My Vision for Gaiter Capital

It starts and ends with infinity.

I am not embarking on this journey in pursuit of a financial number, fame, a certain amount of riches, or a goal which I reach and say, “I won, it’s over.” No. It’s never over. This game is infinite to me. I will die before Gaiter Capital dies, and I hope the company’s legacy is such that it continues on past my time here on this planet.

The point of any infinite game is to keep the game going. James P. Carse wrote a book titled, “Finite and Infinite games,” in which he discusses the nature of both sides of the playground. He states that finite games are played for the purpose of winning, while infinite games are played for the purpose of continuing play. Playing to win (and thus, end the game) isn’t nearly as fun as playing to keep the game going. What do you do after you win a finite game? You have to sign yourself up for another one, and you must find a way to showcase your past winnings. Finite players have to parade around their wealth and status. Carse argues that these players spend their time in the past, because that’s where their winning is. Infinite players, in contrast, look to the future. Because their goal is to keep the game going, they focus less on what happened, and put more effort into figuring out what’s possible. By playing a single, non-repeatable game, they are unconcerned with the maintenance and display of past status. They are more concerned with positioning themselves to deal effectively with whatever challenges come up. As Carse says, “the finite play for life is serious; the infinite play of life joyous.”

The point of this game is not to reach a certain amount of profit, cash out, and close the fund. The point of this game is to keep the game going, which is to accumulate more bitcoins, and to continue making a difference in the world by investing in the people, ideas, businesses, and technologies that are bringing prosperity to the globe and benefiting humanity, all while offering the best place for any qualified investor to put their money. 

I could care less about the personal gains. I care about bringing my vision to life. That is what I want to be an expert at. That is what I am an expert at. That’s what this game is for me, the biggest and best way to help bring my vision to life. Were this fund and game (they are the same) to end, my vision would die with it. My vision only dies when I die.

There is an infinite amount of prosperity awaiting us, but it’s been locked up for literally all of prior time as we have yet to figure out and solve money, the very thing underpinning all of civilization and economic development, which, of course, is what creates prosperity.

Bitcoin is the monetary solution. Bitcoin is the key unlocking the infinite amount of prosperity awaiting us, once and for all, and we get to live through its genesis and adoption as global money, which is so historically significant you can’t even begin to understand.

That’s square one. The opportunity in front of you and me. We get to buy bitcoin before everybody discovers its beautiful brilliance. We can quite literally walk up to an ATM, insert pieces of paper, and come out on the other side with an infinitely asymmetric stake in the money humanity and other forms of intelligence will be using for an unimaginably long period of time. Your grandkids and their grandkids and their grandkids are increasingly looking at you with pure shock and awe that you lived through the adoption of, and had the ability to purchase, Bitcoin.

I’m a big foundational guy. A building is only as strong as its foundation. When starting most anything, the foundation comes first. That is logical, certainly. But it cannot be ignored. The foundation of the new world will be built on and around Bitcoin, and with Gaiter Capital, it is much the same.

Company A is constructing a building, as is Company B. Company A goes to work, their foundation is built, and they start constructing above ground. They build their first five floors. Meanwhile, Company B is still working on their foundation. 

Company A gets to floor ten. They then realize they can’t build any higher, their foundation isn’t strong enough. They can either tear it all down and start from zero or call it quits at floor ten.

Company B finishes their foundation. They start building, floor by floor. They reach floor ten, and they don’t stop there. Floor 20, floor 30, floor 50, floor 100. They are towering above Company A.

Gaiter Capital is still around at the end of this century. The first year of the fund is this year, 2024. In order to build a company that will last at least 76 years, we must first and foremost be diligently patient and focused on constructing an impeccably strong and sturdy foundation that will provide the bedrock for the entirety of the fund’s operation.

Bitcoin works, in part, because the base layer of the network is impenetrable. Bitcoin crumbles if the base layer crumbles, Gaiter Capital crumbles if the foundation crumbles. We, being Gaiter Capital, will survive, and thrive, because our foundation is impenetrable.

