growth investment planner Kathy Wood used to hold a ton Nvidia (Nasdaq: NVDA) However, her Ark Invest fund family sold most of its artificial intelligence (AI) stocks last year, taking advantage of the market’s AI craze to invest in less-hot growth stocks. Today, ARK holds just $81 million worth of Nvidia stock.
Wood’s fund is actively buying stocks Tesla (NASDAQ: TSLA)Four major acquisitions were made in the last week alone, bringing the electric vehicle and alternative energy heavyweight’s Ark stock holdings to $763 million.
But that’s not Wood’s strongest position. In fact, Tesla is tied for third among Ark’s largest investments.Number one is the cryptocurrency market Coinbase Global (NASDAQ: COIN) Currently, Ark’s total investment is US$911 million, accounting for 6.8% of Ark’s total assets, much higher than Tesla’s 5.7% and Nvidia’s 0.6%.
Despite the recent Coinbase price surge, the stock remains Ark’s top holding. This is the legacy of Wood’s long-term vision for the cryptocurrency industry.Despite profit-taking, Wood sees lasting growth opportunities in cryptocurrency, Coinbase and brand new Ark 21-Share Bitcoin ETF (NYSE: ARKB) Be at the front.
Most of us average investors don’t have billions of dollars under management, and what works for Cathie Wood may not work for you or me. Still, Wood’s enthusiastic endorsement could be a sign that the stock deserves a closer look. And, I’m a happy Coinbase shareholder myself. So, let’s take a look at Ark’s reasons for making a significant investment in Coinbase, examining the potential risks and rewards to help you decide whether it’s a good fit for your own portfolio.
Wood’s view: Coinbase has strategic advantage
Cathie Wood has made it clear that she has huge expectations for the cryptocurrency market, especially the industry-leading ones Bitcoin (Cryptocurrency: BTC) Her 2030 price target for the “digital gold” coin is $1.48 million per token The same long-term outlook was reiterated multiple times last year. The global economy is going digital. Bitcoin’s virtually inflation-free design and strictly limited supply should cause Bitcoin prices to rise significantly over time, assuming it remains the top crypto solution as the market evolves.
As such, she believes Coinbase is the leading concrete company in the field of asset management infrastructure for Bitcoin and other cryptocurrencies. The company differentiates itself from other large service providers like Binance with its all-American background and proven experience. Unlike Binance, which faces accusations of criminal activity and data security concerns, Coinbase maintains a cleaner regulatory profile.
In her opinion, this approach puts Coinbase in a strong position relative to its competitors and is a safer option for investors looking to capitalize on the growth of the cryptocurrency market. Essentially, Wood sees mainstream Coinbase as a key enabler of wider cryptocurrency adoption, especially since her fund has been buying Coinbase stock when the stock has fallen due to scandal or fraud elsewhere in the crypto market.
Learn about Ark’s growing cryptocurrency portfolio
That being said, Cathie Wood is not strictly committed to the Coinbase opportunity. Her fund has cut its Coinbase holdings by about half since June 2023, shifting cash profits off the table and into other ideas. Diversification works for big-name investors too, you know.
Some former Coinbase funds have turned to more direct bets on Bitcoin.Early waves on the idea included Grayscale Bitcoin Trust (NYSE: GBTC) At the time it was a traditional fund rather than a more flexible exchange-traded fund (ETF). Today, Ark Invest manages its own Bitcoin-based ETF—some of her other funds already hold shares in the Ark 21Shares Bitcoin ETF.
So rather than putting all her crypto apples in one digital shopping cart, Wood spreads her crypto exposure across several different asset classes. Even so, Coinbase remains Ark’s largest holding, not just in the cryptocurrency space but in the entire stock portfolio.
My own Coinbase investments represent a smaller percentage of the total portfolio. Coinbase stock represents about 3.6% of my stock investments today. This is my largest cryptocurrency bet to date, but ranks only seventh out of 35 stocks and ETFs.
So I guess my Bitcoin exposure is comparable to Cathie Wood’s, but on a smaller scale. Is this a case of “heroes seeing the same thing” or did two Bitcoin investors independently make the same mistake?
Only time will tell – but I’ll stick with my diversified Bitcoin investments, with Coinbase leading the way and Cathie Wood following a similar strategy. Whether your own Bitcoin strategy follows suit or explores a completely different avenue, it’s safe to say that in 2024, it makes sense to have a small amount of exposure to Bitcoin.
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Anders Bylund Owns positions in Bitcoin, Coinbase Global, Grayscale Bitcoin Trust and Nvidia. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Nvidia, and Tesla. Motley Fool owned disclosure policy.
Cathie Wood’s largest holding isn’t Tesla or Nvidia, but the tech pioneer. Originally published by The Motley Fool