Comfy Sunday Space v33: Anthropic IPO, Rates and Quick Portfolio Update

where it's not about year over year, two year over, you know, five year growth, three year growth, you know, how does this company look compared to a decade ago? This is really what is the rate of acceleration of this company in the last two to three months. We're seeing kind of even still open AI and graphic jostle places and I still am not able to get out of my mind why open AI, one hasn't done ads but also two pulled their IPO because they did file, right? Yeah, I don't think we ever got any clear answers on that. And then second, andthropic, we should get the S1 any day now. So we're going to have some insight into exactly how anthropic is thinking about their business, cost of good soul, forecasted spend, agreements, and also they're going to list out and I'm sure we'll have some funny memes, you know, all the material risks to their business like they might blow up the world or something. We're not going to go too deep into the AR Dumerism. We kind of keep it more on the asset side, but this is kind of these are kind of the big things on the advent calendar coming up into end of year. Yeah, it's interesting because even anthropics getting pushed back quite a bit like if you looked at the polymarket odds on an anthropic IPO by November 15th. So, you know, not too far from now. If you had gone back two weeks, the market had this at about 78% chance. Currently the market has it at a 19% chance. So sort of the whole timeline is sort of getting pushed back weeks and weeks and weeks, which is curious, right? It's not obvious why it's taking so long. It felt like there was a big race or big push to be first SpaceX got it. The whole market traded very soft after SpaceX came out. In fact, indexes basically topped and a lot of like AI secular stuff ended up putting in pretty violent reversals after SpaceX dropped. And I think everybody kind of said, maybe IPOing isn't what we thought it was or maybe being second isn't good enough. And even now they're kind of delaying, which I think is, which I think is quite an interesting. Attuming andthropic goes out at two trillion. Are you a buyer or seller at that price? No, I think you have to be a buyer. I think you have to you got to imagine that the enthusiasm to have a pure play model company that you can invest in is worth a phenomenal amount of money. And it's kind of this like phenomena that happens in markets where you kind of wish or you romanticize that the market was very clever. And it looked at a company and figured out exactly what it's worth and priced it well. But in reality, the way that a lot of market participants behave is they say, look, I've got a certain amount of money. And I want five percent of it to be dedicated to some thematic sector. And the more that you can invest in exactly the kind of thing that you want, the better. And I think almost everybody in the market and this there's very few exceptions to this. Almost everybody is actually very price insensitive. And they say, look, I'll just I'll buy it at whatever price the market gives it to me at. And so I think what you're going to have is you're going to have a lot of portfolios in the world say, look, I really, really, really want this like pure play model company exposure that's listed on a US exchange because technically you can get it in like Hong Kong with the Chinese companies right now. But I want like the big ones. I want a frontier company. I want no bullshit. And I want it hosted in America. And I think that there are trillions of dollars that are interested in this. And so I think over time as the market really figures out what it's worth, it probably sells off a lot. But I think the initial like two, three months of price action will be phenomenal. I think even still with codex catching up and maybe some not so great things being said by Dario and head of safety and this sort of thing, it doesn't matter. This is the most interesting equity in the entire world. And gun to head, I don't think we'll be trading this. I think we'll be more watching and then making potentially correlated or reciprocal bets or you know paying attention to how other things that we may trade more move like mega caps or some data center stocks. I don't think we'll have a tremendous amount of alpha trading and throttic at IPO. But gun to head, I'm probably a buyer. I just think for now, especially we don't really know the float dynamics, but I can imagine they may do something similar, itch to SpaceX where it's just hey, there's a hundred billion dollars of people who might want to sell employees, investors, whatever. And there's 300 billion, possibly more of price and sensitive buyers who are just like I want to own a billion dollars of anthropics so I can sleep at night so the AI doesn't kill me. I'm kind of being reductive. But in general, you're right. People just want a waiting and they don't really care too much about price. They're just like, hey, this seems good and this is what everyone tells me is the best. So I'm just going to buy it. Yeah, look at what happened with circle IPO, right? So circle IPOs, what was the opening price like 40 bucks or something? Yeah, the IPO strike was 40. Yeah, it was like 40 bucks. And it goes to 300 in two and a half weeks or something. Why? Because it was like the only way to get pure play exposure to stablecoins. And that's just, there was a lot of money in the world that said, I need to be long this stablecoin, you know, sector. And that's how you did it. And everybody was very price and sensitive as they put those bets on. And eventually, like the market kind of solves what the company is really worth. But, you know, you don't get in the way of the first couple of weeks of price discovery of something that has that kind of dynamic. So what I think, what I think, what I think it's interesting about this though is if you look at what happened to the market, it was on a tear. I mean, we had everything ripping hard, chip names, memory, mega caps, you know, Google was like at the highs. And then SpaceX, SpaceX comes out and it takes enough money out of the market that everything just kind of trades soft like a lot of weakness started showing up across the board. Once SpaceX went in and scooped like, you know, a little over a hundred billion dollars out of the market. And I kind of think right now we're probably in a similar kind of scenario where if Anthropic shows up and says, hey, I'm just going to, I'm going to go out and grab like a few hundred billion dollars. I think the market probably trades like shit, be honest. And I think especially things that people have to sell in order to raise capital to bid andthropic are going to trade unusually soft. And so I think that there will be a lot of opportunities and things like that. But just imagine like, what is the portfolio of the average guy who's going to be max bidding andthropic in the first few weeks. And then just think about what he's got to sell in order to raise cash to do