By Alexandra Semenova
Even as 2022’s stock rout deepens,hitting her own fund particularly hard, Ark Investment Management founder and CEO Cathie Wood is moving forward undeterred with her now-controversial stock-picking strategy.
The technology-focused firm purchased 546,579 shares of crypto exchange Coinbase (COIN) worth about $3 million on Wednesday, a daily trade report published by the firm showed. Wood's Ark snapped up the stock even as Coinbase's shares tumbled roughly 30%after unveiling financial results earlier this weekthat reflected a quarterly loss of $430 million and a 19% drop in monthly users.
The move also comes amid a broader sell-off in cryptocurrencies after TerraUSD (LUNA1-USD), a stablecoin pegged to the U.S. dollar, plummeted to just 23 cents on Wednesday. Cryptocurrencies were still in the red on Thursday, with Tether (USDT-USD), another stablecoin, also trading below a dollar. Meanwhile, Bitcoin (BTC-USD) was still down.
Cathie Wood is buying Coinbase in the middle of a crypto rout.
The plunge in Coinbase shares sent Wood’s flagship ARK Innovation ETF ($ARK Innovation ETF(ARKK)$ ) down more than 10% in Wednesday’s session, extending a five-day slide that pushed the actively managed exchange-traded fund closer to its March 2020 price level when markets crashed at the start of the COVID-19 pandemic.
Still, Wood’s Ark Invest purchased roughly $2.9 million worth of Coinbase stock across three of its ETFs.
Despite continued drawdowns among her family of funds, Wood has been unrelenting in her conviction to invest in innovation-focused companies, loading up portfolios across Ark with companies that have been hit hard by recent pressures in high-growth, technology stocks.
Morningstar strategist Robby Greengold wrote in a March note that the firmfavors companies that are often unprofitableand whose stock prices are highly correlated.
“Rather than gauge the portfolio’s aggregate risk exposures and simulate their effects during a variety of market conditions, the firm uses its past as a guide to the future and views risk almost exclusively through the lens of its bottom-up research into individual companies," Greengold said.
Shares of ARKK were up roughly 3% in a volatile session Thursday to trade at $37.90. However, ARKK is down more than 75% from its high in February 2021, and roughly 60% year-to-date.
In a webinar Tuesday, Wood blamed the sell-off in equity markets on the Federal Reserve’s monetary tightening plans worries over the central bank’s plans to further hike interest rates rattle investors.
"There are a lot of indicators to us that we are in a bit of a bear market,” Wood said during the presentation. "The markets are speaking pretty loudly right now and seem to be calling into question the Fed’s strategy."
Resource: Finance Yahoo
Comments
Salute to Cathy Wood's strategy, betting against the trend