Welcome to Stocks and Income, the holiday edition!
We’re taking a break from live reporting this week, but I hope you enjoy this as you hide from your in-laws.
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In January 2024, we acquired seven works of art by Ithell Colquhoun. Since then, we’ve sold four for an average gain of 139%, yielding a total IRR of over 176%.
Art II
Not our piece. Ours is confidential.
We quickly followed up with Art II by acquiring a charcoal self-portrait by British legend Frank Auerbach. We knew he was getting on in years, and his family had big plans for his estate when he passed.
We had some good fortune when a major London gallery exhibited several of his similar works.
Miguel, from House of Rare, with 40 of our barrels
We learned a lot in Jalisco earlier this year — perhaps most importantly, it became super clear that 100% agave tequila is worth a lot of money if you leave it in the barrel for three years.
So we bought eighty 200L barrels of the stuff and tucked it away in an insured and bonded warehouse.
They’re dutifully appreciating at a 41% IRR.
*Note: House of Rare, our tequila broker, is coincidentally a sponsor of this issue.
Film I
If the name Dafne Keane sounds familiar, she played Laura in the Logan and Deadpool+Wolverine films.
We went live in December and have already initiated three loans to films that need fully securitized and collateralized mezzanine debt.
Night Comes – 109% IRR
Kristallnacht – 113% IRR
[Confidential] – 62% IRR
We’ll keep cycling capital through for three years.
The rest of these will be more under the radar, but you can’t talk about Alts in 2024 without mentioning crypto. Up 150% since the beginning of 2024, Bitcoin has grannies and cabbies talking again.
DJT’s election helped, but the main tailwind was the SEC’s approval of spot Bitcoin ETFs, which facilitated billions of institutional dollars flowing into the cryptocurrency.
But Bitcoin is far from 2024’s biggest winner. Over the last twelve months, several alternate but reasonably mainstream names have posted gaudy numbers.
Elon’s $DOGE is now worth nearly $60 billion if you can believe that.
And those are the bigger coins. Some microcaps have done even better.
What’s the point of working hard when you can buy $FARTCOIN?
The long-term winners will probably come from this year’s colossal advancement on the blockchain, though.
While not as sexy, it’s where most of the real wealth is getting built.
Check out parts one and two of our three-part series. The last issue comes out tomorrow.
Cocoa, Coffee, and Eggs? Cocoa, Coffee, and Eggs.
Many commodities struggled in 2024 (we’ll be seeing you in two weeks, Uranium), but booms came in unexpected places.
Cocoa and coffee prices are up 182% and 70% respectively this year due to climate issues.
Cocoa
While cocoa prices have retreated from their April highs after a dizzying 300% surge, spot prices are going parabolic again.
Produced mostly in west Africa, cocoa crops have suffered in 2024 due to overly dry weather.
And there’s no respite in sight:
Maxar Technologies warned that dry conditions in West Africa will impact the early growth of the mid-year cocoa crop harvested in April, and the arrival of the seasonal Harmattan winds could worsen the situation. Meanwhile, the International Cocoa Association (ICCO) raised its 2023/24 global cocoa deficit estimate to 478,000 MT, the largest in over 60 years, from May’s 462,000 MT.
Coffee
Brazil’s coffee harvest got smash-hammered by drought, which led “major coffee trader Volcafe to cut Brazil’s arabica production outlook by 11 million bags to 34.4 million, forecasting a fifth consecutive year of deficit of 8.5 million bags for the variety.”
Robusta, the less delicious variety, also suffered. Heavy rains in Vietnam delayed the harvest, and demand continues to surge in China.
Eggs
Eggs are a different story. They’re up bigly too (107% YTD) but for a different reason.
Inflation is part of the problem, so much so that it helped toppleoutgoing US President Joe Biden.
“Table egg-layer facilities tend to be very large, and so you can lose a million or 2 million birds on a single facility because this is a highly contagious virus,” said Amy Hagerman, an associate professor of agricultural economics at Oklahoma State University.
And the situation is likely to get worse.
It’s time to buy some chickens.
Listed Private Equity
While everyone was losing their minds over Bitcoin’s surge and watching cocoa prices go parabolic, listed private equity was quietly crushing it in the background, posting numbers that would make a crypto bro blush.
The VanEck Global Listed Private Equity ETF (GPEQ) casually dropped a 43.97% return through mid-November 2024. Not bad for a sector that gets about as much media attention as a chess tournament.
Here’s the kicker: PE firms were wheeling and dealing like it was 2007, pushing transaction values to $419.43 billion by August – a 24% jump from 2023. While the rest of the world was doom-scrolling about interest rates, these folks were buying everything that wasn’t nailed down.
But here’s where it gets interesting (and why you might want to pay attention): despite this face-melting performance, listed private equity is still trading at a 14% discount to NAV. That’s like finding a Ferrari priced like a Camry.
Since 1993, whenever PE trades at a discount, it’s beaten public markets 81% of the time. Those are the kind of odds that make Vegas jealous.
Looking ahead to 2025, the setup looks tasty. The Fed’s probably done playing party pooper with rates, China’s throwing stimulus around like confetti, and there’s a mountain of dry powder sitting on the sidelines waiting to be deployed.
Sure, there are some headwinds – geopolitical drama, Trump vs. the World, and whatever else 2025 decides to throw at us. But with PE firms sitting on enough cash to buy a small country and deals stacking up like planes at LaGuardia, this might be the sleeper trade of 2025.
Just don’t tell your crypto-obsessed cousin about it at Christmas dinner.
Everything else
Less cheery than 2023
It’s time for the lightning round. Quickfire takes on everything else that’s smashed it this year.
German electricity. It’s been an awful year for Germans, and staying warm this Christmas will cost five times more than last year. Relatedly, natural gas prices are up 43% this year.
Germanium, which is unrelated to Germany, has increased nearly 100 percent this year. China has banned its export to the USA.
Thanks to wars, inflation, and a general distrust of Bidenomics, gold rose more than 30% in 2024. However, I still think gold is stupid. Silver is up bigly too.
VC is pulling itself out of the gutter with signs of a comeback.
While UFC, racing, soccer, hockey, golf, and almost everything else threw up all over itself in 2024, Pokemon cards continued to tick up, notching a 10% gain this year.
Also, AI has had a pretty good year.
That’s all for today. Enjoy the festive season, and check back next week as we continue regular programming.
