Should You Still Consider Buying Coinbase (COIN) Shares?

Hayden Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. The portfolio declined by -40.3% in the second quarter of 2022, versus -16.1% for the S&P 500 and -15.1% for the MSCI World indices. This brings the fund’s annualized return since inception, to +7.6%. The portfolio ended the quarter with ~59% of its assets invested in Asia, ~37% in North America, and the remainder in cash. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Hayden Capital mentioned Coinbase Global, Inc. (NASDAQ:COIN) and explained its insights for the company. Founded in 2012, Coinbase Global, Inc. (NASDAQ:COIN) is a cryptocurrency company with a $17.4 billion market capitalization. Coinbase Global, Inc. (NASDAQ:COIN) delivered a -73.55% return since the beginning of the year, while its 12-month returns are down by -74.24%. The stock closed at $66.74 per share on August 26, 2022.

Here is what Hayden Capital has to say about Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2022 investor letter:

“Coinbase (NASDAQ:COIN): The crypto ecosystem moves extremely quickly, and there’s been many new developments since we first invested in Coinbase, a year ago. Most notably, crypto market cap has declined from a peak of ~$3 Trillion last fall, to ~$1.1 Trillion today (a -63% decline, and -72% peak-to-trough; LINK). Crypto is a volatile asset class, and has experienced many draw-downs of similar magnitude in the past. For example, Bitcoin was down -93% during 2011, -85% from 2013-15, and -84% from 2017-18. In this context, the latest draw-down is a pretty normal outcome for this emerging asset class.

A large reason for this volatility, is simply because there aren’t any major “real-world use cases” for the asset just yet. In our letter outlining the investment last year, we wrote that crypto is still “in the middle of ‘crossing the chasm’ into mainstream adoption & use cases, which will result in millions of mainstream users needing to transact crypto in some form”…” (Click here to see the full text)

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Our calculations show that Coinbase Global, Inc. (NASDAQ:COIN) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Coinbase Global, Inc. (NASDAQ:COIN) was in 29 hedge fund portfolios at the end of the second quarter of 2022, compared to 46 funds in the previous quarter. Coinbase Global, Inc. (NASDAQ:COIN) delivered a -11.39% return in the past 3 months.

In July 2022, we also shared another hedge fund’s views on Coinbase Global, Inc. (NASDAQ:COIN) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.