Full episode: Market Call for Monday, May 14, 2018
Thomas George, president of Grizzle
Focus: Global growth stocks
We believe that investors should give serious consideration to cryptocurrencies as an asset class. Grizzle is of the fundamental view that Bitcoin represents the equivalent of "nerd gold" to the millennial generation. A 5 per cent reallocation from gold bullion to Bitcoin would imply a value of US$33,000 per bitcoin (280 per cent upside from the current price of $8,676).
Grizzle believes the marijuana sector is significantly overvalued and that a significant correction is imminent. In every North American marijuana market that has legalized, prices have always fallen shortly thereafter. Excess supply from the black market is one of the major reasons why. Our research has found that legal outdoor (homegrown) and the black market have production costs ($0.35/gram) that are 80 per cent cheaper than the average production cost of the tthree largest public producers ($2.01/gram).
There's still significant upside remaining for digital advertising. Market share gains will continue to come from TV and print. We inherently believe that Alphabet has a less regulatory-burdened mousetrap than Facebook.
Internet users will continue to actively seek the best answers to their questions from Google because its search algorithms are simply that good. Alphabet trades at a multiple in-line with the market, which is attractive given the higher long-term growth opportunities.
Grizzle believes traditional bricks-and-mortar retail is structurally broken. Millennials are increasingly seeking out bespoke, custom merchandise that big box stores simply can't supply or sell. Etsy operates as a digital platform connecting buyers and independent sellers of unique bespoke goods and merchandise, a market that we believe can grow 20 to 30 per cent annually. Etsy trades at half the multiple of Amazon and arguably has significantly higher growth potential given its relative small size.
HUT 8 MINING (HUT.V)
Hut 8's goal is to the be largest Bitcoin miner in North America. It represents an attractive way for equity investors to get exposure to Bitcoin, Grizzle's preferred long-term cryptocurrency. Hut 8 has a highly credible management team and is partnered with the largest non-Chinese producer of Bitcoin mining rigs, BitFury. We believe at a Bitcoin price north of $20,000, there is significant leverage to the upside in the stock.
PAST PICKS: MARCH 2, 2018
The stock remains a long-term hold. It's a play on the growing marginalization of cash as a medium of exchange.
- Then: $120.77
- Now: $132.03
- Return: 9%
- Total return: 9%
ICICI BANK (IBN.N)
We continue to hold the stock. It's a structural long-term play on the economic growth of India.
- Then: $9.43
- Now: $9.21
- Return: -2%
- Total return: -2%
Remains a long-term hold for Chinese e-commerce exposure. The asset light model is scalable and provides strong cash flow.
- Then: $179.76
- Now: $199.68
- Return: 11%
- Total return: 11%
Total return average: 6%