It has been a tough year for some of the largest hedge funds in the country, and big-name fund managers are taking out their frustrations on bitcoin and other cryptocurrencies.
This week, Baupost Group’s Seth Klarman and JANA Partners’ Barry Rosenstein became the latest investing gurus to question meteoric cryptocurrency price gains in their year-end letters to investors.
According to the JANA letter, the cryptocurrency market is the most obviously overpriced financial market today.
“There are clearly pockets of excess in the financial markets to be concerned about – the crypto-craze seems to be the epicenter of it,” Rosenstein says in the letter.
Klarman, who’s known as a disciple of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) CEO Warren Buffett’s style of value investing, said the extreme volatility and price gains in major cryptocurrencies are detracting from their potential use as stores of value or means of value exchange.
“While we have long had our own concerns over the tendency of central bankers to debase paper currency by printing more and more of it, the proliferation of hundreds of virtual currencies seems far more likely to be a craze,” Klarman wrote to investors, according to CNBC. “Cryptocurrencies seem more like tulip bulbs for the digital age.”
Klarman has previously called bitcoin a “trading sardine” for speculators. Earlier this month, Buffett himself doubled down on his bearish stance on cryptocurrencies, telling CNBC he would bet against every global cryptocurrency over the next five-year period if he could easily do so.
“In terms of cryptocurrencies, I can say with almost certainty that they will come to a bad ending,” Buffett said.
Both Klarman and Rosenstein’s funds lagged the 19.4 percent return of the Standard & Poor’s 500 index in 2017, but they were not alone. JANA’s Master Fund gained 5.6 percent on the year, while Klarman’s Baupost generated a return in the “mid single-digits.” Bill Ackman’s Pershing Square Capital reported 2017 losses of 4 percent this week. David Einhorn’s Greenlight Capital and Nelson Peltz’s Trian Fund Management reported lackluster gains of 1.6 percent and 3.7 percent respectively.
In a recent interview with Reuters, Peltz also said…
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