The hottest person in the usually quiet world of exchange traded funds is Cathie Wood. Her active ETFs, managed by ARK Invest, have been a pioneer in the industry, and the fact that they all doubled their price in 2020 was a big selling point.
Wood is constantly buying and selling stocks for its five major active ETFs. However, three companies in particular really stood out last week, given the scale and persistence of Wood’s purchasing activity. Let’s take a look at these companies and see if they look the right way right now.
Image source: ARK Invest.
1. Palantir Technologies
Palantir Technologies (NYSE: PLTR) was a big buy from Wood last week. Her flagship ARK Innovation ETF (NYSEMKT: ARKK) bought more than 5.27 million shares of the data analyst on February 18, accounting for about half a percent of the ETF’s total holdings. This followed a purchase of 1.56 million shares on 16 February ARK Next-Generation Internet ETF (NEW: ARKW), which represents approximately the same purchase of 0.5%. It amounts to nearly $ 200 million in purchases.
The big buy on February 18 took place immediately after Palantir reported its quarterly finances, which sent the stock down sharply and gave Wood a bargain entry point. Some investors were nervous that although Palantir’s revenue had risen 40% year on year, it was losing money at a higher rate than most expected. But as with many young companies, Palantir had a lot of stock-based compensation to hamper. Think about it, and there were encouraging things to see, including improving margins and significant growth in the non-government enterprise.
I would expect Wood to continue to fill positions in Palantir at opportunistic moments. This is one of ARK Innovation’s smallest positions, but it could change quickly based on her previous practice.
2. Tesla
Tesla (NASDAQ: TSLA) has been the driving force behind Wood’s success over the past year, and the share of the electric vehicle manufacturer is a leading part in several ARK Invest ETFs. Wood remains optimistic about the future success of the Elon Musk-led company.
Specifically, on February 17 and February 19, Wood bought a total of 162,000 shares for ARK Innovation and spent nearly half a percent of the assets. She bought just over 29,500 shares for ARK Next-Generation Internet and nearly 13,200 shares for ARK autonomous technology and robotics (NEW: ARKQ), which accounts for approximately 0.25% of the assets for both funds. By all accounts, it probably spent about $ 160 million to bring Tesla’s holdings in the three ETFs to between 8% and 10% each.
Wood loves Tesla, not only for its fast-growing dominant EV franchise, but also for adjacent opportunities in areas such as autonomous driving, artificial intelligence and battery technology. Last week, she also mentioned the ride-along as a potential use for Tesla vehicles. Wood is not giving up the horse that helped her win the race in 2020, and many investors are also optimistic about the stock’s prospects.
3. AbbVie
Finally, AbbVie (NYSE: ABBV) was a big favorite for the ARF Genomic Revolution ETF (NYSEMKT: ARKG). On February 16, 17 and 18, Wood made consecutive purchases of 122,000, 295,000 and 186,000 shares, adding about 0.5% of the ETF’s assets. The genomics ETF is smaller than its peers, at about $ 60 million.
Two of ARK Invest’s big ideas for 2021 involve screening for cancer and second-generation cell and gene therapies. Many of the companies held by the genomics ETF are newer players in the field, such as top stake Teladoc Health (NYSE: TDOC). However, AbbVie has a massive pipeline of candidate treatments, coupled with a solid balance sheet for potential acquisitions and strategic partnerships. Wood apparently believes that AbbVie is well positioned to take advantage of what she sees as groundbreaking trends in the health space.
Do not take your eyes off Cathie Wood’s shares
As so many investors see Cathie Wood’s investment in her red-hot active-managed ETFs moving, it’s essential to know what big moves she’s making. Her opinions carry a lot of weight and she can serve as a useful source of ideas if you are looking for stocks to add to your portfolio.