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Institutional Investment in Crypto: Top 10 Takeaways of 2019 – Coindesk

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This
post is part of CoinDesk’s 2019 Year in Review, a collection of 100+ op-eds,
interviews and takes on the state of blockchain and the world. Scott Army is
the founder and CEO of digital asset manager Vision Hill Group. The following
is a summary of the report:
An Institutional Take on the 2019/2020 Digital Asset Market”.

No. 1: There’s bitcoin, and then there’s everything else.

The
industry is currently segmented into two main categories: Bitcoin and
everything else. “Everything else” includes: Web3 innovation, Decentralized
Finance (“DeFi”), Decentralized Autonomous Organizations, smart contract
platforms, security tokens, digital identity, data privacy, gaming, enterprise
blockchain or distributed ledger technology, and much more.

Non-crypto natives are seldom aware that there are multiple blockchains. Bitcoin, by virtue of it being the first blockchain network brought into the mainstream and by being the largest digital asset by market capitalization, is often the first stop for many newcomers and likely will continue to be for the foreseeable future.

No. 2: Bitcoin is perhaps market beta, for now.

In traditional equity markets, beta is defined as a measure of volatility, or unsystematic risk an individual stock possesses relative to the systematic risk of the market as a whole.  The difficulty in defining “market beta” in a space like digital assets is that there is no consensus for a market proxy like the S&P 500 or Dow Jones.  Since the space is still very early in its development, and bitcoin has dominant market share (~68 percent at the time of writing), bitcoin is often viewed as the obvious choice for beta, despite the drawbacks of defining “market beta” as a single asset with idiosyncratic tendencies.

Bitcoin’s
size and its institutionalization (futures, options, custody, and clear
regulatory status as a commodity), have enabled it to be an attractive first
step for allocators looking to get exposure (both long and short) to the
digital asset market, suggesting that bitcoin is perhaps positioned to be digital
asset market beta, for now.

No. 3: Despite slow conversion, substantial progress was made on growing institutional investor interest in 2019.

Education,
education, education.  Blockchain
technology and digital assets represent an extraordinarily complex asset class
– one that requires a non-trivial time commitment to undergo a proper learning
curve. While handfuls of institutions have already started to invest in the
space, a very small amount of institutional capital has actually made it in
(relative to the broader institutional landscape), gauged by the size of the
asset class and the public market trading volumes. This has led many to
repeatedly ask: “when will the herd actually come?”

The reality is that
institutional investors are still learning – slowly getting comfortable – and
this process will continue to take time.  Despite educational progress through 2019, some
institutions are wondering if it’s too early to be investing in this space, and
whether they can potentially get involved in investing in digital assets in the
future and still generate positive returns, but in ways that are de-risked
relative to today.

Despite a few other
challenges imposed on larger institutional allocators with respect to investing
in digital assets, true believers inside these large organizations are
emerging, and the processes for forming a digital asset strategy are either
getting started or already underway. 

No. 4: Long simplicity, short complexity

Another trend we
observed emerge this year was a shift away from complexity and toward
simplicity. We saw significant growth in simple,
passive, low-cost structures to capture beta. With the lowest-friction investor
adoption focused on the largest liquid asset in the space – bitcoin – the
proliferation of single asset vehicles has increased.  These private vehicles are a result of
delayed approval of an official bitcoin ETF by the SEC.

In addition to the Grayscale
Bitcoin Trust
, other bitcoin-focused
products this year include the launch of Bakkt, the launch of Galaxy Digital’s two new
bitcoin funds
, Fidelity’s
bitcoin product rollout, TD Ameritrade’s bitcoin trading service on Nasdaq via its brokerage platform, 3iQ’s
recent favorable ruling for a bitcoin fund and Stone Ridge Asset Management’s recent SEC approval for its NYDIG Bitcoin Strategy Fund, based on cash-settled bitcoin
futures. 

