Topley’s Top 10 – May 17, 2021

1. Jim Simons Medallion Fund-The GOAT by a Long Shot 

What About the Medallion Fund’s Annual Returns?

So, how does the Medallion Fund make money?  It finds individual patterns in data and exploits each pattern just enough to turn a small profit.  And when you add up all of those small profits, you end up making a lot of money.     

Since inception, the Medallion Fund has only lost money in a single year net of fees (1989).  More importantly though, the fund’s returns have been partially negatively correlated with the market (correlation = -0.4For example, in 2008 when the S&P 500 lost 37%, the Medallion Fund posted a gain of 82% net of fees!

As impressive as their performance was, comparing the Medallion Fund’s annual returns (net of fees) to the S&P 500 takes their accomplishment to another level:

 

https://ofdollarsanddata.com/medallion-fund/

2.FED’s Favorite Inflation Measure is Flat

From Barry Ritholtz Blog 

https://ritholtz.com/

3. Stocks with Extreme Valuations Have Taken a Serious Haircut Since Late Feb.

High Flyers At Much Lower Altitudes

Stocks with extreme valuations have taken a serious haircut since the space peaked on February 22nd. On that date, 59 stocks in the Russell 3000 had a price-to-sales multiple north of 100x. That group had a median price-to-sales multiple of more than 311x on that date. Today, those 59 stocks have a price-to-sales multiple that’s 53.6% lower than it was February 22nd. That compares with a median price decline of 25.4% among the 59 stocks, or -22.5% weighted by market cap. In other words, while prices in this group have been hit very hard, their valuation has compressed substantially more.



Below we show the 20 stocks out of the 59 that have seen the largest drops in price since February 22nd. Among this worse-performing subset, the median stock has plunged 51%, in-line with the median 58% drop in price-to-sales since February 22nd. Despite the huge drops in prices over the last few months, these names are still very aggressively valued at a median price-to-sales multiple of 90x. Virgin Galactic (SPCE) has actually seen an infinite price-to-sales multiple after reporting zero revenue in its most recent quarter. From a valuation perspective, it’s still hard to call any of these stocks attractive.  Click here to view Bespoke’s premium membership options for our best research available.

 

https://www.bespokepremium.com/interactive/posts/think-big-blog/high-flyers-at-much-lower-altitudes

4. BLOK Chain ETF Fails 4 Times in Attempt to Make New Highs.

BLOK ETF never broke above Feb. highs.

sc%3fs=BLOK&p=D&b=5&g=0&id=0&r=1621242376409

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www.stockcharts.com

5. Dry Bulk Shipping ETF +238% YTD

©1999-2021 StockCharts.com All Rights Reserved

Barrons–Iron ore is among the most important commodities for the Breakwave Dry Bulk Shipping ETF, says Kartsonas. The fund, issued by ETF Managers Group, was up nearly 238% this year as of May 11—the best-performing ETF year to date. It invests in shipping rates, and dry bulk shipping is a “very important sector of the global economy,” says Kartsonas. Dry bulk ships transport food such as corn and soybeans, as well as goods such as iron ore.

“You need ships to move the basic commodities in order to produce goods,” Kartsonas says. Freight is “highly correlated with economic activity over longer periods of time,” and this year, “strong demand for commodities has led to strong demand for oceangoing transportation.” Freight rates have increased, lifting the ETF’s returns.

Freight is volatile, and the Breakwave ETF is the “most volatile ETF in the market,” he says, adding that there are higher potential returns but also higher risk. Still, the ETF can be part of a diversified portfolio as a small allocation, he says.

Why Rising Inflation Will Continue to Boost Lumber, Copper, and Steel Prices By  Myra P. Saefong

https://www.barrons.com/articles/why-rising-inflation-will-continue-to-boost-lumber-copper-and-steel-51620902701?mod=past_editions

6. One Month Crypto…Ethereum Massive Outperformance

Source: The Daily Shot

https://dailyshotbrief.com/the-daily-shot-brief-may-14th-2021/

7. McDonald’s Still the Largest Fast Food Chain

This week McDonald’s announced plans to raise wages by around 10% for more than 36,000 workers who work in its company-owned restaurants (not franchises).

