Welcome back to our weekend reading.
A quieter week this week, littered with a lot of interesting stories that unfortunately mean we’ll need to harp on about Elon Musk and crypto again – don’t worry, I promise to make enough snarky comments that we can retain a sense of moral high-ground over hype-chasers.
Let’s look back on the week.
Pocket Rocket
SpaceX is a compelling company and we all hope for the day we can access private equity in it.
Now that I’ve affirmed that I am not somehow rooting against Elon, let’s discuss how SpaceX’s newest and largest rocket exploded, again.
The Starship SN-10 prototype, the vehicle which is intended to shuttle crews to and from the moon by 2023, has now had three test flights to prove its self-landing capabilities. The latest test saw a successful launch and flight to 10km altitude, before returning to the platform with only a slight skew – which would have been a successful outcome, had it not then exploded on the platform after the residual flames from the engines apparently ignited fuel reserves left in the rocket.
Source: SpaceX
This chart shows the sheer scale of the Starship, and doubtless the eventual success of this vehicle will open a whole new avenue of human exploration and possibly settlement within our Solar System.
Competition from Rocket Lab
Some CEOs try to garner respect by discussing a lengthy history in the industry, point to the impressive performance of their enterprise or mention a decorated education. Peter Beck of Rocket Lab took a different approach – the man literally ate his hat.
After going back on his word that “I’ll eat my hat if we ever go into making big, reusable rockets”, Beck and the team at Rock Lab announced their new production of the Neutron rocket (a big, reusable rocket), coupled with a blended baseball cap.
The Neutron will supposedly be smaller than the Falcon 9 (SpaceX’s most prolific rocket vehicle), carrying around 40% of the load, but will be reusable and be able to carry a human crew – putting the two companies directly in competition once the Neutron comes into full production.
The New Zealand rocket maker announced that it will go public on the NASDAQ this year via a SPAC agreement with Vector Acquisition Corp – listing under the ticker RKLB, the deal will provide Rocket Lab with $750 million USD in cash and will be valued at just over $4 billion USD.
This presents competition to SpaceX’s operations in shuttling goods and satellites into space, whilst also providing Cathie Wood with a potential new candidate to add into her space ETF.
Lithium-Ion Man
For anybody who didn’t get around to reading our note on ‘CEOs of personality’, you can pretty much just look at this story and get the idea.
California-based start-up Turntide Technologies is a developer of electric motors, which are applicable to use in electric vehicles and light industry. To a tech-nerd like myself, revolutionising electric motors using a design that dates back to 1838 is more than enough (don’t get me started on the use of superconductors) – but what has garnered attention is the backing of Bill Gates and Robert Downey Jr.
From currently operating in a niche market of replacing old electric motors in industrial ventilation savings, the company is anticipating a 10x increase in turnover this year and will likely expand to further markets with the backing of such large public figures.
Kings of Crypto
Kings of Leon will be releasing a new album this evening, with an interesting delivery method.
Mike wrote about Non-Fungible Tokens this week, a unique token which does not contain money but rather art, videos, music etc.
The Nashville rock band will release the album as a Non-Fungible Token, the first band to do so, in an effort to attract a collector audience.
U.K Taxes Corporate
British finance minister Rishi Sunak will keep spending big to help the economy through the pandemic crisis and intends to raise the U.K. corporate tax rate to cover the bill.
Although not the highest levels it has been, this is the first time a Minister has raised the U.K corporate tax rate in over 50 years.
This announcement comes on the heels of a 65 billion pounds of aid pledged to aid both companies and individuals over 2021 – the U.K government’s total fiscal stimulus is now at a level of 407 billion pounds. Although imbittering news for companies, COVID has created the worst recession Britain has seen in over 300 years and holds the grim position of the most pandemic deaths across Europe.
Detective Facebook
In 2014, NAB Trader Lukas Kamay turned $10,000 into $7.8 million in nine months – and since he apparently hadn’t heard of Bitcoin at the time, this incredible growth was created by confidential economic data from the ABS instead.
After betraying his associate at the ABS (in a classic of the prisoner’s dilemma for any game theorists out there), Kamay managed to reap the upside consequence-free from this insider trading for almost a year.
An industry contact who got suspicious of Kamay’s massive trading activity turned to social media to look for answers, noting that Kamay “got it right too often”. Via LinkedIn and Facebook activity, Joel Murphy from Pepperstone found that while he worked on NAB’s FX desk, he pieced the insider trading activity together, noticing via Facebook that Kamay was friends with ABS employee Christopher Hill.
Quite the way to get found out in one of the biggest busts in Aussie history.
Don’t Mention the Rallies
Jesse passed along a great chart that points out several times in the last few weeks where media has mentioned the US 10Y bond sell offs, only to be proceeded by a rally that was conspicuously unmentioned.
Source: Bloomberg
Berkshire Breaking Records
As has been noted by Bloomberg, Warren Buffett made no splashy deals in 2020, and he didn’t weigh in on some of the year’s most contentious topics in his much-anticipated annual letter.
But that didn’t stop the Oracle of Omaha and his company from setting records – namely buying up $24.7 billion USD of his own shares. Managers who operate in Berkshire’s controlled companies are regularly encouraged that if they cannot generate at least $1 of intrinsic value for every $1 of cash they hold, they should send it to Omaha – and similarly Warren and Charlie take that view for their own cash.
So, they buy quality companies that they know. And what better company do you know better than your own?
The action has also increased the value of shares for the remaining shareholders of both A and B class holders, which will hopefully tide them over from the disappointment of Warren not talking about Bitcoin in the annual report.
Speakers
Our morning calls are back up and running, thank you to everybody dialling in presently – for those who aren’t, we do encourage you to listen in for some unique content from some very capable speakers.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team.
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The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.
