Top 5 Episodes of the First Half of 2024

Hello, hello, iLab listeners. The first half of the year is almost here, and today we have a special recap episode for you. This episode compiles samples of our top 5 most watched episodes of the first half of this year. The full episodes will be linked in the description for you to check out. Hope you enjoy. Hello, future billionaires. Welcome back to the Invest Like a Billionaire podcast. We've got a fun episode today talking with Bob Elliott of Unlimited Funds. So Bob is a quant, he's a macro guy, He comes from the world of hedge funds and actually spent the majority of his career at Bridgewater, which is now the largest hedge fund and really has brought a really cool perspective to the alternative investment space where most of the hedge funds and a lot of types of alternatives, as you may know, have difficulty being accessed for a lot of investors. And they also lack liquidity many times. So they are using machine learning and different models that they've been running for a long period of time to replicate the returns in the portfolios of hedge funds to be able to bring the alternative investment benefits using liquid public market securities. So you have the ability to still have liquidity. So really, really cool. We get all into the weeds of it here of how it works, how they use this model to work with hedge funds, work with VC firms, also work with more traditional private equity. Gerald Tabas, we've talked about, but how they're replicating that in their models trading publicly traded securities. And then the very end, we talk a lot about macro and kind of where he sees the market going. Very, very smart guy. I think you're really going to enjoy his perspectives here. Definitely aligned in a lot of ways. With that, enjoy the show. Talk a little bit about how you're structured. Is your fund, is it also a private fund? Is it traded? Talk a little bit about how you guys run your fund.

Yeah. So we have created, you know, our first products are around the hedge fund replication approach. Approach. And we use that technology basically as the foundation of products that we build both for what I'd call advisor-directed retail investors, you know, so advisors who are looking for alternatives in their portfolios for their clients who may, may not have clients that are qualified purchasers or accredited investors and are looking for an alternative typically through, you know, through like a 40-act product, an ETF product, which is for most investors, for us small-scale investors, ETFs are the most efficient way in which they can gain access to various strategies because they're tax efficient and low cost and very liquid. And then we also have used that technology to create a product more targeted for institutional investors that can switch between different hedge fund style strategies at a time when, you know, the macroeconomic conditions align with certain strategies, say global macro or fixed income strategies or equity long-short strategies. You'll shift between strategies when those underlying hedge fund strategies are likely to do better or shift away from them when they're likely to do worse based upon macroeconomic conditions.

Got it. Okay. And then how is your fee structure different than maybe a traditional hedge fund?

Yeah. So when you're thinking about, you know, from a, from the perspective of the ETF, you know, those fees are typically, those are fixed fees, fixed management fees that are typically associated with an ETF. And, you know, the vast majority of ETFs are priced under 1% in terms of the annual fee. And so that's, considerably lower than you might see with a typical 2-and-20 structure, which is, you know, maybe something like 400 basis points a year or 4% a year. And then the other thing important to recognize for taxable investors, ETFs are also more tax efficient because typically if you buy an ETF and hold it for more than a year, it gets taxed just like a stock from the perspective of being charged capital gains at the point of sale, which is very different from traditional LP investments, which typically generate K-1 income that you have to take annually regardless of whether or not you sell out of the position and you're taxed on those gains and have to pay the taxes on an annual basis.

Yeah. Okay. Very interesting. So it sounds like you said advisor-related retail or advisor-sourced retail investors. So investors need to go through their advisors to access the funds, I'm assuming, or do you guys have direct-to-retail, direct-to-consumer access?

Most retail platforms that folks are trading on, you know, our product is accessible on there. But the reality is that this is a sort of product that's not going to become the next meme stock. You know, it's the sort of thing that frankly advisors who are trying to build robust institutional quality portfolios, but instead of using direct investments into managers, what they're using are, you know, ETF model portfolios. This is the sort of product or strategy that fits into that alt bucket of your ETF model portfolio in the same way you might have, you know, an equity allocation or a bond allocation.

