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New 13F Filings: Leopold's Ghost Portfolio and The Shifting AI Trade · In the Loop AI

0:00
Ejaaz: This week, every famous investor in America published their investment portfolios for the world to see.
0:05
Ejaaz: We're talking about over $200 billion worth of investments across the entire
0:10
Ejaaz: AI stack from the likes of Warren Buffett, Ray Dalio, and even our good friend Leopold Ashenbrenner.
0:15
Ejaaz: And at surface value, it might look like it's quite bearish.
0:18
Ejaaz: They sold a lot of major stocks, including Nvidia and some memory stocks as well.
0:22
Ejaaz: But if you look carefully, there's two specific layers within the AI theme that
0:26
Ejaaz: they've not only doubled down on, but have increased the pie.
0:29
Ejaaz: There's never been more money in the AI sphere before. And we're going to unpack
0:33
Ejaaz: all of these and more on today's episode.
0:35
Josh: There was an episode that we recorded on July 31st in reference to Leopold's
0:38
Josh: 13F, where we said his next 13F filing is going to be one of the most exciting
0:43
Josh: episodes of all time. And listen, we are here.
0:46
Ejaaz: It's exciting.
0:48
Josh: It's exciting, guaranteed. I will say it's not exactly how we imagined this
0:51
Josh: forecast going, because what we're looking at here is basically a memoritum,
0:58
Josh: how do you say it when someone died?
0:59
Ejaaz: Like Leopold's dead. Moratorium. Yeah. Yes.
1:02
Josh: That's what we're looking at. We're looking at a sheet of paper from a company
1:06
Josh: that no longer exists because as we know, Leopold was liquidated tragically.
1:09
Josh: Now, 13 Fs, we might want to start there just so you kind of have an idea of
1:13
Josh: what's going on here. Basically, any company that trades
1:16
Josh: equities over $100 million must disclose their positions quarterly within 45
1:21
Josh: days of the quarter end. So what we're looking at here and throughout this episode
1:24
Josh: is what those snapshots look like across all the top investment firms in the
1:27
Josh: country and in the world.
1:29
Josh: And we're going to try to derive some conclusions from that.
1:31
Josh: But to start, we have to go to Leopold's portfolio because everyone's going
1:35
Josh: to want to know what were the stocks that he was in that blew him up?
1:38
Josh: Because as we know from the previous episode, which if you haven't watched,
1:40
Josh: I highly suggest the Wall Street darling no longer owns public positions.
1:45
Josh: And it's because we have some numbers and it looks like the largest holding
1:49
Josh: by far was Sandisk and Micron.
1:51
Josh: He was very much memory pilled. I think the tough thing about this is like directionally,
1:56
Josh: I think he was correct. He just got totally liquidated, but Sandisk's position
1:59
Josh: was 28.5% of the book. He had Micron at 28% of the book.
2:03
Josh: And then, I mean, together, that's over half of the book is in Micron.
2:06
Josh: And then there's Bloom Energy at nine and a half percent. We know how much he was up on that.
2:10
Josh: We have TSMC, Nebius, Core, we have a couple of the neoclouds,
2:12
Josh: and then everything else combines for about 18% of the portfolio.
2:15
Josh: So he was heavily, heavily, heavily involved in these memory stocks.
2:19
Josh: We know he was using some leverage, and it appears as if that's what blew him up.
2:23
Ejaaz: Yeah. So the saddest part about this is probably all of these positions have been decimated.
2:28
Ejaaz: I saw rumors, I think it was reported from Bloomberg about a week ago that he
2:32
Ejaaz: now has a casual, you know, 500 to a billion dollar open equity position,
2:37
Ejaaz: but the majority still lies in his anthropic stake for now.
2:40
Ejaaz: But I think if we look at the Leopold thesis in general, which was doubling
2:45
Ejaaz: down on AI infrastructure, particularly in memory and neoclouds,
2:49
Ejaaz: That thesis is still very alive and well.
2:51
Ejaaz: And let's like pause on the memory position. It's had a pretty rocky month.
2:57
Ejaaz: If you remember, I think two weeks ago, we were reporting on SK Hynex reporting
3:02
Ejaaz: their best quarterly earnings ever.
3:04
Ejaaz: They made more money in a single quarter than they did in the entire year last year.
3:09
Ejaaz: But their stock tanked about 20% the preceding week.
3:13
Ejaaz: And so the thesis behind that was people thought that memory investors were
3:18
Ejaaz: too overleveraged and that we were reaching a top where GPU infrastructure,
3:23
Ejaaz: NVIDIA, and all the people that were buying memory could not want to buy more memory.
3:27
Ejaaz: Recent news has been revealed from SanDisk over their investing day that not
3:31
Ejaaz: only is that not true, but all these major investors that we're going to be
3:35
Ejaaz: covering in this episode today have doubled down and bought more,
3:38
Ejaaz: especially at the lows recently.
3:40
Ejaaz: And also SanDisk in particular has developed this new type of memory.
