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Cathie Wood Bought Teladoc (TDOC) Stock on the Dip. Here’s Why.

Investor Place · 04/29/2022 12:24

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Shares of Teladoc Health (NYSE:TDOC) collapsed by over 40% yesterday after the company reported disappointing first-quarter results. Teladoc’s earnings were overshadowed by a massive $6.6 billion goodwill impairment charge. According to the company, the charge was due to “decreased market multiples” and an “increased discount rate.”

Teladoc Health (TDOC) logo on a mobile phone screen
Source: Piotr Swat / Shutterstock.com

While not mentioned explicitly, the charge is likely due to Teladoc’s $18.5 billion acquisition of Livongo back in 2020. Before the company disclosed Q1 earnings, Livongo had $12.8 billion of goodwill value.

Despite the poor earnings results, Cathie Wood reported buying 609,665 shares of TDOC stock yesterday. Let’s dive into the details.

Cathie Wood Buys More TDOC Stock

These shares of TDOC stock were purchased through four of Ark Invest’s exchange-traded funds (ETFs), including the Ark Fintech Innovation ETF (NYSEMKT:ARKF). This is somewhat odd, as ARKF is centered towards fintech innovations and Teladoc is a telemedicine company. However, the ETF had previously owned shares of Teladoc prior to yesterday’s purchase. After the purchases, Ark now owns a total of 18.33 million shares, making it the largest shareholder.

Before Teladoc reported earnings, the company was Ark Invest’s second-largest position across all of its ETFs, with a 5.77% allocation worth $1.1 billion. After the large decline, however, Teladoc fell to the eighth-largest position with a 3.6% allocation worth $614 million.

Cathie Wood reported buying shares of Teladoc on Monday and Tuesday as well. On Monday, Ark ETFs purchased 44,940 shares. The next day, Ark bought another 101,563 shares.

Wood’s purchases after Teladoc reported earnings reflect her heavy conviction about the company. The ETF manager likely believes that the price decline was overdone — and that Teladoc can reward investors with long-term gains. Currently, shares of TDOC stock are up about 2% today.

Who Else Is Betting Big on Teladoc?

Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During Q4, 700 funds reported holding Teladoc, a decrease of 36 funds from the prior quarter. What’s more, 224 funds increased their position during the quarter while 246 funds reduced their positions. Finally, the institutional put/call ratio lies at 1.51, which means that more funds own put options against the company than call options.

With that in mind, let’s take a look at the top five shareholders of TDOC stock.

  1. Ark Invest: 18.33 million shares or 11.38% ownership.
  2. Vanguard Group: 13.14 million shares or 8.19% ownership.
  3. Baillie Gifford: 10.88 million shares or 6.78% ownership.
  4. BlackRock (NYSE:BLK): 9.43 million shares or 5.88% ownership.
  5. Sumitomo Mitsui Trust: 8.84 million shares or 5.52% ownership.

It should be noted that WhaleWisdom lists a 19.47 million share position or 12.14% ownership for Ark Invest. This is a slight discrepancy from the data listed on Cathie’s Ark, as of this writing.

On the date of publication, Eddie Pan did not hold (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.

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