What are the odds that they put money in the SPV but the SPV has yet to acquire any SpaceX shares? Or that the SPV has unclear or disputed ownership of shares and thus cannot fully value them? Either way, their disclosures are entirely insufficient for a 40 act product.
Thanks for reading and commenting. I'd put very low odds on that -- I think they have had indirect access to SpaceX shares from the start. But you're hitting on the key point -- how much effective exposure have they had? I have no idea what the terms have been but doesn't seem inconceivable that a combination of onerous fees and dilution made it very difficult for them to mark the position to market/latest tender offer. Why that was less true of their very first mark-up in Dec. 2024, I don't know. But one of the more mystifying aspects of this has been their failure to mark up from $185 per share and if there were structural features that were precluding that then it would make more sense. But I can only hazard guesses.
Great point, and something I had considered as well, that the SPV was a fraud and they found out they really didn't have what they thought they had purchased. And why an SPV anyway?! There are a lot of ways for investment vehicles to acquire private shares today. Forge is one exchange for accredited institutions. There are several others. Just buy private shares and not some SPV that might or might not have a claim on actual shares
Terrific piece. Thank you for sharing your insights. Are we assuming underlying valuation and NAV calculation are both reliable after the 'reset', and therefore the disconnect between SPACEX valuation uplift and NAV adjustment has to be down to the terms of the SPV? Are there requirements on SPV terms disclosure for ETFs? How can we apply lessons learned here to evaluation of other ETFs?
Thanks. Given the history, I don't think I'd consider it reliable. We are really in the dark about the past and present terms of the SPVs. So yes it could come down to that--fees, dilution, etc. As far as requirements around SPV disclosure -- I don't have knowledge in that area. I am assuming that they are satisfying the requirements and if that's the case then I'd say this serves as kind of a case study in inadequacy of the reporting standards. As far as lessons -- if your manager makes owning a single highly sought after security a big part of the pitch...be wary; don't mistake an SPV for direct, unfettered ownership; remember the other 85% of the strategy, don't just focus myopically on what's in the private sleeve; etc. Off the top of my head. Hope that's helpful. Thanks again for reading the post and commenting.
Great post. Very well researched. I am a small holder of XOVR, small enough so if I lose it won't hurt me. With the concentration in SpaceX having gone up quite a bit, and now at 44.5% of NAV due to sudden and massive redemptions, I am sure, I had thought about buying more. I don't need XOVR for the other positions. I have many of them myself. Like most, I wanted SpaceX exposure. Now there is more than ever according to the Holdings page on their website. Is the 44.5% even possible for an ETF? Has the SEC opened an investigation? It sure smells a bit like fraud
Thanks for reading the post. Based on the ETF's own reporting, they have a 40%+ stake in an SPV that offers exposure to SpaceX. This well exceeds the 15% limit on illiquid positions. Nonetheless, that's what they're reporting. I do not know the answer to your question re the SEC.
What are the odds that they put money in the SPV but the SPV has yet to acquire any SpaceX shares? Or that the SPV has unclear or disputed ownership of shares and thus cannot fully value them? Either way, their disclosures are entirely insufficient for a 40 act product.
Thanks for reading and commenting. I'd put very low odds on that -- I think they have had indirect access to SpaceX shares from the start. But you're hitting on the key point -- how much effective exposure have they had? I have no idea what the terms have been but doesn't seem inconceivable that a combination of onerous fees and dilution made it very difficult for them to mark the position to market/latest tender offer. Why that was less true of their very first mark-up in Dec. 2024, I don't know. But one of the more mystifying aspects of this has been their failure to mark up from $185 per share and if there were structural features that were precluding that then it would make more sense. But I can only hazard guesses.
Thanks again for reading and commenting.
Regards,
Jeff
Great point, and something I had considered as well, that the SPV was a fraud and they found out they really didn't have what they thought they had purchased. And why an SPV anyway?! There are a lot of ways for investment vehicles to acquire private shares today. Forge is one exchange for accredited institutions. There are several others. Just buy private shares and not some SPV that might or might not have a claim on actual shares
Terrific piece. Thank you for sharing your insights. Are we assuming underlying valuation and NAV calculation are both reliable after the 'reset', and therefore the disconnect between SPACEX valuation uplift and NAV adjustment has to be down to the terms of the SPV? Are there requirements on SPV terms disclosure for ETFs? How can we apply lessons learned here to evaluation of other ETFs?
Thanks. Given the history, I don't think I'd consider it reliable. We are really in the dark about the past and present terms of the SPVs. So yes it could come down to that--fees, dilution, etc. As far as requirements around SPV disclosure -- I don't have knowledge in that area. I am assuming that they are satisfying the requirements and if that's the case then I'd say this serves as kind of a case study in inadequacy of the reporting standards. As far as lessons -- if your manager makes owning a single highly sought after security a big part of the pitch...be wary; don't mistake an SPV for direct, unfettered ownership; remember the other 85% of the strategy, don't just focus myopically on what's in the private sleeve; etc. Off the top of my head. Hope that's helpful. Thanks again for reading the post and commenting.
Great post. Very well researched. I am a small holder of XOVR, small enough so if I lose it won't hurt me. With the concentration in SpaceX having gone up quite a bit, and now at 44.5% of NAV due to sudden and massive redemptions, I am sure, I had thought about buying more. I don't need XOVR for the other positions. I have many of them myself. Like most, I wanted SpaceX exposure. Now there is more than ever according to the Holdings page on their website. Is the 44.5% even possible for an ETF? Has the SEC opened an investigation? It sure smells a bit like fraud
Thanks for reading the post. Based on the ETF's own reporting, they have a 40%+ stake in an SPV that offers exposure to SpaceX. This well exceeds the 15% limit on illiquid positions. Nonetheless, that's what they're reporting. I do not know the answer to your question re the SEC.