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