Success Universe, a casino-based investment firm, has purchased 24.3 bitcoin with a value of around $1.3 billion. The purchase was announced in a voluntary disclosure which the company submitted to the Hong Kong Stock Exchange on which it floats. This huge purchase is in part aiming to mitigate the companies high-risk portfolio of casino stock.
Success Universe recently announced that it took an $18 million loss on its 2020 P&L.
Most of this loss was due to the company's 49% share in the Macanese casino: Ponte 16. Backing directly onto the waterfront, Ponte 16 looks modeled on the columns of St Mark's square in Venice. The canal-front casino took a bath in 2020 thanks to COVID.
On top of its realized losses, Success Universe also has another $30 million tied up in loans to Ponte 16. These loans are looking increasingly risky. Bitcoin might give the investors a little more security by diversifying their assets.
It's not all doom and gloom for Success Universe though. Hope is coming back to Macau with a nice bump in visitorship since China reopened the border. But clearly, Success Universe is looking to hedge its portfolio somewhat.
The stock market announcement made it clear that the investment was a long term one. Success Universe is not out to play the crypto markets. It wants to hold Bitcoin on the assumption it will ride out the volatility and come out on top.
"Although the cryptocurrency market is volatile in the near-term," the announcement reads. "And the prices of cryptocurrencies may be subject to fluctuations, the Board [of Success Universe] believes that there is still room for cryptocurrencies in general [...] as a dependable store of value which is one of the longest standing and the largest cryptocurrencies in terms of market capitalization, to appreciate in value."
A bit of Bitcoin
Macau has been flirting with the idea of legalizing digital currencies. Although this is most likely a way of allowing China's digital yuan into the SAR, it may also end up allowing Success Universe to liquidate parts of their investment on something closer to an as-needed basis.
Success Universe also view Bitcoin as more specific hedge against the inflation rate of printed currency.
“[The Board] considered the uncertainty in the global economy [...] including quantitative easing adopted around the world," the board writes. "And depreciation pressure on the value of fiat currencies due to aggressive increases in money supply by central banks globally. The Board believes that the investment would diversify the Group’s investment portfolio and enhance its asset value.”
This single trade represents about 1/1,000th of Bitcoin's peak market cap. Might be enough to move the needle on Doug Polk's investment portfolio.
Featured image source: Flickr by Kevin Chung
