x min read

MGT Capital Investments Inc. (OTCMKTS:MGTI): Forget The Shorts

MGT Capital Investments Inc. (OTCMKTS:MGTI): Forget The Shorts
Written by
Chris Sandburg
Published on
September 1, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook

This week, a short bias blog post on Seeking Alpha has put a dent in MGT Capital Investments Inc. (OTCMKTS:MGTI). Before the post hit press, the company was trading in and around $4.23 a share. By market close on August 31, MGT went for $3.14 a piece having bottomed out as low as $2.86 a share.The argument put forward by the above-mentioned blog post and its author was that MGT isn't able to make up its mind as to what business it wants to be in and that this is a sign of an uncertain and unstable future for the stock. MGTI Daily ChartAnyone who's been with us for a while will know that we have followed MGT closely over the last year and a half. We've tracked it all the way up to this point and have, on numerous occasions, taken a close look at its business model in an attempt to decipher what it's doing and where it's going next.Sure, there have been periods of uncertainty during which the company seems to have flip-flopped between one core focus and another. This time last year, it was all about the cybersecurity hardware, Sentinel. Earlier this year, focus switched to a privacy phone that the company is creating in collaboration with Nordic IT. Against a backdrop of all this, however, and at least as far as the period across which John McAfee has been involved with the company is concerned, MGT has maintained a focus on the cryptocurrency space.As the price of bitcoin breaks through $4700 and as more and more mainstream coverage of cryptocurrency hits press, this focus has proven reliably rewarding and, whatever the shorts want to say about the company, it is cryptocurrency that is driving the upside momentum, nothing else.Since around this time last year, MGT has been building what amounts to one of the largest mining facilities in the US and is now reportedly processing transactions at a rate of 10 petahash. The return on this processing power is substantial, and at current prices, could be bringing in as much as $1 million in topline per month for the company. As the price of bitcoin continues to rise, and assuming that MGT is holding onto its digital currency return as opposed to converting it into fiat, so will the company's net asset balance.The Sentinel product is reportedly still slated to hit markets this year, with this month pitched as an initial rollout. The privacy phone is the same, but around six months behind Sentinel. For us, however, this doesn't really matter too much right now. We aren't in a position to form a long-term bias on MGT if for no other reason than the long-term outlook for cryptocurrency is incredibly difficult to predict. Short term, however, things are much clearer – bitcoin may correct soon, but the correction won't last long and MGT is going to track the price of the underlying bitcoin asset for the foreseeable future.A couple of weeks ago, we got news that the company had taken on an injection of capital from an entity called UAHC that will see it expand its mining facility and increase its processing power. This serves to reinforce the company's laser focus on cryptocurrency and very much reinforces our thesis.Don't go into this thinking MGT is a risk-free allocation. Any company at this end of the market is going to be volatile. With that said, however, it remains one of the top stocks for us in one of the most active industries in the world right now and, as said industry continues to expand, it's tough to see MGT doing anything but the same.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on MGTI, sign up below!Image courtesy of Nathan11466 via FlickrDisclosure: We have no position in MGTI and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.