We recently published an article titled Jim Cramer Thinks These 13 Stocks Will Benefit From the New Administration. In this article, we are going to take a look at where MicroStrategy Incorporated (NASDAQ:MSTR) stands against the stocks that will benefit from the new administration according to Jim Cramer.
Jim Cramer, the host of Mad Money, recently raised concerns about the current state of the market, particularly highlighting what he perceives as signs of “excess”. He also examined what he referred to as “Trump trades,” or stocks that Wall Street has been gravitating towards in anticipation of what President-elect Donald Trump’s administration might bring.
He pointed to private prison operators and oil service companies as examples of sectors benefiting from these expectations. Focusing on oil, Cramer noted that a number of smaller oil service stocks have surged this month. He pointed out:
“Now one of the few things that we know for certain about President-elect Trump’s economic agenda is that he wants our country to produce even more oil than it’s doing. His new pick for treasury secretary, that’s Scott Bessent, has advocated for the country to produce an incremental 3 million barrels of oil per day.”
READ ALSO Jim Cramer’s List of 7 Energy Stocks for the Trump Trade and Jim Cramer’s Game Plan: 13 Stocks in Focus
Cramer sees this as positive news for oil service companies involved in the extraction of resources. However, he also warned that this surge in production could exert downward pressure on oil and gas prices, much like what occurred in 2016. Despite this, Cramer highlighted that the major players in oil services have posted impressive gains in November, with some smaller operators making unexpected appearances on the list of the market’s hottest stocks. Shifting to the cryptocurrency market, Cramer addressed the significant rise in Bitcoin’s value. He noted:
“Now that rally is taking up practically the whole cryptocurrency ecosystem… Obviously, the gains in crypto, especially the Bitcoin ecosystem, seem excessive, but again, they aren’t without reason. We’re going from a Biden regime that was pretty antagonistic towards crypto to a second Trump administration that promised to be incredibly crypto-friendly.”
Cramer also pointed out that under the Biden administration, the government had been more paternalistic, aiming to regulate and control crypto, while Trump has promised a much more supportive stance towards Bitcoin. Cramer believes that a Trump administration that actively supports Bitcoin could lead to significant hoarding of the cryptocurrency, especially in the context of a strategic Bitcoin reserve.
This could benefit Bitcoin holders or “hodlers,” as they are often called in the crypto community. He also suggested that owning Bitcoin or an ETF that tracks its performance could serve as a hedge against potential inflation, particularly if the government continues to print money to address its deficit. Cramer voiced his own support for Bitcoin, saying, “call me in favor of owning Bitcoin,” and also recommended purchasing Ethereum, which he owns, despite it lagging behind Bitcoin in recent performance.
“I’m a believer, but these are hedges for me, and if you’re hoarding crypto, be ready for the breakdown no one thinks can come.”
Our Methodology
For this article, we compiled a list of 13 stocks that were discussed by Jim Cramer during a recent episode of Mad Money on November 25. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A software engineer wearing a headset, collaborating with a remote team on a project.
MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 25
At the time of writing on November 28, MicroStrategy Incorporated (NASDAQ:MSTR) stock was up 69.27% for November. Cramer remarked:
“Of course, MicroStrategy, a former software company that’s now pretty much a leveraged Bitcoin fund has shot up 65%.”
MicroStrategy (NASDAQ:MSTR) is a well-known provider of AI-driven enterprise analytics software and services. In addition to its core software business, the company has become increasingly recognized for its active role in Bitcoin development. Recently, the company has benefited from the surge in Bitcoin prices, which have risen by more than 30% since Election Day while the company stock has soared more than double that.
Michael Saylor, the company’s founder and executive chairman, has commented that the company stock has outperformed Bitcoin itself. According to Saylor, this outperformance is largely due to the company’s approach of leveraging its Bitcoin holdings to maximize returns. In line with its Bitcoin-focused strategy, the company has set an ambitious target of raising $42 billion in capital over the next three years.
This plan, referred to as the “21/21 Plan,” consists of $21 billion in equity and another $21 billion in fixed-income securities. Phong Le, MicroStrategy’s (NASDAQ:MSTR) President and CEO emphasized that the capital raised will primarily be used to acquire more Bitcoin, reinforcing its position as a “Bitcoin Treasury Company.” The goal is to continue building Bitcoin reserves in a manner that can optimize the company’s returns from these assets, thereby enhancing its overall performance.
Overall MSTR ranks 7th on Jim Cramer’s list of stocks that will benefit from the new administration. While we acknowledge the potential of MSTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
