Own goal for Irish company as crypto pivot follows bets on third-rate football clubs

Florida-based stock picker and proud Gaeilgeoir Cathie Wood earned cult status during the pandemic with well-timed bets on disruptive innovators such as Tesla and Zoom – and now inhabits a world where even her smallest trades are parsed by investment blogs.

The daughter of Irish immigrants, who lived for a period as a child in her mother’s native village of Castlegregory in Co Kerry, Wood has taken followers of her ARK Invest on a volatile journey since the lockdown era, trying to make calls on the next big winners.

Its flagship ARK Innovation exchange-traded fund (ETF) is changing hands almost 45 per cent below its peak in January 2021. The S&P 500, which tracks most of the largest US-listed companies, has, meanwhile, soared more than 90 per cent.

An investment last September in a company based in the land of her forefathers hasn’t helped the cause.

ARK made a multimillion-dollar investment last September in Dublin-based Brera Holdings, securing an initial stake of more than 10 per cent as the company raised $300 million (€255 million) in total.

Brera was incorporated in Dublin in 2022 as a corporate entity over Brera FC, the so-called “third team of Milan”, after Inter Milan and AC Milan. Following its flotation on the Nasdaq in January 2023, it went on to invest in several other journeymen clubs in the likes of Mozambique, North Macedonia and Mongolia. It also took a small “strategic stake” in Manchester United, making what it claimed was a 74 per cent gain at the end of 2023 as it tendered all its shares as UK billionaire Jim Ratcliffe made an offer for a minority stake in the club.

The clubs have had mixed success under Brera. A slump in the stock in the 2½ years after it floated at $5 a piece forced the group to consolidate shares in a one-for-10 conversion last summer to get the stock above the minimum $1 level required to avoid being booted out of the Nasdaq.

Its most prized asset, Italian Serie B side SS Juve Stabia, near Naples, in which Brera took a controlling stake last June, succumbed to judicial administration within months amid claims of alleged pre-existing mafia-style influence over its financial activities.

But by then, Brera had changed direction, dramatically. Joining a growing list of companies that were essentially ditching their original focus to dive into the cryptocurrency craze.

Former US mobile software company MicroStrategy was one of the pioneers of such a pivot when it announced six years ago that it had bought $250 million worth of Bitcoin as a primary treasury reserve asset.

The $300 million Brera capital injection, also backed by the likes of Abu Dhabi blockchain advisory firm Pulsar Group and Cayman Islands-based investment vehicle RBCH, allowed it to become a so-called digital asset treasury and crypto infrastructure company – and stockpile crypto tokens built on a blockchain – or giant digital transactions notebook, called Solana. Brera also changed its trading name to Solmate.

The market euphoria didn’t last long.

The value of Solana peaked at $210 on September 19^th, the day after Brera announced its metamorphosis. It has since plunged by almost 65 per cent. Bitcoin, the grandfather of cryptocurrencies, has lost a third of its value amid negative sentiment towards digital assets for several reasons, not least recent geopolitical uncertainty and concerns over a global slowdown.

Brera’s own share price has plunged almost 99 per cent from its September spike.

Brera cancelled a tie-up with crypto infrastructure company RockawayX in February, moved to dump its soccer clubs in Mozambique and Mongolia a month later, and offloaded its stake in SS Juve Stabia for €1 in April.

Last week, it announced that it had “terminated” chief executive Marco Santori, a crypto sector veteran who was hired only last September, and said that it would be a few weeks late filing its annual report “because of unanticipated delays in the completion of its financial statements”.

The new chief executive, Ron Sade – Brera’s fourth in under three years – wrote to investors on Monday to try to level with them.

“I want to treat you with the respect you deserve as the intelligent investors you are, and start instead with a realistic message – without trying to dress up the reality,” he said.

The tone follows the classic playbook of an incoming chief trying to steady a shaken company, even if he has been on the board since the outset of the new strategy.

“Regrettably, I am taking on this role at a time when the company is far from where we want it to be,” he added, noting that the stock is now trading well below the net asset value of its crypto holdings – and the price at which Wood and friends piled in.

“My personal commitment is to do everything within my power to position Solmate, by 2030, as the world’s leading Solana-focused technology infrastructure company and the largest Solana treasury in the world,” he said.

But for now, the only company assets holding their own are its stakes in a third-tier club in Milan and two teams in North Macedonia.