Understanding the Risks of Investing in Treasury Companies
In the latest episode of Old Men New Money, Douglas Borthwick delves into the various risks associated with investing in corporate treasury companies that are heavily involved in crypto assets. The episode covers seven major risk categories including asset price risk, NAV premium compression, dilution, debt leverage, regulatory issues, key person risk, and execution risk. Borthwick emphasizes the importance of understanding and managing these risks, especially in volatile market conditions, and provides guidance on position sizing, monitoring metrics, and establishing clear exit rules. He also cautions against treating these investments as conservative or core holdings, recommending them only for those with high risk tolerance and speculative capital.
00:00 Introduction to Corporate Treasury Strategies
00:45 Understanding Major Risk Categories
02:37 Asset Price Risk Explained
04:14 NAV Premium Compression
05:46 Dilution Risks
06:56 Debt and Leverage Risks
08:14 Regulatory and Legal Risks
09:36 Key Person Risk
10:46 Execution Risk
12:20 Competition and Technological Disruption
15:23 Managing Risks and Position Sizing
16:30 Who Should and Shouldn't Invest
18:09 Final Thoughts and Next Module Preview
