Alternative Investing Report - December 4, 2024

*as of 12/3; Sources: S&P, BTC, FTSE, DJRE, CL50

The average discount on prices of direct secondaries have fallen to just 12%, compared to 50% in early 2023. As venture capital funding started to dry up and liquidity options diminished, both startup employees and investors turned to secondary markets to sell their shares, often at a significant discount. Now, enough investors have been targeting these shares on the secondary market that their prices are rising.

➨ TAKEAWAY: It was inevitable that as big players like StepStone and G-Squared raised billion-dollar secondaries funds the discounts would start to disappear. With more optimism in the sector and the possibility of the IPO and M&A markets opening up in 2025, demand for these shares has made it harder to poach them at a discount. For example, the payments company Stripe, which we covered in a pre-IPO briefing, has now seen its value on the secondary market exceed its previous high valuation from 2021.

In the next twenty years, over one-third of all U.S. farmland is expected to change hands, largely due to operators aging out of the business. While prominent investors like Bill Gates and the Mormon church and a number of investment firms have been buying up large swaths of farmland, it is expected that most will go to family members and heirs - only 4% of owners expect to sell to others. Right now, each year, only 1-2% of all farmland hits the open market, and around 70% of that ends up selling to farmers.

➨ TAKEAWAY: Even as more people are looking into farmland as an alternative investment, it is difficult for investors to buy in. Additionally, the U.S. is losing farmland to development, with 2% of the current supply expected to disappear by 2040. Declining supply, and difficult access to the available supply is likely to only push prices up in the long-term.

In this episode of Smart Humans, guest host and Vincent CEO Eric Cantor talks with Vincent co-founder Slava Rubin about his investment philosophy, his allocation to private markets, thoughts on early-stage startups and why he loves entrepreneurs.

🤖 Tenstorrent fundraise: The AI hardware startup and Nvidia competitor raised $700 million at a $2.6 billion valuation, with backing from Jeff Bezos, Samsung, and Hyundai. It had previously been valued at $2 billion in August 2023.

🍷 Wine production falls: Global wine production is projected to fall 2% in 2024 to its lowest level in 63 years, as extreme weather has taken a toll on vineyards. The reduced production may actually help the industry, as supply outstripped demand in 2023, pushing prices down.

🏡 Northwest Arkansas RE: The home base of Walmart and the University of Arkansas has seen substantial population and job growth over the past decade, which has led to housing prices nearly doubling in the past five years.

🪙 Uranium on the blockchain: The first ever decentralized app for uranium trading, Uranium.io, has launched on the Tezos blockchain, another example of real-world asset tokenization.

🏢 Multifamily issues: The combination of record supply hitting the market and owners who bought in at 2021 peaks have led to concerns that the multifamily market could see rising levels of distressed assets.

🚀 Public raise: The investment platform announced a $135 million equity and debt fundraising round, as its AI research tool gains popularity and it continues to expand into alternative assets.

Just a month ago, the price of the Hedera token was around $.04, but in the aftermath of the election, it has risen over 700% to hit its highest level since 2021. Hedera is a decentralized, proof-of-stake that uses hashgraph consensus, a faster, more secure alternative to blockchain consensus. The price movement can be partially linked to rumors that Hedera board member Brian Brooks is a strong candidate to be the next chair of the SEC. Additionally, Hedera, along with other U.S. based-tokens like Ripple (XRP) and Stellar Lumens (XLM) has seen significant gains since incoming President Trump announced his plan to make U.S.-based crypto gains tax-free.