ARK Invest CEO and founder Cathie Wood doesn't like standing still. She's an active trader in her popular exchange-traded funds, and she has no problem taking advantage of buying opportunities.
She's been shopping again this month, hoping to position her ETFs to trounce the market in 2021 the way they did in 2020. This week, she added to her positions in Robinhood Markets (HOOD 7.78%), PagerDuty (PD 3.63%), and UiPath (PATH 4.95%).
Robinhood may seem to be a quintessential Wood stock, as the online trading platform has been disrupting the retail investing game with its zero-commission transactions and its mission to level the playing field for small investors. Robinhood has only been on the public markets for five full trading days so far, and Wood bought shares of it during three of them.
She bought in on Thursday and Friday of last week, and that's already looking like a pretty shrewd choice. Robinhood actually priced at the low end of its initial trading range, and it spent most of its first three days on the market as a broken IPO, closing below its $38 IPO price.
Robinhood as a company is growing quickly, but its critics have been quite vocal. It gets knocked for relying too much on payment for order flow. Traditional investors don't appreciate how a large chunk of its revenue growth stems from sales of speculative options and crypto trades -- transactions often made by less-than-seasoned traders. Also, the company doesn't yet offer mutual funds or IRAs, but bulls rightfully argue that these should be future growth catalysts. Robinhood shares spiked after those first three ho-hum days of trading, but Wood is no stranger to volatility in her investments.
Wood trimmed back her stake in PagerDuty during the early stretches of the summer. But on Monday and Wednesday, ARK Invest picked up more shares of the cloud-based provider of enterprise analytics and uptime monitoring.
PagerDuty doesn't report its second-quarter results until next month, but a look at its last quarterly update in early June may help explain why ARK Invest was a net seller of its shares through June and early July. PagerDuty's stock price took a hit at the time of the earnings release after management warned that it would be posting a larger deficit than expected for the second quarter. Also, its dollar-based net retention rate has contracted from 140% when it went public two years ago -- meaning that its returning customers increased their spending with the company by 40% year over year -- to 121% today. With the stock trading nearly 30% below its earlier high, Wood apparently sees PagerDuty as a buying opportunity this week.
Finally, we have UiPath. As she did with PagerDuty, Wood added to her UiPath position on Monday and Wednesday. This company also disappointed investors with its most recent quarterly report in June. However, Wood has done nothing but buy shares of UiPath since it went public in April.
UiPath provides enterprise software for robotics and automation, and there are now just 10 stocks with larger weightings across ARK Invest's ETFs. UiPath's growth has been impressive. Revenue soared 81% in its fiscal 2021, and climbed a still-respectable 65% in its fiscal 2022 first quarter, which ended April 30. The bullish thesis for the stock is fairly clear with so many employers embracing robotics and automation to improve efficiency and control labor costs.
Robinhood, PagerDuty, and UiPath were on Wood's shopping list this week. Let's see if she continues adding to those positions as the month progresses.