Fortress Loses Millions On Bitcoin Investment

Tyler Durden's picture




 

Readers will recall that back in October, when the only way for Bitcoin seemed up, none other than the head of sophisticated hedge fund/private equity megafund Fortress Group, Michael Novogratz, recommended buying Bitcoin:  "I have a nice little Bitcoin position,” Novogratz said. "Enough that I’m smiling that it doubled... Put a little money in Bitcoin...Come back in a few years and it’s going to be worth a lot."

Or, you can come back in a few months and now that the momentum euphoria is over and done with, watch it be worth far less.

According to the FT, Fortress "is sitting on losses of $8m on an experimental investment in Bitcoin. The company’s annual report revealed that it bought $20m of the virtual currency in the final months of last year, making it the first mainstream investment company to list Bitcoin among the assets on its balance sheet."

The value of its position was already underwater by the end of December, however, and the price of Bitcoin has continued to slip this year amid scares over the underlying technology and the bankruptcy of what was once the largest virtual currency exchange.

 

By buying the currency for its own account, Fortress not only places a small bet on its future value but also learns more about the practicality of using Bitcoin as a financial instrument in the future and about the potential for business built around virtual currency.

 

The company deemed Bitcoin too speculative, however, to put in any of the funds it manages on behalf of other investors.

Good. Because as of year end, Fortress valued its stash of Bitcoin at $16.3 million at the end of December. Since then Bitcoin has fallen by a further one-quarter so far this year, cutting the value of the stake to $12.1m at mid-Friday prices. The bankruptcy of the formerly biggest Bitcoin exchange will do that.

As for Fortress, don't cry for the asset manager: "The experimental stake in Bitcoin represents a fraction of Fortress’s $2.6bn balance sheet. The company manages $61.8bn in assets and posted a 121 per cent rise in net income to $484m for 2013."

Oh well: on to the next gigamomentum (to borrow a popular prefix) investment which sophisticated investors buy into and just because the dumber money always chases on their coattails, makes them believe what incredible investors they are. So for anyone following in Fortress' footsteps: go for it, just don't come back to check on your money "in a few years." It will have long since been "disappeared." Come to think of it, just like those millions of Mt. Gox bitcoins...

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Fri, 02/28/2014 - 19:54 | 4491919 Maximilien Robe...
Maximilien Robespierre's picture

Yeah Fonestar, where did the money go?

Fri, 02/28/2014 - 19:54 | 4491923 Dear Infinity
Fri, 02/28/2014 - 19:56 | 4491933 fonestar
fonestar's picture

YES!!!  LOVE THIS SHIT!!!

Fri, 02/28/2014 - 20:02 | 4491957 James_Cole
James_Cole's picture

Goes to show how good these guys are at their jobs - fuck up one of the easiest investments in the past couple years. 

Their aptitude seems to be graft, crime or.. lose money. 

Fri, 02/28/2014 - 20:10 | 4491997 SoberOne
SoberOne's picture

Gold, bitchez!

Fri, 02/28/2014 - 20:21 | 4492053 FEDbuster
FEDbuster's picture

Still better than Bill Ackman's JCP bet ..... Booo Yaaaa!

Fri, 02/28/2014 - 20:28 | 4492077 fonestar
fonestar's picture

Once fonestar has established the BWO, he will round up anyone who questioned Bitcoin.

Fri, 02/28/2014 - 20:51 | 4492095 AlaricBalth
AlaricBalth's picture

Most of the herd is rounded up already. They just can't see the fences. Those who questioned Bitcoin are the wild broncos who can't be penned.
I do sincerely hope you do well though. It's just not in my portfolio allocation model.

I will continue to up arrow you however just to muck up the ZeroHedge Fonestar Sentiment Index.

http://bitcoineuphoria.com/zero-hedge-fonestar-sentiment-index-still-neg...

Fri, 02/28/2014 - 21:37 | 4492294 knukles
knukles's picture

Bitcoin is about as secure as the Ukrainian people now that Biden spoke with their Prime Minister.

Fuck yeah.
              Thinking about disrobing and running around yanking on Dr. Happystick.... do about as much good.

