Three “Blockchain Breakout Stars”

What is Matt McCall pitching as "the 'safe' way to profit from the bitcoin bonanza?"

By Travis Johnson, Stock Gumshoe, December 6, 2017

Pretty much every newsletter publisher is trying to ride on the “bitcoin mania” with new products and new ads, so this is “bitcoin week” (or “blockchain week”, if you prefer) here at Stock Gumshoe, as we try to ID all of the cryptocurrency investments being hinted at by the latest waves of teaser ads…

… and now it’s Matt McCall’s turn — he’s selling his newsletter now with a pitch that he has “the ‘safe’ way to profit from the bitcoin bonanza.” Sounds nice, right?

McCall’s service is published by Investorplace and called NexGen Profit Multiplier… it’s mostly a short term trading advisory, it appears, he says on his order form that “we will use ETFs, short-term stock positions and quick-hit options to profit from these trends” … and, like most short-term trading services, it’s relatively expensive (“on sale” for $495/yr) — publishers know that they have a better chance of keeping traders happy if their subscriber list is relatively small, particularly if they’re trading things like options where the pricing is apt to swing wildly if even a couple hundred people try to trade the same contract at the same time, and the best way to keep a membership list small is to charge more for it (or to have terrible performance, of course — that usually keeps a list pretty small, too).

McCall, assuming it’s the same guy, also used to run something called FUTR Stocks that appears to no longer be published by Investorplace, and has a couple other “NexGen” services at the same publisher, we haven’t received any feedback on those yet and I don’t know what his track record is.

But, like pretty much everyone with even a hint of a “growth” bone in his body, McCall is revved up about bitcoin and blockchain… and the headline on his order form sums it up pretty well:

“The Blockchain Breakout is Set to Hit $2.3 Billion…

Are you ready to bank as much as 693.95% in profits?”

Gosh, no, I’m not ready. That sounds like too much. Could I have smaller profits, please?

Kidding, of course.

That 693.95% profits number comes from the track record of his “Blockchain Breakout Star #1” stock… which might mean that you can guess it right now, without going any further.

No? OK, let’s check the clues he drops. I’m assuming that you’d rather learn about these stocks on your own, do a bit of research, and then make a decision about whether or not to send Matt McCall $495, yes? Good call.

OK then. The clues…

“One blockchain leader is marching to $200 per share – Blockchain Breakout Star #1…

“Any time someone wants to process data or make a transaction on this ledger, they have to use a computer. That computer has to solve a mathematical equation every time it adds to the ledger….

“These equations need to be processed by a very powerful computer to be successful – computers generally selling for over $3,000 apiece.

“So, any company making powerful computer chips is going to be leading the pack in this industry….

“This company is uniquely positioned to take advantage of the boom in blockchain technology as it hits the mainstream.”

Sound like you might have an inkling which company he’s talking about? You’re probably right. A few more clues…

“It’s not just the blockchain: they are a stellar company on Wall Street….

” it’s more than just a great choice for a coming tech trend. They’re also a company that is doing very well… and so are its shareholders.

“In the last two years alone, their stock has shot up an astounding 693.95%.

“And just when you think you’ve missed the boom from this stock: experts are predicting that they will soon rise well north of $200 a share.”

He even includes a handy little chart showing that 693.95% gain… so yes, the Thinkolator can confirm that this first stock is indeed everyone’s favorite momentum tech stock, NVIDIA (NVDA). I own shares of this one, though not primarily because of bitcoin or blockchain, NVIDIA’s biggest business is indeed GPU chips for high-end video gaming (and crypto mining), their biggest growth comes from higher-end chipsets that are used for artificial intelligence processing and data centers and self-driving cars.

NVIDIA has soared because they have a finger in so many different “hot trend” investment areas, and have real and growing businesses in all those areas, but it’s important to note that it has, indeed, soared — the stock trades at 42X forward earnings and almost 30X 2020 earnings forecasts. It’s profitable and growing, but you’re surely paying for that growth.

I found it tough to buy at half this price and backed cautiously into a position using call options, so I might not be the best person to listen to on this one… it’s a fantastic company at a frightening valuation, and it can certainly do great still if they grow faster than analysts expect, but expectations are now a lot higher than they were a couple years ago.

So that’s one checked off, and it’s pretty much the same stock that everyone mentions first whenever bitcoin comes up as a topic… how about another?

Here are the clues for the next one:

“A $2.3 Trillion market nobody is talking about – Blockchain Breakout Star #2

“Our second pick might be in the most boring application… but sometimes, huge profits can be gained in boring industries.

“Blockchain Breakout Star #2 has been working with two French banks on a pilot program for their own blockchain network.

