Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

Coinshares International / Equity Bottom-Up

<h2>KEY POINTS</h2>
<ul>
<li>CoinShares reported 1Q22 total comprehensive income of £20.2 million, down from £32.1 million in 1Q21. The drop was driven by a weaker market for cryptocurrencies, but adjusted EBITDA of £18.7 million shows the company can still make money in tougher markets. CEO Jean Marie Mognetti highlighted that “CoinShares has delivered a good first quarter with strong financial and operational progress.”</li>
<li>The company continued to make progress on its<br>long-term plans, including staffing for its consumer platform, Napoleon, and plans to uplist to the Nasdaq Stockholm Main Market.</li>
<li>On our fireside chat, view&nbsp;here, Mognetti explained how CoinShares’ business model can perform in bear, as well as bull markets. On the Ukrainian impact on markets, Mognetti said, “Despite the uncertain environment, our goal at CoinShares remains to keep executing and delivering on our vision and mission.”</li>
<li>The company segment breakout shows how some are stable and others volatile. Asset Management grew slightly Y/Y to £17.2 million, while Capital Markets dropped more than 50% to £10.2 million and Principal Investments showed a small loss rather than a small gain. Consumer, aka Napoleon, started to contribute at £0.7 million.</li>
<li>The company’s comparables include other crypto/digital management companies. The seven comps we identify below have a median forward P/E of 15.1x, while CNSRF is trading at 4.7x, a 69% discount. CNSRF is trading near 12% of its 52-week low, better than most of its comps.</li>
<li>Read our initiation and other reports on&nbsp;CoinShares&nbsp;on our website.</li>
</ul>
<h2>COMPANY OVERVIEW</h2>
<div></div>
<p>CoinShares International Ltd is a digital asset investment firm that is adding consumer offerings to its existing asset management and business solutions. The company focuses on expanding investor access to the digital asset ecosystem with new financial products and services that seek to provide trust and transparency when accessing the new asset class.</p>
<p>The company's products and services include exchange traded products, indexes and capital markets, and others. The company generates most of its revenue from its Exchange Traded Products operating segment. CoinShares is publicly listed in SEK on the Nasdaq First North Growth Market (Sweden) under the ticker CS and in USD on the OTCQX under the ticker CNSRF.</p>
<p>As CoinShares is positioned to grow with digital asset adoption, the growth of crypto in general is central to its prospects. According to coinmarketcap.com, there are currently over 17,000 cryptocurrencies trading on 462 exchanges with a total market cap of $1.67 trillion.</p>
<p>For more information, visit&nbsp;www.coinshares.com.</p>
<h2>VALUATION</h2>
<h2>CoinShares (CNSRF) Is Trading at a 69% Discount to Comps</h2>
<p>A hallmark of our research at WTR is that we do not offer specific stock recommendations and/or stock price targets. Our purpose is to help educate our readers about a company and some of the factors that we believe can be relevant to their choices about when and if to invest in a particular issue. We do offer data and graphs about how the stock has been valued historically—typically, using conventional metrics—and sometimes we present data and graphs that juxtapose historical valuations among issuers that are believed to be comparable.</p>
<p>CoinShares’ comparables include other crypto/digital management companies. The seven comps we identify below have a median forward P/E of 15.1x, while CNSRF is trading at 4.7x, a 69% discount. CNSRF is trading near 12% of its 52-week low, better than most of its comps.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/271/955/original/image_43204916631651624036073.png?1651624038" class="editor-image img-responsive" data-smartkarma-image-id="271955"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/271/956/original/image_69230023641651624048461.png?1651624049" class="editor-image img-responsive" data-smartkarma-image-id="271956"></figure>
<h2>DISCLOSURES</h2>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>John Roy, phd, who is the writer of this report, covers the Technology sector for WTR. Mr. Roy, PhD and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY POINTS

CoinShares reported 1Q22 total comprehensive income of £20.2 million, down from £32.1 million in 1Q21. The drop was driven by a weaker market for cryptocurrencies, but adjusted EBITDA of £18.7 million shows the company can still make money in tougher markets. CEO Jean Marie Mognetti highlighted that “CoinShares has delivered a good first quarter with strong financial and operational progress.”
The company continued to make progress on its long-term plans, including staffing for its consumer platform, Napoleon, and plans to uplist to the Nasdaq Stockholm Main Market.
On our fireside chat, view&nbsp;here, Mognetti explained how CoinShares’ business model can perform in bear, as well as bull markets. On the Ukrainian impact on markets, Mognetti said, “Despite the uncertain environment, our goal at CoinShares remains to keep executing and delivering on our vision and mission.”
The company segment breakout shows how some are stable and others volatile. Asset Management grew slightly Y/Y to £17.2 million, while Capital Markets dropped more than 50% to £10.2 million and Principal Investments showed a small loss rather than a small gain. Consumer, aka Napoleon, started to contribute at £0.7 million.
The company’s comparables include other crypto/digital management companies. The seven comps we identify below have a median forward P/E of 15.1x, while CNSRF is trading at 4.7x, a 69% discount. CNSRF is trading near 12% of its 52-week low, better than most of its comps.
Read our initiation and other reports on&nbsp;CoinShares&nbsp;on our website.

COMPANY OVERVIEW

CoinShares International Ltd is a digital asset investment firm that is adding consumer offerings to its existing asset management and business solutions. The company focuses on expanding investor access to the digital asset ecosystem with new financial products and services that seek to provide trust and transparency when accessing the new asset class.
The company's products and services include exchange traded products, indexes and capital markets, and others. The company generates most of its revenue from its Exchange Traded Products operating segment. CoinShares is publicly listed in SEK on the Nasdaq First North Growth Market (Sweden) under the ticker CS and in USD on the OTCQX under the ticker CNSRF.
As CoinShares is positioned to grow with digital asset adoption, the growth of crypto in general is central to its prospects. According to coinmarketcap.com, there are currently over 17,000 cryptocurrencies trading on 462 exchanges with a total market cap of $1.67 trillion.
For more information, visit&nbsp;www.coinshares.com.
VALUATION
CoinShares (CNSRF) Is Trading at a 69% Discount to Comps
A hallmark of our research at WTR is that we do not offer specific stock recommendations and/or stock price targets. Our purpose is to help educate our readers about a company and some of the factors that we believe can be relevant to their choices about when and if to invest in a particular issue. We do offer data and graphs about how the stock has been valued historically—typically, using conventional metrics—and sometimes we present data and graphs that juxtapose historical valuations among issuers that are believed to be comparable.
CoinShares’ comparables include other crypto/digital management companies. The seven comps we identify below have a median forward P/E of 15.1x, while CNSRF is trading at 4.7x, a 69% discount. CNSRF is trading near 12% of its 52-week low, better than most of its comps.


DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  John Roy, phd, who is the writer of this report, covers the Technology sector for WTR. Mr. Roy, PhD and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

1Q22 Results Show CoinShares Making Money in a Tough Market While Investing for the Long Term