UPDATED - January 25, 2018
BotTrigger Trade Alert: $OSTK Sold 50% of entire holdings here as momentum to the downside on the near-term time frame looks like Overstock is picking up steam to retest $65 support area. We're up almost 100% net wise on all our OSTK trades so far. This is a good place to lock in some profits and wait for a reentry.
OSTK is getting caught up in the China/Korean crypto carnage. Last week we tightened the momentum sell point for OSTK due to rumors of a Korean crypto ban. Turns out this move is also protecting us from a Chinese ban. Despite this knee jerk reaction, I assure you crypto is not going anywhere. We’ll be back in OSTK as soon as the crisis dies down. Remember, crypto’s actually trade as a free market which means you have dips and rips. This is a phenomenon foreign to stock market investors who have grown accustomed to low volatility over the last 23 months. Patience here
BotTrigger Trade Alert: $OSTK bought the 2018 June 20 strike call options here @ $30.00 with a 10% allocation. This is now our 4th buy alert with a combination of both call options & common stock: Now up more than 70% since our first buy alerts & more than 120% gained just on call options alone. After selling our calls & now holding the common ...we have decided to buy a different set of call options up here on this very strong earnings breakout that are deep in the money and now farther out in expiration. Instead of the March 20 calls that we originally purchased we're going with the June 20 strike option calls. As the herd races towards blockchain investment opportunities, Overstock demands respect as a major player. Today we are adding a 10% allocation of the June 20 strike option calls. Here's why:
OVERSTOCK TRADE UPDATE
It’s always nice to see your top holding +$10 on a day when the Dow is -90. Our Overstock reported earnings and CEO Patrick Byrne did a great job of explaining to the group of 1,000 Wall Streeters on the call (Overstock typically has 4 or 5 analysts on the call) what exactly Medici Ventures owns in terms of blockchain technology. Interestingly enough, short interest in OSTK has risen 5x since September as blind technical algorithms mistakenly think the stock is rising because of the online retail business. Shorts make up 92% of shares. We expect significant amounts of short covering over the next six months as tZERO fulfills its ICO and other Medici investments evolve to become mainstream in the blockchain universe. Simply put, blockchain is a better technology than the Internet. It’s more secure, it’s faster, and it enables digitization of real world assets in a way that fits the digital world. Remember when Yahoo made the brilliant decision to acquire a stake in Alibaba? Overstock is doing the same thing by investing in top blockchain companies at an early stage.
Here are the relevant soundbites from the conference call:
‘We are building a tech stack for civilization between Overstock and Medici-- Medici is of course our venture capital arm focusing on blockchain. So a tech stack for civilization begins, I think, with money, you need money. You need capital and a capital market, identity in voting and commerce. Everything we are building fits in this structure. We have a wonderful investment in a Barbados company called Bitt. Bitt is the leading company in the idea of digitizing fiat currency from -- for central banks, creating digital wallets for citizens -- for people, essentially frictionless payment system, including remittances, which incidentally are a $500 billion industry globally, remittances alone, on which the vig is about 15%…Economists had been talking about the problem of the unbanked, banking the unbanked. 85% of the world doesn't have a bank account, isn't even tied in to the modern world as we know it. That can all be accomplished without actually them having to go and build the banking -- copying the west and building the banking systems we built through these digital wallets on your cell phone. We own 11%, but with options up to 35% of Bitt. If everything goes right, you will see in December we will do a soft launch. It's dependent of course on the Central Bank letting us digitize their currency, having us digitize their currency. We're in discussions with a number of them. And if all goes as well as it can go, you could see this happen in mid-December. Soft launch of the world's first digital currency. The opportunities for this, the global ramifications for the poor for financial inclusion, for changing economies, are just mind-boggling.’
‘Ripio, which is another digital wallet, payments, credit lending. It's based in Latin America. It's live. They have a product in the market. Medici under Jonathan Johnson, who's the -- runs Medici, is -- has made this investment, 2.25%.’
‘There's also Spiro -- which we are very excited about. Spiro is a payments and invoicing system run by a fellow who has built successful payments and invoices -- payments companies. Very interesting fellow. He's building this on the blockchain. This may have a real kind of crossroads position emerge between a couple worlds. Seems to be quite far along. We own 18%.’
‘And then PeerNova. PeerNova is out in Silicon Valley. It's a banking compliance -- basically, back office system for banks. We own 12%.’
‘Okay, next. We move to capital. Blockchain meets capital formation is the next area that I wanted to have us have strategic investments. We do have an investment in Factom. It's now doing mortgage loan compliance and digital asset verification. We own just 2.5%. I will alert you that there may be another investment coming here, but I won't say anything more about it.’
‘Capital markets. Now this, of course, capital markets is tZERO. And I know a lot of people are on because they're -- they've heard about us because of tZERO. Blockchain meets capital markets. The advantage of it is instant trade clearance and settlement. We have an SEC-compliant exchange for ICOs. I believe it's the only one in the world, the only exchange in the world or an ATS that is technically -- technologically blockchain and SEC-compliant. Who would have thought my old nemeses at the SEC would be so cooperative…Our ownership is 81% in tZERO. Overstock's -- or Medici's ownership is 81%. And Overstock owns 100% of Medici.’
