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Omnivore Digest 6/9/2024

·2010 words·10 mins
  1. Vestible co-founders on investing in athletes’ earnings (220 words)
  2. It’s Better to Be Rich Than Right - Bloomberg (253 words)
  3. 🏆 A New Open Model Dethrones LLama-3 (220 words)
  4. How to Raise Your First Fund💼, 2024 Midas List🏆, Analyzing Startup Financials 📊 (277 words)
  5. Texas Business Court Can Learn a Few Lessons From Other States (253 words)
  6. US Sugar Tariffs Make Canada More Attractive Place to Manufacture Candy - Bloomberg (239 words)
  7. Real Estate Investors Face Crisis as Big Wall Street Deals Unravel - Bloomberg (230 words)
  8. Industrial Strength: M&A Flourishes Quietly in Search for Value - Bloomberg (265 words)

Vestible co-founders on investing in athletes’ earnings (220 words) #

In his article titled “Vestible co-founders on investing in athletes’ earnings,” Tim Baysinger explores a novel investment platform, Vestible, that permits fans to buy shares in athletes’ future earnings. According to Baysinger, Vestible, founded by former Oklahoma State football players Parker Graham and Yves Batoba, received SEC clearance and has begun trading with Denver Broncos linebacker Baron Browning as their first athlete. Graham reveals that initial shares are priced at $10, with 80% of the funds raised going directly to the athlete. Browning’s offering has already attracted over $100,000 since its May launch.

Baysinger highlights that investing in celebrities’ future earnings is not entirely new, citing David Bowie’s “Bowie Bonds” and previous endeavors by firms like Fantex. However, Batoba asserts that today’s fans are more informed and investment-savvy due to platforms like Robinhood. Graham points to Browning’s potential for significantly higher earnings in his next contract as an attractive investment opportunity.

Looking ahead, Baysinger notes that Vestible aims to add two college football players projected as first-round draft picks and an NBA player to their platform, expanding their athlete investment offerings.

Polyvagal theory and the neurobiology of connection, John Quincy Adams on impostor syndrome, a tender vintage Japanese meditation on love and loss (191 words)

Maria Popova offers an exploration of polyvagal theory, which connects the vagus nerve to emotional regulation and trauma recovery. She discusses Stephen Porges’s research, revealing two pathways: the dorsal vagus (fear response) and ventral vagus (connection). Deb Dana’s work is cited, showing how trauma skews attachment, while co-regulation in safe relationships rewires our responses, fostering emotional safety.

Popova then transitions to “Swan Sky” by Keizaburō Tejima, a poignant tale of a young swan facing abandonment and death, illustrating the bittersweet nature of love and loss.

Lastly, she presents John Quincy Adams’s struggle with impostor syndrome upon his unexpected election as President of the American Academy of Arts and Sciences, reflecting on humility and the true measure of success. Through diary excerpts, Adams’s internal conflict exemplifies the universal challenge of balancing self-doubt with societal recognition.

Popova’s use of scientific theories, historical anecdotes, and literary references interweave to support her examination of human connection and self-perception.

It’s Better to Be Rich Than Right - Bloomberg (253 words) #

According to Matt Levine in “It’s Better to Be Rich Than Right,” the key skill for hedge fund managers is not necessarily achieving high investment returns but rather maintaining significant assets under management, ensuring substantial personal income. He argues that successful hedge fund managers often follow a trajectory of initial high returns to attract investments, then enforce restrictive liquidity terms, and despite poor subsequent returns, continue managing large sums due to these terms. Levine exemplifies this with David Einhorn’s Greenlight Capital, noting its decline in performance and assets but Einhorn’s ability to retain control over a significant amount of capital due to stringent withdrawal conditions.

Levine also discusses the automation trend in finance, highlighting UBS’s creation of a digital clone of its chief economist to disseminate standardized views to clients. He critiques the application for its lack of personal touch but acknowledges its efficiency in repetitive tasks.

Furthermore, Levine touches on the high fees charged by bankers for mergers and acquisitions, explaining that they offset years of unpaid advisory work and foster a sense of indebtedness and loyalty among clients.

