My Brain Food This Week...

Why are more public companies not buying bitcoin?, Zimbabwe's sovereign wealth fund wants in on the electrification trend, and I wrote about why Shoprite will keep eating Pick n Pay's lunch

Mansa

Jun 22, 2024

Read my latest Investor Letter:

Shoprite is 11x Bigger than Pick n Pay! Here’s why Shoprite Will Keep Beating Pick n Pay

What caught my eye:

More public companies may start adding bitcoin to their balance sheets. But the adoption isn’t as quick as some might have thought. Why?
In my view Bitcoin is the most volatile asset compared to standard treasury assets such as government bonds, money market funds, and public equities. Bitcoin may have been the best performing public asset for the past decade, however public company CEOs are fearful of adding bitcoins volatility to their balance sheet. Additionally, until earlier this year when Bitcoin ETFs were approved there was no consensus acceptance of bitcoin among institutions. Until then the CEO would have had to justify his/her purchase of bitcoin quarterly, while the stock price of the company falls under pressure. Now however, following the likes of MicroStrategy and Tesla, and given the acceptance of bitcoin among institutions, companies will likely start to pay more attention to bitcoin as they look further out the risk curve in search of better returns for the company treasury.
Through Zimbabwe’s sovereign wealth fund a new lithium mine will be developed in the country. What does this mean for Zimbabwe?
The country’s sovereign wealth fund (Mutapa Investment Fund) currently holds 20 strategic assets which, if they can reach maximum productivity, should act as a valuable reserve asset as the country tries to grow and strengthen its most recently introduced sovereign currency. The key note is whether the fund’s assets can reach maximum profitability. Lithium demand will continue to rise globally due to the electrification trend under way. Lithium is a major component in Lithium-ion batteries used for electric cars. Can this additional strategic asset act as a catalyst to boost Zimbabwe’s economic status?

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