In this article, we discuss the 5 small-cap stock picks of Cathie Wood’s 2022 portfolio. If you want to read our detailed analysis of Wood’s hedge fund performance, stock selection and history, go directly to Cathie Wood’s 2022 Portfolio: 10 Small-Cap Stock Picks.
5. Veracyte, Inc. (NASDAQ:VCYT)
ARK Investment Management’s 13 Portfolio: 1%
ARK Investment Management’s Stake Value: $241.4 million
Number of Hedge Fund Holders: 16
Market Cap: $1.32 billion
Up next on the list of small-cap stocks to buy according to disruptive tech investor Cathie Wood is Veracyte, Inc. (NASDAQ:VCYT). The firm deals in the provision of medical diagnostics. Its products include treatments for thyroid cancer, lung cancer screening and diagnosis of pulmonary fibrosis. Cathie Wood’s ARK Investment Management owned 8.75 million shares of Veracyte, Inc. (NASDAQ:VCYT) at the close of the first quarter, with a price tag of $241.4 million which represented 1% of its total portfolio.
On May 4, Needham analyst Mike Matson maintained a ‘Buy’ rating on Veracyte, Inc. (NASDAQ:VCYT) shares and revised the price target to $26 from $31. Matson noted that the firm has a long runway of strong growth, and is poised to become one of the leaders in the cancer diagnostics space. The company also beat expectations in its Q1 earnings, with organic revenue growth improving to 9% from 5% in the fourth quarter.
Veracyte, Inc. (NASDAQ:VCYT) posted an EPS of -$0.20 for the first quarter, surpassing analysts’ expectations by $0.03. The company recorded quarterly revenue of $67.8 million, beating estimates by $5.9 million and increasing 84.7% in comparison to the year-ago quarter.
16 hedge funds were long Veracyte, Inc. (NASDAQ:VCYT) at the end of Q4 2021, with combined positions worth $442 million. This is down from 21 hedge funds in the previous quarter.
Artisan Partners, an investment firm, discussed Veracyte, Inc. (NASDAQ:VCYT) in its Q2 2021 investor letter, stating:
“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 invitro 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.”
4. Twist Bioscience Corporation (NASDAQ:TWST)
ARK Investment Management’s 13 Portfolio: 1.08%
ARK Investment Management’s Stake Value: $259.94 million
Number of Hedge Fund Holders: 16
Market Cap: $1.5 billion
Twist Bioscience Corporation (NASDAQ:TWST) deals in the development of synthetic DNA-based products. Its DNA synthesis platform enables the manufacturing of synthetic DNA by writing DNA on a silicon chip. These products are also used for drug discovery and the usage of DNA as a digital storage medium. Cathie Wood, according to 13F filings for the first quarter, owned 5.26 million shares of Twist Bioscience Corporation (NASDAQ:TWST) at a value of $259.9 million.
In total, 16 hedge funds were bullish on the company shares at the close of the fourth quarter, down from 19 a quarter ago. The combined value of these Q4 hedge fund holdings stood at $564.8 million.
On May 6, Baird analyst Catherine Ramsey Schulte gave Twist Bioscience Corporation (NASDAQ:TWST) an unchanged rating of ‘Outperform’, and changed the price target to $43 from $70. She remains positive on the firm’s underlying momentum and its differentiated technology platform, and believes in its potential long-term upside.
In Q1 2022, Twist Bioscience Corporation (NASDAQ:TWST) posted an EPS of -$1.02, exceeding analysts’ forecasts by $0.28. Quarterly revenue increased 54.2% from the year-ago quarter to come in at $48.1 million, also beating consensus estimates by $2.9 million.
Here is what investment firm Baron Funds had to say about Twist Bioscience Corporation (NASDAQ:TWST) in its Q2 2021 investor letter:
“We initiated a position in Twist Bioscience Corporation, a provider of synthetic DNA. The company’s proprietary semiconductor-based platform has driven its position as the low-cost provider of DNA for a variety of high-growth applications. These include the attractive areas of synthetic biology, liquid biopsy, and antibody discovery. Of note, the antibody business has the potential to become a source of high-margin royalty streams in the future. As further optionality, we believe Twist has a shot at disrupting the entire digital data storage industry with DNA-based storage.”
3. PagerDuty, Inc. (NYSE:PD)
ARK Investment Management’s 13 Portfolio: 1.46%
ARK Investment Management’s Stake Value: $351.04 million
Number of Hedge Fund Holders: 27
Market Cap: $2.06 billion
PagerDuty, Inc. (NYSE:PD) is another small-cap stock that features in the Q1 2022 portfolio of Cathie Wood, who owns 10.26 million shares of the firm valued at $351 million. The company operates a digital operations management software, which collects data from any software and device to understand opportunities and threats that need to be addressed in real-time. It serves customers in many industries including software and technology, telecommunications, financial services, media and entertainment, travel and retail.
