In this article, we discuss the 10 best biotech stocks under $20 in Cathie Wood’s portfolio. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Biotech Stocks Under $20 in Cathie Wood’s Portfolio.
ARK Investment Management sits on a portfolio value of nearly $42 billion as of Q3, compared to $54 billion in the previous quarter. Its disruptive fund, ARK Innovation ETF (ARKK), returned 22% in the quarter. The fund invests in high-growth sectors including artificial intelligence, robotics, and DNA technologies.
Trailing ARKK is ARK Genomic Revolution ETF (ARKG), one of Cathie Wood’s best-performing ETFs. ARK Genomic Revolution ETF (ARKG) has a diverse portfolio of stocks in the biotech sector. The fund invests in molecular medicine, gene therapies, DNA engineering, and pharmaceutical breakthroughs. Teladoc Health, Inc. (NYSE:TDOC), Pfizer Inc. (NYSE:PFE), and CRISPR Therapeutics AG (NASDAQ:CRSP) are some of the biggest holdings included in Cathie Wood’s ARKG.
Unlike many other industries that were hit hard by the pandemic, the biotechnology industry is booming. More investors and businesses are pouring money into the promising industry as it continues to expand. According to investment banking firm William Blair, biotech IPO activities in 2021 have already outperformed the previous year’s record. As of the end of August, 71 biotech companies had gone public in the United States, raising $12.7 billion, compared to 77 initial public offerings totaling more than $17 billion in 2020. Among the biotech companies that held their IPO this year include Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX), Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), and Zymergen Inc. (NASDAQ:ZY).
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Our Methodology:
These biotech stocks were selected from ARK Investment Management’s Q3 portfolio. These biotech stocks are listed in descending order of share price from highest to lowest.
The sentiment of hedge funds toward each stock was measured using data from 867 hedge funds tracked by Insider Monkey as of the third quarter.
With this context in mind, here is our list of the 10 best biotech stocks under $20 in Cathie Wood’s Portfolio.
Cathie Wood of ARK Investment Management
Best Biotech Stocks Under $20 in Cathie Wood’s Portfolio
10. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)
Number of Hedge Fund Holders: 15
Share price as of November 24: $18.80
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) boasts four clinical-stage products and 37 more pipelines. The Utah-based company develops potential drugs for chronic disorders including Neurofibromatosis Type 2 and Cerebral Cavernous Malformation.
Although the biotech company missed revenue consensus, Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) saw a 150% increase in revenue in the third quarter to $2.5 million in Q3 2021, up from $1 million in Q3 2020.
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) signed an agreement with German pharmaceutical giant Bayer AG last year to utilize AI in drug discovery for lung fibrosis. Bayer provided a $30 million upfront payment and $50 million in equity money as part of the deal.
The biotech company had its initial public offering in April and raised $502 million. At the end of the September quarter, 13 hedge funds owned shares of Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) worth $299 million. Laurion Capital Management is the biggest stakeholder in the company as of Q3 2021.
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is a notable stock to invest in, according to market analysts, just like Teladoc Health, Inc. (NYSE:TDOC), Pfizer Inc. (NYSE:PFE), and CRISPR Therapeutics AG (NASDAQ:CRSP).
In the Q2 2021 Investor Letter, Baron Discovery Fund highlighted a few stocks, and Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is one of them. Here is what the fund said:
“Recursion Pharmaceuticals, Inc. is a biotechnology company engaged in technology-enabled drug discovery. The company uses automated wet-lab infrastructure (actual biologic experimentation) with cell perturbations (multiple experiments done on the duplicate cells), and image capture to generate data at a large scale. It also operates its own supercomputer (the “BioHive”) to drive “in-silico” (virtual, software-enabled) inferences based on its data and wet-lab experiments. This combined approach has generated a strong pipeline of programs spanning early discovery to clinical trials, including a collaboration deal with Bayer. The company’s use of artificial intelligence and machine learning lowers the cost of drug discovery and speeds up a time to market, and we believe this paradigm is in the early innings of disrupting the entire biopharmaceutical industry. Since Recursion’s program pipeline is still relatively early stage, we have started with a small investment.”
9. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA)
Number of Hedge Fund Holders: 32
Share price as of November 24: $12
Cathie Wood initiated her position in Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) in the third quarter, a Boston-based biotech company focused on cell programming. In early October, ARK Investment Management bought approximately $100 million worth of the biotech stock. At the end of the September quarter, the hedge fund owned over 23 million shares of Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) worth over $269 million.
Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is co-developing a drug pipeline with Roche to combat antibiotic-resistant bacteria. Furthermore, the biotech firm is working on new protein, dairy, and plant-based food that are produced through fermentation rather than livestock farming.
In October, Raymond James analyst Rahul Sarugaser initiated an Outperform rating on Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) with a price target of $14.50. Sarugaser sees the biotech company pioneering in the cell engineering market.
