- Amplify’s Mike Venuto manages an active exchange-traded fund that invests in firms developing blockchain technology.
- He shared his strategies for investing in miners, holding companies, and regional banks.
- Insider breaks down Venuto’s top 13 under-the-radar stocks that can surge thanks to the adoption of blockchain technologies.
When Mike Venuto first started investigating bitcoin in 2015, he believed cryptocurrencies could eventually kill the entire exchange-traded fund industry.
“When I started doing initial research, my first reaction was that this technology could replace ETFs,” the manager of the Amplify Transformational Data Sharing ETF (BLOK) told Insider in a recent interview. “It’s getting rid of a bunch of trusted third parties, and making things more decentralized and more efficient.”
An exchange-traded fund, or ETF, tracks a particular sector, strategy, or theme. BLOK actively manages around $1.1 billion assets and invests at least 80% of that into blockchain-related stocks. It has delivered annualized returns of 47% over the past three years, on a par with returns from the Dow Jones Industrial Average.
“We’re building a growth portfolio – we’re looking for blockchain catalysts,” Venuto told Insider. “But we’re also looking to avoid the dot-com bubble experience.”
During the early 2000s, the Nasdaq collapsed by nearly 80% as excessive speculation on newly-listed internet companies created a stock market bubble. Venuto prides himself on identifying under-the-radar stocks that can benefit from the widespread adoption of cryptocurrencies and blockchain technology.
“There are plenty of people who throw blockchain in their name but don’t have anything to do with blockchain,” he said. “We can spot the companies who aren’t properly financed, who don’t have everything set up, and we feel that this active management sets us apart from our competitors.”
“To use an American football analogy, when the market’s going up, it’s always easy to score touchdowns,” Venuto added. “But we’re really good at avoiding sacks.”
Venuto did concede that crypto price movements tend to impact the fund’s performance. Analysts are currently worried about a ‘crypto winter‘, with bitcoin trading just above the $40,000 level, a significant drop-off from its November all-time high of $69,000.
“We’ve had a very high correlation to the movements of cryptocurrency markets, and I can’t make that completely go away,” Venuto told Insider. “If we go into a crypto winter, we’re going to suffer.”
“But we won’t suffer quite as much, because we have a portfolio of companies with real earnings,” he added. “Lots of our companies actually project their earnings based on bitcoin’s price being $30,000.”
Stocks to buy
Venuto shared a list of 13 stocks with Insider, all of which are held by the ETF he manages. His stock picks included crypto miners and small, regional banks.
“We’re very excited about four bitcoin mining firms – they give us great exposure to bitcoin,” Venuto told Insider. “But we also invest in an ethereum miner as a diversifier, and one environmental bitcoin mining firm that listed very recently.”
“Using blockchain, smaller banks are now able to do things at better rates and way more quickly than the big money banks,” he added. “For the first time, tiny little regional banks that have been beaten up for years actually have a leg up on the technology used by the likes of Wells Fargo and Bank of America.”
Insider breaks down Venuto’s stock picks below. He said all 13 companies demonstrated the overall investing strategy of the BLOK ETF.
“We invest in firms who are using blockchain as a meaningful catalyst for growth,” Venuto said. “That means that we’re hoping to find the next big thing.”