This is a big deal for McDonald’s, which has more locations than any other fast food outlet except Subway and Starbucks, and it comes just after rival Chipotle announced a hike in its wages last week.

As the biggest fast food chain, what McDonald’s does has a big impact on the rest of the fast food industry — which reportedly employs more than 4 million people across the United States alone.

Thanks to data from QSR magazine, we were able to plot average revenue-per-restaurant against the number of restaurant units, for each of the different chains. McDonald’s pulls in $2.9m a year per restaurant. Chick-fil-A does a whopping $4.5mStarbucksTaco Bell and Burger King do around $1.5m per restaurant per year. The average Subway does just $410k a year. Some fast food restaurants would be able to afford higher wages for its employees more easily than others.

https://www.chartr.co/

8. Forbes releases its list of highest-paid athletes over the past year

Conor McGregor tops the list of highest-paid sports stars

By Weston Blasi

Forbes releases its list of highest-paid athletes over the past year, and Conor McGregor and LeBron James had huge earnings outside of their sport

Mixed martial arts star Conor McGregor was the sporting world’s highest-paid athlete in the past year.

 GETTY IMAGES

According to an annual list released by Forbes, the top-10 highest paid athletes across all sports grossed $1.05 billion in the past year, a 28% increase from the previous year’s top 10.

Many of the athletes earned huge portions of their income outside of the salaries from their sport in the forms of investments, endorsements and media production deals. The dollar figures below are a calculations from Forbes.

Here is a list of the 10 highest-paid athletes and how they made their money:

10. Kevin Durant, $75 millionKevin Durant #7 of the NBA’s Brooklyn Nets.

Broolyn Nets star Kevin Durant has become an active investor in the past few years.Durant’s investment firm Thirty Five Ventures invested in Coinbase COIN, -2.54% whose April IPO saw his 2017 investment grow 53 times what it was worth then. Durant’s firm also invested in food delivery company Postmates before its sale to Uber UBER, +6.61% in 2020.

See also: Target to stop selling Pokémon and sports trading cards in stores ‘out of an abundance of caution’

Durant has big earnings from his Nike NKE, +1.74% contract and his over NBA salary — he is the second-highest earning basketball player on this list.

Durant’s earnings from the past year were $31 million on the court, and $44 million off the court.

9. Tom Brady, $76 millionTom Brady #12 of the Tampa Bay Buccaneers after winning Super Bowl LV.

In his first year with the Tampa Bay Buccaneers, quarterback Tom Brady won the Super Bowl. His new contract with the team brought him $45 million in on-field earnings.

The rest of Brady’s earnings came from endorsements deals with companies including Under Armour UAA, +3.36%, Fanatics and eyewear maker Christopher Cloos.

See also: The NFL assumes Black men start with lower cognitive skills — when giving out brain injury money

Brady’s earnings from the past year were $45 million on the field, and $31 million off the field.

8. Lewis Hamilton, $82 millionLewis Hamilton of Great Britain.

Formula 1 driver Lewis Hamilton made most of his money on the track in 2020 after winning his sixth championship in the last seven years.

Hamilton, who drives for Daimler-owned DMLRY, +2.61% Mercedes on the F1 circuit, has endorsements deals that include Tommy Hilfiger, Monster Energy and Puma.

Hamilton’s earnings from the past year were $70 million on the track, and $12 million off the track.

7. Roger Federer, $90 millionSwitzerland’s Roger Federer.

Tennis star Roger Federer had a rough 2020 from a tennis perspective. Federer had multiple injuries that precluded him from winning any tournaments.

The 20-time Grand Slam winner still had a strong year financially, as his sponsorships with companies including Rolex, Credit Suisse CS, +1.65% and Uniqlo made him $90 million.

Federer’s $90 million in earnings from the past year were exclusively made off the tennis court.

6. Neymar, $95 millionBrazilian forward Neymar.

 GETTY IMAGES

Soccer star Neymar is the third soccer player in the top-10 highest earners of 2020. The Brazilian forward plays for French football club Paris Saint-Germain, a team who paid him $76 million in the last year.

Neymar benefits from endorsements deals with Puma and Epic Games, and has 282 million followers on Facebook FB, +3.50%, Instagram and Twitter TWTR, +3.23%, where athletes can earn money for sponsored posts.

