Jagdeesh (Jag) Prakasam

Nice Earnings Report from AirBnb: Here's some thoughts Q2 guide probably little light, but explained away by timing of holiday and leap. Also income margin compression, also explained away via same reasoning. Company has healthy pipeline visibility, so comments on summer seem valid. "Due in part to the strength of our Summer backlog, we expect year-over-year revenue growth to accelerate in Q3 2024 compared to Q2 2024." • Healthy income generation, $264m GAAP NI • $11B cash • $22.9B GBV • Nights booked 132.6m, +9.5% y/y • ADRs around 2% (good for inflation) Nobody likes steep decel and margin compression expectations. Short-term vs long-term.

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There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets

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Back from a busy (and hot) week in ATX for CoinDesk's Consensus. This year the conference felt a bit muted coming in but with the policy changing winds behind our back lots of people came out. My biggest takeaways (hint: not that much new) below: 1/ TradFi! Institutions! - they were literally everywhere. In some sense, that's who this conference caters to. But they also have the ETF wind behind their backs and it's clear that the institutional part of the market is here and they have big plans for crypto. Most of their efforts (cough*tokenization) have little to do with permissionless blockchains and crypto, but the exposure and marketing is still good for all of us 2/ In the same sense, the future of regulation in crypto was the most discussed topic -> getting this right is core for the US' ability to compete in this market. I've been speaking regularly on how the Asian market is pulling ahead, so now is the time for the US to stop the bleeding. 3/ Bitcoin - no I don't mean the ETFs or spot BTC, but Bitcoin ecosystem projects, runes, L2s, sidechains, and ordinals are as discussed as any other ecosystem. More of this than there was SOL memecoin discussions, despite what was happening on twitter 4/ AI - still one the largest topics of discussion, as it has been all year. But people are much more guarded on the potential outcomes here than they have been in months. It seems like people are catching up to me as its become more fashionable to talk about how most the projects / promises coming out of the AIxCrypto market seem to be, at best, extremely far fetched. One reporter told me that he heard from more people than not that most of the AIxCrypto market was vaporware (and likely BS). That's a real change. 5/ DePIN - This seems to be the area that is evolving in a really interesting way, in my opinion. I've been critical of this market in the past but there are real entrepreneurs trying to make honest strides - and even if the projects don't work, it seems like there is less grifting and more just innovating. As Chamath would say, they are in the Arena trying things. 6/ Tokenization - truly does not seem like anyone outside of the major institutions understands who the clients are for tokenized products (if you are an entrepreneur and believe you are different, please hit me up and prove me wrong). And the institutions understand it's just themselves, saving on software and capital efficiency. This market on permissionless chains doesn't seem much further along than it did the last time we had this theme 7/ Frankly, there's a general lack of "new" themes -> seems like it might be time to go heads down and focus on building while the institutional adoption wave just keeps flowing over us

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New or smaller VC, PE or HF manager? AUM less than $50 million? Great Performance? Trying to raise assets? Struggling and failing?   Sounds all too familiar: It’s due to poor or non-existent marketing Let’s get real about raising assets for “sub-institutional” managers, those with AUM between $0 and $50 million. IT’S HARD AND A STRUGGLE.   Raising assets in a crowded, hyper-competitive, complex and complicated market from investors that are risk averse, stringently selective and idiosyncratically demanding is more challenging and difficult than most new and sub-institutional managers understand. The fact is the majority of sub-institutional managers fail to get AUM beyond personal capital long with small amounts from family and friends even when they have exceptional performance. Plainly speaking: There is a lot of BS, hype, propaganda and completely wrong information about marketing and fundraising for small managers with AUM less than $50 million Since 2011, Johnson & Company has specialized in meeting the marketing challenges for "sub-institutional" managers. 25+ years experience, expertise and skill uniquely equips a new or smaller manager with the FACTS and proven structured, disciplined and focused PROCESS supported by independent high-integrity data and research, accurate information, objective insight, expert instruction and frontline intelligence that optimizes marketing process execution to maximize the success, efficiency, economy, expedience and effectiveness of raising assets. If you’re a new or smaller manager, with AUM less than $50 million struggling and failing to raise assets, first get the facts: https://johnsn.com/facts If after your review of the “FACTS”, you’d like a candid, no-nonsense conversation about marketing and raising assets, contact me, I welcome the opportunity. bryan@johnsn.com