What the fuck has happened?
It's mad.
We're all in one monolithic, never ending, infinite, timeless asylum!
Mad, I say...
It's All Mad!

Fri, 02/28/2014 - 21:46 | 4492320 NoDebt
NoDebt's picture

The greatest ponzi schemes always have the most enthusiastic victims.

Fri, 02/28/2014 - 22:00 | 4492356 HarryWanqer
HarryWanqer's picture

LOL... how many billions have been lost betting on Silver or betting against the USD?

Let's hope you metal morons and crypto cunts rip each other to pieces.

USD BITCHEZ!!!

Fri, 02/28/2014 - 22:09 | 4492384 NoDebt
NoDebt's picture

Thanks, Harry.  Always nice to hear the occasional shout-out from the peanut gallery.  How's the view from the cheap seats?

Fri, 02/28/2014 - 22:24 | 4492414 nodhannum
nodhannum's picture

@Harry...It's Howdy Doody Time!

Fri, 02/28/2014 - 22:32 | 4492424 HarryWanqer
HarryWanqer's picture

Watching everyone jealously argue which alternative "currency" is doing less bad is worth the tickets. Notice how losses are denominated in USD... I rest my case.

Fri, 02/28/2014 - 22:38 | 4492438 q99x2
q99x2's picture

Harry. Looks like you are related to that other fool Hamy. Maybe you are siamese twins and he gets to wipe the ass for a year while you get to speak.

Sat, 03/01/2014 - 08:30 | 4492966 f16hoser
f16hoser's picture

One more time people, repeat after me: "If you don't Hold-It, you Don't Own It!"

Why is this so hard for sheeple to comprehend??? If you have/had enough scratch to buy Bitcoin, you should have bought Gold/Silver Bullion. Nuff said.

Fri, 02/28/2014 - 22:45 | 4492454 DirkDiggler11
DirkDiggler11's picture

I haven't lost one cent on my silver and gold phyz stacks because i haven't been stupid enough to sell. My phyz is a store of value for long after my timeline has dropped to zero.

Watch your USD's be worth less that toilet paper FuckTard.

Sat, 03/01/2014 - 00:34 | 4492621 Rukeysers Ghost
Rukeysers Ghost's picture

Wouldn't you be better off if you bought a blue chip collectible like a vintage Bentley or Corvette? They hold their value better than precious metals and are more fun to play with until you assume room temperature.

Sat, 03/01/2014 - 08:13 | 4492949 spinone
spinone's picture

Firearms are a good store of value with permanent utility.

Sat, 03/01/2014 - 15:33 | 4494126 Miner
Miner's picture

The same is true of my Bitcoins.  I was smart enough to pay the 0.0001 BTC to transfer them to a wallet I physically posess, and lost nothing when Gox died.

Fri, 02/28/2014 - 23:41 | 4492552 StillSilence
StillSilence's picture

LOL... how many billions have been lost betting on Silver or betting against the USD?

Let's hope you metal morons and crypto cunts rip each other to pieces.

USD BITCHEZ!!!

 

Please provide your timeline. Then go back 5 years from the start of it, then 10 years, then 25 years, then 50 years, then 100 years, then 500 years and let us know if you think silver ounces or (debt) currencies of any sort would have been the better decision for preservation.

Sat, 03/01/2014 - 05:34 | 4492852 FinalEvent
FinalEvent's picture

There is no loss. He still has as many bitcoins as before.

Bitcoin is not a stock.

It's not ment to be converted to FIAT all the time.

It's like gold. 1 ounce in the hand stays 1 ounce in the hand. 1 bitcoin in your wallet stays 1 bitcoin in your wallet.

Unless you are too stupid to give it to someone else. Would you do that with your gold too?

Sat, 03/01/2014 - 04:43 | 4492788 daemon
daemon's picture

" Let's hope you metal morons and crypto cunts rip each other to pieces. "

Don't forget the other toilet paper (USD, EUR, ....) eaters. And also the oil,uranium, .... eaters.

I've always dreamed of playing the last of the Mohicans.

