A prominent hedge fund manager has revealed that 30% of his fund’s assets are allocated into bitcoin.
Bill Miller — a former manager of the Legg Mason Value Trust mutual fund — famously beat the market for 15 consecutive years before losing 55% in 2008 as a result of the of the Great Recession. Now, Miller runs Miller Value Partners LLC, an investment firm that manages $2.3 billion assets. One of Miller’s offerings, the $154 million hedge fund MVP 1, has posted a 72.5% year-to-date gain. The secret to MVP 1’s success? Bitcoin.
As reported by The Wall Street Journal, MVP 1 currently has 30% of its assets allocated into bitcoin. Since purchasing bitcoin at $350, MVP 1 has watched the flagship cryptocurrency’s value increase by 1,650% to a present mark of $6,125.
Miller says that the fund does not currently have any plans to add to its bitcoin stake, primarily because it is impossible to predict whether bitcoin will ultimately fail. Skeptics like JPMorgan CEO Jamie Dimon have called bitcoin a “fraud” that will inevitably prove to be worthless, and bulls like hedge fund manager Mark Yusko believe its price could rise as high as $1 million.
However, Miller contends that bitcoin is an “experiment,” and no one can be certain about its future trajectory:
“My view on bitcoin is that it is a technological experiment that may or may not prove to have any long lasting value,” Miller wrote in a recent letter to investors. “Bitcoin has a market capitalization greater than 90% of the companies in the S&P 500, but it still might fail. I don’t know and neither does anyone else, no matter how certain they are of their opinion.”
That said, Miller also stated that bitcoin’s future prospects increase with every passing day.
“I believe there is a nontrivial chance bitcoin goes to zero,” Miller concluded, “but each day it does not, that chance declines as more venture capital flows into the bitcoin ecosystem and more people become familiar with bitcoin and buy it.”
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Last modified: May 21, 2020 9:10 AM