In this article, we discuss the 11 best cryptocurrency stocks to buy according to hedge funds.
Over the past few years, hedge funds have been increasing their exposure to cryptocurrency. FTX, a cryptocurrency exchange platform, has an average of $10 billion of daily trading volume as of July 2021. Moreover, the exchange raised a record $900 million in Series B funding at an $18 billion valuation. Hedge Fund managers Paul Tudor Jones, Alan Howard, and Izzy Englander were among the participants in the funding. According to a report published by PWC, the total assets under management of global crypto hedge funds increased to $3.8 billion in 2020, up from $2 billion in 2019.
As Financial Times reported, with the decline in prices in the digital currency this June, the crypto funds lost 10%. However, the fluctuation in prices did not stop hedge funds to place bets on digital currencies. In August, cryptocurrency hedge funds gained 24% as the funds investing in digital assets delivered a solid 145% return to shareholders in 2021. Some of the notable cryptocurrency stocks hedge funds are investing in include Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), Square, Inc. (NYSE:SQ), NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Tesla, Inc. (NASDAQ:TSLA).
Our Methodology:
Let’s analyze our list of the best cryptocurrency stocks to buy according to hedge funds. The companies mentioned below are involved in the crypto space through mining, crypto projects, development and investing in digital assets.
These are the most popular crypto stocks among the 873 elite funds tracked by Insider Monkey.
Why pay attention to hedge fund sentiment while choosing stocks?
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 S&P 500 ETF (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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11 Best Cryptocurrency Stocks To Buy According To Hedge Funds
11. Hut 8 Mining Corp. (NASDAQ:HUT)
Number of Hedge Fund Holders: 4
Hut 8 Mining Corp. (NASDAQ:HUT) is a Canadian digital asset miner with a special focus on Ethereum and Bitcoin mining. In September, the company reported 264 mined bitcoins, with an average production rate of 9.11 bitcoin per day. Hut 8 Mining Corp. (NASDAQ:HUT) stands eleventh on our list of the best cryptocurrency stocks to buy according to hedge funds.
In October, DA Davidson named Hut 8 Mining Corp. (NASDAQ:HUT) as its top pick in mining space, expecting rapid production in the coming years. The firm initiated its coverage of Hut 8 Mining Corp. (NASDAQ:HUT) with a Buy rating and a $20 price target. In Q2 2021, the company reported revenue of $33.5 million, showcasing a 264.4% year-over-year growth. At the end of the quarter, Hut 8 Mining Corp. (NASDAQ:HUT) had 3,824 bitcoins, valued at $166 million. The stock gained 1,351% in the past year.
As of Q2 2021, 4 hedge funds tracked by Insider Monkey reported having stakes in Hut 8 Mining Corp. (NASDAQ:HUT), worth over $2 million. There were no hedge fund positions in the company in the previous quarter.
10. Riot Blockchain, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 17
An American bitcoin mining company, Riot Blockchain, Inc. (NASDAQ:RIOT) increased its bitcoin production by 346% in September 2021 at 406 BTC, compared with the last year. The company also reported solid results in Q2, with GAAP EPS beating the market estimates by $0.19, at $0.22. Riot Blockchain, Inc. (NASDAQ:RIOT) ranks tenth on our list of the best cryptocurrency stocks to buy according to hedge funds.
Ken Griffin’s Citadel Investment Group is the largest shareholder of Riot Blockchain, Inc. (NASDAQ:RIOT) with over 2.7 million shares. Overall, 17 hedge funds tracked by Insider Monkey were bullish on the company in Q2, up from 12 in the previous quarter. These stakes are valued at $100.7 million.
In October, Compass Point upgraded Riot Blockchain, Inc. (NASDAQ:RIOT) to Buy with a $45 price target. The stock has delivered a stunning 803.3% return to shareholders in the past year.
Like Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), Square, Inc. (NYSE:SQ), NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Tesla, Inc. (NASDAQ:TSLA), Riot Blockchain, Inc. (NASDAQ:RIOT) is also favored by investors in 2021.
