When Wall Street overreacts and goes right, you can make a fortune by avoiding the noise and going in the opposite direction.
In the latest edition of wild overreactions, Cathie Wood, the top-notch ETF manager of Ark Investment Management, received some flak from The Wall Street Journal.
I’ll have more on that in just a bit and why it is totally off the mark.
But make no mistake. Wood has an uncanny eye for finding breakout stocks with a market-beating track record to prove it.
One particular feather in Wood’s cap is an ETF that she runs focusing on the cutting-edge field of genomics, a tech that basically didn’t exist just a decade ago.
Without genomics, we wouldn’t have been able to understand the structure of the coronavirus. Not only that, but the first two vaccines approved both relied on a hot new segment of genomics.
And this is an industry that is projected to multiply from $18.85 billion in 2019 to $82.60 billion in 2027, according to Fortune Business Insights. That’s more than 300% growth in less than a decade.
I’ll give you more details in a moment. But first, I want to point out the sizzling returns that Wood has amassed.
Over roughly the past year, Wood’s fund beat the market by a stunning 471%.
Let me show you why this play is just getting started…
The Medicine Revolution
To be clear, the Journal story was looking at all five ARK funds that Wood runs.
Fair enough. During the recent tech correction, they significantly underperformed the Nasdaq.
But that brings me to a point you and I have been talking about for years now – it pays to take the long view and look at corrections as great buying opportunities.
It’s pretty true across the public markets, and the genomics play I’m about to tell you about is no exception. Now, there’s another way to beat Wall Street’s hype when it comes to corrections, and that’s to go into private markets, where the pressures of the shifting stock-market don’t apply.
But back in the public markets, your best bet is often to zig when Wall Street Zags
And that is clearly also what is happening when it comes to investing in genomics.
Genomics really got started roughly 10 years ago, about seven years after the human genome was first sequenced.
Today, this field can combat all kinds of diseases, including cancers, antibiotic-resistant bacteria, and parasites such as malaria, all based on the specific weaknesses in their individual genetic mutations.
And it was a godsend for the Covid pandemic. The entire genome of the SARS-CoV-2 virus was sequenced in mere days, and the tracking of new variants of the virus would also be impossible without genomics.
This field is also what gave us two custom-made, anti-Covid drugs in record time. In just months, researchers managed to identify, perfect, and clone antibodies against the virus in quantities high enough to help the seriously ill.
And of course, the two first Western Covid vaccines, made by Moderna Inc. (MRNA), and Pfizer Inc. (PFE) working with BioNTech SE (BNTX), were based on mRNA technology – an outgrowth of genomics.
Rather than using weakened versions of live viruses, or extracted and filtered particles from a virus, to induce an immune response in the body, mRNA vaccines take a completely different approach.
Through genomics, the firms identified the specific protein the SARS-CoV-2 virus uses to enter our cells. They then copied only those instructions, nothing else, and put them in special delivery molecules that shuttle them into our cells.
Once there, our cells are tricked into following these instructions and create that one virus protein. This uses up the instructions, so the cells go back to normal pretty quickly. There is no way for anything to reproduce and spread.
Now, unfortunately, both Moderna’s and Pfizer’s stocks have sold off as the first phase of the Covid vaccine euphoria has faded.
Not to worry, Cathy Wood has you covered. She’s focused on the elite genomics players that will deliver over the long haul.
Her genomics-focused ETF is ARK Genomic Revolution ETF (ARKG). For this fund, Wood picks companies involved in pushing forward genomic technologies such as CRISPR, a form of gene editing. The fund also targets genomic treatments, genetic diagnostics, agricultural biology, stem cells, and so on.
These are the companies that will benefit hugely from the advances being made in genomics. They will revolutionize our healthcare, bring about personalized diagnostics and treatments, and optimize our food supply to boot.
Some of the best ones include:
- Editas Medicine Inc. (EDIT), backed by Bill Gates among others, is one of the world’s leading companies in the CRISPR gene editing space. Last March, the firm was the first in the world to inject CRISPR into a living human, as part of its ongoing trials to cure and reverse certain kinds of blindness by rewriting the DNA in the patients’ eyes.
- Beam Therapeutics Inc. (BEAM) is also developing gene-editing treatments, but uses a slightly different method than CRISPR – one that’s supposed to be more accurate. The firm has two gene treatments for leukemia currently in the pre-clinical stages of development and is doing research with an eye to correct small mutations that cause severe or even fatal liver and eye diseases.
- Fate Therapeutics Inc. (FATE) focuses on extracting and reprogramming immune stem cells. The goal is to make them more active against cancers or in cases of immune diseases, less active against the body’s own cells. By doing this outside the body, Fate can achieve more exact control over how the stem cells are reprogrammed. The firm already has four treatments through Phase 1 trials.
- Berkeley Lights Inc. (BLI) has created the integrated platform that makes genomics work like this possible, by enabling researchers to quickly and accurately find and isolate the exact cells they’re looking for. Using their integrated, custom-made chips, reagents, machines, and software, Berkeley Lights lets scientists increase the speed and scale of finding the right antibodies – or correctly identify where an immune cell comes from and all its properties.
Now, as I mentioned earlier, it pays to take the long view and look at dips as buying opportunities.
From the time ARKG rebounded on March 16, 2020, which was one week ahead of the market, to its recent high on February 12, the ETF was up 357%.
Over that time period, the S&P 500 was up just 62.5%. In other words, ARKG beat the wider markets by 471%.
The five-year record is also very impressive. ARKG has gained 431% over the period.
This is one of those funds that can really build your net worth, especially if you are savvy enough to buy on the dips for even better returns.
Cheers and good investing,
Michael A. Robinson
Source: Strategic Tech Investor