Levine uses anecdotal examples and specific figures to support his claims, such as Greenlight Capital’s asset reduction and performance statistics, as well as UBS’s creation of a digital clone, demonstrating the broader implication of these practices in the financial industry.

🏆 A New Open Model Dethrones LLama-3 (220 words) #

AlphaSignal’s article by Lior reports that Alibaba’s new open-source AI model, Qwen2, has outperformed Meta’s Llama 3 on specialized tasks. Lior explains that Qwen2 improves upon its predecessor, Qwen1.5, with advancements in coding, mathematics, multilingual understanding, and long-context comprehension. The model is available on Hugging Face Spaces in five different sizes, ranging from 0.5B to 72B parameters, and is licensed under Qianwen and Apache 2.0 licenses to ensure broad usability.

According to Lior, Qwen2 is trained on data in 29 languages, bolstering its capability for global applications. Performance benchmarks show Qwen2 exceeding the capabilities of Llama3 and GPT-4, especially notable for managing long interactions with a maximum context length of 128K tokens. This attribute is demonstrated through robust performance in tasks requiring extended context retention.

Lior advises leveraging post-training methods like supervised fine-tuning (SFT) and reinforcement learning from human feedback (RLHF) to optimize Qwen2’s utility. The article also highlights that the extensive data support, advanced multilingual abilities, and specific training methods substantiate Alibaba’s Qwen2 as a superior choice for intricate AI tasks.

How to Raise Your First Fund💼, 2024 Midas List🏆, Analyzing Startup Financials 📊 (277 words) #

According to The VC Corner, key themes in venture capital and startups include several significant insights and trends. Mario Gabriele offers a detailed guide on “How to Raise Your First Fund,” highlighting strategies for new investors to succeed. Gabriele emphasizes the importance of preparation and building a solid network.

Henry Ward, CEO at Carta, argues against the viability of a Private Secondary Marketplace, citing his decade of experience and $150 million investment in trying to solve the startup liquidity problem. Ward concludes that it remains an intractable issue.

Aram Attar outlines how experienced venture capitalists analyze startup financials, insisting that rigorous financial planning is crucial for fundraising success despite claims to the contrary. He supports his assertions with examples of successful startups that prioritize detailed financial documentation.

Sofia Faustino from ChartMogul notes that while overall growth has flattened, specific ARR and ARPA segments showed improvement in May, marking it as an anomaly in a slow period.

Tech Crunch reports on a trend where Y Combinator startups seek smaller seed rounds with terms that deter institutional seed VCs, and highlights a rise in VC funding for female founders propelled by significant AI deals.

Forbes’ 2024 Midas List ranks the world’s top venture capitalists, providing a focal point for industry recognition and influence.

The VC Corner indicates various reports and fund launches, including Cisco Investments’ $1B AI fund and Hakluyt Capital’s $50M fund, underscoring the sustained investment interest in AI and technology sectors.

Texas Business Court Can Learn a Few Lessons From Other States (253 words) #

Ryan Sullivan highlights key lessons Texas can learn from other states’ business courts, addressing areas like consent to jurisdiction, judicial term length, and feedback mechanisms.

Sullivan emphasizes that many states, such as Wyoming and New Hampshire, require universal consent to jurisdiction for business courts. For instance, Wyoming’s Chancery Court dismisses cases if any party objects, leading to 25% of cases being dismissed due to such objections. Similarly, Georgia’s State-wide Business Court also experiences 25% case dismissals due to lack of consent, according to Sullivan.

Texas’s new business court sidesteps this issue for primary jurisdiction but still faces challenges with supplemental jurisdiction, which requires all-party consent. Based on Wyoming and Georgia’s data, Sullivan predicts a 25% likelihood of consent being withheld, complicating litigation.

Sullivan also discusses judicial terms, noting that business court judges in other states serve longer terms: five years in Georgia, six in Wyoming, eight in North Carolina, and twelve in Delaware. He argues that Texas’s two-year terms, much shorter than other states’ terms, create instability, potentially leading to multiple judges handling a single case, thus hindering efficient case management.

