Would you like to improve your stock-picking chops by learning from the pros? You could wait for the next round of disclosures that institutional investors are required to make four times per year, or you could look at what Cathie Wood and the family of exchange-traded funds she manages for Ark Invest are buying from day to day.
To foster transparency, Ark Invest discloses its trading activity at the end of each trading day. Recently Wood scooped up more shares of Beam Therapeutics (BEAM -1.02%), Pacific Biosciences of California (PACB 6.52%), and Spotify (SPOT 0.20%).
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Wood already had significant positions in these stocks before buying more last week. Let's take a closer look at her recent purchases to see why she's been buying them hand over fist.
Beam Therapeutics
Since the beginning of 2022, Wood has snapped up shares of Beam Therapeutics for the flagship Ark Innovation ETF and the Ark Genomic Revolution ETF more than a dozen times. On Tuesday and Wednesday this week, Ark Invest added more shares to both ETFs.
Beam is advancing a suite of gene editing and delivery technologies with a twist. Its business is anchored by proprietary base editing technology. In a nutshell, base editing is like using a pencil and eraser to alter DNA while CRISPR-based methods are more like using scissors and glue.
We'll soon have multiple chances to see if Beam's base editing platform is a worthwhile approach to new drug development. In August, the company began treating patients in a phase 1 trial with BEAM-201. This cellular therapy is made from the immune cells of healthy donors, which could be a huge differentiating factor if it reaches commercialization.
Beam doesn't intend to tackle high cholesterol right away, so it licensed some technology to Verve Therapeutics. The new drug candidate Verve is developing with technology licensed from Beam, VERVE-101 is an in vivo therapy. So far, approved gene therapies do their gene editing outside of the body, so this could be a very big deal if it works.
VERVE-101 is in a phase 1 study with patients genetically predisposed to have high cholesterol, and top-line results are due by the end of the year. If it safely reduces cholesterol, shares of Verve and Beam could soar.
Pacific Biosciences of California
Over the past couple of trading sessions, Wood bought nearly 800,000 shares of Pacific Biosciences of California, or PacBio as the genomic sequencing company is more commonly known. Wood is no doubt encouraged by soaring sales of Revio, PacBio's latest long-read DNA sequencing machine.
PacBio reported second-quarter sales that rose 34% year over year. That's much faster than Illumina, the 800-pound gorilla of the genetic sequencing industry. Illumina reported second-quarter core revenue that flatlined year over year and was only 3% higher than the company reported two years earlier.
PacBio's business is booming, but the $47.6 million in total revenue that it reported during the second quarter is a drop in the bucket compared to Illumina, which recorded $1.76 billion in total revenue during the same period. With heaps of room to grow and strong uptake of Revio, this stock could be at the beginning of a long upward climb.
Spotify
At least twice this week, Wood added shares of Spotify to the Ark Next Generation Internet ETF portfolio. She's likely excited by soaring subscriber metrics and accelerating revenue growth.
The number of monthly active users on Spotify in the second quarter soared 27% year over year to 551 million. There were 220 million paid subscribers, which was 17% more than the company reported a year earlier.
Despite a general pullback from advertisers facing economic uncertainty, music-related ad revenue rose by a mid-single-digit percentage. The company's Spotify Audience Network is bringing in heaps more podcast ad revenue, too. Podcast ad sales surged more than 30% year over year in the second quarter.
Spotify's Audience Network lets advertisers place podcast ads based on their target audience -- and that target audience is enormous. Surprisingly, Spotify's biggest competitor, Apple Music, still makes users leave its app to listen to their favorite podcasts. A first-mover advantage plus heaps of original content mean investors can expect a lot more high-margin podcast revenue from Spotify in the quarters ahead.
