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- [00:00]
Monks Investment Trust Representative
We don't just invest in cutting edge companies. We look at companies with a history of steady growth and companies whose growth cycle has come round again. Because in the real world you have to look at growth in three dimensions. Monk's Investment Trust so there's a lot
- [00:16]
IBM Representative
of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [00:44]
Venture Global Representative
IBM Venture Global, we think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
- [01:18]
Marin Sums Up
Bloomberg audio studios podcasts radio news. Welcome to maritalks your Money, the personal finance edition of Marin Talks Money and these bonus podcasts. We talk about the best strategies for making the most of your money. I'm Marin Sums Up Web Bloomberg UK Money Editor at large and with me today is Anna MacDonald, investment strategy director at Hargreaves Lansdowne. Welcome Anna.
- [01:45]
Anna MacDonald
Thank you very much for having me. Marin, it's a pleasure.
- [01:48]
Marin Sums Up
We haven't had you on for a while but regular listeners will know that you have been frequently on and also have appeared at our friends show and anyone who's listened to those recordings will know that Anna is expert on almost every everything. But today we're going to go, we're just going to talk about one small thing or rather one absolutely huge thing. I've asked you on out to talk about the SpaceX IPO and what it really means for ordinary investors who an awful lot of them have had a go at getting a piece of this largest IPO ever, right? I mean I've heard from some of the retail platforms that they've seen multiples of the level of applications they have ever seen for an IPO before. Have you seen the same at Hargraves Lantern?
- [02:27]
Anna MacDonald
We absolutely have. We had 50,000 applications this time and the usual for an IPO is 1500. So yes, that's quite a big, that's quite a big jump up.
- [02:37]
Marin Sums Up
Okay Interesting. And were most people going for a thousand pounds, twenty thousand pounds, fifty thousand pounds? What would it look like?
- [02:45]
Anna MacDonald
Anyone who applied just to take you through? Anyone who applied for up to 20 shares got their full fill. And we know that you got all your nine shares. And I did get nine shares. I did, yes, yes. And looking at our own clients, we see that 52%. So just over half got over 100% of their allocation. So yes, those were at that kind of level, around the 2,000 pound level.
- [03:12]
Marin Sums Up
One of the things that is interesting to me is through which wrapper people have been buying SpaceX. So I saw from one of the platforms that the majority of people were buying inside their ISAs and inside their SIPs, which rather suggests that certainly if they're buying them inside their sips, they're not buying them to flip. Although possibly if you're buying them inside an isa, you might have thinking you can flip them very quickly and there's no capital gains to pay. Where were you seeing people buying in ordinary accounts for long term wrappers or everything?
- [03:42]
Anna MacDonald
We're seeing in everything, but our data shows about the same as that shape that you've just read out in terms of ISIS and SIPs being the main areas. So, yeah, I mean, I suppose, I mean you can, you could buy and sell quite easily in a sip, you could buy and sell quite easily on our platform. But what we're seeing is I just got our dealers to check and we're not seeing a huge amount of, you know, we're seeing a very, very large majority of our investors are still holding.
- [04:14]
Marin Sums Up
Okay, interesting. And in order to buy in the first place, do you think they sold other stuff? And one of the things that we worried about a lot. Not we, I say we, I mean the market in general worried about in the run up to SpaceX was that, that people would take money out of, say, for example, some of the, some of the AI names or something like that, maybe even they were taking money out of gold to put it into SpaceX. And that would create quite a lot of volatility in the market. And at various points in the run up to the ipo looked like it was creating some volatility. Is that what you saw? Or did you see people using cash they had already or topping up with. Topping up with cash rather than selling to buy?
- [04:51]
Anna MacDonald
There was some topping up of cash. And of course some people, you know, we got quite a few people opening accounts with us. So, you know, they were, they were. We don't know exactly know where that came from, but obviously that was cash to us. So what I mean, I think the broad point is that I know we did see some volatility in the lead up to this, but remember we were also on, I don't know, the 35th consecutive announcement of the straight of Hormuz opening up and there was just that general feeling of market nerves. I think where we saw most of the action in terms of individual shares might not surprise you as a lot of it was in Tesla and Nvidia. And then of course there was good old Strategy Inc. Which you'll know well from with what we've seen in terms of cryptocurrency and I'd rather sell a kidney than sell a bitcoin. Bitcoin. So I think that could have also been slightly higher risk clients thinking, well, I'm not quite, you know, taking a view on that. And then in terms of funds and the active funds, I mean maybe not a surprise as well, a bit of selling down of Baillie Gifford American that maybe makes a bit of sense. And then some just general global equity that hasn't been performing very well, interestingly enough. So, so some of those big names that we know that have been not doing so brilliantly.
