On the heels of Nvidia‘s (NASDAQ: NVDA) recent second-quarter earnings release, CEO Cathie Wood’s Ark Invest firm continued to trim holdings in the semiconductor stock. The investment firm sold 3,952 shares of Nvidia from its Ark Genomic Revolution ETF on Aug. 24 — working out to approximately $1.9 million.
While Nvidia was the only stock that Ark sold that day, Wood’s company also bought five stocks in the daily trading session. What should investors take away from Ark’s decision to sell Nvidia stock on the heels of the company’s very strong second-quarter earnings results? And do other moves from the famous investor signal that she’s become more bullish about another explosive growth sector?
Let’s take a closer look at Ark’s recent portfolio moves.
Nvidia’s second-quarter results arrived with earnings of $2.70 per share on sales of $13.51 billion, crushing the average analyst estimate’s call for per-share earnings of $2.09 on revenue of $11.22 billion. The company also guided for roughly $16 billion in sales in its current quarter, far ahead of the average analyst estimate’s target for $12.6 billion.
Even though Nvidia delivered second-quarter results that blew Wall Street’s targets out of the water, Ark Invest opted to trim holdings in the stock in its Genomic Revolution ETF. Nvidia’s big Q2 beats failed to spur gains for the stock, sparking investor concerns that the big bull run for artificial intelligence (AI) stocks is losing steam.
But it’s not surprising to see Ark reducing its position in the graphics process unit (GPU) leader. Wood had raised concerns that the stock had become too expensive earlier this year, and actually sold all holdings in the stock for the firm’s Ark Innovation ETF late in 2022.
On the other hand, Nvidia still constitutes a significant holding in the Genomic Revolution ETF, even after the recent sale. The fund now holds Nvidia stock totaling roughly $61 million — working out to approximately 3% of the fund’s total weight and ranking as its 12th-largest position.
Nvidia might seem like an odd holding for an exchange-traded fund focused on biotech companies. But many players in the category are using high-performance computing and AI to power drug discovery platforms, disease-and-treatment modeling, and other applications. Notably, Nvidia accounts for a bigger portion of the biotech-focused fund’s holdings than any other Ark ETF.
Meanwhile, Ark purchased shares of Intellia Therapeutics, Invitae, Accolade, CRISPR Therapeutics, and Recursion Pharmaceuticals for its Ark Genomic Revolution ETF on Aug. 24. The table details what these companies do and how much Ark recently invested in them.
Stock Purchased
What the Company Does
Est. Value as of Aug. 24 Purchase Date
Accolade
Provides healthcare information services and helps users navigate benefits, claims, and provider availability.
$162,317
CRISPR Therapeutics
Uses gene-editing technologies to develop treatments for cancer, diabetes, hemoglobinopathies, and other diseases.
$369,744
Intellia Therapeutics
Uses gene-editing technologies to cure genetic diseases and treat cancers and autoimmune diseases.
$289,992
Invitae
Provides genetic testing services.
$205,399
Recursion Pharmaceuticals
Uses an AI-powered software platform to discover drug treatments.
$1,133,254
Data source: Ark Invest; Yahoo Finance.
The Genomic Revolution ETF already held positions in each of these stocks, and the recent additions seem fairly typical for the fund.
More interestingly, Wood’s firm bought more than $2.6 million worth of Intellia stock and more than $766,000 worth of Invitae stock for its flagship Ark Innovation ETF on Aug. 24. The next day, Ark purchased additional Intellia stock worth approximately $185,500.
Ark’s Innovation ETF continues to be heavily weighted toward innovative technology hardware and services companies — with Tesla, Roku, Zoom Video Communications, Coinbase, and UiPath constituting its five-largest holdings by weight. But Wood has been ramping up the percentage of holdings that biotech companies account for in the fund.
Other than recent investments in flying electric vehicle specialist Archer Aviation, all the stocks purchased for the Ark Innovation ETF since Aug. 10 have been biotech companies. Given the trend, it looks like Wood may be betting that the biotech industry offers the best return potential for growth investors right now.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics, Coinbase Global, Intellia Therapeutics, Invitae, Nvidia, Roku, Tesla, UiPath, and Zoom Video Communications. The Motley Fool has a disclosure policy.
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