By Josiah Wilmoth
Kinetics Internet Fund (WWWFX) made a high-risk bet on bitcoin, and it paid off handsomely in 2017.
Kinetics Internet Nets 57% Return After Placing High-Risk Bet on Bitcoin
Though barred from investing in bitcoin directly, portfolio manager Peter Doyle purchased a 12 percent stake in Grayscale’s Bitcoin Investment Trust (OTC: GBTC), an over-the-counter fund that buys and holds bitcoin on behalf of its shareholders.
The investment represents the Kinetics fund’s largest single holding, making it an absolute moonshot that — at least in 2017 — paid meteoric dividends.
The GBTC stake helped carry the Kinetics Internet Fund to a 56.9 percent return in 2017, making the fund the latest winner of The Wall Street Journal’s quarterly Winners’ Circle competition, which profiles high-performing mutual funds.
Not only did the Kinetics fund nearly triple the 19 percent return of the S&P 500 but it also bested its closest competitor — Morgan Stanley Multi Cap Growth (CPOBX) — by more than 11 percentage points.
This astonishing performance came in spite of the facts that the bitcoin price endured a moderate correction during the last week of the year and GBTC generally trades at a steep premium over the value of the underlying assets.
Doyle, who co-founded Kinetics Mutual Funds after a tenure as a Senior Investment Officer at Bankers Trust, said that he is confident in bitcoin’s potential as a disruptive asset, even given its price volatility and recent downturn.
“I would take my salary in bitcoin rather than US dollars right now,” the Journal cites him as saying.
Institutional Investors Chase Outsized Returns on Early Bitcoin Stakes
Kinetics Internet Fund is just one of a growing number of institutional investors to place bets on bitcoin in a bid to stand out in a bull market.
ARK Investment Management has been investing in bitcoin through the Bitcoin Investment Trust since the spot bitcoin price was just $250. ARK CEO Catherine Wood recently said that she believes bitcoin is “so much bigger an idea than even Apple,” which currently has a market cap of just under $900 billion.
More recently, Strategic Coin reported that Founders Fund, a venture capital firm led by PayPal creator Peter Thiel, was holding hundreds of million dollars of bitcoin in several of its funds, making it the highest-profile firm to invest in bitcoin directly.
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