Grayscale’s Ethereum Trust Premium Follows Bitcoin Sibling Into Flipping Negative

Grayscale’s Ethereum Trust Premium Follows Bitcoin Sibling Into Flipping Negative

Bloomberg

(Bloomberg) – A rough week for Cathie Wood is reminding Wall Street that Ark Investment Management has a lot of cash in not that many companies. In fact, the firm’s dominance in some stocks may be even greater than it seems.Ark now owns more than 10% of at least 29 companies via its exchange-traded funds, up from 24 just two weeks ago, according to data compiled by Bloomberg.Less discussed are holdings of Nikko Asset Management, the Japanese firm with a minority stake in Ark that it has partnered with to advise on several funds.When combined, the pair own more than 25% of at least three businesses: Compugen Ltd., Organovo Holdings Inc. and Intellia Therapeutics Inc. Together they control 20% or more of an additional 10 companies.These concentrations would appear to exist because several Nikko products follow the investment blueprint provided by Ark. The company Wood founded in 2014 invests in disruptive themes like genomics and fintech – and the Nikko products do, too.Because there are only so many stocks that fit these emerging themes and Wood has been so successful at attracting new cash, much of it floods into the same companies.“At arms-length, Ark provides non-discretionary investment advisory services to certain Nikko products, and Nikko is a distributor of Ark’s products,” a spokesperson for the U.S. firm said. Ark’s website identifies five of its strategies as being “available in Japan in partnership with Nikko Asset Management.”Ark and Nikko did not respond to requests for comment on the concentration risk.The high shareholdings aren’t necessarily a problem for either the fund managers or the companies, and the relationship between the two firms is clearly announced on both their websites. But such concentrated ownership stirs concern in some quarters about unintended consequences.“The biggest risk has everything to do with their footprint,” said Ben Johnson, Morningstar’s global director of ETF research. “Even treading lightly, they’re going to have some sort of market impact that is going to push prices against them.”In other words, fund outflows could have an outsized impact on the shares held by Ark and Nikko if they are forced to sell.There’s no sign of this yet. Three of Wood’s funds – the flagship ARK Innovation ETF (ARKK), ARK Genomic Revolution ETF (ARKG) and the ARK Next Generation Internet ETF (ARKW) – are on track for record outflows this week after rising yields and lofty valuations hit the tech sector, but there has been no obvious specific contagion. ARKK closed up 0.7% on Friday after a four-day slump, bringing its weekly loss to 14.6%.Wood has been using mega-cap stocks to soak up the pile of cash her firm received, which should help limit Ark’s impact in less-liquid names.Still, there are worries that these ownership concentrations are a risk for Ark and Nikko and their investors. A pullback in any of the heavily owned sectors could force them to reduce their stakes, which could trigger more declines and therefore more selling.“The concern would be performance slips, investors begin exiting the Ark funds and that would ultimately result in redemptions,” said Nate Geraci, president of the ETF Store, an advisory firm. “That could put further negative pressure on those securities and you create this negative feedback loop. This isn’t an issue for larger broad-based ETFs, but for ETFs that are more concentrated and own small-cap securities there absolutely could be some negative pressure there.”In general, companies heavily owned by Ark show higher-than-average short interest, though it’s impossible to say if that’s linked to worries about ownership or simply because they are riskier bets.The average short interest as a percentage of float for ARKK holdings is 4.4%, according to Bloomberg calculations based on data from IHS Markit Ltd. The average is 3.4% for Russell 3000 companies and 2.3% for those in the Russell 1000.The options market shows that bears haven’t jumped in quite yet, however. Of the 29 stocks that ARKK owns more than 10% of, only five have seen more puts than calls trade on average over the last five days. While put activity has increased broadly, the average put-to-call ratio stands at 0.7, a little more than half of what it is for Russell 3000 stocks.Perhaps that’s because wagering against Wood hasn’t worked out very well in the past. Almost every bet like that has lost money in the subsequent six months as prices rebounded, Bloomberg Intelligence analyst Eric Balchunas wrote in a note this week.“The fund’s outflows rarely last, and dips have tended to attract buyers in the past,” Balchunas wrote.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Latest Ethereum price and analysis (ETH to USD)

