25. May 2021 | 11:11 CET
Attention Crypto Investors! Coinbase, SAP, Glencore, Barsele Minerals - Where are the opportunities?
Those who want to make returns today often attach themselves to well-known names such as Elon Musk, Warren Buffett or even Cathie Wood. The latter is a former portfolio manager at Alliance Bernstein. She has become known in recent years for being a trump card of technology investors. Her ARK funds raised a whopping USD 34.5 billion in 2020. One of its flagship funds is the ARK Innovation ETF, which has its largest positions invested in NASDAQ darlings. For the past month, this fund has had a problem, as 14% declines have rarely been seen on a monthly basis. Tesla, Coinbase, and Zoom are the largest positions and they are dropping big time right now.
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ISIN: US19260Q1076 , DE0007164600 , JE00B4T3BW64 , CA0688921083
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Coinbase - A bet on the crypto market
The listing of Coinbase stock in 2021 needed not beg for attention, as it was sure to get the attention of the entire crypto world. By the time of its stock market debut, a pronounced bitcoin rally led to prices close to USD 65,000. Now disillusionment has set in. In just 3 weeks, the value of a bitcoin has halved and some alternative cryptocurrencies lost up to 90%.
However, falling prices do not bother the fund manager because Ark Investment Management, headed by Cathie Wood, grabbed over 250,000 shares worth around USD 59.5 million in Coinbase Global Inc. last Thursday. A number of analysts had sounded the buy on Wall Street because, after all, the paper had already lost USD 100 or almost 35% since the initial listing.
However, the analysis houses are somewhat divided as far as the target value of Coinbase stock is concerned. Broker Loop Capital published a price target of USD 400 to USD 450 per share, but Wedbush analyst Moshe Katri is more cautious with a cautious Outperform rating and price target of USD 275. Coinbase started trading yesterday at USD 227, with a current market cap of USD 47.5 billion. With a hefty valuation for an after-tax profit of USD 108 million in 2020, the stock should remain under pressure.
SAP - Helper in times of need
The family has to stick together in hard times, which is the case with SAP and the Hopp family. The case involves Crossgate AG, a multinational company that had developed a network approach to B2B transactions that allowed data to be transferred independently of EDI systems. The Company was unsuccessful and nearly slid into insolvency in 2011.
However, the son of billionaire SAP founder Dietmar Hopp was able to sell his holdings in the Company to SAP thanks to his father's intervention. The price at which SAP took over Crossgate exceeded the valuation that Ernst & Young once attested to the Company. The transaction has now been uncovered by research conducted by "Der Spiegel" and the ARD magazine "Fakt."
Dietmar Hopp still holds around 5% of SAP shares today; he stepped down from the supervisory board in 2015 and no longer holds any position in the Company. His son, Daniel Hopp, has never been employed at SAP. With his Company DAH Beteiligungs GmbH, he is active as an investor. In 2006 he bought 28% of Crossgate, and from 2007 SAP cooperated with Crossgate and later acquired 6.4% of the shares. Former Chief of SAP, Jim Hagemann Snabe, sat on Crossgate's supervisory board for a while.
When Crossgate later ran into liquidity problems, SAP provided a bridging loan and eventually bought the entire Company, which was already making considerable losses at the time, for EUR 93 million. SAP justified the purchase with strategic considerations and stated that Crossgate had been thoroughly examined before the takeover. After one year, however, the investment was completely written off. The SAP share hardly feels the current headlines, what is a write-off of EUR 100 million with a market capitalization of EUR 135 billion. Peanuts!
Glencore - The combination of blockchain and mining
The mining industry is also taking advantage of blockchain technology. In a joint project, Glencore will pilot a blockchain solution for cobalt traceability with Umicore. Joining forces with battery materials supplier Umicore makes perfect sense as the entire e-mobility industry faces growing criticism of its methods in procurement markets. In order to demonstrate ESG compliance and environmental justice, it is necessary to make the value chain more transparent and sustainable.
The new product is called "ReISource," a solution that uses blockchain and zero-knowledge proofs technology to track responsibly produced cobalt from mine to battery. The trade flows between raw material and finished product are digitally linked and stored in the blockchain; thus, the point of origin and supply chain is immutably linked to the final product.
Glencore is piloting the solution under real-world operating conditions, from upstream cobalt production facilities in the Democratic Republic of Congo (DRC) to downstream electric vehicle production facilities. By the end of the year, the pilot phase will be completed, a striking step in the right direction, we believe. Glencore shares have broken out to the upside at EUR 3.50. The chart target is now EUR 4.70.
Barsele Minerals - Searching for gold in Sweden
A still small resource company is Barsele Minerals, a Canadian-based junior explorer managed by Belcarra Group. The Barsele project is located at the western end of the Proterozoic Skellefte Trend, a prolific belt of volcanogenic massive sulfide deposits that overlaps with the gold line in northern Sweden. A group of highly skilled mining experts is currently working at Vasterbottens Lan (Sweden), to date a joint venture with Agnico Eagle. The same team has already been recognized for discovering Orko Silver Corp.'s La Preciosa silver-gold deposit in Durango, Mexico.
Barsele Minerals has now signed a letter of intent with Agnico Eagle to acquire the indirect 55% interest in the Barsele project. The Company itself currently holds a 45% interest in the joint project and would have complete control of the Barsele property upon completion of the proposed transaction. Completing the transaction will increase Agnico's interest in Barsele Minerals and give the new management a free hand to develop the deposit. Agnico Eagle will receive USD 45 million and a 14.9% interest in Barsele and options on 6 million additional shares at a price of CAD 1.25.
The acquisition of this project represents a milestone for Barsele, as drilling can now be significantly expanded. With 30,000 meters in 1.5 years, the goal is to report a significant increase in the resource estimate of at least 3.5 million ounces of gold.
The Barsele share is listed in Stuttgart and Frankfurt, the original price in Canada is currently CAD 0.53, trading volumes in Germany are manageable. The well-positioned explorer currently has a market capitalization of CAD 68.4 million - here, the cooperation with the major Agnico Eagle leads to a higher valuation. In the mid term, the project is very interesting.