In this article we discuss ARK Investment's Cathie Wood's most favorite EV stocks. You can skip our discussion about the spectacular returns of ARK Investment, Cathie Wood's investment philosophy and go directly to 5 Best EV Stocks to Buy According to Cathie Wood.
Catherine Wood is the founder of ARK Investment Management LLC which now manages close to $50 billion in assets. The hedge fund’s ETF revenue alone rakes in about $225 million a year. The 65-year-old investor has been getting a lot of attention lately amid her profitable bets. Bloomberg named Cathie as the best stock picker of 2020. Cathie Wood is known for her audacious yet prescient bets that often spark a stir. In 2018 Cathie Wood said that Tesla stock would hit $4000. Earlier in 2021 she lifted her price target for the EV company to $7000. Her hedge fund ARK Investment Management now owns 7.31 million shares of Grayscale Bitcoin Trust.
ARK Investment Fund has posted a whopping 39.74% annualized returns, nearly triple the S&P 500’s performance over the same period. Out of a total of six ETFs operated by ARK, five posted returns of more than 100%. As of the end of 2020, ARK has $34 billion in ETF assets, up from $3 billion by the end of 2019.
In a recent interview with Yahoo Finance's Jen Rogers, Cathie Wood talked about ARK's Innovation Fund, big themes for 2021, cryptocurrency and other investment ideas. Wood especially talked at length about the innovation in the automobiles sector, with a special focus on electric vehicles. In this article we will take a look at some of the best EV stocks to buy according to Cathie Wood by analyzing ARK's 13F holdings. But first let's dig deeper into what Cathie said about the EV industry during her interview.
"If we're right, this market is going to go from 2.2 million sales that is in 2020, it might be 2.3 to 40 million in 2025"
Cathie said that the world is swiftly moving away from conventional, combustion engines to EVs. This shift has increased ARK's confidence that the capital markets are going to finance this whole transition.
Tesla: Still the Leader of the EV Market
"Who is going to be leading the charge? We still think it is Tesla, Inc. (NASDAQ: TSLA) certainly in the United States, even in China, Tesla is the number one brand."
The China Factor
Wood also talked about the Chinese automobile manufacturers. She thinks that Chinese EV companies could be the 'next big winners'.
"We think that China might hold the secret as to the next big winners. We do not own NIO Limited (NYSE: NIO), it's a battery swapping company, instead of charging, they swap batteries, and that is going to win the day."
She also mentioned the electric vehicle firm XPeng Inc. (NYSE: XPEV). Even though ARK does not have stakes in the company, Cathie thinks it is emulating Tesla. Cathie also likes BYD, a Chinese automobile and battery manufacturer. ARK owns BYD in their more specialized strategies. She also talked about the car company Geely (NYSE: GELYF) which bought Volvo. According to Cathie, the chairman of Geely owns a position in the vehicle manufacturer Daimler. Cathie said that Geely is doing a lot of interesting things in terms of partnering with various companies including the Chinese technology company Baidu, Inc. (NASDAQ: BIDU).
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"If I had to give you which of the Chinese names we have the highest conviction in, it's probably Baidu, and that had been a hard sell for me because their research business was falling apart," said Wood, noting that there are about 150 to 200 electric vehicle manufacturers that are being subsidized by the government, increasing competition for Baidu.
Another interesting car company mentioned by Wood was self-driving car tech company AutoX.
"They're working with DongFeng(Chinese State-Owned car manufacturer) which is mostly involved in the trucking space, but we did take note that AutoX has gotten approval from California to go fully autonomous,-- so that could be another one to watch."
Talking about cryptocurrencies, Cathie said that there's still a lot of room to run for Bitcoin. Cathie disagrees with the notion that the cryptocurrency has already peaked.
"We do not agree with that. What's been interesting this time around is if you look at Google search trends for Bitcoin against Bitcoin's price itself, you'll find that there's a lot of speculative activity by that measure."
