Exchange-traded funds were initially designed to offer a low-cost way to invest in the whole stock market. But there's an ETF revolution going on, and investing star Cathie Wood's ARK Invest actively managed ETFs are more popular than ever after more than doubling in value in 2020.
Given Wood's success, smart investors are following the moves ARK Invest's ETFs make. Below, you'll learn more about five stocks that got some love -- and a nice chunk of investment capital -- from Wood's five active ETFs.
1. ARK Autonomous Technology & Robotics: Intuitive Surgical
ARK Autonomous Technology & Robotics (NYSEMKT:ARKQ) aims to profit from companies that are automated the world, with stocks in areas like self-driving vehicles, 3-D printing, and space exploration. Robotic surgical equipment pioneer Intuitive Surgical (NASDAQ:ISRG) is a natural fit for the fund, and on Feb. 12, the ETF bought nearly 21,000 shares, making up about 0.4% of the fund's assets and working out to about $17 million. The move continued an upward trend that took the total investment to 1.6%.
Intuitive Surgical has been a giant in robotic surgery for a long time, but until 2020, the company's stock had largely gotten stuck in a holding pattern. Yet although the pandemic has hit sales, the rising prospects for automated healthcare equipment make the stock look more attractive than it has in a long time. As coronavirus vaccines help the healthcare industry return slowly to normal, now's a good time for Intuitive Surgical to redouble its efforts to boost sales.
2. ARK Genomic Revolution: Regeneron Pharmaceuticals
ARK Genomic Revolution (NYSEMKT:ARKG) focuses on companies helping to use genomics for advances in healthcare. Its holdings include stocks in the CRISPR, molecular diagnostic, and bioinformatics niches, and this week, Regeneron Pharmaceuticals (NASDAQ:REGN) got a lot of interest from the ETF. Two purchases on Feb. 8 and 9 added more than 100,000 shares of Regeneron to the portfolio, representing more than half a percent of assets and almost $50 million. That made Regeneron the fourth-most popular stock in the portfolio, with total holdings of more than $530 million.
Regeneron has had its prospects connected to the COVID-19 pandemic throughout 2020 and early 2021, with its antibody cocktail treatment having had some success fighting the disease. Yet Regeneron has a much longer history of promising treatments, and Wood likely sees solid growth opportunities well beyond the pandemic's effects.
3. ARK Fintech: Ping An Healthcare and Technology
ARK Fintech (NYSEMKT:ARKF) aims to invest in cutting-edge companies in financial technology. It might therefore seem strange to see Ping An Healthcare and Technology (OTC:PANH.F) in a fintech portfolio. But two massive buys on Feb. 10 and 11 added nearly 2.6 million shares of the Chinese company, representing close to 1% of the ETF's $2 billion in assets.
Ping An's healthcare services include a customer-facing platform for obtaining medicines and medical equipment, obtaining physical exams and genetic testing, online consultations and referrals, and health management and wellness. In that sense, Ping An falls into the categories that ARK Fintech follows. Moreover, Ping An Insurance owns a 41% stake, and its focus on healthcare insurance is squarely within the fintech ETF's purview. With the Chinese market undergoing the same revolution in telemedicine and healthcare tech as the U.S., Ping An's prospects are intriguing.
4. ARK Next Generation Internet: Shopify
Investors interested in the internet have gravitated to ARK Next Generation Internet (NYSEMKT:ARKW), with more than $5 billion in assets under management. This week, the fund added to existing positions in e-commerce enabler Shopify (NYSE:SHOP). Four purchases from Feb. 8 to 11 added a total of more than 61,000 shares, or almost $90 million. Shopify now makes up more than 3% of the portfolio, ranking No. 7 in its holdings.
Shopify's stock has soared, but it still has plenty of growth potential ahead of it. The company has made it easy for businesses of all sizes to establish a web presence, and that's been critical during the pandemic to help companies stay in business. As it adds partners and keeps pulling new businesses into its ecosystem, Shopify should continue to improve its platform and accelerate its expansion into 2021 and beyond.
5. ARK Innovation: Unity Software
Last but not least, ARK Invest's largest active ETF is ARK Innovation (NYSEMKT:ARKK). It has almost $18 billion split across the four subcategories above, and Wood's favorite stock for the week was Unity Software (NYSE:U). The fund bought more than 419,000 shares on Feb. 8, worth more than $50 million and representing a third of a percent of the ETF's total assets. That brought ARK Innovation's stake in Unity to 1.6%, putting it among the top 25 holdings.
Unity Software helps video game developers with tools on its development platform. Serving more than 1.5 million game creators, more than half of video games on mobile devices, computers, and game consoles relied on Unity for their initial build. Given how quickly the video game industry is growing and evolving, many seem to agree with Wood's assessment of Unity's long-term growth prospects.
Can Wood repeat in 2021?
It'll take a strong showing for Wood's ETFs to double again in 2021. But even if they fall short, the stocks that the ARK Invest chief investment officer chooses are worth a look from investors looking for great stock ideas.