Hello, future billionaires. Welcome back to another episode of the Invest Like a Billionaire podcast. I'm your host, Ben Frazier, and today we've got something unique for you. We recently did a webinar called a Private Credit Masterclass. And so this is an area of discussion that a lot of people are curious about, especially right now in the current economic environment we're in and been hearing the buzzwords around private credit, credit investing. What does that mean and why is it such a unique opportunity right now? And so periodically we do these kind of masterclass webinars, really educational focus. To just lay the landscape of these particular topics. So today's part 1 of the Private Credit Masterclass. We have a special guest that we brought on who's been in credit and banking for over 30 years, good friend Anton Matley, to just bring some great experience and perspective to what's going on. And if you have any interest at all in learning about private credit and really the whole landscape of opportunity, definitely encourage you to check this out. It's going to be a two-parter because we spent quite a lot of time really laying the groundwork for understanding what this is. So I think you're really going to enjoy it and appreciate you all listening. If you are enjoying it, please feel free to share with a friend, leave a review, share some feedback with us. We always appreciate that. Thanks so much. Enjoy. And so it is possible and it's likely that a portion of these will make it out. But there's a lot that, you know, we'll get to here in a little bit of distressed deals that it's unlikely that, you know, whether they kick the can down the road or not, they wipe the equity out. It's, it's, they're, they're not going to be able to recover at the current basis that they bought it at and the current debt service that, that they have. And so the other kind of thing that this does is it further elongates the credit tightening, right? Because the way that the banks lend and, you know, I'm speaking here mostly traditional banks, is they have certain leverage ratios that they have to hit and they can only lend based on a certain amount of equity capital they have. And if they don't have payoffs, they don't have new capital to put out to new loans again. So existing loans don't pay off, they can't make new loans, right?

Yeah, right.

So it's creating that tightening. You know, you have this chart here, bridge loans that originated. So we saw a huge amount of bridge loans. And so just as a real quick explanation of bridge loans, so these are non-banks, these are private funds and they were very popular in 2021 and 2022 because they would do super high leverage rates, a lot of times up to 80% of the purchase at these very low cap rates. So very high values. And then a lot of times they would lend up to 100% of the renovation budget. And so it was very compelling for a lot of these operators because one, it's not a big down payment they gotta put in. Welcome back to the Invest Like a Billionaire podcast. I am your host Ben Frazier, and very excited about today's guest. Plural, we have Rick Macy and Niva Jareth. They are teamed up and they have written an awesome book called Billion Dollar Mind. And when I first saw what they had put together to come on the podcast tours, was very intrigued, obviously with the connection of the billionaire, but we've also been doing more episodes focused more on mindset recently and how that kind of impacts us as investors, impacts us as business owners. How we can continue to improve and grow and learn and break through ceilings. And if you don't know who Rick is, he is famously the coach for Serena and Venus Williams and has been a tennis and a tennis coach and one of the premier coaches for many, many decades. And Rick, you know, he didn't probably want me to tell this, but he charges $800 an hour for a lesson. So You guys get a very, very valuable next hour for free.

For you, since we're doing the podcast, I'm going $7.99.

All right. So, oh, wow. Okay. That's a good deal. We'll just put your Venmo in the show notes at the end. People can throw it in. And not to be outdone, we have Niva, who is a Harvard-educated neurologist. And as I said, they've teamed up to write a book called Billion Dollar Mind. So Neva, Rick, welcome to the podcast. Thanks for coming on. Yeah, thanks for having us.

It'd be a lot of fun.

We've been kind of talking about this from different angles, but I think one thing I did want to, to address specifically is, you know, how do you break ceilings? How do you break plateaus, right? You kind of achieve a certain level of success, and I'm kind of thinking, you know, say there's an entrepreneur, they've hit a certain level of revenue, they hit a certain, you know, amount of, um, you know, get clients and employees, and they're kind coasting there, but they don't know how to get to that next level. They maybe they feel like they don't have the ability or the resources or capacity to get to the next level. Same with investing in these kind of things. What are the things that you've seen when you're working with your clients to help them? Obviously, Thinking Loops can help, but how do you break through these ceilings or how do you, how do you get to that next level? And kind of breakthrough?

