🧬 ARKG | ARK Invest’s MASSIVE Genomic Stock Trades (Q3 Finale)

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Welcome back to this quarter's State of the ARK, my quarterly review of Cathie Wood's biggest
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trades in each of ARK Invest's six actively managed funds. The goal is simple: to look
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back at the most recent 90 days of data and see how ARK Invest is putting their money where their
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mouth is. If this is your first time watching the State of the ARK, welcome. There are 4 episodes
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total, which you can watch in any order, I'm calling the whole series ARK Week, which, uh,
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only took me 3 weeks to make. Part one covered the biggest changes to ARK Invest's combined
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positions. Part two highlighted some of the biggest buys inside ARKW and ARKF
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as well as what I think is a pretty interesting inconsistency between their holdings. Part three
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covered ARKQ and ARKX, both of which saw a lot of investments into urban air mobility stocks
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and now have a huge amount of overlap as a result. This is part 4, which will cover ARKG,
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ARK Invest's fund themed around the genomic revolution, as well as ARKK, Cathie Wood's
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flagship innovation fund, which also contains a lot of genomics stocks. Your time is valuable,
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so timestamps are enabled for your convenience and you can find a link to download the full
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State of the ARK presentation for yourself, for free, at ticker symbol you dot com using the URL
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on your screen right now and I'll leave a copy in the description below as well.
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A special thanks to my Patrons on Patreon and channel members right here on youtube
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for helping fund that website. I hope it turns into a useful resource for my great community.
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The first thing I want to point out is that ARKG and ARKK were by far
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the worst-performing ARK Invest funds for the quarter. ARKG dropped in price by about 20%
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and ARKK dropped by about 15%. In fact, both of these funds are currently trading
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near their lowest prices of 2021. Because we trade and track these funds like stocks,
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it's easy to forget that they're NOT stocks. They're baskets of around 40 stocks each that
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are researched, updated, and curated by the ARK Invest team and actively managed by Cathie Wood.
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When you buy these things, you're basically assigning your money to a specific area
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of technology and innovation and letting that money be managed by ARK Invest for a small fee.
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A lot of people like doing that for ARKG because genomics and advanced medicine are specialized
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fields that work very differently from other markets. And a lot of people like doing that for
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ARKK because then you don't have to worry about how to weigh all the different areas of innovation
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relative to each other – like genomics, robotics, energy storage, and blockchain technology.
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When you buy ARKK, Cathie Wood does that for you by definition. I'm not a financial advisor,
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but if you like the sound of either of these things, then a 15 to 20% drop in price is a great
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discount on these specialized financial products. I personally am very happy buying into ARKG
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anywhere below 80 dollars per share. If you're someone who prefers to manage your own money and
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likes picking your winning stocks yourself, then the rest of this episode is for you.
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One of the goals of this channel is to use data to change the way retail investors, including myself,
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think about investing. And one of the ways I do that is by always going over ARK Invest's
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assets under management. That way, we have the right context for some of these huge changes in
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positions over the last quarter. If I sound like a broken record here, that's alright. When you see
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someone saying ARK Invest sold over 300 million dollars worth of Tesla stock over the quarter
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and your instinct is to ask how that compares to the rest of their funds, I'm doing my job. So,
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ARKK's assets under management dropped by 24%, from over 25 billion dollars at the start of
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the quarter to under 20 billion dollars at the end. ARKG's assets under management dropped by
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even more than that, from just under 10 billion dollars to just over 7. That means that not only
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are ARKK and ARKG the two biggest ARK Invest funds and the two lowest performers for the quarter,
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but they're also the two that shrank the most in terms of assets under management,
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meaning we have to be extra careful when we look at the shrinking positions inside these funds.
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So, here's the table of Cathie Wood's positions inside ARKG. Each row is one stock, the rows are
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ordered by the size of that stock's position in ARKG, and the rows are colored by the change in
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position over the quarter RELATIVE TO the change in ARKG's assets under management. Since the total
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amount of money inside ARKG shrank by about 27% over the quarter, positions that are in white
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shrank by that amount. ARKG's top 3 positions are Teladoc Health, ticker symbol T D O C,
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Exact Sciences, E X A S, and Pacific Biosciences, P A C B. Cathie Wood shrank each of those
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positions by 26%, exactly in line with the fund. Green rows shrank by less than 27%,
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so they grew relative to the fund and red rows shrank by more than the fund did. The first
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column shows the percent change in her share count and the second column shows the percent change in
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share price, which are the two things that affect the total position size of each stock. So, right
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away, here are a couple of interesting things to note. Almost every single stock inside ARKG
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is 15 to 40 percent cheaper now than a quarter ago. It looks like Genomics and related stocks
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got hit super hard this quarter, so if you believe in this space in general or some specific stocks
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within it, now is a great time to be doing your research and building up your watch list. Second,
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of the top 15 positions in ARKG, the only one that had a meaningful increase in share count is Fate
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Therapeutics, ticker symbol F A T E, which ended up being the 5th biggest position in the fund
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at the end of the quarter. I have to go pretty far down the list to get to the next stock that Cathie
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Wood actually bought more shares of, instead of just selling less as the fund shrank over time.