9. Marathon Digital Holdings, Inc. (NASDAQ:MARA)
Number of Hedge Fund Holders: 19
Marathon Digital Holdings, Inc. (NASDAQ:MARA) has been gaining hedge funds’ attention as the number of hedge funds tracked by Insider Monkey having stakes in the company stood at 19 in Q2, valued at $108.8 million. In the previous quarter, 10 hedge funds had positions in the company. Marathon Digital Holdings, Inc. (NASDAQ:MARA) stands ninth on our list of the best cryptocurrency stocks to buy according to hedge funds.
A bitcoin miner, Marathon Digital Holdings, Inc. (NASDAQ:MARA) reported a 91% quarter-over-quarter growth in mined bitcoins at 1,252, valued at $336.3 million, in Q2. In October, DA Davidson initiated its coverage on Marathon Digital Holdings, Inc. (NASDAQ:MARA) with a Buy rating and a $65 price target, highlighting the company’s unique position in crypto mining. Marathon Digital Holdings, Inc. (NASDAQ:MARA) delivered a 2,098% return to shareholders in the past year.
8. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 49
Coinbase Global, Inc. (NASDAQ:COIN), a cryptocurrency exchange platform, went public in April 2021, valued at $85.8 billion. The stock gained 24.02% in the past month.
Recently, Coinbase Global, Inc. (NASDAQ:COIN) has announced its move into the non-fungible token (NFT) space to make the mining purchase easier. In October, JMP Securities lifted its price target on Coinbase Global, Inc. (NASDAQ:COIN) to $330, while keeping an Outperform rating on the shares.
At the end of Q2, ARK Investment Management is the leading shareholder of Coinbase Global, Inc. (NASDAQ:COIN), with shares worth $1.4 billion. Overall, 49 hedge funds tracked by Insider Monkey reported having stakes in the company, valued at over $2.9 billion. There were no hedge fund positions in the company in previous quarters.
Miller Value Partners mentioned Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2021 investor letter. Here is what the firm has to say:
“Coinbase (COIN) became a public company in mid-April following their direct listing at a reference price of $250. Coinbase is a cryptocurrency exchange that allows consumers, financial institutions and businesses to transact between fiat and cryptocurrencies and securely store and use cryptocurrencies. We believe over the long term the company has the potential to be the leading technology platform in the growing cryptocurrency space.
COIN’s 2021 revenues are expected to be 4.5x its 2020 revenues as crypto prices and volumes have exploded. It trades at 30x this year’s earnings, which is quite a steal for a quickly growing company in this market. That’s because the market believes this is peak cycle revenues and earnings, and retail margins will be pressured. That all very well may be true, but we see significant potential for the business over the long term as the nascent industry continues to grow and COIN cements it’s position as the leading platform.”
7. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA), an electric vehicle manufacturer, has always been a staunch supporter of digital currencies and started accepting them as payments in February 2021, when the company purchased $1.5 billion worth of bitcoin. However, due to environmental concerns surrounding mining, the company suspended bitcoins as a form of payment but has recently insinuated to resume the practice. Tesla, Inc. (NASDAQ:TSLA) ranks seventh on our list of the best cryptocurrency stocks to buy according to hedge funds.
At the end of Q2, ARK Investment Management is one of the leading shareholders of Tesla, Inc. (NASDAQ:TSLA), with shares worth $3.6 billion. In addition to this, 60 hedge funds tracked by Insider Monkey have positions in the company, compared with 62 in the previous quarter. These stakes are valued at over $9.2 billion.
Recently, Wedbush raised its price target on Tesla, Inc. (NASDAQ:TSLA) to $1,000, with an Outperform rating on the shares. The firm’s analyst Daniel Ives expects another solid quarter from the company as it managed to deliver over 241,000 units in September. Tesla, Inc. (NASDAQ:TSLA) gained 101.9% in the past year.
Like Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), Square, Inc. (NYSE:SQ), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA) is also one favored by investors in 2021.
Worm Capital LLC mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?
