How It Ends
w.256 | Warren's DOGE Wishlist, Midwit-Adjacent, Baupost, $NOTE, $LAZR & Divvy
Dear Friends,
It was a high-volume media week, though it felt like a lot of macro noise and nothing particularly new. It was a series of excuses for someone to try to hijack your attention. I only succumbed a little because of other pressing matters, which was a blessing.
Today's Contents:
Sensible Investing
Song of the Week: How It Ends
Sensible Investing
Elizabeth Warren’s Suggestions for DOGE. Not a bad list. Lots of DoD suggestions. At least the existence of DOGE is prompting suggestions.
Midwit-Adjacent Investing. Looking for a good investment? Find it on the lower slopes of the “midwit curve.”
I like his thesis and this article. He also makes a point of looking for memetic investments. I’m not sure that’s the same as an avalanche, but I can see how it’s in the same zip code.
Memetic potential means investments that:
Fit into a theme that could become super hyped in the coming years; and
Are likely to become emblematic of that theme
On the other hand…
Baupost Clients Pulled $7 Billion from Hedge Fund since 2021 After Poor Returns via Bloomberg. Posted 4% annualized returns for a decade. Yeah, it's not a great look for value investors. VOO for the win!
Periodic reminder: here is a free download of Margin Of Saftey (out of print, $9K on eBay). The book is still good, even if the returns these last few years have been bad.
How Does It End?
There are also quiet bankruptcy and shutdown stories amid the daily announcements of mega-rounds. You can learn from known outcomes, failure or success, rather than in-process stories with asymmetric information. Plus, you can find news on financings elsewhere. So, what did I look at this week?
Marketing Automation Vendor Act-On was Acquired for $53 Million. One of the oldest players in the MAP market sells to a Washington-based SPAC. You can see in this graphic how the valuation evolved over a (long) time.
Some Rent-to-Own Startup Divvy Homes Shareholders May Not See a Dime From $1B Sale. Happens. It is a good reminder this probably wasn’t a technology business.
I was looking at the legislation tracking space this week and at FiscalNote (company presentation) $NOTE, now trading at ~$220M market cap with $250M of debt on $109M of revenue and not many profits - $9M AEBITDA, A is for adjusted :). The last stage of these SaaS-ish companies, when they stop growing and pile on debt, is an EBITDA multiple (earnings!), not a revenue multiple, and that’s when it doesn’t look pretty—many such cases.
The lesson for high-integrity early founders and investors is capital efficiency. Get profitable. Stay profitable—growth through profits. Be a disciplined operator, not a financial engineer.
Luminar, the LiDAR company, Q3 2024 report. Now at $200M market cap from ~$2.7B a few years back. The company is bleeding cash and did only $15M of revenue last quarter.
Song of the Week: How It Ends
Here on YouTube.
The band’s name means girl in Russian, but the band is an American four-piece multi-instrumental and vocal ensemble. Egnimatic.
This song is their only notable hit and is the opener to Little Miss Sunshine.
The song suggests a sense of inevitability—things are concluding, whether it's a relationship, a phase of life, or mortality itself. The main line is both resigned and reflective.
“How It Ends“ by DeVotchKa
No longer shall you need
You always wanted to believe
Just ask and you'll receive
Beyond your wildest dreams
And you already know
Yet you already know
How this will endSelfie of the Week
This week, I attended a debate organized by the Austin Union, the University of Austin's debate society.
The question was: "Is electoral government the optimal path to preserve capitalism?" Ilya Shapiro, a lawyer and director of constitutional studies at the Manhattan Institute, affirmed, and Curtis Yarvin, a philosopher and founder of the Neo-Reactionary Movement (NRx) and of recent New York Times fame, was opposed. No surprise there.
Who won, you are wondering?
The debate had a clear back-and-forth structure that worked well. However, there was no evaluative framework at the end; in my view, this is a miss.
There are winners, losers, and points for speaking pretty in every debating society I’ve ever been part of. Witty jokes should be rewarded. Yes, we are here to find “the truth” and, just as important, to laugh. Competition creates an incentive for performance.
As for my adjudication, Shaprio clearly won. He was structured, stuck to the topic, and was just…right?
Yarvin mostly rambled and was entertaining in that professor-in-a-leather-jacket-who-swears sort of way. But he was unprepared, unstructured, and lacked compelling supportive examples - on a topic that is his schtick! He did not seem like he came to win.
Gotta take these selfies quickly in public—no retakes. But it’s all for you, friends.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn
Certainly not a notable hit but “ We’re Leaving” is also a great song from that same album!