Cathie Wood’s Stock Shuffle: 4 Names She’s Loving, 3 She’s Leaving

Cathie Wood stocks have captivated investors for years now.

Wood is a popular money manager because her investing style isn’t so different from many small retail investors. She likes to go deep with her family of exchange traded funds into exciting sectors like technology and biotech stocks. 

It’s no secret Cathie Wood stocks offer the potential for big returns, but they also come with some outsized risk.

ARK Innovation ETF (NYSE:ARKK) averaged an annual 39% return on investment between 2014 and 2021. That’s over three times greater than the S&P 500 index’s return during the same period.

At Wood’s peak, ARK Innovation managed around $60 billion in investments, but it’s been a rough slog for Cathie Wood stocks since.

The ETF lost 23% in 2021 and 67% last year. Total assets under management are less than $15 billion today. ARK Innovation has under $7 billion. When a hot hand turns cold, investors flee.

Wood is performing well again in 2023. Her premiere ETF is up 24% year to date compared to a 12% gain by the S&P 500. However, ARK Innovation was up as much as 62% as recently as July.

Cathie Wood is a smart money manager and riding her coattails for investment ideas isn’t a bad idea. So here are four Cathie Wood stocks she is buying and three she is selling.

Palantir Technologies (PLTR)

Wood is heading in the opposite direction from other money managers with data analytics firm Palantir Technologies (NASDAQ: PLTR).

Where Wood recently purchased 745,000 shares of the company bringing her combined total stake to 6.7 million shares, industry peer Ken Griffin from Citadel Advisors was exiting the stock. He dumped 97% of his holdings last quarter. 

This is what can be so divisive about Cathie Wood stocks.

Even though Palantir is down 30% from its August highs, shares remain 120% above where they started the year.

Big Data is proving to be lucrative for Palantir. Enterprise level clients grew 8% sequentially in the second quarter to 302.

The number was up 38% year over year sending U.S. commercial revenue 20% higher. The data analytics firm also notched its third consecutive quarter of profitability.

Wood has been in and out of Palantir before. She sold out of the stock in February 2022 only to buy again this past May. With an estimated average cost basis of $22 a share, Wood is down about 35% on her purchases.

Ginkgo Bioworks Holdings (DNA)

Genetic engineering biotech Ginkgo Bioworks Holdings (NYSE:DNA) is another of the Cathie Wood stocks to watch.

After her last purchase of nearly 5 million shares, Wood’s ETFs own a combined 169 million shares. That makes the biotech her 16th largest position.

Ginkgo’s technology is used to alter the genetic makeup of molecules for use in food and chemicals. It likens altering the genetic code to how a computer responds to 0’s and 1’s, except it is using the most basic building blocks of a cell, its DNA.

Ginkgo notes that once a cell is reprogrammed, it can replicate itself and grow exponentially.

While that may sound like a dystopian hellscape to many, it is finding traction with numerous corporate partners. Bayer (OTCMKTS:BAYRY) is using Ginkgo’s technology to create microbes for crops that will lessen the use of fertilizer.

Robertet (OTCMKTS:RBTEF) and Givaudan (OTCMKTS:GVDNY) are partnering to create new food flavorings. Motif FoodWorks is creating lab-grown animal proteins with Ginkgo microbes.

Its first product Hemami gives a meaty flavor to plant-based burgers, sausages, and chicken.

Ginkgo Bioworks went public two years ago. After initial excitement over its debut, shares are down 85% from their offering price.

Wood has been buying them almost from the start. The Cathie’s Ark site that tracks her daily buys and sells estimates her average cost basis is about $9.97 per share, which puts her deep in the red on the biotech stock.

Rocket Lab USA (RKLB)

Satellite launch stock Rocket Lab USA (NASDAQ:RKLB) is down 70% from its IPO, but it took Wood a little while to catch onto this rocket launcher, though she’s at break-even here.

Rocket Lab is the second-most successful space company behind SpaceX, routinely launching rockets into space with its Electron rocket. It has launched 171 satellites into orbit for commercial and government customers.

Like SpaceX, it is looking to reuse its engines. Although not as elegant as seeing one of SpaceX’s Falcon Heavy boosters land on a launch pad, Rocket Lab successfully recovered an Electron first stage booster.

It will relaunch the engine later this year.

However, Rocket Lab’s stock took a hit the other day after its latest Electron rocket failed about two minutes after launch. It was the first failure suffered in two years. 