“The goal? Recording the details of bilateral repurchase – or “repo” – agreements.

“What are repos? They are a short-term loan where the borrower will sell some stocks or bonds to an investor and agrees to buy them back later. In this case, there is no middleman – the two parties will settle the transaction themselves, rather than work through a third-party.
Using blockchain technology to process these transactions offer several key benefits that would simplify a repo agreement….”

Finally we get to one that’s new to me — this is Broadridge Financial Solutions (BR), the brokerage services company that was spun out of giant ADP about ten years ago. I can’t say that I’ve ever looked at this company in any detail, but they’re behind a lot of mail that most investors get — those proxy voting statements, official announcements from brokers, etc… here’s how they describe themselves:

“Since becoming independent in 2007, we have grown into a global fintech company with over $8 billion market capitalization and are recognized as an invaluable partner for the world’s leading companies and financial institutions. We help drive business transformation for our clients with solutions for enriching client engagement, navigating risk, optimizing efficiency and generating revenue growth. We handle millions of trades a day involving trillions of dollars, support communications that reach 75% of North American households and manage shareholder voting in 90 countries.”

You can get a pretty good idea of the scope of the business from their latest Investor Day Presentation here — and yes, they did do that pilot project with some French banks to use a private blockchain for repo transactions, though I’d assume that’s really still in the “R&D” category. Tthey do mention blockchain from time to time, but it’s not a critical part of the current business… indeed, it’s blockchain is probably as much a threat to “middleman” businesses like Broadridge as it is a benefit, which is probably why they’re making an effort to lead in blockchain testing with their large financial clients.

Banks and brokerages want very much to be out in front when it comes to blockchain, not competing with fintech startups or with existing blockchain “tokens,” and that a great many of those “tokens” from ICOs might just end up funding a development team that itself gets bought by a large financial firm, with no profit to be had for the token-holders (since from what I can tell, holding one of these crypto coins, in most cases, gives you no ownership over the company that created it… though some of them do provide some exposure to the business).

So that might be an interesting financial “insider” to dabble in, I suppose, though blockchain isn’t going to have a meaningful impact on their revenue or earnings next year. Broadridge is a high quality company, with decent revenue growth and very good earnings growth and strong margins, and they have an excellent client base covering much of the mainstream financial world… but, of course, they’re expensive to reflect that high quality business, trading at a trailing PE of 30.

Broadridge is aiming for 5-7% annual revenue growth and 9-13% earnings per share growth over the next three years, which is great for a large and fairly stable company, and analysts are estimating a huge earnings pop of 20% next year (followed by 7-8% growth in future years), so that may be worth owning for a high-quality company… but at 24X forward earnings you’re paying for that growth, and you’re probably hoping that BR will surprise on the upside a bit, as they did last quarter.

So… this is one of the more rational financial services companies I’ve seen teased as “bitcoin plays” — it’s not really a blockchain play at the moment, of course, but one never knows what the future holds, and it is a decent and growing company with a valuation that’s just a bit optimistic… we won’t hold it against them that they aren’t really a “blockchain breakthrough” company right now.

There are some risks, I’m sure, Broadridge is and “old economy” financial information and transaction processing firm, what we would have called a “document management” company before people started to pretend that we don’t use documents anymore… so they could be upset by lots of fintech breakthroughs (not just blockchain), but financial services firms are highly regulated and risk-averse, so the sober and reliable partner often gets the nod even if there’s something shinier coming down the pike. I’m talking myself into liking this one a little bit, particularly given the regulatory changes coming through (change always means more consultants and more money for service providers, in my experience, even if the change is putatively to “less regulation”), though I’m still new to Broadridge so that’s just a preliminary settlement.

And we’ve got one more for you…

“Invest in all the blockchain leaders – Blockchain Breakout Star #3

“If you haven’t figured out yet, the blockchain industry is moving at lightning speed.

“Bitcoin – the first application of blockchain – didn’t even exist 10 years ago, and now it’s one of the hottest sectors on Wall Street.

“And while our first two blockchain picks are proven winners… there are going to be more.

“Opportunities are going to pop up all over the place: in health care, in IT, even in sports.

“With Blockchain Breakout Star #3, you won’t miss out on any opportunities.”

Jeez, we can buy them all? Where, Matt!?

More clues…

“This third pick is an actively managed fund focused on companies well-positioned to take advantage of new technology and innovation… including blockchains.

“Right now, they are holding 54 stocks all focusing on major tech and industry trends.

“But an ETF is only as good as the stocks that they pick, right?

“Well, they have one blockchain pick in their basket that has tripled this year alone. In fact, all but one of their current top 10 individual holdings is up at least 30% this year.

