What happened
Poised to end the week lower than where they finished last Friday, shares of synthetic biology, or "synbio," specialist Ginkgo Bioworks (DNA 6.08%) are heading swiftly in the other direction. Instead of feeling inspired by some auspicious company news, investors are clicking the buy button after learning of Cathie Wood's bullish stance on the stock.
As of the end of the trading session today, shares of Ginkgo Bioworks rose 11.4% since the market's close last Friday, according to data from S&P Global Market Intelligence.
So what
Often, average investors pay close attention to the stock purchases of famous investors like Cathie Wood -- and this week was the same. On Monday two ARK funds acquired shares of Ginkgo Bioworks; the ARK Genomic Revolution ETF bought 404,329 shares and the ARK Innovation ETF bought 1,026,000 shares.
The buying spree continued into Tuesday with the ARK Genomic Revolution ETF and the ARK Innovation ETF buying 39,891 shares and 106,286 shares, respectively.
While the enthusiasm that Cathie Wood is bringing to Ginkgo Bioworks is notable this week, it's far from an unfamiliar sight. The ARK funds have been bullish on Ginkgo Bioworks, buying shares last week as well as in August.
Now what
Seeing famous investors amass large positions in equities may lead investors to do the same. It's critical for us on Main Street to recognize that noting a famous investor's enthusiasm for buying a stock isn't reason in and of itself to follow suit. Instead, it should be the start of one's due diligence. Ginkgo Bioworks is no different. There are plenty of risks that surround this growth stock, and unless investors are comfortable with accepting a large degree of risk, it may be more prudent to watch Ginkgo Bioworks from the sidelines.
