Cathie Wood’s Top 5 Stocks See Abysmal Year In 2022

Summary

• Tesla, Zoom, Roku, UiPath and Exact Sciences were impacted by inflation, interest rates and other factors.

As we head into a new year, investors are taking a look at their portfolios to determine which stocks were winners and losers in 2022.

With a long list of concerns creating volatility in the market, including geopolitical conflicts, inflation and rising interest rates, it is unsurprising that many gurus saw their top stocks underperform the benchmark indexes last year. ARK Investment’s Catherine Wood (Trades, Portfolio) is no exception. While her portfolio of exchange-traded funds has managed to find success in the past among companies with “disruptive innovation,” its largest holdings underperformed the S&P 500 Index’s return of -19.44% last year as growth stocks took a dive.

The guru’s $41.63 billion equity portfolio consisted of 249 stocks as of Sept. 30. A majority of the portfolio was invested in health care stocks at 37.81%, while the technology sector has a weight of 32.53% and the communication services space represents 11.90%.

As of the end of the third quarter, 13F filings show Wood’s five largest holdings were Tesla Inc. (TSLA, Financial), Zoom Video Communications Inc. (ZM, Financial), Roku Inc. (ROKU, Financial), UiPath Inc. (PATH, Financial) and Exact Sciences Corp. (EXAS, Financial).

Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.

Tesla

Representing 7.55% of the equity portfolio, Tesla (TSLA, Financial) is Wood’s largest holding. GuruFocus estimates she has gained 120.39% on the investment so far.

With a loss of nearly 70%, the Austin, Texas-based company considerably underperformed the S&P 500 last year.

The well-known electric vehicle manufacturer has a $372.20 billion market cap; its shares were trading around $117.87 on Tuesday with a price-earnings ratio of 36.42, a price-book ratio of 9.34 and a price-sales ratio of 5.32.

The GF Value LineVALU
suggests the stock is significantly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.

Further, the GF Score of 73 out of 100 indicates the company is likely to have average performance going forward. While Tesla received high ratings for financial strength and momentum, its profitability and growth ranks were more moderate and the GF Value rank was low.

Of the gurus invested in Tesla, Baillie Gifford (Trades, Portfolio) has the largest stake with 0.88% of its outstanding shares. Ron Baron (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Spiros Segalas (Trades, Portfolio) and Philippe Laffont (Trades, Portfolio) also have notable positions.

Zoom Video Communications

Accounting for 5.59% of the equity portfolio, Zoom Video Communications (ZM, Financial) is the investor’s second-largest holding. GuruFocus says Wood has lost approximately 71.25% on the investment since the fourth quarter of 2020.

With a return of -65.01%, the software company, which is headquartered in San Jose, California, underperformed the benchmark index by a wide margin.

The company, which provides an online platform for video conferencing, has a market cap of $20.54 billion; its shares were trading around $70.50 on Tuesday with a price-earnings ratio of 30.81, a price-book ratio of 3.57 and a price-sales ratio of 4.91.

According to the GF Value Line, the stock is significantly undervalued currently.

The GF Score of 72 suggests the company is likely to have average performance going forward, driven by high ratings for growth and financial strength, middling marks for profitability and low ranks for GF Value and momentum.

With a 3.66% stake, Wood is Zoom’s largest guru shareholder. Other top guru shareholders include Baillie Gifford (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Ken Fisher (Trades, Portfolio).

Roku

With 4.69% space in the equity portfolio, Roku (ROKU, Financial) is the guru’s third-largest stake. GuruFocus data shows Wood has lost an estimated 56.39% on the investment over its lifetime.

Returning -82.23% last year, the San Jose, California-based media company widely underperformed the index.

The company, which is known for its streaming services, has a $6.48 billion market cap; its shares were trading around $46.55 on Tuesday with a price-book ratio of 2.33 and a price-sales ratio of 2.06.

Based on the GF Value Line, the stock, while undervalued, appears to be a possible value trap. As such, potential investors should do thorough research before making a decision.

Further, the GF Score of 68 indicates the company has poor future performance potential. While it raked in a high growth rating, its financial strength, momentum and profitability ranks were more moderate and its GF Value was low.

Wood is Roku’s largest guru shareholder with an 8.92% stake. Baillie Gifford (Trades, Portfolio), Simons’ firm, Paul Tudor Jones (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Ray Dalio (Trades, Portfolio)’s Bridgewater Associates also own the stock.

UiPath

Occupying 4.05% of the equity portfolio, UiPath (PATH, Financial) is Wood’s fourth-largest position. GuruFocus data shows she has lost approximately 73.46% on the investment since establishing it in the second quarter of 2021.

Posting an annual return of -71.50%, the software company headquartered in New York underperformed the benchmark.

The company, which makes robotic process automation software, has a market cap of $7.02 billion; its shares were trading around $12.72 on Tuesday with a price-book ratio of 3.77 and a price-sales ratio of 6.65.

Since its initial public offering in April 2021, the stock has tumbled more than 80%.

Additionally, the GF Score of 22 indicates the company has poor performance potential. However, it only has ratings for financial strength and profitability, so its full potential may not be reflected.

Of the gurus invested in UiPath, Wood has the largest stake with 8.38% of its outstanding shares. It is also being held by Laffont, Simons’ firm, Frank Sands (Trades, Portfolio) and Jones.

Exact Sciences

Coming in at number five, Exact Sciences (EXAS, Financial) represents 3.98% of the guru’s equity portfolio. According to GuruFocus, Wood has lost an estimated 41.22% on the investment.

Tumbling nearly 40% for the year, the Madison, Wisconsin-based health care company underperformed the S&P 500.

The company, which specializes in medical diagnostics for the detection of early stage cancers, has a $10.39 billion market cap; its shares were trading around $58.66 on Tuesday with a price-book ratio of 3.33 and a price-sales ratio of 5.11.

The GF Value Line suggests the stock, while undervalued, is a possible value trap. Therefore, potential investors should conduct thorough research before making a decision.

The GF Score of 73 means the company is likely to have average future performance. While it recorded high ratings for growth and momentum, its financial strength and GF Value ranks were more moderate and the profitability grade was low.

As with most of her other top holdings, Wood is Exact Sciences’ largest guru shareholder with a 9.92% stake. Baillie Gifford (Trades, Portfolio), the Vanguard Health Care Fund (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) also have large holdings.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.