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Should You Invest in Crypto with Morgan Creek Capital?

Is Crypto A Smart Investment?

Warren Buffett famously lampooned investment advisors saying, “I hate to use the example, but you can have monkeys throwing darts at a page, and, you know, take away the management fees and everything, I’ll bet on the monkeys.” I suspect Mark Yusko is one such investment manager Mr. Buffett had in mind when he said that.

Mr. Yusko’s firm, Morgan Creek Capital (MCC), has quite a record of, how should I say this - getting it wrong. Earlier this year MCC launched an ETF in conjunction with AdvisorShares called the Managed Bitcoin Strategy ETF (ticker: CRYP). “We believe steadfastly that blockchain technology and digital assets present a generational opportunity for investors,” Yusko was quoted as saying in the April 27, 2022 press release. In the subsequent months, CRYP has lost over 40% of its value (over the same period the S&P 500 index is down about 5%). With total expenses of 1.59%, it would seem the only person making money on this investment would be Mr. Yusko. However, according to the AdvisorShares website the CRYP ETF only has $228,000 of assets under management as of 11/14/22, so his take, like his returns are paltry.  

I’ve outlined my thoughts on crypto in an earlier blog post. Its safe to say that I share Charlie Munger’s rather low opinion of crypto. Yet as the recent bankruptcy of FTX demonstrates, greed tends to trump reason when FOMO is about.  

Is Mark Yusko Often Wrong But Never In Doubt?

This isn’t Yusko’s first fund gone bad. In 2017 I wrote about Yusko’s 2010 launch of the AdvisorShares Morgan Creek Tactical ETF. The fund struggled to post positive returns and liquidated after about 6 years. It would appear CRYP is headed for a similar fate. The lesson here is there’s always someone willing to sell a story to investors, irrespective of the merits of the investment. Yusko, it seems, is banking on the proverb a fool and his money are soon parted.