In today's Exponential Investor...- You can't sell the NHS!
- But you can sell this UK key industry
- The Spezialfonds eye up bitcoin
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The idea the government is about to carve up and sell off the National Health Service (NHS) to the United States has people up in arms.
When the trade deal with the United States was struck in 2020 there was outrage amongst a certain leaning part of the population.
In fact, Emily Thornberry wrote in an opinion piece in the Guardian:
The Tories' new trade bill means the NHS is now unquestionably up for sale.
Former Labour leader Jeremy Corbyn echoed that sentiment earlier this year saying,
"During the General Election, Tory MPs denied our claims that the NHS would be up for sale in trade deals, but that is exactly what is happening now."
Outrage on social media has ensued ever since the very idea of the NHS being "for sale" has been circulating.
The reality is the NHS isn't "for sale". And if anything, it could do with a healthy dose of privatisation to ensure better services, better care and better and more appropriately placed funding.
What is fascinating about the NHS "for sale" debate is the visceral fervor which gets people's blood boiling about the issue.
The NHS is very widely seen as an iconic UK institution that must be defended from foreign raiders
at all costs. All this leads us to wonder if the popularist policymakers will have much to moan about when it comes to other industries in the UK that appear to be "for sale".
This week US big business set its sights on another inherently UK industry, aerospace and defence.
US engineering giant Parker-Hannifin (NASDAQ:PH), a $40 billion mega-corporation, is looking to buy UK engineering company Meggitt for around £6.3 billion.
However, this isn't a story about engineering. It's a story about aerospace and defence. Meggitt's primary markets are aerospace, defence and energy markets.
Both companies are, "trusted defence suppliers to the UK and US governments," which makes an acquisition look like a pretty good idea.
This is a great outcome for Meggitt holders. The acquisition price will be at 800GBp per share, or roughly 70% premium to the Meggitt closing price on 30 July 2021.
Even now with Meggitt trading at about 730GBp there's still a 10% upside from current prices to the deal price.
If the deal is approved and completes.
Of course, there are always hurdles to cover in a mega acquisition like this, along with the fact that there are governments that will almost certainly get involved somehow (hence the current discount to acquisition price).
But this is a US company taking over a mega-size UK company. And on first glance, no one in the political establishment (on either side) seems to have bat an eyelid about it.
The deal itself is great for Meggitt and Meggitt shareholders.
But it also reminds us of the hypocrisy of many politicians, political commentators and others who are looking to level-up their political game.
Die Spezialfonds kann jetzt 20% kaufen…
Hopefully Google Translate has done its job there and not gone with the utterly literal translation (which it sometimes does).
However, for non-German speakers, the sub-headline above reads (in English), "The special funds can now buy 20%".
That means, thanks to a new law passed in July, that German Spezialfonds are now legally allowed to invest up to 20% of their assets into cryptocurrencies.
A Spezialfond is a particular kind of investment fund that only institutional investors (such as pension funds and insurance companies) are allowed to invest in.
According to International Investment, Spezialfonds make up the bulk of the German investment industry. It estimates that Spezialfonds hold over €1.875 trillion in assets.
That's a huge chunk of change that could be looking to find its way into crypto investments.
Of course, it would be naïve to think that €375 billion of assets will instantly flow into the crypto market from the Spezialfonds.
But it opens the door nonetheless to that kind of capital flow.
Our take is that we will see some of that money flow into bitcoin to start with, and then progressively into other cryptocurrencies.
Bitcoin is really the "gateway drug" for institutions before they decide to dive deeper into the crypto rabbit hole.
Bear in mind at this point in our discussion that bitcoin's current market cap is just $746 billion (€628 billion) – so we are looking at a sizeable potential inflow.
And remember, this is just the Spezialfonds. Add up the money around the world from other institutions, private companies, exchange-traded funds (ETFs), wealthy individuals, and retail investors…
The tsunami of money that may be looking to find a home in bitcoin is
astronomical. And it means that's going to put an enormous supply squeeze on bitcoin.
The long story short is this: when you run the numbers of the potential flow into a fairly limited supply of around 21 million bitcoin, there's a lot to suggest that
$1 million per bitcoin in the long term isn't out of the question.
Sam Volkering
Editor,
Exponential Investor
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