Cathie Wood rose to fame last year when the exchange-traded funds (ETFs) under the ARK Invest banner were among the biggest winners of 2020. Trouncing the market in 2021 has proved to be more challenging, but her penchant for disruptive growth stocks isn’t going away anytime soon.
Wood is making the most of the correction in growth stocks that began in the springtime of this year. On Tuesday, she added to her existing positions in Unity Software (NYSE:U), Coinbase Global (NASDAQ:COIN), and Grayscale Bitcoin Trust (OTC:GBTC). Let’s see why she’s building up her stakes in these three names.
Entertainment doesn’t stand still, and Unity Software is an emerging star with a platform for cloud-based, real-time 3D content creation. Its initial appeal was for game developers, but now we’re seeing movie studios, architects, and graphic designers hungry for its bar-raising tools.
Unity’s revenue climbed 43% last year, and it kicked off its new fiscal year with a healthy 41% increase on the top line during the first quarter. Wood has been warming up to Unity Software lately, buying it six times across four of her ETFs over the past week. She added to her growing position in a pair of her funds on Tuesday.
There’s no denying that ARK Invest’s favorite 2021 IPO is Coinbase. Wood has been a heavy buyer of the leading cryptocurrency marketplace since it hit the market just three months ago. It is now the sixth largest holding among all of her ETFs, and it would be the bronze medalist if Coinbase was trading close to the high of nearly $430 that it hit on its first day of trading.
Coinbase is doing a lot of things right to keep its rapidly growing account base trading and engaged. The 845% year-over-year burst in revenue it posted in the first quarter will be hard to follow. It also doesn’t help that crypto prices fell in the second quarter and continue to be weak in July. However, since Coinbase is cashing in on the volatility and trading volume, it will continue to hold up better than the crypto market itself.
Grayscale Bitcoin Trust
Speaking of crypto, Wood has been a vocal bull on digital currencies in general and Bitcoin (CRYPTO:BTC) in particular. Recently, ARK inked a deal to be a marketing partner for 21Shares, a company that filed to issue an ETF that will buy and custody Bitcoin tokens directly.
For now, Wood’s favorite way to own the world’s most popular cryptocurrency is Grayscale Bitcoin Trust, the largest U.S. exchange-traded trust that only owns Bitcoin. Grayscale has $19.4 billion in assets under management. The trust does charge a stiff 2% annual fee, but it’s currently trading at a 14% discount to its net asset value. The gap between the Bitcoin stake and the market price of the trust is not guaranteed to narrow anytime soon, but buying Bitcoin for $0.86 on the dollar seems like a smart way to go if you believe that the crypto market will bounce back.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.