Bi-monthly investor update 6th November 2021


## **What we bought**

### Stripe (Unicorn startup)

Stripe dominates the online payment industry. I've worked in some very well-run companies but Stripe's execution puts them to shame. We invested at a valuation of $205 billion in a secondary transaction and are going to increase allocation to $1 million in the next few months.

### Vacation rental properties (Real estate)

We've increased our allocation to vacation rental properties to around 2% of the fund. The investment capital is used to purchase and renovate properties that are listed on websites like Airbnb and earn when they're rented by travelers. We estimate rental yields of ~28% pre-tax.

### Data center in Hong Kong

Southeast Asia is the fastest-growing market for internet usage. Broadband use in the region is up 60% in the last two years. Tech companies are rushing to house their servers in the region in order to reduce latency (time -taken for bits of information to travel from their servers to the user's device). We've invested in a special-purpose vehicle along with other institutional investors who will own a data center in Hong Kong. The data center is dedicated to being used by 9 large tech companies and has a lease locked in for 15 years with rental income due to increase at 6% each year. We project returns of 21.7% IRR for the next decade.

![Graph illustrating the monthly average household broadband usage](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636288571-nov-6-page-4.webp)

## **What we sold**

### Bitcoin (Cryptocurrencies)

We reduced our exposure to Bitcoin in a routine rebalance. My heart aches every time I'm forced to sell our best-performing asset but to rein in the volatility of the fund, it is important to keep crypto holdings below 15%. Crypto holdings are 17% of the portfolio and reducing every day. We continue holding Ethereum.

### PayTM (Unicorn startups)

PayTM is the ubiquitous Indian payment super app. The company has filed to go public in India and local regulations do now allow investors to exit their holdings for 1-year post-IPO. In order to reduce liquidity risk, we have exited 25% of our holdings and continue to hold the rest.

### Art NFTs

We have exited almost every art NFT that we owned. Art NFTs were all the rage in the first quarter of the year. After peaking in March 2021, the money flow into art NFTs dropped like a cliff. In light of this, we have exited all our art NFTs.

Moneyflow: a measure of actual dollars into an asset. Money flow is an important measure Hedonova uses to make investment decisions.

![Bar chart displaying NFT marketplaces' trading volumes in 2021, measured in millions of dollars](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636293215-nov-6-page-5.webp)

## **What we're exploring**

### Investing in racehorses?

We spoke to the team at [Commonwealth](https://www.joincommonwealth.com/), a horse ownership platform. Investors own a portfolio of horses that generate income from races, horse shows, and breeding. The philosophical dilemma here is whether this is a worthy investment or does it cross the line and should be considered gambling. I've made an investment in my personal capacity to learn the ins-and-out and will write about my thoughts in the coming weeks.

![Image of a man riding a horse](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636259764-mikayla-storms-9h-bjdgqzck-unsplash-1.webp)

### Real estate NFTs

We're in the midst of parenting with EstateProtocol. The company has an ambitious goal to put commercial real estate properties on the blockchain. We're in the process of doing due diligence on properties that will be listed on their platform.

Read the whitepaper: <https://estateprotocol.com/whitepaper#page-1>

![Estate Protocol and Hedonova logo](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636294065-nov-6-page-6-2.webp)

### Palantir ☒

In our last update, I wrote about considering an equity investment in Palantir. The reason we invest in the stock markets is to have adequate liquid assets in the fund to be able to honor redemptions as they arrive. We decided not to invest in Palantir's stock since for the last few months the stock has experienced low money flow and very low momentum.

![Palantir logo](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636294237-nov-6-page-7.webp)

### Worldcoin ☑

I wrote about the possibility of backing Worldcoin orb operators before the cryptocurrency goes mainstream. We can think of orb operators as similar to *miners* of Bitcoin. The returns in the first few years are higher and diminish with time. After speaking to multiple orb operators in Chile and Nigeria we've decided to back operators in developed Latin American countries with capital. More information on this later.

![A lady showing an orb to a man](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Bi-monthly%20investor%20update%206th%20November%202021/117214-1636294303-nov-6-page-8.webp)


Several investments were made and sold. The investments include increasing allocation to Stripe, a dominant player in the online payment industry, investing in vacation rental properties for high rental yields, and acquiring a data center in Hong Kong to benefit from the growing internet usage in Southeast Asia. The data center is leased to nine large tech companies, providing a projected return of 21.7% IRR over the next decade.

Bi-monthly investor update 6th November 2021

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