Feb 13, 2021
Morgan Stanley may bet on Bitcoin in US$150B investment arm
Bitcoin rallies to record high
A US$150 billion Morgan Stanley investing arm known for its prowess in picking growth stocks is considering adding Bitcoin to its list of possible bets.
Counterpoint Global, a unit of Morgan Stanley Investment Management that’s racked up wins in mutual-fund rankings, is exploring whether the cryptocurrency would be a suitable option for its investors, according to people with knowledge of the matter. Moving ahead with investments would require approval by the firm and regulators.
Morgan Stanley’s affirmation would put the heft of an almost-century-old marquee Wall Street name behind a volatile asset class that’s still struggling to win acceptance in much of the traditional financial industry. But a four-fold jump in four months has stoked customers’ interest, making the digital asset even harder to ignore.
As of Sunday morning in New York, Bitcoin was within 2 per cent of crossing US$50,000, a milestone that seemed highly improbable when it was trading for cents for several years after its debut more than a decade ago.
After catching the attention of hedge fund moguls including Alan Howard and Paul Tudor Jones, cryptocurrencies have recently made headway with more mainstay firms such as Mastercard Inc. and Bank of New York Mellon Corp. Just this week, Tesla Inc, the leading maker of electric cars, also got behind Bitcoin with a US$1.5 billion investment and plans to start accepting the cryptocurrency as payment.
A spokeswoman for Morgan Stanley declined to comment. The review could ultimately result in Morgan Stanley opting to stay away from Bitcoin. Previous rallies in the cryptocurrency have also attracted flurries of Wall Street interest only to fizzle.
Much of the industry’s skepticism centers on Bitcoin’s unpredictable price swings and the lack of things it can buy more than a decade since its creation. But faithful followers have felt vindicated this year. Billions of dollars have been pouring into the cryptocurrency through vehicles including the Grayscale Bitcoin Trust.
Even institutional investors, barred by the rules of their funds from holding Bitcoin directly, have turned to such trusts. For Wall Street firms, an inability to offer Bitcoin to those clients raises the risk of losing them to other managers. That may spark fresh discussions in the industry about opening up to the asset.
Counterpoint Global, led by Dennis Lynch, has expanded with a simple-sounding mantra of betting on unique companies whose market value can increase significantly. Enthusiasts would argue that approach fits well with Bitcoin.
The group oversees about 19 funds, of which five delivered gains in excess of 100 per cent in 2020. Its mutual funds have consistently made the top tier of rankings in recent years. Last year’s unusually high returns were aided by bets on companies benefiting from the pandemic, such as e-commerce and streaming entertainment. Prominent investments included Amazon.com Inc., Shopify Inc., Slack Technologies Inc., Zoom Video Communications Inc. and Moderna Inc.
Despite its size, the group relies on concentrated investments and has stakes in just about 200 companies.