- [06:16]
Marin Sums Up
Okay, so now you've got an awful lot of small investors holding SpaceX. They've already made quite a lot of money on it. Shares price has gone up appreciably since the launch, which was already at. On any ordinary metric, although it's impossible to judge SpaceX on ordinary metrics, of course, but on any ordinary metrics, already insanely expensive. Popped quite a lot from there. Is this a sensible thing for people to be holding in a portfolio? Let's say that, I mean a lot of people don't hold very many individual shares, right? Mainly they'll hold ETFs, they'll hold a few active funds maybe, but mostly ETFs. A few, maybe very big, very big shares, but not that many individual shares. Is this a sensible thing to have sitting in your portfolio?
- [06:56]
Anna MacDonald
Well, I mean we very much tried
- [06:58]
Marin Sums Up
and other impossible questions and other impossible
- [07:01]
Anna MacDonald
questions, but we've, we very much tried to get investors to think about. Yeah, you know, how have your, have your core, your sort of your, your, your bastions, whether that's a, you know, could be a tracker fund, it could be a global fund that you really like, it could be something in the uk, something in Europe, something in emerging markets. Have that as your kind of base, your core and then have your, your satellites can be the bits that, that really interest you and I know it sounds dreadfully dull probably to say it like that, but I do think that you should think about companies like this that you know, it is, it is a pretty, you know, this is a very unusual company. This is a, it's coming at a very, it's coming at a, as you've talked about, evaluation that is, is, is, it has definitely, you know, raised some eyebrows but other people feel very comfortable with it and it's, and it's coming at him. You know, there's a very small amount floating initially free float as in the number of shares that you can buy and sell. It's very small. So it's, it's, it's not really a surprise that it's very exciting for people. But I suppose what I would say is that, you know, you could have, have a bit of excitement. There's no, there's no harm having, you know, something that really, you know, does really arouse your interest. But be very aware that this is not going to be, you know, you shouldn't put all your eggs in one basket and you might want to just, you know, have, have a bit and then you can also, you know, you might want to have something which you can have other, you can hold other things as well which will give you exposure to this same kind of pretty exciting, exciting area in terms of AI. But you don't have to hold, you know, you don't have to put all your eggs into this one basket or
- [08:52]
Marin Sums Up
you can more diversified way through a trust or something like that.
- [08:57]
Anna MacDonald
So yes, today I went to see Maggie Fenari. She is CEO and runs the RIT Capital Markets. It's the Rothschild Investment Trust and they have not only holdings in SpaceX, they also have anthropic and open AI. So as well as a very diversified portfolio in other private companies, in public listed companies, they have, you know, they've got a real mix of investments in there. So there are ways to get, get, get into that theme that don't involve sort of just putting everything in with SpaceX because I think a lot of people I've spoken to, you know, it's this pop. I hope you're feeling good about the pop in the share price but we don't really know what the set, the settled price is going to be. We don't know how it's going to react to index inclusions. We don't know how it's going to react when, when some of the investors that are still holding it, when they come off lock up. We just, you know, there's a lot of, you know, we just don't know. And I think some people have certain to say that it takes quite a long time for something to find its natural price. And so I think just be aware of that. You might see some volatility in both directions.
- [10:23]
Monks Investment Trust Representative
We don't just invest in cutting edge companies. We look at companies with a history of steady growth and companies whose growth cycle has come round again. Because in the real world you have to look at growth in three dimensions. Monks Investment Trust so there's a lot
- [10:39]
IBM Representative
of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [11:08]
Public Investing Representative
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- [11:58]
Monks Investment Trust Representative
advisors SEC registered advisor crypto services by ZeroHash.
- [12:02]
Public Investing Representative
All investing involves risk of loss. See complete disclosures@public.com, disclosures.
- [12:18]
Marin Sums Up
There's some wider issues around the SpaceX IPO that I think are beginning to be discussed more widely now. The original excitement has passed and one of those, of course, is shareholder democracy. The fact that Elon Musk retains the majority of the voting rights. And so you don't have that thing that you should get with a listed company which is one share, one vote, proper democratic setup and everyone who is a shareholder will have a sense that they can have some control over the future direction of the company. And you don't get that with SpaceX. And that's worried some people that listed markets are now losing their democracy as well.
- [12:54]
Anna MacDonald
And I think they've had that worry in other shares too that have floated. I mean, I think it was much the same with Facebook as was then and, and Meta as now, which enable big spending decisions around things like the Metaverse to happen. So yeah, I think with SpaceX there is possibly that. I wouldn't say it's part of the attraction having no control. That's like saying. Or having no democracy. But I think that a lot of investors think that they want Elon Musk to be in the driving seat. They want, they want that. And so, so they're, they're, they're going in very, you know, they're really cognizant that is what's, what they're buying. They're buying. I think what a lot of them are buying is Musk. I mean, and to be fair, Stardust.
- [13:46]
Marin Sums Up
They're buying Stardust.