Neymar’s earnings from the past year were $76 million on the field, and $19 million off the field.

5. LeBron James, $96.5 millionLos Angeles Lakers forward LeBron James.

NBA star LeBron James had a busy 2020. He led the Los Angeles Lakers to a world championship in the NBA bubble at Disney DIS, -2.60% World and was involved in several off-court social justices causes.

In the last year, James became the highest career earner in NBA history at $346 million over his 18 seasons.

See also: eBay to allow NFT sales on its platform

James’s production company SpringHill Entertainment is producing many TV projects including shows for ABC and Starz, as well as the upcoming film Space Jam: A New Legacy.

James’s off-court endorsements include deals with Nike, Apple’s AAPL, +1.98% Beats by Dre, fast-food pizza chain Blaze Pizza, and a small stake in Fenway Sports Group (FSG), which owns the Boston Red Sox, Liverpool FC.

James’s earnings from the past year were $31.5 million on the court, and $65 million off the court.

4. Dak Prescott, $107.5 millionCowboys star Dak Presott.

It pays to be the quarterback for the Dallas Cowboys.

Star quarterback Dak Prescott was already making over $30 million last season from the Dallas Cowboys, but the team decided to give Prescott a contract extension in the offseason with huge lump sum payment, according to sports contract site Spotrac.

See also: Here’s how much the 2021 NFL draft picks will earn on their rookie contracts

Prescott has endorsement deals with companies including Sleep Number SNBR, +3.33%, 7/11, Campbell’s CPB, -0.59% soup and DirecTV.

Prescott’s earnings from the past year were $97.5 million on the field, and $10 million off the field.

3. Cristiano Ronaldo, $120 millionJuventus’ Portuguese forward Cristiano Ronaldo.

Portuguese soccer star Cristiano Ronaldo is the second footballer on this list, and has become a mainstay on Forbes top-10 highest earners lists over the years.

Ronaldo plays for the Italian club Juventus JUVE, +0.22%, which is one of the many public sports teams you can invest in.

He benefits from a lifetime contract with Nike and sells his CR7 branding to many accessories, hotels and gyms.

Ronaldo’s earnings from the past year were $70 million on the field, and $50 million off the field.

2. Lionel Messi, $130 millionLionel Messi of FC Barcelona.

FC Barcelona star forward Lionel Messi is another mainstay on the top earners list from Forbes. The 33-year-old footballer is widely considered one of the greatest players ever and was the top soccer earner in the world for 2020.

Messi has a lifetime sponsorship deal with Adidas ADDYY, +1.50%, as well as other deals with Pepsi PEP, +0.15% and clothing company Ginny Hilfiger, sister brand of Tommy Hilfiger.

Messi’s earnings from the past year were $97 million on the field, and $33 million off the field.

1.       Conor McGregor, $180 million

Mixed martial arts fighter Conor McGregor.

The top athlete earner of 2020 was MMA fighter Conor McGregor.

McGregor fought just one time in 2020, at UFC 257. He earned $22 million in a fight where he lost by knockout to Dustin Poirier.

The Irish fighter’s endorsement portfolio includes deals with DraftKings DKNG, +9.51%, the videogame Dystopia, and the lifestyle brand Roots of Fight. His biggest deal by far came when he sold his majority stake in his whiskey brand Proper No. Twelve. The deal netted the fighter well over $100 million, according to Forbes.

McGregor’s earnings from the past year were $22 million in the octagon, and $158 million out of the octagon.

All of the top-10 highest paid athletes of 2020 were men, and a majority of them (six) are not from the United States.

Forbes’ data on athlete earnings were calculated for the 12-month period between May 1, 2020, and May 1, 2021.

Conor McGregor tops the list of highest-paid sports stars – MarketWatch

9. Making the Bet that Europe will Re-Open…Cheap Flights

CNBC-If Europe opens to them, Americans may have another reason to rejoice. Flights to Europe are cheaper than they’ve been in the past, according to Hopper.  

“Reopening a country can enable more competition among airlines and increase the supply of seats sold along those routes, which tends to lower airfare in the short-term,” said Adit Damodaran, an economist at Hopper.

Airfare to Iceland dropped after the country reopened, and similar trends are happening for trans-Atlantic flights as it becomes increasingly likely that Europe will open to vaccinated Americans this summer, he said.

