Money Stuff Podcast: Endeavor Deal, KKR's Strategic Holdings, and Private Market Pricing

Endeavor Deal and Potential Lawsuits

• 🚀 The Endeavor deal has closed as planned, with Silver Lake taking the company private at $27.50 per share.
• 💡 Despite the closing price, the stock traded above $27.50 in the week prior, suggesting anticipation of a class action lawsuit alleging the board failed in its fiduciary duties.
• 💰 Carl Icahn's recent acquisition of an 8.4% stake in Endeavor is seen as a potential indicator of further legal action, as he is known for engaging in such disputes.
• ⚠️ A historical pattern exists where short sellers who profit from the difference between the last trade price and the deal price may later owe money to brokers if a lawsuit successfully raises the final deal price.

KKR's Strategic Holdings and Business Model Shift

• 🎯 KKR is evolving from a traditional leveraged buyout firm to one that buys and holds strategic stakes in companies and infrastructure projects on its own balance sheet.
• 📈 This shift aims to quadruple earnings per share over the next decade and generate over $1 billion annually in dividends, moving towards a model similar to a mini Berkshire Hathaway.
• 💰 The strategy allows KKR to transition from a fee-based service provider to a direct asset owner, potentially future-proofing against declining financial service fees.
• 🏢 Examples of these strategic holdings include 1800 Contacts and Barracuda Networks, representing unglamorous but stable cash-flow generating businesses.

Private Market Pricing and Accessibility

• 📊 Yahoo Finance now displays price charts for private companies like SpaceX and OpenAI, sourced from secondary marketplaces like Equity Zen and Forge.
• 📉 While these prices are algorithmically determined and not always reflective of real-time trading, they represent a significant step towards making private markets appear more public.
• 💡 The accessibility of these private markets is increasing, with investment minimums lowered to $5,000 for accredited investors, though sourcing stock can still be challenging.
• ⚖️ The existence of public-like pricing for private companies raises questions about the necessity of traditional IPOs, especially as private companies avoid the quarterly reporting burdens of public entities.
• 📈 The perceived lower volatility of private markets, despite similar underlying risks, is a valuable attribute for many investors, potentially justifying a premium.