3:45
Ejaaz: It's called high bandwidth flash. And I just want to take like 20 seconds to describe what this is.
3:49
Ejaaz: There's a couple different types of memory. There's DRAM, which is like your standard memory type.
3:53
Ejaaz: There's HBM, which is your high bandwidth memory, which is specialized for AI GPU specifically.
3:58
Ejaaz: And then there's this thing called high bandwidth flash, which is this new thing,
4:01
Ejaaz: which was created by SanDisk and honestly dominated by them.
4:04
Ejaaz: And it's used for like inference mainly. and inference recently has become like
4:08
Ejaaz: the major trend in AI. It's actually consuming so much CapEx spend for the hyperscalers
4:14
Ejaaz: from Google, Amazon, and the likes.
4:15
Ejaaz: And so SanDisk in particular stands to benefit the most from this.
4:19
Ejaaz: And they have this new memory type, which is being ordered or backlogged already into the end of 2027.
4:24
Ejaaz: So this is a new revenue opportunity for them. And we haven't seen exceeding
4:28
Ejaaz: demand like this ever before. So the point is memory, the memory argument is
4:31
Ejaaz: still very strong. And Leopold was right. He just, he was too over-leathered, man.
4:34
Josh: That's the tragic part. is like the thesis is coherent and it still stands.
4:39
Josh: And there was nothing wrong about his positions or his like directional ideas
4:44
Josh: of where the market was going.
4:45
Josh: He just did it all wrong because he was using improper position sizing and most
4:49
Josh: importantly, leverage. I mean, this is what happens when you use leverage.
4:52
Josh: Everybody knows this. So I think it's an interesting peek into what could have
4:56
Josh: been like directionally, the stock names look strong. It's just the way he positioned
5:00
Josh: didn't look nearly as strong.
5:02
Josh: There is another company who reported their 13F this week that I think it's
5:06
Josh: worth highlighting who is.
5:08
Josh: When you think of the strongest, they're about as strong as it gets.
5:10
Josh: These people have been around forever. This is Warren Buffett's Berkshire Hathaway.
5:14
Josh: They are always really interesting because they move in a way similar to the
5:19
Josh: way Apple does. They move very slow.
5:21
Josh: They're normally the last mover. When they do so, they do so with a tremendous
5:24
Josh: amount of size and conviction.
5:26
Josh: Now, as we know, Berkshire Hathaway is no longer run by Warren Buffett.
5:30
Josh: Unfortunately, no longer run by Charlie Munger either. And Greg Abel is now
5:34
Josh: at the helm of this. So Greg Abel is the new guy in charge. And he has joined
5:38
Josh: Berkshire and has begun deploying capital at pretty high rates.
5:42
Josh: The biggest ad of the quarter, which was 17 billion added, was for Google or
5:47
Josh: Alphabet, which was really surprising to see because why would they be buying
5:51
Josh: Google instead of buying the memory companies? And I think we have like a thesis.
5:56
Josh: I'll cover the rest first before we get into why.
5:57
Josh: But it looks like they've added 44% of Delta, of Macy's, of Lenar.
6:03
Josh: So they're very much moving towards a
6:06
Josh: This is kind of like the Joshua Kushner thing where they're like,
6:08
Josh: okay, who's been around forever? And then who's going to win on the frontier?
6:12
Josh: And that feels like kind of how Warren Buffett and Berkshire are placing themselves
6:16
Josh: here. But the Google thing, I want to talk about the Google thing,
6:18
Josh: EJS. Why are they buying so much Google?
6:19
Ejaaz: So I think it's a thesis that you and I have been very fond of for over many years now.
6:26
Ejaaz: Google is the only company on earth that owns the entire stack for AI.
6:31
Ejaaz: Now, I just want to emphasize how important this is. Like, they're not only
6:35
Ejaaz: creators of AI models, but they're also creators of custom GPUs that run and train those AI models.
6:41
Ejaaz: They're also creators of the distribution platforms. The number one in the world,
6:45
Ejaaz: by the way, you've got Google search. Obviously, you've got Gmail,
6:47
Ejaaz: you've got G Suite, you've got Android, you've got so many different Google
6:51
Ejaaz: products that distribute to hundreds and hundreds of millions of people every single day.
6:55
Ejaaz: So they have the ultimate distribution platform, but they also own all the infrastructure,
6:59
Ejaaz: the power that is required to fund all of this.
7:01
Ejaaz: And they have amazing amounts of capbacks. I think Google actually this year
7:05
Ejaaz: takes the crown for spending the most. I think they're on track to spend around
7:08
Ejaaz: $250 billion by the end of the year.
7:11
Ejaaz: If Google is the only company that owns or dominates across the entire stack
7:15
Ejaaz: in AI, that is an amazing company to own because they can fine tune each of
7:20
Ejaaz: the different layers for their particular product.
7:23
Ejaaz: So why that's important is let's say you look at Google search data and you
7:26
Ejaaz: notice that customers really like buying houses in a specific area at this time
7:32
Ejaaz: of the year, they can orient their own AI model to
7:36
Ejaaz: Produce and serve up adverts or suggestions to people to shop in a particular type of way.