that. And I'm thinking a lot of those names are going to trade pretty weak like anthropic success. And I think it really will be a success of an IPO definitely comes at the expense of some of these other names. And so I'm kind of looking at the sort of relative strength play for a lot of those kinds of things. I think there's going to be just like the SpaceX IPO, a lot of enthusiasm for similar or beta-esque that sort of like when a meme coin goes up or some sort of real world event happens, you know, people will be like, oh, this is X beta and it's some like meme coin slot. Equities are a bit more serious than that maybe, but even still there's quite a bit of interest in, you know, just high beta options, especially if someone feels like they can't get access to the anthropic IPO. And the weeks leading up to it, you know, people will sort of bet on these other reciprocal names. So one thing I think worth touching on is you've had a fair amount of exposure. We didn't buy any of these things, but we've been around the hoop on a lot of like anthropic and open AI secondaries. You know, the market for secondaries on these names in particular has been robust, right? Like if you were really motivated and you were on the sidelines, there was usually a path to getting some sort of like proxy like exposure. And in a world where so much activity has happened in secondaries, like I kind of, I look at a lot of like things that we've learned in crypto or these financial experiments that we've seen, where you give people maybe a little too much access before the IPO or the TGE. And it kind of fucks up the trading dynamics. So like I think of pump fun, I think of Monad, I think of mega-eat, where you had a lot of people that were allowed to accumulate well in advance of TGE so that maybe some of the more institutional type buyers were a little bit exhausted or are already filled before TGE. Like if there's any risk, and again, I really do think it's going to trade well. But if there's any risk, I do wonder if the sheer volume of access that people have had through the secondary markets takes a little bit of the edge off of how explosive the first month of trading on an anthropic might be? I still think it's just the most hype thing ever. So I think we're going to see it probably just rip up far higher than people think and then kind of spiral down and sort of normalize that some sort of price. It'll be interesting as well to see Kyle, you made this great point in the office where you're like, look, when China releases a new open-source model and it tests pretty well, right now these companies are private, like open AI and then the market and then the market is going to be very high on the benchmark. So I think that's really the most interesting thing to see in the future when they're public, you know, you could see tremendous volatility as people sort of price in or get scared about the rapid increase in open-source gains where they're testing very high on the benchmarks now. I'm not really a benchmark expert have quite a bit of edge trading AI stocks compared to maybe traditional fundamentalist investors simply due to the fact that a lot of this will be narrative-based. Anthropic isn't priced at two trillion because it makes five hundred billion dollars like some of these other companies here, right? Anthropic is priced at two trillion because it makes a couple hundred because it makes tens of billions of dollars but it's growing extremely fast and that magnitude of a multiple makes it very sensitive to narrative. All assets are sensitive to narrative but I kind of think about some of these frontier models sort of like the layer ones where I would always look at them and look at the revenue and be like this just doesn't make any sense. How is Solana trading at, you know, five hundred times or something? But it's all because if there's a decent chance that, you know, the entirety of finance will be housed on a single platform then maybe a trading at five hundred times is cheap because there's a chance that the majority of economic activity occurs on some sort of chain. And so it's really interesting. I'm not quite sure how to think about things. I do want to touch on something back to rates. I know we're kind of jumping around here but just a really quick refresher lesson. It was a lesson that I really learned in 2022. Probably one of the worse drawdown years unfortunately as well due to FTX which sort of exacerbated it but I went in pretty long into the quite rapid hiking cycle and you know our portfolio took a pretty significant right down. We had mostly crypto exposure and it does feel a little bit different at this time. However I think it's important to be aware of rates and also be aware of where assets are trading and sort of weigh the risk reward of locking up gains and parking them in T-bills and farming, you know, close to 4%. I mean it feels pretty good right especially, you know, locking up gains into taxis and it's something that I tweet about quite frequently which is, you know, always be selling, you know, you never went broke from taking profit. A lot of people think I'm talking to the market and maybe I'm trying to walk the market down because I'm bearish or something like that but actually I'm talking to myself because my biggest leak in flaws of trader has been not selling into fairly obvious places to do risk. I don't think anyone's going to make the argument that, you know, hype at $90 when it was trading at, you know, $5 two years ago is cheap. It's very difficult to articulate that argument. I don't think it's significantly overvalued given that it's still a fantastic company but this is something that I have to remind myself as if it were up to me, I would do the Buffett-East thing and hold assets forever but unfortunately markets are far quicker now to reprise assets according to certain narratives. So just wanted to sort of recommend that people go and check out 2022 hiking and the corresponding price action on equities and especially crypto. You might not think that rates are particularly relevant but they are. They affect the entire financial system. So I mean, look, yeah, I think when rates go up, like the value of a dollar gets stronger because there's a great yield pool that you can throw it into and farm teabills, right? Or farm like even, you know, one-year money to your money. So like just cash gets more valuable and there's a lot of people who point at what's happening with rates right now and come to a multitude of conclusions about what's really driving it. I think inflation is kind of whatever. I just don't think anybody gives a shit man. Like it's not that bad and people will point out especially like a lot of the financial critics will look at it and say, it's terrible credibility and something like that. I just don't think anybody really cares. I just think there's a lot of borrowing going on in the world. There's a lot of people who have their hands out who say, I need to borrow dollars because I need to build a dentist.