The most searched European destinations by Americans from April 27 to May 11, according to Hopper's data.

The most searched European destinations by Americans from April 27 to May 11, according to Hopper’s data.

Courtesy of Hopper travel app

The trend, however, isn’t expected to last much longer.

“Hopper estimates airfare to Europe will bottom out at $700 round-trip around May 15, before rising towards $775 around mid-June,” said Damodaran.

There are particularly good deals on round-trip airfare to Portugal ($501) and Iceland ($530) last week, he said.

Summer travel is returning: Here’s who’s booking and where they’re going

Monica Buchanan Pitrelli@MONICAPITRELLI

https://www.cnbc.com/2021/05/17/where-should-i-go-this-summer-see-where-other-travelers-are-headed.html

10. Do We Accept Pain or Reject It?

Farnam Street Newsletter

Knowledge Project

Annie Duke on how hard it is to realize our mistakes

“Do we accept the pain or reject it? The first choice is accepting the pain because I know in the long run it’s going to help me learn. I’m going to go in and I’m going to examine my decisions. I’m going to see where maybe I could’ve improved, where I could’ve made a better decision that would’ve increased the likelihood that I had a better outcome. The short term is going to take a hit but in the long run, I’m going to feel better about myself and I’ll obviously have a more positive narrative of my life story over the long run, if I’m willing to do that. The second choice is avoiding the pain. People make this choice when they don’t want to face reality… when they want to preserve their self-narrative. They don’t want to take the hit so I’m going to blame it on luck. In the short run, that feels good, because you don’t need to do any kind of identity update. You don’t need to admit you were wrong. You don’t need to update your beliefs in any kind of way, or say that those beliefs were wrong, or that you made poor choices, or that you caused these things to happen, but it’s devastating to learning. It’s devastating to long term results.”

https://fs.blog

Disclosure

Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..

Topley’s Top 10 – May 12, 2021

1. Highest 4 Month Total in Stock Buybacks 20 Years

BONANZA– Companies are preparing to launch a record wave of share buybacks as executives get comfortable with spending excess cash following a blockbuster earnings season and greater clarity on the trajectory of the world economy.  US companies announced $484bn in share buybacks in the first four months of this year, the highest such total in at least two decades, according to Goldman (FT)  In what its analysts dubbed a “buyback bonanza”, Goldman projected shares repurchases by US companies would increase 35 per cent this year from 2020.

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Topley’s Top 10 – May 12, 2021

1. Goldman Sachs Non-Profit Tech Index -36% from Highs

Holger Zschaepitz  https://twitter.com/Schuldensuehner

2. IPO ETF -29% from Highs.

IPO ETF breaks thru Dec. 2020 levels

www.stockcharts.com

Long-term weekly chart closes below 50 day but still way above pre-covid 2019 levels

3. Chinese Tech Giants -30% from Highs

Chinese tech giants have borne the brunt of the sector’s retreat this month, after regulators expanded an antitrust crackdown and announced steps to rein in the companies’ fast-growing finance units.  Meituan’s stock plunged as much as 8.6 per cent in early Tuesday trading, taking the slump over two days to 15 per cent after the Shanghai Consumer Council released criticism late Monday on issues that hurt consumer rights.  With talk of tighter regulation from Beijing, Chinese tech heavyweights Baidu, Alibaba, and Tencent, collectively dubbed the BATs, all dropped more than 3%.

4. Semiconductor Stocks -10% Correction from Highs.

No Breakout for Semi ETF.

www.stockcharts.com

5. 55% of ARKK Total Lifetime Flows are now Under Water

 

Eric Balchunas, @EricBalchunas

Roughly 55% of $ARKK‘s total lifetime flows are under water now as they came in after Nov 2020, which is the level its price has fallen to. Also true is the fund is STILL up 78% over past 12mo, $QQQ 44%. Can’t not add that context, sorry. Here’s a quick look at the situation:

6. Decentralized Finance Growth …Smart Contracts Cross $10B Mark.

What is DeFi?-Definition

Short for decentralized finance, DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum.