Sat, 03/01/2014 - 16:44 | 4494382 Lionhearted
Lionhearted's picture

What made USD the world reserve is that it was once backed by precious metals. Now it's backed by NOTHING and look what has happened to it since 1913. Nixon drove the final nail in the USD coffin in 1971 when everyone decided that they wanted their PM's instead of the dollar. Look what's happened to the VALUE of the dollar since then. From 1833 to 1913 an once of gold was $18.94. From 1913 (Creation of The Fed) to 2013 the price went from $18.94 to $1326.00. I posit that the value of gold has not gone up the value of USD has gone down. Holding longterm savings in USD only allows The Fed to steal your money.

Sat, 03/01/2014 - 05:35 | 4492785 daemon
daemon's picture

 

" The greatest ponzi schemes always have the most enthusiastic victims. "

Probably.

But, .... you and a lot of the people who agree with you, when reading this :

" ... investment which sophisticated investors buy into and just because the dumber money always chases on their coattails, makes them believe what incredible investors they are. "

just don't seem to realize that, depending on the circumstances, this is applicable to everything, ...  even precious metals.

In the end, it's always some process that happens between those who have informations versus those who haven't. Maybe not that far from ponzi schemes, in this respect.

Fri, 02/28/2014 - 22:22 | 4492408 nodhannum
nodhannum's picture

The new movie, 2014...My G_d...it's full of Biotcoins!

Sat, 03/01/2014 - 14:55 | 4494003 Keyser
Keyser's picture

Dave? Dave's not here.

 

Fri, 02/28/2014 - 20:51 | 4492160 funthea
funthea's picture

Fone, dude, I don't even have your kind of enthusiasm for gold. You do realize the very real possibility that the day may well arrive where you are left holding your dick in your hand. Fawning over memories past of when you were masturbating to your virtual ivory tower of bitcoin. 

Fri, 02/28/2014 - 20:54 | 4492180 fonestar
fonestar's picture

That is impossible.  fonestar's PAL has already run all probablistic outcomes through his simulator.

Fri, 02/28/2014 - 21:05 | 4492204 knukles
knukles's picture

From a Quantum Mechanical perspective I'd suggest your probability simulations are worthless.  (It's philosophical thing that, relating to your design of the experiment, the measuring apparatus design and physical composition itself, observations, your participation therein, and assumptions as to the nature of the wave or particle you assume to be measuring let alone the more fundamental consideration as to whether any of it is even real.)
You, every jack and his dog.

Fri, 02/28/2014 - 21:16 | 4492243 nope-1004
nope-1004's picture

I think he meant to say "stimulator".  lmao

 

Fri, 02/28/2014 - 21:05 | 4492210 Bay of Pigs
Bay of Pigs's picture

I'm sure the people invested in Mt Gox would agree with you. It's impossible they have lost their money.

 

Fri, 02/28/2014 - 21:31 | 4492281 FEDbuster
FEDbuster's picture

Mt. Gox, the MF Global of virtual currency exchanges.

"and it's gone.....  What do you mean it's gone?  It's all gone." Southpark

"If you can't stand in front of it and defend it with an AR-15, you don't own it" Ann Barnhardt

Fri, 02/28/2014 - 21:39 | 4492299 knukles
knukles's picture

Q:  So my hemorrhoids are good?
A:  Yes, Knukie, better than Bitcoins!

Fri, 02/28/2014 - 21:49 | 4492329 LoneStarHog
LoneStarHog's picture

Simulator? Is that the one with the handle, makes a flushing sound, as the contents swirl around a bowl, then fall into a hole, never to be seen, again?

Fri, 02/28/2014 - 21:56 | 4492353 erg
erg's picture

I've developed an injury from faithfully junking you. Pay me now!

And not in your vaporcoin or ghostcoin or whatever the fuck you call it.

Sat, 03/01/2014 - 09:58 | 4493042 Slave
Slave's picture

Can we please stop feeding this troll? He'll go away if you just ignore him...

Sat, 03/01/2014 - 11:19 | 4493257 fonestar
fonestar's picture

Although fonestar is drawn towards Bitcoinophobic activities, simply not replying to him does not change his application specific mission.

