Of Cathie Wood's 10 Largest Positions, One Stock Stands Out From the Rest
In my hunt for new buys, I've been reviewing the holdings of the ARK ETFs. Here's what I found.
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The market opened sharply higher on Thursday morning primarily because of growing confidence that the jobs market is cooling off. Weekly unemployment claims were slightly higher than anticipated at 221,000, and there were 90,000 job cuts in March, according to Challenger Gray.
A deeper analysis of the jobs market shows that the rate of hiring is slowing, which usually leads to eventual layoffs. In an article entitled "Why the US Job Market Isn't So Hot," Bloomberg discusses how the acceleration of immigration has prevented the job market from becoming too tight and made it harder for some people to obtain jobs.
This news flow appears to have decreased concern about the employment report on Friday, and it caught the bears by surprise once again. A combination of short-squeezes and FOMO helped to drive the action Thursday morning, with breadth running at around 7,000 gainers to 1,800 decliners.
I'm not interested in betting on the market's reaction to the jobs news on Friday morning, so I am doing very little right now.
In my hunt for new buys, I've been reviewing the holdings of Cathie Wood's ARK ETFs. Woods receives a tremendous amount of publicity despite very poor results. She did extremely well with a very large position in Tesla TSLA back in 2020-2021, but year to date, in 2024, she is down 2%. In 2022, she lost 67% but gained 68% in 2023.
Wood has uncovered some gems, which is why she continues to receive so much attention despite her lumpy performance. Currently, her six ETFs hold 126 positions. Her top-10 positions make up about 60% of the total. In order of size, they are Coinbase COIN, Tesla, Block SQ, Roku ROKU, UiPath PATH, CRISPR Therapeutics CRSP, Robinhood HOOD, Roblox RBLX, Zoom Video ZM, and DraftKings DKNG.
Do any of these names currently look like compelling buys?
COIN and HOOD are largely levered to Bitcoin and cryptos, which have been on a strong run but are now looking extended and may need to consolidate. If you believe in the Bitcoin theme, then these two names are a great way to play it.
RBLX, TSLA, ROKU, PATH, ZM, and CRSP have poor charts and currently are not in uptrends. These stocks may be potential bottom-fish candidates if they hold support, but there is no compelling technical reason to buy them currently.
SQ is in a trading range after gapping up on good earnings in February. It has the potential to test recent highs depending on market conditions and fundamentals.
The best name of the 10 right now is DKNG. The stock has had a nice uptrend since October and pulled back after hitting highs about a week ago. Sports betting is seeing secular growth, and DKNG looks to be a leader in the group. If I was going to buy one of Wood's top-10 stocks, it would be DKNG.
At the time of publication, Rev Shark had no positions in any securities mentioned.
