Teeka’s “The Investment of the Decade” — Digging into “Genesis” and the “Three Must-Own Stocks that Will Power Blockchain’s 295,000% Revolution”

What's the Palm Beach Letter's pitch all about? Who are the teased "blockchain gatekeeper," "next Visa" and "modern day Cisco?"

By Travis Johnson, Stock Gumshoe, February 23, 2021

I’ve gotten a bunch of questions about Teeka Tiwari’s “Trump Tower” teaser pitch recently, so although the ad is actually very old now (it’s still got a January 29, 2020 date under the signature) I thought I’d re-share our solution. It is still circulating heavily, and it’s an ad for Palm Beach’s “entry level” newsletter called The Palm Beach Letter ($49, renews at $129).

What follows was last updated on April 6, 2020, in the throes of the Pandemic Panic, so the story for all of these stocks has obviously changed dramatically… as have prices for cryptocurrencies, with Bitcoin now up about 650% since then… but the actual ad and the stocks he’s teasing remain largely unchanged. I have kept my notes unchanged as well, though they may now sound foolish given the year we’ve had, so be gentle :).

The basic pitch is that blockchain is going to revolutionize the world, and that all the big guys are invested in it and we’re just getting started, with 295,000% gains coming (that comes from the World Economic Forum’s assessment that the blockchain ecosystem will store 10% of the world’s GDP by 2027, which might as well be a made-up number — there’s a free Palm Beach note about that here).

Tiwari even throws Warren Buffett in there as being part of this “investment of the decade” in blockchain technology, though that’s a pretty spurious name-drop (he implies that Buffett is “all in” because 21 of Berkshire’s 25 largest holdings have “invested in Genesis technology” — meaning they’ve done some kind of work with blockchain or cryptocurrencies… since I expect that almost every large company has done some work exploring or researching blockchain, that’s probably pretty meaningless).

But anyway, yes, his basic argument is that “Genesis Technology” is about to go mainstream and reach heavy adoption, and that as it becomes a huge part of the global economy you’ll get rich if you own the right stocks. Which, of course, he can tell you about for $49.

To be fair, Teeka Tiwari was one of the early mainstream newsletter guys who was recommending cryptocurrencies early on, back in the Summer of 2016, and particularly got into Ethereum before most pundits, so he’s not making up those historically excellent returns he probably had at that time. I would imagine that Ethereum pick in 2016 is probably what boosts the high average return that he brags about for his newsletter portfolio, much like the early picks of Netflix or Amazon fuel David Gardner’s average performance at the Motley Fool, and Tiwari these days is probably recommending little tiny cryptocurrencies right and left to try to replicate that 1,000% return magic.

But this one’s about stocks — so let’s find out what he’s pitching, shall we?

Before we get started, though, I should note that the “Trump Tower” part of this tease seems to be just name-dropping — he uses it as an example of a property evolving to “highest and best use”, as happens with lots of real estate eventually (a long spiel about a vacant lot becoming townhouses becoming a department store tower becoming Trump Tower, and adding value along the way). Somehow he applies this to blockchain, but mostly it’s just a way to drop the Trump name for attention… here’s how the connection is drawn…

What is blockchain’s “highest and best” use? More from the ad…

“Well, here’s the thing…

“At its core, blockchain is really just a very secure way to store information…

“It is the safest way to store information that has ever been devised. Because you can’t ‘hack’ the system.

“So, blockchain’s potential uses are wide and varied—I can’t possibly go into all of them in detail.

“But, to give you a taste, blockchain is being used today…
* To help modernize the $217 trillion real estate industry…
* To combat the $1.7 trillion in counterfeit goods sold each year…
* To improve the electoral voting system, making illegal votes a thing of the past…
* To help greatly reduce healthcare costs….
* And, also, to secure the food supply.”

But the big market, no surprise, is “money”…

“You see, while I was in Manhattan, I discovered something major going on right now…

“And that is this:

“The finance industry is ALL OVER blockchain!

“We talked about the “adoption curve” earlier.

“Well, we’re right at the “take off” point.

“Mass adoption has started…

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“Have you ever heard of the DTCC, the “Depository Trust Clearing Corporation”?

“That’s the major organization that clears more than $54 trillion in stock, mutual fund, and other financial trades each year…

“Well, get this…

“The DTCC just announced they’re moving $10 trillion onto the blockchain!”

OK, so that’s the basic background to his pitch — that blockchain is going mainstream. And while he does tease and tout some specific cryptocurrencies in his other pitches for higher-priced newsletters, in this ad he’s pitching stocks that are connected to blockchain. So what are they?

Let’s get into the clues… here’s the talk about number one:

“Well, soon, we’re going to see a brand new blockchain exchange hit the markets.

“And one company has positioned itself as the sole ‘gatekeeper.’

“You see, it’s the only company cleared by the SEC to trade blockchain investments…

“That means, as blockchain goes mainstream…

“And more and more investors rush in, and new financial blockchain products are introduced…

“This company will make a cut on every transaction.”

Other hints about this one? This is what we get…

“It’s got a huge competitive advantage—a ‘moat,’ as Buffett would put it.

“Insiders LOVE it. They own 93% of the company…

“Vanguard, Blackrock, State Street. They’ve all scooped up a ton of shares.

“But—today—you can still buy cheap shares while it’s flying under the radar.”

Not much certainty here, there are lots of companies setting up to try to become the toll-taking “exchanges” of the blockchain world, but my first thought was that this is very likely Overstock.com (OSTK), which has been investing in building a blockchain-focused venture capital arm for a few years. That division is called Medici Ventures, and the star of the portfolio is tZero, which is indeed trying to become a big exchange for security tokens.

I don’t know where they get the “insiders own 93% business,” though — there are essentially no publicly traded companies where insiders own that large a percentage. Yes, Vanguard, Blackrock and State Street all own “a ton” of shares of Overstock, but that’s not really useful informaion — that’s true of pretty much every single stock of any size in the public markets, if you’re in any of the indices, from the S&P 500 to the Russell 2000 to any major sector index, then a large number of your shares will be held by index ETFs, and those are the three big managers of those index ETFs so they’ll always show up as major owners of any nontrivial company.

Readers called to my attention, though, that Intercontinental Exchange (ICE) is a much better match. ICE is a great company, they own a couple dozen exchanges and really benefit from market volatility so it’s probably a good idea here (better at the trough, of course, then in January or now, but one never gets timing perfect), but I’d be very surprised if it ends up being dramatically impacted by trading in cryptocurrencies or security tokens. They do have an interesting business in BAKKT that might turn into something big as this evolves, but I would be surprised if that makes a financial impact on the company in the next five years — t