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Quant’s New Frontier Famed investor and philanthropist James Simons passed away in May. Simons was the founder of Renaissance Technologies and led the Medallion Fund, likely the most successful hedge fund ever. Over a 30-year period from 1988 to 2018, estimates are the Medallion Fund annualized at 66% before fees and 39% after fees1. While details on the firm’s investment process are highly guarded, it’s accepted that their use of advanced machine learning techniques was instrumental in their process. As an accomplished mathematician and former Cold War code breaker, Simons' technical expertise led to incredible success and launched widespread interest in quantitative investing. Today, as the investment industry continues to play catch-up with techniques likely utilized by Renaissance decades ago, assessing how artificial intelligence (AI) and machine learning (ML) are employed is at the industry’s forefront.   It should be noted that while AI and ML are often used interchangeably, there are distinctions. AI is a larger field that aims to build computers capable of mimicking human cognitive functions such as reasoning, learning, and recommendations. ML is a branch of AI that involves teaching machines to learn from data without being explicitly programmed. While the number of use cases and future applications are only going to grow as computing power and market interest increases, let’s review a few relevant examples as many investment firms often promote how they utilize ML in a rather vague manner. As an incredibly dense field without an accepted list of best practices, specific examples should help cut through the everyday jargon.     Return Predictions Using Neural Networks and Decision Trees. Investment firms use neural networks and decision trees as part of their predictive modeling tools to help forecast investment returns. Neural networks are a type of ML that can identify complex patterns and relationships in data. Firms will train neural networks using historical market data, such as stock prices and economic indicators, to predict future market movements and investment returns. These models can consider a wider range of variables and factors that may impact investment performance. Decision trees are another type of predictive model that use a tree-like structure to make decisions based on input variables. Decision trees can also be used to analyze historical market data and identify key factors that are correlated with investment returns.    Follow this link to read the complete article and important disclosures: https://lnkd.in/gibUDuHC Follow this link to learn about independent financial planning and investment management through Mountain-Bishop Private Wealth Management: https://mbpwm.com/ #QuantitativeInvesting #MachineLearning #InvestmentStrategies

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Should developers measure #ROCE rather than #ROE? In short, yes. ROCE, or Return on Capital Employed, shows how effectively a company uses its capital— debt and equity—to generate profits. Unlike metrics such as Return on Equity (ROE), which only considers equity, or Return on Assets (#ROA), which only focuses on assets, ROCE is calculated by considering both debt and equity, providing a balanced and comprehensive view into profitability and capital efficiency. At a time when every penny counts, ROCE is a powerful tool for assessing a site's efficiency and profitability, ensuring that every penny invested is working hard. A higher ROCE value usually implies better investment quality, as it suggests that a company can generate a higher return on each unit of capital employed. As more #developers (and #lenders) move towards using ROCE to measure the viability of their sites and make informed investment decisions, Brickflow now shows ROCE in the search results against every #DevelopmentFinance and #RefurbishmentBridging search.

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My latest Substack post analyzes $XOM once again catching $TSLA in terms of market cap. Last 5 qtrs: $XOM returned ~$40bb to shareholders via divvies, buybacks. $TSLA: $0.00 That is what really matters. But the key to investing is the second derivative, and as EV sales slow (good for demand for oil, obvs, and for $XOM) I fail to see the Silver Bullet for $TSLA. Why? Because Elon let his product line get old. No amount of robotaxi/FSD necromancy is going to change that. Trade accordingly. Excelsior! --Jim

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Discover how ExtractAlpha’s TrueBeats signal can predict earnings surprises with precision. Learn more about our award-winning team’s research and trading signals: https://lnkd.in/gtDXWkiM #quanttrading #quantitativeresearch #quants #alternativedata

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Bloomberg makes proprietary alternative data available to quants Bloomberg has made its proprietary Bloomberg Second Measure (BSM) transaction data analytics feeds available via Bloomberg Data License. Data professionals and quantitative researchers can now connect this alternative dataset with Bloomberg’s more traditional Data License content. #data #datasets #markets #trading #finance #GlobalTrading https://lnkd.in/eMvGdWzi