7:42
Ejaaz: And that kind of uniformity or like hyper-specificity is really hard to nail
7:47
Ejaaz: down if you are just a model lab creator or if you're just a GPU producer.
7:51
Ejaaz: So that's really powerful for the thesis in general for Google.
7:54
Ejaaz: Now, my question to you, Josh, is do you think...
7:57
Ejaaz: This happened before the fallout within Google. When Dan Sosibis stepped aside,
8:02
Ejaaz: Jeff Dean left, I have a feeling it is. So I wonder if they've cut down their
8:06
Ejaaz: position since, but I still think Google's a good bet.
8:09
Josh: Yeah, I would bet this happened beforehand. And I would bet that it's also not
8:12
Josh: really going to change their mind because I don't think it materially affects
8:15
Josh: the business. In fact, it may be a positive.
8:18
Josh: It's like, I remember seeing this post from a long time ago that was basically
8:22
Josh: like, Google isn't taking themselves seriously until they start firing the leadership
8:25
Josh: that put them in this position.
8:26
Josh: And I mean, in a way, that's kind of what's happening here.
8:29
Josh: The leadership who put them in this position where they had all the technology
8:32
Josh: did not capitalize is starting to rotate and cycle out. There is Fresh Blood,
8:37
Josh: who I'm sure is very hungry.
8:38
Josh: Sergey Brin is back. He is kind of in wartime mode.
8:41
Josh: And I mean, Google is this remarkably incredible business. And what we're going
8:44
Josh: to find as we go through the remaining 13 filings here is that,
8:47
Josh: I mean, spoiler alert, the two biggest winners this quarter are Amazon and Google.
8:51
Josh: Everyone loves the hyperscalers. Everyone loves the people who are spending
8:54
Josh: huge amounts of CapEx because it's easy for them to project revenues.
8:58
Josh: For these newer companies, when they spend a lot of money, it's high risk.
9:00
Josh: They haven't proven their revenue over time.
9:02
Josh: But in the case of Google, they're projecting unbelievable margins on their Google Cloud services.
9:07
Josh: They have the increasing capability of building their own hardware chips,
9:10
Josh: like their TPUs and their Ironwoods that they have.
9:12
Josh: And they have this entire ecosystem that they've built with a very strong moat.
9:17
Josh: And it seems like that's not going anywhere anytime soon. So Google is just
9:20
Josh: this unbelievable business.
9:21
Josh: Same thing with Amazon. They're companies with huge amounts of capital on their
9:25
Josh: balance sheets. They're companies that are spending it.
9:27
Ejaaz: These things are pretty underpriced, man. They're pretty underpriced.
9:30
Josh: On a relative basis, they're not trading at a very high multiple,
9:32
Josh: even though they're the only companies with proven track records that are showing quarter over quarter.
9:37
Josh: We're spending all this capex, but look at the returns that we've had on this capex.
9:41
Josh: There's this amazing stat about Google and I have no idea what the specifics
9:45
Josh: are, but I remember reading it and being like, oh my God, this is so right.
9:48
Josh: Where every dollar Google invested yielded say like $2.8 in return or something
9:53
Josh: like that, where since, since the inception of the company.
9:56
Josh: So when you hear a company like Google, who is one of the best capital allocators
9:59
Josh: in the world over the course of the last three decades saying,
10:02
Josh: not only are we going to spend a lot of money, because we are so high conviction
10:08
Josh: that these investments will pay off in the long run, I think you gotta get pretty
10:11
Josh: excited about that because as a capital allocator, there's not many people better than Google.
10:15
Josh: So that is why I presume Berkshire, we see taking a pretty large position in this.
10:19
Josh: But now we have to move over to what feels like a home for us.
10:23
Josh: I think this is the Brad Gershner, the Gavin Baker, the NVIDIA portfolio.
10:27
Josh: These are what the companies that I think like, when we think of the companies
10:30
Josh: we wanna invest in, this feels most true to me at least.
10:34
Josh: The number one holding of all of them, NVIDIA.
10:36
Josh: Like $2 billion is just crazy. It's like $1.9 billion they have.
10:40
Josh: Second for Brad Gerstner is Cerebrus at $1.6 billion. Then there's Meta, TSM, CoreWeave, ARM.
10:46
Josh: Gavin Baker, on the other hand, $4.7 billion position in SpaceX,
10:51
Josh: then Micron, Cerebrus, Astero Labs, Siena, and Credo.
10:55
Josh: Those bottom ones I don't even recognize, but that's kind of how we could think
10:58
Josh: of the top two, perhaps like Twitter traders, the top traders on X.
11:02
Josh: Here's kind of the position that they find themselves in.
11:04
Ejaaz: Yeah, I mean, if I were to bucket these investors in a particular group,
11:07
Ejaaz: it's like the forward looking group, right? They're like the higher risk takers,
11:11
Ejaaz: but they're playing with like much bigger capital allocations.
11:14
Ejaaz: It's funny you mentioned the SpaceX 4.6 billion position from Gavin Baker.
