Cathie Wood's ARK Invest Funds Are Buying Penny Stocks But Are They Worth It?
By simple definition, penny stocks are shares of stock trading for less than $5. Some may define them by exchange, while others place a lower price threshold on these cheap stocks. Needless to say, if you do a quick search on the ol' Google machine, you'll find that most outlets report this $5 mark as the threshold.
Regardless of how you feel about low-priced stocks, or what you call them, for that matter, the idea of buying cheap stocks is relatively universal for most traders. You either avoid them altogether or try your hand to make money with them by investing or trading.
One of the barrier-breaking names in the stock market today is Cathie Wood. She has become a rockstar among retail traders. Whether it's finding ways to double down on certain meme stocks or taking an aggressive stance on higher-risk niches, her style of investing has gained broad support from mom and pop traders over the last year. Her claim to fame came during the pandemic of 2020 when her innovation ETFs gained billions of inflows and capitalized on numerous trends that emerged.
Cathie Wood's "Ark On Steroids" Approach
In an interview this week with CNBC, Wood seemingly upped the ante on her bullish market outlook. She explained that her firm is "testing out a portfolio, but it's really Ark on steroids."
"We think the benchmarks are where the big risks are long term, because they are filling up with value traps -- those companies that have done very well historically but are going to be disintermediated and disrupted by the massive amount of innovation that's taking place."
Though this methodology could be more volatile, according to Wood, she expects that in 5 years, the world "will look nothing like it does today, and we're invested in all the disruptors, the winners, that are going to disrupt the traditional world order."
ARK Invest Penny Stocks To Watch
Thanks to our namesake, we focus much more on cheap stocks rather than your bigger blue chips. Call them penny stocks, call them low-priced equities, or call them the cat's pajamas; this comes secondary to the whole purpose of putting together a list of inexpensive stocks for your watch list. Keeping to this theme, we took a look at some of ARK's family of funds to see if Cathie Wood has a soft spot for low-priced names.
Believe it or not, there were a few current and former "penny stocks" that we've reported on and are currently sitting among the holdings of some of these funds. Here are 5 to watch heading into the end of the year.
Nano Dimension (NASDAQ:NNDM)
Shares of Nano Dimension are no stranger to big breakout moves. In fact, at one point last year, NNDM stock was trading below $1. The initial spark that ignited some early interest came with a case of mistaken identity. Traders had confused Nano Dimension (with a space) (NASDAQ:NNDM) and NanoDimension, without a space. Apparently, the "no-space" name had released some big news that traders first attributed to NNDM.
Needless to say, Nano Dimension came into its own for other reasons, including additive manufacturing technology. I won't bore you with a history lesson, but NNDM stock was one of the best penny stocks to watch last year after momentum carried shares from under $1 to as high as $17.89 at the beginning of 2021. Fast-forward to this week, and NNDM stock continues trading in and out of the penny stock range.
Wednesday, the company announced its latest quarterly results, which included a significant increase in revenue for the three and nine months ended September 30. Furthermore, Nano Dimension spelled out several key initiatives moving forward, including M&A, accelerated R&D as well as a firm "go-to-market" effort.
In addition to corporate milestones, Cathie Wood may have brought some additional excitement to the table. As of today, ARK Next Generation Internet ETF (NYSE:ARKW) and Ark Autonomous Tech ETF (NYSE:ARKQ) both show NNDM stock listed among the holdings. The former has 7,864,213 shares with ARK's position worth $36,332,664.06 and the latter has 9,412,517 shares worth $43,485,828.54. This puts ARK's respective averages at $4.619 and $4.62.
AquaBounty Technologies (NASDAQ:AQB)
If you've read some of our articles over the last year, AquaBounty Technologies (NASDAQ:AQB) should be familiar. Similar to NNDM, AQB stock was one of the biggest movers between 2020 and 2021. Shares managed to explode from lows of $1.52 last February to over $13.30 this January. Of course, like most penny stocks, AQB stock recalibrated (a lot), and shares have slid back below the $5 level once again.
AquaBounty is an aquaculture company focusing on sustainable fish farming. It provides Atlantic salmon from its numerous farms in Indiana and Prince Edward Island, Canada. There's been somewhat of a revolution in how food is consumed and how it's processed. Across multiple supply chains, companies are focused intently on their ESG (Environmental, Social, Governance) models. In AquaBounty's case, raising antibiotic-free salmon has provided a solution that reduces the company's carbon footprint and cuts any risk of pollution to marine ecosystems.
Despite the slide in share price, AQB stock has experienced a strong rebound and increased trading volumes this week. The company announced a public offering last week that ultimately resulted in selling pressure, taking shares lower. However, considering the offering is expected to have closed on November 23, there's been a bit more optimism. What's more, if you're looking for Cathie Wood penny stocks, AQB could be one on your list. That's because her ARK Genomic Revolution ETF (NYSE:ARKG) shows a 5.6 million share position in the penny stock. Based on the 5,661,264 shares equating to a listed position worth $15,172,187.52, ARK's average price is around $2.68.
Compugen Ltd. (NASDAQ:CGEN)
Are you looking for more Cathie Wood ARK penny stocks for your list? Given a glance over the companies in her ARK Innovation ETF (NYSE:ARKK). You'll see that as of November 24, the fund has 0.13% of its holdings in Compugen Ltd. (NASDAQ:CGEN). More specifically, ARKK has 5,256,123 shares worth $24,073,043.34, roughly $4.58 per share.
Compugen was a rock star last year, rallying from around $6 to highs of nearly $20. This was thanks to considerable progress in its cancer treatment pipeline. This included many updates on its COM701 anti-tumor platform trial with Bristol Myers Squibb's Opdivo. Despite last year's optimism, shares have retreated to the penny stock range as of late.
This month the company announced that Bristol Myers Squibb completed its $20 million investment into Compugen. Though shares have slid following the company's latest earnings and Phase trial results of COM701 and COM902, management is optimistic thanks to Compugen's current industry relationships.
CEO Anat Cohen Dayag, Ph.D. explained, "We believe the growing commitment from Bristol Myers Squibb, along with the advancement of AstraZeneca's COM902 derived TIGIT/PD-1 bispecific in the clinic, provide important external validation to our approach, and we will continue our steady execution to maintain our first-mover advantage in the space."
Are You Following Cathie Wood On These Penny Stocks?
Like penny stocks with insider trading, investment fund purchases can bring their own type of sentiment. Whether it's a buy or sell of shares, some traders read these instances differently. The important thing to keep in mind is that different investors buy different stocks for specific reasons. Based on this, it's always important to do further research and determine if penny stocks are right for you.
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