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Besides Fate Therapeutics, the stocks ARK Invest loaded up on inside ARKG are all toward the middle
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of the fund. The biggest additions were Signify Health, ticker symbol S G F Y, UiPath, P A T H,
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Quantum S I, Q S I, Repare Therapeutics, R P T X, and Verve Therapeutics, ticker symbol V E R V.
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Cathie Wood also added some big new positions to the fund during the quarter: Ginkgo Bioworks,
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which traded under the ticker symbol S R N G earlier this quarter but is now trading under
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the ticker symbol D N A, Pfizer, ticker symbol P F E, Sema 4 holdings, S M F R, SomaLogic, S L G C,
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and Palantir, ticker symbol P L T R. Whenever I find myself with a huge list of stocks like this,
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I like to narrow it down by looking at which ones Cathie Wood has enough conviction in
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to include in ARKK. Because ARKK includes stocks from any area of disruptive innovation and the
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fund is conviction-weighted, stocks that make it into ARKK must be the ones Cathie Wood thinks
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are the best overall winners. So, of the positions with the biggest increases in ARKG, the ones that
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are also in ARKK are UiPath, ticker symbol P A T H, Palantir, P L T R, Fate Therapeutics, F A T E,
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Signify Health, S G F Y, and Ginkgo Bioworks, ticker symbol D N A. I'm pretty lucky it worked
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out this way, but these are actually some of the biggest overall buys in ARKK as well.
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UiPath and Palantir are the only two stocks to be in literally all six of ARK Invest's funds.
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Because of that, I heavily featured them in the first episode of ARK Week and I've put out
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dedicated deep-dive videos on each of them. I've also done a deep dive on Ginkgo Bioworks since
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Cathie Wood has been loading up on that position ever since the SPAC deal was announced. If you're
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interested in my deep dives on these companies as well as ARK Invest's biggest positions like Tesla
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and Teladoc Health, I've put them all together in one convenient playlist for you. I'll leave that
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in the top right-hand corner of your screen right now and in the description below as well. One
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thing I want to point out is that Ginkgo Bioworks currently has a short report out against it,
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written by Scorpion Capital. I'm still working through the report myself, since it came out
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on October 6th and is about 175 pages long, but it's safe to say that ARK Invest isn't worried
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about it because they've bought over 8 million shares of Ginkgo Bioworks since that report came
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out. Since I've talked a lot about UiPath, Palantir, and Ginkgo in recent episodes, let
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me instead highlight a few other high-conviction genomics stocks I think are worth looking into.
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Fate Therapeutics, ticker symbol F A T E, is a clinical-stage biopharmaceutical company with
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a pipeline filled with various drug candidates developed under immuno-oncology programs. Fate
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uses induced pluripotent stem cells, or i P S Cs, to develop immunotherapies that target
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myeloid leukemia, B-cell lymphoma, and certain types of solid tumors. So, it's a personalized
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immunotherapy company that uses flexible stem cells to create a wide variety of targeted
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treatments. According to their June 2021 investor presentation, they have 7 drugs in their cancer
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immunotherapy pipeline that range from being pre-clinical to being in phase 1 clinical trials.
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Unlike other biopharma companies though, all of these drugs share the same underlying
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technology – the iPSCs. To me, that's a big risk and a big reward. The risk FATE hasn't yet brought
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a self-developed drug to market and if there's an issue with these pluripotent stem cells,
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it affects all of FATE's candidate drugs. On the other side of that same coin is the big reward,
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where if one of their drugs reaches the market, it goes a long way to validating their whole iPSC
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drug platform, significantly raising the chances that their other drugs could reach the market.
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Based on the fact that Fate is a top 5 position in ARKG and a sizeable position in ARKK,
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I can only assume that ARK Invest's genomics analysts are confident in this iPSC drug platform.
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Fate Therapeutics is currently down over 50% percent from its all-time high in January,
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trading at a market cap of around 5 billion dollars.
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Signify Health, ticker symbol S G F Y, is a platform that leverages advanced analytics,
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technology, and nationwide healthcare provider networks to create value-based payment programs
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and transform how care is paid for and delivered. Instead of being a Tele-HEALTH company like
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Teladoc, Signify focuses on in-home evaluations, general diagnostics, and preventative services,
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as well as covering the end-to-end treatment pipeline, from entering a hospital to
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post-discharge care. Also unlike Teladoc, Signify Health works with the healthcare system itself.