11:19
Ejaaz: This was his biggest win. I was listening to a podcast of him on the All In show just yesterday.
11:25
Ejaaz: And he was basically like, yeah, this is like one of my biggest winnings.
11:27
Ejaaz: But like what I'm most excited about right now is the power and optics trade,
11:33
Ejaaz: which seemingly is a big theme amongst these particular investors in particular.
11:37
Ejaaz: So just to give you a kind of like lay of the land, when you invest in AI,
11:42
Ejaaz: the typical names that people look at are things like NVIDIA,
11:45
Ejaaz: they look at some of the hyperscalers that were mentioned already,
11:47
Ejaaz: which is like Google and Amazon.
11:49
Ejaaz: And then if you kind of dig a layer deeper, they're like, oh no,
11:51
Ejaaz: all these guys are going to need a lot of memory.
11:54
Ejaaz: So you invest in the likes of SanDisk, Micron, SK Hynix, these are names that
11:58
Ejaaz: we've already mentioned on the show multiple times before.
12:01
Ejaaz: But something that we haven't really opined on is this idea of power.
12:05
Ejaaz: So if you have all these expensive GPUs that NVIDIA is making,
12:08
Ejaaz: if you have all this memory to make these GPUs,
12:10
Ejaaz: you still need power to turn these things on. But also, there is tons of data
12:16
Ejaaz: that these GPUs are generating that they need to kind of like transfer between these GPUs.
12:21
Ejaaz: And that's something that Gavin Baker specifically has identified really early on.
12:25
Ejaaz: And he's winning quite a lot through the likes of companies like Coherent Corp.
12:29
Ejaaz: So let me explain sort of very quickly why this is important.
12:33
Ejaaz: So if you look at the sector of photonics, which basically means light.
12:38
Ejaaz: When you have a ton of GPUs in your data centers, it gets really arduous to
12:43
Ejaaz: transfer data between these GPUs, especially if you rack up hundreds of thousands
12:48
Ejaaz: of millions of GPUs, which is what Elon Musk is basically doing.
12:51
Ejaaz: Right now, the way to transfer data between GPUs is using copper wires,
12:55
Ejaaz: and it uses electricity.
12:56
Ejaaz: It's pretty good. It's been used for decades now at this point,
12:59
Ejaaz: But we've reached a point where there's so many GPUs that it becomes incredibly
13:03
Ejaaz: inefficient and cost inefficient as well. So you waste power and you waste a lot of money.
13:07
Ejaaz: The solution to this is basically using light. And you heard me correctly,
13:11
Ejaaz: like literal light to transfer data. And this solves a problem where it's much,
13:16
Ejaaz: much cheaper and you can transfer data at rapid speeds over very great lengths.
13:20
Ejaaz: And the only way to do this is through companies like Coherent,
13:24
Ejaaz: through companies like GE Vanova, who basically create the materials and the
13:29
Ejaaz: kind of tiny infrastructure tools that kind of like latch onto your GPUs that'll
13:33
Ejaaz: allow yourself to do this.
13:34
Ejaaz: And we've seen this trade become quite consensus over the years so far.
13:39
Ejaaz: You look at Coherent Group is kind of like one of the major manufacturers here,
13:42
Ejaaz: which Gavin Baker has taken a pretty big position in. And year to date, they're up 85%.
13:47
Ejaaz: If you look at this position actually here on our artifact that we have here,
13:51
Ejaaz: he's taken a major position in Astero Labs, which helps with the interconnects
13:55
Ejaaz: between GPUs. So basically like the plumbing,
13:57
Ejaaz: The wiring, the ability to transfer tons of data and information across the
14:02
Ejaaz: GPUs is where all the money has been flowing. And it's not just a Gavin Baker thing.
14:06
Ejaaz: It is a Brad Gerstner thing. And it is pretty similar across traditional investors
14:10
Ejaaz: as well, including like Ray Dalio. So it's cool to see. And I think it's something
14:13
Ejaaz: that I'm keeping my eye on quite astutely, actually.
14:16
Josh: You can kind of see these companies based on their size and their risk exposure
14:19
Josh: going out the curve. Like we have Berkshire, who's right at the core.
14:23
Josh: You're buying Amazon, you're buying Google.
14:24
Josh: Those types of companies are going to be slower more steady growth much more
14:28
Josh: stable then there's people like gavin people like brad gerstner they're going
14:32
Josh: the next concentric circle out of the sloop they're going to the infrastructure layer
14:36
Josh: what is required in order to generate tokens it's optics it's memory it's like
14:40
Josh: going further and further out the stack that's kind of what we're seeing with
14:43
Josh: them and it has been playing out really well another thing i wanted to mention
14:46
Josh: in Gavin's portfolio is that
14:48
Josh: he has a huge $2.3 billion.
14:52
Josh: Position on QQQ puts.
14:54
Josh: And for those that aren't familiar, that basically means he's buying the right
14:57
Josh: to own shares of the QQQ, which is representative of the index at the current
15:01
Josh: price, meaning it's insurance in the case that it goes down.