The way we see it, Tesla is perhaps the generational example of the marginal gain aggregation theory. It’s also been our largest position for several years now. There are many ways to characterize and value this business (see previous letters for longform write-ups), but perhaps the best way to think about the company is that it is a highly vertically-integrated software and hardware firm that’s devoted entirely to aggregating marginal gains across its organization. The goal? Lower costs, improve thruputs, and dramatically enhance the value proposition—at scale—for consumers…”
6. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Holders: 62
CME Group Inc. (NASDAQ:CME) is a financial derivatives exchange that offers trades in cryptocurrencies as well. In Q3 2021, the company reported a 14% year-over-year increase in its average daily volume (ADV) at 17.8 million contracts. CME Group Inc. (NASDAQ:CME) stands sixth on our list of the best cryptocurrency stocks to buy according to hedge funds.
In October, Piper Sandler lifted its price target on CME Group Inc. (NASDAQ:CME) to $230, with an Overweight rating on the shares. Since the beginning of the year, CME Group Inc. (NASDAQ:CME) delivered a 19.13% return to shareholders, while the stock gained 30.9% in the past year.
Of the 873 elite funds tracked by Insider Monkey, 62 hedge funds reported having stakes in CME Group Inc. (NASDAQ:CME) in Q2, up from 60 in the previous quarter. The total value of these stakes is over $2.64 billion.
Cooper Investors mentioned CME Group Inc. (NASDAQ:CME) in its Q1 2021 investor letter. Here is what the firm has to say:
“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. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hegde Fund Holders: 63
Advanced Micro Devices, Inc. (NASDAQ:AMD) stands fifth on our list of the best cryptocurrency stocks to buy according to hedge funds. The company makes CPUs and GPUs which are used for bitcoin mining. In June, Advanced Micro Devices, Inc. (NASDAQ:AMD) underperformed as China sharpened its crackdown on crypto mining. However, the stock gained 26.14% in 2021 and 41.99% in the past year.
This October, Goldman Sachs called Advanced Micro Devices, Inc. (NASDAQ:AMD) as its best idea in the semiconductor market and lifted its price target on the stock to $127, with a Buy rating on the shares. In Q2 2021, Advanced Micro Devices, Inc. (NASDAQ:AMD) posted an EPS of $0.63, beating the estimates by $0.09.
Ken Fisher’s Fisher Asset Management is one of the leading shareholders of Advanced Micro Devices, Inc. (NASDAQ:AMD), with shares worth $941 million. Overall, 63 hedge funds tracked by Insider Monkey reported having stakes in the company, valued at over $4.6 billion. In the previous quarter, 61 hedge funds had stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD).
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ:NVDA) reported solid earnings in Q2, with a record gaming revenue of $3.06 billion, up 85% from the prior-year quarter. The company posted an EPS of $1.04, beating the estimates by $0.02. NVIDIA Corporation (NASDAQ:NVDA) stands fourth on our list of the best cryptocurrency stocks to buy according to hedge funds.
Mainly a technology company, NVIDIA Corporation (NASDAQ:NVDA) develops processors that are used to mine cryptocurrencies. As of Q2, Aubrey Capital Management is the company’s largest shareholder, owning shares worth $11.2 billion. In addition to this, 86 hedge funds tracked by Insider Monkey were bullish on NVIDIA Corporation (NASDAQ:NVDA), valued at over $9 billion. In the previous quarter, 80 hedge funds had stakes in the company, highlighting a positive hedge fund sentiment.
Recently, KeyBanc lifted its price target on NVIDIA Corporation (NASDAQ:NVDA) to $260, with an Outperform rating on the shares. The stock is up 69.4% in 2021.
Harding Loevner mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2021 investor letter. Here is what the firm has to say:
“Within IT, shares of US-based computer chip developer NVIDIA continued their climb as rising demand across segments-from work-from-home laptops to data centers to cryptocurrency mining rigs-led to shortages that translated into surging prices for its chips. Such was the windfall that NVIDIA even made technical changes to some of its products to make them towards waht it believes are more sustainable uses. Less attractive to cryptocurrency miners, to steer scarce supply viewed by geography, the lion’s share of excess returns came from good stock performance in the US. In addition to the contributions from NVIDIA and our health care holdings, a pair of IT software and service providers also aided relative returns.”
