In this article, we discuss 10 biotech stocks to sell now according to Cathie Wood.
The mass sell-off of stocks in the high growth sector has not been very kind to Cathie Wood, the chief of ARK Investment Management. Her fund has suffered as investors shed her flagship ARK Innovation ETF for safer options in a volatile market. Even though Wood has publicly defended her investment strategy amid the sell-off, recently telling news platform CNBC that the market shift towards “benchmarks” instead of game-changing tech was creating a “massive misallocation of capital” in markets that could be the biggest in “the history of mankind”.
However, her latest moves in the market suggest that Wood is privately considering some of the risks associated with owning non-profitable companies in the present macro-economic environment. 13F filings by ARK Investment Management reveal that Wood has decreased exposure to the biotech sector in the past few months, selling off stocks in the sector that she had owned for the past few years. She has also trimmed stakes in many biotech stocks she was previously bullish on.
Some of the top biotech stocks that Wood sold during the fourth quarter of 2021 include Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), Sema4 Holdings Corp. (NASDAQ:SMFR), and Caribou Biosciences, Inc. (NASDAQ:CRBU), among others discussed in detail below.
Our Methodology
The stocks were picked from the fourth quarter regulatory filings of ARK Investment Management. The companies in which the fund trimmed a previously-held stake or sold it off completely feature on the list.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Cathie Wood of ARK Investment Management
Biotech Stocks to Sell Now According to Cathie Wood
10. Codexis, Inc. (NASDAQ:CDXS)
Number of Hedge Fund Holders: 20
Percentage Decrease in Stake in Q4: 45%
Codexis, Inc. (NASDAQ:CDXS) develops and sells biocatalysts. Latest filings show that ARK owned over 3.2 million shares of Codexis, Inc. (NASDAQ:CDXS) at the end of the fourth quarter of 2021 worth $101 million, representing 0.3% of the portfolio. The company has featured in the ARK portfolio since the fourth quarter of 2018.
Codexis, Inc. (NASDAQ:CDXS) has attracted interest from other hedge funds as well. At the end of the fourth quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $544 million in Codexis, Inc. (NASDAQ:CDXS), compared to 21 in the previous quarter worth $413 million.
Just like Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), Sema4 Holdings Corp. (NASDAQ:SMFR), and Caribou Biosciences, Inc. (NASDAQ:CRBU), Codexis, Inc. (NASDAQ:CDXS) is one of the growth stocks on the radar of elite investors.
In its Q4 2020 investor letter, Roubaix Capital LLC, an asset management firm, highlighted a few stocks and Codexis, Inc. (NASDAQ:CDXS) was one of them. Here is what the fund said:
“The largest contributor to fourth quarter long performance was Codexis, Inc. (NASDAQ:CDXS), a truly unique investment story. The company engineers enzymes that enhance productivity of the manufacturing processes of major industries including pharmaceutical, food and other companies. The high-performance enzymes identified by Codexis, Inc. (NASDAQ:CDXS) enable higher levels of production, which in turn drives profits for customers. The story does not stop here. Codexis’ proprietary platform, Code Evolver, has also demonstrated early success in identifying proteins to develop novel protein and gene therapies. This adds another layer of upside optionality to the company and has validation from partnerships with Nestle and Takeda. In these instances, the company earns milestone driven incentives and royalty payments. We see Codexis’ API business generating increasing scale at the same time the pipeline around licenses and royalties has never been larger, and as a result we maintain our position.”
9. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders: 61
Percentage Decrease in Stake in Q4: 46%
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotech firm that develops therapies for the treatment of cystic fibrosis. Hedge funds have been piling into the stock as Wood sells it. At the end of the fourth quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), up from 55 in the preceding quarter worth $2.7 billion.
Regulatory filings show that ARK owned 928,791 shares of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) at the end of December 2021 worth $203 million, representing 0.61% of the portfolio. The company has featured in the ARK portfolio since the third quarter of 2020.