Since buying her first 22,000 share tranche in March 2022, Wood has accumulated almost 4.5 million shares total.

Roblox (RBLX)

Shares of online kids gaming platform Roblox (NASDAQ:RBLX) crashed after missing second quarter earnings expectations.

They lost a fifth of their value that day and continued falling afterwards. Where they had been up 64% this year prior to the report, they’re now down 11% in 2023. 

That’s typical among many Cathie Wood stocks. She has purchased some 2 million shares since the report, bringing her total stake to 11.1 million shares. But she is sitting on losses of about 50% across her combined holdings.

Roblox became a play on the metaverse. Its platform is perfectly suited to the task. It lets users explore virtual worlds, allows developers to create and publish the virtual experience, and provides the services and infrastructure needed to power the platform.

The all-in-one virtual world attracts corporations as diverse as Nike (NYSE:NKE) and Walmart (NYSE:WMT) to populate the gameplay. Falling demand for its online games and intense competition hurt the company’s growth in the second quarter.

Online gaming is broadly suffering a slowdown from the heady pandemic lockdown days. Persistent inflation is also weighing on consumers who are becoming more selective about the titles they play. And the metaverse is catching on as quickly as many expected.

Because the company’s tween target demographic gives companies an opportunity to create lifelong customers, I wouldn’t count out the online gaming platform.

DraftKings (DKNG)

Despite rising 150% in value in 2023, Wood is steadily selling off its holdings in DraftKings (NASDAQ:DKNG), the country’s second largest sports book behind Flutter Entertainment‘s (OTCMKTS:PDYPF) FanDuel.

Her holdings peaked at over 24 million shares last November, but now stand at 13.6 million shares. Her average cost basis is an estimated $48 a share, for an estimated 40% loss.

After the Supreme Court struck down a ban on sports betting as unconstitutional in 2018, sports books like DraftKings took off throughout 2020 and 2021 as states legalized the practice. DraftKings stock soared to $72 a share. It has lost 60% of its value since.

The sports book is rising again. DraftKings operates in 21 states. Based on trailing three month gross gaming revenue (GGR), it has a 20.2% share of the market. FanDuel is the leader with 46.6%. There may be more states coming online too.

Kentucky, North Carolina, Vermont, and Puerto Rico all passed legislation that will soon allow for mobile sports betting. An additional 12 states are considering allowing it.

Tesla (TSLA)

Does Cathie Wood have a love-hate relationship with Tesla (NASDAQ:TSLA)? Although she put a firm $2,000 per share price target for 2027 on the electric car maker earlier this year (the stock currently goes for $245 a share), she’s been steadily selling the stock. 

Her holdings topped out at 5.7 million shares a year ago, but beginning this past June Wood sold off 1.4 million shares.

Tesla is a volatile stock. After plunging as low as $100 a share at the start of the year, they rallied to just over $300 a stub. Now they’ve pulled back again. That has just as much to do with its business operations as it is Tesla is still a popular meme stock. It remains one of the most talked about stocks on Reddit.

Tesla’s business is still growing too. Production jumped 86% in the second quarter while deliveries were 85% higher. They come amidst layoffs and price cuts to help spur waning demand amongst consumers.

With automakers producing their own EVs in greater numbers, competition is more intense. 

The union strike against automakers may give Tesla some short-term advantages, but growth may not be so fast in the coming years.

AeroVironment (AVAV)

Drone maker AeroVironment (NASDAQ:AVAV) seems to have limitless growth for the immediate future.

The war in Ukraine endures and the U.S. seems intent on becoming more intimately involved beyond providing financial support. 

President Biden is escalating U.S. involvement by sending Abrams tanks to the front line just as it has supplied unmanned surveillance drones from AeroVironment, such as the Jump 20 model, and killer drones from other manufacturers. The risk of direct confrontation with Russia grows considerably.

War is proving profitable for AeroVironment. Second quarter revenue grew 40% to $152 million while net income surged 361% as the drone-maker sells more product. It ended the quarter with a funded backlog of $540 million in future business, a 27% increase over last year.

Wood continues to sell down her stake. She now only has 545,000 shares spread across ARK Autonomous Technology & Robotics ETF (NYSE:ARKQ) and ARK Space Exploration & Innovation ETF (NYSE:ARKX). That’s half the number she had in February 2022 when she owned 1.2 million shares.

Unlike many of her other positions here, Wood is showing a profit on AeroVionment. Her estimated average cost is $79 a share, a 42% gain over the current price.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.