This Crypto Stock Fell 40% in Weeks but One Investor Has Revealed a New $4.7 Million Bet

On November 13, Montreal-based Formula Growth disclosed a new position in Galaxy Digital (NASDAQ:GLXY), acquiring 139,195 shares valued at approximately $4.71 million.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 13, Formula Growth established a new position in Galaxy Digital (NASDAQ:GLXY), purchasing 139,195 shares. The stake is valued at approximately $4.71 million at the end of the reporting period. The new holding represents approximately 1.67% of the fund’s approximately $281.08 million in reportable U.S. equity assets.

What Else to Know

Top five holdings after the filing:

• NASDAQ: SWIM: $7.53 million (2.7% of AUM)
• NYSE: JHX: $7.24 million (2.6% of AUM)
• NASDAQ: TEAM: $6.39 million (2.3% of AUM)
• NASDAQ: SSYS: $6.38 million (2.3% of AUM)
• NASDAQ: MU: $6.36 million (2.3% of AUM)

As of Friday, shares of Galaxy Digital were priced at $24, up just 2% over the past year and well underperforming the S&P 500, which is up 16.5% in the same period.

Company Overview

Company Snapshot

• Galaxy Digital offers digital asset trading, derivatives, structured products, lending, capital markets, M&A advisory, asset management, bitcoin mining, and validator services.
• The company generates revenue through trading fees, asset management, financing, advisory services, and technology solutions for digital assets and blockchain infrastructure.
• It serves institutional investors, corporations, and individuals seeking exposure to digital asset markets and blockchain technology solutions.

Galaxy Digital operates at scale in the digital asset and blockchain sector, leveraging a diversified platform across trading, asset management, and infrastructure solutions. The company combines financial expertise with technology innovation to address the evolving needs of institutional and corporate clients in the digital economy. Its integrated approach and broad product suite position it as a leading provider of financial services within the crypto and blockchain ecosystem.

Foolish Take

This portfolio typically keeps individual positions modest, with most top holdings clustered just above 2%, so at 1.67% of assets, this stake fits the pattern of a measured entry and not necessarily a high-confidence swing. That sizing matters because shares of Galaxy Digital have dropped nearly 40% from late October after the company announced a $1 billion exchangeable notes offering, reigniting familiar dilution concerns.

Yet the underlying business is throwing off real earnings. In the third quarter, Galaxy reported net income of $505 million and adjusted EBITDA of $629 million, driven by record trading activity and investment gains. The balance sheet remains liquid, with $1.9 billion in cash and stablecoins and total equity of $3.2 billion at quarter-end. Just as important, its Helios data center project is now fully funded, with up to $1 billion in anticipated annual revenue once all phases are delivered.

Ultimately, this likely isn’t a volatility trade. It is a bet that Galaxy’s diversified exposure to trading, asset management, and AI-linked infrastructure ultimately matters more than the noise created by one seemingly painful financing decision.

Glossary

Stake: The ownership interest or investment a person or entity holds in a company.
13F reportable assets: Securities holdings that institutional investment managers must disclose quarterly to the Securities and Exchange Commission (SEC) on Form 13F.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Quarterly average pricing: The average price of a security over a three-month reporting period.
Position size: The amount or value of a particular investment held within a portfolio.
Alpha: A measure of an investment's performance relative to a benchmark, indicating value added or subtracted by active management.
52-week high: The highest price at which a security has traded during the previous 12 months.
Capital markets: Financial markets where companies raise long-term funds through the issuance of stocks, bonds, or other securities.
M&A advisory: Services provided to companies involved in mergers and acquisitions, including strategy, valuation, and negotiation support.
Structured products: Pre-packaged investment strategies based on derivatives, designed to meet specific risk-return objectives.
Validator services: Support for blockchain networks by verifying transactions and maintaining network security, often earning rewards.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atlassian and Stratasys. The Motley Fool has a disclosure policy.