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Mint
5 days ago
- Business
- Mint
The hottest business strategy this summer is buying crypto
It's the hottest trade of the summer. Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. A Japanese hotel operator, a French semiconductor manufacturer, a Florida toy maker, a nail-salon chain, an electric-bike maker—they're all plowing cash into tokens, helping to send all kinds of digital currencies to record levels. News that a new company plans to buy crypto is enough to send its shares flying—spurring others to consider joining the frenzy. Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners, a crypto advisory firm. Nearly $86 billion has been raised for this purpose since the start of the year. That's more than double the amount of money raised in initial public offerings in the U.S. in 2025, according to Dealogic. Skeptics say the rush of companies buying crypto is a sign the market is overheating, noting that digital tokens, especially the obscure ones, are notoriously volatile and have uncertain futures. They scratch their heads about why an investor would buy shares of a company purchasing cryptocurrencies when they can buy them on their own through low-cost exchange-traded funds and other vehicles. Others note that many of these companies are worth much more than the cryptocurrencies they hold, as if investors are willing to pay $2 for a $1 bill. That hasn't stopped big-name bankers, investors and others from jumping in. Mutual-fund giant Capital Group, hedge fund D1 Capital Partners and investment bank Cantor Fitzgerald are among those backing recent efforts by companies to raise huge sums to purchase cryptocurrencies. Venture capitalist Peter Thiel's Founders Fund, Mike Novogratz's Galaxy Digital and other investors backed a move by a company called Bitmine Immersion Technologies to raise $250 million to buy ether. The company, worth $26 million on June 27, the Friday before its announcement, is now worth over $2 billion after a surge of more than 800%. Thiel, the tech billionaire known for starting PayPal and Palantir, holds a 9.1% stake in the company, according to a recent filing. He declined to comment. 'If you blink, you miss a couple of these deals," said Bob Diamond, the former Barclays chief executive. He should know. Last week, an investment firm Diamond co-founded called Atlas Merchant Capital said it was working with Paradigm, D1, Galaxy, 683 Capital and other big investors to form an entity that will spend $305 million to buy a seven-month-old crypto token called Hype. Diamond will be chairman of the new entity, while Eric Rosengren, the former president of the Boston Fed, is expected to be on its board of directors. 'We think Hype is pretty special," Diamond says. The new entrants are following in the footsteps of the company once known as MicroStrategy, whose CEO, Michael Saylor, pioneered the so-called crypto-treasury strategy in 2020. Now known simply as Strategy, it has spent years selling shares and debt to buy bitcoin. It is now worth over $115 billion, up 153% in the past year and 3,371% in the past five years. Saylor has long implored other companies to buy bitcoin with their excess cash. Most everyone ignored or scoffed at the notion. Using spare cash or raising money to buy volatile cryptocurrencies seemed a dicey proposition. Executives who run companies that sell products and services weren't supposed to speculate on bitcoin. As of last August, just a handful of companies were using their cash to buy any crypto. That all changed this year. President Trump has embraced crypto, vowing to make America the 'crypto capital of the planet." He has installed crypto-friendly cabinet members and Congress has advanced legislation that could make cryptocurrencies part of the mainstream financial system. Trump Media and Technology Group, the social-media firm controlled by the president's family, has also bought about $2 billion worth of bitcoin and related securities as part of its treasury strategy. Lately, companies have been taking things further than even Saylor suggested—buying overlooked or unknown digital currencies, not to diversify their holdings but to make outright wagers on risky tokens. Even Saylor is unsure that's a wise move. 'Applying a treasury strategy to other crypto assets introduces a different—and often speculative—risk profile," Saylor said in an email. 'I haven't seen a compelling rationale for doing so." Some bears are wading into the frenzy, including well-known short seller Jim Chanos, to bet against some of these companies. 