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MGT Capital Investments Inc (OTCMKTS:MGTI) Is Still A Great Trading Stock

MGT Capital Investments Inc (OTCMKTS:MGTI) Is Still A Great Trading Stock
Written by
Chris Sandburg
Published on
October 28, 2016
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MGT Capital Investments Inc. (OTCMKTS:MGTI) is one of the most talked about small caps in tech right now. Exactly what is going on behind the scenes, no one outside of the company's walls really knows. One thing is for sure, however, and that's price action. Despite strong and unrelenting downside pressure on the company, in the form of law suits, SEC subpoenas, hit pieces, etc., MGT's share price is not only holding, it's rising. The company is up more than 6% on its first OTC open. Yes, it's down on its NASDAQ halt price, but that comparison is moot right now.McAfee knows how to stir up public interest, and has managed to do so masterfully since the company's first disclosure of his (albeit currently tenuous) link with the company. We don't see his efforts easing off, and if a delisting, coupled with the above mentioned pressures, are not enough to induce a mass exodus, then this warrants a closer look.What are we trying to say here?Well, we're not saying that MGT is a buy and hold. It might be, but there's just no way of telling right now. The company has too much uncertainty surrounding its operations to say for sure whether there's any real long term potential. If the announcements that have hit press are representative of underlying operations, then there looks to be some longer term upside on offer. With the majority being press releases, however, and very few actually filtering through to an SEC filing, we can’t rely on them for a solid bias.What we are saying is this: whatever happens longer term, MGT looks like it might make a great trade stock near to medium term. Every time something hits press that looks like it should have the potential to do some damage, the company is ready with a rebuttal (albeit, usually just a PR, but that's not important to the vast majority we've already seen overlook the fact that a PR is not a filing), and the rebuttal absorbs any selling pressure.The latest announcement concerns a letter of intent that details the planned formation of a joint venture between MGT and Bitmain, a Beijing headquartered bitcoin company. For those not familiar with the bitcoin space, Bitmain is a developer, manufacturer and retailer of bitcoin mining hardware. The company pioneered a system called the Antminer, and this system has become if not the most widely used at least the most well known piece of bitcoin mining hardware on the market. It's in its 9th iteration now, and from a spec perspective, it's pretty much unrivaled.A quick Google search will uncover some horror stories (the company basically oversubscribed on each iteration of its Antminer systems months in advance of launch for the first three or four launches) but it's now a reputable entity in the space.McAfee, of course, knows this. Hence the LOI. The partnership looks as though it involves Bitmain licensing hardware to MGT, which MGT is going to set up in US based facilities, and sell hash power to third party US entities.For us, that's a nice model – if it can be executed on.What we are really taking away from the announcement is how many positive press releases MGT can put out relating to the execution. Each of these is going to serve up some upside, and this is exactly what makes the company a great trading stock right now.

"The Company anticipates that it will make announcements in the near future regarding the brand identity and economics of the cloud hashing ventures."

These announcements should help continue to build on the hype surrounding MGT, and so whatever the long term end-game, there's plenty of upside in this one going forward.Note: we're not being naïve here – we know MGT is a risky hold right now. We also know, however, that it's going to move plenty over the coming quarters, and that there's going to be some great breakouts that, for a risk-on trader, will be well worth a look.Subscribe below and we'll keep you updated as this MGT, McAfee story plays out!Disclosure: We have no position in MGTI and have not been compensated for this article.

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