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Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought

By Rick Munarriz – Aug 11, 2021 at 11:57AM

Key Points

  • CEO Cathie Wood's ARK Invest publishes its buys and sells daily.
  • She added to three names that posted financial results earlier this month.
  • DraftKings, Zillow Group, and Etsy continue to trade well below their earlier highs.

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ARK Invest is always making moves. Let's go over some of the star fund manager's noteworthy buys on Tuesday.

ARK Invest CEO Cathie Wood turned heads last year after the breakthrough performance of the money manager's exchange-traded funds. This year has proven a bit more challenging, but volatility in some of her favorite names is creating buying opportunities.

What is Wood buying these days? Well, she added to her positions in DraftKings (DKNG -0.41%), Zillow Group (Z 0.06%), and Etsy (ETSY 2.01%) on Tuesday. Let's take a closer look at the shopping list. 

A stock chart bouncing up from a trampoline.

Image source: Getty Images.

DraftKings 

We love sports, and we tend to overestimate our ability to predict outcomes of games and individual performances. DraftKings is cashing in as a leader in fantasy sports and now traditional wagering. 

Growth has been stellar here. Revenue soared 320% in last week's second quarter, accelerating from the 253% year-over-year top-line pop it posted for the first quarter. Monthly unique payers on the DraftKings platform have soared 281% over the past year, and it continues to strike new deals with networks, leagues, and individual teams to make sure the brand is prominent in the sports world. 

Despite DraftKings' growth and its dominant position, the stock is still trading 30% below its springtime highs. With DraftKings raising its guidance last week and making another smart acquisition earlier this week you can't blame Wood for placing some more chips on her DraftKings bet.

Zillow Group

The real estate market is booming, and Zillow Group came through with a 70% year-over-year increase in revenue in last week's second-quarter report. A return to its home-flipping Zillow Offers platform played an important part in the recovery, but the 70% growth there was matched by a 70% uptick for the balance of the business. 

Zillow has never been more popular, with 229 million monthly unique visitors across all of its platforms. Zillow Offers continues to lose money, but its flagship business -- the internet, media, and technology segment -- is more than bailing the home-flipping initiative out.

If buying DraftKings for 30% off sounds like a deal, Zillow Group is still trading for less than half of its all-time high. Wood knows how to spot a bargain.

Etsy

A third stock that Wood added to Tuesday was Etsy. The online marketplace for arts and crafts was a superstar last year. Folks stuck at home discovered the joys of the side hustle in creating artsy merchandise. Shoppers looking for unique face coverings as COVID-19 protection turned to Etsy.

The comparisons will get challenging now, and that could be why the stock took a 12% hit through the final two trading days of last week after the company posted mixed financial results. Revenue growth slowed to 23% on a mere 13% rise in gross merchandise sales, but that was actually just ahead of analyst expectations. The real dagger in last week's report was guidance, with Etsy forecasting a sequential dip in revenue that fell well short of Wall Street's target. 

Etsy has already made back roughly half of last week's hit, but it's still a dinner bell for Wood. The online marketplace isn't going away anytime soon, and the pandemic only helped it speed up the number of buyers and sellers that are now comfortable on the platform. 

Rick Munarriz owns shares of DraftKings Inc. The Motley Fool owns shares of and recommends Etsy, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Etsy Stock Quote
Etsy
ETSY
$121.88 (2.01%) $2.40
Zillow Group (C shares) Stock Quote
Zillow Group (C shares)
Z
$35.31 (0.06%) $0.02
DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.44 (-0.41%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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