Cathie Wood of Ark Investment Management loves disruption, especially when it comes with some controversy. The thematic based investor thinks the companies fundamentally changing the way we go about our lives end up winning, at least as a group.
That’s an easy observation to share when markets are in euphoric phases. Remember, at one point someone, somewhere thought Pets.com was going to lead a revolution. It didn’t. Great idea-based companies that can also execute can be harder to find but for those with the brains to find them early and the gumption to stick with them make money.
In the attached clip Ms. Wood shares three picks that could disrupt your book.
Netflix (NFLX)
It’s been a wild October for Netflix. The content maker / streaming service saw investors take it down by $100 on an earnings miss two weeks ago, though the company regained much of the drop last week.
Beyond the miss were concerns over CBS (CBS), HBO and others joining Netflix in streaming; an area it’s had largely to itself after effectively dispatching with would-be challengers for years. Wood says the threat is overdone.
“HBO doesn’t understand their customer the way Netflix does,” she says, pointing out that HBO’s subscriber count hasn’t budged in five years. She’s betting Netflix will continue to shine in a more competitive space.
athenahealth, Inc. (ATHN)
It’s been a wild year for athenahealth shareholders. By mid-January the stock was already up nearly 50% for the year. By May 7th all those gains and an additional 20% were gone after notable short-seller David Einhorn put the company under his harsh microscope.
Wood isn’t worried. For her, what athenahealth is doing is akin to a social network in that it needed critical mass to become the standard. As she sees it, the company is almost there. “They are bringing together insurers, doctors, hospitals and patients. We think the viral networking effect has already started.”
Illumina (ILMN)
The leader in DNA sequencing with 90% share, Illumina is both dominant in its group and a pioneer. “Through the end of last year there had been 40,000 human genomes sequenced. Today we’re up to 250,000 in just one year. We think that number is going to hundreds of billions. We’re not talking just about humans, we’re talking about virus, bacteria, plants. It’s a huge space. Changing the course of healthcare.”
It’s not often you go from Adam Sandler movie producers to genome sequencing in one stock picking segment but there were are. Let us know your take in the space below.
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