In this article, we discuss 10 small-cap growth stocks in Cathie Wood’s portfolio.
Ark Investment Management CEO Cathie Wood has had a rough 2022 so far as her disruptive technology darlings have been among the biggest losers this year in the face of rising interest rates. Her flagship active fund Ark Innovation ETF (ARKK) is down a staggering 52% year-to-date, nearing its March 2020 low point, while her hedge fund’s assets under management in all of its ETFs declined from a peak of more than $60 billion earlier in February 2021 to $16 billion by the end of April of this year. Ironically, however, Wood’s flagship fund has posted its longest streak of inflows in over a year as it fights back from an interest rate hike-fueled decline. Investors have poured money into the $9.5 billion Ark Innovation ETF for eight straight days, with the amount totaling $639 million, according to Bloomberg.
Despite her recent woes, the innovation-focused investor remains adamant in her fund’s long-term growth. Last December, Woods predicted that Ark Investment Management would return 40% annually over the next five years, and while her losses deepened this year, she doubled down in April, saying ARK would rebound and gain 50% a year. Although she has stated that inflation has turned out to be far hotter than she had anticipated due to unprecedented supply chain disruptions and geopolitical tensions between Russian and Ukraine, Woods still has a legion of fans that are mostly sticking with her, and new money is coming in as investors seek diversification in a down market.
While some of the stocks in her portfolio have decidedly been crushed right now, including Block, Inc. (NYSE:SQ), Shopify Inc. (NYSE:SHOP), and Tesla, Inc. (NASDAQ:TSLA), Cathie Wood sought to reassure investors that she’d bounce back in 2022. In that regard, some of the top gainers could include small-cap growth stocks as well. Some of the prominent small-cap stocks in Cathie Wood’s portfolio include Pacific Biosciences of California (NASDAQ:PACB), SomaLogic, Inc. (NASDAQ:SLGC), and Schrödinger, Inc. (NASDAQ:SDGR), among others listed below.
Cathie Wood of ARK Investment Management
Our Methodology
After scouring through Cathie Wood’s 13F portfolio for the first quarter of 2022, we narrowed down a list of the top 10 small-cap growth stocks. Hedge fund data around each stock has been provided to give readers better context for their investment choices, and has been derived using Insider Monkey’s database which tracks more than 900 elite hedge funds at the end of the first quarter of 2022.
10 Small-Cap Growth Stocks in Cathie Wood’s Portfolio
10. Silvergate Capital Corporation (NYSE:SI)
Percentage of ARK Investment Management’s 13F Portfolio: 0.3%
ARK Investment Management’s Stake Value: $72.04 million
Number of Hedge Fund Holders: 35
Market Capitalization: $1.68 billion
Silvergate Capital Corporation (NYSE:SI) is a bank holding company that operates as a provider of financial infrastructure solutions and services with sizeable interests in fintech products. According to the 13F filings for the first quarter of 2022, Cathie Wood’s ARK Investment Management reported holding 478,486 shares of Silvergate Capital Corporation (NYSE:SI) worth approximately $72 million.
On June 13, Wells Fargo analyst Jared Shaw initiated coverage of Silvergate Capital Corporation (NYSE:SI) with an Overweight rating and $120 price target. According to Shaw, the firm has created a strong network effect through its Silvergate Exchange Network, which is utilized by some of the largest exchanges and institutional clients in the crypto space. He argues that the continued institutional adoption of crypto and product innovation at Silvergate should help maintain the bank’s growth profile, and believes much of the bear-case is priced in at current levels, making for an attractive entry point.
For the first quarter of 2022, Silvergate Capital Corporation (NYSE:SI) recorded an EPS of $0.80, outperforming estimates by $0.33. Quarterly revenue grew 92.7% year-on-year to come in at roughly $60 million, beating estimates by $5.1 million.
35 hedge funds were long on the company shares at the close of Q1 2022, with stakes valued at $838.6 million. This is compared to the preceding quarter where 37 hedge funds held positions in the company. Paul Marshall and Ian Wace’s Marshall Wace LLP is the company’s leading shareholder, with over 1.3 million shares.
Just like Block, Inc. (NYSE:SQ), Shopify Inc. (NYSE:SHOP), and Tesla, Inc. (NASDAQ:TSLA), Cathie Wood remains bullish on Silvergate Capital Corporation (NYSE:SI).