3. Square, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 94
Earlier this year, Square, Inc. (NYSE:SQ) announced that it plans to develop bitcoin mining hardware as the company witnessed a surge in digital payments. Square, Inc. (NYSE:SQ) is a financial services and digital payments company that ranks third on our list of the best cryptocurrency stocks to buy according to hedge funds.
Recently, Atlantic Equities upgraded Square, Inc. (NYSE:SQ) to an Overweight rating with a $300 price target, highlighting the company’s future growth potential. In Q2 2021, the company posted an EPS of $0.66, beating the estimates by $0.35. Square, Inc. (NYSE:SQ) reported revenue of $4.6 billion, up 143% from the prior-year quarter.
Of the 873 elite funds tracked by Insider Monkey, 94 hedge funds have stakes in Square, Inc. (NYSE:SQ) in Q2, up from 92 in the previous quarter. The total value of these stakes is $10.2 billion.
RiverPark Funds mentioned Square, Inc. (NYSE:SQ) in its Q1 2021 investor letter. Here is what the firm has to say:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ:PYPL) is a financial services company that facilitates online money transfers and has recently allowed users to checkout with cryptocurrencies as well. The company stands second on our list of the best cryptocurrency stocks to buy according to hedge funds.
Since the beginning of the year, PayPal Holdings, Inc. (NASDAQ:PYPL) delivered a 17.15% return to shareholders, while the stock gained 34.5% in the past year. This September, DA Davidson lifted its price target on PayPal Holdings, Inc. (NASDAQ:PYPL) to $325, while keeping a Buy rating on the shares.
As of Q2 2021, Codex Capital is the leading shareholder of PayPal Holdings, Inc. (NASDAQ:PYPL), with shares worth $9.5 billion. In addition to this, 143 hedge funds tracked by Insider Monkey have stakes in the company in Q2, the same as in the previous quarter. These stakes are valued at $16.3 billion.
Wedgewood Partners mentioned PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2021 investor letter. Here is what the firm has to say:
“Top performance detractors for the first quarter include PayPal. PayPal reported +40% growth in total payment volume to $311 billion during the second quarter’s most recent report. In spite of this impressive growth, the stock detracted from performance as the market became overly concerned about the pace at which its legacy eBay business rolled off. Despite the stock’s premium valuation, we continue to hold PayPal as a core position and think eBay represents short-term noise in PayPal’s longer-term drive to become a “super-app” with payments at its core.”
1. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 156
Mastercard Incorporated (NYSE:MA) recently revealed a new deal in its crypto segment by acquiring CipherTrace, a cryptocurrency intelligence company, to ensure the security of digital payments. The company tops our list of the best cryptocurrency stocks to buy according to hedge funds.
On September 20, Mastercard Incorporated (NYSE:MA) announced a quarterly dividend of $0.44 per share, yielding 0.52%. The company has a track record of 7 years of dividend growth. In Q2, Mastercard Incorporated (NYSE:MA) posted an EPS of $1.95, beating the estimates by $0.20. This August, JPMorgan lifted its price target on the stock to $430, while keeping an Overweight rating on the shares.
In Q2 2021, the number of hedge funds tracked by Insider Monkey having stakes in Mastercard Incorporated (NYSE:MA) increased to 156, from 151 in the previous quarter. The total value of these stakes is over $17 billion.
Ensemble Capital mentioned Mastercard Incorporated (NYSE:MA) in its recently published Q3 2021 investor letter. Here is what the firm has to say:
“Mastercard: Mastercard’s role as a payment network has seen strong growth as the economic recovery around the world continues, and customers go back to more regular spending habits. Core spending growth of 38% against the highly impacted COVID affected quarter last year and 25% over 2019 levels are fueling revenue growth of 20%+ despite still depressed cross border fees, whose expected recovery from a resumption in travel, has been delayed by the Delta variant waves. In addition, a lot of news flow about potential rival small but fast-growing payment tech firms has dampened sentiment on the stock but we believe the bar is high for firms to compete instead of partnering with Mastercard to transact payments. The stock finished the quarter down 3% and is flat for the year.”
You can also take a look at 10 Best Cryptocurrencies to Invest in According to Hedge Fund Billionaires and 10 Biggest Cryptocurrency Predictions in 2021
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Disclosure. None. 11 Best Cryptocurrency Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.