'In my three decades experience I have never witnessed a period where investors are willing to pay such large premiums for assets they can readily purchase on their own," says Michael O'Rourke, chief market strategist at JonesTrading. Big companies, including tech giants Meta and Microsoft, have resisted the idea, as have their investors. Shareholder proposals at both companies sought to add bitcoin to their balance sheets at recent annual meetings, but were overwhelmingly voted down. Meta and Microsoft's boards of directors recommended voting against the proposals to invest in bitcoin. The companies that are taking the plunge are being transparent about their plans to raise cash and put it all in crypto. They argue that they can do things an ETF cannot, such as 'stake" tokens, or lock them up for a specified amount of time to earn a return. The companies can also borrow money to buy additional cryptocurrencies, something ETFs also can't do. Cryptocurrencies are volatile even in the best of times. If the price of a token plunges after a company has bet the farm, it could be left holding a worthless asset. Staking amplifies the risk, since it means an investor can't touch the locked-up tokens if they start to fall in value. And then there's the risk that investors sour on the strategy. Last week, Volcon, an electric-bike maker based in Austin, Texas, raised $500 million in just seven days to initiate its bitcoin treasury strategy, according to co-CEO Ryan Lane. Shares of Volcon jumped from $9.22 to more than $44 on the day of its announcement as speculators rushed to snap up the stock. Shares have fallen every day since, closing Friday at $13.40. Two weeks ago, French semiconductor manufacturer Sequans Communications raised $384 million from more than 40 institutional investors to buy bitcoin. The company's stock jumped 215% that week and peaked at $5.83 a share—but it's since fallen back down to $1.98. 'What happens in six, 12 or 18 months from now and instead of the current bull market, we have a bear market?" said Evgeny Gaevoy, the co-founder of crypto market-making firm Wintermute. 'A lot of low-effort crypto treasury companies will potentially crash and burn. And a lot of the retail investors that predominantly invested in them will be affected." Executives of some of the companies aren't waiting to see if their plans work out—they're dumping their personal shares after making the announcements, pocketing millions in the process. On June 16, for example, SRM Entertainment, a toy-and-souvenir manufacturer in Winter Park, Fla., with a market value of $25 million the Friday before, announced plans to spend $100 million on a cryptocurrency called Tron. The token purchase is part of a reverse merger between SRM and crypto entrepreneur Justin Sun's company, also called Tron. SRM's stock, which traded between 28 cents and $1.45 a share all year, shot up past $9. Over the next several days, the company's CEO, Richard Miller, and its chief financial officer, Douglas McKinnon, exercised previously issued stock options to buy a combined 600,000 shares at 56 cents a share, according to data from The Washington Service. They sold a combined $2 million or so of the newly acquired shares. A vice president of the company sold $941,000 worth of stock. Executives of the company, which has changed its name to Tron Inc. and rang the Nasdaq opening bell on Thursday, declined to comment. Lately, tiny companies are working with recognized names in finance to raise cash to buy crypto. Among them is Cantor Fitzgerald, run by Howard Lutnick before he became commerce secretary this year and passed the reins to his sons Brandon and Kyle Lutnick. Cantor last week said it would form a $5.3 billion bitcoin treasury company with Adam Back, an early cryptographer. It was Cantor's second multibillion-dollar crypto-treasury SPAC deal in less than three months. The firm also facilitated several other bitcoin treasury deals and acted as an adviser to Trump Media's plan to buy bitcoin. For now, many investors are scoring big profits betting on these deals, which remind some of the frenzied SPAC boom of the pandemic era, when established members of the financial world jumped on the wave. Fabio Giorno, an entrepreneur who operates a tutoring business in Toronto, says he has begun to invest in Bitmine and SharpLink Gaming, another ether-focused treasury stock. He's done well on the stocks, but says the volatility of the shares shakes him. 'Sometimes it's a little risky when you walk away from your computer, because you never know what's going to happen with the news," he said. Write to Gregory Zuckerman at and Vicky Ge Huang at
Bloomberg
5 days ago
- Business
- Bloomberg
Goldman Returns as ETF Lead Market Maker After Eight-Year Exit
Goldman Sachs Group Inc. is back in the lead market-making game for exchange-traded funds, after an eight-year hiatus, reviving its presence in a corner of finance now dominated by fast-moving trading firms. The Wall Street firm has taken on the lead market-maker role for the $34 million CG US Large Growth ETF (CGGG), launched by Capital Group in late June. It marks Goldman's first public step back into a US activity it largely exited in 2017. The move is in response to growing client demand, according to a person familiar with the matter who asked not to be identified. The firm declined to comment.