We also observed a growing
institutional appetite for simpler hedge fund and venture fund structures. For
the last several years, many fundamental-focused crypto-native hedge funds
operated hybrid structures with the use of side-pockets that enabled a barbell
strategy approach to investing in both the public and private digital asset
markets.  These hedge funds tend to have
longer lock-up periods – typically two or three years – and low liquidity.
While this may be attractive from an opportunistic perspective, the reality is it’s
quite complicated from an institutional perspective for reporting purposes. 

No. 5: Active management’s been challenged, but differentiated sources of alpha are emerging.

For the year-to-date period ended Q3 2019, active managers were collectively up 30 percent on an absolute return basis according to our tracking of approximately 50 institutional-quality funds, compared to bitcoin being up 122 percent over the same time period. 

Bitcoin’s performance this year, particularly in Q2 2019, has made it clear that its parabolic ascents challenge the ability of active managers to outperform bitcoin during the windows they occur. Active managers generally need to justify the fees they charge investors by outperforming their benchmark(s), which are often beta proxies, yet at the same time they need to avoid imprudent risk behavior that can potentially have swift and sizable negative effects on their portfolios. 

Interestingly, active management performance from the beginning of 2018 consistently outperformed passively holding bitcoin (with the exception of “opportunistic” managers who also take advantage of yield and staking opportunities, as of May 2019). This is largely due to various risk management techniques used to mitigate the negative performance drawdowns experienced throughout the extended market sell-off in 2018.

Source: Vision Hill Group

Although 2019 has challenged the large-scale
success of these alpha strategies, they are nonetheless in the process of
proving themselves out through various market cycles, and we expect this to be
a growing theme in 2020.

No. 6: Token value accrual: Transitioning from subjective to objective

At the end of Q3 2019, according to dapp.com, there were 1,721 decentralized applications built on top of ethereum, with 604 of them actively used – more than any other blockchain. Ethereum also had 1.8 million total unique users, with just under 400,000 of them active – also more than any other blockchain. Yet, despite all this growing network activity, the value of ETH has remained largely flat throughout most of 2019 and is on track to end the year down approximately 10 percent at the time of writing (by comparison, BTC has nearly doubled in value over the same period). This begs the question: is ETH adequately capturing the economic value of the ethereum network’s activity, and DeFi in particular?

A new fundamental metric was introduced
earlier this year by Chris Burniske – the Network Value to Token
Value (“NVTV”) ratio – to ascertain whether the value of all assets anchored
into a platform can be greater than the value of the base platform’s asset.

The ETH NVTV ratio has steadily declined throughout the last few years. There are likely to be several reasons for this, but I think one theory summarizes it best: most applications and tokens built and issued atop ethereum may be parasitic. ETH token holders are paying for the security of all these applications and tokens, via the inflation rate that is currently given to the miners – dilution for ETH holders, but not for holders of ethereum-based tokens.

This is not a bullish or bearish
statement on ETH; rather it is an observation of early signs of network stack
value capture in the space.

No. 7: Money or not, software-powered collateral economies are here

Another trend we observed this year is a larger migration away from “cryptocurrencies” in an ideological currency (e.g., money/payment and a means of exchange) sense, and toward digital assets for financial applications and economic utility.  A form of economic utility that took the stage this year is the notion of software-powered collateral economies. People generally want to hold assets with disinflationary or deflationary supply curves, because part of their promise is that they should store value well.  Smart contracts enable us to program the characteristics of any asset, thus it is not irrational to assume that it’s only a matter of time until traditional collateral assets get digitized and put to economic use on blockchain networks. 

The
benefit of digital collateral is that it can be liquid and economically
productive in its nature while at the same time serving its primary purpose (to
collateralize another asset), yet without possessing the risks of traditional
rehypothecation. If assets can be allocated for multiple purposes
simultaneously, with the risks appropriately managed, we should see more
liquidity, lower cost of borrowing, and more effective allocation of capital in
ways the traditional world may not be able to compete with. 

No. 8: Network lifecycles: An established supply side meets a quiet but emerging demand side.

Supply side services in digital asset
networks are services provided by a third party to a decentralized network in
exchange for compensation allocated by that network. Examples include mining,
staking, validation, bonding, curation, node operation and more, done to help bootstrap
and grow these networks. Incentivizing the supply side is important in digital
assets to facilitate their growth early in their lifecycles, from initial fundraising
and distribution through the bootstrapping phase to eventual mainnet launches.