DeFi (or “decentralized finance”) is an umbrella term for financial services on public blockchains, primarily Ethereum. With DeFi, you can do most of the things that banks support — earn interest, borrow, lend, buy insurance, trade derivatives, trade assets, and more — but it’s faster and doesn’t require paperwork or a third party. As with crypto generally, DeFi is global, peer-to-peer (meaning directly between two people, not routed through a centralized system), pseudonymous, and open to all. 

https://www.coinbase.com/learn/crypto-basics/what-is-defi?utm_source=google_search_nb&utm_medium=cpc&utm_campaign=9943088770&utm_content=100067298945&utm_term=&utm_creative=432723830326&cb_device=c&cb_placement=&cb_country=us&cb_city=open&cb_language=en_us&gclid=CjwKCAjw1uiEBhBzEiwAO9B_HXuwQ2nSQOAQSYEIpICnrpqTX1WEKO1oIX9jqGD4vyBziW9Jhf6v2xoC_JkQAvD_BwE

Contracts Cross 10B

DeFi still is a niche market with relatively low volumes—however, these numbers are growing rapidly. The value of funds that are locked in DeFi-related smart contracts recently crossed 10 billion USD. It is essential to understand that these are not transaction volume or market cap numbers; the value refers to reserves locked in smart contracts for use in various ways that will be explained in the course of this paper. Figure 1 shows the Ether (ETH, the native cryptoasset of Ethereum) and USD values of the assets locked in DeFi applications. 

Figure 1
Total Value Locked in DeFi Contracts (USD and ETH)

NOTE: M, million.

SOURCE: DeFi Pulse.

The spectacular growth of these assets alongside some truly innovative protocols suggests that DeFi may become relevant in a much broader context and has sparked interest among policymakers, researchers, and financial institutions. This article is targeted at individuals from these organizations with an economics or legal background and serves as a survey and an introduction to the topic. In particular, it identifies opportunities and risks and should be seen as a foundation for further research.

Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Marketsby Fabian Schär

https://research.stlouisfed.org/publications/review/2021/02/05/decentralized-finance-on-blockchain-and-smart-contract-based-financial-markets

7. The Most Job Openings Ever in the U.S.

8. Pizza Machines Coming Via Robot

Piestro | The Future of Artisanal Pizza

From Morning Brew Morning Brew

9. Global Greenhouse Gas Emissions by Sector

https://www.thealternative.org.uk/dailyalternative/2020/9/19/energy-use-predicts-our-climate-imperial-future

10. Afraid of Change? 6 Ways to Embrace It—

Alicia H. Clark Psy.D.

Change doesn’t have to be bad, even if it’s unwelcome

KEY POINTS

  • Even as we long for change, we tend to prefer the safety of our routines.
  • The negative impact of change tends to be overestimated, and therefore avoided.
  • A mindset of growth, careful risk-calculation, and novelty-seeking can help leverage anxiety control, so you can get on with living your life.

We are afraid of change.

Whether it’s facing post-pandemic bak-to-work, an unknown event forced into our calendar, or the simple change of season requiring the perennial change of wardrobe and routine. Most of us don’t like change, and we seldom foresee its good side, even as it appears a prerequisite for almost all that strengthens us in life. Despite its likelihood of portending something positive, in the face of change, we resist. We cling to what we know – even if stuck in our routines – because we are afraid that we won’t like, and worse, can’t handle what is ahead.

Ironically it is resistance, and not the process of change itself, that actually burdens us. Fighting change ignites fear and anxiety, robs us of novelty needed for health, and is exhausting. In the end, most of adjust, even if we kick and scream. If you feel yourself resisting risk and feel afraid of change, here are a few things to keep in mind that can help ease your dread.

1. We overestimate how bad things might be. Thanks perhaps to negativity bias or simply a habit of catastrophizing, we are prone to overestimate future pain which in turn drives up anxiety and resistance. If one listens to every worry and avoids all risk, success will remain out of reach, and anxiety will continue its escalation, having been reinforced by avoidance. The trick is to learn how to work with your anxiety and discover where your anxiety could be holding you back, rather than just protecting you. There are times when anxiety’s message needs to be considered, but then overturned in favor of action. Action is where the relief is, not avoidance.

