for aggressively pursuing disruptive technology stocks, her drastic selling of Apple Inc. (NASDAQ: AAPL) stock does come as a bit of a surprise. At the end of March, the company also no longer held more than 20% of the stock in any company, compared to three such firms previously. Tesla, Inc. (NASDAQ: TSLA) still represents the largest holding for the firm.
ARK Investment holds more than 5.7 million shares in Tesla, Inc. (NASDAQ: TSLA) worth over $3.8 billion, representing more than 7.6% of their investment portfolio. Other major companies on the investment list for ARK include Spotify Technology S.A. (NYSE: SPOT) and Baidu, Inc. (NASDAQ: BIDU). ARK activity on Spotify Technology S.A. (NYSE: SPOT) stock increased 66% in the past three months. The increase was even more apparent on Baidu, Inc. (NASDAQ: BIDU) stock, which represents 2.2% of the ARK portfolio, clocking in at 127%.
Even though these famous companies make up a large portion of ARK Investment holdings, Wood has doubled down on her bets on cheap tech stocks in recent months, increasing her stakes in companies like Palantir Technologies Inc. (NYSE: PLTR) and Opendoor Technologies Inc. (NASDAQ: OPEN). According to the latest info, Ark Investment increased their holdings in Palantir Technologies Inc. (NYSE: PLTR) by a whopping 1,135% in the past few months. Their increased activity on Opendoor Technologies Inc. (NASDAQ: OPEN) stock was close to 200%.
Wood has a history of averaging handsome returns by selling stakes in bigger firms during crisis periods and buying up chunks in lesser known, cheaper growth stocks. Last year, one of her growth funds offered investors 152% in returns. Investors looked eager to jump on the bandwagon, pouring money into her firm that was managing over $60 billion in assets at one point this year. However, a lull in tech-related growth stocks and inflation worries have stoked market volatility, leading to a 32% drop in the flagship fund of ARK Investment since February.
Wood isn't alone. 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 February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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 of ARK Investment Management
With this context in mind, here is our list of the 10 best cheap tech stocks to buy according to Cathie Wood.
Best Cheap Tech Stocks to Buy According to Cathie Wood
Cellectis S.A. (NASDAQ: CLLS) is a France-based biotechnology company founded in 1999. It is ranked tenth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. The company primarily deals with cancer-related therapies, including the development and marketing of genome-edited chimeric antigen receptor T-cell technologies. ARK Investment owns more than 5 million shares in the company worth over $103 million, representing 0.2% of their investment portfolio.
Cellectis S.A. (NASDAQ: CLLS) reported earnings per share of -$0.26 for the first quarter of 2021, beating market predictions by $0.52. The revenue for the first three months of 2021 was over $27 million, beating market estimates by close to $20 million.
At the end of the first quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $112 million in Cellectis S.A. (NASDAQ: CLLS), up from 6 the preceding quarter worth $191 million.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), and Baidu, Inc. (NASDAQ: BIDU), Cellectis S.A. (NASDAQ: CLLS) is one of the best stocks to buy according to Cathie Wood.
Nano Dimension Ltd. (NASDAQ: NNDM) is an Israel-based 3D printing company founded in 2012. It is placed ninth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. The company stock has returned more than 150% to investors over the course of the past twelve months. ARK Investment holds close to 13 million shares in the company worth over $111 million. This represents 0.22% of their portfolio. Nano Dimension primarily focuses on research and development related to 3D printed electronics.
In earnings results for the first three months of 2021, posted on May 20, Nano Dimension Ltd. (NASDAQ: NNDM) reported earnings per share of -$0.05 and a revenue of $0.8 million. The revenue was up over 15% compared to the same period last year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Nano Dimension Ltd. (NASDAQ: NNDM) with 6.6 million shares worth more than $57 million.
Skillz Inc. (NYSE: SKLZ) is a California-based video game competition platform founded in 2012. It is ranked eighth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Skillz stock has offered investors returns exceeding 57% over the past year. ARK Investment holds more than 6 million shares in the company worth over $114 million, representing 0.22% of their portfolio. The Skillz platform has been integrated into mobile software like Android and iOS for global gamer connectivity.
On May 4, Skillz Inc. (NYSE: SKLZ) reported earnings results for the first three months of 2021, posting earnings per share of -$0.15, just missing market estimates by $0.02. The revenue over the period was over $83 million, up 92% year-on-year.
At the end of the first quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $672 million in Skillz Inc. (NYSE: SKLZ), down from 33 in the previous quarter worth $719 million.
7. Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS)
Number of Hedge Fund Holders: 16
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a California-based company that specializes in direct energy weapons and satellite communications. It was founded in 1994 and is placed seventh on our list of 10 best cheap tech stocks to buy according to Cathie Wood. Wood, through ARK Investment, holds more than 5 million shares in the company worth over $143 million. This represents 0.28% of her portfolio at ARK. Kratos has increased investment in cyber warfare solutions in recent years, looking to capitalize on the growing technology market.
On May 5, Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) posted earnings per share of $0.06 for the first quarter of 2021, beating market estimates by $0.01. The revenue over the period was over $194 million, up 15% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Washington Harbour Partners is a leading shareholder in Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) with 475,989 shares worth more than $12 million.
Codexis, Inc. (NASDAQ: CDXS) is a California-based technology company that concentrates on the development and marketing of enzymes for pharmaceutical, food and medical applications. It was founded in 2002 and is ranked sixth on our list of 10 best cheap tech stocks to buy according to Cathie Wood. ARK Investment holds more than 6.2 million shares in the company worth over $143 million. This represents 0.28% of their investment portfolio. Codexis stock has returned more than 60% to investors in the past year.
In earnings results for the first quarter of 2021, Codexis, Inc. (NASDAQ: CDXS) reported earnings per share of -$0.14, beating market predictions by $0.07. The revenue for the first three months of 2021 was over $18 million, beating market estimates by over $3.6 million.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $418 million in Codexis, Inc. (NASDAQ: CDXS), down from 14 in the previous quarter worth $367 million.
Just like Square, Inc. (NYSE: SQ), Spotify Technology S.A. (NYSE: SPOT), Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR) and Baidu, Inc. (NASDAQ: BIDU), Codexis, Inc. (NASDAQ: CDXS) is one of the best stocks to buy according to Cathie Wood.
In its Q4 2020 investor letter, Roubaix Capital LLC, an asset management firm, highlighted a few stocks and Codexis, Inc. (NASDAQ: CDXS) was one of them. Here is what the fund said:
“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.”