While there has been significant growth of this supply side of the equation in
2019 from funds, companies, and developers, the open question is how and when
demand for these services will pick up. Our view is that as developer
infrastructure continues to mature and activity begins to move “up the stack”
toward the application layer, more obvious manifestations of product-market fit
are likely to emerge with cleaner and simpler interfaces that will attract high
volumes of users in the process. In essence, it is important to build the
necessary infrastructure first (the supply side) to enable buy-in from the end
users of those services (the demand side).

No. 9:  We are in the late innings of the smart contract wars.

While ethereum leads the space on adoption and moves closer to executing on its scalability initiatives, dozens of smart contract competitors fundraised in the market throughout 2018 and 2019 in an attempt to dethrone ethereum.   A handful have formally launched their chains and operate in mainnet as of the end of 2019, while many others remain in testnet or have stalled in development.

What’s
been particularly interesting to observe is the accelerative pace of innovation
– not just technologically, but economically (incentive mechanisms) and
socially (community building) as well. 
We expect many more smart contract competitors operating privately as of
Q4 2019 to launch their mainnets in 2020. Thus, given the incoming magnitude of
publicly observable experimentations throughout 2020, if a smart contract
platform does not launch in 2020, it is likely to become disadvantageously
positioned relative to the rest of the landscape as it relates to capturing
substantial developer mindshare and future users and creating defensible
network effects.

No. 10: Product-market fit is coming, if not already here

We don’t think human and financial capital would have
continued pouring into the digital asset space in such great magnitude over the
last several years if there wasn’t a focus on solving at least one very clear
problem. The questionable sustainability of modern monetary theory is one of
them, and Ray Dalio of Bridgerwater Associates has been quite vocal about it. Big Tech centralization is another. There are also growing
global concerns related to data privacy and identity. And let’s not forget
cybersecurity. The list goes on. We are at the tip of the iceberg as it
relates to the products and applications blockchain technology enables, and mainstream users will come with growing
manifestations of product-market fit. As more time and attention gets spent on
diagnosing problems and working on solutions, the industry will begin to
achieve its full potential. Facebook’s Libra and
Twitter’s Bluesky initiative confirm that as an industry we are heading in the
right direction.  

A 2020 look ahead

We see 2020 shaping up to be one of the brightest years on record for the digital asset industry. To be clear, this is not a price forecast; if we exclusively measured the health of the industry from a fundamental progress perspective, by various accounts and measures we should have been in a raging bull market for the last two years, and that has not been the case. Rather, we expect 2020 to be a year of accelerated industry maturation.

Source: Vision Hill Group

Digital assets are still an emerging asset class with many quickly evolving narratives, trends, and investment strategies.  It is important to note, that not all strategies are suitable for all investors. The size of allocations to each category will and should vary depending on the specific allocator’s type, risk tolerance, return expectations, liquidity needs, time horizon and other factors. What is encouraging is that as the asset class continues to grow and mature, the opacity slowly dissipates and clearly defined frameworks for evaluation will continue to emerge. This will hopefully lead to more informed investment decisions across the space. The future is bright for 2020 and beyond.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Here’s What Makes Intuit (INTU) A Meaningful Investment – Yahoo Finance

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Cooper Investors, an investment management firm, published its “Cooper Investors Global Equities Fund (Hedged)” third quarter 2021 investor letter – a copy of which can be downloaded here. For the rolling three months to one year, the Fund returned 5.7% and 28.24% respectively, while its benchmark, by comparison, returned -0.42% and 26.57% over the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Cooper Investors, in its Q3 2021 investor letter, mentioned Intuit Inc. (NASDAQ: INTU) and discussed its stance on the firm. Intuit Inc. is a Mountain View, California-based software company with a $156.4 billion market capitalization. INTU delivered a 50.80% return since the beginning of the year, while its 12-month returns are up by 72.12%. The stock closed at $572.80 per share on October 19, 2021.

