While it appears that TFG was well advised to seek this protection, the inevitable question levied at the fund is why invest in a company it knew was already under regulatory scrutiny? The answer is likely to be the asymmetry in the investment by having the redemption right (that it clearly felt Ripple would comply with), but also exposure to the upside should XRP have been given the all-clear by the regulator. This means that at the time of TFG’s investment it understood the SEC was investigating XRP’s status and acknowledged it as a material risk. As announced late last year, the SEC has now made such a determination and is taking enforcement action against Ripple. “ When TFG invested in Ripple in December 2019 it bargained for the right to require Ripple to redeem the investment if the SEC determined that XRP – the cryptocurrency used by Ripple in its payment system – is a ‘security’. The core issue seems to be the right to require Ripple to redeem its holdings of Series C preferred stock. Today comes an update from Matt Hose who’s been digging around in the legal paperwork, attempting to shine a bit more light on what the heck happened. I absolutely ‘get’ these worries and have some sympathy for the bear case but I simply believe those concerns are baked into the price already.Īnyway, I mentioned in passing that Tetragon has very recently initiated a legal action against Ripple, as reported by fund analysts at Numis. A few readers have contacted me expressing their skepticism about this perennial unloved fund. The first centers on Tetragon which only joined the list last week. Moving on to funds I have two updates on funds in my alternative funds trading list. Unless otherwise stated, all price returns are calculated based on S&P GSCI Excess Return Component Indices. Lastly, the industrial metals sector declined very slightly by 0.25%, bringing its year-to-date performance up 14.39%.”Īnalysis period: 1 December 2020 – 31 December 2020. Softs also rose, up 6.01%% over the month. The precious metals sector rose in December by 7.46% with gold up 6.4%. Outside the energy complex, silver was the best performing commodity rising 16.9%, followed by corn at 13.6%. Both crude oils’ rose around 6-8%, but natural gas was the worst-performing commodity across all sectors for the second month in a row, falling 12.6%. Meanwhile, energy rose 6.33%, for a year-to-date decline of 46.49%. Five of the six sectors rose in December with the largest advance in grains, which was up 11.76% and bringing its year-to-date increase to 17.01%. Those brought the year-to-date decline to 24.02% as the index finished at 180.71. They report that the benchmark S&P GSCI (ER) index “saw a resilient 5.96% gain in December, building on the very significant 12.03% in November. Grist to the mill of my possible commodity bull argument comes in end of year numbers on commodity markets from experts at SocGen. Lastly, I think we might be about to experience a weaker dollar which could be beneficial for commodity prices. Related to this tailwind is a growing big power scramble to secure some key commodities as tensions increase. I also think that we have seen very capacity destruction in some segments of the spectrum and although excess profits will surely drive-up supply, I’m not entirely sure there is enough elasticity in supply for some commodities. I also think some parts of the commodity spectrum related to the Green push will benefit from very strong multi-decade secular drivers. First the concerns about a reflationary economy pushing into inflationary territory, which could in turn prompt speculators to pile into some parts of the commodity spectrum as inflation insurance. Why my cautiously bullish stance? A number of tailwinds come to mind. That might even impact the energy complex though I’m slightly more skeptical about the prospects for oil and gas prices. I’m not remotely certain of this turn but I’d give it a 40% probability if pushed that we’ll see a major bull run over two or more years in commodities. But by late 2020 the numbers were beginning to turn and I’m growing more receptive to the idea that we might be fast approaching a key inflection point when large bits of the commodity spectrum start to roar ahead. Over the last few years, most though not all, commodities have had a dismal time but 2020 proved to be a real bloodbath for the sector. As long as I have been writing about alternative investments, experts have been predicting a new leg up in the commodity cycle.
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