The most attractive person in the normally laid-back world of exchange-traded funds is Cathie Wood. Their ETFs actively managed by ARK Invest have been 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 shares for its top five active ETFs. However, three companies in particular really stood out last week, given the size and persistence of Wood’s purchasing activity. Let’s take a look at these companies and see if they seem like solid options right now.
1. Palantir Technologies
Palantir Technologies (NYSE: PLTR) It was a big purchase from Wood last week. Your flagship ARK Innovation ETF (NYSEMKT: ARKK) bought more than 5.27 million shares of the data analytics specialist’s stock on February 18, representing about half percent of the total ETF holdings. That followed a February 16 purchase of 1.56 million shares for the ARK Next Generation Internet ETF (NYSEMKT: ARKW), which represents roughly the same 0.5% purchase. That adds up to nearly $ 200 million in purchases.
The big purchase on Feb.18 came on the heels of Palantir reporting its quarterly financial statements, sending the stock down sharply and giving Wood an entry point into trading. Some investors were nervous that although Palantir’s revenue increased 40% year-over-year, they contained the loss of money at a higher rate than most had anticipated. However, as with many young companies, Palantir had a large share-based compensation to weigh in its bottom line. Back off, and there were encouraging things to see, including improving margins and considerable growth in your non-government private sector business.
I anticipate that Wood will continue to add positions at Palantir at opportunistic times. It’s one of ARK Innovation’s smaller positions, but that could change quickly based on your previous practice.
Tesla (NASDAQ: TSLA) has been the driving force behind Wood’s success over the past year, and the electric vehicle maker’s stock is one of the largest holdings in various ARK Invest ETFs. Wood remains optimistic about the future success of the Elon Musk-led company.
Specifically, Wood bought a total of nearly 162,000 ARK Innovation shares on February 17 and February 19, spending nearly half a percent of assets. He bought a little over 29,500 shares for ARK Next-Generation Internet and almost 13,200 shares for ARK autonomous and robotic technology (NYSEMKT: ARKQ), which is equivalent to approximately 0.25% of the assets of both funds. In total, you probably spent around $ 160 million to bring Tesla’s holdings in those three ETFs to between 8% and 10% each.
Wood likes Tesla not only for its dominant fast-growing electric vehicle franchise, but also for adjacent opportunities in areas like autonomous driving, artificial intelligence and battery technology. Last week, he also mentioned ride-sharing as a potential use for Tesla vehicles. Wood is not giving up on the horse that helped her win the race in 2020, and many investors also remain optimistic about the stock’s outlook.
Finally, AbbVie (New York Stock Exchange: ABBV) it was a big favorite for him ARK Genomic Revolution ETF (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, amounting to a spend of around $ 60 million.
Two of ARK Invest’s big ideas for 2021 include multiple cancer detection and second-generation gene and cell therapies. Many of the genomics ETF companies are newer players in the field, such as Teladoc Health (NYSE: TDOC). However, AbbVie has a huge portfolio of candidate treatments along with a strong 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 healthcare space.
Don’t take your eyes off Cathie Wood’s stock picks
With so many investors watching Cathie Wood’s investment moves in her red-hot actively managed ETFs, knowing the big moves she’s making is essential. Their opinions carry enormous weight and can serve as a useful source of ideas if you are looking for stocks to add to your portfolio.