Bloomberg

(Bloomberg) – Warren Buffett’s 15-page annual letter to shareholders on Saturday made mention of the pandemic that ravaged the globe in 2020 exactly once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.Buffett likewise steered clear of politics, despite the contested presidential election and riots at the U.S. Capitol, and never touched on race or inequality even after protests and unrest broke out in cities across the nation last year. He also avoided delving into the competitive deal-making pressures faced by his conglomerate, Berkshire Hathaway Inc., a topic routinely dissected in past year’s letters.“Here you have a company with such a revered leader who’s held in such high regard – whose opinion matters, who has businesses that were directly impacted by the pandemic, insurance companies that were influenced by global warming and social inflation – and there was not one word about the pandemic,” Cathy Seifert, an analyst at CFRA Research, said in a phone interview. “That to me was striking. It was tone deaf and it was disappointing.”Buffett, 90, has been unusually quiet since last year’s annual meeting in May amid a multitude of issues facing Americans. His annual letters are often seen as a chance to offer investors help in understanding his thinking on broad topics and market trends, in addition to details on how his conglomerate is faring.But the Berkshire chief executive officer carefully weighs his words, and some topics, such as the pandemic, risk veering into highly controversial political territory, Jim Shanahan, an analyst at Edward D. Jones & Co., said in an interview.“There’s been a lot of comments about the pandemic and the impact on the businesses, but by not saying something in the letter, I think it’s just a way to try and avoid saying something that could be perceived as a political statement, which he’s been less willing to do in recent years,” Shanahan said.A representative for Buffett didn’t immediately respond to a request for comment placed outside routine office hours.Buffett also stayed quiet on topics that are key to his conglomerate, such as the market environment amid a tumultuous year – and the work of key investing deputies like Todd Combs and Ted Weschler, according to Cole Smead, whose Smead Capital Management oversees investments in Berkshire.“There’s more found by what’s not in the letter,” said Smead, the firm’s president and portfolio manager. “I think just time and time again in this letter were sins of omission.”Here are other key takeaways from Buffett’s letter and Berkshire’s annual report:1. Buffett Relies on Buybacks Instead of DealsBerkshire repurchased a record $24.7 billion of its own stock as Buffett struggled to find better ways to invest his enormous pile of cash.And there’s more where that came from: The conglomerate has continued to buy its own stock since the end of last year, and is likely to keep at it, Buffett said Saturday in his annual letter.“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” Buffett said in the letter, which pointed out that the company “made no sizable acquisitions” in 2020.Berkshire did make a small amount of progress in paring the cash pile, which fell 5% in the fourth quarter to $138.3 billion. Buffett has struggled to keep pace with the flow in recent years as Berkshire threw off cash faster than he could find higher-returning assets to snap up, leading to the surge in share repurchases.2. Apple Is as Valuable to Berkshire as BNSF RailroadBerkshire’s $120 billion investment in Apple Inc. stock has become so valuable that Buffett places it in the same category as the sprawling railroad business he spent a decade building.He began building a stake in the iPhone maker in 2016, and spent just $31.1 billion acquiring it all. The surge in value since then places it among the company’s top three assets, alongside his insurers and BNSF, the U.S. railroad purchase completed in 2010, according to the annual letter.“In certain respects, it’s his kind of business,” said James Armstrong, who manages assets including Berkshire shares as president of Henry H. Armstrong Associates. “It’s very much brand name, it’s global, it’s an absolutely addictive product.”Buffett had always balked at technology investments, saying he didn’t understand the companies well enough. But the rise of deputies including Combs and Weschler has brought Berkshire deep into the sector. In addition to Apple, the conglomerate has built up stakes in Amazon.com Inc., cloud-computing company Snowflake Inc., and Verizon Communications Inc.3. Buffett Concedes Error in $37.2 Billion DealBuffett admitted he made a mistake when he bought Precision Castparts Corp. five years ago for $37.2 billion.“I paid too much for the company,” the billionaire investor said Saturday in his annual letter. “No one misled me in any way – I was simply too optimistic about PCC’s normalized profit potential.”Berkshire took an almost $11 billion writedown last year that was largely tied to Precision Castparts, the maker of equipment for aerospace and energy industries based in Portland, Oregon.The pandemic was the main culprit. Precision Castparts struggled as demand for flights plummeted, prompting airlines to park their jets and slash their schedules. Less flying means lower demand for replacement parts and new aircraft. Precision slashed its workforce by about 40% last year, according to Berkshire’s annual report.4. Profit Gains Thanks to Railroad, ManufacturersDespite the pandemic’s effects continuing to hit Berkshire’s collection of businesses, the conglomerate posted a near 14% gain in operating earnings in the fourth quarter compared to the same period a year earlier.That was helped by a record quarter for railroad BNSF since its 2010 purchase and one of the best quarters for the manufacturing operations since mid-2019.5. Good-bye Omaha, Hello Los AngelesBerkshire’s annual meeting has for years drawn throngs of Buffett fans to Omaha, Nebraska, where the conglomerate is based. This year, the show is moving to the West Coast.While still virtual because of the pandemic, the annual meeting will be filmed in Los Angeles, the company said Saturday.That will bring the event closer to the home of Buffett’s longtime business partner, Charlie Munger. Buffett and Munger will be joined by two key deputies, Greg Abel and Ajit Jain, who will also field questions.Buffett and Abel, who lives closer to Berkshire’s headquarters, last year faced “a dark arena, 18,000 empty seats and a camera” at the annual meeting, Buffett said in his letter. The 90-year-old billionaire said he expects to do an in-person meeting in 2022.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Grayscale Buys Ethereum Dip as ETH Drops Below $1,600

