2. Square, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 98
Square, Inc. (NYSE:SQ) aims to achieve carbon neutrality by 2030. The company’s ‘Bitcoin Clean Energy Investment Initiative’ has committed $10 million to support companies that would aid the adoption of renewables within the bitcoin ecosystem.
Square, Inc. (NYSE:SQ) is the sixth-largest holding of ARK Investment Management and represents 3.52% of the hedge fund’s 13F portfolio as of Q3. The company earned $3.84 billion in revenue in Q3, up 26.7% from the prior-year quarter. Square, Inc. (NYSE:SQ), among other fintech companies, was recently appreciated by analysts as it has the ability to replace traditional credit card payments through its digital services.
As of Q3 2021, 98 hedge funds tracked by Insider Monkey reported owning an $8.8 billion worth of stake in Square, Inc. (NYSE:SQ). In the previous quarter, 94 hedge funds held stakes in the company. Along with ARK Investment Management, Lone Pine Capital was one of the largest shareholders of Square, Inc. (NYSE:SQ) in Q3, holding shares worth $1.3 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.”
