You have to applaud Cathie Wood's all-weather transparency. The co-founder, CEO, and ace stock picker of the Ark Invest exchange-traded funds (ETFs) announces all of her transactions at the end of every trading day. Investors knew what she was buying and selling in 2020 when her flagship funds would go on to more than double. She's still putting out the daily updates now when her ETFs are badly lagging the market.
What is she buying these days? Wood kicked off the new trading week by adding to her existing stakes in Adobe (ADBE 0.23%), Velo3D (VLD -2.25%), and General Motors (GM -0.35%) on Monday. Let's see why she's building up her positions in these three names.
Image source: Getty Images.
Adobe
It's great to see Wood go shopping, but the market doesn't think it's all that great when her investments are the ones doing the shopping. Shares of Adobe hit a two-year low last week after the desktop publishing pioneer announced a $20 billion deal for online design specialist Figma.
It's not the only reason Adobe stock is back to where it was in early 2020 during the initial COVID-19 sell-off. Year-over-year revenue growth has decelerated in four of the past five quarters, and guidance calls for the current quarter to be another period of slowing top-line gains.
Adobe is a juggernaut, and I'm not just talking about Photoshop and PDF files. Its Creative Cloud suite of digital publishing tools is the cloud-based golden standard for the masses. Spending $20 billion in cash and stock for Figma may not seem like much for a company with a $138 billion market cap. The problem here is that analysts feel that Adobe overpaid for Figma because it was hungry to get back on track given its slowing organic growth. The catch? Adobe stock has actually surrendered $35 billion in market cap in the 20% slide it has experienced in the past three trading days since the deal was announced. It's already discounted the Figma purchase, and it could be ready to bounce back now.
Velo3D
One of the smallest stocks in Wood's portfolio is Velo3D, a 3D printing company that helps companies in the aerospace, aviation, industrial power, and oil and gas industries make mission-critical metal parts faster and cheaper in-house than they would by ordering them from third parties. Velo3D's latest Sapphire printer uses laser powder bed fusion technology to create parts faster and cheaper than its earlier model.
Velo3D is still early in its growth cycle. It generated just $27.4 million in revenue this year, but it expects to more than triple that to $89 million this year. It shouldn't be a problem, as it already has 95% of its top-line guidance for 2022 either recorded or in its order backlog. Next year should be even better. Velo3D moved higher last week after announcing one of its largest orders ever, a seven-printer purchase by a subsidiary of contract manufacturer Kevton Industries. The first two printers will be deployed in early 2023. The stock is on a roll, more than tripling since bottoming out two months ago.
General Motors
One of the investments that stands out among Wood's collection of purchases is General Motors. Revenue has declined in three of the past five years, for starters. It's 114 years old, and few will take it for an emerging disruptor. However, GM isn't just following its peers into making electricity-fueled versions of its classic rides.
GM is actually a leader in the future of autonomous driving with its Cruise platform. It also helps to get a low-priced stock -- it's trading at just eight times trailing earnings -- to help diversify the heartier octane in the rest of her investments.
Adobe, Velo3D, and General Motors remain compelling growth stocks at attractive price points. Wood sees it that way. Let's see if these moves help her turn things around.
