Why ‘Billionaire’ Novogratz Holds 10% of His Wealth in Bitcoin and Ether

Billionaire Michael Novogratz reportedly revealed that he has 10 percent of his money invested in bitcoin and ether. He also predicts that the price of bitcoin will go to $2,000. Bitcoin.com looks into how much his net worth is and why he decided to invest in bitcoin.

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10% of His Money in Bitcoin and Ether

On Wednesday, bitcoin investor Michael Novogratz spoke at a forum held at the Harvard Business School Club of New York. Referring to him as a “billionaire investor”, CNN Money reported him saying:

Ten percent of my net worth is in this space. […] It’s the “best investment of my life”.

However, he did not reveal how much his net worth is.

Why He is Pro-Bitcoin

Michael Novogratz on Bloomberg in 2015

Novogratz has given several interviews about Bitcoin and blockchain technology. In May 2015, he gave a detailed explanation of why he personally invested in bitcoin during an interview with Bloomberg. Citing an open source community with “huge brainpower” from “over 30,000 individual programmers” working on Bitcoin, he said:

I think it’s real. […] There’s a lot of smart money going into it; I’ve never seen a small project with more human capital going into it, and so, I kinda want to bet just on that alone.

“I think it’s got first mover advantage, but certainly there are risks,” he further conveyed. “There will be a revolution in payment systems, and frankly, there will be a democratization of finance at one point.”

Self-Made Billionaire

Novogratz joined Fortress Investment Group four years after it was founded in 1998. He ran the Fortress global funds.

In 2007, Forbes listed him #317 on the Forbes 400, a list of America’s richest Billionaires by their estimated net worths. His net worth was $1.5 billion that year. He became a self-made billionaire “with the public offering of Fortress Investment Group,” Forbes wrote. However, Fortress shares had been sinking since its IPO. By the time Novogratz made the list in 2007, Fortress shares were down 45%, knocking the firm’s founders off the billionaire list, the publication detailed.

In 2008, Forbes ranked Novogratz #962 on its list of “The World’s Billionaires”, even though his net worth had fallen to $1.2 billion. That year, Fortress shares were down 60% since its IPO, to about $12.

In 2012, the Observer reported that “Fortress shares were trading in the $3 range, down from a post-IPO high of $24.40, and Mr. Novogratz’s worth had fallen with it, down to about $500 million the last time Forbes checked.”

Up until October 2015, Novogratz was still managing approximately $2 billion in assets at Fortress. The fund made a few bad bets about the direction of the Swiss franc and the Brazilian interest rates. Within a couple of months, Novogratz lost about $250 million. Faced with the prospect of client redemptions, he cut his losses and vacated his position at Fortress, according to the Wall Street Journal. By that time, Fortress shares had fallen to $6. Today, the shares trade at about $5.

Moving from Fiat to Bitcoin

While Fortress shares had fallen 70-80% since its IPO and were trading approximately between $5 and $8 in 2013, Novogratz had already moved some of his money into bitcoin.

In October 2013, he said at a UBS conference in New York that “I have a nice little bitcoin position,” Bloomberg reported. “Enough that I’m smiling that it doubled,” he added. At that time, the price of one bitcoin was just $175.30. He also advised others to invest in bitcoin, stating that:

Put a little money in Bitcoin. […] Come back in a few years and it’s going to be worth a lot.

Then, on Wednesday, Novogratz told the Harvard Business School Club crowd that bitcoin’s price will go to $2,000. He also warned them that there will “likely be a bubble” in bitcoin and other cryptocurrencies and recommended diversification as a way to handle the bubble.

How many bitcoins do you think Novogratz owns? Let us know in the comments section below.

Images courtesy of Shutterstock, Fortress, Forbes and Bloomberg

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