Morgan Creek's Yusko Sees Opportunity In Saudi, Bitcoin

Aug 18 2014 | 11:02am ET

Morgan Creek Capital Management CEO Mark Yusko sees Saudi Arabia and Bitcoin as “truly” special situations—and investment opportunities.

In his Q2 2014 Market Review & Outlook, Yusko considers Saudi Arabia in light of its decision to open its stock market to foreign investors in 2015. (Until now, foreigners could buy shares only indirectly, through participating notes issued by a broker-dealer with operations in Saudi.)

The opening of the market, he writes, “should serve as a significant catalyst to move the market higher as capital flowing in from global institutional managers is likely to equate to a significant portion of the current Saudi market cap. For perspective (and to see why this is a big deal), the Saudi market has a market cap of $550 billion, twice the size of Turkey, larger than UAE, Qatar and Kuwait combined, and about the same size as the South African and Russian markets.”

Moreover, he adds, opening the market will allow MSCI to add Saudi to their emerging markets index (with a weighting that could be as high as 4%) which could attract “tens of billions” of foreign capital into the country. This, writes Yusko, “presents a compelling Beta opportunity, especially for investors that can access the market before it officially opens to foreign investors.”

As for Bitcoin, Yusko sees it as “a truly disruptive technology” and “an interesting investment opportunity.

Bitcoin, he writes, is in the early stages of “mainstreaming” as prominent venture capitalists (including David Hornick of August Ventures) fund startups that “will actually seek to provide Bitcoin to the masses.”

Add to that the claim by eBay's CEO that PayPal will eventually have to integrate digital currencies into its payment platform and New York state's recently proposed regulations for such currencies and Bitcoin, writes Yusko, becomes “an attractive theme to keep an eye on going forward.”


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