Wood’s ARKK Bought Coinbase, Block Before Shares Tumbled

A pair of top holdings in ARK Investment Management flagship exchange-traded fund plummeted as the firm was in the process of adding to its positions, highlighting the volatility in fintech, crypto investing and the ARK Innovation ETF (ARKK) itself. 

Shares of cryptocurrency exchange Coinbase Global Inc. were down 12% midday, while payment company Block Inc. fell 13%. Coinbase, which before Thursday had more than doubled in price, dropped after it acknowledged receiving a Wells Notice from the Securities and Exchange Commission, while Jack Dorsey’s Block fell after a short-seller released a report saying the company was inflating user numbers with fake accounts. 

The sudden price swings highlight the volatility in the tech- and crypto-heavy shares favored by Wood, who revealed yesterday that her fund lost $2 billion in 2022 as a result of interest rate hikes. She said yesterday that her strategy resembles that of venture capital firms, which place high-risk bets on startup firms.  

“Our companies are going to disrupt the traditional world order,” Wood told Bloomberg Television. 

Coinbase had been ARK’s No. 2 holding after Tesla Inc. before Thursday’s sell-off, comprising 6.1% of the firm’s holdings. The stake made up 7.1% of all of Coinbase shares, according to an online disclosure.  

Just this month, the firm added 685,000 shares. It sold 161,000 shares on March 20; the last time it sold Coinbase was in July, when it sold 1.42 million shares. 

Before Thursday, Coinbase had been on a tear in March, gaining 18%. 

Shares in ARKK, which has $7.3 billion in assets under management, fell 2% Thursday. The fund has gained 29% this year, handily beating the 4.7% increase in the broad S&P-tracking SPDR S&P 500 ETF Trust (SPY). Its top holding, Tesla Inc., has more than doubled this year, lifting ARKK.  

Wood initially gained notoriety as a top fund manager in the months after the pandemic hit in 2021, when ARKK hit its top price, passing $150 a share. It traded around $38 Thursday. 

ARK had also been adding to Block this month, another top-five holding, at 6.24% of the firm’s assets. It bought 459,000 shares this month. The company didn't respond to requests seeking comment.

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