In this article, we discuss 5 small-cap growth stocks in Cathie Wood’s portfolio. You can see more of Woods’s favorite small-cap stocks by clicking 10 Small-Cap Growth Stocks in Cathie Wood’s Portfolio.
5. CareDx, Inc (NASDAQ:CDNA)
Percentage of ARK Investment Management’s 13F Portfolio: 0.54%
ARK Investment Management’s Stake Value: $129.88 million
Number of Hedge Fund Holders: 19
Market Capitalization: $1.19 billion
CareDx, Inc. (NASDAQ:CDNA) is a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value healthcare solutions for transplant patients and caregivers. Catherine Wood reported owning over 3.51 million shares of CareDx, Inc. (NASDAQ:CDNA) in Q1 2022, worth $129.88 million.
Earlier this April, Stephens analyst Mason Carrico initiated coverage of CareDx, Inc. (NASDAQ:CDNA) with an Overweight rating and $50 price target. According to the analyst, CareDx has established itself as the leader in transplant diagnostics over the past two decades, which has resulted in strong test adoption and a multi-year presence within the vast majority of transplant centers in the U.S. This position not only supports continued use of current tests, but also paves the way for adoption of future tests, said Carrico, who sees CareDx, Inc. (NASDAQ:CDNA) capturing majority share of the market as it expands.
By the end of the first quarter of 2022, 19 hedge funds were long CareDx, Inc. (NASDAQ:CDNA) with stakes worth $270.59 million. This is compared to 26 firms that held stakes in the company in the preceding quarter. Israel Englander’s Millennium Management is one of the biggest shareholders of CareDx, Inc. (NASDAQ:CDNA), with stakes valued at $22.59 million.
Baron Funds, an asset management firm, named several stocks in its “Baron Discovery Fund” fourth-quarter 2021 investor letter, one of which was CareDx, Inc (NASDAQ:CDNA). Here is the firm’s view on the stock:
“CareDx, Inc. provides transplant testing and ancillary services. The company reported strong fourth quarter earnings (it beat and raised full-year guidance), driven primarily by its kidney and heart transplant tests. It also continues to move forward with more transplant tests (liver, stem cell/bone marrow transplant, cell transplant, and lung). We believe the weak share performance in the quarter related to flattish revenue guidance in the fourth quarter driven by some holiday seasonality and the Omicron COVID variant. Additionally, some investors were concerned that average selling prices were a bit lower in the third quarter, however this reflects the company’s new lung test which is not yet reimbursed by commercial insurers (but which CareDx is running to gain share). This is typical of
diagnostic launches, and we are not concerned. There is also noise surrounding a competitor’s study data in kidney that is purported to be more accurate than CareDx’s test. While the headline number looks slightly better for the competitor, it is important to note that CareDx’s Heart Care combination test, which includes both donor-derived DNA and gene expression testing, is at least comparable to the competitor’s accuracy. Also, the full publication has not yet been released, and we have reason to believe that CareDx could successfully modify its test to be as accurate as the competitor if needed. CareDx has proven itself to be a terrific long-term partner to its customers, providing not only tests, but services to transplant centers and their patients that creates brand stickiness, and therefore competitive advantage beyond pure testing. We are not concerned by the short-term dip in the share price as CareDx still has significant market opportunity in kidney, heart, and all of its pipeline products.”
4. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Percentage of ARK Investment Management’s 13F Portfolio: 0.73%
ARK Investment Management’s Stake Value: $175.55 million
Number of Hedge Fund Holders: 17
Market Capitalization: $1.74 billion
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), headquartered in San Diego, California, specializes in directed-energy weapons, unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, training and combat systems. By the end of March, Cathie Wood’s ARK Investment Management reported holding stakes worth $175.5 million in the defense company.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) announced on June 16 that it was awarded a contract to build a state-of-the-art C-band Geostationary Orbit Satellite Spectrum Monitoring Facility. The company is implementing this solution as part of a joint project with Japan’s main satellite operator, SKY Perfect JSAT Corporation for the Ministry of Internal Affairs and Communications in Japan.
Earlier this May, Canaccord analyst Austin Moeller reiterated his Buy rating and $23 price target on the company’s shares. According to the analyst, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)’s acquisition of Southern Research’s engineering division enables it to further accelerate its current R&D efforts in the classified realm, including hypersonic vehicles, space/missile defense, and ISR sensor design.
According to the first quarter database of Insider Monkey, 17 hedge funds were bullish on Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), compared to 18 funds in the last quarter. In Q1 2022, D. E. Shaw holds a notable investment in the company, with stakes worth $20 million.
3. Invitae Corporation (NYSE:NVTA)
Percentage of ARK Investment Management’s 13F Portfolio: 0.92%
ARK Investment Management’s Stake Value: $220.6 million
Number of Hedge Fund Holders: 29
Market Capitalization: $582.39 million
Invitae Corporation (NYSE:NVTA) is a biotechnology company that was created as a subsidiary of Genomic Health in 2010 and then spun-off in 2012. The company provides gene sequencing and deletion/duplication analysis for disorders in various medical specialties. Latest data shows that ARK Investment Management owned close to 27 million shares of Invitae Corporation (NYSE:NVTA) at the end of March 2022 worth $220.6 million, representing 0.92% of the total portfolio.