“The fund itself is up a very healthy 81.46% in the past 12 months”

This is almost certainly the Ark Innovation ETF (ARKK), which matches the chart in the teaser pitch quite perfectly… though the similar Ark Web X.0 ETF (ARKW) is quite similar.

Ark Innovation is an actively managed ETF, which I’m not crazy about — ETFs that follow a manager’s opinions don’t make sense to me, better to have a closed-end fund or mutual fund if you’re going to evaluate specific companies on their merits instead of just weight a sector by your quantitative rules and rebalance periodically. But it has certainly done well, partly because it has a large position in the sometimes-wildly-overvalued Bitcoin Investment Trust (GBTC, 6.4% of the portfolio as of yesterday), and holds plenty of other rapid-growth stocks (Tesla, Stratasys, Twitter, and athenahealth round out the top five).

So this one might be interesting to watch, but that’s a pretty esoteric collection of technology-related stocks, including several biotechs in the top ten, and I have no idea what their skill will be at picking stocks in the future — and it’s also hard to know what to compare them to. Here’s a 3-year chart of the two ARK funds compared to the Nasdaq index (QQQ) and the semiconductor index ETF (SMH), for whatever that’s worth (ARKW is green, ARKK is blue):

It’s generally dangerous to chase performance in mutual funds — most active managers come back to earth after a lucky streak, and ARKK and ARKW have clearly gotten a boost from bitcoin itself with their large GBTC positions, as well as from other volatile stocks like Tesla, so I’d expect a bumpy ride. If you do decide you want a taste of this one, I’d make sure to read up on it a bit and make sure you understand the portfolio management strategy and feel comfortable with their active management.

And we’re out of time for today, dear readers, so I’ll pass it back to you — do any of these “blockchain breakout stars” catch your fancy? Have other favorites to share with the class? Let us know with a comment below. Thanks for reading!


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31 Comments on "Three “Blockchain Breakout Stars”"

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Deborah
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Deborah

I just bought some Ripple because Ben Bernacke is in on it and he hates to lose moeny. It is a REAL business a platform for money to move in real time as well as all the crypto currencies. It actually has a physical establishment. To date many big banks have signed on. It’s a risk but the projections by those in the know about crypto’s say is is the real deal. Picks and Shovel type of thing. Its about $.25 right now I bought it below 15 cents. Take a look at that one perhaps for us[me actually] lol

Cita Fontimayor
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0
Cita Fontimayor

Where to buy?

Investing123
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0
Investing123

what is the correct ticker symbol please..

beanloop
Irregular
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beanloop

XRP

SergeE
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0
SergeE

Looks like it is XRP with possibility of buying using US$ through Kraken. Check out this article from NASDAQ : http://www.nasdaq.com/article/this-020-cryptocurrency-is-set-to-soar-by-december-2018-cm853317

taipalag
Irregular
3
taipalag

Yep, you can buy Ripple on Kraken. It’s trading engine is currently buggy as hell, though.

socr
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socr
Kraken has a big problem ,very slow often interupted needs urgent upscaling ,lost the oppertunity to get into coins that went up huge because of that inefficient exchange ,they say they are working on it but in the meantime I missed a tenbagger,there is also the problem that not many altcoins are available with kraken they need to increase the amount of different intresting altcoins too;It’s better to at least diversify into more exchanges. Ripple is not doing much lately there are to many coins to make it breakout,most altcoin investors are not keen on XRP because it’s centralized,maybe in… Read more »
Stuart
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0
Stuart

Bitstamp trades in XRP as well…

fatboy2281
Irregular
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fatboy2281

where and how?

martinc
Irregular
14
martinc
There’s a lot of talk in forums about XRP’s Total supply of 99.9 billion, with 38 billion in circulation. It currently has a market cap of 8.8 billion. For Ripple to reach $2 it would need a market cap of 77 billion or an increase of 775%. Bitcoin has a current market cap of 245 billion, so it’s certainly doable. As an example, Apple at the time of writing has a market cap of 867 billion. Cyrpto currencies are going crazy and it’s easy to get left behind. If you’re into buying and holding (2-5 years), I don’t think you… Read more »
Createwealth
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Createwealth

Like, Power, Miota, Qash, SALT, and my number 1 pick is Cardano

taipalag
Irregular
3
taipalag

EOS is my favorite pick for the next half year, it’s an Ethereum rival by Dan Larimer, which previously created Steem and BitShares.

xmBill
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xmBill

Good list of Alt-Coins you are suggesting. I have most of them, also.

fatboy2281
Irregular
17
fatboy2281

how do you get them?