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NVIDIA Stock Forecast for This Week NVIDIA's stock is projected to open at $1,053.15 on Tuesday, May 28, with a potential trading range of +/- $39.08 (+/-3.67%). The stock holds buy signals from both short and long-term Moving Averages, suggesting a positive outlook. However, the RSI14 is at 77, indicating the stock is extremely overbought, which may present a selling opportunity. Support and Resistance Key support levels are identified at $1,037.99, $974.60, and $888.79. These levels could provide buying opportunities if tested, but a breakdown below any of these points will issue sell signals. Predicted Price Movement May 2024: Max $1,239, Min $823, Avg $1,009, Ending $1,142 (+37.6%) June 2024: Max $1,459, Min $1,057, Avg $1,221, Ending $1,225 (+7.3%) July 2024: Max $1,225, Min $1,036, Avg $1,153, Ending $1,126 (-8.1%) Analyst Ratings and Price Targets The average price target from 39 Wall Street analysts is $1,185.29, with a high of $1,400.00 and a low of $870.00, predicting an 11.33% change from the last price of $1,064.69. The average target suggests a 2.75% increase from the current price. Bullish or Bearish Overall, the news is BULLISH. The stock holds buy signals from both short and long-term Moving Averages and a general buy signal from their relationship. However, the high RSI14 indicates it is extremely overbought, possibly presenting a selling opportunity. More Insights at: https://solvent.life/

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SaaS metrics through Q1 are updated on our website for all publicly traded companies we monitor closely (those that IPO'd after 2017). View the data here:   https://lnkd.in/gdW4KwKr

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A big mistake LPs make when assessing GP commitment %’s The GP commitment is often a key heuristic in evaluating fund managers alignment. Occasionally, it serves as a key reason for a pass/go (it shouldn’t be the key reason, but that's for another day). The way GP commits are typically presented are as a % of a fund. I.e. a 2% GP commitment of a $100MM fund is $2MM. The higher the number, the more alignment the GP has, in theory. However, a more refined lens is needed. The % of GP to the Fund size is fairly irrelevant. What's more critical is the commitment to the GP net worth. Of course, that’s not something you can just easily get by asking, but a quick search on work history, past track, etc. can help with a general estimation. For example, I know an emerging manager whose GP commit was 0.5% and was raising a $15MM fund (Full time).  LPs pushed back heavily. The person came from no money and had little liquidity, had limited work experience, and was hiring a team member to help. $15MM * 2.5% (funds often have a higher fee during the investment period and drop off later) is $375K/year. Let’s say the team member makes $125K. That leaves $250K for the GP, any other management company expenses (Accounting, Space, filings, etc.). Let’s say that leaves the GP $200K before tax, or ~$150K after tax. With a 0.5% GP commit ($75,000) called over 4 years, it would have dropped the annual net cash income to the GP to about $130K. This person also had plenty of opportunities to join other funds or companies and could have made 2-3x the take home pay. Looking a the GP commit only as a view of misalignment would have been incorrect, and prevented someone with a different background from starting. On the other hand, let’s say a fund with 3 partners has a 5% GP commit on a $200MM. Great. However, one of the partners had a huge exit in the past and is likely worth more than $500MM. This partner is also 90% of the GP commitment (the other two partners are $1MM in total). Additionally, they use a fee waiver at 80%. This means that 80% of the GP commitment can be contributed on a pre-tax basis by a reduction of management fee collected (they will pay LT tax gains upon liquidity events). Who would you think has higher economic alignment? Finally, the GP commit is just one data point and should be used as such, however analyzing it correctly is key to creating relevance for the data point. Also, the illustration for above is for a Fund I, but later on, the analysis can be more complex.  

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If you can’t beat the benchmark, you should just invest in the benchmark. Active investment management is hard. It costs time and money. Professionals get paid to beat the benchmark. You should try too. Here’s how: Tracking error is the standard deviation of the difference between the returns a benchmark. It’s a great way to measure how you’re performing. And it’s easy to compute in Python. Tomorrow, 26,000+ subscribers will get the code. Join us: https://lnkd.in/eMDmp_3v

