Alternative Investing Report - May 27, 2025

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*as of 5/26; Sources: S&P, BTC, FTSE, DJRE, CL50

Last week, the AI startup OpenAI spent $5 billion to buy a startup co-founded by the influential Apple designer Jony Ive, leading to speculation that the company is going to directly compete with Apple by releasing a new AI-powered device. There are now reports that CEO Sam Altman told employees that OpenAI is planning to sell 100 million AI “companions” but it is unknown what the device actually is — though apparently it is not a phone nor glasses. The device will apparently be fully aware of a user’s surroundings and life, and could be available by late next year.

➨ TAKEAWAY: Despite the billions of dollars being poured into AI companies, it hasn’t been clear just where the revenue and profits would come from. If OpenAI can successfully create a device that competes with or replaces the smartphone, that is a potential trillion-dollar market and would be a major technological advance. But the downside is that it could spend untold billions to create something resembling the last generation of failed AI companies, a sort of Humane Pin 2.0.

Over the past few months in France, there has been a wave of crypto-related kidnappings targeting crypto millionaires and their families. A co-founder of the crypto company Ledger and the father of an unnamed crypto millionaire both had fingers cut off by kidnappers, and there was an attempted kidnapping of the pregnant daughter of a crypto exchange CEO. This week, the crypto trader John Woeltz and his assistant were arrested in New York for kidnapping and torturing an Italian tourist to obtain his Bitcoin password, and a Swiss crypto millionaire is wanted in connection with the crime.

➨ TAKEAWAY: Crypto is conducive to these types of crimes for two main reasons - first crypto transactions are nearly impossible to reverse and ill-gotten gains can be easily laundered across borders. Second, all blockchain wallets are publicly available, and criminals have been hacking databases to get the personal information of owners of big wallets. Investors need to protect themselves by staying as anonymous as possible i.e. staying off social media, spreading holdings over multiple wallets, and avoiding any public declarations of their crypto holdings. Using ETFs and other securities as opposed to digital wallets can help as well.

🎨 Old Masters disappointment: Last week’s Sotheby’s Old Masters auction only generated $64.7 million of sales compared to pre-sale estimates of $80-120 million, and only 24 of the 43 lots sold. The category has seen stagnant growth for a number of years, and this auction continued the trend.

🏡 Housing inventory rising: In another sign of an incoming buyer’s market, new listings rose 8.4% year-over-year to their highest level since 2022, and the number of total homes for sale on the market is the most in nearly five years.

🚀 Strava’s funding round: The fitness app raised a new round that valued the company at $2.2 billion, up from its last valuation of $1.5 billion back in 2020, coming off of two major acquisitions - the cycling app The Breakaway and the running app Runna.

⚾ Sports investment: Franchise values in the four major North American sports have risen significantly faster than the S&P 500, and women’s sports in particular has seen exponential growth in the past few years.

🪙 Trump media to buy billions in crypto: The President’s media company is planning to raise $3 billion to buy Bitcoin and other cryptocurrencies.

🍷 Koch collection auctions: Nearly 8,000 bottles from the noted wine collector Bill Koch’s cellar are going to be sold at Christie’s in June and is expected to bring in upwards of $15 million in total.

The price tag for a 5 bedroom, 5.5 bathroom, 5,393 square-foot home in the upscale Southern California town of Montecito? Just $1.5 million, far below the town’s median listing price of $9 million. Seem too good to be true? Well, it’s because the buyer is only getting 1/8th of the mansion, the guest house, the three-car garage, and the pool and hot tub. The co-owned property is a managed by Pacaso, and presumably, the buyer will be entitled to spend 1/8th of the year there, or more likely, rent it out as a vacation rental.