In this article, we will take a look at the top 10 biggest companies and hedge funds bullish on Ethereum.
Crypto stocks have plummeted in value over the past week amid inflation worries, social media speculation, and Chinese restrictions on financial institutions that facilitate cryptocurrency transactions. Bitcoin, the most popular cryptocurrency, has dropped more than 26% in the last seven days, leading to a chain reaction that has affected other stocks that mine blockchain as well. However, amid all the chaos and volatility surrounding crypto in the recent past, Ethereum, the second most popular cryptocurrency in the world, has performed surprisingly well.
Big companies like Tesla, Inc. (NASDAQ: TSLA) and Alphabet Inc. (NASDAQ: GOOG) have turned bullish on Ethereum after noticing the steps it is taking to become environmentally stable. Ethereum is in the process of reducing reliance on energy intensive mining. Tesla, Inc. (NASDAQ: TSLA) owner Elon Musk earlier this month suspended Bitcoin payments at his firm citing environmental concerns. Alphabet Inc. (NASDAQ: GOOG), a carbon neutral firm, earlier announced that Ethereum app builders using Google can integrate data from outside sources.
The fintech universe, led by giants like Square, Inc. (NYSE: SQ) and PayPal Holdings, Inc. (NASDAQ: PYPL), is bullish on Ethereum as well. Square, Inc. (NYSE: SQ) owns more than $400 million in crypto-related assets and PayPal Holdings, Inc. (NASDAQ: PYPL) recently allowed millions of users on its platform to checkout with cryptocurrency. Together, these two firms are shaping the future of blockchain in finance. Most of the clients these companies deal with are young cohorts that want exposure to crypto investments.
There is hedge fund interest in Ethereum as well. On April 16, Brevan Howard, a $14 billion hedge fund, announced that it would start buying cryptocurrencies. New York-based Renaissance Technologies, a $166 billion hedge fund, has also said it is exploring something similar. Fortress Investment Group and Ark Investment Management have made elaborate bets on digital assets in recent months as well. Balaji Srinivasan, an angel investor and entrepreneur renowned for technological insights, in a recent interview, detailed the potential upsides to Ethereum compared to other blockchain-based cryptocurrencies.
Some of these include the migration of Ethereum from proof-of-work systems to proof-of-stake, thereby reducing the carbon footprint of coin mining and also improving security by improving mining accessibility that will make regulatory action against it more difficult. The scaling options for Ethereum also look more promising than other coins. However, investors should be wary that Ethereum also has more programs running on top of it than other cryptocurrencies that are having a negative overall effect on the network. Like other revolutionary tech, it is still evolving.
Crypto has made a huge splash in the finance world already under heavy strain from the rise of fintech and cashless societies in recent years. 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 (see the details here). 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.
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With this context in mind, here is our list of the top 10 companies bullish on Ethereum.
Top Companies Bullish on Ethereum
10. MetLife, Inc. (NYSE: MET)
Number of Hedge Fund Holders: 37
MetLife, Inc. (NYSE: MET) is a New York-based life insurance company. It is placed tenth on our list of top 10 companies bullish on Ethereum. In June 2019, Singapore-based Lumen Lab, owned by MetLife, announced that it would be using Ethereum cryptocurrency to debut a new contract platform known as Lifechain to settle insurance claims. Zia Zaman, the CIO of MetLife Asia and CEO of LumenLab at the time, said that the future of distributed ledger technology in life insurance was dependent on public sector involvement.
MetLife, Inc. (NYSE: MET) was founded in 1868 and is one of the largest insurance firms in the world. The company posted a quarterly revenue of over $16.7 billion in the first three months of 2021, beating market estimates by more than $680 million.
At the end of the fourth quarter of 2020, 37 hedge funds in the database of Insider Monkey held stakes worth $983 million in MetLife, Inc. (NYSE: MET), up from 36 in the preceding quarter worth $920 million.