jonah_in_the_whale
Irregular
0
jonah_in_the_whale

I thought Ripple was a cheap wine, occasionally mentioned on Sanford & Son TV series

Stuart
Guest
0
Stuart

Yes, Fred and Bubba would be all over Ripple and would accept it as payment at the Sanford Arms Hotel…lol.

beanloop
Irregular
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beanloop

Ripple is XRP

LoserBoy
Guest
0
LoserBoy
Wow – Watched as stocks, bonds and crypto’s marched to Valhalla over dead and dying wretched putrid gold bugs. Left behind, fighting last century’s war, all rules been changed (if ever were any other then financial cartel will ALWAYS come out on top unless nuclear armageddon blows us all to kingdom come). Be careful – all ye who tread with wide grins and smiles. Spend your money now, wine, women and song. Spend it before it is ripped out of your greedy hands by the gubbermint boys and their minions of lawyers, regulators, and swine, and/or the fat pigs who… Read more »
elroy
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elroy

bought 1.0 btc @4,2880 in sept. now 12,150 sorry I did not buy 1,000,000

Altaf
Guest
0

No way to buy 1m units of BTC

SoGiAm
Irregular
9630

21 million Bitcoins
In fact, there are only 21 million Bitcoins that can be mined in total. Once miners have unlocked this many Bitcoins, the planet’s supply will essentially be tapped out, unless Bitcoin’s protocol is changed to allow for a larger supply.Jun 8, 2017
What Happens to Bitcoin After All 21 Million are Mined? | Investopedia
https://www.investopedia.com/news/what-happens-bitcoin-after-all-21-million-are-mined/

manfromjax
Irregular
11
manfromjax
Funny, I was in a Mitsubishi/Maserati shop today getting my car service. I met a guy who bought Bitcoin back when it was $300 and he had 15 coins. We had this same conversation about the 21million wall and what would happen. We didn’t know but I thought it would sell off. Any way in the same shop I meant a second bitcoin owner who said he had few bitcoin that he bought back in the beginning, but he didn’t say how many. So, I guess Maserati and bitcoin goes together. I have none, so my car was a simple… Read more »
fatboy2281
Irregular
17
fatboy2281

SoGiAm,
Where and how can you buy coins?

Michael R Elliott
Guest
0
Michael R Elliott

Great to havevthe overall info on the blockchain surge, but you’re covering USA stocks almost exclusively..what’s the chance of more Australian ASX coversge in this field…we kinda feel neglected..haha!

SoGiAm
Irregular
9630

$PGM.asx longer .155 in #OZ with #InterActive #Brokerz
$PIL.asx adding, also, with bid outstanding at .013 Best2AllAlwayz!
#ASX: http://www.asx.com.au/asx/markets/equityPrices.do? by=asxCodes&asxCodes=auz+clq+euc+jrv+ncz+pgm+arl+mei+cob+pil
https://www.stockgumshoe.com/2017/02/microblog-scandium-cobalt-and-water-purification-cleanteq-holdings/comment-page-14/#comment-4963094

Michael R Elliott
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0
Michael R Elliott

How about some info on Australian blockchain potentials pretty please?

SoGiAm
Irregular
9630

Michael, I have a suggestion: Please share some with the Gummunity and we shall attempt to solve. 🙂 #Best2YouAlwayz – Ben
You may wish to look at $PIL.asx #NIAIOADYODD

lekmek
Irregular
0
lekmek
Marc Pearsall
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Marc Pearsall

One blockchain company I have been invested in this year is BTL Group (Toronto exchange BTL.TSX) and it has done very well. Still a small company ($192M) but lots of good software and some impressive trial partners.

annelise
Irregular
0
annelise
There’s an ad that comes up in Rikkard’s Investor about a chip that is so small that 100 can fit on a dime, that this chip is going to allow the internet of things to really connect the world, and it is only made by one company that is still under the radar. The best I can come up with is that the chip in question is a low power integrated circuit. People have tried to effectively produce one of these for a while. A small company called Psikick makes such a thing and is associated with some influential investors,… Read more »
whoflung
Member
0
whoflung
I bought into a small company ACM.CN @0.54/shr It was on the verge of buying a block chain company.It halted and low&behold opened again after name change to BIG Blockchain Intelligence Group Inc. Symbol =BIGG.CN The shares opened Dec 5 at $1.45 and moved up to 2.70 in a day or two.There is alot of selling today and most likely for a few days because of millions of warrants at 0.35 They have raised $17-19M on there opening.I see it as,as long as the Bitcoin craze is performing,this stock should recover from its selling and continue over $3.00 This one’s… Read more »
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