Things I Don't Invest In

For every investment I do make, there are a lot that I look at and decide against. A recent example that I blogged about is the Pabrai Funds. 

I'm sent more and more invitations to invest in start-ups. One I saw today was Venice AI. Some complicated story about a privacy oriented LLM (but uses resources from other LLMs maybe?) plus two different crypto tokens. I couldn't understand the pitch and deleted it. In general, I like to see some attention to the "economics" - what is the route to profitability. If it is not discussed at all, I tend to pass on the opportunity.

And then there are more mature opportunities including two upcoming IPOs. One is the IPO of SpaceX. CommSec has provided an Australian version of the prospectus. I already have exposure via Pengana Private Equity (PE1.AX) and if I wanted more I could buy more shares in that fund, which are trading at a discount to what the NAV would be with the SpaceX IPO price. SpaceX is their largest holding by far. S&P have decided not to change their index rules to allow unprofitable and new companies to join their indices. NASDAQ on the other hand will be including it in the NASDAQ 100 index very quickly. I am sceptical of the idea that there will be a pop in price at the IPO beyond the already crazy price–the price is near 100 times 2025 sales. With USD 75 billion of shares being issued in the IPO, most people who want them will probably get them? Most IPOs do not perform well in the short term if you buy at the IPO price.

The other IPO I looked at was a new fund from Pengana focusing on 20 private AI related companies–AIX. Bytedance and Handshake are the two seed assets. They will also be investing in "picks and shovels" and applications companies. Most closed end funds definitely don't trade well following their IPO. My preference is to be invested in related resources (e.g. via Tribeca Global Resources, TGF.AX) and in earlier stage firms that have routes to profitability (see above).