These are the things we are reading and thinking about. Most translate into nothing useful except providing some blips in my brain waves. We hope you enjoy these curated reading which will definitely not appeal to all.
Pershing Square Tontine Holdings, the industry of streaming music:
There is really nothing complicated about it, but just 3 parts created.
PSTH is doing a partial acquisition of Universal Music and a distribution of those shares back to shareholders of PSTH.
The remaining funds which is not used in the Universal Music acquisition will be held under an investment holding firm which should be acquiring soon after.
Those who continue to hold PSTH will also get the “rights” to invest in their future deal which hopefully could be consummated in the next few years.
The only wild card is the “right” given. With the Universal Music deal, has Bill Ackman lost so much credibility that the market would view this option to invest right beside Bill Ackman as zero? Since PSTH had never traded below its trust value, the worst case scenario seems to be that the market is valuing the options at a slight premium.
If the market soften in the next 5 years, the ability to invest in an iconic company with Bill Ackman is a huge opportunity. The question is if anyone would be willing to cough up the cash when the economy is soft and cash is scarce,
For people who wanted to know more about streaming revenue and the music publisher relationship (Universal, Warner, Sony and +++), Music Streaming Royalties 101 - Sleepwell's Bedtime Story (substack.com) provides a good detail breakdown on the dynamics and the money. Our view is that the publishing house has tons of place to monetise their assets other than just Spotify.
Roblox vs Unity vs Epic:
Roblox_Investor_Letter continue to highlight to us why it is so exciting to track the gaming development sector. There are so many levers for Roblox to pull to grow as a company. The concept of Roblox as a game engine seems to appeal to the idea of Clayton Christensen’s disruptive innovation theory, a scrappy product which is always improving and may eventually become better than the product compared to Unity and Epic?
We do not know but we will be watching this game development space for a long time. The future of Ready Player One will be created by one of these companies or a company that is yet to be born.
Graphs and Visuals:
The best things in excel is that they help translate numbers into nice graphs. But with better visualisation tools, we can help translate most things into a nice visual. Sometimes it is just nice to see things from a visual basis. Visual Capitalist is a good place to check out some of the visuals.
A Global Perspective: The Possibilities in International Equity Investing (visualcapitalist.com) help us to see the attitude towards global investing. We believe one should always invest globally but that come with other risk as well.
Which Are the 20 Most and Least Profitable Companies Per Employee? (visualcapitalist.com) detail one of the most surprising results. It is a tad dated but it shows you why every tech company wants to add a fin to their name.
The Biggest Companies in the World in 2021 (visualcapitalist.com) could possible help us to narrow down the biggest companies in the world to invest in. Maybe the easiest way to beat the market is to rotate among these name like what Terry Smith did for FundSmith. We may just incorporate a strategy doing just that.
For the Geeks:
There’s More To Machine Learning Than CNNs (semiengineering.com) help us understand the basic of neural networks. Now I can put some context to what my PhD friends are talking about.
What is Zero Trust? (hhhypergrowth.com) is a good understanding on how security are build and managed. The companies covered here include CrowdStrike, Okta, Zscaler, and Cloudflare. Interesting to learn more about cyber security with the news of ransomware attacks happening in the U.S. and around the world.
This article lead us back to the concept of using blockchain as part of the zero trust architecture. That may be an interesting use case for the ethereum blockchain.