Despite a Tough Year, Cathie Wood Is Still Up Big on These 3 Stocks | The Motley Fool
Investors did not have a fun year in 2022. But few struggled more than Cathie Wood and her company Ark Invest, which oversees a number of exchange-traded funds (ETFs) highly focused on the growth, tech, and crypto sectors.
The Ark Fintech Innovation ETF (ARKF -0.07%) and Ark Innovation ETF (ARKK 0.23%) are down about 66% and 68%, respectively. And ETFs are supposed to be less volatile than individual stocks because they hold a basket of stocks.
While there is a lot of red this year among Ark’s holdings, Wood still owns several stocks that are up big since Ark first invested in them. Here are three.
Ark owns more than 26,600 shares of Microsoft (MSFT -0.49%), valued at close to $6.4 million in the Ark 3D Printing ETF (PRNT -0.24%). Ark started buying the stock in 2016 and is up about 87%, despite Microsoft’s sell-off this year.
What’s great about Microsoft is that it really has a diversified business within the digital space. It provides digital tools, like Office 365, that are now essential to companies’ daily operations. Its ownership of LinkedIn exposes it to the social media space, its ownership of Xbox exposes it to video games, and products such as Microsoft Cloud and Azure give it great exposure to the burgeoning cloud space.
The company could face some pressure in the near term or if a recession hits as consumers and businesses tighten their belts, but it has a very strong balance sheet with more than $107 billion of cash, cash equivalents, and short-term investments. Long term, Microsoft should perform well, as it is a giant in the digital economy, with many of its businesses well positioned in growing markets.
Wood and Ark have also hit big on the graphics processing unit (GPU) computing giant Nvidia (NVDA 0.07%), up about 87% on that investment as well. Ark owns Nvidia in both its Fintech Innovation ETF and Ark Autonomous Technology and Robotics ETF (ARKQ 0.15%). All in all, Ark owns about 182,750 shares collectively worth $27.7 million. Ark began buying Nvidia in 2016 and has been buying the dip hard this year, with the stock down more than 50%.
While Nvidia made a name for itself in GPUs, Nvidia is also in other fast-growing tech markets, such as video games. It’s the sole provider of graphics and processing power for Nintendo‘s Switch and is big in the data processing space. Overall, these segments combined represent a $1 trillion opportunity.
The struggles in the tech and crypto spaces, as well as in China, this year have spilled over into Nvidia’s business, with revenue falling 17% year over year in the third quarter of the year. There’s a lot of uncertainty over what demand for Nvidia’s products will look like in 2023, but the company is still in an attractive space with a huge long-term opportunity.
3. Perion Network
While it’s probably not as well known as Microsoft or Nvidia, Cathie Wood has actually done even better on her investment in the Israeli tech company Perion Network (PERI), which is up more than 108% since first purchasing the stock.
Ark owns more than 91,400 shares of Perion valued at more than $2.2 million in its Ark Israel Innovative Technology ETF (IZRL 1.18%). Ark first bought the stock at the end of 2019 and both purchased and sold shares this year. The stock is actually up slightly this year as well.
Perion is an adtech company connecting buyers and sellers of ads on its real-time Intelligence Hub. It leverages artificial intelligence and machine learning to optimize ad space for sellers while delivering great experiences for advertisers. The company is well positioned to take advantage as ad spending continues to migrate to digital platforms.
Despite the struggles of many other tech companies this year, Perion is growing fast. In its most recent third quarter, the company generated close to $159 million, up more than 31% year over year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is up 87.5% year over year.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool has a disclosure policy.
Read More: Despite a Tough Year, Cathie Wood Is Still Up Big on These 3 Stocks | The Motley Fool
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