Finally, Sullivan advises Texas to adopt Wisconsin’s method of soliciting feedback through surveys from attorneys, as it provides valuable insights for potential improvements.

US Sugar Tariffs Make Canada More Attractive Place to Manufacture Candy - Bloomberg (239 words) #

Ilena Peng argues that US protectionist measures on sugar imports are driving American candy manufacturers to invest in Canada. According to Peng, companies like Hershey Co., Blommer Chocolate Co., and Mondelez International Inc. have recently significantly expanded their operations in Ontario. Sébastien Pouliot, an agricultural economist, attributes this trend primarily to the high cost of US sugar, which is twice the global benchmark due to tariffs and decades-old regulations. Rick Pasco from the Sweetener Users Association supports this view, stating that the high US sugar prices incentivize companies to move their production abroad.

Peng uses data to support her claims, citing Agralytica’s findings that the volume of sugar in finished goods from Canada to the US reached a two-decade high last year and USDA data showing record-high imports of chocolate and other sugar confectioneries from Canada. John Boyd, a location consultancy founder, and other experts mention that additional factors like Canada’s labor force, energy costs, and exchange rates also play a role. Despite the shift, some US companies are still investing domestically; for instance, Hershey and Mondelez are upgrading or building new facilities in the US. However, the Canadian sugar industry continues to ramp up capacity, with significant investments from companies like Redpath Sugar and Rogers Sugar.

Real Estate Investors Face Crisis as Big Wall Street Deals Unravel - Bloomberg (230 words) #

Prashant Gopal, Patrick Clark, and Scott Carpenter highlight the dire situation facing real estate investors, exemplified by Lynn Nathe’s financial loss. According to the authors, Nathe invested $200,000 in US apartments via Western Wealth Capital, enticed by promises of 30% returns, but lost most of her money. This incident underscores a broader trend: the combination of social media-driven investing, Wall Street’s complex financial mechanisms, and rising interest rates has led to an unraveling of the US real estate market.

The authors present data from MSCI revealing that multifamily buildings now constitute $56 billion of potentially distressed US properties, surpassing even offices. They draw parallels with the 2008 subprime mortgage crisis, explaining how speculators’ risky leverage strategies and subsequent securitization of loans led to financial turmoil. For example, when interest rates soared in 2022, property values dropped drastically, impacting investors like Nathe. The authors use this data to illustrate the systemic risks and challenges permeating the real estate sector.

Western Wealth CEO Janet LePage acknowledged that her firm and others didn’t anticipate the interest rate hikes’ speed and extent, which exacerbated the crisis. However, she emphasized the company’s commitment to transparency.

Industrial Strength: M&A Flourishes Quietly in Search for Value - Bloomberg (265 words) #

Brooke Sutherland argues that although 2023 is not seeing massive industrial mergers, it is one of the busiest years for smaller deals. According to Sutherland, $200 billion worth of transactions involve at least one U.S. industrial company, showing a decrement from previous years. Data compiled by Bloomberg indicates that industrial companies have engaged in over 4,000 transactions this year, compared to an annual average of about 2,800 over the past two decades.

TransDigm, Ametek, and Fortive are among companies acquiring smaller businesses, indicating a trend toward smaller but numerous deals. Jim Lico, CEO of Fortive, emphasizes seeking durable growth opportunities and strategic fits for operational improvement. The competitive landscape, highlighted with transactions like Emerson’s $8.2 billion acquisition of National Instruments, illustrates the strategic M&A environment.

Private equity activity in industrial M&A has slowed due to higher interest rates and valuations, contributing only $9 billion in takeovers of industrial assets. Nonetheless, industrial companies leverage strong cash flows to fund acquisitions, avoiding substantial debt. This financial strategy is illustrated by Carrier Global’s pending purchase of Viessmann Climate Solutions, exemplifying the balance between leveraging equity and divesting non-core assets.

Siemens Energy’s financial struggles and recovery plans underscore the complexity and risks of the industrial M&A landscape. Sutherland concludes by discussing the strategic importance of acquisitions in a challenging macroeconomic environment.