In this article, we discuss the 10 fintech stocks to buy according to Cathie Wood. In order to skip our detailed analysis of Wood’s hedge fund performance, stock selection and history, go directly to 5 FinTech Stocks to Buy According to Cathie Wood.
Cathie Wood’s ARK Investment Management is the fund to watch on Wall Street when it comes to disruptive tech. Wood started her own hedge fund in 2014 after her idea for innovation-focused disruptive tech ETFs was rejected by AllianceBernstein, where she worked as chief investment officer of global thematic strategies. Her early bullish call on Tesla, Inc. (NASDAQ:TSLA), along with choosing pandemic trailblazers such as Zoom Video Communications, Inc. (NASDAQ:ZM) and Teladoc Health, Inc (NYSE:TDOC), made her investment choices the talk of the town. Her flagship ARK Innovation ETF (NYSE:ARKK) returned 170% in 2020, even though it initially received plenty of criticism for the unusual style of investing. The critics had their day in 2021 and the start of 2022, as the growth-oriented fund lost more than $13 billion in value, falling over 60%. This is because inflation, soaring energy prices, and the geopolitical tensions resulting from the Russian invasion of Ukraine left investors with little appetite for risky, growth stocks. But come May 2022, and investors are again warming up to Wood’s Innovative ETF, recording more than $450 million of inflows in the first week of May.
FinTech combines two very crucial sectors of the economy: financial and technology. Tech is transforming the traditional banking and finance industry by moving it towards digital platforms which provide better, more inclusive financial services for everyday citizens.
Analyst Jeff Cantwell at research firm Wells Fargo says there’s a $1.5 trillion growth market opportunity for fintech companies, with annualized growth of 6% over the coming decade. This growth will be driven by the increased adoption of digital payment methods, for both consumers and merchants alike. Another trend is the transition of some firms towards a cloud-based model of ‘as-a-service’, where subscription fees are charged for e-wallets, account processing and related services.
Not only that, increased relevance of cryptocurrencies in the global payments industry will also lead to growth in the fintech sector. Among the 14 stocks in his coverage which includes Paypal Holdings, Inc. (NASDAQ:PYPL), Fiserv, Inc. (NASDAQ:FISV) and Global Payments Inc. (NYSE:GPN), Cantwell believes fintech stocks can raise profits by 15% in 2022 and 17% in the coming year, figures which are above the yearly growth projections for the S&P 500.
Cathie Wood of ARK Investment Management
With all this hype around fintech, disruptive tech and Cathie Wood’s latest portfolio, let’s take a look at the top 10 fintech stocks to buy according to the famed investor’s ARK Investment Management.
We went through Cathie Wood’s 13 portfolio for the first quarter of 2022, and picked her top 10 holdings in the fintech sector.
FinTech Stocks to Buy According to Cathie Wood
10. Kaspi.kz JSC
ARK Investment Management’s 13 Portfolio: 0.06% ARK Investment Management’s Stake Value: $14.9 million Number of Hedge Fund Holders: N/A
Starting off the list of fintech stocks to buy according to ARK Investment Management is Kaspi.kz JSC, which is Kazakhstan’s largest marketplace, payments, and fintech ecosystem. According to regulatory filings for first quarter of 2022, Cathie Wood owned 212,000 shares of Kaspi.kz JSC at a value of $14.9 million, representing 0.06% of the fund’s total holdings. In comparison, the hedge fund owned 221,000 shares of the Kazakhstani firm a quarter ago.
Kaspi.kz JSC has developed an all-in-one platform known as its Super App, which allows users to make mobile payments, browse the company’s online marketplace, make P2P payments, get access to personal finance and loans, as well as a personal finance app called My Bank.
For the first quarter of 2022, Kaspi.kz JSC recorded 7.2 million daily average users for its Super App, an increase of 34% year-on-year. The average monthly transactions of each active consumer also increased 63% from the year-ago quarter to come in at 53.1. The company also recorded strong growth in the number of active merchants, growing 233% year-on-year to reach 292,000.