Yeah, sure, absolutely. I love that question because it's something where we can all relate to when we do reach a certain level. We have a certain level of financial success, a certain level of success in our job, and, you know, we're just like kind of coasting in life and going through a pattern of feeling like comfortable, you know, we're like, oh yeah, this is it. And I think, Good is always the enemy of great. And so it is, you feel so good, you're like, okay, I don't need to do anything, kind of coast. And you get into this pattern of just being kind of the same and you don't have any sort of goals or achieve any kind of plateau. And I think one of the most important things to do at that point is to recognize what it is that's important to you. And there's a lot of ways to do that. It's a lot of time spent with yourself. It's you versus you. But when you're at home, what are the things you enjoy doing when nobody's really paying you to do it? What you really enjoy on your own free time, you really love. And those passions, for instance, for me, I love diet, you know, and exercise. Those two things I really love. And of course, Rick's the master of all those too. But for me, I love that. I love optimizing my diet and I love being on top of my health now. So I could be really average at it or above average. And then, I talk in the book about Ivan Djokovic and how he's number one in it. And so, getting— learning about that, once you learn, okay, like, he's never had chocolate, he doesn't eat any gluten, really, to optimize his tennis, you start comparing yourself. How can you be on top? How can you get to that next 5% of perfection, right? Because all of us will cheat a little bit. Oh, yeah, we'll eat a little bit of gluten. We're kind of, you know, don't have that intense perfection there. And that is the concept of self-discipline. So you get to that, you break that barrier by doing, disciplining yourself, and it's you versus you. So if you want it and you start making that discipline, and then we'll start by visualize, visualizing what you want, and you'll break through with those two things of visualization and discipline and getting there. So I love those concepts because for me, it was almost that little 5% that I could do better. And I was like Aubrey Moore everywhere, I could do better. I'm gonna make this diet I'm going to be better. I'm going to learn more and I'm going to achieve that rather than just saying, okay, my diet's good. I'm okay. You know, like I can always make it better and learn. And so knowing what you want and then visualizing it and then getting the discipline to get there, even if it's a 5% difference, you can maximize your life.

Hello, future billionaires. Welcome back to a new episode of the Invest Like a Billionaire podcast. Have a fun interview for you today with a gentleman named Andy Lee of Parallaxus Capital and very, very fun discussion all around one particular asset class that you've probably never heard of called TRAs, tax receivable agreements, and really cool background. He tells a story of why he got a master's in taxation, really as a way to appease his dad and just not have to do a lot of work. But it actually ended up really working in his favor, finding a very unique asset class of C-corps that kind of creating these receivables and it gets all into it. Really, really cool stuff. But again, with our goal here, Investing Like a Billionaire, we like to do a lot of different things. One of them being educating around unique, interesting asset classes that you maybe never heard of and things that are very interesting and happening in the alternative finance space. With that, if you are enjoying the show and you're not already subscribed, please do so. And if you can leave us a review, that really helps us get the word out, get on bigger guests onto the show so we can keep adding more value-packed content. And I hope you enjoy this show. Thanks. Talk a little bit about what is a TRA, right? I mean, this, you know, I had a little more, you know, context, more conversation to kind of get the base, you know, understanding of it. But it is a little complicated. So let's, you know, explain it, explain it to the very high level, just kind of key parties involved, why it's created and kind of how it works. So just kind of set the stage for us here.

So in terms of what a TRA is and rather some of the analogies that you likely have brought onto your show over the course of the last year or so, There are— it reminds many of what pharmaceutical royalties were in the 2000s and what musical royalties were in the 2010s. So long-dated annuity-like cash flows that are uncorrelated to broader markets. And so that's at least what we do in terms of the asset itself and the opportunity set. It's called a $30 billion opportunity and growing. With increased adoption, we like to say as a firm that not only is there riches in the niches, but it is also the largest opportunity set that people have just never heard of. Tax. So across a number of things, think about us almost buying the standard deduction, a concept that many are probably familiar with, but for corporations. Nades in our portfolio, that we've transacted with include the likes of a RE/MAX, a Shake Shack, a Duff Phelps. So public issuers that people have seen, understand their propositions. They're not small businesses, they're relatively large and they're public companies in nature. In terms of the product, it is a long-dated annuity stream that is one, uncorrelated, 2, cash yielding, and 3, serves as a call option on higher corporate tax rates. Those are attributes that are interesting to many, and it's created by just a misunderstanding of tax more broadly, primarily on the front of, I mean, how often do you look forward to going to your dentist?

Not very often, we'll say that.

In the same way, Most people run away from tax season, and that's like one of the misunderstandings driven by the fact that most people don't want to have to deal with much in the way of tax. And tax professionals, unfortunately for my brethren in this space, rarely, if ever, speak English. And that creates an incredible challenge, but also an opportunity for us to bring light to this overall opportunity set.