15:04
Josh: So I find this interesting too. And we saw this with Leopold's portfolio as well, where everyone
15:09
Josh: has this or not everyone, but there are a few people that have this hedge baked
15:12
Josh: into their portfolios currently where if the market goes down they can still
15:16
Josh: survive they're really just making a very specific hyper concentrated bet in this case on ai hardware
15:22
Josh: the infrastructure layer so even if they're wrong even if the market does go down
15:27
Josh: but ai hardware still continues to do well they can win and i find it interesting
15:31
Josh: that they do have this hedge put in place which is kind of cool there's also
15:34
Josh: nvidia which i found interesting
15:36
Josh: and apparently they they also filed a 13f because they i mean as a company they
15:40
Josh: own quite a bit of things the first one being intel they own 30 billion dollars
15:45
Josh: of intel which is great a pretty large position yeah i mean good good place
15:48
Josh: to be it's funny you think of intel and nvidia as like.
15:51
Josh: Total competitors but nvidia owns like quite a big chunk of change in that company
15:55
Josh: nvidia also has a second biggest holding being spacex which we all know i mean
16:00
Josh: this clearly makes sense spacex is going to
16:03
Josh: be exclusively buying nvidia gpus to power all the new data centers then also
16:07
Josh: there's core weave there's coherent there's nokia there's synopsis
16:10
Josh: there's this interesting thing where there is kind of like the circular economy
16:15
Josh: type questions going on we're like okay nvidia invests core we have a nebius
16:20
Josh: then they take that capital to buy nvidia gpus which shows up as nvidia revenue
16:23
Josh: they have these companies on their cap table that they are investing in and
16:26
Josh: therefore collecting revenue from.
16:28
Josh: I mean, at the end of the day, this is kind of the general play from the people
16:31
Josh: who are in the trenches in the world of AI.
16:33
Josh: A lot of infrastructure, a lot of those like higher level purchases into Intel,
16:38
Josh: into SpaceX, into the neoclouds. That's what they're thinking about.
16:41
Ejaaz: If you are considering investing in this space, the number one North Star you
16:47
Ejaaz: should always ask yourself is,
16:49
Ejaaz: will the demand for AI products, AI tools, AI models be greater 10 years from now than it is today?
16:57
Ejaaz: If your belief is yes, then all of these things, infrastructurally,
17:02
Ejaaz: especially involved in physical atoms like GPUs, like energy,
17:05
Ejaaz: like power, is all going to be required and going up.
17:08
Ejaaz: Now, of course, you need to make sure that you are backing the types of companies
17:13
Ejaaz: and builders that are actually going to execute on this.
17:15
Ejaaz: And when I think of like the dummies guide to what to kind of like support,
17:20
Ejaaz: I look at NVIDIA's portfolio, essentially, because there's no one better than
17:24
Ejaaz: Jensen Huang, who has a much deeper insight as to what is actually being built
17:28
Ejaaz: and where the demand actually is.
17:30
Ejaaz: He said on a recent, I think it was like an interview panel,
17:33
Ejaaz: or maybe it was like at one of these conferences that he spoke at,
17:35
Ejaaz: that people are questioning
17:37
Ejaaz: Whether some of these AI labs or some of these hyperscalers are actually seeing
17:41
Ejaaz: demand for the AI models and products that they're offering,
17:44
Ejaaz: like Microsoft and Google, for example, prior to their quarterly earnings,
17:47
Ejaaz: everyone was doubting them.
17:48
Ejaaz: Then they released their quarterly earnings. And not only has their revenue
17:51
Ejaaz: gone up like 5x over the last quarter, but they've also seen revenue margins specifically go up.
17:58
Ejaaz: And it's the same trend that you see across neoclouds, hyperscalers,
18:02
Ejaaz: as well as some of these CPU companies.
18:04
Ejaaz: So you see his biggest position is a $30 billion stake in Intel.
18:08
Ejaaz: Now, I want to remind everyone that I think it was midway last year that he
18:12
Ejaaz: put a $5 billion investment into Intel to own, I think it was like,
18:16
Ejaaz: what was it, like a 5% stake in them?
18:18
Ejaaz: He invested alongside the US government.
18:21
Ejaaz: And the main reason for that was unclear at the time, but today is very clear.
18:25
Ejaaz: Intel creates bleeding-edge CPUs. In order to orchestrate all these hundreds
18:30
Ejaaz: of thousands of GPUs, you need
18:32
Ejaaz: things like CPUs to make sure that your AI agents make the right tool calls
18:37
Ejaaz: and to make sure that they operate efficiently and fast enough for you to get
18:40
Ejaaz: your answer to your prompt.
18:41
Ejaaz: And this is what all of these companies are that NVIDIA is investing in.
18:45
Ejaaz: And you see this collectively across so many of the different funds.
18:48
Ejaaz: They're betting on AI demand just being higher.
18:51
Ejaaz: And if that's the case, then you're going to need more neoclouds.
