Cryptocurrencies have attracted mixed reactions from the Wall Street over the last few years, including criticism from institutions and individuals in traditional finance. Some notable figures in the investment landscape have also expressed unfavorable opinions.
Berkshire Hathaway Inc. (NYSE: BRK-B) CEO Warren Buffett remains a crypto skeptic. His associate Charlie Munger took a more vocal approach, going as far as to call the whole thing "disgusting." But despite the respect Buffett and Munger have in the finance circles, many believe their views on crypto are outdated. Even Wall Street hedge funds are looking for growth opportunities through crypto and blockchain stocks. PwC, a multinational research firm, released a report revealing that the annual rate of return for the average crypto hedge fund was more than 30% in the last two years.
Elwood Asset Management, an investment advisory company based in London, projects that the asset management market will average a 20% compound annual growth rate for the next five years. The world is seeing major crypto IPOs — Coinbase Global, Inc. (NASDAQ: COIN) — and famous companies like Paypal Holdings, Inc. (NASDAQ: PYPL), Tesla, Inc. (NASDAQ: TSLA), Square, Inc. (NYSE: SQ), Visa Inc. (NYSE: V) buying, accepting and adapting cryptocurrencies as asset classes.
Mainstream companies are adapting crypto, leaving traditional funds with no option but to embrace the emerging currency. For example, Paypal Holdings, Inc. (NASDAQ: PYPL), in which 147 elite hedge funds own stakes, stunned the market earlier this year with its decision to allow millions of its customers checkout using crypto. This was a huge boost in trust for crypto and traditional hedge funds have no option but to accept this decision by the company.
Visa Inc. (NYSE: V) was one of the major contributors in a $40 million funding round for Anchorage, which provides crypto services to institutions. Visa Inc. (NYSE: V)'s move may encourage more widespread acceptance of cryptocurrencies. The crypto segment is seeing more participation from companies in various other industries. EV manufacturer Tesla, Inc. (NASDAQ: TSLA) acquired Bitcoin worth $1.5 billion in January 2020. In April, investment firm Wedbush upgraded Tesla, Inc. (NASDAQ: TSLA) to "Buy" and gave the stock a price target of $1,000. Square, Inc. (NYSE: SQ) bought 4,079 bitcoins in October 2020, which would currently be worth more than $200 million.
Since blockchain forms the basis of major cryptocurrencies, including Ethereum, we are going to mention some of the best blockchain stocks to buy for those who want to expand their exposure to the overall industry. Apart from directly buying crypto, investing in blockchain and crypto stocks would help beginner investors diversify their portfolios. Diversification is the key in today's volatile financial markets, which are causing trouble even for the experts. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points. We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Blockchain Stocks to Buy
10. Extreme Networks, Inc. (NASDAQ: EXTR)
Number of Hedge Fund Holders: 19
Extreme Networks, Inc. (NASDAQ: EXTR) provides various services such as cloud-based network management, virtual private network solutions, and control of wireless architecture. It provides its services across various segments, including healthcare, manufacturing, retail, and education. The company owns Aerohive Networks through an acquisition. The stock ranks 10th in the list of best blockchain stocks to buy now.
It recently released its fiscal third-quarter results ended March 31, revealing that it generated $253.4 million in revenue after a 21% YoY gain and a 5% gain from the previous quarter. Its GAAP EPS for the three months was $0.03 per share.
Extreme Networks, Inc. (NASDAQ: EXTR) also announced that it signed a strategic partnership with DeFi Technologies. The partnership will facilitate a swap engagement where Extreme Networks will receive 10 million DeFi shares in exchange for 4 million Hive shares.
9. Riot Blockchain, Inc. (NASDAQ: RIOT)
Number of Hedge Fund Holders: 7
Riot Blockchain, Inc. (NASDAQ: RIOT) is a blockchain and crypto company that mainly focuses on crypto mining. The company had 7,043 miners across North America as of December 31, 2020. In April, the company announced that it acquired Whinstone US, which operates cryptocurrency mining colocation data centers. RIOT ranks 9th in the list of best blockchain stocks to buy now.
Riot announced its Q4 and full-year 2020 financials in March this year. Its GAAP net income in Q4 was $3.9 million, a positive change from the $1.7 million net loss in Q3 2020 and $3.4 million net loss in Q4 2019. Its mining revenue in Q4 last year was $5.2 million representing a 116% gain from the previous quarter. Full-year 2020 mining revenue was $12 million, which was almost double the $6.7 million mining revenue that the company reported in 2019.
The crypto mining company reported a $12.7 million or $(0.30) per share net loss for the full year 2020. It improved from the $20.03 million, or $(1.02) per share net loss that it reported for 2019.
8. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 273
Amazon.com, Inc. (NASDAQ: AMZN) is currently one of the best e-commerce companies globally, but it is also about to become one of the best blockchain stocks through blockchain-related endeavors. The company is reportedly planning to roll out its cryptocurrency. It also rolled out its new crypto mining solution on AWS. AMZN ranks 8th in the list of best blockchain stocks to buy.
The e-commerce giant announced favorable financials for Q1 2021. Its operating cash flow was $67.2 billion, a 69% gain on a trailing twelve-month basis. In comparison, its TTM operating cash flow for Q1 2020 was $39.7 billion.
