Ryan Jacob, the internet fund manager who navigated the dot-com bust, shares two stock tips in the crypto space

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What does the dawning of the age of the internet in the late 1990s have to do with cryptocurrencies? Ask Ryan Jacob, chief investment officer of the Jacob Internet Fund JAMFX, -3.32%, whose five-star Morningstar-rated fund got its start in 1999 and survived the collapse the following year of the dot-com bubble.

“You have a new technology that people are still trying to grasp and don’t fully comprehend,” Jacob, also chairman of Jacob Funds, tells MarketWatch in a Monday interview. Still, there remains a big then-versus-now difference between the two.

“Cryptocurrency is really not driving the stock market today. The internet was driving the stock market in the late 1990s. We may get to that point, but we’re not there yet,” he said.

Jacob, whose funds look for companies with innovative technology and wide investment moats, says his approach to the crypto space features the same balance as its outlook on Chinese internet stocks in the early 2000s, seen as risky at the time. “We know we want the exposure, but we also want to be extra careful in terms of how much risk we introduce in the portfolios,” he said.

One play he likes is Voyager Digital VYGR, -11.87% VYGVF, -11.86%, a top holding in both the Internet Fund and Jacob Discovery Fund JMCGX, -2.82%. It is a small Canadian cryptocurrency broker with robust technology and an impressive management team. Its co-founder and chief executive, Steve Ehrlich, is a former E-Trade executive, while fellow co-founder Oscar Salazar was the founding architect and chief technology officer of ride-hailing technology group Uber UBER, -3.57%. Up over 2,000% in 2021, Voyager shares have gained 382% so far this year.

Another holding in those Jacob funds is Silvergate Capital SI, -1.69%, a specialty bank focused on the digital-currency business.

It is a “traditional bank that decided that the crypto market needed an exchange network that can handle a 24/7 asset,” said Jacob. The bank is known for its Silvergate Exchange Network, an instant settlement network. As the existing financial system has been slow on this front, it leaves smaller, more nimble players more able to cater to what is needed right now. Shares are up 68% this year so far, after a 367% gain in 2020.

Cryptos are a “dangerous playground to be playing in for sure … but it’s also an area where there are exciting companies that will benefit greatly from this and should be around for a long time or eventually acquired,” said Jacob.

Watching earnings and cryptos

Stocks DJIA, -0.68% SPX, -0.68% COMP, -0.91% are lower after Monday’s tech-driven tech selloff and investors brace for an earnings deluge this week. Stocks in Tokyo NIK, -1.97% tumbled 2% amid rising COVID-19 cases. Elsewhere, bitcoin BTCUSD, -0.98% continues to drift south, but dogecoin DOGEUSD, -17.00% is rising on “Doge Day” — a loosely organized effort to push to $1 the cryptocurrency that started as a joke.

Pharmaceutical giant Johnson & Johnson JNJ, +2.63% and cigarette maker Philip Morris PM, +2.44% reported forecast beating results, with streaming giant Netflix NFLX, -1.05% the big headliner after the close.

Read: The pandemic’s differing earnings effects will be on display with tech, airline reports

Shares of International Business Machines IBM, +4.15% are climbing after the tech giant topped Wall Street estimates and forecast a return to pre-COVID-19 growth levels.

Shares of United Airlines UAL, -8.70% are slumping after losing more than $1.3 billion at the start of the year, missing Wall Street forecasts, but the airline promised new international routes for countries open to travelers. That is, if they can find any, as the State Department is now warning Americans not to visit 80% of the world due to COVID-19 risks. India has just put its capital under a weeklong lockdown amid surging cases.

Canadian National CNI, -6.17% has confirmed a cash-and-stock bid valued at $33.7 billion to buy rival railway Kansas City Southern KSU, +15.79%, whose shares are soaring.

A tweet by Tesla TSLA, +0.75% Chief Executive Elon Musk appeared to boost shares of the electric-car maker in late trade. “Data logs recovered so far show Autopilot was not enabled & this car did not purchase FSD [Full Self-Driving],” he said on Twitter TWTR, -2.50%. Elsewhere, an article in China’s state-run Xinhua News Agency said Tesla needs to do more to win consumer trust, after a protest by a customer at an automobile show on Monday.

In what looks like a win for cannabis companies, the House of Representatives has passed a measure making it easier for cannabis-related businesses to access financial services.

Apple AAPL, -0.85% will host a virtual event on Tuesday — “Spring Loaded.” Analysts expecting the tech giant to roll out newer, faster iPads. Also, check out MarketWatch’s new quarterly review of Apple’s key metrics.

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