Bitcoin Rally Left in the Dust by This Puzzling Hungarian Stock

(Bloomberg) -- Bitcoin euphoria may be taking the world by storm but for investors in one Hungarian company the cryptocurrency’s gains come a distant second.

Konzum Nyrt., an asset manager owned by an oligarch close to Prime Minister Viktor Orban, has gained more than 6,000 percent this year. Bitcoin has gained almost 1,700 percent in the period, trading just below $17,000 on Tuesday.

If Bitcoin’s gains puzzle even the most seasoned investors, so do Konzum’s, which has a market capitalization of just $245 million.

The Budapest-based company reported sales of just $140,000 in the first half, but a web of investments from tourism to finance helped generate earnings more than 100 times that via a network of subsidiaries. The stock took off after Lorinc Meszaros, the mayor of Orban’s hometown -- who describes the premier as a friend -- first bought a stake in February. Orban has rejected opposition allegations that he’s using Meszaros as a strawman.

“Bitcoin and Konzum are comparable in that investors are buying into them because they don’t want to miss out on their significant gains and not necessarily because of their fundamentals,” said Zoltan Varga, an analyst at Equilor Zrt. brokerage in Budapest. No Hungarian brokerage covers Konzum because it’s too small or its business is too opaque.

Konzum shares were suspended from trading on Tuesday, along with shares of CIG Pannonia Life Insurance Plc, pending information material to the companies. Pannonia has climbed 69 percent since Dec. 31.

Meszaros controls another conglomerate also giving bitcoin a run for its money: Opus Global Nyrt. That stock has posted gains of more than 1,500 percent so far this year.

To contact the reporters on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net, Gabriella Lovas in Budapest at glovas2@bloomberg.net.

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Angela Cullen

©2017 Bloomberg L.P.