2) MicroStrategy Incorporated (NASDAQ:MSTR)
% Gain Over Past 6 Months: ~149.5%
Average Upside Potential: ~62.8%
Number of Hedge Fund Holders: 25
MicroStrategy Incorporated (NASDAQ:MSTR), doing business as Strategy, is the world’s first and largest Bitcoin treasury company. It adopted Bitcoin as its primary treasury reserve asset. The company’s business is providing and developing enterprise analytics software, which is focused on business intelligence tools and mobile apps. Analyst Dan Dolev from Mizuho Securities initiated coverage on shares of MicroStrategy Incorporated (NASDAQ:MSTR) with an “Outperform” rating and a price target of $515.
The analyst’s rating is backed by MicroStrategy Incorporated (NASDAQ:MSTR)’s potential to continue buying Bitcoin. The analyst expects the price of Bitcoin to rise over time, pushing the company’s value higher. Elsewhere, Mark Palmer, an analyst at Benchmark, believes that MicroStrategy Incorporated (NASDAQ:MSTR) is a top candidate to be added to the S&P 500 index when the next rebalancing occurs in June 2025. Notably, the stocks that are added to major indices like the S&P 500 get a boost as ETFs and MFs tracking the index need to buy their shares.
The company’s subscription-based cloud revenue can result in increasing the migration to cloud BI (business intelligence) platforms. Also, MicroStrategy Incorporated (NASDAQ:MSTR)’s focus on embedded analytics places it well to capture more enterprise customers. With firms increasing their software spending to improve decision-making, the company’s strong enterprise customer base can fuel software revenue growth. Greenlight Capital, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