The question then becomes - how do you build an impenetrable foundation for an investment company?

Of course, it starts with Bitcoin. Dedicating 85% of the portfolio to a single asset at the inception of the fund is almost unheard of, but for me, I was concerned about that number being too small rather than too big. Bitcoin is the apex predator of wealth storage and propagation, it is the greatest savings technology ever invented, and it has drastically outperformed all other assets since its genesis on January 3rd, 2009, because of those reasons.

Why not hold 100% of the portfolio in bitcoin? That was the question I kept coming back to, and I couldn’t come up with an answer to direct the fund’s strategy elsewhere.

The foundation of any company is largely built on who is constructing and fortifying the foundation. Warren Buffett, a bonafide Mount Rushmore investor (despite his incredulous view of Bitcoin) and Chairman of Berkshire Hathaway, knows this all too well, and, in fact, credits his success to those around him, specifically the late great Charlie Munger.

“Charlie Munger, my partner, is 95% of the reason we’re sitting here today. Charlie has been an enormous part of Berkshire’s success. It wouldn’t have happened without him.”

Late in 2023, I realized this endeavor would not succeed with a one-man army. I needed my Charlie Munger. I needed someone with fund experience, financial know-how, and the gutty smarts to back. Most of all, they had to be a Bitcoiner. That was a must.

I drafted a job description for the role of “Fund Manager/COO” and posted the position to bitcoinerjobs.com. What better place to find a Bitcoiner?

Applications immediately started trickling in; 46 people in total applied for the position. I conducted interviews with many of them and identified a few next-level candidates to continue discussions with.

In selecting a partner and COO, I consistently came back to one core question - am I willing to work with this person for the rest of my life? If there was hesitation, it was a no. It had to be a, “hell yes.”

Enter Spiridon Raptodimos, Don Moss to many. Either way, he has a cool name. A Greek Australian that’s fluent in Mandarin and lives in Switzerland, Don and I had an instant connection that was qualitatively different from every other applicant. He asked deep, thorough questions and was unafraid to get down to the bones of my mindset and vision for Gaiter Capital. He demonstrated a faultless understanding of Bitcoin and the world that is approaching, and had the fund and financial experience that perfectly fit what I was looking for. He’s guided by an inner moral compass that’s always pointed true north and he has an incredible ability to cut through the noise and see what really matters. He’s innovative, intuitive, and thinks with a perspective any hiring company would beg for. He was, and is, an intellectual sparring partner, someone I can confidently and proudly say is way smarter, wiser, and quicker-witted than I can ever hope to be, and I couldn’t be happier about it, and Gaiter Capital couldn’t be better off as a result. I will never get bored talking to Don - time flies talking to him. In fact, the first time we had the chance to meet in person, we spoke for over nine hours straight. That’s longer than the average American workday, and with no breaks.

Hell yes.

Simply put, there’s nobody I’d rather fight this fight with than Spiridon Raptodimos. I hope any investor in the fund can understand how lucky we are to have him on this journey.

Don and I continued to hop on calls and ideate on the fund. I still have the notes from all of our meetings. I kept posing, and we kept coming back to, the question of, “Why not hold 100% of the portfolio in bitcoin?” 

We worked backwards. We envisioned the world on a Bitcoin standard. Bitcoin was the money, you couldn’t buy it anymore, it was the global medium of exchange, unit of account, and store of value. What would you want to invest in then?

Don posed the idea, quoting his exact words, of, “Warren and Charlie investments.” Warren and Charlie investments are other words for consistently cash-flowing businesses with large competitive moats, run by highly competent people. These are businesses that are borderline boring with how consistent they are at pumping out profits and free cash-flows. Every month, they write you a check and you earn more money. These are the investments Warren Buffett and Charlie Munger hung their hat on.

