Zweig-DiMenna Quadruples Its Hut 8 (HUT) Position

Zweig-DiMenna disclosed in an SEC filing that it purchased 508,700 shares of Hut 8 during Q3 2025, bringing its post-trade holding to 707,000 shares with a market value of $24.61 million as of Sept. 30, 2025 (the position value rose roughly $20.92 million). The fund reports $1.43 billion in reportable U.S. equity assets across 94 positions, with Hut 8 representing 1.72% of its 13F AUM and falling outside the top five holdings. Hut 8, a vertically integrated Bitcoin miner and energy/data-center operator, traded at $42.43 on Dec. 5, 2025, with a $4.58 billion market cap, TTM revenue of $178.32 million and TTM net income of $205.76 million; shares benefited from AI and crypto tailwinds but remain exposed to Bitcoin volatility and recent price pullbacks.

Analysis

Market structure: Zweig-DiMenna’s sizable Q3 buy and HUT’s 57% YTD price move underscore a rotation into hybrid crypto/AI infrastructure plays; direct winners are integrated operators (HUT, AVGO/TSM indirectly via AI demand), losers are single-purpose Bitcoin miners and spot BTC longs if miner supply increases. Pricing power will bifurcate — operators that can sell steady power/data center contracts gain higher revenue multiple while pure miners face margin compression as hash price and energy costs reprice.

Risk assessment: Tail risks include a regulatory shock (US/foreign mining curtailment) that could erase >50% of HUT’s market value within 3 months, and an energy-supply shock (≥30% power cost increase) that compresses margins for 6–12 months. Short-term (days–weeks) sensitivity is dominated by BTC moves (±30% moves will likely move HUT >40%); medium (3–12 months) hinges on announced AI/data-center contracts and PPA terms; long-term (12–36 months) depends on sustainable non-BTC revenue mix reaching >20% of sales.

Trade implications: Tactical direct play — a controlled long in HUT to capture re-rating as AI revenue scales, sized 1–2% portfolio with 20% stop and 6–12 month target +50%. Pair trade — long HUT / short dollar-equivalent BTC futures to isolate infrastructure cash flow; rebalance monthly and unwind if HUT’s disclosed non-BTC revenue exceeds 20% TTM. Use 9–18 month call spreads (buy Jan‑2027 52.5/70 or similar) to express asymmetric upside while capping premium.

Contrarian angles: The market under-weights accounting distortions (TTM net income likely includes mark-to-market BTC gains) — strip crypto MtM and value HUT on recurring EBITDA; the sell-off on October BTC weakness may have over-penalized firms with credible energy/data contracts, creating mispricing. Historical analog: 2019 miners that pivoted to hosting/data-center services re-rated higher after two consecutive quarters of contracted revenue; unintended consequence — faster capex for AI can strain balance sheet if commodity cycles reverse.

Key Decisions for Investors

• Establish a 1–2% long position in HUT (HUT) sized as 1–2% of portfolio at market or on 10% dip; set an initial stop-loss 20% below entry and a profit target of +50% within 6–12 months, trim 50% at target.
• Implement a pair trade: go long $1 of HUT equity and short $1 of Bitcoin futures (or a liquid BTC ETF) to hedge crypto-price exposure; maintain for 6–12 months and unwind if HUT quarterly non-BTC revenue >20% of total or BTC moves ±40% from entry.
• Purchase a 9–18 month HUT call spread (example: buy Jan‑2027 calls at ~1.25x current price, sell ~1.6x) sized to 0.5% portfolio to cap premium while targeting 100%+ upside if AI re-rating occurs; consider selling near-term calls against existing stock if collected premium >3% monthly.
• Reduce exposure to pure-play Bitcoin miners by ~50% within 30 days and redeploy 1–2% into semiconductor/AI infrastructure leaders (AVGO, TSM) for durable secular AI demand; size each new overweight to 0.5–1% of portfolio.
• Conditioned trade: wait for HUT Q4/annual report (next 30–45 days) and commit incremental capital only if management discloses multi-year AI/data center contracts ≥$50M ARR or PPAs covering ≥60% of incremental power needs — these are binary catalysts that justify the re-rating.