In addition to Paypal Holdings, Inc. (NASDAQ:PYPL), Fiserv, Inc. (NASDAQ:FISV) and Global Payments Inc. (NYSE:GPN), Kaspi.kz JSC is one of the best fintech stocks to buy now.
9. LendingClub Corporation (NYSE:LC)
ARK Investment Management’s 13 Portfolio: 0.06% ARK Investment Management’s Stake Value: $14.9 million Number of Hedge Fund Holders: 31
LendingClub Corporation (NYSE:LC) deals in the provision of loans to customers in the categories of auto, education, medical, real estate and commercial. It operates through its tech-driven online platform lendingclub.com. Cathie Wood’s portfolio at the end of the first quarter of 2022 consisted of approximately 944,000 shares of LendingClub Corporation (NYSE:LC) worth $14.9 million, representing 0.06% of her total holdings.
On February 7, Wedbush analyst David Chiaverini kept an ‘Outperform’ rating on LendingClub Corporation (NYSE:LC) shares, and decreased the price target to $30 from $35. The analyst lowered his EPS estimates as he took into account an increasingly competitive market for consumer lenders which could put pressure on expenses.
For the fourth quarter of 2021, LendingClub Corporation (NYSE:LC) posted revenue of $262.2 million, showing an impressive increase of 245.45% from the year-ago quarter. EPS of $0.27 also outperformed estimates by $0.05.
31 out of the 924 elite hedge funds tracked by Insider Monkey held positions in LendingClub Corporation (NYSE:LC) at the end of the fourth quarter, with a combined value of $360.4 million. This shows a positive trend from the previous quarter where 25 hedge funds held $437 million worth of stakes in the company.
8. Intuit Inc. (NASDAQ:INTU)
ARK Investment Management’s 13 Portfolio: 0.07% ARK Investment Management’s Stake Value: $18.34 million Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) ranks next on the list of fintech stocks to buy according to Cathie Wood. The firm provides a range of financial management and compliance products, including QuickBooks, a platform for accounting and business management, and Credit Karma, a personal finance platform which provides personalized information regarding credit cards, insurance products and loans. Cathie Wood’s ARK Investment Trust owned 38,000 shares of Intuit Inc. (NASDAQ:INTU) worth $18.3 million at the end of the first quarter of 2022.
On May 2, analyst Daniel Jester of research firm BMO Capital maintained an ‘Outperform’ rating on Intuit Inc. (NASDAQ:INTU) shares, and reduced the price target to $550 from $600 to reflect the on-going compression in software multiples. The analyst notes that shares of the firm have lagged its competitors in the current market situation, thus creating an attractive entry point for investors with a long-term horizon.
Investors were seen piling into Intuit Inc. (NASDAQ:INTU) at the close of the fourth quarter of 2021, where 82 hedge funds reported owning $7.99 billion worth of stakes in the company. In comparison, 64 hedge funds held $6.15 billion worth of positions in the company a quarter earlier. The largest shareholder in Intuit Inc. (NASDAQ:INTU) at the end of Q1 2022 was Fisher Asset Management, which held a stake in the firm worth $1.04 billion.
Investment firm Baron Funds talked about many stocks in its Q4 2021 investor letter, and Intuit Inc. (NASDAQ:INTU) was one of them. The fund said:
“Intuit Inc. is the leading provider of accounting and tax preparation software. Shares increased after the company reported quarterly results that beat Street estimates, with 22% revenue growth in the Small Business segment and record-high revenue from Credit Karma. The company closed the acquisition of MailChimp, which expands its product offering and is accretive to EPS. Management increased full-year guidance to reflect better organic growth and the contribution from MailChimp. We continue to own the stock due to Intuit’s strong competitive position and numerous growth opportunities. We have several investments in software companies that help businesses manage their financial processes and operations. Intuit Inc. provides accounting and payroll solutions for small businesses as well as tax preparation software for consumers and tax professionals.”
