As an analyst with over two decades of experience in the financial markets, I find ARK Invest’s recent moves intriguing. While it’s always concerning when a significant investor like ARK sells a substantial portion of its holdings before a major earnings report, it’s important to remember that they have strict rules about concentration risk.
Last Thursday, ARK Invest disposed of approximately 69,069 shares of Coinbase (COIN), valued at around $14.8 million, prior to the company’s second-quarter earnings announcement. Remarkably, this selling activity on August 1 surpassed the combined amount of Coinbase shares ARK has offloaded in the previous two months.
In June and July, the company offloaded a total of $10.81 million worth of its shares. The shares it sold on Thursday were components of two exchange-traded funds that the firm provides—the Next Generation Internet ETF (ARKW) and Fintech Innovation ETF (ARKF).
As a crypto investor, I ensure that the investment firm I’m with follows stringent guidelines to prevent any single asset from becoming excessively dominant within our portfolio. This is achieved by ensuring that our Exchange Traded Fund (ETF) products do not exceed 10% of the value of a single company’s shares. Currently, COIN occupies 9.69% in ARKF and 6.74% in ARKW, maintaining its substantial presence within ARK’s diverse funds.
In Q2, Coinbase announced an impressive $1.4 billion in earnings, but profits fell short of expectations. Yet, this figure represented a doubling from the same quarter the previous year and a 17% increase from Q1 2024. Coinbase’s VP of international policy, Tom Duff Gordon, stated that the impressive performance underscores significant advancements the company has made in striving for regulatory clarity on a global level.
Ark, by offloading some of its COIN shares, decided to allocate resources towards the Canadian 3iQ Ethereum Staking ETF (ETHQ.U). This fund enables investors to capitalize on Ethereum’s price fluctuations while simultaneously earning passive income through staking. 3iQ has partnered with Coinbase and Tetra Trust to facilitate this staking integration.
Ark Capital committed $21 million towards purchasing 1.7 million shares of the ETHQ.U ETF. Specifically, 1 million shares were assigned to the ARKW fund while the rest went to ARKF. This strategic move stems from the notable growth the ETF has experienced over the past year, with a YTD increase of approximately 40%.
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2024-08-05 16:24