On March 17, Craig-Hallum analyst Chad Bennett maintained a ‘Buy’ rating on PagerDuty, Inc. (NYSE:PD) stock, and decreased the price target $45 from $52, whilst noting that he sees the firm’s return to 30%+ growth in mid 2022 as part of a sustainable growth trajectory.
Out of all the hedge funds tracked by Insider Monkey, 27 reported owning stakes in PagerDuty, Inc. (NYSE:PD) at the end of Q4 2021 with an overall value of $717.4 million. This is down from 30 hedge funds with bullish bets on the company shares a quarter ago.
2. Fate Therapeutics, Inc. (NASDAQ:FATE)
ARK Investment Management’s 13 Portfolio: 1.77%
ARK Investment Management’s Stake Value: $426.01 million
Number of Hedge Fund Holders: 31
Market Cap: $2.11 billion
Biopharmaceutical firm Fate Therapeutics, Inc. (NASDAQ:FATE) is up next on the list of Cathie Wood’s top small-cap stock picks. The firm develops programmed cellular immunotherapies for cancer and immune disorders. Regulatory data for the first quarter of 2022 showed that Cathie Wood owned 10.98 million shares of the firm priced at $426 million, representing 1.77% of her overall portfolio.
Truist analyst Robyn Karnauskas on April 13 maintained a ‘Buy’ rating on Fate Therapeutics, Inc. (NASDAQ:FATE) shares, and lowered the price target to $75 from $125.
As of the end of the fourth quarter, 31 hedge funds owned stakes in Fate Therapeutics, Inc. (NASDAQ:FATE), with a combined worth of $1.77 billion. This is down from 36 hedge funds holding $2.1 billion worth of positions in the firm a quarter earlier.
Fate Therapeutics, Inc. (NASDAQ:FATE) reported its first quarter earnings on May 4, and EPS was recorded at-$0.68, beating estimates by $0.06. Revenue of $18.4 million for the quarter was also above analysts’ forecasts by $9.4 million, and registered an uptick of 65.27% from the year-ago quarter.
1. Beam Therapeutics Inc. (NASDAQ:BEAM)
ARK Investment Management’s 13 Portfolio: 1.96%
ARK Investment Management’s Stake Value: $469.9 million
Number of Hedge Fund Holders: 22
Market Cap: $2.21 billion
Beam Therapeutics Inc. (NASDAQ:BEAM) is the largest small-cap holding in the Q1 2022 portfolio of Cathie Wood. The famed investor owned 8.2 million shares worth roughly $470 million in the firm, making her its biggest shareholder. Based in Cambridge, Massachusetts, Beam Therapeutics Inc. (NASDAQ:BEAM) develops precision genetic medicines for patients with serious diseases such as sickle cell disease, thalassemia and leukemia, among others.
On April 28, Credit Suisse analyst Richard Law initiated coverage of Beam Therapeutics Inc. (NASDAQ:BEAM) with a Neutral rating and a price target of $62. In January, the firm announced a four-year research collaboration with Pfizer Inc. (NYSE:PFE) to develop in vivo base editing therapies targeting three undisclosed targets for rare genetic diseases of the liver, muscle and central nervous system. Beam Therapeutics Inc. (NASDAQ:BEAM) will receive $300 million as an upfront payment, and will also be eligible to receive up to $1.05 billion in future milestones.
Investors were seen buying up on Beam Therapeutics Inc. (NASDAQ:BEAM) stock at the close of the fourth quarter of 2021, where 22 hedge funds held positions in the firm with a combined value of $1.17 billion. In contrast, 20 hedge funds held stakes worth $1.24 billion in the firm a quarter ago.
Baron Funds, an investment firm, talked about many stocks in its Q1 2021 investor letter, and Beam Therapeutics Inc. (NASDAQ:BEAM) was one of them. The fund said:
“Beam Therapeutics Inc. is a biotechnology company pioneering a novel technology called base editing, which allows for individual base pairs (the letters of DNA) to be modified. Shares fell along with other biotechnology stocks driven by a sudden rise in treasury yields. Early stage biotechnology stocks are particularly sensitive to interest rates because their cash flows are further in the future. We believe we are entering into a phase of significant advancement for the gene editing field that will eventually lead to curative therapies, and we think Beam has a unique platform technology.”
You can also take a look at 15 Largest Chemical Companies in the World and 10 Best Cheap Stocks To Buy Now
