Cathie Wood’s flagship fund, the ARK Innovation (NYSEARCA:ARKK) exchange-traded fund (ETF), has lost over 50% since the year began. However, investors still seem to be confident in ARK Invest’s active funds. From June 19 to June 27, ARKK posted eight straight days of inflows, totaling $639 million. Last Friday, ARKK received an inflow of $323 million in just a single day, the most in two months.
Rising rates paired with supply chain challenges have battered Wood’s ETFs this year. Still, it appears that her conviction remains unfazed in her top holdings. These include Tesla (NASDAQ:TSLA), Teladoc (NYSE:TDOC) and UiPath (NYSE:PATH). Wood invests in a variety of unprofitable names, which offer future potential but net losses in the present. These companies have been especially hurt by higher rates as their future cash flows are discounted back to the present.
While the ARK Invest CEO has doubled down on her top positions, she has also taken stakes in many new (and relatively new) names. With the S&P 500 down about 20% year to date (YTD), many companies are trading at massive discounts. It appears that Wood believes that these companies are now worth buying at their current valuations. Let’s get into the details.
|ATAI||ATAI Life Sciences||$4.28|
Cathie Wood Stocks: StoneCo (STNE)
On June 21, the ARK Fintech Innovation ETF (NYSEARCA:ARKF) purchased 97,442 shares of StoneCo (NASDAQ:STNE). This marked the ETF’s first purchase of the company since Nov. 23. Back then, STNE was trading around $17.50. Today, the price has come down generously to the $8.50 range. STNE is currently ARKF’s 14th-largest holding out of 30 total. After the purchase, Ark now owns a total of 2.73 million shares.
StoneCo operates as a financial technology company that offers multiple solutions through its platform. These include payment processing, management tools, and point of sale (POS). The company also owns several subsidiaries geared toward payment solutions, such as CAPPTA and Equals.
The Brazilian-based company debuted on the Nasdaq in 2018 for $24 per share and received much fanfare after Warren Buffett disclosed a 11.3% stake shortly after. Today, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) owns 10.69 million shares, making it the 38th-largest position out of 49 total.
However, the company has dealt with several challenges since its initial public offering (IPO). After posting profitability in 2018, 2019 and 2020, the company reported a negative earnings per share (EPS) during 2021. Still, StoneCo’s strong revenue growth is undeniable. It reported revenue of 2.07 billion reais during Q1, up 138% year over year (YOY). On top of that, adjusted pre-tax income clocked in at 163 million reais, up from 17 million reais during the prior quarter.
3D Systems (DDD)
Excluding the June purchases, the last time Wood purchased 3D Systems (NYSE:DDD) was on March 30 when DDD stock traded in the $17 range. During June, the ARK Space Exploration & Innovation ETF (BATS:ARKX) purchased DDD on eight separate occasions. In total, ARKX purchased 311,458 shares in June, bringing its total position to 3.97 million shares. 3D Systems is currently the ETF’s 23rd-largest position out of 35 total.
The company offers advanced three-dimensional (3D) printing and software solutions through a wide variety of products. Its 3D printers are geared toward over 130 different printing materials, such as plastic and metal. In addition, 3D serves many industries, ranging from dental to semiconductors. The company has been issued over 1,000 patents in the last decade.
Financial analysts seem to be in favor of the company as well. 3D has an average price target of $14.17 among six firms covering the stock. That price target implies upside of about 40% from current levels.
After 3D’s analyst day in May, Bank of America analyst Wamsi Mohan reiterated his “underperform” rating and price target of $12. Notably, 3D mentioned that it plans on achieving annual revenue of $1 billion by 2027. On top of that, it plans on expanding into emerging areas of business, such as bioprinting and regenerative medicine, while further penetrating into more established markets like dental and aerospace.
Cathie Wood Stocks: Butterfly Network (BFLY)
Butterfly Network (NYSE:BFLY) has declined by over 40% YTD and now trades at a market capitalization of about $730 million. From July 5 to July 7, the ARK Genomic Revolution ETF (BATS:ARKG) reported purchasing shares of the company for the first time in over seven months. Over those three days, the ETF purchased 474,390 shares, bringing its total position count to 7.33 million shares.
Butterfly’s flagship product is a handheld, whole-body ultrasound device called the Butterfly iQ+. The device starts at $2,399 and must be purchased with a subscription that starts at $199 per year. The subscription comes with several resources, such as diagnostic and procedural tools. In addition, users can download the Butterfly iQ app to access and store scans and share information with team members.
Founder Jonathan Rothberg’s mission with Butterfly is to “democratize healthcare by making medical imaging accessible to everyone around the world.” Today, the Butterfly iQ+ serves over 45 “low-resource settings” and is commercially available in 20 countries.
While the mission is admirable, Butterfly is currently unprofitable. During Q1, the company reported a net loss of $44.5 million, worse than its net loss of $700,000 a year ago. Revenue came in at $15.6 million, up 25.2% YOY. However, the company’s cash and cash equivalents remains strong at $359.9 million. Furthermore, the company received a $5 million grant from the Bill & Melinda Gates Foundation to “improve maternal and fetal health in Sub-Saharan Africa with Butterfly iQ+.”
ATAI Life Sciences (ATAI)
From July 5 to July 7, the ARK Genomic Revolution ETF purchased 268,974 shares of ATAI Life Sciences (NASDAQ:ATAI). This was the ETF and Ark Invest’s first purchase of ATAI stock since March 14. From March 14 to July 5, ATAI stock declined by 27%. After the recent purchases, ARKG now owns a total of 1.82 million shares. Furthermore, ATAI is now the 45th-largest position out of 48 total in ARKG.
ATAI operates as a clinical-stage biopharmaceutical company that seeks to treat mental health disorders, like depression, anxiety and schizophrenia. The company recently announced that it would raise $300 million through the issuance of “common shares, debt securities, warrants and units.” ATAI used the shelf registration process, which means that it can sell securities over a three-year period and in multiple offerings.
Benzinga characterizes the company as one of the “best-capitalized companies in the psychedelics space.” With cash, cash equivalents and short-term investments of $335 million on hand, CEO Florian Brand expects that ATAI will be able to run at full capacity until at least 2023.
ATAI currently has 17 programs underway for U.S. Food and Drug Administration (FDA) approval. However, FDA approval is an expensive process, and the company reported a net loss of $36.9 million for Q1. Adding to the expenses, research and development (R&D) costs almost tripled to $15.5 million, up from $5.6 million a year ago.
Cathie Wood Stocks: Surface Oncology (SURF)
Surface Oncology (NASDAQ:SURF) currently has three FDA product programs underway to treat a multitude of cancers. It also has two licensed programs in the Phase 1 stage. For example, Surface’s SRF388 antibody targets IL-27, which is an “immunosuppressive cytokine involved in resolving T cell mediated inflammation.” Elevated levels of IL-27 can be associated with cancer.
Surface reported net income of $6.2 million during Q1, improving from a net loss of $15.6 million a year ago. In addition, the company’s cash on hand of $150.4 million is expected to last until at least 2024.
CEO Rob Ross added:
We look forward to presenting our next update on SRF388, the only antibody targeting IL-27 in the clinic, at ASCO, and we remain on track to share new clinical data for SRF617 in the second half of this year.
From July 5 to July 7, ARKG purchased 664,472 shares of SURF, marking the ETF’s first purchase since April 28. After the purchases, the ETF now owns 6.25 million shares, which makes SURF the 42nd-largest holding. Shares of Surface Oncology are down about 60% YTD.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.