The most popular person in the usually quiet and calm world of exchange-traded funds is the head of ARK Invest, Cathy Wood.
Wood constantly buys and sells stocks for his five major active ETFs. But last week, three companies that she bet on stood out in particular. Let's look at the details and try to decide if Wood's choice was a wise one.
1. Palantir Technologies
Last week, Wood made a massive purchase of shares in Palantir Technologies (PLTR). On Feb. 18, flagship fund ARK Innovation (ARKK) acquired more than 5.27 million shares of the data analytics company, about 0.5% of the ETF's total holdings.
The deal follows a Feb. 16 purchase of 1.56 million shares for the ARK Next-Generation Internet ETF (ARKW), also at about 0.5%. In total, the value of transactions is at the level of $200 million.
The big buy on Feb. 18 came just after Palantir released its quarterly financial results, sending the stock plummeting and providing Wood with an entry point for a bargain. Some investors were unhappy with the fact that while Palantir's revenue grew 40% year-on-year, the company continued to lose money at an even faster rate than most expected.
Most likely, Wood will continue to buy shares of Palantir at convenient moments. So far, this is one of the smallest positions in ARK Innovation, but as history shows, this can change quickly.
2.Tesla
Most likely, you know that Tesla (TSLA) has been the key to Wood's success over the past year - shares of the electric car manufacturer are the main asset of several ARK Invest ETFs. Wood remains optimistic about the future success of the Elon Musk-led company.
Specifically, on February 17 and 19, Wood purchased a total of nearly 162,000 shares for ARK Innovation. It bought just over 29,500 shares for ARK Next-Generation Internet and nearly 13,200 shares for ARK Autonomous Technology & Robotics (ARKQ), representing roughly 0.25% of both funds' assets. Overall, Wood spent about $160 million to bring Tesla to 8-10% stake in each of these three ETFs.
Wood is banking on Tesla not only for the company's fast-growing, dominant electric vehicle franchise, but also for its strong growth opportunities in areas such as autonomous driving, artificial intelligence, and battery technology. Wood has no plans to give up on the horse that helped her win the race in 2020, and many investors are also optimistic about Tesla's prospects.
3. AbbVie
AbbVie (ABBV) has become one of the top favorites for the ARK Genomic Revolution (ARKG) ETF. On February 16, 17, and 18, Wood purchased 122,000, 295,000, and 186,000 shares of the company, representing about 0.5% of the ETF's assets. The purchase took about $60 million.
Two big ideas that ARK Invest will focus on in 2021 include cancer screening and second-generation cell and gene therapies. Many of the companies in the ARK Genomic portfolio are new to the field. For example, we are talking about Teladoc Health (TDOC), whose papers occupy the largest share in the ETF.
But AbbVie also has a broad portfolio of new drugs, as well as a solid balance sheet for potential acquisitions and strategic partnerships. Apparently, Wood thinks AbbVie is well positioned to take advantage of innovative healthcare trends.
Why Cathy Wood's Actions Matter
Since a large number of investors are watching Kathy Wood's investments, it is important to know what important steps she is taking. Her opinion is of great value and can be a useful source of ideas if you are in the process of building your portfolio.
Source Financial Online
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