Yahoo
22-07-2025
- Business
- Yahoo
Factories, Data Centers Will Get A Boost From The 'One Big, Beautiful Bill'
The manufacturing sector is set to get a big boost from President Donald Trump's 'One Big, Beautiful Bill,' which is likely to spur new waves of investment, especially in sectors like AI and biotechnology. The sprawling budget bill introduces a series of tax deductions and credits for businesses, especially those that invest in research and development (R&D), AI buildouts, and domestic factory construction. 'Likely beneficiaries of the law include industrial machinery manufacturers, heating and ventilation system providers, pharmaceutical innovators, semiconductor companies and major technology firms,' wrote Matt Hochstetler, equity portfolio manager at Capital Group. Bigger Up-Front Tax Breaks to Create Cash Flow One of the bill's main provisions benefiting manufacturing is a change to how quickly companies can claim tax breaks on investments in equipment, facilities, and production lines. The bill now lets companies deduct 100% of their investment in 'qualified production property' in the year it's paid for instead of spreading the deduction over several years. 'This measure could become a powerful tailwind for free cash flow and spur fresh waves of investment across multiple sectors, assuming overall debt levels don't drive interest rates too high,' Hochstetler wrote. Because both the factory itself and the machinery inside can be deducted immediately, some analysts said this could incentivize companies to build more of their supply chains in the U.S. 'This 'reshoring super-deduction' dramatically lowers the after-tax cost of domestic investment. This should encourage the onshoring of supply chains and manufacturing capacity and create more jobs for Americans,' wrote Brownstone Research Senior Analyst Nick Rokke. AI Will Be A Big Winner The bill offers immediate deductions for investments made into research and development, including retroactively from 2022. The bill also boosts the tax credit for semiconductor production to 35% from 25% previously. Together, these changes could provide a boon for AI production in the U.S., especially amid a surge in data center construction by companies like Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Meta Platforms (META). 'With new data center costs reaching into the tens of billions of dollars, the short-term tax savings are enormous,' Rokke wrote. 'This change alone frees up billions in cash flow for the hyperscalers. And that cash will almost certainly be reinvested into even more compute infrastructure.' Smaller Factories Get a Leg Up Another provision that could benefit manufacturers is the restoration of deductions based on earnings before interest, taxes, depreciation, and amortization, or EBITDA. The Association of Manufacturing Technology (AMT) said this would allow for greater deductibility of interest expenses related to financing investments, acquisitions and expansions. The group also pointed to higher expensing limits for small businesses, which it said would allow for larger equipment purchases. 'This change dramatically increases the ability of small manufacturers to invest upfront in critical assets, leveling the playing field against larger competitors,' wrote Amber Thomas, AMT vice president of advocacy. An increase in the estate tax exemption is another benefit for small business owners, AMT pointed out. That provision could help family-owned manufacturing businesses pass on ownership without facing burdensome taxes. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
14-07-2025
- Business
- Yahoo
Anti-Bitcoin Vanguard Might Be the Largest Institutional Holder of MSTR Stock
Vanguard, the $10 trillion asset manager known in crypto circles for blocking client access to bitcoin ETFs, has emerged as the largest institutional shareholder of Strategy (MSTR), a company whose business model is built around buying and holding bitcoin. According to Bloomberg, Vanguard now owns more than 20 million shares of MSTR — over 8% of the company — surpassing Capital Group as the top institutional holder. The stake is worth about $9.26 billion. "God has a sense of humor," said Bloomberg analyst Eric Balchunas, who has also written The Bolge Effect. "Vanguard chose this life. When you have an index fund, you have to own all the stocks, for better or worse, and that includes stocks that you may not like or approve of personally." "Institutional dementia," said a somewhat less diplomatic Matthew Sigel, head of digital asset research at VanEck. 'Indexing into $9 billion of what you openly mock isn't strategy,' he wrote in a post on X. Vanguard's exposure comes from passively managed index funds, not a deliberate bet on bitcoin or Strategy's strategy. MSTR is included in several of Vanguard's funds, such as the Total Stock Market Index Fund (VITSX), the Vanguard Extended Market Index Fund (VIEIX) and the Vanguard Growth ETF (VUG). These funds mirror the composition of broad stock indices and automatically include companies like Strategy when they meet certain criteria. Strategy, led by executive chairman Michael Saylor, has converted itself into a bitcoin holding vehicle, acquiring more than 600,000 BTC worth now about $72 billion since 2020. The company's shares have become a proxy for bitcoin exposure, especially in the years before the U.S. approved spot bitcoin ETFs. Still, Vanguard remains opposed to the asset class. The firm has refused to offer clients access to bitcoin ETFs, even as competitors like BlackRock launched the wildly successful iShares Bitcoin Trust (IBIT), which became the fastest ETF to manage over $80 billion in assets. Even the arrival of supposedly crypto-friendly CEO Salim Ramji in May last year hasn't shifted the firm's position. 'I think it's important for firms to have consistency in terms of what they stand for and the products and services they offer,' Ramji said after his appointment.
