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Are Genomic Stocks The Next FANG Stocks?

·2 min read

Some of the best performing ETFs in 2020 have been the Ark Funds, actively managed ETFs led by Cathie Wood. A long-time Tesla Inc (NASDAQ: TSLA) and technology stock bull, Wood is now betting heavily on genomic stocks.

Wood On Genomics: Genomic stocks are expected to drive strong returns for the next five years, according to Wood.

“The biggest upside surprises are going to come from the genomic space, and that’s because the convergence of DNA sequencing, artificial intelligence, and gene therapies are going to cure disease,” Wood said in an interview with Bloomberg.

Health care stocks have become a large part of the Ark ETFs with the sector now the largest weight in the Ark Innovation ETF (NYSE: ARKK) flagship fund.

The Ark Genomic Revolution ETF (NYSE: ARKG) launched in 2014 is a pure-play option for investors in the growth of genomics. 

"We actually think the next FANG stocks are in the genomic age," she said. FANG and FAANG are common acronyms for the large technology stocks of Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX) and Google, a unit of Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL).

Related Link: Cathie Wood Increases Teladoc Holdings Across Ark ETFs

Stocks to Watch: Following Wood into several genomic stocks could be a way for investors to get exposure to the space.

Crispr Therapeutics (NASDAQ: CRSP) is the second-largest holding in ARKG and the third-largest holding in ARKK, representing one of the biggest bets Wood has placed on genomics. The company is one of several gene-editing companies.

Editas Medicine (NASDAQ: EDIT), a genome editing company, is another stock Wood owns in both these ETFs.

Invitae Corporation (NYSE: NVTA), a genetics testing company, is a top five holding in both ARKG and ARKK.

Twist Bioscience (NASDAQ: TWST) is the fourth-largest holding in ARKG and a top 15 holding in ARKK. The company makes synthetic DNA and could see strong growth in the market.

One of the newest additions to the Ark Genomic ETF is Veeva Systems (NYSE: VEEV), a cloud-based company focused on the pharmaceutical and life sciences industries. Wood took an initial $40 million stake on Dec. 22.

Another name to watch could be Berkeley Lights (NASDAQ: BLI), a 2020 IPO in the cell biology field. Wood has added to this position four times in December.

The Ark Genomic ETF has also been adding to its position in the SPAC Longview Acquisition Corp (NYSE: LGVW), which is bringing portable ultrasound company Butterfly Network public.

Price Action: Shares of the Ark Innovation ETF are up 170% in 2020. The Ark Genomic Revolution is up 215% in 2020.

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