Yeah, no, so interesting. And what I love about this whole world of alternative investments, right, is as we kind of see these new things start to percolate over time, like you mentioned, you know, music royalties, you know, I've seen other things is, you know, unique is investing in distilleries and, you know, casks of for wine or, you know, harder liquors. I've seen, you know, buying fractional shares of horse, you know, racing horses. And I mean, it's really creating liquidity, creating markets around assets that have different characteristics, but being able to bring it to a different audience to where maybe there was no market. Right. And in this case, you're kind of one of the first in creating a market to transact on these assets that are created that the companies that have on the balance sheet don't really want to hold because it's not, you know, very advantageous to them from an allocation of capital or resources standpoint. And, you know, there's not a whole lot of buyers out there. I'm assuming we've talked a little bit about just what you have to do to go to drum up these types of assets. It's difficult to find and explain all that. And so you've kind of created this, this very unique niche that is totally uncorrelated to, you know, the markets. It has some other unique aspects. So let's kind of give a— give an example here of how this is created and who the kind of key parties are in, you know, what the transaction might look like just at a high level. So use some kind of just more of a case study, but just use simple numbers so we can kind of get a sense of how this— how this works.

Absolutely. So the— there is a fundamental tax transaction that occurs whenever a company goes public. Many businesses here in the US are formed in several formats, that being pass-through entities. Might that be a limited liability corporation, a partnership, or an S corporation? And so whenever you go public here in the US, unless you are electing for an MLP or a REIT designation for tax purposes, you ultimately have to become a C corp. As a result, you undertake a tax transformation and there is a taxable transaction known as an up-C transaction that occurs. That transaction results in the pre-IPO shareholders paying a large tax liability and as a result, also creating and delivering to the newly public company a large tax asset for which they share it via a tax receivable agreement. So the key stakeholders in this transaction are, one, the public company which receives a large tax asset, and two, the pre-IPO shareholder who not only paid a large tax liability but also received a large tax asset in the transaction. Many of these of these parties are, are private equity funds. So think about them as having many portfolio companies that they take public on a regular basis. And for private equity funds, they have 10-year fund lives. They may take a company public in year 6 of their fund. And over time, as the company grows and they sell down their exposure, They then are at the tail end of their funds and these tax assets might survive 10 years after that. And so some of the holders that we've transacted with, they run the gamut from management team, co-investors, private equity funds, and they're just looking to wrap up finite fund life vehicles. So in that sense, we are almost helping them provide liquidity for a somewhat misunderstood asset. In order for them to deliver proceeds back to their investors, one, and to reduce the administrative burden with closing down a fund.

Right. Okay. So let's break down a little bit further because there's a lot of, lot of information there. So what you're saying is on these companies that are going IPO, they go onto an exchange, become publicly traded. To do so, you have to change the structural ownership of your firm, right? And most stocks and companies that are traded on exchanges are C-corps. That's a requirement unless you have an exemption, either being an MLP, master limited partnership, or a REIT. But most of our C-corps, right? So when you, when you go public, you have to convert the structure, but you've had your legacy structure, which most people, you know, when they're building businesses that are private and not publicly traded, they're usually using limited liability companies, LLCs, limited partnerships, other types of partnerships, or S corps, like you said, because you're not generally going to start with a C corp unless you have to, right? That's, that's kind of the idea.

Unless you have a capital back for it.

Yeah, there are, there are reasons. There are, there are times that it makes sense. But as you're kind of making this transition, what you're saying is you kind of have this— you said tax transformation that is creating this transaction that you know, between the new publicly traded company and the older company or the old shareholders. So talk a little bit about that. So basically the, the shareholders of the pre-IPO company, they have a receivable from the new publicly traded company. Is that correct? That's right. So what they're doing is they now have an agreement between these two parties where they're going to be receiving X amount of you know, cash per year over a set period of time. Well, what you were just saying at the end there is a lot of these shareholders of these pre-IPO companies, they're funds and they have, you know, designated fund terms. And if they're liquidating these assets through, you know, the IPO, they're getting a nice big, you know, you know, the capital event in the fund, they now are kind of winding it down potentially and they don't want to have to hold on to this kind of probably small asset as a percent of the overall fund that now is a receivable over a long period of time. And there's an administrative burden. It's just, you know, you have to send K-1s for the next 10 years to your investors. So it creates kind of this annoying, you know, kind of pebble in the shoe that they don't want to deal with. And so they're willing to sell this asset at potentially a discount. Am I right so far?

Absolutely. So you are 100%— we're a secondary market purchaser of these assets.

