Johnny-come-latelies

Generally I refrain from back-to-back posts with similar topics but decided to make an exception this week as the moving parts have kicked into high gear.  My post last week addressed my uneasiness with cryptocurrency as well as my interest in the underlying blockchain technology.  It appears that my view has some support as two blockchain ETFs debuted on January 17th (BLOK and BLCN) and one January 25th (LEGR).  This should be followed by KOIN next week.  Horizons and Harvest (HBLK) also have ETF applications pending.  Grenadier penned a piece on Seeking Alpha that did some analysis on the first two.  Four of LEGR’s top five holdings are included in either one or both of the originals so it will probably be similar.  David Snowball highlights this sentiment in his piece There’s no idea so dumb that it won’t attract a dozen ETFs stating, “…there are no publicly traded companies that specialize in blockchain; there are mostly companies with a dozen other lines of business that have some sort of efforts going into blockchain.”  This is 100% correct.

Not being above saying “I told you so”  though I try not to use it very often (probably due to lack of opportunity), I decided that a piece on my blockchain investments might be a timely topic this week.
I own 36 companies that have some degree of publicly disclosed exposure to blockchain that are not components of any of these ETFs which can be grouped as follows:

OWNED / NOT IN A BLOCKCHAIN ETF

CATEGORY QTY NOTES
Application Development 19
Consortium Member 6
Investor 5
Hiring Employees 3
Patent 2 WU, AAPL
Token/ICO 1 DragonCoin (DRGN)
I will acknowledge that perhaps dipping a toe in the water is not as sexy as going ‘all in’ (by comparison), but the real grunt work is in the trenches – like cross border transactions or multinational smart contracts.  If successful, this is where the productivity gains and subsequent profits reside.
Returning to this posts’ focus, the following companies are both in my portfolio and contained in one (or more) of the ETFs.  I would caution that most of these issues have seen gains from either the market in general, the hype surrounding the technology or being named to the ETFs (or all of the above) – do your due diligence.

I’ve  provided my companies, date purchased, gain and ETFs owning them.  As the technology – and space – is rapidly evolving, this list is is subject to change.  Check the respective ETF prospectuses for their actual and total holdings.  Personally, I own a fair representation – but not all – of this space.

MY BLOCKCHAIN COMPANIES

COMPANY DATE TTL GAIN
ETFs
Visa Inc./V 6 Jan 2015 63.15% BLCN,BLOK
PNC Financial Services/PNC 6 Jan 2015 46.94% BLOK
Toronto-Dominion Bank/TD 25-Mar-2015 22.2% BLCN
Wells Fargo/WFC 26-Mar-2015 -7.02% BLOK
Broadridge Financial/BR 6-Nov-2015 44.41% BLCN,BLOK
Square, Inc./SQ 20-Nov-2015 224.53% BLOK
Bank of NY Mellon/BK 24-Dec-2015 22.45% BLOK
MasterCard Cl A/MA 24-Dec-2015 47.43% BLCN,BLOK
Goldman Sachs Group/GS 24-Dec-2015 24.42% BLCN,BLOK
Bank of America Corp./BAC 24-Dec-2015 47.75% BLCN
IBM/IBM 24-Dec-2015 5.4% BLCN,BLOK
State Street Bank/STT 24-Dec-2015 33.41% BLCN,BLOK
Citigroup Inc/C 24-Dec-2015 31.57% BLCN,BLOK
QUALCOMM, Inc./QCOM 31-Oct-2016 -5.62% BLOK
Cboe Global Markets/CBOE 14-Dec-2017 8.0% BLOK
CME Group Inc./CME 14-Dec-2017 1.9% BLCN,BLOK
Cognizant Tech. Sltns./CTSH 14-Dec-2017 9.46% BLOK
Intuit Inc./INTU 14-Dec-2017 8.68% BLCN
JP Morgan Chase & Co./JPM 14-Dec-2017 9.56% BLOK
Microsoft Corporation/MSFT 14-Dec-2017 9.73% BLCN,BLOK,LEGR
Nasdaq Inc./NDAQ 14-Dec-2017 4.17% BLCN,BLOK
NVIDIA Corporation/NVDA 14-Dec-2017 30.87% BLCN,BLOK,LEGR
NOTE: Dec 2017 purchases have two dividend offsets so far

As always, the question is, “How much room is left for these puppies to run” and are these ETFs late to the party? If a recent Morningstar report is correct, the prediction is for a 54.5% CAGR between 2017 and 2023 in the blockchain space.  Yet a Harvard Business Review article best illustrates the challenges to accelerated adoption.

Regardless, these are all companies that pay a dividend, have seen an impact on their stock price due to blockchain euphoria, yet are not dependent on blockchain or cryptocurrency for their ongoing success.

As always, just my personal worldly observations and next week we return to our regular programming with month end results (already?).

Update 29 Jan 2018: During week 1 of operation, these ETFs experienced $240 million inflows

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4 thoughts on “Johnny-come-latelies

  1. SR, I think I mentioned on your last post that my heads in the sand in this area, for better or worse. This approach to blockchain you write about is closer to my area of interest. I guess I participate in this area of blockchain by default with some of my holdings and will keep it that way for now. Again, for better or worse. I’m just slow to adopt new things and direct investment in coins which seems to be the sexy thing these days is not for me right now. Instead, I will keep a good supply of canned goods on hand for bartering just in case our financial systems fall apart. 🙂

    Tom

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  2. Canned goods as currency, why not? Maybe it’s time to add CPB to the portfolio. 🙂 I’m just amazed at how quickly this concept is morphing into ETFs – maybe my crystal ball is still at work seeing the 1 month returns obtained by front running the ETF creation. I think the real story (and long term return) is hidden in the companies quietly researching applications that didn’t fit the ETF criteria like MMM, PEP, SYY, MKC, HD and the five major Canadian banks – all of which are held in my portfolio.

    Charlie

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  3. I agree. Other than the tax cut and some misguided (imho) optimism there is little reason for the holdings I purchased last month to have appreciated this much this fast other than being pegged as a blockchain company. Broadridge,(a 2015 buy), processed proxy votes last year and does the same this year. Getting attention that part of this is performed via blockchain doesn’t warrant a 34 PE. Perhaps there’s a lack of other decent investing ideas available?

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