Teladoc Stock: Cathie Wood Does It Again (NYSE:TDOC)

Back in May, I explored the very interesting situation that was going on with Ark Invest and its Teladoc (NYSE:TDOC) holding. Despite Cathie Wood’s continued extremely bullish statements on the name, the portfolio actions taken regarding the telehealth provider were quite a bit different. Recently, the high-profile ETF manager talked up the name in another major TV appearance, yet days later again did something quite odd with the stock.

Last week, Cathie Wood was on CNBC, discussing why she thinks the Fed is making a mistake in its policy actions. During the interview, she touched on a variety of names in her portfolio, including Teladoc, in which she repeated her sentiment (subscription required) that the name will be a category killer in the future. As a reminder, she previously stated that Teladoc could be the next Amazon (AMZN), and said that Ark’s model had Teladoc making new all-time highs in the coming years, which would be a bit over $300 a share.

Since my previous article, Teladoc shares have lost almost 30% of their value, hitting a new multi-year low below $24 on Tuesday. With a new high in Ark’s model now representing more than 12 times where we are currently, one might expect that the firm is building its position in the name. Well, just like we saw a bit earlier in the year, the situation is currently quite different. Take a look at the table below, showing recent daily position changes for a couple of the ARK Innovation ETF (ARKK) over the past few days. Some totals may appear off due to rounding.

Electric vehicle maker Tesla (TSLA) remains the largest holding in the flagship fund, so the percentage change of its day-to-day holding shows whether ARKK had inflows or redemptions during the previous day. Just a few days after her CNBC interview, Cathie Wood and her team again underweighted Teladoc and Invitae (NVTA) in the redemption basket. With Monday’s holding data out now, it has happened for the second time in just three trading days. For holdings from Friday to Monday, a number of ARKK components saw their positions down by 25 basis points. However, the difference with Teladoc certainly wasn’t a case where the percentage was just one basis point off that could be considered a potential rounding error.

In just these two trading days seen above, the underweighting here has resulted in Teladoc’s holding being reduced by almost 25,000 shares over what it should have been. While that may not seem like that much on a more than 12 million share position, we’ve seen in the past how the number could get quite high if this pattern continues. As a reminder, when this happened previously, Teladoc was underweighted to the point where the difference was well over one million shares in total, especially when considering this also happened in the ARK Genomic Revolution ETF (ARKG). Not only are we talking about a meaningful portion of the firm’s holdings here, but also tens of millions of dollars’ worth of stock.

The situation with Teladoc is also a bit different this time in terms of the name’s place in the flagship fund. When this process started in March, Teladoc was the second-largest holding in ARKK and had a weight of more than 6.5%. When the May scenario got underway, the name was down to 6th place with a weight just over 4.9%. Last week, Teladoc was just the 11th largest holding and its weight wasn’t even 4.3%.

As for Teladoc shares, the street remains quite bullish on the name, although that comes with a bit of an asterisk. The current average price target above $35 implies significant upside from current levels. Of course, that number was nearly $53 at my last article and down well over $200 from the peak average target. The street also doesn’t see the exceptionally large upside that Ark Invest is currently calling for in its model.

In the end, Cathie Wood is back to her pattern of conflicting actions with Teladoc. Despite another bullish interview last week where she talked up the name, the flagship ARKK fund started underweighting the name in its redemption basket just a few days later. This time, the situation is even more curious with Teladoc being a smaller weighting in the fund than the last couple of times it happened, and not even being a top 10 holding. This process has resulted in Teladoc’s holding being reduced significantly from where it likely should be, despite the portfolio manager believing shares could surge more than 10 times from here.