Distressed PE Investor, previously BB IB DM for partnerships! Page sponsored by: https://xitter.cf/t.co/m0dUn8aOUy
Joined January 2021
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It’s funny because we said 3 months ago the future hedge fund analyst job will be to collect esoteric information
This is another step forward to automate that part of the job
My theory is that relationships and access to semi-private information will be all the alpha up for grabs in a few years
🤝 Paid partnership
The marketing function is getting automated now.
If you aren't generating money for your business, you are a cost center and are at risk of being replaced.
Backed by Anthropic too so you know you're cooked.
>lead product for news feed and creator monetization at meta and X
>spend years seeing exactly how things grow in the feed
>cofounder scaled facebook groups to 1bn+ users
>build nectar
>$40mm+ raised, backed by Anthropic's Anthology Fund
I spent way too much time doing busy marketing work while building Pari Passu, no alpha in that - great to see this!
Blackstone $BX released earnings this morning. I read the transcript, so you don’t have to:
> A tighter AI financing environment will help Blackstone, as they are uniquely positioned to offer capital solutions which will allow them to earn a higher yield.
> Distributable Earnings: Blackstone reported distributable earnings of $1.7B, underpinned by a growth in fee-related earnings and fewer realizations than previous quarters, as expected
> Private Wealth: Assets from the Private Wealth channel grew 15% YoY to $330B. Fundraising for perpetual strategies increased significantly QoQ.
> IG Private Credit: IGPC grew 24% YoY and is increasingly being supported by pension and SWF LPs rather than solely insurance. The broader industry is seeing tailwinds from IG corporate borrowers looking to tap the private markets for customized solutions.
> PE: Returned 2.8% for the quarter and 15% on an LTM basis.
> Non-IG PC: Returned 2.6% for the quarter and 7% on an LTM basis.
What would you do?
> Associate at a Megafund
> Weak recent performance
> Life is perfect (Good city, healthy, great friends)
> Incompetent IC
Stick it out a little longer and love your life or try looking for something new?
Let's see Claude end the call with "Nothing from my end, thanks"
BREAKING: Claude can now build your board deck like a $309,068-a-year investment banking associate.
Open Claude Code with Anthropic's free financial-services plugins, put this quarter's model, the budget, a GL export and last quarter's deck in one folder and run these 7 prompts:
UnstructuredCap retweeted
The entire AI infrastructure complex is now in a bear market.
Drawdown since all time high
> GE Vernova: -22%
> Quanta: -24%
> Eaton: -18%
> Vertiv: -47%
> Bloom Energy: -32%
> Constellation Energy: -33%
> Coreweave: -67%
> IREN: -64%
Either a falling knife or a generational buying opportunity, depending on which side of the AI debate you sit on
Blackstone’s President Jon Gray: “This isn’t a bubble, AI demand is almost parabolic.”
His position goes against Citadel’s Ken Griffin’s take this week stating that we are almost certainly in an AI Bubble.
“When you think about a bubble, you think about building capacity, and then hoping the demand comes. With AI your building capacity and you’re hoping you can keep up with demand.”
“Personalized agents are rolling out as well creating incremental demand. So demand is almost parabolic. On the supply side, that's the part of the world where we're really focused, its governed by a lot of things that are slowing down delivery (power, chips, capital)”
Definitely interesting the way the narrative changes regarding AI depending on your position as a financier, hyperscaler, or trader.
This clip from former SEC Chair Gary Gensler might be helpful for further context: xitter.cf/UnstructuredCap/status…
Former SEC Chair Gary Gensler warns that “inevitably we will have a downturn in the next 18-30 months.”
“We humans and our financial markets pile into the fashionable new technology of its day: whether it’s canals, railroads, the internet. We build the infrastructure before there's enough demand and revenues to support that.”
“We inevitably have a retrenchment or downturn.”
“There's optimism in all humans but there's also people who are dependent on that growth, [...] even the people from the financial community.”
“It still takes consumers to buy that product and find that it's valuable, and right now the math isn't working for me.”
Is the AI market only being held by investor optimism?
If you are a gifted 18 year old going to a top college, traditional Finance is decreasingly becoming the place to go.
