Over the past couple of weeks, I took a look at both the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW). With so much attention being given to what trades the ARK funds are making lately, I wanted to see specifically which stocks are being added to the portfolios. Cathie Wood and company have had the Midas touch over the past couple of years and news that ARK is taking a position has become enough to move the stock price.
Today, I want to take a look at another of the company's top performers - the ARK Fintech Innovation ETF (ARKF).
ARKF is a particularly interest fund to watch right now because of what's going on in the cryptocurrency space. Bitcoin price have been surging. Dogecoin has entered the fray thanks to a few mentions from Elon Musk. Two bitcoin ETFs were just launched in Canada (although we still don't have one in the United States).
But the fund's appeal goes beyond just crypto. With the acceleration of cashless transactions during the pandemic and the growth of blockchain applications, fintech innovation is becoming bigger and it's getting there faster.
Square (SQ) and PayPal (PYPL) are the fund's two biggest holdings, while other popular names, including Tencent (TCEHY), Pinterest (PINS) and Zillow (Z) are also present. Silvergate Capital (SI), a new addition to the ARKW portfolio in 2021, is also in the top 10 in ARKF.
Again, I used the database at arktrack.com to take a look at the portfolio's changes. According to their data, ARKF has taken three brand new positions in 2021, while it's completely sold out of positions in JD Health International and SBI Holdings.
One of the new names is a position that ARK has been building up across multiple funds, while the other two add an interesting bit of variety.
Here are the 3 new stocks that have been added to ARKF so far this year.
Ping An Healthcare & Technology
Ping is a Chinese healthcare company that specializes in four different segments - health mall, consumer healthcare, health management & wellness and online medical services. I would presume that's the last business segment that attracted ARK's attention.
Similar to Teledoc Health, Ping also operates an online platform, which allows for online doctor consultations, health management and prescription services. The rest of what the company does may not have a heavy influence from fintech, but the online services piece most definitely does.
ARKF just added shares of Ping earlier in February and the stock now accounts for about 1% of the portfolio overall.
Ping's price trajectory is a good example of what the "ARK effect" can do to a stock. Ping was a relatively smaller company to begin with, which gave it the potential of making a bigger move in a shorter period of time. Once news broke that ARK was taking a position (which took place on February 10th and 11th), Ping's stock price climbed 35% over the course of two trading days.
Bill.com falls right into ARKF's wheelhouse. It's a provider of cloud-based software solutions that help enable, enhance and automate company financial operations. Some of its product involvements include Oracle NetSuite and QuickBooks.
While ARK only jumped on board this year, Bill.com has been rolling lately. Since the March 2020 low, the stock is up more than 500% compared to a 240% gain for ARKF over the same period. Similar to what Ping has done for the healthcare space, Bill.com has seen huge demand and adoption for its online financial solutions suite.
Bill.com also has inroads with major banks, including JPMorgan Chase, Bank of America, PNC and Wells Fargo for its payment processing solutions. This is a company that's well-positioned and well-connected for the current environment and should continue expanding its presence.
I profiled DraftKings already as it was one of the stocks also added to ARKW during 2021. The online gambling and gaming industry was perhaps one of the biggest beneficiaries of the changes to the COVID-influenced economy. With businesses shuttering all around the world, consumer turned to online gaming platforms to get their entertainment fix. With many sports on hiatus, casino gambling, including poker, was the activity of choice. With sports leagues back in the swing of things again, event betting and daily fantasy are adding to revenue streams.
As I noted last week, "Sports gambling has been a rapidly growing industry as more states consider legalization. The online gaming industry has also been one of the fastest growing sectors and is expected to remain so over the next several years."
DraftKings, while struggling to generate profits in the short-term, is emerging as one of the likely winners in this high growth space and makes an ideal addition to the ARKF portfolio. The stock is only a modest holding within the fund at just 0.5% of total assets.