Kathy Wood continues to buy Coinbase as Wall Street sours

(Bloomberg) — Wall Street’s waning conviction against Coinbase Global Inc . didn’t do much to deter Kathy Wood. Instead, it has been collecting shares from the exchange for a cryptocurrency exchange since the collapse of Sam Bankman-Fried’s FTX.

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Wood’s Ark Investment Management funds have bought more than 1.3 million shares of Coinbase since early November, worth about $56 million based on Monday’s trading price, according to data compiled by Bloomberg. The buying spree, which began just as FTX’s slide began, increased Ark’s total holdings by roughly 19% to about 8.4 million shares. This equates to about 4.7% of Coinbase’s total shares.

Coinbase initially recovered in the days after Ark’s first purchase on Nov. 8, largely due to softer-than-expected U.S. inflation data that sent risk assets soaring globally. That rally was short-lived for the crypto exchange, however, with its share price falling for four straight days, including an 8.9% drop on Monday to close at a new record low.

The majority of Ark’s Coinbase holdings are from its flagship ARK Innovation ETF, which has nearly 6 million shares for a weighting of about 3.6%, the fund’s 13th largest position. While the ARK Next Generation Internet ETF and the ARK Fintech Innovation ETF hold just over 1 million shares, Coinbase’s weighting in the two funds is much higher, at 5.4% and 6.3%, respectively, according to data on Ark’s website.

Ark’s renewed interest in Coinbase is in stark contrast to the sentiment that has been emanating from Wall Street for the better part of the past six months. Analysts at firms including Bank of America and Daiwa Securities downgraded the stock this month, leaving it with just 14 equivalent analyst recommendations, its lowest number since August 2021.

Read more: FTX Collapse Shakes Wall Street’s Beliefs in Coinbase

Wood has also been adding to holdings in other crypto-related assets in recent weeks. Her ARK Next Generation Internet ETF bought more than 315,000 shares of Grayscale Bitcoin Trust last week as its discount to the value of the underlying cryptocurrency continued to widen. That purchase was followed later in the week by a purchase of around 140,000 shares of crypto bank Silvergate Capital Corp.

The increased buying comes as cryptocurrency-exposed stocks have tumbled this year amid a deep selloff in tokens including bitcoin and ether. Coinbase and Silvergate Capital have lost more than 80% of their value this year. These losses are even greater than those suffered by the world’s two largest cryptocurrencies, whose prices have fallen by more than 65% in 2022, with the decline accelerating this month in the wake of the FTX crash.

The Coinshares Block Index, which tracks 45 global stocks with varying exposure to the cryptocurrency sector, fell 2.5% on Monday.

(Updates with closing prices)

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