18:53
Ejaaz: You're going to need more hyperscalers you are going to need way more ai models
18:57
Ejaaz: and you're going to need a way to route across all of them you need the power
19:00
Ejaaz: to like power all of them so this just makes a lot of sense to
19:03
Josh: Me yeah no it's pretty interesting i guess now we could kind of move down to
19:05
Josh: the like the rapid fire versions of just like who who is left here one of the
19:09
Josh: noteworthy investors bill ackman
19:11
Josh: we have uh he is positioning himself mostly in payments which i find interesting
19:16
Josh: his new positions are visa mastercard,
19:19
Josh: s&p global and netflix which is a little bizarre and when you think about that
19:23
Josh: one you're like huh why payments and then you think well who did stripe just
19:26
Josh: acquire um it's just acquired open router it's like it turns out payment infrastructure
19:31
Josh: is due for an entire overhaul
19:33
Josh: and it seems like if
19:35
Josh: you are betting on that you are almost shorting visa and mastercard uh not buying
19:40
Josh: visa mastercard so i'd love to talk about,
19:42
Josh: why i'd love to ask him like why are you going along these companies when everybody's
19:46
Josh: actively working to sabotage and destroy them.
19:49
Josh: Like the credit card providers, for those who don't know, they normally take
19:52
Josh: an X amount of pennies and like 2.9%, 2.7% of every transaction, fairly large.
19:57
Josh: And a lot of people are kind of sick of paying that. And it seems like AA agents
20:01
Josh: are needing their own infrastructure lay in order to make these payments.
20:03
Josh: So I find the Visa and MasterCard pretty interesting.
20:07
Josh: There's a few other noteworthy ones. There's...
20:09
Josh: This guy, Sam Klarna, who runs apparently $5.4 billion worth of money.
20:14
Josh: His number one is Amazon. I mean,
20:17
Josh: it seems like there's a lot of people in Amazon being the number one.
20:20
Josh: Tiger Global, I think they had theirs as number one. Also, David Tepper,
20:24
Josh: his number one was Amazon. A lot of people are really excited about Amazon.
20:27
Ejaaz: I'm just looking at this and I'm seeing like a lot of confusion.
20:30
Ejaaz: Like you've got Bill Ackman buying all the finance rail companies,
20:33
Ejaaz: but he's trimming Amazon down 25%. Then you got Seth Klarman buying Amazon.
20:37
Ejaaz: On. Then you got Terry Smith dumping Visa, dumping Alphabet.
20:41
Ejaaz: And so I'm like, okay, some of these funds kind of agree with each other. Some of them don't.
20:46
Ejaaz: I think on your point around why Ackman might be buying the financial rails
20:50
Ejaaz: and why Stripe just acquired Open Router, I'm realizing that
20:54
Ejaaz: the whole thesis of plumbing AI, I want to buy tokens and I want to convert
21:00
Ejaaz: those tokens into intelligence that makes my business earn more money.
21:03
Ejaaz: Stripe is perfectly positioned for that. Visa and MasterCard perfectly positioned
21:07
Ejaaz: for that because they already have the distribution to all of these different
21:09
Ejaaz: companies' financial books, right? They're already getting paid.
21:12
Ejaaz: So for them to flip on a switch and say, hey, we can also provide you and serve
21:16
Ejaaz: you the inference for all these different models might actually be really attractive.
21:19
Ejaaz: Maybe that's my tinfoil hat guess, but.
21:21
Josh: Yeah, well, all of these things also require agents. And we're going to have
21:24
Josh: to talk about agents again because of our friend and sponsor Ledger,
21:28
Josh: who is building an infrastructure for agents in which there's a three part solution.
21:32
Josh: If the agents propose, the humans
21:34
Josh: approve, the Ledger signer enforces the transactions that are being made.
21:38
Josh: They built this really neat Ledger agent stack that allows you to use their
21:41
Josh: open source tools to work with agents because chances are, I mean,
21:44
Josh: if you're building with agents, you're pretty worried about security.
21:47
Josh: There's been a lot of breakouts from companies like open ai and anthropic recently
21:51
Josh: you want to lock that down you do so with this hardware
21:54
Josh: process that ledger has they work with cloud code they work with codex it works
21:59
Josh: with cursor it's all totally open source for you to try out today and you can find more in
22:02
Josh: the link in the description below thank you to ledger for sponsoring this video
22:06
Josh: and as we get to the final segment of the show we have to make the you have
22:10
Josh: to answer the question like okay what is the smart money actually buying in
22:13
Josh: consensus after going through all these portfolios after seeing all these companies
22:17
Josh: what are the largest winners and losers and we have this really nice chart on
22:21
Josh: screen for those who are watching on spotify youtube wherever you get your videos
22:24
Josh: it shows kind of where everyone's been adding and i see this line down the board
22:28
Josh: of tepper who seems to have added like pretty much everything they're going across the board.
22:31
Ejaaz: He's the new leopold dude
22:33
Josh: Uh it seems like tepper's like really making a strong play into amazon alphabet
22:37
Josh: tsmc power energy neoclouds spacex but what we do see is the most amount of
22:41
Josh: dots out of all of these funds across Alphabet.
