Update - February 15, 2022

A Big Crypto Buyout

Let’s talk about crypto…

Something big just happened, and most folks totally missed it.

It deals with a stock I’ve written about before… MoneyGram International (MGI). I even included it in one of our special reports.

The money transfer company just accepted a very big buyout offer. A well-known investment firm made a move to take it private at a 20%-plus premium.

It marks the culmination of a very strong move higher.

In December of 2018, shares of MoneyGram traded for just $2 each. Today’s buyout puts them at $11 each.

We first researched and recommended the company for one simple reason… crypto.

Many saw Bitcoin and its digital brethren as a competitor to MoneyGram. After all, with the blockchain, there’s little need for a middleman.

But MoneyGram saw the emergence of crypto as an opportunity. It still does.

In fact, the company’s digital future clearly played a large role in why Madison Dearborn was excited to take MoneyGram private.

By ditching the public markets, MoneyGram’s CEO said the firm will be able to “deliver a more expansive set of digital offerings, while leveraging our global platform for new customers and use cases.”

Signs of a tremendous new “digital growth strategy” are all over the deal.

Don’t forget that it was just a few weeks ago that MoneyGram bought a stake in Coinme, an exchange known for its cash-to-Bitcoin offerings. Clearly management saw a big opportunity for folks to turn their cash into crypto and immediately send it around the world.

I bring this up today not to say “I told you so” or to tell you to grab a stake in MoneyGram. That opportunity just passed us by.

Instead, I bring it up to continue to pound the table about the real opportunity in the crypto market. It’s not just a speculator’s game. There are genuine business cases and real-world demand.

The more that crypto becomes entrenched… the higher the intrinsic value of the industry will rise.

I’ve used a baseball analogy to illustrate where we are in the overall trend. To date, I’ve said that we’re not even in the first inning of the game. We’re still waiting to see who the players will be.

We’re getting closer, though. Today’s news tells us the pitchers are starting to warm up.

On the subject of crypto, our shares of Silvergate Capital (SI) are treating us well. The value of the crypto-loving bank is up big-time again today… opening 9% higher this morning.

Since the lows in late January, shares are up nearly 40%.

Very nice.

Finally, we have a big earnings report coming this week.

Sandstorm Gold (SAND) will open its books after the closing bell on Thursday. Wall Street is expecting moderately good news – sales of $30 million and earnings per share of $0.04. Both figures would represent strong growth.

As you’ve likely seen, gold prices have been on the rise in recent days. That jump has come just as the industry’s biggest players have been preparing to open their books, which they’ll do this week.

I expected mixed results from the industry. Prices have been good, but costs are rising.

But that’s why we own a royalty company rather than a typical miner. We care mostly about sales and production volumes. Margins at the mines are a much smaller concern.

That could bring us very good news on Thursday afternoon.

I’ll dig in and let you know what I find.