🍋 Keeping Up with Private Equity

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Good Morning! As temperatures cool down in most places, California is facing potential blackouts as the electricity grid is set to be tested by a heat wave. PG&E warned 525k homes and businesses may lose power. Some of those homes are also probably seeing their prices fall, as a Fannie Mae survey shows a 0.4% decline in price expectations. If you're not buying a new house, maybe you'll buy a new phone, or one of the other products Apple announced at their iPhone 14 event. Also, if you're in NYC and still buying masks, you may want to stop, as the mask requirement for mass transit has ended.

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1. Story of the Day: Keeping Up with Private Equity

Whether you like it or not, the Kardashians have built legitimate businesses that print a ton of money. Now, arguably the most (in)famous sister, is starting to invest in other businesses. Kim Kardashian has partnered with former Carlyle head of consumer, media, and retail investments to start Skky Partners.

Jay Sammons and Kim will be cofounders and co-managing partners of the firm that will focus on the consumer and media industries. Matriarch of the Kardashian klan, Kris Jenner, will also be a partner at the firm.

You might be thinking, "What do these reality TV stars know about private equity investing?" Well, Sammons said they will bring, "a long history of investing capabilities and experience of working with high growth brands that are disruptors."

He's not wrong. Kim's name is tied to undergarment company Skims which raised a new round at a $3 billion valuation this year. Sammons has plenty of experience to put the team on his back anyway, as he was at Carlyle for almost 17 years, and participated in investments into Beats by Dre, Philosophy, and Beatycounter.

The two met through a mutual friend in 2016, and stayed in touch as business and personal contacts. It was Sammons' idea to start Skky, as he said, "Kim has started two businesses that sophisticated investors have valued over $1 billion. She's an incredibly accomplished entrepreneur and investor."

Short Squeez Takeaway: The final season of "Keeping Up with the Kardashians" has already aired, but boy I would've loved to watch Kimmy break down over "plz fix"es from Sammons. Similar to our recent story about Serena Williams (if you missed it, make sure you're subscribed," influential people tend to get great opportunities. Best of luck to Kim, Jay, and anyone on the team that has to battle headline risk.

2. Markets Rundown

After seven straight days selling off in the Nasdaq, equity markets finished the day up, likely thanks to a drop in oil prices, and lower inflationary pressures. Crypto was down, and Bitcoin hit its lowest levels all year, as retail traders are nervous again.

Movers & Shakers

• (+) Coupa Software ($COUP) +18% on earnings that exceeded expectations, and strong full-year guidance.

• (+) Gitlab ($GTLB) +14% after the company reported a smaller than expected loss for the last quarter.

• (–) UiPath ($PATH) -11% because of weaker than expected Q3 and full-year guidance.

Private Dealmaking

• Misfits Markets acquires Imperfect Foods, rival online grocery store, at $700 million valuation

• Arsenal Biosciences, a cell therapy startup, raised $220 million

• PR tech firm Muck Rack raises $180 million

• VTS, a tenant data platform, raised $125 million

• TruKKer, a digital freight platform, raised $100 million 

• Cymulate, a cybersecurity startup, raised $70 million

3. Top Reads

• Kim Kardashian launches private equity firm with former Carlyle partner (YF)

• New Fed banking chief prioritizes crypto and climate change (CNBC)

• Judge rules that Elon Musk can use whistleblower complaints (Axios)

• European Central Bank could unleash jumbo rate hike as economy slides into recession (CNBC)

• Google CEO looking to improve tech giant’s efficiency (Fox)

• Fed’s Brainard sees tight policy for ‘some time’ to slow inflation (YF)

• Most workers say they’re ‘quiet quitting’ (Axios)

• Elizabeth Holmes asks for second trial after newly discovered information (Fox)

• BlackRock CEO’s solution for inflation: bring workers back to office (YF)

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4. Book of the Day: The Chaos Machine

We all have a vague sense that social media is bad for our minds, for our children, and for our democracies. But the truth is that its reach and impact run far deeper than we have understood.

Building on years of international reporting, Max Fisher tells the gripping and galling inside story of how Facebook, Twitter, YouTube, and other social networks, in their pursuit of unfettered profits, preyed on psychological frailties to create the algorithms that drive everyday users to extreme opinions and, increasingly, extreme actions.

As Fisher demonstrates, the companies’ founding tenets, combined with a blinkered focus maximizing engagement, have led to a destabilized world for everyone.

Traversing the planet, Fisher tracks the ubiquity of hate speech and its spillover into violence, ills that first festered in far-off locales to their dark culmination in America during the pandemic, the 2020 election, and the Capitol Insurrection.

Through it all, the social-media giants refused to intervene in any meaningful way, claiming to champion free speech when in fact what they most prized were limitless profits. The result, as Fisher shows, is a cultural shift toward a world in which people are polarized not by beliefs based on facts, but by misinformation, outrage, and fear.

His narrative is about more than the villains, however. Fisher also weaves together the stories of the heroic outsiders and Silicon Valley defectors who raised the alarm and revealed what was happening behind the closed doors of Big Tech.

Both panoramic and intimate, The Chaos Machine is the definitive account of the meteoric rise and troubled legacy of the tech titans, as well as a rousing and hopeful call to arrest the havoc wreaked on our minds and our world before it’s too late.

“The first rule of social media is that everything changes all the time.”

5. Short Squeez Picks

• The new rules of work clothes

• The internet’s top 50 productivity tips

• Companies weigh pros and cons of business trip vacations

• Dolphins, sharks, and whales in New York City

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6. Daily Visual: Falling Expectations

Consensus forecast for 2023 GDP growth

Source: Axios

7. Daily Acumen: Tax Losses

Some of your holdings may be below your original purchase price. By selling these positions, you book a tax loss that can be used to offset capital gains either this year or any year in the future.

You will have to get over your Get-Even-Itis to embark on this accounting strategy, and you cannot buy the same security back within 31 days to avoid running afoul of the IRS wash sale rule.

But you can reinvest the cash into something similar and maintain your asset allocation. For example, you could sell Netflix, Facebook, and Amazon and purchase the QQQs (the Invesco ETF linked to the NASDAQ 100).

For the first time in a while, you have the opportunity to take tax losses in bonds and bond funds. Your tax losses are an asset. You will use them in the future to reduce your capital gains tax. Harvest them.

8. Crypto Corner

• Bitcoin turns positive, rebounds from lowest level since June

• The future of crypto is at stake with Ethereum’s switch

• U.S. bank watchdog says he’s not budging on crypto distrust

• 7 trends that could reignite crypto growth

• How crypto innovation is sweeping the world

• With declining crypto prices and mounting competition, what’s next for Coinbase?

9. Memes of the Day

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