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Renowned investment house Ark Invest has stuck to its dip-buying strategy for a long time and there is no stopping it.
Run by Cathie Wood, the company bought another block of Coinbase shares (COIN) on Thursday, which was around 158,116.
With the price of COIN at $34.78 at the time of closing, the purchase cost the Wall Street veteran’s firm a total of $5.5 million.
The purchase
The information newsletter of Ark that highlights its daily trade showed that ARK Fintech Innovation ETF (ARKF) had been allocated the entire purchase.
It is known for making investments in equity securities for firms that are operating in the fintech space. This move came shortly after the stock of the leading crypto exchange in America declined.
The share price of Coinbase shares hit a new all-time low on December 28th, 2022 at a value of $31.86 per share, before they rebounded on Thursday by about 7%.
This is the biggest purchase of COIN by Ark Invest since December 14th, when the company spent a total of $11.9 million to buy about 296,578 shares of Coinbase.
Last week, the investment house made two more purchases of COIN shares, which had taken place on December 22nd and December 23rd, 2022.
It had first bought 5,000 COIN and then 23,509 shares.
Coinbase bet
This year has seen Coinbase’s stock price plunge by more than 86% and most of the other stocks have also taken a heavy beating.
It has resulted in poor performance when it comes to Ark’s fund. Nonetheless, this has not stopped Cathie Woods and she has defended the strategy of the company.
The veteran pointed out a five-year horizon where investments are concerned. The CEO of Ark shared a message with investors earlier this week.
She said that while people were undoubtedly fearful of the future, history indicates that there are always opportunities amidst a crisis.
The details
She cited the latest survey conducted by the Bank of America related to funding managers and said that the cash levels recorded had not been this high since 2001 when the 9/11 crisis had struck.
She also referred to a rise in the CBOE equity put-to-call ratio, which achieved a new record on Wednesday when it hit 2.4.
This is in comparison to the financial crisis in 2008 and the tech crash in the early nineties. If this metric is on the high side, it means that the market may actually be too bearish.
It hints at a bubble when this ratio drops. The Ark boss also stated that the financial crisis and the tech crash had been great opportunities for investing purposes.
She said that as long as investors have reserves of cash available, then this situation is no different. Wood said that when the equity markets make a recovery, such innovation strategies would become prime beneficiaries.
Ark Invest is certainly not the only company to have chosen to buy the dip, as a number of others are opting for this strategy.
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