‘Symbiont as well. Symbiont is a company we have. It's smart contracts for digital securities. This is another blockchain meets capital markets company. They have a deal going in Delaware where they're digitizing corporate ownership. We have -- basically, I think the 2 leading companies in blockchain meets capital markets are tZERO and Symbiont. I think those are the 2 companies to watch. We own 81% of one and own 1% of the other, run by [Mark Smith] and Caitlin Long, who's quite a philosopher of this stuff. And you see her name more and more in the press. You'll -- she knows what's going on in this space.’
‘Next, digital locate receipt platform. I'm going to talk about this at length. Over the last 13 weeks, the monster has gone from twitching his fingers and twitching his toes to standing up and walking. And as of 5 days ago, I would say, walking. And as of today, actually really moving. We're really running…How much of Goldman Sachs prime brokerage actually comes from the -- from this thing called securities lending? The answer turns out to be 75% of American prime brokerage revenue. Not 5 -- I thought it was 5% or 10%. I -- but it turns out it's 75%…On the supply side, starting 5 days ago, and now as of today, on a fixed basis, we have $80 billion to $120 billion of lendable securities. We have 2,000 traders as of last Wednesday. Another 3,000 come on within another week. We are in the process of rollout with 12 brokers. And some of these brokers may have 1,000 clients…we basically have found -- well, as I say, the pipe -- I mean, I almost can't say this without laughing, the pipe that is 75% of Goldman Sachs prime brokerage revenue, we have a better solution. It's based in the blockchain. No SEC audits and finding Daffy Duck and Mickey Mouse. Everything is 1:1, rigid, blockchain, immutable, secure, transparent to regulators. It's such a brilliant -- I mean, such an invention. And the idea that we have this -- basically, in short, I'm telling you we have an invention. We're going after 75% of Goldman's revenue…We are hearing from so many clients of prime brokers. I love this. I was just in New York. You can't believe the people who are reaching out to me.’
‘Okay. Next, the other thing that they have at tZERO that's so powerful, that is getting a lot of attention this quarter is a venue for trading ICOs. And because of that SEC report, anything that is a security, any token that is a security has to trade on an SEC-compliant register or exchange that can trade this stuff. Well, like I say, there's -- when it comes to having an SEC-compliant ATS, year to trade blockchain, there's precisely one of those in the world as far as I know. And we own it.’
‘Blockchain meets identity and voting. We have investments in Identity Mine -- digital identity and compliance. Risk management, and we own 5%. I think that was just recently named like one of the hottest 50 companies in Silicon Valley.’
‘We also have settlement. I'm especially proud of settlement. We made an angel investment. It does secure and audible vote -- auditable voting, document authentication, it also started its ICO this September in -- for Internet of Things. A really interesting idea what they've built there. Very classy guys from Belgium and Canada. We own 33%’
‘We thought we could really bring something to this space. We said it 3 years ago, we've been hearing people gripe about it for 3 years. I'm very happy that the world has kind of caught up with this idea that blockchain is here to stay…Medici is -- we think has phenomenal, frankly just ridiculous value. And it will be possible at some point to monetize up from assets like tZERO.’
Marc Cohodes was right…OSTK is likely heading to $100 and beyond. Companies like Bitt may represent greater opportunities than even tZERO.
HERE'S THE RECAP
Overstock is about 70% higher in share price since our first buy alert. Overstock crossed the this the $1 billion market cap barrier and is now @ 1.3 billion in market cap value. This stock is being rewarded for being three years early to the blockchain revolution. CEO Patrick Byrne was profound in his understanding that blockchain would be an even more important innovation than bitcoin. The easiest way to understand blockchain is to think of it as a more secure, decentralized version of Internet 2.0 that cuts out the middleman in peer-to-peer transactions. Bitcoin is merely an application that runs on top of blockchain. In 2014 Byrne set up an entity called Medici Ventures and hired Jonathan Johnson to run it as a blockchain investment arm of Overstock. The upcoming tZERO ICO is the first fruit of their labors. Just the first. Beyond tZERO, Overstock’s Medici Ventures has investments in the following companies:
PEERNOVA (big data for financial institutions on the blockchain)
RIPIO (Latin America bitcoin wallet and micro lending company with 100k users that cuts costs and fees of traditional banking… recently raised $31 million in its ICO)
BITT (on December 15th will launch the first digital wallet backed by a central bank…digital currency from the Central Bank of Barbados)
SPEED ROUTE (U.S. equity order routing via blockchain)
BLUE OCEAN (allows Asian customers to trade U.S. equities during normal business hours via blockchain)
IDENTITY MIND (management of secure digital identities on the blockchain)
SETTLEMINT (creates a marketplace for monetization of data collected by sensors from the Internet of Things)
SPERA (digital office that tasks, invoices, and collects payment via blockchain)
SYMBIONT (platform of smart contracts that recently received an investment from Alibaba’s Jack Ma).
As the herd races towards blockchain investment opportunities, Overstock demands respect as a major player. Today we are adding a 10% allocation of the June 2018 calls.