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Time to own Bitcoin? Chris Wood to trim Gold weightage and make way for Bitcoin investment

Bitcoin is again making headlines with the unreal upwards movement it recorded on the price charts recently, setting fresh all-time highs. The crypto currency has gained nearly 400% since March this year and over 200% since the beginning of this pandemic struck year. Investor’s interest in bitcoin has been gaining steam in 2020 and it’s not just small investors, institutions too have joined in cheering it. Seeing these developments, Chris Wood, global head (equity strategy) at Jefferies, has decided to introduce Bitcoin in its long-only global portfolio.

In his weekly newsletter, Greed & Fear, Chris Wood said that Bitcoin will be introduced in the long only global portfolio for US dollar-denominated pension funds. Chris Wood had made a case for owning Bitcoin back in June of 2019. The investment space for Bitcoin will be made by reducing the weight of physical gold bullion by 5 percentage points. “If there is a big drawdown in bitcoin from the current level, after yesterday’s historic breakout above the US$20,000 level, the intention will be to add to this position,” Chris Wood said last week.

Bitcoin institutionalisation

His views on owning the crypto currency have been strengthened by the ‘institutionalisation of Bitcoin’ and with custodian arrangements being made available. Retail investors can now buy into Bitcoin via quoted vehicles, unlike before when the risk of Bitcoin accounts being hacked was real. Wood also highlighted the case of Nasdaq-listed MicroStrategy, a business intelligence software company, that has invested in the Bitcoin equivalent of$425 million ($250m in August and$175m in September), amounting to almost 100% of its own treasury funds, to hold on its balance sheet.

MicroStrategy, in its filings to the SEC said that the aim is to make Bitcoin “the primary treasury reserve asset on an ongoing basis”, along with cash and short-term investments. “This marks a watershed moment in GREED & fear’s view since the auditors approved MicroStrategy putting Bitcoin on its balance sheet as did the SEC,” Chris Wood noted. He further highlighted that MicroStrategy’s market capitalization has risen 131% since announcing its investment in Bitcoin and the value of its Bitcoin holding has almost doubled to $917 million.

Gold not out

Although Chris Wood is trimming Gold’s weight, he said that this does not mean that he is going to give up on gold. “… the yellow metal should rally again if the Fed stays dovish in the face of the dramatic cyclical recovery that is coming on the other side of the pandemic, in line with GREED & fear’s base case,” he said.

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RIL share price gains 1.5% today after Reliance-BP start gas production from Asia’s deepest project

Reliance Industries Ltd (RIL) share price gained 1.5 per cent to Rs 2,022 apiece in the morning deals on BSE today, taking the total market capitalisation to Rs 12.74 lakh crore. On Friday, after market hours, Mukesh Ambani-led Reliance Industries and BP announced the commencement of gas production from an ultra-deep-water gas field in block KG D6 R-Field of Krishna Godavari basin. In another development, the oil-to-telecom conglomerate will set up the ‘Greens Zoological Rescue and Rehabilitation Kingdom’ in Jamnagar district. MK Das, Additional Chief Secretary to the chief minister said at the virtual conference to mark ASSOCHAM foundation week on Friday, that this will be one of the world’s biggest zoos in terms of number and species of animals and spread over 250 acres in Jamnagar, according to PTI.

Around 9.55 AM, RIL shares were trading 1.3 per cent up at Rs 2,018 apiece on BSE, as compared to a 0.05 per cent rise in S&P BSE Sensex. In the previous week, RIL along with Hindustan Unilever Ltd witnessed erosion from the market valuation. While RIL remained at the top in the ranking of most valued firms last week. RIL share price hit a 52-week low of Rs 867.82 apiece on March 23 on the back of COVID-19 induced lockdown. The stock rose to Rs 2,368.80 apiece, an all-time high, in September this year. With today’s gain, RIL shares are up 133 per cent from March lows.

Earlier this month, during the India Mobile Congress event, Reliance Industries Ltd (RIL) chairman Mukesh Ambani pitched for policy interventions to shift 30 crore 2G users to 5G in India. Ambani also said that the Indian economy will soon bounce back and prove cynics wrong by becoming a $5 trillion economy. Ambani also announced that Reliance Jio will launch 5G services in the second half of 2021 in India, which will be powered by the indigenous network, hardware and technology components.

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PVR fundamentals intact despite near-term hiccups

PVR has scheduled a board meeting on December 18 to consider raising funds through issue of equity (or other instruments) by way of QIP (or other modes). We believe that the company is adequately funded to sustain operations for 6-7 months even if occupancy remains subdued and cash burn elevated at current levels. Additional funding would help reduce debt to enable investments in organic/inorganic opportunities post-Covid, or in event of resurgence of Covid-19.

PVR had liquidity of Rs 5.5 billion as at end-October 2020. It has to repay debt of Rs 1 billion by March 2021. As per our estimate, PVR is incurring Ebitda loss of Rs 500-600 million/month and interest expense of Rs 110 million/month at present (from November 2020).

Cash burn is higher (on expected lines) versus 1HFY21, as operations have resumed at subdued occupancy pending release of key movies. PVR is adequately funded to sustain operations for 6-7 months even if one assumes cash burn to continue at the current run rate.

PVR’s gross/net debt is about Rs 15 billion/Rs 10 billion as of date; equity fund raise would reduce leverage enabling PVR to invest in organic and inorganic growth opportunities post-Covid. We note that PVR raised Rs 3 bn in August 2020 through a rights issue.

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Burger King India shares fall, hit 10% lower circuit; what should investors do now?

Burger King India share price sharply fell in the afternoon deals today after surging for the last three days. The stock fell to hit the 10 per cent lower circuit at Rs 179.35 apiece today afternoon, after rising in the morning to hit the upper circuit. In the morning deals, Burger King shares were locked in the 10 per cent upper circuit. The company’s market capitalisation has also fallen to Rs 6,844.98 crore from Rs 8,363.96 crore in the morning.

According to an analyst, the rally in Burger King India shares was beyond expectations, and the stock became much more expensive above Rs 200 levels. “The expected profit booking is on cards. The listing day high of 135 may be tested soon. Below 135 one should not hold it in the portfolio,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online.

Burger King India made stock market debut earlier this week with 92 per cent premium over the issue price of Rs 60 apiece. At the current level, Burger King shares are up 55 per cent from the listing price of Rs 115.35 per share, and 199 per cent up from the IPO price. Burger King India’s Rs 810-crore initial public offer was subscribed a massive 156.65 times during the three-day bidding process. During the IPO process, most of the research and brokerage firms had recommended to ‘subscribe’ to Burger King India IPO for the listing gains.

Out of the 12 IPOs that the stock markets witnessed so far this year, Burger King India is among the top four IPOs. From the listing day, Route Mobile shares have gained 221.6 per cent, Happiest Minds Technologies 94.7 per cent while Rossari Biotech stock price surged 94 per cent.

Meanwhile, Mrs Bectors Food Specialities’ Rs 540-crore IPO has also witnessed strong demand from investors across categories so far on the last day of the bidding.

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