In a recent interview with Bloomberg TV, Scott Minerd, Global Chief Investment Officer of Guggenheim Partners, “a global investment and advisory firm with more than $295 billion in assets under management,” made some important comments regarding his firm’s current position with respect to Bitcoin.
Guggenheim Investments is “the global asset management and investment advisory division of Guggenheim Partners and has more than $233 billion in total assets across fixed income, equity and alternative strategies.” It focuses on “the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, wealth managers and high net worth investors.”
On 27 November 2020, according to a U.S. SEC post-effective amendment filing, it became known that one of Guggenheim Investments’ fixed income mutual funds (“Macro Opportunities”) was considering investing in Bitcoin. Per data by the Financial Times, this fund was launched on 30 November 2011, and its total net assets was $4.97 billion (as of 31 October 2020).
The SEC filing made on 27 November 2020 is known as an “SEC POS AM” (aka “post-effective amendment”) filing. This type of filing “allows a company registered with the SEC to update or amend its prospectus.”
This filing stated that the fund is considering getting some cryptocurrency exposure:
“Cryptocurrencies (also referred to as ‘virtual currencies’ and ‘digital currencies’) are digital assets designed to act as a medium of exchange. The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in bitcoin.”
Then, on 16 December 2020, after the Bitcoin price had finally broken through the $20,000 level on all crypto exchanges to set a new all-time high, Minerd, the Guggenheim CIO, talked about Bitcoin during an interview on Bloomberg TV.
The interview started by the Guggenheim CIO being asked by Scartlet Fu, Bloomberg TV’s Senior Editor of the Markets Desk, about the Guggenheim Macro Opportunities Fund and the decision by its managers to invest “up to 10% of its net asset value in Grayscale Bitcoin Trust.” In particular, he was asked if Guggenheim had started buying Bitcoin yet and how much this decision was “tied to the Fed’s extraordinary policy.”
“To answer the second question, Scarlett, clearly Bitcoin and our interest in Bitcoin is tied to Fed policy and the rampant money printing that’s going on. In terms of our mutual fund, you know, we are not yet effective with the SEC. So, you know, we’re still waiting.
“Of course, we made the decision to start allocating toward Bitcoin when Bitcoin was at $10,000. It’s a little more challenging with the current price closer to $20,000. Amazing, you know, over a very short period of time, how big run-up we’ve had, but having said that, our fundamental work shows that Bitcoin should be worth about $400,000. So even if we had the ability to do so today, we’re going to monitor the market and see how trading goes, what evaluation that ultimately we have to buy it.”
Then, on January 11, shortly after the Bitcoin price had corrected to as low as $32,475 on Coinbase, Minerd cautioned traders that Bitcoin might have gone up too much too fast and that perhaps it was time to take some profits.
Minerd’s Latest Thoughts About Bitcoin
Last Friday, the Guggenheim CIO was interviewed on Bloomberg Television’s “Bloomberg Markets: The Close“, and asked where sees the Bitcoin price going and what catalysts are going to help it get there.
Minerd said that retail FOMO seemed to be causing a short-term “speculative frenzy” and that this was the reason he had issued his January 11 warning:
“Well, I think one thing that we’re seeing is the the sudden interest in retail. You know, in a story that appeared yesterday on Bloomberg, there was a discussion about how a lot of the crypto outlets are being overwhelmed, they’re starting to limit the orders because they can’t handle the demand.
“I think in the short term what that’s telling you is we’re moving into a speculative frenzy, and that was one of the reasons for my tweet on Monday to say, perhaps, it’s time to take some money off the table here.
“But, the other side of that is it’s demonstrating that crypto is becoming much more mainstream, and the $400,000 price that I talked about really was based off of the supply of gold in the world and crypto in, a lot of ways, is more attractive than gold. It’s portable, you can use it to to buy things with… the acceptability of crypto is rising rapidly, and I think Bitcoin and other cryptocurrencies have potentially a lot of upside.“
Minerd was then asked about Guggenheim’s November 2020 SEC filing. As mentioned earlier, this filing stated that that “the Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust.”
Minerd’s reply contained an important disclosure that seems to have been gone unnoticed by many journalists and analysts:
“Well, Caroline, I don’t really think we’re effective yet for any of our mutual funds, and we’re going take the feedback of our clients in terms of what they would like us to do, but it’s nice to know the flexibility is there if it’s in the good interest of the client, but in some of our private funds, we have already purchased it, and I think because I recommend it to somebody, if you believe what I said that it’ll go to $400,000 eventually, 2% of your portfolio will be 20% of your portfolio before this is over. So you don’t want to get too overweight, but certainly an allocation of a couple of percent of your portfolio seems to be a prudent thing.“
Until this comment, it was widely believed that Guggenheim had not yet started buying Bitcoin in any form.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.