This content is from: Portfolio

Morning Brief: Whitney Tilson Calls a Top in Bitcoin

The latest cryptocurrency bubble prediction comes as Bitcoin futures begin trading on the CME.

Former hedge fund manager Whitney Tilson believes Bitcoin has peaked.

In an email to friends and followers, Tilson wrote that he is “calling a top right now,” comparing the cryptocurrency craze to previous asset bubbles.

“The only times such foolishness has happened before in my 18-year career were at the peak of the internet and housing bubbles,” he wrote in the email, which was obtained by Institutional Investor’s Alpha.

Tilson made the market call just before Bitcoin futures began trading on the Chicago Mercantile Exchange Monday.

The former hedge fund manager noted that he had been “asked about Bitcoin by a parade of the least-knowledgeable investors imaginable.” Another exchange, the Cboe Futures Exchange, had begun trading Bitcoin futures last week.

“Blockchain technology is real in the same way that the internet was real back in 1999 and housing prices tend to go up in the mid-2000s,” Tilson wrote. “In other words, a good idea taken to absurd extremes is NOT a good idea!”

Tilson announced in September that he is shutting down his hedge fund firm, Kase Capital Management, citing bad performance. In the new email, he admitted that “the greed and speculative nature of humans is inherently unpredictable, so for all I know Bitcoin could go to $1 million.”

Bitcoin was trading above $18,000 on Monday after climbing past $19,000 Sunday.

“I do know the ultimate outcome,” Tilson added. “Smoldering rubble, a lot of finger-pointing (where were the regulators?!), and a lot of tears and empty bank accounts, especially among those who can least afford it.”

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Hedge funds are pulling out of gold in favor of stocks cryptocurrencies, according to Bloomberg. The financial news site reported that hedge funds cut their net-long positions in gold by 43 percent on the futures exchanges in the week ending Dec. 12, according to data from the U.S. Commodity Futures Trading Commission.

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Fir Tree Partners is siding with activist investor Carl Icahn in opposing SandRidge Energy’s planned acquisition of Bonanza Creek Energy, according to a filing with the Securities and Exchange Commission.

Fir Tree, which owns approximately 8.2 percent of SandRidge, said it disproved of the plan to issue a “considerable amount of undervalued company common stock” in order to purchase Bonaza.

The private investment firm added it had independently reached the same conclusion as Icahn. Icahn Capital is currently waging a proxy battle to convince shareholders that the acquisition plan is “dilutive, non-strategic, and significantly overvalues Bonanza.”

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Activist hedge fund manager Christopher Hohn won’t attend the London Stock Exchange shareholders’ meeting where investors will vote on his motion to remove LSE chairman Donald Brydon, Reuters reported.

Hohn, who is founder of TCI Fund Management, had called for Brydon to be fired following the announcement that former LSE chief executive Xavier Rolet was stepping down.

Reuters reported that several big shareholders, including the Qatar Investment Authority and BlackRock, have come out against the firing of Brydon, and Hohn doesn’t expect his resolution to pass.

TCI did not return a request for comment.

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