In its Q1 2021 investor letter, Diamond Hill Capital , an asset management firm, highlighted a few stocks and MetLife, Inc. (NYSE: MET) was one of them. Here is what the fund said:
“Life insurance company MetLife, Inc. underperformed due to fears around the potential impacts arising from lower interest rates, credit risks, and equity market drawdowns. Despite these concerns, we remain comfortable with our holding as we believe the fears significantly overstate the fundamental impact to the business.”
9. Mastercard Incorporated (NYSE: MA)
Number of Hedge Fund Holders: 154
Mastercard Incorporated (NYSE: MA) is a New York-based financial services company founded in 1966. It is ranked ninth on our list of top 10 companies bullish on Ethereum. In April, Raj Dhamodharan, the executive vice president of digital asset products at Mastercard, told Business Insider that Ethereum was a key infrastructure on which the company was building payment and non-payment applications to power the future of commerce. Media reports also suggest that Mastercard Incorporated (NYSE: MA) last month funded Ethereum startup studio ConsenSys.
Like Tesla, Inc. (NASDAQ: TSLA) and Alphabet Inc. (NASDAQ: GOOG), Square, Inc. (NYSE: SQ) and PayPal Holdings, Inc. (NASDAQ: PYPL), Mastercard is one of the top companies bullish on Ethereum.
On May 18, investment advisory Daiwa Capital Market upgraded Mastercard Incorporated (NYSE: MA) stock to Outperform from Neutral with a price target of $402.The target price presents a 10% upside potential for the stock of the financial services firm.
Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE: MA) with 5.8 million shares worth more than $2 billion.
In its Q4 2020 investor letter, Bretton Fund , an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE: MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
8. Cisco Systems, Inc. (NASDAQ: CSCO)
Number of Hedge Fund Holders: 60
Cisco Systems, Inc. (NASDAQ: CSCO) is a California-based technology firm that makes and sells hardware, software and telecom equipment. It was founded in 1984 and is ranked eighth on our list of top 10 companies bullish on Ethereum. Cisco was one of the first firms that jumped on the crypto bandwagon, joining the Enterprise Ethereum Alliance back in 2017 that has connected enterprises, startups, and academics with Ethereum subject matter experts. In 2019, it also released a report titled Blockchain that discussed crypto adoption on a global scale.
On May 13, investment advisory MKM Partners gave Cisco Systems, Inc. (NASDAQ: CSCO) stock a Buy rating with a price target of $61. The target implied a 16% upside potential for Cisco stock. The share price of the technology firm jumped more than 1.7% after the ratings update.
At the end of the fourth quarter of 2020, 60 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in Cisco Systems, Inc. (NASDAQ: CSCO), up from 59 in the preceding quarter worth $3.9 billion.
7. BP p.l.c. (NYSE: BP)
Number of Hedge Fund Holders: 29
BP p.l.c. (NYSE: BP) is a London-based oil and gas company founded in 1909. It is ranked seventh on our list of top 10 companies bullish on Ethereum. BP is the first major oil giant hedging bets on blockchain technology to facilitate oil and gas order processing. In 2018, Vakt Global, a consortium venture backed by BP p.l.c. (NYSE: BP), launched a new platform to bring efficiency to energy commodities trading. The venture aims to eventually lead the migration of all forms of energy transaction data to the blockchain, improving data quality and strengthening security.
On May 18, investment bank Barclays named BP p.l.c. (NYSE: BP) as one of its top picks in the European oil industry with an analyst at the firm saying that aggregate cash flow of the firm was enough to allow it to ensure competitive cash returns to shareholders and reduce debt.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in BP p.l.c. (NYSE: BP) with 20 million shares worth more than $425 million.