In a Bitcoin world, such an investment is hyper-lucrative. Today, those businesses pump out U.S. Dollars (and other fiat currencies), at which you have to put those dollars to work elsewhere because they constantly lose value every year via inflation. In the Bitcoin world, those businesses are pumping out BTC, which means you are earning more of the apex predator of wealth storage and propagation and the greatest savings technology ever invented, which means you are earning more of the best possible thing you could be earning more of (do you understand how significant Bitcoin is? It is more significant than that). Every month, you are stacking more and more BTC because you own consistently profitable, cash-flowing businesses with competitive moats, run by highly competent people.

We both agreed with the merit of the idea. But that’s in the Bitcoin world, what about today’s world? Do we shell out capital to buy those types of businesses now and risk the opportunity cost of not using that capital to buy BTC directly? Is that worth it?

We’re still solving for the foundation of the fund. The strategy we deploy at the outset of the fund logically plays a pivotal role in the construction and strength of the foundation. How do we become impenetrable?

We concluded that the only way to measure the value of any strategy, both in today’s world and the Bitcoin world, is to denominate performance in bitcoin terms.

If the fund bought 100 bitcoins on January 1st, 2020, and held them for five years without doing anything, there would be a 0% return in Bitcoin terms. We’d still be worth 100 bitcoins. The valuation of the fund and its strategy in bitcoin terms is the only performance metric that matters. If the fund became less valuable in bitcoin terms over the years, we’d be better off just holding bitcoin (and so would you). We had to find a strategy that generated positive returns in bitcoin terms - the fund had to become more valuable in bitcoin terms as the years went on.

Don thought of Blackrock’s research paper titled, “Asset Allocation with Crypto: Application of Preferences for Positive Skewness.” Thankfully, the Blackrock and Crypto part don’t matter because they simply ran math and analyzed the math. The math stated that the optimal allocation to Bitcoin in an investment portfolio consisting of 60% equities and 40% bonds should be a substantial 84.9%, meaning 84.9% of the portfolio would be in BTC and of the remaining 15.1%, equities would make-up 60% and bonds 40%.

That served as the spark for our very own 85% BTC allocation, but what to do with the rest?

We started with Berkshire Hathaway, publicly traded as BRK.A, the ultimate conglomerate of literal Warren and Charlie investments. We ran the numbers on an 85:15 Bitcoin:BRK.A portfolio, rebalanced quarterly back to that ratio, over an eight year period, and this is what we found:

In fiat terms:

START 1 JAN 2016: 19,540.23 BTC, 7.89 BRK.A shares = $10m

END 1 JAN 2024: 17,637.77 BTC, 250 BRK.A shares = $916.5m

+9,165% in USD terms ($1 million investment becomes worth $91,650,000)

What’s noteworthy here is that we lost roughly 10% of our BTC stack but gained 3,000% in cash-flowing equity. Additionally, BRK.A shares will eventually be repriced in BTC (as with everything else), and because Berkshire has cut their teeth on the exact type of investment that will thrive in the Bitcoin world, those shares will be extra-valuable in BTC terms, so much so that the lost BTC stack would become much more marginable due to the added value (in BTC terms) of the BRK.A shares. Furthermore, those BRK.A shares will be pumping out BTC at a rate higher than most anyone, allowing us to continue stacking more and more BTC as rightful (and sizable) BRK.A shareholders over time.

But the USD is not the denominator, BTC is.

In Bitcoin terms:

1 JAN 2016: 1 BRK.A share = 436.78 BTC

7.89 BRK.A shares = 3,446.21 BTC

BTC stack = 19,540.23 BTC

Total portfolio worth 1/16 = 22,986.44 BTC

1 JAN 2024: 1 BRK.A share = 12.45 BTC

250 BRK.A shares = 3,112.5 BTC

BTC stack = 17,637.77 BTC

Total portfolio worth 1/24 = 20,750.27 BTC

-10% in BTC terms

A losing strategy in BTC terms, however, the case is there to be made that the additional cash-flowing equity stacked will eventually make up for the short term loss in BTC.

We were thrilled to be stacking so much equity while maintaining most of our BTC stack, but I wondered if there was a better strategy.

