Super Friday

The current holdings (as of today 4th July) are:
1) BAE (BA.) : 1115 shares valued @ £6,820
2) BlackRock Smaller Co IT (BRSC) : 1181 shares valued @ £13,995
3) G4S (GFS) : 2058 shares valued @ £6,970
4) GlaxoSmithKline (GSK) : 393 shares valued @ £6,395
5) GVC Holdings (GVC) : 1031 shares valued @ £7,945
6) HG Capital Trust (HGT) : 220 shares valued @ £3,670
7) ICG Enterprise Trust (ICGT) : 470 shares valued @ £3,433
10) JPMorgan Emerging Markets (JMG): 625 shares valued @ £5,130
11) Lancashire Holdings (LRE) : 1209 shares valued @ £8,670
12) Legal & General (LGEN): 2489 shares valued @ £6,580
13) Pacific Assets (PAC) : 1931 shares valued @ £4,920
14) Paysafe (PAYS) : 7000 shares valued @ £40,810
15) Sage Group (SGE): 931 shares valued @ £6,420
16) Schroder Asia-Pacific (SDP) : 1252 shares valued @ £5,346
17) Segro (SGRO) : 1607 shares valued @ £8,188
18) Senior (SNR) : 1574 shares valued @ £3,787

Shareholdings total = £139,079
19) XBT Provider (BIT-XBT) : 798 units valued @ £8,158
Cash @ £669
SIPP Value = £147,906

When I wrote my last blog on 4^th July, it was with the news that Worldpay had received and offer (which was successful) and that Paysafe (PAYS) would fit the bill as a follow-up target.  Here we are, not 3 weeks later, and Paysafe is the subject of a US$3.70bn, 590-pence a share, offer from Blackstone and CVC Capital Partners.

I’m hoping that the 590-pence offer will be rejected by the board of directors as insufficient as, in my opinion, PAYS is worth a lot more than that. I’d be more comfortable with a bid that values PAYS at about US$8bn (which would be 800-pence a share). Apparently, Blackstone & CVC first approached PAYS in May but that initial offer was rejected – since then the PAYS board of directors has received 4 offers! This could be interesting.

In another major development since early July, I’ve decided to sell-off my holding in Imperial Brands Group (IMB) at 3422-pence, recouping £5,842.  Since investing £6,500 into the shares in March at an average of 3840-pence, the SP of this company has done nothing but go down.  There has been a flat-line of the SP through July, but the outlook is difficult to understand. There is a bid expected from Japan Tobacco International (JTI) – however, as the SP of that company has also been in retreat in 2017, any bid may be a long time coming.

I’ve taken the proceeds of that sale and bought the crypto-currency Bitcoin (BTC) via XBT-Provider tracker fund (BIT-XBT). This week, I’ve invested £7,540 into Bitcoin as that represents approximately 5% of the value of the SIPP. Approximately 200 units of BIT-XBT buys one Bitcoin, and I have accumulated 798 units. So, I’m in at a £1,890 per BTC (approx. US$2,455 per BTC).  The price of Bitcoin fluctuated a fair bit this week, from a low of US$1,863 to a high of US$2,940. As I write, the price is at US$2,740 and as more and more “legitimacy” is given to BTC (this week the London Stock Exchange started accepting BTC) in my opinion those negative fluctuations will reduce, and a long-term positive outlook will dominate.  It would not surprise me to see BTC trading at over US$4,000 before the end of 2017.

Worldpay bid, and the onset of Crypto-coin

A change in direction this week on the SIPP, and it could lead to a significant future investment strategy. First though, early today there was strong speculation (later confirmed) of a bid for the Worldpay Group by the US-based payment processing and technology provider Vantiv Inc and JPMorgan Chase Bank. The SP is up over 20% this morning from Monday’s close of 320 to 390 as I write this (noon on Tuesday 4^th July). That a major bank is starting to take the internet payment processing system seriously enough to put together a bid for Worldpay is extremely significant. To me it signals that banks (some of them at least) are beginning to come to the conclusion that the internet (combined with other technology such as smart-phones and pads) is bringing an end to the banking industry as we know it.   

For my SIPP, there has been some strengthening of the SP of PAYS (up 9 to 515) and I can see that should the Worldpay bid prove successful, and Worldpay is swallowed-up and removed from the FTSE100, then we could see other banks looking to find their own similar target.  PAYS would fit that bill well and, at only 35% of the Market Value of Worldpay, would be a very cheap option. Not that I’d expect a bid at 515-520 for PAYS to be successful, we can look forward to a significant premium on that SP should a bid occur.

I've long been of the opinion that banks as we know them are coming to the end of their shelf-life and a new form of finance-house will take their place. It will mean "adapt or die" for the major banks, and it looks like JPMorgan Chase is the first bank to take that step to protecting and preserving their future.  Hopefully, my strong position in PAYS which forms 25% of my SIPP value will see that opinion bear fruit.  However, I have been growing in awareness over the past 12-months of another financial development that is undermining the foundations of the banking industry - crytocoin.

The major "player" of crypto coins is Bitcoin which currently have a total market value of US$43bn which is approximately 40% of the total value of cryto coins in circulation.  Yes, cryto coins have a total market value in-excess of US$100bn (see coinmarketcap).
There was recently an article on the Crypto Coin phenomena published in the Investors Chronicle and I expect we will see more written about crypto coin in the next 6 months as the banking industry starts to get it's head around just what the future does (or rather, doesn't) hold for their businesses. The big advantage of something like Bitcoin is that international financial transactions using bitcoin "side-step" the need to pay commission and fees to the banks - and banks make considerable profits from the movement of currencies in business around the World. That profit is in serious danger of being lost to the banks, unless the banks do something about it - and that (in my opinion) can only be by taking a serious interest in the cryto coin market.

With much of my funds tied-up in the SIPP, in order to take advantage of cryto coin I've bought some units in the XBT-Provider tracker fund (BIT-XBT) which trades in "notes" which tracks the movement in the Bitcoin currency. My intention is to build-up a position equivalent to 5% of the value of the SIPP over the next 6 months, and my initial purchase is £1,250 worth of units.      

The current holdings (as of today 4th July) are:
1) BAE (BA.) : 1115 shares @ 654
2) BlackRock Smaller Co IT (BRSC) : 1170 shares @ 1175
3) G4S (GFS) : 2058 shares @ 341
4) GlaxoSmithKline (GSK) : 393 shares @ 1710
5) GVC Holdings (GVC) : 1031 shares @ 775
6) HG Capital Trust (HGT) : 220 shares @ 1680
7) ICG Enterprise Trust (ICGT) : 470 shares @ 743
8) Imperial Brands (IMB) : 170 shares @ 3454
9) JPMorgan Emerging Markets (JMG): 625 shares @ 791
10) Lancashire Holdings (LRE) : 1209 shares @ 705
11) Legal & General (LGEN): 2489 shares @ 262
12) Pacific Assets (PAC) : 1912 shares @ 246
13) Paysafe (PAYS) : 7000 shares @ 515
14) Sage Group (SGE): 931 shares @ 678
15) Schroder Asia-Pacific (SDP) : 1252 shares @ 409
16) Segro (SGRO) : 1607 shares @ 487
17) Senior (SNR) : 1574 shares @ 235
18) XBT Provider (BIT-XBT) : 129 units @ 986.82

Cash @ £531

SIPP Value = £140,140