Miller Opportunity Fund’s Co-Manager Says Bitcoin Is a Buy After Selloff. Here’s Why.
Bitcoin’s plunge rattled some investors, especially as China banned the use of cryptocurrencies by financial and payment institutions and Tesla said it wouldn’t accept Bitcoin any longer. But Samantha McLemore, co-manager of the Miller Opportunity fund, told Barron’s on Wednesday that none of it detracted from the investment case for Bitcoin, and she views the selloff as a buying opportunity.
McLemore oversees the $2.7 billion Miller Opportunity fund (LGOAX) with legendary value manager Bill Miller, an early and vocal Bitcoin bull. The fund, whose 106% gain over the last year beat 99% of its peers, filed in February to own as much as 15% of its assets in the cryptocurrency. Part of the draw: A wider view of Bitcoin as digital gold—an attractive quality especially as investors start looking for potential inflation hedges. As of March 31, Bitcoin was owned in the Patient Capital fund McLemore manages on her own, but not in the Opportunity fund. McLemore launched Patient Capital Management last year; Miller is a minority partner.
The sharp decline in Bitcoin, which fell to its lowest levels since February, comes amid a broad selloff in speculative assets, following a period of rampant speculation in cryptocurrencies, McLemore noted in a email. “We’ve expected Bitcoin to be volatile, and that is how it’s behaving,” she said, adding that it had already rallied 25% off its lows.
That volatility has been clear in the past couple of weeks as the market has been whipsawed by a range of crypto-related news, including Tesla’s decision not to accept Bitcoin after Musk questioned its environmental impact and, more recently, China’s warning to investors of speculative cryptocurrency trading and restrictions on their use in financial transactions.
But McLemore said neither have a notable impact on the investment case for Bitcoin. While Musk’s criticism about Bitcoin’s energy intensity could help shift mining toward more renewable sources—a positive development—McLemore noted that Bitcoin is actually less energy intensive than gold mining.The developments out of China were also not surprising. “China is an authoritarian country pursuing its own digital currency and doesn’t want to condone competition. It can’t control Bitcoin, which is one of the main features that make Bitcoin attractive, but it can regulate services offered by financial institutions in China,” McLemore said.
Despite a research report from JPMorgan that discussed indications investors were moving out of cryptocurrencies into gold, McLemore said she hasn’t seen any announcements of institutional sellers of Bitcoin, adding that Tesla sold a small amount earlier in the quarter but not anything since, and MicroStrategy has also been buying more Bitcoin.
Write to Reshma Kapadia at [email protected]
