Buffet Fishing Approach: Does it work well with Cryptoassets?

A US-based blockchain and cryptoasset-focused investment fund have reportedly yielded 93% this year by “fishing where no one else is fishing,” compared with an industry average of 57%.

The Off, The Chain Capital LLC fund, practices in buying crypto-related assets “at fire-sale prices from motivated sellers,” Bloomberg reported, citing the fund’s manager, Brian Estes.

As claimed by Estes, their favorite places to look for deals are people in the industry who, for various reasons, need to raise cash quickly.

Among the deals the fund has done, Estes mentioned a stake they grabbed in Barry Silbert’s crypto-focused venture capital firm Digital Currency Group last year from a shareholder who needed to settle a divorce. Further, the fund is reportedly also in talks to buy 1% of major crypto payments company BitPay and a stake in crypto exchange Kraken, valued at USD 4bn last year.

While, another example of how the fund accumulates assets is claiming they purchase from creditors of the Mt. Gox hacking, which Estes has previously told Bitcoin Magazine yields up to 90% discounts on bitcoin (BTC), and hash rate contracts with miners that reportedly produces 40% discounts on BTC.

As reported by Estes, the fund purchases Mt. Gox claims every week, making them the biggest such buyer in the market.

(While, as stated, in May, Puerto Rico-based firm Gox Rising, led by crypto entrepreneur Brock Pierce, offered Mt. Gox creditors USD 800 per BTC. That month, BTC traded in a range of USD 8,400 and almost USD 10,000.)

Explaining his investment style as similar to Warren Buffet’s, Estes has previously said that his fund is the only value-focused crypto fund they know. “Everyone is trying to do venture capital investing, and we’re using a Warren Buffet style for finding deeply discounted investment opportunities,” the fund manager told Bitcoin Magazine in August, adding that “this value style of investing gives investors a margin of safety in the portfolio.”

Any researchers also seem to agree with the potential for value investing in the crypto space, with Josh Gnaizda, CEO of CryptoFundResearch, telling Bloomberg that the fund’s performance this year “may indicate promise for value investing in the crypto space, even as it has fallen out of favor with traditional equity investors.”