Yahoo
02-07-2025
- Business
- Yahoo
What To Expect From the Stock Market in the Second Half of 2025
Stocks closed out the first half of 2025 trading at record highs after recovering from an April drop. Analysts generally expect the S&P 500 to remain rangebound this year, with high valuations limiting upside potential and economic resilience limiting downside risk. But international, Big Tech, and AI stocks could continue to outperform as investors increase exposure to corners of the market seen as relatively undervalued or fast-growing and investors, the first half of 2025 was a rollercoaster ride that ended happily. Market watchers think the rest of the year could look much the same. Stocks underwent one of their worst sell-offs in decades after President Donald Trump announced his 'Liberation Day' tariffs on April 2. That was followed a week later by one of their best days in decades when Trump paused those tariffs. In the end, the S&P 500 rose more than 10% over the second quarter, finishing the first half of the year at a record high. The rebound was aided by easing economic uncertainty. A preliminary trade deal with the U.K. and de-escalation with China boosted optimism that tariff rates will ultimately settle below their "Liberation Day" levels. Despite mounting fears of a growth slowdown and resurgent inflation, data throughout the second quarter suggested the labor market was resilient and tariffs were having only a modest impact on inflation. Taken together, investors now see reasons to hope that the Federal Reserve will resume interest rate cuts in the second half, which could further lift shares. Several banks have lifted their year-end S&P 500 targets in recent weeks, with many restoring estimates they slashed after "Liberation Day." The path ahead for stocks could turn largely on questions about trade. The clock is ticking for the White House to strike bilateral trade deals by July 9, when the 90-day tariff pause ends. Trump has hinted he's open to extending the deadline, which could keep businesses and Wall Street in an uncertain position for some time. "I expect stock markets to be noisy in the coming months, because many companies are frozen in place until they have more clarity on where global trade is headed," said Cheryl Frank, portfolio manager at Capital Group. Still, Frank said, noise and headline-driven volatility, like April's tariff rout, can create buying opportunities. "In periods of disruption, markets have tended to punish good companies as well as bad," she said. "A lot of companies will appear to be on sale." Historically high valuations may keep a lid on the S&P 500's gains in the second half, according to some market watchers. The S&P 500's price-to-earnings ratio rebounded sharply off April's lows and was recently near a cycle high. At the same time, earnings estimates have declined this year, though only to a degree that reflects expectations for a moderate slowdown. 'This tells me that markets are no longer priced for an adverse outcome,' wrote Jurrien Timmer, director of global macro at Fidelity's Global Asset Allocation Division. 'This matters, because the sunnier the market's expectations, the harder it is to beat them.' Higher valuations for stocks "will remain a psychological hurdle for some investors,' which could limit the market's upside potential, wrote JPMorgan analysts Dubravko Lakos-Bujas and Bhupinder Singh in a recent research note. High valuations themselves are rarely a reason stocks decline, say Lakos-Bujas and Singh; instead, they wrote, they set prices up to fall faster and further when things go awry. If stocks slip in the coming months, it will most likely be because the economy slows, according to Lakos-Bujas and Singh. Hard data like employment and consumer spending could deteriorate as the effects of tariffs, immigration crackdowns, and federal spending cuts take their toll. U.S. stocks have had a strong start to the year. International ones have done even better. Where's an investor to turn? The MSCI World ex. USA Index, which tracks large and mid-cap stocks in 22 non-American developed markets, more than tripled the S&P 500's 5.5% return through June. Yet despite their outperformance, international stocks remain inexpensive on a price-to-earnings basis compared to their U.S. counterparts. 'Attractive valuations may persuade investors to reallocate money away from the U.S. in their portfolios,' according to strategists at Charles Schwab. That could sap the U.S. market of some upside potential. Global stocks may also be helped by recent policy changes. Trump's insistence that allies rely less on U.S. security guarantees has led most European countries to boost defense and infrastructure spending. Japan late last year approved a 9% increase in defense spending. 'This move should spur more economic activity in those regions and potentially narrow the gap in global growth,' possibly drawing more interest from domestic and international investors, said Bernstein analysts. The Magnificent Seven stocks had a rough start to the year. They were first hammered by concerns about overspending on AI infrastructure and then by tariff fears. The Bloomberg Magnificent 7 Total Return Index inched up just 0.3% this year through June, while only three of the seven stocks finished the first half in the green. However, market watchers remain bullish on Big Tech, whose healthy balance sheets and cash flows should help them weather extreme uncertainty. 'We are Overweight Tech on the back of tariff de-escalation, along with the Big Beautiful Bill's support for investment spending and high-end consumption,' wrote JPMorgan analysts. Within Tech, the firm favors semiconductors, the Mag 7, and stocks tied to AI themes, including data center buildouts, power providers, and cybersecurity. There's room for retail investors to up their exposure to the Mag 7, according to Charles Schwab analysts Liz Ann Sonders and Kevin Gordon. The group's share of retail investor inflows has declined to multi-year lows this year, according to Sonders and Gordon's assessment of data from Vanda Research. 'It doesn't suggest the mega caps are under-owned entirely," they said. "But we wouldn't be surprised to see them make an attempt at reasserting their dominance in the second half." Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