- [13:47]
Anna MacDonald
They're buying Stardust. But you know, he has, you know, if you look at, there are some, it's a loss making company, but they are generating revenues and they've been signing deals and Starlink is quite well established. He's got his track record at Tesla. You know, it's not, they're not asking, you know, it's not someone unknown that they're handing over the control to. But I do sympathize with the whole idea that, you know, if you're a shareholder you should, you know, be able to vote at AGMs and you should be able to, you know, we want shareholder democracy. But this is, I suppose one of those special cases where you're just going to have to be aware of that. I do think it's quite fun to think back about when I used to look at IPOs in, in the UK market, which I did quite a lot when I was at Amati and I just, we used to, you know, apply things like liquidity discounts and, and shareholder control discounts and things like that seems to be the reverse now.
- [14:47]
Marin Sums Up
No longer required. No longer required. The other thing that we've been talking about a lot and John and I talked about last week is the idea that the SpaceX IPO and the discussion about which indices is it included in and not included in, effectively mark the end of the idea that it is possible to invest passively. There is really no such thing. We knew that before, we talked about it a lot and that you think you are a passive investor, but the very act of having to choose your passive constituents is an active decision. So there is no, there is no such thing as passive investing. Really. But now we're at the point where there isn't even such a thing as passive investing in the US market because some indices will include space X and some will not. So it kind of tells us that all, all investing is active investing now. It's kind of over standard and poor.
- [15:37]
Anna MacDonald
Who or S and P who produce the s and P500 index? They have made what I think, I think it's quite a sort of a mature decision in terms of they are not changing their rules just to allow fast Track entry for SpaceX or Anthropic or OpenAI. So they are still thinking that things like seasoning as in time spent as a listed company, they think things like profitability and float are important. Now NASDAQ are waiting. So NASDAQ are doing fast track entry, but they are applying a weighting to it. So it's not like it's going to be, there's not going to be the kind of wall of passive money that you might have thought. So that means yes, if you choose FTSE, Russell, you're buying it. If you're getting SpaceX, if you choose NASDAQ over the next week or two, you're getting SpaceX. If you choose S&P 500, you're not. But I guess there's always been that argument that, well, if you're buying the NASDAQ 100, you are buying the top 100 shares, you're automatically excluding some. If you're buying s and P500, you're automatically buying those biggest qualifying 500 companies. So I suppose to some extent there always has been some kind of, there's some kind of choice there. But you're right, you are actively choosing to have exposure.
- [17:05]
Marin Sums Up
Okay. Right. Anna, I've got nine chairs. Have you got any?
- [17:08]
Anna MacDonald
I am actually do have it in. I have exposure in some of my boring diversified trusts. I don't mean they're boring, I mean, you know what I mean. I've not gone full out on it. I think I, I think I also,
- [17:22]
Marin Sums Up
I'd have anything that holds SpaceX is boring.
- [17:26]
Anna MacDonald
Exactly. And, and yeah, so I think I, I'm pretty well set in that. But, but I, yeah. What about, what are you going to do with yours? Keep them. Good. That's a good long term investment mindset.
- [17:40]
Marin Sums Up
I mean. Yeah, well, no, I mean also because I don't know what's going to happen. It's, you know, with something like SpaceX, when, as I say, it doesn't fit any normal metrics, you can either take the. Well, it's horribly overvalued on every conceivable measure and therefore I will take this little flip and sell it. Or you can say, I don't really know what will happen next. I suspect it's horribly overvalued. But then on the other hand, I've said that about an awful lot of companies and almost an awful lot of times I give you, I don't know, Google, Amazon, Video, Palantir, et cetera. So I might as well keep my nine shares and see what happens. It is nine chairs, not 900.
- [18:19]
Anna MacDonald
And I also think that you could. Yeah, I know what you mean. You can sort of feel almost like you're a bit like a broken record and whatever is called climbing a wall of worry. But then you have the same frustrations on the other side, don't you, with some whole asset classes or areas of the market that just consistently seem to us to be undervalued and when do we see that switch? So it's not just some shares are co revalued if you believe they are. But you've got on the other side that some things seem to consistently have a tough time getting that re evaluation.
- [18:58]
Marin Sums Up
That's pretty much all anybody needs to know about SpaceX. Anna, thank you very much.
- [19:02]
Anna MacDonald
It's a pleasure.
- [19:09]
Marin Sums Up
Thanks for listening to this week's Marion Talks yous Money. If you like our show, rate, review and subscribe wherever you listen to podcasts and be sure to follow me and John on X or Twitter. I'm MarinSW and John is JohnStepec. This episode was produced by Sama Saadi and Moses Andam San Designed by Aaron Casper. Questions and comments on this show and all our shows are always welcome. Our show email is merinmoneyloomburg.net.
- [19:53]
Okta Representative
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- [20:52]
Public Investing Representative
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