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Raising Assets: THE critical objective for new & smaller VC, PE & HF managers. Most struggle and fail despite "performance"+ an exceptional track record. WHY? = MARKETING.   There are thousands of venture, private equity and hedge funds in active fundraising + investors are risk-averse, highly skeptical, stringently selective and uniquely demanding.   New and smaller managers must be completely prepared for marketing in a hyper-competitive, crowded and complex fundraising climate.    Success raising assets depends on the marketing process.   However, "81% of smaller managers do not have a marketing process".   The requirements of marketing are misunderstood and under-estimated by almost all new and smaller managers.   1. The marketing process for "sub-institutional" managers is completely different than for larger, "more-seasoned" "institutional" funds.   2. “Pitching”, “Posting”, “Parties (conferences)” & "Performance" don’t raise assets for new and smaller managers.   3. There's a lot of BS, scams and wrong information about raising assets for new and smaller managers.   Since 2011, Johnson & Company has specialized in marketing for new and smaller managers with AUM less than $50 million.   “MARKETING ALPHA BRIEFINGS”: A “1-on-1 intensive process” for managers with AUM considerably less than $50 million to implement the structured, disciplined and focused “manager-specific marketing process" that drives consistent “step-by-step” “high-impact” "investor-centric/prospect-specific” engagement with experienced assisted execution, expert guidance and the personal instruction that raises assets efficiently, economically & expediently.   Key Briefing Process Components:   ✅ 12 weeks 1-on-1 Marketing/Fundraising Sessions. ✅ 7 day/week "On-Call" Marketing/Fundraising Guidance. ✅ "Step-By-Step" Assisted Marketing/Fundraising Execution.   On-Site "Briefing Topics":   1. The “6-Steps” of the Allocation Pathway. 2. DON'T "PITCH"="PRESENT!" = Know the CLIMATE.Understand CONTEXT. 3. Prospect Engagement: "INVESTOR-CENTRIC" + "PROSPECT-SPECIFIC". 4. Building The "Pipeline": What's YOUR Profile? 5. Avoiding the "Field of Dreams": "If YOU build it; THEY won't come!" 6. 3rd Party Marketing: Placement Agents - The mystery for smaller managers. 7. 4Q Profiling: Organically build relationships to raise assets. 8. Databases and Platforms: "Post & Hope"!? 9. ODD-Ready! Your Operational Blueprint. 10. Collateral/Content/Conversations: One size doesn't fit all! 11. EQ>IQ: Connect to Build Trusted Relationships & Actionable Conviction. 12. CON'D?! "CON"ferences stop wasting your time and $$$! 13. De-CAPitated!: Working with prime broker cap intro. 14. Consultants & Gatekeepers: Allies? Advocates? Adversaries? 15. Family Offices: Getting The Trusted Introduction. 16. Seeding, Incubators & First-Loss Capital: Real? Hype?! 17. LIGHTS! CAMERA! ASSETS?!: Using social media. 18. NO FREE LUNCH: Take $$ to raise assets.   FOR DETAILS: https://lnkd.in/gRetGVzA

