Investor Cathie Wood deserves to take a victory lap.
After being vilified for almost two years for allocating capital to disruptive technology stocks, Wood’s 2023 strategy has proven successful. The flagship ARK Innovation (NYSEARCA:ARKK) exchange-traded fund (ETF) that Wood runs through her investment management firm Ark Invest is up 70% this year. After enduring the 2022 bear market, the ARKK fund, which has nearly $9 billion of assets under management, is now up 43% over the last five years.
The turnaround is remarkable. Wood stuck to her guns and refused to change her approach of investing in high-growth innovative companies, even if they are unprofitable start-ups. Heading into the new year, Wood and her main ETF look positioned for continued success. Let’s explore December’s picks.
Coinbase Global (COIN)
The biggest position in Wood’s ARKK fund is Cryptocurrency exchange Coinbase Global (NASDAQ:COIN). With Bitcoin (BTC-USD) price more than doubling this past year, COIN stock has had a great run in 2023. Year to date (YTD), the share price of Coinbase Global is up 352%. Indeed, this has helped drive performance of Wood’s flagship fund. And many analysts see more growth ahead for Coinbase’s stock, especially if crypto prices continue marching higher.
Also, Coinbase Global has benefitted from consolidation among cryptocurrency exchanges with rival FTX collapsing into bankruptcy and Binance struggling to resolve litigation brought against by the U.S. government. Coinbase too is facing some litigation. The U.S. Securities and Exchange Commission (SEC) is suing Coinbase for allegedly violating securities laws. Coinbase is aggressively fighting back, and, so far, the SEC action does not seem to have hurt COIN stock any.
Block (SQ)
Another big holding of Wood’s that’s a bet on the future of crypto, is Block (NYSE:SQ). The fintech is also a major holder of Bitcoin. It has seen its stock start to recover after a bruising downturn along with the entire market last year.
In 2023, SQ stock is up 15%. The stock’s upturn has accelerated since the company issued third-quarter financial results in November that trounced Wall Street forecasts.
Block beat forecasts on both the top and bottom lines and demonstrated strong growth in its Cash App. The company announced earnings per share (EPS) of 55 cents versus the expected 47 cents. Revenue totaled $5.62 billion compared to $5.44 billion that was anticipated. Additionally, Block raised its forward guidance, saying it now expects a 2023 gross profit of $7.44 billion to $7.46 billion. A major crypto holder, Block said that its Bitcoin revenue in Q3 rose to $2.42 billion from $1.76 billion a year earlier.
SQ stock turned positive on the year after the company’s latest earnings print.
Zoom Video Communications (ZM)
The fifth largest position in the ARKK fund is Zoom Video Communications (NASDAQ:ZM). Many investors wrote ZM stock off after the Covid-19 pandemic as people returned to in-person work and school.
But not Wood. As ZM stock fell steadily throughout 2022 and into this year, she kept on buying. Now, Wood is being rewarded as Zoom Video’s share price has risen 22% since the end of October. Like Block, Zoom Video issued strong Q3 financial results that showed much improvement.
The company reported EPS of $1.29, well ahead of consensus forecasts for $1.08 per share. Revenue came in at $1.137 billion, up 3.2% from a year ago and ahead of analyst expectations of $1.119 billion. Zoom said that the number of customers contributing more than $100,000 in revenue on a trailing 12-month basis was up 13.5% from a year earlier.
Looking ahead, Zoom raised its forward guidance above the consensus view on Wall Street, helping to lift ZM stock. This is one of Cathie Wood’s best stock picks.
On the date of publication, Joel Baglole did not have (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.