Why would you go to a bank or investing platform where you're going to make a mid hundred-thousand dollar base salary plus bonus when you could go to somewhere like:
1) Quant shop and make $500K plus
2) A startup where you can get equity that could turn you into a multi-millionaire in a couple years
3) AI roles which, to be transparent, I'm not super well aware of how the pay works, but know it has to be lucrative or the top talent wouldn't be going there.
The Harvard valedictorian doesn't want to work at Goldman and earn $120K base + 100% bonus while working 100 hours a week.
And frankly, Goldman doesn't need the Harvard grad either.
Hertz lenders about to get their faces ripped off
What a shit show
Hertz, the next non-sub (JV) dropdown?
- Hertz has Oro Mobility in its own subsidiary
- Oro Mobility is Hertz’s side business that runs vehicle fleets for ride-hailing and robotaxi companies like Uber, a great asset
- Certares and Knighthead purchase 50% of voting units and 16% of common equity of that entity, the entity is therefore a JV (see next tweet)
- Hertz also agrees to retire $51mm of 2L due 2029 from Certares and Knighthead at 60% discount (which likely bought this debt before at even greater discount)
- Debt is retired at a discount, a JV is ready with unencumbered assets, Certares and Knighthead make a gain on the flip, everyone wins, right? Sorry to whoever sold their 2L to Certares and Knighthead ha!
The next step?
- Class, you now have a nice entity with unencumbered assets, a ParentCo which needs to extend its maturities. What do you suggest doing?
- Raise debt against those assets, a beautiful non-subsidiary dropdown. Maybe, yes!
Read our primer on Non-Subsidiary Dropdowns to learn more, awesome work from our legal analyst!
Do people actually think we will end up running models offline?
It seems a simplistic view to me.
Everyone thought we would never move to the cloud in mission-critical industries with regulations (e.g., healthcare), which has proven wrong.
Is this time different?
This quoted post is unavailable.
I find this challenging to believe.
If you segregated the data between under 40 and over 40 however, I bet you X would still be in the lead.
$SSTK is next. Down 82% this year and 96% over 5 years.
Yesterday, I did an online guest speaker event for my alma mater's investment club. Thought it went pretty well and honestly I love giving back!
Did notice some things though:
Very wide disparity in the quality of questions asked. Some were well phrased regarding things I brought up during the presentation portion, others sounded genuinely AI generated.
There was definitely a correlation between the students who had cameras on and those who asked good questions vs the opposite.
Some of the students were able to ask some pretty niche questions about topics that I really didn't know too much about when I was that age. The bar is much higher now.
Honestly, if I were them I don't know if I would even go into finance, but I didn't say that.
I've noticed that people often believe their company has a moat when in reality its more of a shallow line in the sand.
Sure, right now in the current competitive landscape, it would be hard for a new entrant to take market share.
Once the competitive landscape begins to shift, that moat evaporates. Look at Chegg for example.
Chegg had a great moat as the leader for students to get quick answers in their College courses. It would be very challenging for someone new to enter the space as Chegg's network effect was too strong.
Then AI entered and shifted the whole landscape. $CHGG
I hear a lot of pushback from SMBs saying they don’t need AI because their industry has high moats.
To me, that’s like saying we won’t make a website or use the internet because we have a high moat.
Sure, that moat might give you some runway, but it won’t adapt; you’ll eventually fall behind.
And once you’re behind, you’ll never recover as the gap is only getting larger.
Breaking news: Your local government-regulated utility provider isn't dumping billions on AI research.
Of course it's going to be concentrated at the top.
1% of companies represent 90% of AI spending.
Of that 90%, 80% of this spend are from unprofitable VC backed companies.
So, roughly, $0.70-75 of every dollar of AI spending right now comes from AI companies spending VC investment dollars.
As a result, the revenue quality in AI is currently poor. This happened in previous cycles as well, like cloud when early users of AWS were mostly venture backed startups.
The thing, though, is that before AWS could scale and pull thru GCP and others as legitimate cash machines, there were a few clearing events to sort out these brittle revenues.
This is the extrapolation of Ken’s point. We will need to transition from speculative AI spending to consistent, reliable spend that shows up in public market earnings reports.
This hasn’t happened yet because most of the breathtaking revenue growth comes from LPs investing in VC funds who then send it to startups.