Thank-you for choosing fonestar.

Sat, 03/01/2014 - 11:49 | 4493354 Hooter Shaker
Hooter Shaker's picture

I'm pretty sure fonestar is a vrtual junk collector.  I'm going to help him out with another junk.  He will be mighty dissappointed when he takes it all to the scrap yard and finds out they only pay for REAL junk.

Sat, 03/01/2014 - 11:47 | 4493353 Black Warrior W...
Black Warrior Waterdog's picture

With comments like these, why does anyone take this troll seriously?

Sat, 03/01/2014 - 12:26 | 4493494 Jonas Parker
Jonas Parker's picture

"Once fonestar has established the BWO, he will round up anyone who questioned Bitcoin."

 

C'mon down to Texas and try it, asshole! We don't like threats!

Sat, 03/01/2014 - 12:31 | 4493516 Jonas Parker
Jonas Parker's picture

Bitcoin - the investment that keeps on taking...

Fri, 02/28/2014 - 22:34 | 4492429 Lets Buy The Dip
Lets Buy The Dip's picture

get physical yes I agree. BITCOIN is DOOMED! => http://bit.ly/OLEttU

 

 

Sat, 03/01/2014 - 04:04 | 4492783 anu
anu's picture

If I had a gold atom for every time someone said "Bitcoin is dead|doomed" I'd be richer than Goldfinger

Sat, 03/01/2014 - 20:56 | 4495235 logicalman
logicalman's picture

I think your math is a bit off....

in 197gm of gold there are 6.02 x 10 to the power 23 atoms.

That's a lot of atoms.

Sat, 03/01/2014 - 03:57 | 4492776 anu
anu's picture

Same recommendation as for gold: Paper gold is just a promise. Paper Bitcoins is just a promise. Don't store Bitcoins in an exchange, don't store them on computers. Store them in a brainwallet:

http://brainwallet.org/

Fri, 02/28/2014 - 20:01 | 4491960 Mentaliusanything
Mentaliusanything's picture

Smartest Kids on the Block!

Fri, 02/28/2014 - 20:08 | 4491985 max2205
max2205's picture

Traded it on paper and now I am a paper millionaire

Sat, 03/01/2014 - 02:20 | 4492719 Mentaliusanything
Mentaliusanything's picture

minus 4 for what?  time and time again we see companies like Fortress dabble in momo. money is cheap so they chase momentum. All it takes is a sudden movement, a gust of air and the house falls down. No longer do you understand sound money. Sound money is land, sweat, toil and the product that flows from it. Sound money is not taking margin at 2 & 20, that is middleman theft. judge a man by this hands and what he does with what they produce. Yes I have to admit that my eldest son has been in Bitcoin from the begining. He asked and I gave him cash to build the computer and he did, by hand with parts sought all over the World. I never asked why he needed $ 15 thousand. At 25 he can buy me 50 times over. Sometimes I regret letting him pull a computer apart at the age of 10. Upside is I never need to pay for Norton virus or anything that appears blocked and encripted because he goes into a black screen and alters code. The best thing is he so totally understands the Fiat monetery system and is expert is solving complex algorithms. The future is our children and trust me they are aware and very awake. And they are pissed off. just wish he had calouses on his hands and a tan from nature. As for Bitcoin, it works. just has some start up glitches. The weaknesses are known and are being addressed. I admit I don't understand it fully but the advantages are both enormious and destructive to an old system that appears to be failing. Look for E bay/ Pal to accept it and its mainstream. It is clear ex teething troubles it could be ( and I say COULD) be a solution to unsound money. Pity about the greed part of human make up. Ok I have some poddy calves to feed and the Combine needs a new battery. The Wheat and corn however looks strong and healthy and will bring a good price.  

Fri, 02/28/2014 - 20:17 | 4492024 MeMongo
MeMongo's picture

Phoney!  Shit is not to love. Get on board with some real tangible assets before it's too late

And don't call me "tardo"!

Do NOT follow this link or you will be banned from the site!