SCV fam, I made a webpage to help answer one of life’s most important questions: Is today an SCV day? summitward.com/scv-day

I spoke with a member of the technical staff at Anthropic yesterday who is about to make $17 million. He's been there less than 2.5 years and is blown away by his equity value. His biggest worry now is tax strategy. His CPA told him to "max out his 401(k) and consider a donor-advised fund." While that's a great starting point, here's what makes even more sense: He's acquiring a 48 unit apartment complex in Phoenix for $14.5 million. We're running a cost segregation study to reclassify approximately 30% of the depreciable basis into 5, 7, and 15 year property. Here's the math: • $14.5M purchase price • ~$12.3M depreciable basis (excluding land) • ~$3.7M reclassified to short-life assets via cost seg • 100% bonus depreciation under OBBBA = $3.7M accelerated to Year 1 Plus standard Year 1 depreciation on the remaining basis adds another ~$315K. Total Year 1 deduction: approximately 4M. His wife is qualifying as a real estate professional 750 hours, more time than any other activity. The loss is no longer passive. It offsets ordinary income. At a 37% federal bracket plus 13.3% California, that's a combined rate just over 50%. $4M × 50% = 2M in tax savings. Year 1. Layer in operating expenses, loan interest, and startup costs on the property, the total offset against his Anthropic income crosses $3 million. Not deferred. Not spread over 27.5 years. Meanwhile, the property cash flows. He's converted concentrated tech stock into a real asset producing monthly income. And he's done it all before he files the return on his equity windfall. This is what real tax planning looks like for tech liquidity. If you're an engineer, exec, or early employee sitting on a meaningful equity position and your CPA hasn't mentioned cost segregation, bonus depreciation, or REPS qualification, you're probably leaving seven figures on the table.

Some Saturday musings on turnkey return stacking / portable alpha solutions... Consider two fund choices: 100% S&P 500 100% Managed Futures or 100% US Bonds 100% Managed Futures At the portfolio level, both allow you to do the same thing: stack managed futures. But there are some very important trade-offs. Let's assume that both implement their beta with 75% cash securities 25% futures. Right now, the financing in S&P 500 futures is approximately SOFR 88bp while in US Treasuries it is approximately SOFR. That means implementing the structure on top of equity beta has an invisible 22bp drag (88bp x 25%). In fact, S&P 500 futures are almost always more expensive than Treasury futures and have traded substantially over the SOFR 30-50bp historical average for the last several years. Furthermore, if you ask people outright which structure is "riskier" (e.g. which one is more likely to face a substantial margin call), almost everyone will say the equity plus managed futures approach. And yet equity plus managed futures seems to absolute dominate bonds plus managed futures in sales. Why? I'd argue it's all about the perceived line item risk. Equities are already risky... so what if we add something else on top? And when you combine stocks managed futures, neither dominates the return. Bonds on the other hand are supposed to be safe and steady. Adding managed futures on top adds substantial volatility. Plus the managed futures dominate the variance, making the alternative return really stand out. That line-item risk has an increasingly costly trade-off though (especially if you're implementing the beta only with futures...)

You lost all credibility when you cited gross expense ratio for a fund that shorts dividend paying assets.

$ORR David Orr's realized return by AUM bucket. $86M: 40.8%/yr. $165M: 44.5%/yr. $449M: 5.05%/yr. He scaled to a $476M peak in Feb selling to retail RIAs at 10.91% gross expense ratio. The ‘edge’ didn’t survive scale. Public data below:

Small Caps are turning into Ignored Caps.. they used to have 10% asset share in ETFs.. that's been chopped down to 4% and now they're finally outperforming and no one cares. Flows non-existent in ETFs and in MFs they've seen $25b in outflows. It's almost not fair. Good stuff today on it from @psarofagis and @DavidCohne

Apparently Pabrai blocks you if you say anything negative about him, don't even need to mention his X handle. So in honor of that, from Jan 2006 through Dec 2024 his fund returned 8.6% annualized compared to SPY's 10.3% return. His GFC drawdown was 67% compared to SPY's 55%.

Everyone in the world has to take a private vote by pressing a red or blue button. If more than 50% of people press the blue button, everyone survives. If less than 50% of people press the blue button, only people who pressed the red button survive. Which button would you press?

last april, during the tariff tantrum, equity trend fell -25% vs S&P 500's -16%. a client fully redeemed. to paraphrase, "I feel bad for you guys; you'll be out of business soon." since then, stocks trend beat the S&P 500 by 24 percentage points and AUM is up ~62%. sometimes the realized path is just a way to let clients self select into the process. it's a good thing.

An interesting diversion in the performance of alpha in long-only managers vs market neutral managers. How much of it is talent versus a bunch of constraints (e.g. no shorting; need to sell down MAG7 to make room for active bets; harder to neutralize factor bets; etc)?

Our quarterly commentary for the Return Stacked® suite of ETFs is now available. returnstackedetfs.com/quarte…