It's always good to keep an eye on the transaction reports that Cathie Wood puts out every trading day. The CEO, co-founder, and ace stock picker for the Ark Invest family of exchange-traded funds (ETFs) hasn't been doing a lot of buying as her growth stocks are rallying, making her handful of purchases stand out.
3D Systems (DDD -0.86%), Coinbase Global (COIN -5.10%), and Adaptive Biotechnologies (ADPT 0.78%) are three of the stocks that Ark Invest bought on Wednesday. What does Wood see in these three fast-growing companies? Let's take a closer look.
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3D Systems
Wood has taken a shine to a couple of 3D printing stocks lately, and that also includes one of the original leaders among publicly traded players. Wood had been lightening her position in 3D Systems over the past two months, but on Wednesday she added to her stake for the first time since mid-January.
3D Systems posted fresh financials at the end of February, and the results are encouraging once you dig beneath the surface. Revenue did decline 13% to $150.9 million, but back out the revenue from its divested businesses a year earlier and it's actually a gain of 13%. The red ink continues on a reported basis, but it's substantially narrower now. The bottom line is positive on an adjusted basis, and up 9% to $0.09 a share. It was a blowout performance on both ends of the income statement, as Wall Street was banking on an adjusted profit of just $0.04 a share on $144 million in revenue.
The shares initially soared on the report, only to give back those gains after investors reflected on guidance for the year ahead. 3D Systems' revenue outlook was better than the market was expecting, but the rest of its outlook suggests that margins could come under pressure on the way down to the bottom line.
Coinbase Global
Wood adding to her stake in the world's largest cryptocurrency exchange isn't new. She's been nibbling away at Coinbase all year. It's now her third-largest holding across her combined ETF assets. The explosive growth that Coinbase showed early in its brief publicly traded tenure has slowed considerably, and the initial burst of profitability also merited a few asterisks that would question the sustainability.
The stock isn't as cheap as the trailing earnings multiple in the low teens suggests. Coinbase is trading for more than 60 times next year's projected net income, but it's still a leader in a market that is starting to show signs of life this month.
Coinbase is a broken initial public offering right now, trading more than 20% below last year's reference price of $250. Wild swings in trading volume and regulatory fears are weighing on both the crypto market in general and the financial prospects for Coinbase in particular. It's still the bellwether for trading in digital currencies, and it's clear that Wood is a believer in cryptocurrencies.
Adaptive Biotechnologies
Wood has surprisingly not done a lot of buying this month, but one name really stands out. She has added to her Adaptive Biotechnologies position in 14 of the last 18 market days, including each of the last eight trading sessions. The small biotech stock commands a market cap just shy of $2 billion, tiny by Wood standards.
This is a swing for the fences as it focuses its immune system genetic sequencing technology to tackle residual disease and immune medicine. Earlier this month it laid off 12% of its workforce, and just last week its chief medical officer resigned. Adaptive's CFO cleared out in January. Wood obviously sees something here that the market may be missing. The stock has shed two-thirds of its value since peaking 13 months ago.
Adaptive's struggling with a lack of profitability like many biotech upstarts, but it is generating decent revenue growth. The stock is up nearly 20% since the latest buying spree, and it's fair to wonder if all of her buying is helping push the stock higher.
