- Coinbase (NASDAQ:COIN) cofounder and director Fred Ehrsam purchased 706,554 shares of COIN stock on May 13
- On May 17, Ehrsam then purchased an additional 385,260 shares
- The director owns 3.67 million shares of COIN stock through Paradigm after the purchases
Shares of Coinbase are in the spotlight today following a rare insider purchase. COIN stock has declined by more than 70% year-to-date (YTD). Now, an insider is stepping in and picking up shares for the first time this year.
Insider Fred Ehrsam helped found Coinbase alongside current CEO Brian Armstrong. Ehrsam eventually moved away from the company, however. He is the cofounder and current managing partner of Paradigm, an investment firm focused on cryptocurrencies and Web 3.0 opportunities.
Let’s dive into the details of Ehrsam’s recent purchases.
Director Fred Ehrsam Buys COIN Stock
On May 13, Ehrsam purchased 706,554 shares of COIN stock at averages prices ranging between $69.53 and $72.85. In total, the transaction amounted to a massive $50 million. However, Ehrsam wasn’t done just yet.
On May 17, the cofounder purchased another 385,260 shares at average prices ranging between $63.92 and $66.52. This time, the transaction value was worth $25 million.
Ehrsam indirectly purchased all of these shares through the Paradigm One Fund. After the purchases, Ehrsam indirectly owns 1.09 million shares through the fund. He also owns 1.13 million shares through The Frederick Ernest Ehrsam III Living Trust and 2.58 million shares through the Paradigm Fund. As of the fourth quarter of 2021, the executive owns a grand total of 18.35 million shares, both directly and indirectly.
Ehrsam is clearly bullish on the company he helped found. Before the May 13 purchase, Paradigm did not own any shares of COIN stock. The sudden purchase suggests Ehrsam is confident on the long-term prospects of the company.
This week, Coinbase announced a slowdown of hiring and said that it would review its current headcount. While this may seem like a negative headline, reduced hiring can also lower general and administrative (G&A) expenses.
Who Else Is Betting Big on Coinbase?
Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During Q1, 738 funds reported owning COIN, a decrease of 121 funds from the prior quarter. Meanwhile, the institutional put/call ratio sits at 1.01. This means that funds in aggregate own about the same amount of put and call options against the company.
With that said, let’s take a look at the five largest shareholders of Coinbase:
- Brian Armstrong, cofounder and CEO: 38.68 million shares
- Fred Ehrsam, cofounder: 18.35 million shares
- Andreessen Horowitz Fund III: 14.86 million shares
- AH Equity Partners III: 10.86 million shares
- Ark Invest: 7.72 million shares
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.