22:44
Josh: Everyone's really bullish on Google. People want to own the company that's spending
22:49
Josh: how many hundreds of billions of CapEx this year with how large profit margins
22:53
Josh: in their cloud infrastructure with like a new leadership team that's coming
22:56
Josh: in probably a little more hunger than the old. It seems like this new...
23:00
Josh: Beginning for Google almost. And the hope is that a lot of people can capitalize on that.
23:04
Josh: The next most popular, I guess there's three of them here. It's Amazon, TSMC, and SpaceX.
23:09
Josh: Those all seem like pretty amazing opportunities. Amazon, we know,
23:12
Josh: is pretty much one of the largest mag seven companies for AI exposure.
23:17
Josh: You get AWS, you get the sneaky anthropic stake for the company,
23:22
Josh: and then you get terranium chips,
23:23
Josh: which are all three huge verticals that can play a large role in the earnings
23:27
Josh: of amazon i think people are pretty excited about these large cap companies
23:30
Josh: spacex again goes without saying we have 25 episodes on why they're going to
23:34
Josh: be one of the most valuable companies in the world
23:35
Josh: people are excited about ai data centers in space they're excited about grok
23:38
Josh: getting on the frontier they're excited about the data center build out there's
23:41
Josh: a lot of things to be excited about there and then tsmc
23:43
Josh: It's just buying the picks and shovels, man. Someone's got to make the chips.
23:47
Josh: TSMC is pretty damn good at it.
23:48
Ejaaz: I think when we look at this, it gives you a clear idea of where the consensus
23:53
Ejaaz: of investments are in AI right now.
23:55
Ejaaz: Like you look at Amazon Alphabet, that's not new news from like a couple of
23:59
Ejaaz: years back when these companies were making very heavy capex investments in AI in general.
24:04
Ejaaz: I still think that they have a long way to go.
24:07
Ejaaz: And I don't quite believe people think that AI is going to be as big as they
24:12
Ejaaz: could potentially conceive.
24:13
Ejaaz: Like when I look at Andy Jassy, CEO of Amazon's reports on AWS,
24:18
Ejaaz: I can't help but think that, I can't help but get like incredibly bullish about it because
24:23
Ejaaz: it's not only him making, what
24:25
Ejaaz: is it, like a $200 billion investment this year in AI CapEx, but it's him
24:30
Ejaaz: Showing us publicly, by the way, this is all reported on, the revenue and margins
24:34
Ejaaz: that are expanding for the company itself.
24:36
Ejaaz: So when you look at that and look at the investment, it kind of makes a lot
24:39
Ejaaz: of sense. Bear in mind, Andy Jassy has been running AWS well before he was CEO
24:44
Ejaaz: of Amazon. So he knows the infrastructure in and out the best,
24:49
Ejaaz: better than anyone, right?
24:50
Ejaaz: So when he says things like this, it's very important, I think, to pay attention.
24:54
Ejaaz: Now, if you lower your gaze to the bottom of this stack, it tells you where
24:58
Ejaaz: the money is effectively going to go.
24:59
Ejaaz: It's going to be in things like power and energy. It's going to be in things
25:02
Ejaaz: like payments and memory. Now, memory is already quite a consensus trade.
25:05
Ejaaz: But as you can see, a lot of people got scared after the Leopold blowout.
25:09
Ejaaz: Now, is it just a blot that was based off of leverage?
25:12
Ejaaz: Or have we reached some kind of top that maybe makes no sense?
25:14
Ejaaz: We're going to have to see over the next couple of months.
25:17
Ejaaz: It's my belief that like, memory is constrained by physical atoms.
25:21
Ejaaz: We do not have enough plumbing and chip fabs out there to meet demand going
25:26
Ejaaz: into 2028. I just want to emphasize that
25:29
Ejaaz: All the supply that is available for memory for next year is completely sold out.
25:33
Ejaaz: You've got SanDisk literally inventing brand new forms of memory to be able
25:38
Ejaaz: to serve up demand just to kind of get memory into the hands of AI providers.
25:43
Ejaaz: Now, when you look at payments, this is kind of like a brand new thing,
25:45
Ejaaz: you know? Maybe we'll have a few more episodes in the future about this,
25:48
Ejaaz: but you've got Stripe just acquiring Open Router. You've got Ramp creating their
25:51
Ejaaz: own router. There's a lot of movement in the AI router side of things,
25:55
Ejaaz: and that's a thesis to unpack on a separate episode.
25:58
Ejaaz: And then you have neoclouds and power and energy, which has been the case for
26:01
Ejaaz: so many years at this point, where we have all these GPUs, we're going to have
26:05
Ejaaz: way more GPUs in the future, and we don't have enough power to serve for this.
26:09
Ejaaz: So we're looking into nuclear, we're looking into solar, we're looking into
26:12
Ejaaz: ripping jet engines off planes and trying to like spit it up at the back of
26:15
Ejaaz: a data center, which is what Elon Musk is literally doing.
