Cathie Wood is having a tough year as co-founder, CEO and asset manager of Ark Invest. Her largest exchange-traded fund is down 15% this year, a stark contrast to a successful year for many growth investors. But she’s not giving up hope. She’s been buying stocks all summer.
Wood added to his three existing positions on Thursday and bought more shares in Tempus AI (NASDAQ: TEM), Air mobility of the blade (NASDAQ: BLDE)And Absci (NASDAQ: ABSI) on Thursday. Let’s take a closer look at her latest purchases.
1. Tempus AI
It’s been two months since Tempus AI went public at $37. Wood was an immediate buyer, and she’s still building her position in the provider of practical artificial intelligence (AI) applications for oncologists and academic medical centers. She’s now added to her stake in the 18 trading days since the mid-June IPO.
Many market debutants stumble after their opening-day pops. Tempus is not one of them. The stock is trading 57% higher than its IPO price. Wood knows that. She has sold some of Ark’s weaker investments to put more weight behind a market winner in the early stages of its listing.
Tempus delivered solid financial numbers last week in its first quarterly report as a listed company, with revenue up a better-than-expected 25%. It also posted smaller red numbers than analysts had expected. But is its current $9 billion market cap too high, too soon? That’s 13 times the $700 million Tempus is forecasting for the whole of 2024.
Analysts don’t expect Tempus to turn a profit until 2027, so investors will have to be patient. The outlook remains promising. Tempus sees an addressable market of more than $70 billion for its oncology and neuropsychiatry genomics products. Tempus also has notable investors and a historically successful founder-CEO.
2. Air mobility of the blade
You may not realize that there is a thriving market for short-haul flights, but Wood has invested in a number of companies that are building fleets of helicopters and electric aircraft. Blade Air is a pioneer, starting the old-fashioned way with traditional helicopters to help hospitals deliver vital organs on time for life-saving transplants. This accounts for nearly 60 percent of its revenue. The rest of its revenue comes from ferrying affluent travelers from airports in densely populated cities to landing pads in major metropolitan areas, avoiding traffic jams.
Blade Air’s business has been booming since the pandemic peaked. Revenue more than doubled in 2021 and 2022, but top-line profits have slowed sharply over the past year, from 71% year-over-year growth in the second quarter of last year to just 11% in its latest financial update earlier this month.
Losses are narrowing. The flagship company for transporting livers, hearts and lungs is now generating positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). There will be competitors for a seemingly thin market for on-demand helicopter transport services, but Blade’s advantage is its track record of reliability in a niche that can’t be left to chance.
3. Absci
It’s probably fitting that two of the three stocks Wood bought Thursday are companies using generative AI for healthcare solutions. Absci combines AI with scalable wet lab technologies to speed up the process of creating medicines.
Absci went public three summers ago. The company has been around for much longer than Tempus, but is much smaller, with a market cap of less than $500 million. It also generates very little revenue, with just $3.3 million in revenue over the past 12 months. Absci has a healthy internal pipeline, but like Tempus, it is still a number of years away from profitability.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
