Fortress Investment to Invest in Bitcoin - Analyst Blog
March 19 2014 - 4:00PM
Zacks
Fortress Investment Group LLC (FIG), the
NY-based investment manger, along with Benchmark Capital and Ribbit
Capital, is set to buy stakes in Pantera Bitcoin Partners – a
subsidiary of Pantera Capital. The latest move shows Fortress
Investment’s renewed interest in Bitcoin’s operations.
As of Dec 31, 2013, Fortress Investment reported $3.7 million paper
loss in its pilot Bitcoin investment. The investment reflected less
than 1% of the $2.6 billion balance sheet of the company and hence
did not dampen the company’s quarterly earnings.
Despite the reported loss in the previous quarter related to the
virtual currencies, Fortress Investment foresees long term growth
prospects in the aforementioned deal.
The “Bitcoin economy” is no more an elusive dream as virtual
currencies are becoming increasingly popular, given the convenience
of usage and innate characteristics which help to maintain its
purchasing power.
Moreover, as per analysts, Bitcoin’s price has reached an inflexion
point, which indicates that it is the correct time to invest in the
same. Though the price had fallen following the closure of MtGox,
the Bitcoin exchange, it has been recovering since then. Moreover,
in 2013 Fortress Investment reported a year-over-year rise of 121%
in net income, which depicts the company’s ability to undertake
calculated risks.
Nevertheless, there are certain loopholes that could be a drag in
the long term. The price volatility, high susceptibility to
technological fallouts and chances of being misused could challenge
the usage of these currencies for money transfers and payments.
The absence of regulated derivative markets for Bitcoin restricts
risk hedging, which in turn, discourages investors. Therefore,
Fortress Investment’s latest move may not prove to be a safe bet
going forward.
Fortress Investment currently carries a Zacks Rank #1 (Strong Buy).
Other investment mangers worth considering include Lazard
Ltd. (LAZ), Calamos Asset Management Inc.
(CLMS) and Noah Holdings Limited (NOAH). All these
stocks carry the same Zacks Rank as Fortress Investment.
CALAMOS ASSET-A (CLMS): Free Stock Analysis Report
FORTRESS INVEST (FIG): Free Stock Analysis Report
LAZARD LTD (LAZ): Free Stock Analysis Report
NOAH HLDGS LTD (NOAH): Free Stock Analysis Report
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