Flying High in Bird Heaven: MSTR, PSUS, ETF

The podcast discusses measuring success in non-profits, emphasizing the importance of actual impact on people's lives over low overhead costs and efficient fundraising. GiveWell is highlighted for its extensive research on cost-effective programs in global health and poverty alleviation, having directed over $2.5 billion to high-impact opportunities and potentially saving over 300,000 lives.

The conversation transitions to the Money Stuff Podcast, where hosts analyze the current status of micro strategy trades and Bitcoin trading dynamics. They note a significant decline in market value, raising concerns about the sustainability of these strategies if Bitcoin prices continue to fall. Fong Li, CEO of Strategy, mentioned the possibility of selling Bitcoin if the market value drops below 1, reflecting a shift in their financial strategy.

Discussion includes Michael Saylor's 2020 announcement about buying Bitcoin amid dollar debasement fears, with one speaker arguing that the strategy was more about market demand. The challenges of paying interest on borrowed funds for Bitcoin purchases are raised, along with concerns about covering these expenses if selling stock to fund purchases becomes ineffective. The negative perception of selling stock to pay dividends is likened to a Ponzi scheme, although the speaker refrains from using that term.

The conversation also touches on MSCI's consideration of whether digital asset treasury companies (DATs) should be classified as investment funds, with a decision expected in January that could negatively impact these companies. The potential exclusion from MSCI indices may reduce demand for digital asset treasury stocks, leading to a decline in their market value. The discussion notes the distinction between DATs and traditional companies, with Strategy being a notable exception due to its business operations.

Bill Ackman, the hedge fund manager, is a focal point, particularly regarding his plans for a closed-end fund in the U.S. He aims to raise $5 billion, significantly reduced from an initial target of $25 billion, and intends to offer investors shares in Pershing Square Capital as an incentive. A key challenge for Ackman is selling shares at a premium to net asset value, which is essential for raising capital. He is considering offering investors a 10% stake in the management company, valued at $10 billion, to encourage investment in the fund.

The conversation critiques the performance of European listed closed-end funds, which currently trade at a 25% discount, and raises the question of why Ackman does not consider launching an ETF instead. While ETFs can attract significant capital, they may not be ideal for long-term concentrated investments. Following the closed-end fund plan, Ackman has shifted his strategy to partner with Howard Hughes, aiming to transform it into a diversified holding company akin to Berkshire Hathaway, where he owns 47% and serves as chairman.

The podcast introduces "The Big Take" from Bloomberg, which provides concise insights into global business stories. Contributors discuss various topics, including the SEC's embarrassment over Boomstock, the challenges viral companies face, and the role of voters in elections. The conversation also covers Goldman Sachs' $2 billion acquisition of ETF issuer Innovator Capital, known for buffer ETFs, which offer upside potential without downside risk. Levine explains the advantages of ETFs over structured notes, while acknowledging criticism from industry figures regarding buffer ETFs.

John Souther proposed the integration of structured products into ETFs, leading to the establishment of Innovator in 2017. Innovator launched its first buffered products in 2018 and is now in the process of selling to Goldman Sachs for $2 billion. Bruce Bond, holding at least a 50% stake in Innovator, has become a new ETF billionaire. The discussion highlights the simplicity of launching ETFs and how Innovator's achievements serve as a model for emerging companies in the industry.