Last week was a good week at Hidden Profits.
Actually, last week was a great week at Hidden Profits! You see, one of my recommendations was bought out. American International Group Inc. (NYSE: AIG) announced an all-cash deal to buy Validus Holdings Ltd. (NYSE: VR) for $5.56 billion. The stock popped 44% on the announcement.
The best part?
The position was recommended only three months prior, give or take. That’s a tidy triple-digit annualized return in what I considered a relatively low-risk, if not misunderstood, stock with impeccable shareholder yield characteristics.
However, the upside experienced in Validus is nothing compared to what February’s Hidden Profits stock recommendation has in terms of long-term potential.
I’m diving into the cryptocurrency craze head first!
I’ve been watching cryptocurrencies such as Bitcoin very closely in recent months – I mean, who hasn’t?! The rise in the value of these currencies has been nothing short of staggering.
The broader investment public is now paying full attention (and top dollar). Futures contracts started trading on Bitcoin, which some felt legitimized it as an asset class, and now you can find the price of Bitcoin on data services as easily as you can find the Dow Jones Industrial Average.
But the question remains: Do these currencies have value, and is all of this sustainable?
Well, I’m very skeptical in both directions. I wouldn’t be surprised if Bitcoin goes to $1,000 or $40,000. To me, it seems like a vehicle for nothing more than speculation.
Once the general public gets involved in a sector, there’s usually a fervor which lifts all stocks in the space. But, just like with the PC revolution, the internet, and social media, there will be very few winners and many, many of losers. That’s why I am skeptical of cryptocurrencies.
However, I’m not skeptical about blockchain technology, which often gets overshadowed by the currencies themselves.
Blockchain technology is essentially a digital ledger that can record transactions. It’s incorruptible, with the information dispersed across its network and no single point of failure. The data is public and verifiable. These characteristics make the blockchain incredibly valuable.
I think blockchain technology will be huge and revolutionary. I also think that investors don’t differentiate between the currencies, many of which may become worthless, and the blockchain technology.
Recently, I looked long and hard to find investment opportunities that could benefit shareholders from the blockchain.
I’m not talking about lemonade companies that change their name to Lemonade Blockchain and see their stock price rocket higher. I mean real companies. Companies with management teams with real experience in financial services. Companies that are well funded and that have backing from smart investors.
The billionaires. I want to ride on the coattails of the billionaires.
After searching and searching, I think I have found such a company.
Its stock has certainly popped along with many other companies involved in the crypto craze. But it has an experienced management team, backing from some marquee investors, and technology that can revolutionize the financial services industry.
I also think that the economics of the business can be very high margin, leading to tremendous cash flow profits over the course of time. The businesses that survive and thrive will make ripe acquisition targets or benefit shareholders by returning large sums of cash in the form of buybacks or dividends.
We’re still in the early phases of this revolutionary technology, and Hidden Profits plans to jump on that train and take a ride with its February 2018 stock selection.
John Del Vecchio
Editor, Hidden Profits