We recently compiled a list of the 20 Best Cryptocurrency Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where MicroStrategy Incorporated (NASDAQ:MSTR) stands against the other cryptocurrency stocks.
A Review of the Crypto World: Latest Updates
Crypto has emerged as a major political issue in the US with the campaigns for election going on. Head of Firmwide research Galaxy Digital Alex Thorn called August a rough and seasonally bad week for Bitcoin. He mentioned how eight out of the eleven prior Augusts witnessed the major coin trading down. However, political events have also played a role in the crypto landscape.
In Thorn’s opinion, most people view Trump’s victory as bullish for the crypto market. Trump who is now running for President brought the hopes of the crypto world higher by promising to deliver a plan to make the United States the ‘crypto capital of the planet’. Crypto became an even hotter topic as Kamala Haris simultaneously supported policies for the expansion of the industry. In the opinion of Thorn, most people view Trump’s victory as bullish for the crypto market. He predicts crypto will run quite higher if Trump ends up winning the election based on an anticipated easing of the regulations. On the other hand, he expects the victory of Harris to be more neutral even for the industry since those advising her belong to the Biden administration on crypto policy.
Looking forward to September which is a seasonally weak month for crypto too, the next months including October, November, and December are crypto’s most bullish months based on the seasonality factor. Regardless of the highly awaited Fed interest rate cuts just ahead of us, the crypto market investors still remain concerned as JPMorgan’s Head of Global and European Equity Strategy dismissed the potential of a crypto bull market. While September has been a historically worst month for US stocks, the upcoming rate cut might be an outlier in history.
In an interview with CNBC, Anthony Pompliano, Professional Capital Management CEO, talked about the recent price moves in Bitcoin. The German government offloading Bitcoin through as many exchanges and the Bitcoin exchange Mt. Gox unloading coins onto the market are two important events defining this supply. Pompliano refers to Bitcoin as really illiquid with many Bitcoin holders having a long-term view of it. At the start of 2024, the Bitcoin amount that had not moved in more than a year was over 70%. Some of it started to get distributed as prices rose, as expected in a bull market. Although Pompliano expects this percentage to drop to 50% to 55% but still at least half of the Bitcoin would still be in the hands of people who have an over 10-year time horizon. Thus, the question revolves around whether these hands are strong enough to outlast the aforementioned two events. Pompliano finally states time as the only catalyst for Bitcoin rather than a pro-crypto candidate in the upcoming US elections. While the summer season is a bit slow, prices typically go back up in September and beyond.
Our Methodology:
In order to compile a list of the 20 best cryptocurrency stocks to buy according to hedge funds, we sifted through ETFs and online rankings to compile a preliminary list of 40 companies involved in the crypto space. Moving on, we shortlisted the top 20 stocks from our list which had the highest number of hedge fund holders. The 20 best cryptocurrency stocks to buy according to hedge funds have been arranged in ascending order of the number of hedge fund holders they have, as of Q2 2024.
At Insider Monkey we are obsessed with 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).
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MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 26
MicroStrategy Incorporated (NASDAQ:MSTR) offers artificial intelligence-powered enterprise analytics software and services. The company claims to be the world’s first Bitcoin development company and focuses on the development of the Bitcoin network through activities in the financial markets, advocacy, and technology innovation. MicroStrategy’s Software Technology business remains its core revenue and cash flow generator.
As the largest corporate holder of Bitcoin, MicroStrategy remains focused on its Bitcoin development strategy. Simultaneously, the firm is benefitting from the growing global adoption of its cloud-powered BI and AI software. The firm reported strong double-digit growth in both subscription revenue and subscription billing during the year’s second quarter. The firm is also leveraging high-profile institutions and individuals showing interest in Bitcoin. A downside the company is facing is the product licenses and subscription services revenues declining by 5.7% year-over-year.
In the software business, MicroStrategy Incorporated (NASDAQ:MSTR) is positioned as the largest independent publicly traded business intelligence company globally. The growing subscription services revenue during the second quarter driven by both existing customer migrations to the cloud and new customer wins, is evidence of the performance of this business. With customers moving to the cloud to empower their AI-driven digital transformations, the firm expects to see a decline in product license revenues and support revenues which will be offset by the rise in subscription services revenues.
The dynamics of shifting upfront product license revenues to subscription services revenues as the company migrates customers to the cloud might reduce revenue in the short term but will ultimately lead to engaged customers utilizing the firm’s latest software, higher retention rates, and more durable and recurring cloud revenues. In short, MicroStrategy continues to champion Bitcoin as a strategic treasury reserve asset while laying out a clear growth trajectory for the future. As of Q2, the stock is held by 26 hedge funds. Citadel Investment Group was the top shareholder with a stake worth $1.9 billion.
Overall MSTR ranks 15th on our list of the best cryptocurrency stocks to buy according to hedge funds. While we acknowledge the potential of MSTR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.