Here is what Cooper Investors has to say about Intuit Inc. in its Q3 2021 investor letter:

“The other meaningful deal during the quarter was Intuit’s acquisition of Mailchimp for $12bn. Intuit has reinvented itself over the last decade and thrived with a leadership position in QuickBooks Online, the financial accounting software for small businesses (effectively the ‘Xero of the US’). We originally invested in Intuit in February 2020, excited by the QuickBooks prospects.

Management have executed exceptionally well on the opportunity set which has seen the shares double since our initial purchase. However, the company has now conducted two meaningful deals in Mailchimp and Credit Karma worth a combined US$20bn over the last 12 months. The investment proposition has shifted from a focus on QuickBooks to now being a financial and small business software conglomerate. We continue to very much admire the company, but with Intuit now trading on 50x forward earnings we no longer see such attractive latency on offer, nor the rewards for the level of execution risk and thus we have exited the position.”

Software

Software

Based on our calculations, Intuit Inc. (NASDAQ: INTU) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. INTU was in 66 hedge fund portfolios at the end of the first half of 2021, compared to 68 funds in the previous quarter. Intuit Inc. (NASDAQ: INTU) delivered an 11.34% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.

Disclosure: None. This article is originally published at Insider Monkey.

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New Found Announces $48 Million Investment by Eric Sprott – Yahoo Finance

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/THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF NEW FOUND GOLD CORP.’S SECURITIES IN THE UNITED STATES/

VANCOUVER, BC, Oct. 21, 2021 /CNW/ – New Found Gold Corp. (“New Found” or the “Company“) (TSXV: NFG) (NYSE American: NFGC) is pleased to announce that it has arranged a non-brokered private placement with Mr. Eric Sprott of 5 million common shares of New Found (the “Common Shares“), at a price of C$9.60 per Common Share, for gross proceeds of C$48 million (the “Offering“).

New Found Gold Corp. Logo (CNW Group/New Found Gold Corp.)

New Found Gold Corp. Logo (CNW Group/New Found Gold Corp.)

New Found intends to use the proceeds of the Offering to fund exploration of New Found’s 100% owned Queensway Project and for working capital and general corporate purposes. The Offering is subject to the satisfaction of customary closing conditions, including the approval of the TSX Venture Exchange (the “TSXV“) and approval by the shareholders of the Company if required by the TSXV.

Collin Kettell, Founder & Executive Chairman of New Found Gold stated: “Mr. Eric Sprott has been a major supporter of New Found Gold since prior to the Company’s IPO. New Found Gold finds itself in an enviable position, well-funded with approximately $150 million in working capital post raise, as the Company continues to explore for high-grade gold at its Queensway Project. With a district size land package and our success to date, we believe there is great potential for this success to continue to build as we advance our program. On behalf of management and the Board of Directors, I would like to thank Eric for his continued support.”

Mr. Sprott currently beneficially owns 31,601,200 common shares of New Found. Upon closing of the Offering, Mr. Sprott will beneficially own 36,601,200 common shares of New Found.

In the event the TSXV requires shareholder approval of the Offering, the Company will call a special meeting of its shareholders. The Offering is expected to close shortly after all necessary approvals are obtained.

Any securities issued pursuant to the Offering will be subject to a hold period under applicable Canadian securities laws, which will expire four months plus one day from the date of closing of the Offering. A 1% finders’ fee is payable in connection with the Offering.

The securities to be issued under the Offering have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“) and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of New Found’s securities in the United States.

About New Found Gold Corp.

New Found holds a 100% interest in the Queensway Project, located 15 km west of Gander, Newfoundland, and just 18 km from Gander International Airport. The project is intersected by the Trans-Canada Highway and has logging roads crosscutting the project, high voltage electric power lines running through the project area, and easy access to a highly skilled workforce. The Company is currently undertaking a 200,000m drill program at Queensway. With a current working capital balance of approximately $103 million, New Found is well funded for this program.

Please see the Company’s website at www.newfoundgold.ca and the Company’s SEDAR profile at www.sedar.com.