On June 13, Benchmark analyst Bruce Jackson lowered the price target on Invitae Corporation (NYSE:NVTA) to $6 from $13 and maintained a Buy rating on the shares after lowering his 2022 revenue forecast to $601 million from $640 million and adjusting his non-cash expense estimates while also lowering the multiple to one that is consistent with the comp group.
At the end of the first quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $545 million in Invitae Corporation (NYSE:NVTA), compared to 24 in the preceding quarter worth $958 million. Eli Casdin’s Casdin Capital is one of the firm’s leading shareholders, holding over 12.2 million shares in the biotechnology company.
2.Veracyte, Inc. (NASDAQ:VCYT)
Percentage of ARK Investment Management’s 13F Portfolio: 1%
ARK Investment Management’s Stake Value: $241.4 million
Number of Hedge Fund Holders: 15
Market Capitalization: $1.51 billion
Veracyte, Inc. (NASDAQ:VCYT) is a global diagnostics company that provides genomic diagnostic products and services to improve patient care against diseases such as thyroid cancer, lung cancer, and idiopathic pulmonary fibrosis. The firm’s product portfolio consists of products such as Afirma analysis, Percepta, Envisia, and others. According to first-quarter 13F filings, ARK Investment Management held 8.75 million company shares worth $241.4 million.
Earlier this May, Needham analyst Mike Matson lowered his price target on Veracyte, Inc. (NASDAQ:VCYT) to $26 from $31 but kept a Buy rating on the shares. The company’s Q1 results topped expectations as organic revenue growth improved to 9% from 5% in Q4, the analyst tells investors in a research note. Matson adds that Veracyte, Inc. (NASDAQ:VCYT) has a long runway of strong growth and is positioned to become one of the leaders in cancer diagnostics.
Out of the 912 hedge funds tracked by Insider Monkey, Veracyte, Inc. (NASDAQ:VCYT) was part of 15 public hedge fund portfolios in the first quarter of 2022. In the previous quarter, 16 hedge funds had a stake in the company. Ken Fisher of Fisher Asset Management is one of the company’s most notable shareholders, with 1.14 million shares worth approximately $31.65 million.
Artisan Partners mentioned Veracyte, Inc. (NASDAQ:VCYT) in its second-quarter 2021 investor letter. Here is what the firm said:
“Among our bottom contributors (includes) Veracyte. Veracyte develops and markets molecular tests designed to minimize ambiguity in the treatment of patients with cancer. These tests can reduce unnecessary surgeries and help put cancer patients at ease when the decision is to “watch and wait.” Shares have been pressured amid a recent investment cycle (acquired Decipher and HalioDX) and a resurgence of the pandemic earlier this year weighing on testing volumes. In addition, the company’s founder and CEO recently announced she was moving to Executive Chair. Her replacement is the former CFO of Illumina, who is very knowledgeable in in-vitro diagnostics and played a critical role in Illumina’s international expansion efforts (which we expect him to pursue at Veracyte). We are maintaining our position as patients return to the clinic for testing and as management executes on its strong R&D pipeline, including the upcoming launch of a nasal swab lung cancer test. Longer-term, the company is well-positioned to expand internationally as it ports its growing menu of tests onto the recently acquired nCounter instrument.”
1. Pacific Biosciences of California (NASDAQ:PACB)
Percentage of ARK Investment Management’s 13F Portfolio: 1.03%
ARK Investment Management’s Stake Value: $248 million
Number of Hedge Fund Holders: 22
Market Capitalization: $1 billion
Pacific Biosciences of California (NASDAQ:PACB) is an American biotechnology company founded in 2004 that develops and manufactures systems for gene sequencing and some novel real time biological observation. Its products include analytical software, single molecule real-time (SMRT) compatible products, and PacBio Systems that are used to analyze biochemical sequencing reactions.
Earlier this May, Cantor Fitzgerald analyst Ross Osborn lowered the price target on Pacific Biosciences of California (NASDAQ:PACB) to $19 from $23 and maintained an Overweight rating on the shares following the quarterly results. Given the company’s “superior” long-read offering, strong cash balance and product pipeline that significantly expands the company’s TAM, Osborn encourages investors to take advantage of the firm’s attractive valuation and acquire shares.
22 hedge funds were long Pacific Biosciences of California (NASDAQ:PACB) at the end of the first quarter of 2022, with combined stakes worth $481.5 million. In contrast, 21 hedge funds held positions in the company a quarter ago. Julius Baker and Felix Baker’s Baker Bros. Advisors was among the largest shareholders of Pacific Biosciences of California (NASDAQ:PACB) in the first quarter with a stake worth approximately $49.54 million.
DEVON Equity Management, an investment firm, highlighted a few stocks in its Q2 2021 investor letter, and Pacific Biosciences of California (NASDAQ:PACB) featured among them. The fund said:
“As a final word on Sequencing – we established a position in Pacific Biosciences (PACB US) during the quarter. Pac Bio are the leader in Long Read Sequencing (Illumina are dominant in Short Read). The Long Read market is far less developed than short read, but our continued research into the genomic sequencing field increased our confidence in the commercial viability for Long Read Sequencing in the coming years. We will discuss the investment case for Pac Bio in more detail in a future letter.”
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