A privately-held investment firm from Chicago, Marlton Partners, has urged Grayscale Investments to embrace the modified Dutch auction tender offer for GBTC shares. According to Marlton, such a tender offer â€œwould materially narrow â€” if not eliminate â€” the discount to net asset value (NAV).â€ This, in turn, offers stockholders confidence â€œin the sponsorâ€™s ability to manage the fundâ€™s discount.â€
Billions in Lost Value
Despite GBTCâ€™s competitive advantage as the worldâ€™s largest bitcoin fund, GBTC shares continue to trade â€œat a significant discount to NAV.â€ According to Marlton Partners, this discount on NAV â€œcurrently represents over $3.1 billion in lost value to trust stockholders.â€
Meanwhile, in an open letter addressed to the Grayscale Investments management, Marlton Partnersâ€™ managing member, James C. Elbaor, insists that current efforts to eliminate the discount have been proven to be inadequate. To bolster this argument, Elbaor points to Digital Currency Group (DCG)â€™s recent announcement of plans to purchase up to $250 million worth of GBTC shares. In the letter, Elbaor said:
According to Elbaor, the marketâ€™s reaction to the announcement by DCG already proves the ineffectiveness of such an authorized purchase. At the time of writing, the discount on GBTC shares had widened to 11.45%.
The Modified Dutch Auction Tender Offer
In the meantime, Elbaor claims that Marltonâ€™s proposed tender offer system gives â€œstockholders the ability to sell their shares for a specified price.â€ He says this can be done â€œwithin a particular window of time for an offered price at a premium to the market price and (is) contingent upon a minimum or a maximum number of shares sold.â€
Further, the managing member tells Grayscale that â€œa clear capital allocation plan via a tender offer in GBTC, will distinguish you and GBTC as the sole digital currency asset manager creating stockholder value worthy of their 2% management fee beyond sole digital currency exposure.â€
Meanwhile, Elbaor says while he expects these conversations (with Grayscale) to be productive, he insists Marlton Partners â€œreserves all rights to take further action in order to protect our investments and those of other stockholders.â€
Do you agree that an auction offer system will eliminate the discount on GBTC shares? Tell us what you think in the comments section below.
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