"We have been expecting institutions to start moving into Bitcoin and other crypto assets....If you look at the correlation of Bitcoin's performance relative to any other asset class, it has the lowest correlation, meaning if you buy some Bitcoin, you will further diversify your portfolio and increase your returns with lower risk. That's why institutions look for that low correlation, Bitcoin has it."
Cathie also talked about the 'surprising' new trend of companies putting money into Bitcoin.
"Square, Inc. (NYSE: SQ) put 1% of all of its assets in Bitcoin and I think you're going to see more of that."
The most surprising one for Wood so far has been MassMutual, an insurance company that put $100 million in Bitcoin for its general investment account.
"Its general account now is enormous. A hundred million dollars is something like 0.001, but what that move told us is that MassMutual is very conservative and very highly regulated, so it had to jump through many more regulatory hurdles that I thought would have been possible by now. So I think that is a seal of approval."
Much Bigger Than Apple or Amazon
"We do believe that Bitcoin is getting ready for institutional but when we actually think about this, Bitcoin is only roughly a $600 billion market cap so not even half the size of Apple or Amazon.-- Yet it is a very big idea, I think a much bigger idea than Apple or Amazon."
With Cathie's thoughts in mind, let's start our list of 10 best EV stocks to buy according to Cathie Wood. We will analyze ARK Investment's 13F data released for Q4'20 for this analysis.
10. Honeywell International Inc. (NYSE: HON)
Honeywell International is a global conglomerate that offers electric vehicle charging services. The company currently has a $142.7 billion market capitalization. For the past 12 months, it delivered a 12.49% return and settled at $203.57 per share at the closing of February 12th.
As of the end of the fourth quarter of 2020, ARK Investment Management owns 37,476 shares of Honeywell International worth $7.97 million. HON accounts for 0.02% of ARK's total portfolio.
9. Magna International Inc. (NYSE: MGA)
Magna International makes mobility technology for automakers. The company is currently focused on investing in Artificial Intelligence (AI) to produce more high-end classy electric vehicles. Magna International currently has a $23.5 billion market capitalization. It was able to deliver a decent 53.92% return in the past 12 months and settled at $77.90 per share at the closing of February 12th.
Cathie Wood's ARK Investment Management invested $8.3 million in Magna International Inc. in the fourth quarter, buying 117,282 shares.
8. Rockwell Automation, Inc. (NYSE: ROK)
Rockwell Automation is an industrial automation and information technology provider. The company is committed to industrial automation and information to provide sustainable and more efficient vehicles and other products to their customers. Rockwell recently opened its Electric Vehicle Innovation Center in Silicon Valley to provide education for manufacturers who want to learn new technologies. Rockwell currently has a $29.1 billion market capitalization. For the past 12 months, it was able to deliver a 24.78% return and settled at $249.18 per share at the closing of February 12th.
ARK Investment Management currently owns 55,862 shares of Rockwell Automation.
7. Niu Technologies (NASDAQ: NIU)
Niu Technologies is a Chinese electric scooter company. The entry-level Niu scooter is priced in the mid $2,000 range. Niu Technologies currently has a $3.7 billion market capitalization. For the past 12 months, it was able to deliver an impressive 424.36% return and settled at $49.01 per share at the closing of February 12th.
ARK currently holds 887,653 shares of Niu Technologies that amounts $24.88 million. NIU occupies 0.06% of ARK's total portfolio.
6. Xilinx, Inc. (NASDAQ: XLNX)
Xilinx Inc. is a semiconductor manufacturing company that offers EV services and technologies such as Electric Vehicle Management ECU, On-board Charger, Battery Management Systems and EV Motor Drive Control. Xilinx currently has a $34.9 billion market capitalization. For the past 12 months, it was able to deliver a decent 57.70% return and settled at $145.75 per share at the closing of February 12th.
ARK Investment Management owns 205,309 shares of Xilinx Inc., worth $29.1 million.
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Disclosure: None. 10 Best EV Stocks to Buy According to Cathie Wood is originally published on Insider Monkey.