I had mentioned to Don the notion of investing in MicroStrategy (MSTR) a few times at this point, but we had dismissed it in part because we felt it was too distant from our Warren and Charlie thesis. That didn’t stop us from researching and verifying whether or not it made sense to add MicroStrategy to the portfolio. I was pushing heavily for it, and sent Don my thoughts and resources on the overall MSTR thesis. We ended with Don saying, “Love how we’re both serious about MSTR here.”

MicroStrategy already owns over 1% of all BTC that will ever exist, which is another way of saying they own over 1% of all wealth in the world (because everything will be priced in BTC). That is astronomically significant and almost certainly never going to be matched by a publicly traded company. Combine this with the fact that they already have a profitable operating business underneath their BTC treasury and the brains that led them to diving headfirst into a Bitcoin standard in the first place, and you’re talking about a massively asymmetric investment that is also, in a sense, levered BTC. In short, MicroStrategy is as likely a candidate as any to be the financial behemoth in the Bitcoin world (watch out for that Gaiter Capital, though).

We decided to run the numbers on and verify a Bitcoin:MSTR:BRK.A portfolio, with 85% BTC, 10% MSTR, and 5% BRK.A, once again rebalanced quarterly back to that ratio, starting from the first quarter after MicroStrategy adopted their Bitcoin Standard (in August 2020) and ending April 1st, 2024 (right when we calculated the data). This is what we found:

In fiat terms:

START 1 OCT 2020: 809.52 BTC, 7,413.45 MSTR, 1.57 BRK.A = $10m

END 1 APR 2024: 910.26 BTC, 3,889.95 MSTR, 5.93 BRK.A = $74.69m

+749.46% in USD terms

The important part. In BTC terms:

OCT 2020: 809.52 BTC, MSTR = 95.24 BTC, BRK.A = 47.47 BTC = 952.23 BTC

APR 2024: 910.26 BTC, MSTR = 107.09 BTC, BRK.A = 53.53 BTC = 1,070.88 BTC

+11.08% in BTC terms

Of course, this is only over four years (it’s all the data we could have possibly back tested in accordance with MSTR’s Bitcoin Standard), but if you notice, we have increased the Bitcoin valuation of each of our portfolio holdings. That is astounding. In line with that, we increased the total valuation of the fund by over 11% in BTC terms. Past performance does not guarantee future returns, but if the name of the game is generating returns in BTC terms not just in the Bitcoin world, but today (that is the name of the game), then we have succeeded in identifying a winning strategy.

Now we’re talking about a serious foundation. We have the people (I have the utmost confidence in that), we have a winning strategy, and it’s all being built with and around Bitcoin. But we’re not yet impenetrable. Somebody can copy our strategy. We need our own competitive moat.

Firstly, Gaiter Capital’s competitive moat is partly the people who have come up with the idea and this strategy. Sure, somebody can copy our rebalancing strategy, but they likely won’t know how to navigate the open seas as that strategy needs to shift and adapt, because they didn’t formulate the strategy in the first place. But we need something more than just intellectual capital.

(Founder’s note: if you think for one second that I’m not relentlessly hunting down the best and brightest people to help build this thing and grow our intellectual moat, you are mistaken.)

That’s where our official Gaiter Capital market and portfolio strategy comes in. We’re not buying just Bitcoin, MicroStrategy, and Berkshire Hathaway. We have a fourth category: our own “Warren and Charlie” investments, call it the “other” category, if you will. These are investments in private and public equity that we anticipate becoming majority shareholders in over the long run, giving us unmatched access to the very businesses we know will be BTC printers, i.e. businesses that will pump out consistent BTC like no other.

And there’s a secret ingredient to our portfolio strategy that won’t be mentioned here (a magician never reveals all of his secrets).

If you can’t already tell, what we are building here at Gaiter Capital is the Bitcoin Berkshire.

Cole Walmsley and Don Moss, the modern day Warren Buffett and Charlie Munger.  A multinational conglomerate of businesses and operational assets. Rooted in value investments, profitability, and cash-flows. Providing a lifelong home for investors. 

Except this time, we’re on a Bitcoin standard.

Can you imagine if Warren and Charlie were Bitcoiners? All of their business profits and free cash-flows would be saved in Bitcoin. They’d have each of their businesses on their own Bitcoin standards. 