2. Taking risks and embracing change allows us to grow. To grow and adapt is to stretch outside our comfort zone, that is to say, depart from what’s comfortable. People in business understand that success in any competitive endeavor involves risk – to take advantage of an upside, one has to be willing to invest when others won’t. This means being uncomfortable. Not all discomfort or risk is advisable, of course, and risks need to be considered carefully. Risk taking isn’t about taking any risk, it’s about taking smart risks.

3. Calculating risk allows you to take control. Still not sure what’s a smart risk, and what’s just a bad idea? Try taking anxiety out of the equation by asking yourself, “what would you do if you couldn’t fail?” This should help you rebalance the thinking parts of the decision from the emotional parts. If you are risk averse, and struggle with letting anxiety get the better of you, look to balance facts in calculating a decision.

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4. Novelty helps . Ironically it is precisely when we are overstretched that we are primed for change, and ready to be inspired by novelty. Novelty requires energy, but can deliver it too. Curiosity, a different perspective, and intrinsic motivation are all helped by new situations and experiences. These are the things we need when we are stuck and overwhelmed. So if you need a boost of motivation, look to find novelty in the changes ahead.

5. How you fail is more important than if you fail. In business, in relationships, and in life, failing is part of learning, and sometimes delivers the most powerful learning there is. Thanks to evolution, we are primed to notice and learn from our mistakes so as not to make them again. But that shouldn’t mean we set out to avoid them all together, an impossible goal. Instead we should aim to manage how we learn from our mistakes. This is what it means to have a growth mindset, to expect failure and change as part of the creative process.

6. Balanced stretching produces the most growth. We can’t grow if we don’t stretch, but we won’t grow unless we rest. Balancing exertion with rest is the key to managing a growth process effectively, and keeping ourselves strong. This means managing your body and your human resources. Making good nutritional choices, moving your body, and prioritizing sleep are the three most important things you can do to maintain optimal mental and physical health.

Change inherently feels uncomfortable, but that doesn’t mean it is bad. Make the best rational decision you can, channel courage – that is, believe something is more important than your anxiety – and take action. Simply making a decision is an action, and action always feels better than avoidance and risk aversion. That’s not to say this is easy, but it works. If you struggle with change, how might you spark your curiosity for what’s ahead, and allow yourself to lose a bit more sight of the shore?

Looking for more help understanding your anxiety? Visit my website , get the Hack Your Anxiety book , or read more about my wellness and anxiety programs here .

https://www.psychologytoday.com/us/blog/hack-your-anxiety/202105/afraid-change-6-ways-embrace-it

Disclosure

Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..

Topley’s Top 10 – May 11, 2021

1. One Financial Product Group is not Under Industry Fee Pressure—Grayscale Bitcoin Quasi-Closed End—2 Products $1B in Revenue-Double the Revenue of QQQ

The $756 Million Product-Sumit Roy ETF.com

Another product that exhibits this power is the Grayscale Bitcoin Trust (GBTC). To be clear, GBTC isn’t an ETF (it’s a quasiclosed-end fund that periodically offers private placements to accredited investors). It’s not even a product that trades on a U.S. exchange (it trades over the counter and is quoted on the OTCQX).

But it is a product that provides exposure to bitcoin in a way that is valued by investors and at a time in which the cryptocurrency has been on fire. GBTC charges a 2% annual fee, which, when applied to its $36 billion in assets under management, equals revenue of a whopping $756 million.

To put that in perspective, that’s more than double the implied revenue of the Invesco QQQ Trust (QQQ), the U.S.-listed ETF with the largest revenue haul. It’s even more than the combined haul of QQQ and the SPDR S&P 500 ETF Trust (SPY), which together generate $650.6 million in revenues.

If you add the $10 billion Grayscale Ethereum Trust (ETHE) into the mix, Grayscale is pulling in an estimated $1 billion per year from just two products (it has another 12 much smaller products).

For Grayscale to generate close to a $1 billion from just two products—the amount Vanguard takes in from all 82 of its ETFs—is truly impressive. For context, the entire U.S.-listed ETF industry generates revenues of just under $12 billion across almost 2,500 funds, with 56% of that going to BlackRock, State Street and Vanguard.

TickerNameExpense RatioAUM ($B)Implied Revenue
GBTCGrayscale Bitcoin Trust2.00%37.81756,192,759
ETHEGrayscale Ethereum Trust2.50%9.97249,273,851
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