26:18
Ejaaz: He bought a company to help him do that. And so I think we're going to see a
26:21
Ejaaz: bunch more of these investments, whether it pays out or whether it plays out
26:25
Ejaaz: is something we're going to see over the next couple of months.
26:27
Ejaaz: It's my strong belief that we will but again this could all be a house of cards
26:31
Ejaaz: and a lot of people think so and so i don't want to negate that fact
26:34
Josh: It's also worth noting that these aren't uh specific ai filings for 13f companies
26:39
Josh: like these are just the standard 13fs it just so happens that it seems like
26:43
Josh: a lot of the large funds are investing in ai which is interesting is like if
26:47
Josh: if everyone's focused here is there an edge elsewhere is there some place that
26:51
Josh: other people aren't looking because everyone is seemingly interested in figuring
26:55
Josh: out how this ai trade plays out possibly
26:57
Josh: probably i don't see my voice tesla anywhere come on where's the love over there,
27:01
Josh: but it's interesting it's interesting to think like okay well if everyone's
27:04
Josh: focused on these things is there an edge is there alpha elsewhere that we may
27:08
Josh: be able to extract from the market like it's interesting.
27:10
Ejaaz: No one's holding nvidia josh like some of the like the major company that's making these these gpus
27:16
Josh: Yeah, that was a, yeah, actually Nvidia was missing from most of these, huh?
27:20
Josh: Except for, I believe, Gavin Baker, maybe, has it as his largest holding.
27:25
Josh: I think he's Jensen's biggest bull. He probably owns quite a bit.
27:27
Josh: Warren Buffett's still, Berkshire Hathaway's biggest holding is Apple.
27:30
Josh: And I find it ironic that it's been the biggest holding forever because everyone's
27:33
Josh: just kind of forgot about it.
27:35
Josh: They've moved past it. And yet Apple is currently sitting here,
27:37
Josh: the most valuable company in the world, even more so than Nvidia.
27:40
Josh: So it's pretty interesting to see kind of how these companies structure themselves,
27:44
Josh: see which ones are more nimble, like Leopold, and getting blown out of their
27:47
Josh: portfolios, which ones have been around since the beginning of time, like Berkshire.
27:51
Josh: And they're actually just long, some of these fantastic companies that is now
27:56
Josh: the most valuable company in the world.
27:57
Josh: And perhaps you can use that to kind of gauge your risk tolerance and see where
28:01
Josh: your personal portfolio fits into this.
28:04
Josh: But that is the entirety of the episode today. I want to just thank everyone
28:08
Josh: so much for watching, for being here with us, for hearing about the aftermath
28:12
Josh: of the Leopold blow up i thought this would be exciting for different reasons,
28:17
Josh: but um unfortunately it is exciting because we get to see the final holdings
28:21
Josh: before everything exploded and now what you're looking at is probably the citadel
28:25
Josh: portfolio because they bought the entire thing in a single block of trades so.
28:29
Ejaaz: Which there are about two and a half x just fyi from that
28:32
Josh: Purchase imagine oh my.
28:33
Ejaaz: God two weeks also didn't leopold make like a 500 million dollar private investment
28:39
Ejaaz: I saw his report on like Bloomberg or Reuters or somewhere.
28:42
Josh: Yeah, man, he's down, but far from out.
28:44
Ejaaz: He'll be back. Dude, he's already back. He's back. Where did he get that cash?
28:47
Josh: It's going to, you know, it's going to be really fun. You know what you really
28:49
Josh: need to stick around for is the next Leopold 13F. Because then we'll see what
28:55
Josh: rises from the ashes. It's like, okay, like what is left? Is it going to be zero?
28:59
Josh: Is he even going to have enough money on the balance sheet to be required to file a 13F?
29:03
Josh: We will see. I suspect the answer will be yes. I suspect it is a Phoenix rising
29:07
Josh: from the ashes, a strong comeback.
29:09
Josh: But that's the update if you enjoyed this episode as always uh first thank you
29:13
Josh: so much for watching we really appreciate you sticking around till the end
29:15
Josh: second uh don't forget to share with a friend who might also enjoy don't forget
29:18
Josh: to give us a thumbs up on youtube or wherever you view your podcast eejus any
29:22
Josh: final parting thoughts before we head out of here today.
29:25
Ejaaz: No i uh i'm curious for the folks who are listening who i i get are very investor
29:30
Ejaaz: oriented are there any layers of the stack or if there are any companies that
29:34
Ejaaz: were missed like we would love to to hear about it like leave us in the comments
29:38
Ejaaz: a note, DM us, whatever.
29:40
Ejaaz: We're always looking for like where the edge might potentially be.
29:43
Ejaaz: And, you know, Josh and I have got our rose-tinted glasses on, right? We love memory.
29:46
Ejaaz: We love power. We love NVIDIA. We love Google. So if you have any ideas,
29:50
Ejaaz: let us know. But that I think is it.
29:52
Ejaaz: And yeah, we will see you guys on the next one.