August 2 - This Week in Alternative Investments

Author

Adam Katz
August 02, 2024

 

Brought to you by Groundfloor, where you can fractionally invest into real estate debt


Headlines

  • The biggest IPO of 2024

  • Record demand for gold

  • Home price growth slowing

  • Are rate cuts coming?

Plus: VCs for Kamala, crypto and politics, the biggest private credit fund ever, and much more.

Performance

Bitcoin
$65,035 (-0.8% weekly)
Card Ladder 50
12,858 (-2.1% weekly)
FTSE VC Index
17,034.27 (+0.5% weekly)
Zillow Observed Rent Index
$2,052 (+0.5% monthly)

*as of close of market August 1

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Market Updates

Lineage, the world’s largest operator of cold-storage warehouses, raised $4.44 billion in its IPO. The industrial REIT instantly became the year’s the biggest public market debut. in the week since, the stock price rose nearly 7%, and underwriters exercised their options, adding another $600M to the company’s balance sheet. The company is now valued at more than $18 billion. The result is another promising sign for the IPO market going forward. It also shows that not all pre-IPO or real estate investing is in sectors that get a lot of hype, and that value can be found in companies that are very good at what they specialize in.

Demand for gold reached a record-high in Q2. The total demand was 1,258 tons, a 4% increase on last year’s marks, with private purchases making up 329 tons, a fivefold increase over Q1. Largely responsible were family offices and high-net worth individuals who may be concerned with rising U.S. debt levels and political uncertainty. This rise in demand coincided with the all-time record-high price of $2,483.60 per troy ounce, and shows once again that gold becomes more coveted in turbulent times.

The FHFA House Price Index was flat in May, while the Case-Shiller Index also saw slower growth. Rising supply and lowered demand caused by high mortgage rates have finally started to catch up to the housing market. The FHFA index showed a year-over-year gain of 5.7%, down from prior months, and Case-Shiller showed a year-over-year gain of 5.9%, down from the 2024 high of 6.5%. The latter did see better performance from its 20-city and 10-city indices, perhaps indicating that major metro areas are seeing their prices hold up better than smaller markets.

The Fed kept rates steady but indicated that cuts could be coming. Fed chair Jerome Powell made it clear that a September rate cut is in play if inflation data remains on its current pace and the economy stays steady. Mortgage rates have already dipped slightly on the news, and markets are now projecting three total rate cuts in 2024, and four more in 2025. Investors in many different asset classes have been eagerly awaiting the cuts, and September could see the start of relief for many of them.

Smart Humans Podcast

In this episode of Smart Humans, Slava Rubin talks with Gumroad's Sahil Lavingia about angel investing, raising $5M, and Web3.

Explore

📝 Top Stories

  • VCs for Kamala: More than 100 prominent venture capitalists, including Mark Cuban, Vinod Khosla, and Reid Hoffman, backed VP Kamala Harris for President, in response to a number who have recently endorsed former President Trump, indicating people on both sides believe their preferred candidate will be the better one for the industry.

  • SearchGPT: OpenAI announced that a prototype search engine is being tested on a small group of users, signaling the startup eyeing a direct shot at Google, and indicating one path the AI revolution could take.

  • Ackman backs off IPO: The hedge fund Pershing Square USA, led by investor Bill Ackman, withdrew its plans for an IPO, due to a lack of investor demand.

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 🎨 Art

  • Lost Warhol discovered: A long-lost portrait of Blondie’s Debbie Harry was found in Delaware and is now heading to sale, where it could fetch a price in the millions.

⚾ Collectibles

(Heritage Auctions)

  • Leia’s $175K bikini: Heritage’s July entertainment auction included a $1.55 million sale of a filming miniature Y-Wing Starfighter from Star Wars, and a $175,000 sale of Princess Leia’s gold bikini costume from Return of the Jedi.

  • The National recap: cllct’s takeaways from the biggest collectors’ event in the country include the domination of baseball, vintage cards and Mickey Mantle.

🪙 Crypto

  • Trump and Bitcoin: Speaking at Nashville’s Bitcoin 2024 conference, the former President pledged to create a national Bitcoin reserve and completed a 180-degree turn from previous skeptic positions on crypto.

  • What will the election bring?: With both Trump and Harris potentially more crypto-friendly than they were previously, there is less political downside risk in the market, which could lead to greater crypto VC funding going forward.

  • Coinbase’s PAC problems: The crypto exchange may have violated federal campaign finance laws with a $25 million donation to the Fairshake super PAC, despite federal contractors being barred from making campaign contributions.

💵 Private Credit

  • Biggest fund ever: Ares Management Corp. announced a $34 billion direct lending fund, the largest ever, and will continue its strategy of originating senior debt to middle market companies in North America.

🏡 Real Estate

  • Best cities for renters: Raleigh topped CNBC’s ranking of US Cities, which looked at levels of new construction, vacancy rates and median rents. Meanwhile, Wallethub released its own rankings earlier this month, which named Bismarck, ND, as the #1 market for renters. The two cities to make the top 10 on each list were Huntsville, AL, and Sioux Falls, S.D.

  • Fort Wayne is hot: The Indiana city topped Realtor.com’s rankings of the hottest housing markets in the U.S., which looked at the 200 largest metro areas in the country and compared how fast homes are selling, price growth, macroeconomic data, and other factors.

  • Existing-home sales down: Prices fell by 5.4% in June and are down 5.4% year-over-year, while inventory is up 3.1% monthly and 23.4% year-over-year, suggesting the dip in sales is not due to a lack of supply, but to lower demand and higher prices.

🚀 Venture Capital

  • Headcount falling: In 2023, for the first time in five years, the overall headcount at VC-backed startups declined, with the notable exception of AI startups.

  • FranShares raise: The investment platform that allows individuals to invest in franchises announced a seed funding round of $4.1 million, in the hopes of expanding their offerings to more people.

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