How do you spell “relief”?
That’s a critical question right now. Years ago, it was common knowledge: R-o-l-a-i-d-s. Nowadays, that recipe has changed. Our guess right now is either: F-e-d or F-r-e-e M-o-n-e-y.
And it would appear there’s a bottomless supply of both in play right now as the stimulus process guiding the US recovery effort goes into overdrive.
More importantly, it doesn’t seem to be the case that the stock market is anticipating a decline in stimulus on the basis of improving economic data. We saw that 10 days ago when jobs data came in massively above expectations and risk assets failed to account for a pullback in stimulus. And we saw it again on Tuesday following a massive jump in retail sales, and the market still launched higher in unbridled enthusiasm with no fear of reduced stimulus.
We want to explore why that might perform as a key catalyst for ISW Holdings Inc (OTCMKTS:ISWH).
The Pressure Function
The above conundrum suggests we may face a currency issue here in the US as we transition to policy control on a fiscal basis (ie, politicians with a foot on the gas pedal) from policy control on a monetary basis (ie, central bankers in charge).
The big difference is the central bankers aren’t populist politicians up for re-election. The politicians are. That’s exactly why we have tried to keep policy in the hands of the central bankers in the past. At this point, the genie is out of the bottle. As Stephen Roach – star Morgan Stanley analyst – put it this week, the result could be a crash in the value of the dollar.
As Roach warned already this week, the US Dollar is potentially headed for a crash. The question investors face is clear: how to hedge for this contingency?
The upshot is this: we had a supply-side shock, economically. But, through gov’t stimulus, it would appear thus far that we have yet to experience a true demand shock of any significant duration. And yet we have seen nearly $20 trillion in fiscal and monetary stimulus around the world in just 3 months. That is not just unprecedented. It’s many multiples beyond anything we have ever even contemplated before.
The main impact is a potential premium presented to investment opportunities that stand to provide for the creation of alternative forms of currency savings, which places a potential future premium on precious metals producers and cryptocurrency mining equipment suppliers – namely, gold miners and companies in the business of distributing the equipment involved in mining for crypto coins.
That’s where we circle back around to ISW Holdings Inc (OTCMKTS:ISWH).
The Bit5ive Deal
ISW Holdings just announced its entrance into a new venture with Bit5ive LLC, a global leader in cryptocurrency mining and innovative turnkey mining solutions.
“We are incredibly excited to expand our current portfolio and move into what we believe is a sector poised for strong technological and financial growth,” stated ISW Holdings President and Chairman Alonzo Pierce. “This new joint-venture agreement enables us to collaborate with the experienced team at Bit5ive to innovate the infrastructure needed to run profitable, efficient crypto mining projects, and to take advantage of the incredible growth projected for the crypto market.”
While Bit5ive is one of the most dynamic distributors of crypto mining equipment, the company is not accessible to investors in any publicly traded form. That means ISWH may be the best way to gain exposure to this strong theme.
Bit5ive is an official distribution partner of Bitmain, the industry-leading fabless manufacturer of computing chips and distributor of Antminers to more than 30 countries in Latin America, Central America, and the Caribbean. In addition, Bit5ive is the producer and distributor of POD5 and Power Skid 2.5, the most efficient and successful infrastructure for crypto mining hardware.
No One-Trick Pony
ISW Holdings Inc (OTCMKTS:ISWH) is interesting beyond its Bit5ive deal. In fact, this company is a diversified holding company with a range of exposure in growth markets.
In addition, the company has been performing well in terms of its recent quarterly filings, recently racking up a string of sequential q/q growth leaps at double-digit percentage scale on the top-line. While we are still dealing with relatively small numbers, one can easily make a case that the company will be looking at something like $2-3 million in revenues for 2020, and considerably more in 2021 based on organic growth in the home healthcare market, which currently accounts for the lion’s share of its recent revenue performance.
Note that those numbers do not take into account any tangible returns from its joint venture with Bit5ive, which seems to suggest these may be very conservative assumptions.
If that’s true, the stock is now trading at well less than 1x forward sales despite being tethered to very high-growth industries such as cryptocurrency capital equipment supplies, renewable energy, home healthcare, adult beverage, and wellness industry.