Investment firm Artisan Partners mentioned Silvergate Capital Corporation (NYSE:SI) in its Q3 2021 investor letter. The fund said:
“Silvergate Capital is the leading regulated provider of traditional banking solutions to the digital currency industry (DCI). Notable customers include Coinbase, Paxos, Circle, Binance, Gemini, Jane Street, Fidelity, ICE, PayPal and the CME Group. We believe the company is well positioned to grow as digital assets become an increasing part of the economy. As a bridge between regulated financial markets and the crypto industry, Silvergate has established itself as a core infrastructure layer for trading digital assets. The company provides regulated banking services to the DCI to capture low-cost funding deposits, which can be monetized through its securities and loan portfolio. As of Q3, the company had $11 billion of deposits from over 1,300 digital currency customers and processed $600 million in transaction volumes over the last 12 months through the Silvergate Exchange Network (SEN). Today, the majority of SEN transactions are not being monetized to reduce friction of growing the network; however, we believe this could become an additional profit cycle driver over time as new products are launched or if the technology is adopted for use cases such as cross-border remittance or commerce.”
9. Codexis, Inc. (NASDAQ:CDXS)
Percentage of ARK Investment Management’s 13F Portfolio: 0.33%
ARK Investment Management’s Stake Value: $81.29 million
Number of Hedge Fund Holders: 23
Market Capitalization: $710.51 million
Codexis, Inc. (NASDAQ:CDXS) is a protein engineering company that leverages its proprietary CodeEvolver platform to discover and develop high performance enzymes and novel biotherapeutics for pharmaceutical, food and medical applications. Cathie Wood’s ARK Investment Management increased its position in Codexis, Inc. (NASDAQ:CDXS) by 22% in the first quarter of 2022, holding 3.94 million shares worth $81.29 million.
Earlier this April, Codexis, Inc. (NASDAQ:CDXS) announced that its partner, Molecular Assemblies, will initiate a soft launch of its DNA synthesis platform, which uses a template-independent DNA polymerase developed under their collaboration. Sandler analyst Do Kim expects Molecular Assemblies to fully build out its commercial infrastructure in preparation for a broad 2023 launch, and enzyme supply for the company to meaningfully contribute to revenues starting in 2023, with incremental sales in 2022 from the early access program. The analyst maintained an Overweight rating and a price target of $35 on Codexis, Inc. (NASDAQ:CDXS) shares.
Among the hedge funds tracked by Insider Monkey, 23 funds were bullish on Codexis, Inc. (NASDAQ:CDXS) at the end of March 2022, up from 20 funds in the last quarter. Nantahala Capital Management is a prominent position holder in the company, with 3.3 million shares worth about $70 million.
Here is what Roubaix Capital has to say about Codexis, Inc. (NASDAQ:CDXS) in its Q4 2020 investor letter:
“The largest contributor to fourth quarter long performance was Codexis (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 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.”
8. SomaLogic, Inc. (NASDAQ:SLGC)
Percentage of ARK Investment Management’s 13F Portfolio: 0.34%
ARK Investment Management’s Stake Value: $83.3 million
Number of Hedge Fund Holders: 37
Market Capitalization: $816.66 million
SomaLogic, Inc. (NASDAQ:SLGC) is a protein biomarker discovery and clinical diagnostics company located in Boulder, Colorado. The company monitors health diseases through the analysis of protein concentration changes in biological samples. Latest 13F filings show that ARK owned more than 10.39 million shares of SomaLogic, Inc. (NASDAQ:SLGC) at the end of March 2022, worth $83.3 million.
SomaLogic, Inc. (NASDAQ:SLGC) announced it has signed a licensing agreement with OncoHost, a global leader in next-generation precision oncology for personalized cancer therapy on June 13. As part of the agreement, OncoHost will license SomaLogic’s SomaScan Platform to develop proteomics tests for its PROphet diagnostic system, designed to predict patient response to immunotherapy treatments and provide strategies to overcome treatment resistance.
On June 23, Cowen analyst Dan Brennan lowered his price target on SomaLogic, Inc. (NASDAQ:SLGC) to $11 from $14 and maintained an Outperform rating on the shares. The analyst said the company is uniquely positioned to overcome bottlenecks created by existing tools to analyze the proteome, and believes that its durability of growth given the large market and nascent penetration is underappreciated.
At the end of the first quarter of 2022, 37 hedge funds in the database of Insider Monkey held stakes worth $434.5 million in SomaLogic, Inc. (NASDAQ:SLGC), the same as in the previous quarter worth $630 million. Eli Casdin’s Casdin Capital is the company’s biggest shareholder, with over 12.38 million shares valued at $99.36 million.