6. Accenture plc (NYSE: ACN)
Number of Hedge Fund Holders: 50
Accenture plc (NYSE: ACN) is an Ireland-based company that provides consulting and processing services. It is ranked sixth on our list of top 10 companies bullish on Ethereum and was founded in 2009. The company markets Ethereum-based blockchain solutions to businesses to make it easier to process payments. The firm has also invested in the Digital Dollar Project in partnership with the Digital Dollar Foundation to advance the exploration of a Central Bank Digital Currency (CBDC) in the United States.
On March 18, the Bank of America upgraded Accenture plc (NYSE: ACN) stock to Buy from Neutral with a $300 price target. The price target implied a 13% upside potential for the stock and the share price of the consulting firm jumped more than 1.5% after the ratings update.
Like Tesla, Inc. (NASDAQ: TSLA) and Alphabet Inc. (NASDAQ: GOOG), Square, Inc. (NYSE: SQ) and PayPal Holdings, Inc. (NASDAQ: PYPL), Accenture is one of the top companies bullish on Ethereum.
At the end of the fourth quarter of 2020, 50 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Accenture plc (NYSE: ACN), up from 46 in the previous quarter worth $1.1 billion.
In its Q4 2020 investor letter, Polen Capital Management , an asset management firm, highlighted a few stocks and Accenture plc (NYSE: ACN) was one of them. Here is what the fund said:
“Ireland-based information technology consulting firm Accenture was a leading contributor to the Portfolio for the year. We think Accenture is a well-oiled machine, enabling its global customer base to better utilize technology. With more than 500,000 employees, Accenture serves clients in many corners of the world. Its deeply embedded client relationships are a source of competitive advantage and can create a connection point that fosters new business opportunities with existing clients. More than 70% of business is solesourced, meaning Accenture is the only bidder on a contract.
Services businesses generate high returns on capital and consistent cash flows. Accenture management thoughtfully allocates the cash produced to shareholder returns via dividends and share repurchases and a steady diet of acquisitions. With a broad range of interests in the tech world, Accenture casts a wide net for acquisition targets, which bring new technology, talent, and client relations to the firm. Targets tend to be small. In 2020, Accenture acquired more than 30 companies. In aggregate, though, these acquisitions do add up and contribute a few percentage points of growth to Accenture’s roughly $45 billion in annual revenue.”
5. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 72
Intel Corporation (NASDAQ: INTC) is a California-based technology company that makes and sells products used in electronic devices, cloud data centres, and other smart solutions. It was founded in 1968 and is ranked fifth on our list of top 10 companies bullish on Ethereum. Intel is one of the top firms investing in Ethereum through the development of special processors that are used in blockchain mining. Squirrels Research Labs, a world leader in blockchain, uses Intel processors for mining the second most popular cryptocurrency in the world.
On May 11, investment advisory Citi reiterated a Neutral rating on Intel Corporation (NASDAQ: INTC) stock citing disappointing shipment numbers for personal computers and predicting that Intel would take a hit from these sales. Intel stock was down 2% following the update.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Intel Corporation (NASDAQ: INTC) with 29 million shares worth more than $1.4 billion.
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Intel Corporation (NASDAQ: INTC) was one of them. Here is what the fund said:
“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.”
4. Credit Suisse Group AG (NYSE: CS)
Number of Hedge Fund Holders: 11
Credit Suisse Group AG (NYSE: CS) is a Switzerland-based global wealth manager founded in 1856. It is placed fourth on our list of top 10 companies bullish on Ethereum. In February 2020, American crypto startup Paxos, in partnership with Credit Suisse, claimed the first live blockchain-based settlement of US equities. The previous year, in February, Credit Suisse Asset Management, owned by the wealth manager, and Portugal-based bank Banco Best successfully processed live end-to-end fund transactions using blockchain technology.
Credit Suisse Group AG (NYSE: CS) has consistently backed blockchain and Ethereum. However, it has had some setbacks of late in the financial services business. In April, the Swiss bank took a $4.7 billion hit from the Archegos disaster and slashed its dividend.
