Investment management firm, Marlton, has applauded the recent decision to authorize the purchase by Digital Currency Group (DCG) of up to a total of $750 million worth of shares of Grayscale Bitcoin Trust (GBTC). This latest action follows Marlton’s recent call for DCG and the Grayscale board to do more to narrow the discount on GBTC shares.
Support for Purchase Authorization
In a statement, Marlton’s Managing Member, James C. Elbaor says this DCG action is “a more constructive approach to alleviating the dramatic discount between the market price of GBTC shares and net asset value.” He added:
We continue to believe GBTC maintains a competitive advantage as the world’s largest Bitcoin fund, and appreciate that GBTC has recognized the need to take meaningful steps that are aligned with stockholder value creation and ensuring the best path forward.
Martlon’s Elbaor argued in an open letter that a modified Dutch auction tender offer for GBTC shares would “materially narrow — if not eliminate — the discount to the net asset value.”At the time, Elbaor warned that if Grayscale Investments did take heed, Marlton reserved the right to “take further action in order to protect our investments and those of other stockholders.”
No Specific Number of Shares
Meanwhile, in its own statement following the new purchase authorization, Grayscale’s parent reveals that “as of April 30, 2021, DCG has purchased $193.5 million worth of shares of GBTC.” These purchases follow an earlier authorization which allowed the DCG to purchase up to $250 million GBTC shares.
However, DCG warns that this new authorization does not bound or obligate it to make any particular purchases. The parent company of Grayscale Investments explained:
The share purchase authorization does not obligate DCG to acquire any specific number of shares in any period and may be expanded, extended, modified, or discontinued at any time. The actual timing, amount and value of share purchases will depend entirely upon a number of factors, including the levels of cash available, price, and prevailing market conditions.
Concerning such future stock purchases, DCG says this information will be available in the GBTC periodic reports filed with the Securities and Exchange Commission (SEC) on Forms 10-K and 10-Q as required by the applicable rules of the Exchange Act.