In its Q2 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was one of them. Here is what the fund said:
“Among the largest detractors from relative performance (includes) Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Vertex fell after the company halted development of one of its drug candidates undergoing Phase 2 trials. The failure leaving some investors wondering if Vertex’s much-heralded research capabilities might not extend beyond its core franchise in cystic fibrosis, a view we respectfully reject.”
8. InMode Ltd. (NASDAQ:INMD)
Number of Hedge Fund Holders: 30
Percentage Decrease in Stake in Q4: 48%
InMode Ltd. (NASDAQ:INMD) makes and sells healthcare equipment. Securities filings reveal that ARK owned 36,457 shares of InMode Ltd. (NASDAQ:INMD) at the end of the fourth quarter of 2021 worth $2.5 million, representing a very small percentage of the portfolio. The company has been in the ARK portfolio since the fourth quarter of 2019.
Top hedge funds still hold large stakes in InMode Ltd. (NASDAQ:INMD). Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in InMode Ltd. (NASDAQ:INMD), with 2.5 million shares worth more than $182 million.
In its Q3 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and InMode Ltd. (NASDAQ:INMD) was one of them. Here is what the fund said:
“InMode Ltd. (NASDAQ:INMD) was among the topic contributors to performance. InMode designs, develops, manufactures and commercializes innovative minimally invasive and non-invasive aesthetic medical products. InMode’s platforms harness novel radio frequency (RF) technology to enable emerging minimally invasive procedures that bridge the gap between temporary treatments like facials and more invasive surgical procedures like facelifts across several categories of surgical specialties such as plastic surgery, gynecology, dermatology, ophthalmology and otolaryngology (ear, nose and throat care).
The aesthetics market is seeing strong tailwinds coming out of the Covid-19 pandemic. These tailwinds include the “Zoom effect,” or dissatisfaction with one’s personal appearance after viewing one’s own face on Zoom, which has resulted in more people deciding to undergo aesthetic procedures. De-stigmatization of aesthetics procedures, aided by social media platforms, is also supportive of InMode’s results. Between the strong growth of its existing product lines and the anticipated launch of two new products, investors perceive InMode Ltd. (NASDAQ:INMD) as being well positioned to capitalize on the broader strength of the aesthetics market, which is a key reason shares outperformed in the third quarter.”
7. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 83
Percentage Decrease in Stake in Q4: 58%
Pfizer Inc. (NYSE:PFE) makes and sells biopharma products. As Wood sells the stock, other hedge funds have been loading up on it. At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $5 billion in Pfizer Inc. (NYSE:PFE), up from 74 in the preceding quarter worth $2.6 billion.
Latest data shows that ARK owned 943,849 shares of Pfizer Inc. (NYSE:PFE) at the end of December 2021 worth $55.7 million, representing 0.16% of the portfolio. Wood had first purchased a stake in the company in the third quarter of 2021.
In its Q3 2021 investor letter, Saturna Capital, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer. The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”
6. SomaLogic, Inc. (NASDAQ:SLGC)
Number of Hedge Fund Holders: 37
Percentage Decrease in Stake in Q4: 65%
SomaLogic, Inc. (NASDAQ:SLGC) operates as a clinical diagnostics firm. ARK owned 300,000 shares of SomaLogic, Inc. (NASDAQ:SLGC) at the end of December 2021 worth over $1 million. Wood had first bought a stake in the firm during the third quarter of 2021.
Major hedge funds remain bullish on SomaLogic, Inc. (NASDAQ:SLGC). At the end of the fourth quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $630 million in SomaLogic, Inc. (NASDAQ:SLGC), the same as in the preceding quarter worth $647 million.
In addition to Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), Sema4 Holdings Corp. (NASDAQ:SMFR), and Caribou Biosciences, Inc. (NASDAQ:CRBU), SomaLogic, Inc. (NASDAQ:SLGC) is one of the stocks feeling the heat of inflation.
5. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 41
Percentage Decrease in Stake in Q4: 83%
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) makes and sells medicines for treating various diseases. Top hedge funds hold large stakes in the company. At the end of the fourth quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), compared to 44 in the previous quarter worth $1.3 billion.
Latest 13F filings show that ARK owned 72,993 shares of Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) at the end of December 2021 worth $46 million, representing 0.13% of the portfolio of the fund.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) was one of them. Here is what the fund said:
“We restored Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) from a rather trivial to a more normal position size. You may recall Regeneron performed well for the Fund during the Covid-19 crisis, so we significantly reduced our position as its price-value gap narrowed. During the past several quarters, however, the market has experienced the now infamous “reopening trade,” in which companies that performed well during the pandemic trailed as the economy reopened. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) suffered a similar fate and its shares have lagged the S&P 500 by roughly 4000 basis points, despite the company’s strong fundamentals and robust pipeline of new products. The underperformance widened Regeneron’s price-value gap, so we restored it to a more normal position size.”
4. Caribou Biosciences, Inc. (NASDAQ:CRBU)
Number of Hedge Fund Holders: 24
Percentage Decrease in Stake in Q4: 100%
Caribou Biosciences, Inc. (NASDAQ:CRBU) is a clinical stage biopharma firm that develops treatments for solid tumors. Wood had first purchased a stake in the company during the third quarter of 2021, buying nearly 5,000 shares at an average price of $24.45 per share. She sold off that entire stake in the next quarter.
Other hedge funds have also been selling Caribou Biosciences, Inc. (NASDAQ:CRBU) stock. At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $233 million in Caribou Biosciences, Inc. (NASDAQ:CRBU), compared to 26 the preceding quarter worth $297 million.
3. RedHill Biopharma Ltd. (NASDAQ:RDHL)
Number of Hedge Fund Holders: 4
Percentage Decrease in Stake in Q4: 100%
RedHill Biopharma Ltd. (NASDAQ:RDHL) is a specialty biopharma firm. Elite hedge funds hold large stakes in the company. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in RedHill Biopharma Ltd. (NASDAQ:RDHL), with 175,058 shares worth more than $452,000.
RedHill Biopharma Ltd. (NASDAQ:RDHL) had been featured in the ARK portfolio since the first quarter of 2018. In the first quarter of 2021, the company had nearly tripled its stake in the biopharma firm. However, this holding was sold off completely during the fourth quarter of 2021.
2. Sema4 Holdings Corp. (NASDAQ:SMFR)
Number of Hedge Fund Holders: 38
Percentage Decrease in Stake in Q4: 100%
Sema4 Holdings Corp. (NASDAQ:SMFR) is a health intelligence firm. Wood had first purchased a stake in the firm during the third quarter of 2021, buying 9.4 million shares at an average price of $10.41 per share. The fund sold this entire holding between October and December.
There is positive hedge fund sentiment around Sema4 Holdings Corp. (NASDAQ:SMFR). At the end of the fourth quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $257 million in Sema4 Holdings Corp. (NASDAQ:SMFR), up from 34 in the previous quarter worth $483 million.
1. NanoString Technologies, Inc. (NASDAQ:NSTG)
Number of Hedge Fund Holders: 22
Percentage Decrease in Stake in Q4: 100%
NanoString Technologies, Inc. (NASDAQ:NSTG) is a Washington-based biotech firm. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in NanoString Technologies, Inc. (NASDAQ:NSTG), with 2.1 million shares worth more than $89 million.
NanoString Technologies, Inc. (NASDAQ:NSTG) has been featured in the ARK portfolio since the first quarter of 2018. The fund had been shedding the stock since the first quarter of 2021 and completely sold it off during the fourth quarter of 2021.
You can also take a peek at 10 High-Yield Dividend Stocks with Payout Ratio Less than 55% and 10 Stocks to Buy Today According to British Billionaire David Harding.
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Disclosure. None. 10 Biotech Stocks to Sell Now According to Cathie Wood is originally published on Insider Monkey.