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It's a business-to-business company that works with state-run and federal medical programs,
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hospitals and clinics, and big-name healthcare providers like Anthem and Humana. They add value
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to these clients by using a suite of data capture and analysis tools
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to reduce costs associated with analysis time while increasing the accuracy of each analysis.
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The results are then incorporated into a large-scale network of physicians,
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clinics, and social care providers, as well as healthcare providers that would otherwise
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not have access to such large pools of data. As of this recording, Signify Health is trading at
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an all-time low of 17 dollars per share, which is less than a 3 billion dollar market cap.
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Quantum S I, ticker symbol Q S I, is the maker of Platinum, which is a first-of-its-kind
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semiconductor-based next-generation protein sequencing platform. They have developed a
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special-purpose chip specifically for biology, which enables single-molecule protein sequencing
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and end-to-end protein analysis. The “Platinum” allows researchers to perform sample prep,
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identification, sequencing, and analysis in one machine that's roughly the size of
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a large toaster oven. On the software side, the company has a cloud solution
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for data and analytics. The data streams directly from the equipment to the cloud,
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ready to be processed. This technology could potentially transform how different conditions
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like infections, cancer, and neurological disorders are diagnosed and treated.
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The company has over 550 issued and pending patents, which I think is very important in
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the proteomics space and the semi-conductor space. The thing I really like about this company is its
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technology is something we can all understand at a high level; it's a chip maker, which means
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it benefits from the same trends as the rest of the semiconductor industry, like Wright's Law.
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One other thing I should mention is that Quantum SI was founded by Dr. Jonathan Rothberg,
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who also founded CuraGen, Ion Torrent, and Butterfly Network. My favorite line from his
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Wikipedia page is: In March 2020, Rothberg began working on a low-cost, rapid home test
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for COVID-19 from the lab on board his private yacht, the Gene Machine. This guy is basically
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the Tony Stark of Genomics and Quantum SI is one his latest companies. Quantum SI currently trades
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for under $9 dollars per share, reflecting its roughly 1.2 billion dollar market cap.
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Verve Therapeutics, ticker symbol V E R V, IPOed this past June. Verve is a
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genetic medicines company focused on using gene editing to create a new treatment paradigm for
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cardiovascular diseases, transforming chronic management of these diseases into single-course
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gene editing medicines. Coronary heart disease is the number one cause of death globally. They're
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specifically going after a disease called familial hyper cholesterolemia, which is a life-threatening
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genetic disease that can cause congenital heart defects and stroke. Over 3 million people around
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the world suffer from this disease each year, representing about a 2.4 billion dollar per
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year total addressable market. Their roadmap initially focuses on the 1.6 million in the US
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and Europe with the disease. Then, they plan to add in people with established athero sclerotic
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cardiovascular disease, which expands their total addressable market by about 15x. Then, they plan
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to offer that preventative therapy to everyone at risk of coronary heart disease. I think it's truly
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amazing that we're living through a time where companies are trying to transform the way we think
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about heart disease; this is something that would meaningfully increase the average human lifespan
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and our quality of life. It should be noted that their drugs aren't yet on the market and their
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drug pipeline is still pre-phase 1 clinical trial, but they're planning their first-in-human tests
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sometime in 2022. Verve is currently trading at around 45 dollars per share, reflecting
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a 2.2 billion dollar market cap, which has steadily been sliding down over the last month.
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So, there you go. Four really diverse genomics companies to wrap up the final episode of ARK
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Week. Comment below or tweet me with your thoughts on these companies. Does one of them stand out
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to you? Are you more interested in the diseases they're trying to cure or the technologies they're
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making to cure them? I'm excited to hear your thoughts. Hopefully, these four episodes of ARK
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Week showed you how the videos on this channel fit together like puzzle pieces. Because ARK Invest's
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funds are all conviction-weighted and actively managed by the same person, Cathie Wood, looking
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at their combined investing data should reveal the companies and trends that the ARK Invest team
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feels will provide the best returns five years from now, given today's valuations. Likewise,
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looking at the data within each fund should show us which trends and technology platforms are
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currently winning in a given area, like genomics, fintech, robotics, or energy storage. Every
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single video I make is about highlighting these advanced technologies, these economic trends, and
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the publicly traded companies that are combining them to somehow change our lives for the better.
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Speaking of changing for the better, let me know what you think of ARK Week in general. Do you like
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these higher-level episodes that cover multiple funds and stocks? Or do you prefer the episodes
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focused on single-stock deep dives and cover single news stories? I read all your comments
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and tweets and I'm always open to constructive feedback. And if you did find this information
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useful, consider liking this video and subscribing to the channel with all notifications turned on.
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That way, you'll be the first to know when I come out with tech research and market commentary AND
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that's a great way to invest in the channel that invests in you. Until next time, this is Ticker
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Symbol YOU. My name is Alex, reminding you that the best investment you can make… is in you.