Amazon.com, Inc. (NASDAQ: AMZN) operating income for the latest quarterly period was $8.9 billion, an improvement from $4.0 billion in Q1 2020. Net sales also surged to $108.5 billion from $75.5 billion in the previous year’s Q1. The net income reported for the latest quarter was $8.1 billion or $15.79 per share, compared to $2.5 billion, or $5.01 per share in Q1 2020.
Like Paypal Holdings, Inc. (NASDAQ: PYPL), Tesla, Inc. (NASDAQ: TSLA), Square, Inc. (NYSE: SQ) and Visa Inc. (NYSE: V), Amazon.com, Inc. (NASDAQ: AMZN) is one of the mainstream companies embracing crypto and blockchain.
7. Mastercard Incorporated (NYSE: MA)
Number of Hedge Fund Holders: 154
Mastercard Incorporated (NYSE: MA) is a payments giant that is swiftly embracing crypto and blockchain. In February, the company announced that it will start allowing customers to accept payments in the form of cryptocurrencies. Mastercard Executive Vice President for Blockchain and Digital Asset Products said in the announcement that stablecoins will be the primary beneficiary of Mastercard’s coming integration.
Mastercard Incorporated (NYSE: MA) also revealed that it holds 89 blockchain patents, involving methods to keep crypto transactions private, on-chain credit card payment verification, instant blockchain payment processing and technologies to handle crypto refunds. This makes Mastercard one of the best blockchain stocks to buy.
6. International Business Machines Corporation (NYSE: IBM)
Number of Hedge Fund Holders: 51
International Business Machines Corporation (NYSE: IBM) is a high-pedigree technology company that has been around for decades. IBM ranks 6th in our list of best blockchain stocks to buy, thanks to its involvement with private blockchain technology.
IBM recently announced that it entered a deal through which it will license its software to Swiss-based METACO, which offers crypto custody services to financial institutions. Crypto custody services will see an increased demand in the future, just like gold custody services that are offered worldwide. International Business Machines Corporation (NYSE: IBM) Cloud and AI technologies will also play a key role in crypto and blockchain services in the coming years.
International Business Machines Corporation (NYSE: IBM) announced its Q1 2021 financials in April, revealing that it generated $17.7 billion and $1.06 GAAP earnings per share. Its non-GAAP EPS for the same period was $1.77 per share.
5. Square, Inc. (NYSE: SQ)
Number of Hedge Fund Holders: 89
Square, Inc. (NYSE: SQ) contributes to the payments industry by providing hardware solutions that help sellers integrate card payments into their businesses. The company is swiftly increasing exposure to cryptocurrencies and blockchain.
Of the 887 hedge funds tracked by Insider Monkey, 89 held long positions in Square at the end of 2020, compared to 73 funds having stakes in the company in the previous quarter.
4. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 72
Intel Corporation (NASDAQ: INTC) is a technology company known for its computer chips. However, it also makes solutions that support various other segments such as connected devices and technologies that support cloud services and machine learning, among others.
Alger Spectra Fund, in their Q1 2021 investor letter, mentioned Intel Corporation (NASDAQ: INTC). Here is what Alger Spectra Fund has to say about Intel Corporation in its letter:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
3. Nvidia Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 88
Nvidia Corporation (NASDAQ: NVDA) is known for making graphics cards, especially for the gaming industry, but it also makes computing and networking hardware. Its graphics cards are popular with crypto miners, leading to shortages for the gaming industry.
The company reported that it earned $5.00 billion record revenue in its fiscal first quarter ended January 31, a 61% gain from the $3.11 billion revenue it reported for the corresponding quarter in 2020. The bulk of the revenue was from its data center and gaming segments.
2. Paypal Holdings, Inc. (NASDAQ: PYPL)
Number of Hedge Fund Holders: 147
Paypal Holdings, Inc. (NASDAQ: PYPL) is one of the leading companies in the global remittance industry. It recently enjoyed a stock price boost thanks to government stimulus payments and an increase in Bitcoin transactions. It was also highly favored by the booming e-commerce boost as transactions. It is ranked as one of the best blockchain technology stocks because of its growing involvement with cryptocurrencies.
PayPal reported a 29% revenue gain to $6.03 million for Q1 2020 after its Honey Science acquisition.
Paypal Holdings, Inc. (NASDAQ: PYPL) recently announced a partnership with FlexiLoans.com to provide more financial flexibility to MSMEs in the form of working capital.
1. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 68
Tesla, Inc. (NASDAQ: TSLA) is a battery and EV manufacturer. It tops our list of best blockchain stocks to buy now because of the company’s exposure to cryptocurrencies. The company earlier this year announced through an SEC filing that it acquired Bitcoin to maximize cash returns and attain more flexibility and diversity.
Tesla also announced recently that customers will soon be able to use Bitcoin to purchase its products. The company’s Q1 2021 financial report revealed that it managed to generate $10.39 billion revenue which was higher than its $5.99 billion Q1 2020 revenue. Its adjusted earnings per share in Q1 2021 was 93 cents per share, which was higher than the 80 cents expected earnings and 23 cents YoY.