The hottest person in the normally quiet world of exchange-traded funds is Cathie Wood. Its actively managed ARK Invest ETFs have been a pioneering force in the industry, and the fact that they all doubled in price in 2020 was a major selling point.
Wood is constantly buying and selling shares in his top five active ETFs. However, three companies in particular really stood out last 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 good options right now.
Image source: ARK Invest.
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 analyst on February 18, making up about half a percent of the ETF’s total holdings. This followed a purchase on February 16 of 1.56 million shares for the ARK Next-Generation Internet ETF (NYSEMKT: ARKW), representing approximately the same 0.5% purchase. That adds up to almost $ 200 million in purchases.
The big purchase on February 18 came just after Palantir released its quarterly financial results, which caused the stock to plummet and gave Wood a bargain entry point. Some investors were nervous that while Palantir’s revenue increased 40% year over year, it contained the loss of money at a higher rate than most had anticipated. However, as with many young companies, Palantir had too many share-based compensation to weigh its financial results. Take that away, and there were encouraging things to see, including improved margins and considerable growth in your business in the non-governmental private sector.
I would anticipate that Wood will continue to increase positions in Palantir at opportunistic times. It is one of the lowest positions in ARK Innovation, but this can change quickly based on its previous practice.
2. Tesla
Tesla (NASDAQ: TSLA) has been the driving force behind Wood’s success in the past year, and the shares of the electric vehicle manufacturer are a major holding in several ETFs ARK Invest. Wood remains optimistic about the future success of the company led by Elon Musk.
Specifically, Wood purchased a total of almost 162,000 shares of ARK Innovation on February 17 and 19, spending almost half a percent of the assets. It bought just over 29,500 shares for ARK Next-Generation Internet and almost 13,200 shares for ARK Autonomous Technology & Robotics (NYSEMKT: ARKQ), resulting in approximately 0.25% of the assets of both funds. In all, she probably spent about $ 160 million to bring Tesla’s holdings in these three ETFs to between 8% and 10% each.
Wood likes 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 mentioned hitchhiking as a potential use for Tesla vehicles as well. 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 prospects.
3. AbbVie
Finally, AbbVie (NYSE: ABBV) was a big favorite for the ETF ARK Genomic Revolution (NYSEMKT: ARKG). Wood made successive purchases of 122,000, 295,000 and 186,000 shares on February 16, 17 and 18, adding up to about 0.5% of ETF assets. The genomic ETF is lower than its peers, so it totaled an expenditure of about $ 60 million.
Two of ARK Invest’s great ideas for 2021 involve tracking multiple cancers and second generation cell and genetic therapies. Many of the companies owned by the ETF genomics are newer players in the field, such as the top holding Teladoc Health (NYSE: TDOC). However, AbbVie has a wide range of candidate treatments, along with a solid balance sheet for potential acquisitions and strategic partnerships. Wood apparently believes AbbVie is well positioned to take advantage of what it sees as innovative trends in the healthcare space.
Don’t take your eyes off Cathie Wood’s stock choices
With so many investors watching Cathie Wood’s investment moves in her extremely active ETFs, it is essential to know the big moves she is making. Her opinions weigh heavily and she can serve as a useful source of ideas if you are looking for actions to add to your portfolio.