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The hottest person in the usually quiet world of exchange traded funds is Cathie Wood. Its ETFs actively managed by ARK Invest were a pioneering force in the industry, and the fact that they all doubled in price in 2020 was a huge selling point.
Wood is constantly buying and selling stocks for his top five active ETFs. However, three companies in particular really stood out in the past week, given the size and persistence of Wood’s buying activity. Let’s take a look at these companies and see if they look like solid choices right now.
Image source: ARK Invest.
1. Palantir Technologies
Palantir Technologies (NYSE: PLTR) was a big buy from Wood last week. Its flagship product ETF ARK Innovation (NYSEMKT: ARKK) bought more than 5.27 million shares of the data analyst’s stock on Feb. 18, which is about half a percent of the ETF’s total holdings. This follows a purchase of 1.56 million shares on February 16 for the Next Generation Internet ETF ARK (NEW: ARKW), which is roughly the same 0.5% purchase. This represents nearly $ 200 million in purchases.
The big buy on Feb.18 came immediately after Palantir released its quarterly financials, which took the stock down significantly and gave Wood a good deal entry point. Some investors were concerned that while Palantir’s income jumped 40% year over year, it contained losing money at a faster rate than most had expected. Yet, as with many start-ups, Palantir had a lot of stock-based compensation to weigh on its bottom line. Support that, and there were some encouraging things to see including improved margins and significant growth in its private non-government sector business.
I anticipate that Wood will continue to add positions to Palantir at opportunistic times. This is one of ARK Innovation’s smaller positions, but that could change quickly depending on its past practice.
2. Tesla
You’re here (NASDAQ: TSLA) has been the driving force behind Wood’s success over the past year, and the title of Electric Vehicle Manufacturer is one of the main titles of several ARK Invest ETFs. Wood remains optimistic about the future success of the company led by Elon Musk.
Specifically, Wood bought a total of nearly 162,000 shares for ARK Innovation on February 17 and 19, spending nearly half a percent of its assets. She bought just over 29,500 shares for ARK Next-Generation Internet and nearly 13,200 shares for Autonomous technology and ARK robotics (NEW: ARKQ), representing approximately 0.25% of the assets for the two funds. In total, she probably spent around $ 160 million to bring Tesla’s holdings in those three ETFs down to between 8% and 10% each.
Wood loves Tesla not only for its dominant, fast-growing electric vehicle franchise, but also for the adjacent opportunities in areas such as autonomous driving, artificial intelligence, and battery technology. Last week, she also mentioned carpooling as a potential use for Tesla vehicles. Wood isn’t giving up on the horse that helped her win the race in 2020, and many investors also remain bullish on the stock’s outlook.
3. AbbVie
To finish, AbbVie (NYSE: ABBV) was a big favorite for the ARK Genomic Revolution FNB (NYSEMKT: ARKG). Wood made successive purchases of 122,000, 295,000 and 186,000 shares on February 16, 17 and 18, representing approximately 0.5% of the ETF’s assets. The Genomics ETF is smaller than its peers, costing approximately $ 60 million.
Two of ARK Invest’s big ideas for 2021 concern the screening of several cancers and second generation cell and gene therapies. Many companies owned by the Genomics ETF are newer players in the field, such as Teladoc Health (NYSE: TDOC). However, AbbVie has a massive pipeline of candidate treatments as well as a strong track record for potential acquisitions and strategic partnerships. Wood apparently believes AbbVie is well positioned to capitalize on what she sees as revolutionary trends in healthcare.
Stick to Cathie Wood’s stock picks
With so many investors watching Cathie Wood’s investments in her actively managed and effervescent ETFs, it’s critical to know the big moves she’s making. Her opinions carry considerable weight and she can be a useful source of ideas if you are looking for stocks to add to your portfolio.
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