7. Schrödinger, Inc. (NASDAQ:SDGR)
Percentage of ARK Investment Management’s 13F Portfolio: 0.4%
ARK Investment Management’s Stake Value: $96.65 million
Number of Hedge Fund Holders: 22
Market Capitalization: $1.97 billion
Schrödinger, Inc. (NASDAQ:SDGR) is a New York-based life sciences and materials science company founded in 1990 that is involved in the development of software for computational chemistry and has pipeline drug discovery programs. ARK Investment Management holds 2.83 million shares of Schrödinger, Inc. (NASDAQ:SDGR), amounting to $96.65 million in worth and accounting for 0.4% of the firm’s portfolio.
On June 28, Piper Sandler analyst Do Kim said he believes Schrödinger, Inc. (NASDAQ:SDGR)’s MALT1 represents an attractive target and that the company has a “potentially best-in-class” MALT1 inhibitor. The analyst, who expects Schrödinger to out-license SGR-1505 after positive Phase 1 data in 2023, has an Overweight rating and $84 price target on the company’s shares.
By the end of the first quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth over $520.6 million in Schrödinger, Inc. (NASDAQ:SDGR), compared to 24 in the previous quarter worth $463.49 million. The Bill & Melinda Gates Foundation Trust held stakes in Schrödinger, Inc. (NASDAQ:SDGR) worth approximately $238.2 million, making it the company’s biggest shareholder.
Here is what Baron Growth Fund has to say about Schrödinger, Inc. (NASDAQ:SDGR) in its Q4 2021 investor letter:
“Our Disruptive Growth investments are pursuing idiosyncratic opportunities across the entirety of the global economy. Schrodinger, Inc. is pushing the boundaries of drug development by pursuing novel diagnostics and therapeutics in areas including neurodegenerative disease and blood cancers.”
6. Adaptive Biotechnologies Corporation (NASDAQ:ADPT)
Percentage of ARK Investment Management’s 13F Portfolio: 0.44%
ARK Investment Management’s Stake Value: $107 million
Number of Hedge Fund Holders: 28
Market Capitalization: $1.20 billion
Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is a leader in immune-driven medicine that focuses on translating the genetic language of the adaptive immune system into clinical immune-driven products to diagnose and treat diseases. As of Q1 2022, Cathie Wood’s ARK Investment Management holds over 7.7 million shares of Adaptive Biotechnologies Corporation (NASDAQ:ADPT), amounting to more than $107 million in worth and representing 0.44% of the investment firm’s portfolio.
On June 15, Adaptive Biotechnologies Corporation (NASDAQ:ADPT) announced the launch of T-Detect Lyme, the company’s second test to be made available from its growing T-Detect franchise. The test detects an immune response by leveraging the body’s unique T-cell response to disease-associated antigens.
Earlier this June, Piper Sandler analyst David Westenberg initiated coverage of Adaptive Biotechnologies Corporation (NASDAQ:ADPT) with a Neutral rating and $7.50 price target. In a research note to investors, Westenberg states that the company’s lead analyzing the immune system, in the longer term, will have a “significant and sustainable” lead in diagnosing patients using the immune system. However, the analyst adds that the company’s best content are autoimmune and oncology launches, which are in 2024 or after.
Of the 912 elite funds tracked by Insider Monkey, 28 were long Adaptive Biotechnologies Corporation (NASDAQ:ADPT) at the end of March 2022, up from 22 in the fourth quarter of 2021. Andreas Halvorsen of Viking Global is the leading stakeholder of the company.
Similar to Block, Inc. (NYSE:SQ), Shopify Inc. (NYSE:SHOP), and Tesla, Inc. (NASDAQ:TSLA), Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is on the radar of institutional investors.
Here is what Aristotle Capital Management Small Cap Equity has to say about Adaptive Biotechnologies Corporation (NASDAQ:ADPT) in its Q1 2022 investor letter:
“Shares of Adaptive Biotechnologies were weak in the first quarter, despite the company reporting better-than-expected results and guiding in line with estimates in mid-February. High-valuation growth companies like Adaptive Biotechnologies continued to be pressured during the quarter, as investors weighed the risk of inflation and rising Treasury yields. On a positive note, clonoSEQ volumes continue to be strong and we believe 2022 is shaping up to be a catalyst rich year for the company.”
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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Disclosure: None. 10 Small-Cap Growth Stocks in Cathie Wood’s Portfolio. is originally published on Insider Monkey.
