These 2 Warren Buffett and Cathie Wood Stocks Are Lapping the Market so Far in 2023

Cathie Wood and Warren Buffett are two of the most well-known investors in the world, albeit for very different reasons.

Buffett runs the large conglomerate Berkshire Hathaway (BRK.A -0.30%) (BRK.B -0.24%) and has historically been a value investor, although he dabbles in a variety of investing strategies and in almost every industry. Wood, on the other hand, runs ARK Invest, which manages several exchange-traded funds (ETF) focused on growth stocks and is known for being a big-tech investor and a believer in crypto, as well.

While they have different investing strategies, both Berkshire and ARK happen to own two of the same stocks. Those two stocks just happen to be doing quite well compared to the broader market so far in 2023. Let's take a closer look at these two stocks.

1. StoneCo

Berkshire and ARK both seem to be interested in the fintech space in Latin America, particularly in Brazil, which is a very fast-growing banking and financial market. ARK Invest owns 2.45 million shares in the payments and e-commerce company StoneCo (STNE -1.45%), valued at around $25 million. Berkshire owns close to 10.7 million shares, valued at more than $114 million.

StoneCo stock is up about 32% this year, which compares very favorably to the S&P 500's roughly 5% rise so far this year. Tech stocks, in general, have rallied, thanks to favorable data lately regarding inflation.

StoneCo makes it easier for merchants in Latin America to do business and drive sales, both online and in person. This includes providing various financial services such as payments, digital banking, and various lending products, as well as software, such as an e-commerce platform, marketplace, and customer interaction tools. At the end of the third quarter of 2022, StoneCo had more than 2.3 million payment clients generating $14.5 billion in volume across its platform.

The company has struggled due to geopolitical and macro headwinds in Brazil in 2022, which are a common theme in the country, but is still showing promising growth in a high-opportunity market. The stock trades at about 18 times forward earnings, which is a growth valuation but certainly not unreasonable, given the opportunity.

2. Nu Holdings

ARK Invest owns the Brazilian digital bank Nu Holdings (NU 1.35%) in both its ARK Fintech Innovation ETF and its ARK Next Generation Internet ETF. Collectively, ARK owns close to 4.5 million shares, worth more than $18.1 million. Berkshire owns more than 107 million shares, valued at close to $431.7 million. The stock is up close to 16% this year.

Nu got its start by offering credit cards with no annual fees to Brazilians and then expanded into many other banking products and financial services. Its sleek fintech interface makes it a lot easier for customers to use and access than incumbent banks in Brazil.

Since launching in 2014, Nu amassed an astounding 70 million-plus customers and now banks 39% of the Brazilian adult population. Nu is also operating in Mexico and Colombia. In the third quarter of 2022, the company generated more than $1.3 billion in revenue and even managed a small profit of $7.8 million.

But being a bank, Nu isn't immune to broader macro headwinds, which have added concerns over how its credit card and personal loan portfolio might hold up. Still, it's not common to see a fintech company with this kind of incredible growth that also showing signs of profitability.