ARK Invest Holds $2.4B Stock With Crypto Exposure
ARK Invest has been busy stacking Coinbase stock, but does it really make up more of its overall portfolio?
Ark Invest’s Cathie Wood | Artwork by Axel Rangel
ARK Invest’s Cathie Wood has long been notoriously bullish on Bitcoin — a favorite factoid of crypto investors worldwide.
Wood’s bitcoin bullishness has extended to other cryptocurrency sectors, including routine Ark buys of Coinbase (COIN) stock at scale. It’s all added up to something akin to a fuzzy and warm security blanket for crypto investors trading through atypically turbulent markets.
The digital assets-driven hype around Ark makes some degree of sense. ARK’s actively-managed ETFs had more than $11 billion in assets under management this week. How wrong can they be?
If Ark’s traders keep buying Coinbase shares — and if other traders follow suit — there’s a chance the stock will finally make it out of the toilet. Spot digital asset traders are known to use Ark’s COIN purchases as one US proxy for gauging crypto market sentiment.
But tracking trades piecemeal doesn’t say much about ARK’s aggregate conviction in crypto.
Think about your own portfolio: A few splurges here and there don’t reflect overarching sentiment or strategy. Neither, necessarily, does analyzing the size of individual positions.
Blockworks analyzed ARK’s entire ETF portfolio over the past two years to determine how bullish Wood’s firm has been on Coinbase over the long haul — as well as additional equities with crypto exposures.
The firm holds additional positions outside of its core actively managed ETFs, including private funds open to accredited investors as defined by the SEC. Blockworks reached out to ARK representatives for comment.
The metric that really matters is portfolio weight.
For example: adding $500,000 worth of bitcoin (BTC) to a given portfolio might sound impressive — until you learn it consists of $10 million split up among memecoins and illiquid NFTs.
In a scenario like that, the BTC would have been seen as a necessity to hedge the outsized risk of the investor’s bullishness on moonshots. And if the BTC was added alongside those Hail Marys in similar amounts, then the construction of the portfolio would stay practically the same.
ARK has almost tripled Coinbase weight
Two years ago (about one month after Brian Armstrong’s exchange went public), Coinbase made up 1.75% of ARK’s total holdings. It held close to 2.7 million shares at the time, worth $790 million.
Since, Coinbase’s stock price has tanked more than 80%.
COIN changed hands for around $300 back then. It closed Thursday’s trading session in New York at $49.22.
(Wood’s website on Thursday indicated that her firm’s cost basis was $239.60 to $254.65, drawing on a sample size of three separate positions.)
- ARK’s portfolio was weighted by 4.83% to Coinbase on May 3.
- It held nearly 10.8 million COIN shares — four times as many from two years ago.
- Those shares were worth $556.6 million.
So, ARK has quadrupled the amount of Coinbase shares in its portfolio in two years and now owns virtually 6% of all outstanding. Even so, its COIN stash is worth 30% less.
ARK has indeed added 3.08% to its Coinbase weight since May 2021, and COIN is now its fourth biggest holding.
But it’s barely more than it was during the peak of the previous bull market 18 months ago, when COIN commanded 4.55% of ARK’s total portfolio.
COIN’s share price, then trading above $330, had a lot to do with that then. The US crypto exchange traded at steep, and perhaps unsustainable, multiples during the bull market.
ARK’s 5.6 million-odd Coinbase shares were worth $1.88 billion then, and the firm has since snapped up an additional 5-million-plus shares.
An analysis of weight adjustments to 219 stocks held by ARK’s six actively-managed ETFs over the past 24 months shows that COIN was the firm’s second-most favored stock across that period, slightly ahead of Zoom and DraftKings.
Only robotic automation software firm UiPath ranked higher by that methodology, increasing from 0.57% to 4.73% to sit in sixth place.
Yes, ARK does hold other crypto-exposed stocks
Enough about Coinbase.
ARK has been willing to buy and hold other stocks impacted by the ebbs and flows of crypto markets, even through its prolonged downturn.
Discount brokerage Robinhood appears to be Wood’s second-favorite crypto child, holding about 28.1 million shares worth $237.9 million.
The Menlo Park firm — which at one point counted on Dogecoin for 62% of its crypto revenues — makes up 2.07% of ARK’s total portfolio.
- ARK’s HOOD weight has multiplied from 18 months ago (1.02%).
- The stock has since tanked about 75%, but ARK has more than doubled its share count (although that figure has been trimmed over the past year).
- Its weighting is still down from October 2022, when HOOD hovered at 2.26%.
ARK has also bumped its weighting of Jack Dorsey’s Bitcoin-forward fintech Block (formerly Square).
Block — which holds BTC and supports the crypto via Cash App — was 3.65% of ARK’s portfolio two years ago. It’s now at 4.59%, Block ARK’s seventh-largest holding and worth $528 million.
Chipmaker Nvidia, whose crypto exposure was slashed when Ethereum ditched proof-of-work last year, has an increasing place in ARK.
NVDA was only 0.13% of ARK’s portfolio in May 2021. It’s now 0.95% (ARK also holds some shares in rival AMD, however its historical crypto exposure has been estimated to be far lower than Nvidia’s).
At $846 million, ARK’s top position is Tesla (with $280 million in BTC on its balance sheet). There have also been much smaller amounts in discount-ridden Grayscale Bitcoin Trust (GBTC) and failed crypto bank Silvergate.
Wood has rid her portfolio of Silvergate altogether (0.24% weight towards the end of last year, worth $31.6 million).
ARK’s Tesla and GBTC weighting have barely budged over the past two years (currently 7.34% for TSLA and 0.76% for GBTC — the latter worth $87.3 million).
Overall, weight for ARK’s crypto-exposed stocks has jumped 55 percentage points over the past two years, from under 14% to 21%.
ARK’s actively-managed ETFs handled about $44.4 billion in assets in May 2021, per Wood’s data, and crypto-exposed stocks made up $6.1 billion (although Tesla was almost half that amount).
Now, those same funds contain $11.3 billion, with stocks with crypto exposure amounting to less than $2.4 billion.
Find ARK’s biggest portfolio moves outside of the digital asset industry outlined below.
Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.
Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.