Grayscale, the world’s largest digital assets manager, purchased nearly $25 million worth of Ethereum (ETH) in a single day after the price of ETH dropped below $1,600. ETH has dipped nearly 20% in the last 5 days.

According to the latest data published by crypto analytics firm, Bybt.com, Grayscale has accumulated a total of 15,521 ETH in the last 24 hours in an effort to take advantage of the recent crash in ETH. As of writing, the world’s second-largest cryptocurrency is trading near $1,600 with a total market cap of $185 billion.

The crypto asset manager now holds 3.17 million ETH with a total value of more than $5.1 billion. Grayscale purchased 238,784 ETH in the last 30 days. The firm reopened its ETH Trust in late January 2021 after a temporary hold on new investments in December 2020.

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Grayscale has accelerated its efforts to accumulate ETH in the last few months. Recently, the company released a report on ETH and highlighted the potential benefits of ETH 2.0. Michael Sonnenshein, CEO of Grayscale mentioned in December 2020 that the institutional interest in ETH-related investment products has grown significantly.

Grayscale’s Crypto Holdings

In addition to ETH, the asset manager has accumulated Bitcoin and other digital assets. The company purchased 137 Bitcoin worth nearly $6.7 million in the last 24 hours. Grayscale has 655,690 BTC under management with a total worth of approximately $33 billion. Grayscale bought 609 Litecoin (LTC) and 268 Bitcoin Cash in a single day. The company now has $254 million worth of Litecoin under management along with $150 million worth of Bitcoin Cash. Grayscale reported a minor outflow of 1,009 ETH Classic during the last 24 hours.

Grayscale’s total digital assets are valued at approximately $38.7 billion. The value of the company’s digital assets has dropped by more than $4 billion in the last 5 days. Despite the recent dip, Grayscale’s crypto assets have grown significantly since the start of 2021 as the company started this year with $20 billion worth of digital assets under management.