Hello, future billionaires. Welcome back to another episode of the Invest Like a Billionaire podcast. Today's show, I've got a returning guest, friend of mine. Her name is Whitney Elkins-Hutton. She just wrote a book called Money for Tomorrow. and this is really, really good stuff. So she talks about really her reason for writing this book. She, she wrote it initially for her daughter, and it's all about not only how to build and grow your wealth, but also how to keep and protect your wealth. And if you know Whitney at all, she speaks a lot, does a lot of different coaching. She's been in this space for over 20 years and she's learned so much. And this is just a pure pass on the knowledge. To people that are a few steps behind. So she talks everything about making sure your goals are aligned with where you want to be, changing your mindset to help achieve where you want to get to, mimicking the ultra wealthy and doing the things that they are doing to put yourself in a position to have the best chance of success. And then the real big things a lot of people don't talk about sometimes are what do you need to do to make sure you're keeping and protecting your wealth and avoid building this moat so you avoid erosion of your wealth. And then Lastly, how to pass it on. So she gets all these things. It's a, it's a longer interview, but it's so good. A lot of good things. Definitely encourage you to get this book and support what she's doing. It's called Money for Tomorrow. And again, if you're liking the show, we appreciate the support. Make sure you hit subscribe so you don't miss any other episodes and leave a review, share with a friend. I always appreciate all that. So with that, enjoy the show. Talk a little bit about making that shift to kind of a multi-generational wealth plan and where do you see a lot of people kind of miss the boat or kind of not do it right?

Yeah. And this is, you know, we know we touched on all the different rules here, creating wealth, keeping wealth, growing wealth. Now we're in kind of the last rule bucket, which is how do you pass it on? I think most of us really fully understand. Yeah, we should have a living will or a trust in place or excuse me, a will or a trust in place. Okay, but that's just part of the kind of like the order of operations in order to pass wealth on effectively. And I'll tell you a little story. When my mom passed away, I knew there was a wealth. I just assumed it was in the safety deposit box. I was the sole heir and the sole executor on the estate. And when I say heir, remember my mom lost $200,000 in a retirement account. No one would— error does not mean that you actually get money yourself. Oh man. Um, so anyway, so I'm trying to settle an estate. My husband and I are going through her house and, you know, she had dementia, you know? Um, it was just, I don't think she had thrown away a piece of paper in like the past 25-30 years. She was super organized! That was the bizarro part, is that her filing cabinet was the floor. Right. Like, it's all like, everything was like piled up, like all the different, like, bank accounts. And I'm like, thank goodness nobody decided to break in the house because they would have had access to everything. Nothing was under lock and key. Anyways, so we're trying to find the will. Can't find the will. Assume it's in the safety deposit box. It's— there's a copy there. I'm like, oh my gosh, we got to find the will. And then so here I am. I don't know. Where any of the assets are. I don't even know what the assets are. I don't know where the will is. I don't even know how to contact the water company or the electric company or anything like that because she never moved things out of my dad's name. And so now I don't have to— I don't just have to get her off the account, I have to get my dad off the account so I can start taking care of all this. And so passing wealth on effectively There's training your executor.

Okay?

And that is one huge part of it. Like, where's the will? Where's the assets? Okay, just give them a high-level walkthrough. You know, if I pass away, this is why I want everything organized the way it is. These are all the contact information for all of my investments. I'm not going to give that to you right now. I'm going to put it under lock and key, but you know how to get to everything in case something happens. To me, right? But then there's lots of educating heirs, okay? Like, they're the ones that are now going to be stewarding whatever you left. And so that actually— education starts now, right? They should be like kind of looking over your shoulder as you build your portfolio, whether it's actively or passively. They should be having— you should be playing games, reading books, you know, um, talking about, you know, how things are going to pass onto them, not just like them getting handed a piece of paper when you pass away and, you know, they, you know, Susie gets 30%, Joey gets 30%, and then, you know, Bobby gets 40. Why does Bobby get 40? I don't know. Has her daughter left with the trust or the will, right? So, you know, that education starts now because, you know, the whole point is we want the next generation to be good stewards We don't want to hand them a silver spoon. And so it can be stewards of information. It can also be stewards of actual assets, and it can be a blend of both. And I strongly encourage a blend of both there.

Love that. Okay, for the big reveal, we already said what the name of the book is and where to get it, but those that weren't listening, Whitney, where do we get this book and where do we, where do folks kind of reach out to you if they want to learn about some of your coaching and some of the investment opportunities you guys have at Passive Investing?

Absolutely. Yeah. So BiggerPockets, if you get the book on BiggerPockets, you get a suite of tools that go alongside of it. I understand some people love getting books off of Amazon because it drops on their Kindle. I do. You can also get it on Amazon. Totally fine. If you're interested in one-on-one help, if you want somebody to help you, you know, take you through this process of, you know, learning how to protect your wealth and grow it, you can reach out to me at ashwealth.com.