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𝐇𝐞𝐝𝐠𝐞 𝐅𝐮𝐧𝐝 𝐇𝐢𝐫𝐢𝐧𝐠 𝐔𝐩𝐝𝐚𝐭𝐞: 𝐉𝐮𝐥𝐲 2024 HF hiring activity remains robust, although with a massive supply shortage of top PM & Quant talent due to the ever-growing length of sit-outs/non-competes, as well as recent launches like Taula Capital and Jain Global LLC now competing for the same talent as other larger multi-strats. Squarepoint Capital also seems to be quietly becoming one of the largest hedge funds globally by AUM. 𝐊𝐞𝐲 𝐓𝐫𝐞𝐧𝐝𝐬: ●𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐋𝐨𝐧𝐠 𝐒𝐢𝐭-𝐎𝐮𝐭𝐬: Extended sit-out & non-compete periods creating significant talent shortages, intensifying PM competition between funds. ●𝐋𝐚𝐫𝐠𝐞-𝐒𝐜𝐚𝐥𝐞 𝐑𝐞𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐭𝐨 𝐍𝐞𝐰 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐇𝐮𝐛𝐬: We are seeing an acceleration in front-office talent relocating to Dubai away from hubs like London and Paris. Many candidates are now more keen than ever to move, not only due to tax incentives, however also due to increasing political uncertainty & deteriorating economic conditions in their home markets. ●𝐇𝐅𝐬 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰𝐢𝐧𝐠 𝐌𝐨𝐫𝐞 𝐒𝐞𝐥𝐥-𝐒𝐢𝐝𝐞 𝐓𝐫𝐚𝐝𝐞𝐫𝐬: More hedge funds than ever are increasingly looking towards top-tier sell-side traders with strong prop numbers for risk-taking seats, due to an increasing shortage of buy-side PM talent with established track records ●𝐒𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐅𝐮𝐧𝐝𝐬 𝐑𝐚𝐩𝐢𝐝𝐥𝐲 𝐄𝐱𝐩𝐚𝐧𝐝𝐢𝐧𝐠: Qube (QRT) and SquarePoint are aggressively hiring and growing at a much faster rate than pretty much all of the large multi-strats ●𝐂𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐅𝐥𝐞𝐱𝐢𝐛𝐢𝐥𝐢𝐭𝐲: Many PMs, APMs and Analysts are increasingly valuing collaborative cultures, shared resources, and more flexible risk limits over higher payouts 𝐒𝐤𝐢𝐥𝐥𝐬𝐞𝐭𝐬 𝐢𝐧 𝐝𝐞𝐦𝐚𝐧𝐝: ●𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧: High demand for inflation Quants, Strategists, and PMs ●𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐬𝐭𝐢𝐜 𝐂𝐫𝐞𝐝𝐢𝐭: Some multi-strats are beginning to explore credit strategies spanning public and private markets and some funds are even considering pure private credit-focused strategies, although there is still work to be done on figuring out how to approach risk-limits/drawdowns given the less liquid nature of these strategies ●𝐒𝐩𝐞𝐜𝐢𝐚𝐥𝐢𝐬𝐭 𝐌𝐚𝐜𝐫𝐨 𝐄𝐱𝐩𝐞𝐫𝐭𝐢𝐬𝐞: Strong demand in specialist areas like LatAm Rates, EM FX, Inflation, and Basis ●𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞𝐝 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐬: Increasing interest in SP Quant and PM talent covering areas like ABS, MBS, and NPLs 𝐂𝐨𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧: HF hiring remains more cautious than in 2023 and while funds are still actively interviewing, they remain highly selective and are hiring 1 out of every 50-100 people that they meet on average. Due to the increasingly high hurdles to landing top talent, we would not be surprised at Laz Partners if we see some mid-sized ($5bn-$10bn) multi-strats getting swallowed up while we end up in a scenario with a few mega-funds and a wide range of smaller, niche funds running anywhere from $1bn-$3bn.

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Preqin is acquired by BlackRock Rumors are S&P, Bloomberg, LSEG and a handful of PE buyers were all bidders $3.2B was the purchase price. $240m is the expected revenue this year. BlackRock sees the Preqin data and products as a natural fit and extension of their Aladdin product. The value of data continues to be recognized by the strongest companies. Another great acquisition of a unique data asset. We had Tegus acquired a few weeks ago by AlphaSense and now Preqin by BlackRock. The good news is these types of deals will wake up other sleeping giants and get the M&A liquidity back into the private markets. I am excited to see which assets get scooped up next.

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Emerging alternative assets are reshaping the investment landscape Traditional alternatives like VC & PE have paved the way, now new classes like crypto & more are on the rise, collectively valued at $1 trillion, impacting over 120 million users globally! Despite their growth, the missing piece remains: infrastructure The industry lacks streamlined operations for these novel assets, prompting startups to address crucial areas like discovery, data analytics, and custody. Discovery, education, and execution are key Aggregators like Vincent and MoneyMade are making strides, set to simplify the fragmented alternatives market for investors, providing a consolidated investing experience. Data accuracy and normalization are crucial Comparable to Morningstar in the mutual funds era, a standardized approach to evaluating these assets is essential for scalability and institutional adoption, hinging on reliable data sources. Actively managed funds will drive long-term growth With players like Grayscale and Galaxy already capturing significant AUM, this fee-rich category is poised for more entrants with diverse strategies, shaping the future of alternative investments. Custody, clearing, and settlement are the unsung heroes Ensuring asset security and seamless transactions is vital, yet the current landscape lacks the mature infrastructure seen in traditional markets, presenting opportunities for innovation and consolidation. Startups have a prime opportunity As traditional and emerging alternative assets expand, the call for a robust infrastructure is louder than ever. The sector is ripe for innovation and investment, inviting bold players to shape the future of alternative investments. https://lnkd.in/eJAVrNhD

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