Today’s edition is brought to you by Eckard, an investment firm offering 16%+ passive income returns.
"I made my money by selling too soon." — Bernard Baruch
Good Morning! Chevron dropped $53 billion to buy Hess - in a sign oil megadeals are back. The yield on a 10-year Treasury reached 5% for the first time since 2007 and Billy Ackman covered his bet against long-term Treasurys, anticipating rising bond demand.
Private equity folks are bullish as bonus season approaches, and they're not letting little things like "down years" get in the way of double-digit raises.
Meanwhile, money managers who collectively control $100 trillion, are facing the prospect of the bull market ending. And it's now officially the worst time to buy a house in decades, and soaring interest rates are pushing more buyers out of deals.
SQUEEZ OF THE DAY
Harvard’s Hedge Fund
Harvard Management Company, the investors behind Harvard's enormous $51 billion endowment, recently unveiled their fiscal 2023 investment return (ending June 30, 2023), and it's a modest 2.9%.
The value of the endowment fell for the second consecutive year, as distributions to school operations outpaced investment gains and new contributions. See below:
Now, you might think that when you're overseeing a $51 billion pot of gold, you'd be a bit more inventive with your investment strategies… HMC chalked it up to “macro conditions,” and casually underperformed the S&P 500 by ~17%, which was up 19.6% during the same time period.
HMC declined to provide a detailed breakdown of their performance by asset class, a practice they abandoned last year. But there's a hint. They've got 39% of their endowment locked up in private equity, including venture capital and growth equity.
And 31% of their endowment is with hedge funds, and a mere 11% is in public equities.
The struggle also might not be over yet. With rising interest rates, slowdown in exits and financing rounds, it will likely take more time for private valuations to fully reflect current market conditions. 2024 might be another rough year in endowment land.
Takeaway: It turns out Harvard isn't the only brainiac university struggling with the private equity demon. Even their peers are pointing fingers at private equity for their less-than-spectacular returns. MIT (-2.9%), Dartmouth (+1.6%), Yale (+1.8%) had worse years than Harvard. Stanford (+4.4%) and Columbia (+4.7%) outperformed Harvard. Meanwhile, someone please check what the folks over at University of Nebraska are eating, with their 9.8% annual gainz. (see the full list here).
Stocks closed mixed after the benchmark Treasury yield eased below 5%.
(+) Walgreens ($WBA) +3% after JPMorgan upgraded the company.
(–) Chevron ($CVX) -4% after buying Hess for $53 billion.
(–) Okta ($OKTA) -8% after a cybersecurity hack.
Chevron bought Hess for $53 billion
Vista Equity Partners bought EngageSmart, a customer engagement software provider, for $4 billion
Stonepeak bought Textainer, a container lessor, for $2.1 billion
Island, an enterprise internet browser, raised $100 million
Databricks aquired Arcion, a data startup, for $100 million
Xpanceo, a smart contact lenses developer, raised $40 million
Get access to private deal flow here.
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The big risk behind the AI investment boom (Axios)
The bond vigilante is coming back (CNBC)
How Apple wants to lure sports fans to its streaming service (YF)
The SEC v. stealth activists (Axios)
Economy, supposed to be slow, is now revving up (WSJ)
Does a cartel of asset managers own major U.S. corporations? (CNBC)
Benchmark 10-year U.S. Treasury yield tops 5% (YF)
Bitcoin trades above $30k to start the week as hopes grow over ETF (CNBC)
11 charts to make sense of the stock market (YF)
Goldman leads small biz campaign against new bank rules (Axios)
BOOK OF THE DAY
Think Like A Rocket Scientist
A former rocket scientist reveals the habits, ideas, and strategies that will empower you to turn the seemingly impossible into the possible.
Rocket science is often celebrated as the ultimate triumph of technology. But it's not. Rather, it's the apex of a certain thought process -- a way to imagine the unimaginable and solve the unsolvable.
It's the same thought process that enabled Neil Armstrong to take his giant leap for mankind, that allows spacecraft to travel millions of miles through outer space and land on a precise spot, and that brings us closer to colonizing other planets.
Fortunately, you don't have to be a rocket scientist to think like one.
In this accessible and practical book, Ozan Varol reveals nine simple strategies from rocket science that you can use to make your own giant leaps in work and life -- whether it's landing your dream job, accelerating your business, learning a new skill, or creating the next breakthrough product. Today, thinking like a rocket scientist is a necessity.
We all encounter complex and unfamiliar problems in our lives. Those who can tackle these problems -- without clear guidelines and with the clock ticking -- enjoy an extraordinary advantage.
"Ozan Varol is like Nassim Taleb meets Daniel Kahneman."
Short Squeez Picks
What Stoic philosophers would think of cameras off in Zoom meetings
How to reengineer yourself for a career change
Steve Jobs’ advice for micromanagers
It’s time to rethink traditional career trajectories
4 lesser-known leadership behaviors to master for success
High Interest Rates Push Homebuyers to Back Out of Deals
Percentage of US home sales that failed to close
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Economist Bryan Caplan has advice for those who want to succeed at ambitious goals:
“When I see the contrast between people who succeed and fail, I generally witness a similar gap in effort. During my eight years in college, I spent many thousands of hours reading about economics, politics, and philosophy.
Since high school, I’ve spent over ten thousand hours writing. When young people ask me, “How can I be like you?“ my first thought is, again, do ten times as much.
Ten times as much of what, exactly? The answer is usually: Whatever you already think the crucial ingredient is. “Why can’t I get ahead in my career? I strive to study and emulate my role models.” Great idea; you just need to multiply your effort by a factor a ten.
“How can I save my marriage? I’m really trying to make my spouse happy.” Again, great idea. You just need to multiply your effort by a factor of ten.”
Memes of the Day