7. Adyen N.V. (OTC:ADYEY)
ARK Investment Management’s 13 Portfolio: 0.09% ARK Investment Management’s Stake Value: $23.6 million Number of Hedge Fund Holders: N/A
Adyen N.V. (OTC:ADYEY) is a Dutch fintech company which provides technologies and services related to e-commerce, mobile, and point-of-sale payments. It allows merchants to send and accept online payments and connect to the global payment infrastructure through international credit cards, local cash-based methods, and internet banking methods.
ARK Investment Management of Cathie Wood owned a $23.6 million stake in Adyen N.V. (OTC:ADYEY) at the close of the first quarter of 2022, consisting of 1.19 million shares and representing 0.09% of its total holdings.
On April 14, Piper Sandler analyst Christopher Donat initiated coverage of Adyen N.V. (OTC:ADYEY) with an Overweight rating and a €1,810 price target. The analyst feels the firm is “best positioned to take market share from legacy merchant acquirers,” and he believes the four next-gen payments companies in his coverage have only penetrated a small portion of their addressable markets, and therefore boast significant revenue-growth opportunity in the coming years.
In May, Adyen N.V. (OTC:ADYEY) expanded its 2018 partnership with Afterpay, a leader in Buy Now Pay Later financial services. The partnership will now work to process payments in the markets of UK, France, Italy, Spain, New Zealand and Australia.
6. StoneCo Ltd. (NASDAQ:STNE)
ARK Investment Management’s 13 Portfolio: 0.13% ARK Investment Management’s Stake Value: $31.30 million Number of Hedge Fund Holders: 35
Then there’s StoneCo Ltd. (NASDAQ:STNE), a provider of integrated fintech services to small-and-medium businesses, e-commerce platforms and integrated software vendors. The firm is based in the Cayman Islands, and serves approximately 1.75 million customers primarily in Brazil.
According to regulatory data for the first quarter of 2022, Cathie Wood owned 2.67 million shares of StoneCo Ltd. (NASDAQ:STNE) worth $31.3 million, representing 0.13% of her overall portfolio. Tybourne Capital Management was the largest shareholder of the firm at the close of the first quarter, with a stake worth more than $45 million.
On April 8, Cantor Fitzgerald analyst Josh Siegler initiated coverage of StoneCo Ltd. (NASDAQ:STNE) with an ‘Overweight’ rating and a price target of $15. The analyst feels that inflation in Brazil will remain high for the year, but the market may be overlooking the company’s ability limit the financial expense impact through higher prepayment fees. He holds that the stock has overcorrected. As of May 12, it is down 62.42% year to date.
Of the 900+ elite hedge funds tracked by Insider Monkey at the close of the fourth quarter, 35 held positions in StoneCo Ltd. (NASDAQ:STNE) with a combined price tag of $892.5 million. This is in comparison to 37 hedge funds a quarter earlier with $2.21 billion worth of positions in the company.
Here is what investment firm ClearBridge Investments had to say about StoneCo Ltd. (NASDAQ:STNE) in its Q4 2021 investor letter:
“We also sold and trimmed several names in the emerging market and emerging growth areas, to manage risk and pursue growth companies with a better long-term risk/reward. These included Brazilian payments provider StoneCo. Having expected a rebound in their performance post a profit warning earlier in the year, rising interest rates in Brazil and investments in newly acquired companies increased operating costs and depressed earnings.”
In addition to Paypal Holdings, Inc. (NASDAQ:PYPL), Fiserv, Inc. (NASDAQ:FISV) and Global Payments Inc. (NYSE:GPN), StoneCo Ltd. (NASDAQ:STNE) is an exciting fintech stock to consider.
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Disclosure. None. 10 FinTech Stocks to Buy According to Cathie Wood is originally published on Insider Monkey.