Catherine Wood (Trades, Portfolio)'s ARK Investment Management has revealed a large reduction in the Organovo Holdings Inc. (ONVO, Financial) position alongside a small reduction in the Syros Pharmaceuticals Inc. (SYRS, Financial) position according to GuruFocus' Real-Time Picks, a Premium feature.
ARK Investment Management combines a top-down and bottom-up approach in an attempt to identify innovation in the market early that can cause rapid cost decline. This allows them to capitalize on opportunities and provide long-term value to investors.
The firm's Organovo holding was acquired in 2016 and has grown over the last several years with consistent additions coming almost every quarter. Prior to the most recent reduction, the holding has only seen two reductions totaling 11.58% of the shares.
On Feb. 28, the firm cut the holding by 51.98% with the sale of 730,166 shares. On the day of the sale, the shares traded at $12.75 per share on average. Overall, the sale had a -0.02% impact on the portfolio and GuruFocus estimates the total loss on the holding at 46.23%.
Organovo (ONVO, Financial) is a biotechnology company, which designs and creates functional and three-dimensional human tissues for medical research and therapeutic applications. The company collaborates with pharmaceutical and academic partners to develop human biological disease models in three dimensions. Organovo's key instrument platform is the NovoGen Bioprinter. The firm's 3-D bioprinting technologies create tissues using living cells and biocompatible hydrogels.
On March 11, the stock was trading at $11.71 per share with a market cap of $83.38 million. According to the GF Value Line, the shares are trading at a modestly undervalued rating.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rank of 2 out of 10. There are currently two severe warning signs issued for a Beneish M-Score of -1.02, indicating the company might manipulate its financials, and declining revenue per share.The company has a negative operating margin and the return on invested capital is severely overshadowed by the weighted average cost of capital.
Wood is the largest shareholder with 9.47% of shares outstanding. Other top shareholders include Sumitomo Mitsui Trust Holdings Inc. (Trades, Portfolio), Nikko Asset Management Americas, Inc. (Trades, Portfolio) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.
On the same day, the firm pulled back its Syros Pharmaceuticals (SYRS, Financial) holding. The 2.5 million shares sold cut the holding by 5% and the shares traded at an average price of $8.40 on the day of the transaction. GuruFocus estimates the firm has lost 5.99% on the holding and the sale had a -0.01% impact on the portfolio.
Syros Pharmaceuticals is a biopharmaceutical company engaged in a non-coding regulatory region of the genome controlling the activation and repression of genes. It is primarily involved in the segments of the pharmaceutical, biotechnology and other related markets that address gene control and cancer. The company operates only in the United States.
As of March 11, the stock was trading at $9.29 per share with a market cap of $568.32 million. The stock is a possible value trap according to the GF Value Line, so investors should think twice before buying shares.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rank of 1 out of 10. There are currently five severe warning signs issued, including assets growing faster than revenue and an Altman Z-Score of -0.17 indicating bankruptcy as a possibility in the near future. The company's cash-to-debt ratio of 2.63 ranks it lower than 68.29% of competitors and cash flows have remained negative through 2020.
Wood is one of the largest shareholders with 13.94% of shares outstanding. Other top shareholders include FMR LLC (Trades, Portfolio), Bain Capital Life Sciences Investors, LLC (Trades, Portfolio) and Nikko Asset Management Americas.
Disclosure: Author owns no stocks mentioned.
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