At the end of the fourth quarter of 2020, 11 hedge funds in the database of Insider Monkey held stakes worth $46 million in Credit Suisse Group AG (NYSE: CS), down from 13 in the preceding quarter worth $68 million.
In its Q1 2021 investor letter, Gator Capital Management, an asset management firm, highlighted a few stocks and Credit Suisse Group AG (NYSE: CS) was one of them. Here is what the fund said:
“We were extremely disappointed with the news from Credit Suisse in March. We were blindsided with a double dose of management incompetence. In early March, Credit Suisse announced they were suspending redemptions on the bank’s investment funds related to Greensill’s trade finance business. Then, in late March, the bank announced that it had exposure to the family office Archegos. We believe that of all Wall Street banks, Credit Suisse had the worst response managing the risk presented by Archegos. The combination of these two events in the same month made it clear that the bank does not have adequate risk controls.
We sold our position in Credit Suisse in late March, ending a three-year period of holding shares in the company. Our investment thesis had been Credit Suisse 1) was a global wealth management franchise with an attractive growth rate, 2) had a low-risk, highly profitable domestic Swiss banking franchise, 3) had reduced capital intensity and volatility in the investment bank, and 4) traded for just 75% of tangible book and 8x forward earnings. We believe the bank will be in the penalty box with investors for multiple years due to these risk management failures. We view this situation as similar to Wells Fargo’s account opening scandal from four years ago. Wells Fargo has underperformed the S&P 1500 Financials Index by 95% during that. We believe Credit Suisse’s stock will probably underperform its peers for several years as well.”
3. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ: MSFT) is a Washington-based technology company founded in 1975. It is placed third on our list of top 10 companies bullish on Ethereum. The software giant was among the first tech firms that allowed blockchain-based payments, and in 2019, created a mint, named Azure Blockchain Tokens, to help enterprises with Ethereum tokens. Several big firms, including a game developing company and a virtual reality equipment manufacturer, were among the first users of the new mint.
On May 18, Microsoft Corporation (NASDAQ: MSFT) confirmed in a blog post that a rumored Windows 10X won’t be released. Instead, the firm said it would leverage learnings and accelerate the integration of key foundational 10X technology into other products.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.3 million shares worth more than $5.2 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
2. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 273
Amazon.com, Inc. (NASDAQ: AMZN) is a Washington-based multinational technology firm founded in 1984. It is ranked second on our list of top 10 companies bullish on Ethereum. Amazon, which primarily operates one of the largest ecommerce retail businesses in the world, has backed Ethereum for easy processing of payments. In December, the company announced that Amazon Managed Blockchain, a service that allows users to set up and manage scalable private networks using open-source frameworks, would start supporting Ethereum.
On May 17, news media reported that Amazon.com, Inc. (NASDAQ: AMZN), which already has significant stakes in several big businesses like publishing and food delivery, was considering an entry into medical diagnostics with the launch of a new business.
At the end of the fourth quarter of 2020, 273 hedge funds in the database of Insider Monkey held stakes worth $51 billion in Amazon.com, Inc. (NASDAQ: AMZN), up from 245 in the preceding quarter worth $43 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ: AMZN) was one of them. Here is what the fund said:
“We purchased Amazon in February 2021, which accounts for 5% of the Portfolio’s weighting. For most of the last decade, Amazon did not meet our guardrails. We also did not have enough visibility into future free cash flow margins to indicate that the company would sustainably meet our guardrails and, relatedly, if valuation supported the double-digit annualized returns we seek. We now believe we have that visibility.
In 2008, almost all of Amazon’s revenue and operating profits came from its e-commerce business. Amazon Prime and Amazon Web Services (AWS) were new and relatively small back then. The company had roughly 5% operating profit margins overall, entirely from the e-commerce business. In 2009, the company began harvesting its retail business profits to accelerate investment in its distribution and logistics infrastructure globally and very heavily build out and scale AWS data centers. The company’s return on equity began to decline at that time and turned negative for three full years from mid-2012 to mid-2015 (margins and free cash flow declined similarly). So, beginning in 2010 and continuing to mid-2018, Amazon’s business was outside our guardrails. We chose to stick to our guardrails and not own Amazon.