70+ cash-flowing businesses churning out BTC like a hot knife through butter. Investors would flock like moths to a light.

Gaiter Capital isn’t there, yet. We’re not building floor 100, we’re building our foundation.

It’s important to more specifically highlight the type of businesses we want to invest in and hold over the long run. What better way to showcase a Warren and Charlie investment than looking at a Berkshire Hathaway subsidiary?

Acme Brick is an American manufacturer and distributor of brick and masonry-related construction products and materials, with revenues of ~$750 million in 2023. The company was founded in 1891 and isn’t going away anytime soon - people will continue to build and improve their homes, place flooring, create outdoor living spaces, and use brick, tile, and stone. These consumer actions are basic, fundamental, and consistent, and Acme Brick is a top provider of such products and services. We’re not investing in companies attempting to reinvent the wheel - we’re investing in companies that are positioned to continue bringing the wheel to market, and that do it better than most anyone else.

A non-Berkshire example is a company by the name of W.H. Amad, a business with another 100+ year track record (they last this long for a reason) as a manufacturer and supplier of bed linen, furniture, curtains, drapes, towels, and more. Again, none of these products are going away anytime soon. Hotels, hospitals, boutique B&B’s, and individuals will continue to demand what W.H. Amad produces. This is a company with long standing relationships with clients as a reputable brand in a city with high population growth. Pre-tax earnings have increased by 10% annually over the last decade, with profit margins following a similar trajectory as costs remain relatively stable, in addition to a set of vertically integrated, firmly established systems and processes. This is a prototypical business that is already thriving in today’s world and will thrive even more so in the Bitcoin world. They pump out cash flows like the sun rises each morning. These are the types of businesses we want to own, and these are the types of businesses we will own.

The vision is simply to offer a place for investors to stack more bitcoin over time. Who doesn’t want more BTC?

Not everybody desires a greater stack of BTC the way we and other Bitcoiners currently do, but that’s why this opportunity is so massive. We are frontrunning the future. There is no better portfolio out there for the world we know is coming.

As humanity adjusts to the Bitcoin Standard, AUM increases, and the scale of the fund grows, we will spread our wings further, slowly but surely, with a low-time preference (always), along the risk curve accordingly as trends for the exchange of BTC for certain goods and services higher up Maslow’s Pyramid emerge. But those are the above ground floors. We are focused on the foundation, and more importantly, the next brick. 

We are inching our way out of the Bitcoin harbor as the world inches their way in. By the time everyone’s docked, we’re already out at sea in front of them all, with a colossal BTC treasury and BTC producing portfolio to back. And you have the chance to join us.

I was never going to bring a fund to market unless I could without a doubt say I would put 100% of my investment capital into it.

Without a doubt, I will be putting 100% of my investment capital into Gaiter Capital. Scratch that, I am putting 100% of my investment capital into Gaiter Capital. I can’t possibly emphasize or put into words how significant it is for me to decide not to put all of my investment capital and savings into just BTC, but I can try. Imagine the Sun, the Moon, and all the other planets crashing into Earth at the same time. That’d be pretty significant, right? Not having my investment money 100% in BTC is even more significant. That’s purely a reflection of 1) how much I believe in Bitcoin and 2) how much I believe in Gaiter Capital.

The vision for Gaiter Capital is grander than this document could ever encapsulate, but I’m focused on our formative years and making sure we have the wherewithal to even build floor one, much less floor 100. Brick by brick, we will become the Bitcoin Berkshire. Believe that.

And we’re not stopping at floor 100. Infinity is our target.

What you have in front of you, and what Don and I have in front of us, is like buying BTC at 10 cents.

It will look so obvious 10 years from now to have joined the Gaiter Capital voyage, much like it looks so obvious in hindsight to have bought BTC at 10 cents. But what if you could buy BTC at 10 cents?

I’ll leave you with a quote from Satoshi Nakamoto:

“It might make sense to get some just in case it catches on.”

gaitercapital.com

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