It’s fast transpiring that investors are starting to have the view that the lion share of any value that will arise from Blockchain technologies will be for the end user or consumer as opposed to the developer or operator. We guess that this view is largely based on the idea that most value propositions of Blockchain technologies seem to be lower costs, reduction of supply chain inefficiencies and even in some cases replacing the need for certain services such as legal. If this turns out to be the case, then it’s hard to see which corporates will do better from the adoption of Blockchain. Scarily, its quite easy to start highlighting many corporates that are in fact at risk if they’re unable to adapt and be a first mover.
The other issue with Blockchain is a lot of the development and deployment is happening in the private space rather than the listed space, which is usually the case with the newer trends. This makes it even more difficult to play in the listed space. We look for corporates who operate in sectors where blockchain technologies can be effective. Sectors we have highlighted so far are Banking, Real Estate, Healthcare, Insurance and Professional Services. We then search for companies with strong cashflows on their existing businesses that are making clear investments in the Blockchain space. In the worst-case scenario we will own a cash flow positive stock operating in traditional sectors and in the best-case we own Blockchain proliferation in the right sectors. We see this as a “call option” on Blockchain in the listed space.