Amazon’s profit drivers have changed quite dramatically over the years. Starting in the back half of 2018, Amazon came back above our hurdles. Revenue generation overcame ongoing heavy investments in areas such as delivery infrastructure, data center infrastructure, and shipping.
Our research suggests that today, after considering cost allocation, Amazon’s underlying profit drivers from higher-margin AWS and Advertising could grow much faster than its low-margin e-commerce business (excluding Prime), its historical driver of revenues and operating profits.
Amazon Prime, AWS, and Advertising together account for only about 20% of revenue today, but we believe over 150% of operating profits. Looking forward, growth higher-margin businesses means Amazon’s total margins and profit dollars could rise quite dramatically.
It is important to note that Amazon proved to be an exception to our guardrails. Based on our experience, very few companies that remain outside our guardrails for an extended period operate from a position of competitive strength but rather, from a position of competitive pressure. Today, we feel we have better visibility into the future earnings growth and margins from AWS and Advertising and believe these could drive 30%+ annual earnings growth for the next five years. Even with significant P/E multiple compression, we would still expect double-digit investment returns.”
1. JPMorgan Chase & Co. (NYSE: JPM)
Number of Hedge Fund Holders: 112
JPMorgan Chase & Co. (NYSE: JPM) is a New York-based investment bank and financial services firm founded in 2000. It is placed first on our list of top 10 companies bullish on Ethereum. In April, ConsenSys, a software development firm that markets cryptocurrency infrastructure, said it had raised $65 million in a funding round led by JPMorgan Chase. In a note to investors on April 27, the investment bank noted the gains made by Ethereums in recent weeks as other crypto stocks plummet amid social media speculation.
JPMorgan Chase & Co. (NYSE: JPM) stock is one of the top options for income investors as the firm pays a healthy dividend to shareholders. On May 17, JP Morgan declared a quarterly dividend of $0.90 per share, payable to shareholders by the end of July.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Viking Global is a leading shareholder in JPMorgan Chase & Co. (NYSE: JPM) with 8.4 million shares worth more than $1 billion.
In its Q4 2020 investor letter, Bretton Fund, an investment management firm, highlighted a few stocks and JPMorgan Chase & Co. (NYSE: JPM) was one of them. Here is what the fund said:
“After a strong performance in 2019, we wrote this about our bank stocks in last year’s report: “There will be another recession sooner than later, and our banks will see larger loans losses, but we think this is more than priced into the stock, and our banks are well reserved for that eventuality.” Little did we know “sooner” really meant “a few weeks from now.” Despite the economic shock, the banks still have huge capital cushions that can absorb large loan losses. Our remaining bank investments, JPMorgan and Bank of America, increased their reserves significantly at the beginning of the Covid-19 crisis in anticipation of imminent loan defaults, but with the government stimulus and perhaps a more resilient economy than many would have guessed, actual loan losses are up only slightly. They might happen later in 2021, but with an additional stimulus package and the vaccine rolling out, the large-scale losses may not be as bad as most people predicted. The bigger drag on the banks’ earnings power is lower rates, which in our opinion will persist for a long time. Despite this drag, we estimate both JPMorgan and Bank of America will continue to grow revenue and earnings over the next few years, while we believe their stocks remain bargains in a somewhat expensive market. JPMorgan’s earnings per share declined 17% last year, and its stock returned -5.5%. Bank of America’s earnings, which are more sensitive to interest rates, were down 32%, and its stock returned -11.6%.”
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Disclosure: None. 10 Biggest Companies and Hedge Funds Bullish on Ethereum is originally published on Insider Monkey.
