Goldman’s Blockchain Screen Stocks are Trouncing the S&P

• The rally in bitcoin (BTC-USD) has propelled related stocks to returns nearly four times greater than the broader market this year.

• Goldman Sachs ran a screen that returned 19 companies with exposure to the blockchain or cryptocurrency with a market cap above $1B.

• Those companies have outperformed the S&P 500 (SP500) (NYSEARCA:SPY) by 34 percentage points, up 46% vs. 12%.

“On average, these stocks have dramatically outperformed the S&P 500 during the last several months alongside the surge in the price of Bitcoin,” strategists including Ben Snider and David Kostin wrote in a note. “An equal-weighted portfolio of the stocks has demonstrated roughly 60% correlations with Bitcoin and the Bloomberg Galaxy Crypto Index during the last several months, compared with 20% correlations for the S&P 500.”

The stocks identified are: Marathon Digital Holdings (NASDAQ:MARA), Riot Blockchain (NASDAQ:RIOT), MicroStrategy (NASDAQ:MSTR), Silvergate Capital (NYSE:SI), Square (NYSE:SQ), PayPal (NASDAQ:PYPL), Overstock.com (NASDAQ:OSTK), Nvidia (NASDAQ:NVDA), InvestView (OTCQB:INVU), Ideanomics (NASDAQ:IDEX), Tesla (NASDAQ:TSLA), JPMorgan Chase (NYSE:JPM), Visa (NYSE:V), Bank of New York Mellon (NYSE:BK), Facebook (NASDAQ:FB), Mastercard (NYSE:MA), Broadridge Financial (NYSE:BR), IBM (NYSE:IBM) and Coinbase (NASDAQ:COIN).

To screen for the stocks, Goldman used:

1. A text search for relevant keywords in company filings, earnings filings, presentations and news articles in the last 12 months and company descriptions from Bloomberg and FactSet.
2. Regression betas for share prices to Bitcoin.
3. Membership in third-party blockchain and crypto indexes and ETFs.

Tesla talked up bitcoin potential on its conference call yesterday.

By: Kim Khan, SA News Editor