The Bill Gates-backed synthetic biology company went public in mid-September via SPAC, raising more than $1.6 billion and valuing the company at $15 billion. Shares of Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) rose 36% in the past six months.
At the end of the third quarter of 2021, 32 hedge funds owned Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) shares worth $5.69 billion, up from 0 in Q2.
8. SomaLogic, Inc. (NASDAQ:SLGC)
Number of Hedge Fund Holders: 37
Share price as of November 24: $12.36
In September, SomaLogic, Inc. (NASDAQ:SLGC) announced the completion of its SPAC merger with CM Life Sciences II, Inc., raising $630 million in cash. The Colorado-based biotech firm creates proteomics technology which is used in the screening and development of treatment for cancer and cardiovascular diseases.
The stock gained 14.3% in the past six months. The company announced its third-quarter earnings in November, with revenue increasing by 40% to $20 million. On November 2, shares of SomaLogic, Inc. (NASDAQ:SLGC) jumped 8.6% on a rumor of a potential buyout offer by biotech behemoth Illumina, Inc.
SomaLogic, Inc. (NASDAQ:SLGC) is one of the newest biotech stocks in Cathie Wood’s portfolio. At the end of the third quarter, ARK Investment management held 6.3 million shares of SomaLogic, Inc. (NASDAQ:SLGC) worth $78.5 million. Overall, at the end of Q3, 37 funds held stakes in SomaLogic, Inc. (NASDAQ:SLGC) worth over $647 million, up from 0 in Q2.
7. Zymergen Inc. (NASDAQ:ZY)
Number of Hedge Fund Holders: 9
Share price as of November 24: $8.84
Zymergen Inc. (NASDAQ:ZY) is a biotech company that utilizes genomics, artificial intelligence, and machine learning in manufacturing industrial products. The company recently reported third revenue of $4.08 million, a 27.5% increase year over year.
Of the 867 elite funds tracked by Insider Monkey, 9 were long Zymergen Inc. (NASDAQ:ZY) at the end of September, compared to 15 in the second quarter of 2021.
In the third quarter, ARK Investment Management increased its holdings in Zymergen Inc. (NASDAQ:ZY) by 245% to 3.78 million shares worth $49.8 million.
Goldman Sachs analyst Matthew Sykes maintained a Neutral rating on Zymergen Inc. (NASDAQ:ZY) with a price target of $10.50 on November 4.
Along with Teladoc Health, Inc. (NYSE:TDOC), Pfizer Inc. (NYSE:PFE), and CRISPR Therapeutics AG (NASDAQ:CRSP), Zymergen Inc. (NASDAQ:ZY) is one of the biotech stocks included in Cathie Wood’s ARK Genomic Revolution ETF (ARKG).
In its Q3 2021 investor letter, Baron Funds mentioned Zymergen Inc. (NASDAQ: ZY) and discussed its stance on the firm. Here is what the fund said:
“Zymergen Inc. is a company dedicated to biofacturing, or harnessing bacteria to manufacture materials. Zymergen was a detractor following an unexpected update announcing both a major delay in the launch of lead product Hyaline and the removal of CEO Josh Hoffman, who was replaced by company chairman and former Illumina CEO Jay Flatley. We exited our position given material impacts to the business.”
6. Cellectis S.A. (NASDAQ:CLLS)
Number of Hedge Fund Holders: 8
Share price as of November 24: $8.72
One of the cheap biotech stocks included in ARK Investment Management’s portfolio is Cellectis S.A. (NASDAQ:CLLS). The biotech company is based in Paris and specializes in gene editing. The company develops immuno-oncology products and soybean oil.
With over 3.7 million shares of Cellectis S.A. (NASDAQ:CLLS), ARK Investment Management is the biggest shareholder of the company, based on the data of 867 funds tracked by Insider Monkey as of the end of the September quarter. Overall, 8 funds were bullish on Cellectis S.A. (NASDAQ:CLLS) at the end of the Q3, up from 7 in the previous quarter.
The biotech company recently announced its partnership with Cytovia Therapeutics Inc. to expand its gene-editing cancer platform in China. Cellectis S.A. (NASDAQ:CLLS) reported an EPS of -$0.82 in the third quarter, beating estimates by $0.04. The company’s revenue in the period grew 22% to $11 million, compared to $9 million in Q3 2020.
Just like Teladoc Health, Inc. (NYSE:TDOC), Pfizer Inc. (NYSE:PFE), and CRISPR Therapeutics AG (NASDAQ:CRSP), Cellectis S.A. (NASDAQ:CLLS) is a good investment option for diversifying a long-term high-growth portfolio, according to market analysts.
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Disclosure. None. 10 Best Biotech Stocks Under $20 in Cathie Wood’s Portfolio is originally published on Insider Monkey.
