In this article, we discuss the 10 stocks better than Coinbase according to hedge funds.
After a record rally through the past year, the prices of crypto stocks have taken a beating over the past few months amid concerns around regulation and a crackdown in China. Coinbase Global, Inc. (NASDAQ:COIN), the Delaware-based financial infrastructure and technology firm for the crypto economy, is perhaps the most prominent crypto stock on the market. After a record debut on the market in April, the stock has fallen sharply from a record high of $429 per share on April 14. It was trading at around $251 per share on October 8.
Despite the setback, crypto stocks like Coinbase Global, Inc. are on the comeback trail as the price of Bitcoin, the most popular cryptocurrency, rises again. Bitcoin touched a record high of $64,000 in April before falling to below $40,000 within weeks. Presently, the coin is trading at around $55,000. The Delaware-based firm has also started taking concrete measures to stabilize the stock, including a proposal to pitch crypto regulations to officials in the US government.
Coinbase Global, Inc. is likely to encounter many challenges as it seeks to push the stock higher. In addition to valuation concerns around the company that have dogged progress since the IPO, there are some security concerns that are starting to rear their head too. On October 1, the company revealed that hackers had stolen from at least 6,000 customer accounts at the firm between March and June this year. The company added it was working with law enforcement agencies to identify the culprits.
Despite the setback, the hedge fund sentiment around Coinbase Global, Inc. is mostly positive. At the end of the second quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $2.9 billion in Coinbase Global, Inc.. Out of the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management, led by crypto bull Cathie Wood, is a leading shareholder in the firm with 5.6 million shares worth more than $1.4 billion.
For investors who have security concerns around crypto and are looking for less volatile options on the market, there are many finance stocks that could provide a better alternative. Some of the stocks that hedge funds presently prefer over Coinbase Global, Inc. include Bank of America Corporation (NYSE:BAC), Citigroup Inc. (NYSE:C), and Morgan Stanley (NYSE:MS), among others discussed in detail below. There is little doubt that the rapid digitization of the world economy has transformed the finance world.
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 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). 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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Our Methodology
With this context in mind, here is our list of the 10 stocks better than Coinbase according to hedge funds. These were picked from a database of hedge funds tracked by Insider Monkey. Only those companies that have more hedge funds with stakes in them, as compared to Coinbase Global, Inc., at the end of the second quarter of 2021 were selected for the list.
The list is ranked according to the number of hedge funds having stakes in each company. Data from the 873 funds tracked by Insider Monkey was used for this purpose.
Special importance was assigned to outlining the analyst ratings and business fundamentals for each firm to provide readers with some context so they can make more informed investment choices.
Stocks Better than Coinbase According to Hedge Funds
10. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 52
American Express Company (NYSE:AXP) is placed tenth on our list of 10 stocks better than Coinbase Global, Inc.. The firm provides charge and credit payment products. It operates from New York.
On September 16, investment advisory Bank of America upgraded American Express Company stock to Neutral from Underperform with a price target of $169, noting that the risk/reward on the stock had become more balanced after recent underperformance.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company with 15.3 million shares worth more than $2.5 billion.
Just like Bank of America Corporation, Citigroup Inc., and Morgan Stanley, American Express Company is one of the stocks on the radar of institutional investors.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
9. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 52
The Bank of New York Mellon Corporation (NYSE:BK) is ranked ninth on our list of 10 stocks better than Coinbase Global, Inc.. The firm provides an array of financial products and services. It is headquartered in New York.
On September 15, investment advisory Citi kept a Buy rating on The Bank of New York Mellon Corporation stock and raised the price target to $60 from $56, noting there was optimism around the near-term growth trajectory of the firm.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in The Bank of New York Mellon Corporation, up from 49 the preceding quarter worth $4.7 billion.
Alongside Bank of America Corporation, Citigroup Inc., and Morgan Stanley, The Bank of New York Mellon Corporation is one of the stocks that hedge funds are buying.
8. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 54
KKR & Co. Inc. is a New York-based private equity and real estate investment firm. It is placed eighth on our list of 10 stocks better than Coinbase Global, Inc..
On October 7, investment advisory Jefferies resumed coverage of KKR & Co. Inc. stock with a Buy rating and raised the price target to $74 from $66. Gerald O’Hara, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, California-based investment firm ValueAct Capital is a leading shareholder in KKR & Co. Inc. with 27 million shares worth more than $1.6 billion.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and KKR & Co. Inc. was one of them. Here is what the fund said:
“KKR & Co. Inc. was also a material contributor during the quarter. This company has deep and growing relationships with capital providers. The company has a stable management fee stream and a proven ability to convert investor capital into a performance fee stream. These attributes contribute to its stable and growing intrinsic values. In addition, the company enjoy nice tailwinds of increasing allocations to private and alternative investments. We are pleased to continue to own KKR & Co.”
7. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 54
Ally Financial Inc. (NYSE:ALLY) is a Michigan-based bank holding company. It is ranked seventh on our list of 10 stocks better than Coinbase Global, Inc..
On July 22, investment advisory Citi maintained a Buy rating on Ally Financial Inc. stock and raised the price target to $63 from $59, underlining a bullish outlook on the firm for the next few years based on margins and production.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Ally Financial Inc. with 24 million shares worth more than $1.2 billion.
Bank of America Corporation, Citigroup Inc., and Morgan Stanley are some of the top finance stocks to buy now, just like Ally Financial Inc..
6. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Holders: 62
CME Group Inc. (NASDAQ:CME) is placed sixth on our list of 10 stocks better than Coinbase Global, Inc.. The firm operates in the financial exchanges industry and is headquartered in Illinois.
On September 14, investment advisory Atlantic Partners upgraded CME Group Inc. stock to Overweight from Neutral with a price target of $230, noting the earnings power of the firm was favorable.
At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in CME Group Inc., up from 60 the preceding quarter worth $2.3 billion.
In its Q1 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and CME Group Inc. (NASDAQ:CME) was one of them. Here is what the fund said:
“CME has been owned by the portfolio for five years. CME’s strategic positioning as a monopolistic global financial exchange operator will continue to afford the business a highly attractive margin profile. CME is well managed however we can no longer identify clear value latency opportunities for the management team to execute against and so decided to exit our position.”
5. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 64
Capital One Financial Corporation (NYSE:COF) is ranked fifth on our list of 10 stocks better than Coinbase Global, Inc.. The firm operates as a financial services holding firm and is headquartered in Virginia.
On October 5, investment advisory Piper Sandler maintained an Overweight rating on Capital One Financial Corporation stock and raised the price target to $188 from $177, underlining that the shares of the firm still had room to climb higher.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Capital One Financial Corporation with 6 million shares worth more than $967 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Capital One Financial Corporation (NYSE:COF) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. In financials, we increased our position in Capital One on the premise that a benign consumer credit environment should be sustainable in light of unprecedented government support.”
4. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a Georgia-based payments technology and software solutions provider. It is placed fourth on our list of 10 stocks better than Coinbase Global, Inc..
On September 9, investment advisory BMO Capital reiterated an Outperform rating on Global Payments Inc. stock and raised the price target to $217 from $206. James Fotheringham, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Global Payments Inc. with 5.5 million shares worth more than $1 billion.
3. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 69
Morgan Stanley is a New York-based financial holding company. It is ranked third on our list of 10 stocks better than Coinbase Global, Inc..
On July 16, investment advisory Argus maintained a Buy rating on Morgan Stanley stock and raised the price target to $105 from $93, noting that the shares of the firm were outperforming peers in the finance marketplace.
At the end of the second quarter of 2021, 69 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in Morgan Stanley, down from 79 in the preceding quarter worth $5.2 billion.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Morgan Stanley (NYSE:MS) was one of them. Here is what the fund said:
“Top three contributor Morgan Stanley, a leading global financial services company, came into the portfolio in Q4 as a result of its purchase of E*TRADE. E*TRADE is a great fit on Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked Morgan Stanley’s business by adding less volatile fee streams and deemphasizing the risk-obtuse culture of prior management. We believe the market will come to appreciate this mix shift over time.”
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 87
Citigroup Inc. is placed second on our list of 10 stocks better than Coinbase Global, Inc.. The company operates as a diversified financial services holding firm and is headquartered in New York.
On July 6, investment advisory Keefe Bruyette assumed coverage of Citigroup Inc. stock with an Outperform rating and a price target of $85, noting that the overall environment on large-cap banks was constructive despite short-term volatility.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Citigroup Inc., down from 90 the preceding quarter worth $6.9 billion.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE:C) was one of them. Here is what the fund said:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 87
Bank of America Corporation is ranked first on our list of 10 stocks better than Coinbase Global, Inc.. The firm provides banking and financial products. It operates from North Carolina.
On September 13, investment advisory Odeon Capital upgraded Bank of America Corporation stock to Buy from Hold with a price target of $46.50, underlining the “sweeping restructuring of management” at the firm as a growth catalyst.
At the end of the first quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46 billion in Bank of America Corporation, down from 97 in the previous quarter worth $45 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
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