Contact

To contact the Company, please visit the Company’s website, www.newfoundgold.ca and make your request through our investor inquiry form. Our management has a pledge to be in touch with any investor inquiries within 24 hours.

New Found Gold Corp.
Per: “Craig Roberts”
Craig Roberts, P.Eng., Chief Executive Officer
Email: contact@newfoundgold.ca
Phone: + 1 (910) 406 2407

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statement Cautions

This press release contains certain “forward-looking statements” within the meaning of Canadian securities legislation, relating to the Offering, TSXV approval of the Offering, the requirement for and timing of shareholder approval of the Offering, the closing of the Offering, and the timing related thereto, drilling on the Queensway gold project and funding of the drilling program. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are statements that are not historical facts; they are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “aims,” “suggests,” “potential,” “goal,” “objective,” “prospective,” “possibly,” and similar expressions, or that events or conditions “will,” “would,” “may,” “can,” “could” or “should” occur, or are those statements, which, by their nature, refer to future events. The Company cautions that forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made, and they involve a number of risks and uncertainties. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except to the extent required by applicable securities laws and the policies of the TSXV, the Company undertakes no obligation to update these forward-looking statements if management’s beliefs, estimates or opinions, or other factors, should change. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include risks associated with the Company’s ability to satisfy the conditions to close the Offering, including the Company’s ability to obtain all necessary shareholder and stock exchange approvals, possible accidents and other risks associated with mineral exploration operations, the risk that the Company will encounter unanticipated geological factors, risks associated with the interpretation of assay results and the drilling program, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration plans, the risk that the Company will not be able to raise sufficient funds to carry out its business plans, and the risk of political uncertainties and regulatory or legal changes that might interfere with the Company’s business and prospects. The reader is urged to refer to the Company’s Annual Information Form and Management’s discussion and Analysis, publicly available through the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com for a more complete discussion of such risk factors and their potential effects.

CisionCision

Cision

View original content to download multimedia:https://www.prnewswire.com/news-releases/new-found-announces-48-million-investment-by-eric-sprott-301405422.html

SOURCE New Found Gold Corp.

CisionCision

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View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2021/21/c0025.html

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Bitcoin is over $66,000. Here are 3 questions to ask yourself before you invest – CNBC

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Bitcoin, the largest cryptocurrency by market value, hit an all-time high on Wednesday, surging above $66,000. Its previous record of $64,899 was set in mid-April.

This surge comes after the first U.S. bitcoin futures exchange-traded fund made its market debut on Tuesday.

With all the hype, investors may feel tempted to buy in on the fear of missing out, or “FOMO.”

“A lot of people who have yet to get into the space or really learn more about it are going to be bombarded with a lot of noise right now,” Douglas Boneparth, certified financial planner and president of Bone Fide Wealth, tells CNBC Make It.

But before investing in bitcoin or any other cryptocurrency, it’s important to step back from the noise and excitement and first understand what it means to invest in a digital asset, he says.

To do that, Boneparth recommends asking yourself three questions.

1. Why am I investing?

First, assess why you want to invest in the first place.

If you’re just afraid of missing out, then you should probably pause before moving forward. It’s important to truly understand bitcoin, cryptocurrency or any asset prior to investing in it.

“‘Educate before allocate’ is a phrase that me and my friends are using,” says Boneparth, who has invested in bitcoin since 2014.

Taking a step back may be difficult, especially now as bitcoin hits an all-time high, but it’s worth taking some time to research what it is, how it operates and what the risks are before parting with your money.

2. Can I handle volatility?

Next, consider how well you handle extreme swings in price, since bitcoin is a notoriously volatile asset. “That’s not easy to handle for most investors,” Boneparth says.

For some people, the volatility “may be OK, that may coincide with your appetite for risk and your own risk tolerance and investment time horizon,” Boneparth says. “But, you still got to live with it.”

Other investors may prefer something more stable.

But regardless of your tolerance level, financial experts warn that the volatility makes bitcoin and other cryptocurrencies a riskier investment than something like a low-cost index fund, which should be kept in mind.

3. How much can I afford to allocate?

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