Anthropic IPO Could Mark a Generational Moment for Founder-Led Investing

Nicole (0:00)

It's time for our ETF watch list. Joining me right here on set, we're happy to have with us Michael Monaghan, Partner and Portfolio Manager at Founder ETFs. I'm so glad that you are with us. And we think about the founders and how much they love their babies and what they've created. So let's talk about ETF growth overall and some of the trends you're seeing. Before I get to the FFF, just some of the trends you're seeing in the world of ETFs, Michael.

Michael Monaghan (0:26)

Great to be here, Nicole. So we're having record inflows into ETFs. I feel like there's a new one launched every day or tens of launch or even some of these companies are launching hundreds of them. But it's a crowded space, but the level of high quality products tends to be fairly concentrated. And so that's where we're playing and we really encourage others to play.

Nicole (0:46)

Understood. So the records are there. We've seen that we saw it last year and you're seeing it again this year. Folks are moving into these ETFs.

Yours, the Triple F. Tell us a little bit about that one and how that is fairing. In fact, I saw that you were outpacing the S&P since the war began. Tell me a little bit about that.

Michael Monaghan (1:05)

The Founders 100 invest in the 100 best founder led companies. The reason we chose that as a durable investment factor, founders over very long periods of time tend to outperform non-founders by about 4 percent CAGR. So if you think of the S&P compounding at, say, 8 to 10 over very long periods of time, a strategy like ours with the same risk profile should be able to compound at, say, 12 to 14 percent. And I'm really happy you brought up the question of the war, because a lot of people ask, how do you perform in an uncertain environment? And since the war started, we've really shown that these founders can maneuver in an uncertain environment.

Nicole (1:40)

And obviously, they have so much skin in the game too. You know, it's their heart and their money, right? And you're following names and some of the names that are in here, Mark Zuckerberg's Meta and Michael Dell and Elon Musk and his companies, CrowdStrike, Viking.

Did you want to feature any of those or just some of how these headlines go and how you decipher the top holdings?

Michael Monaghan (2:01)

Yeah, so one of the things that we're trying to do is, you know, not necessarily be smarter than the market. So what we've done is we've said there's a very robust area of the market. That's where we're going to pick stocks from. The way we pick them was we start with the 200 largest by market cap. And we run a fundamental quant model over the top of that, which we pick, which picks out what we believe to be the 100 best. And then we rebalance that quarterly. If a founder leaves, we sell the stock. And if a great new IPO comes in like SpaceX, we add it to the portfolio.

Nicole (2:33)

Well, you're also watching Anthropic. You said that that IPO, right? That's a mega one that you have on your radar as well. What are you expecting?

Michael Monaghan (2:42)

Yeah, we think Anthropic will be very well received by the market. I think the first sort of trial balloon valuation that bankers are talking about is 2 trillion.

I think when the S1 comes out and the roadshow documents, I think they'll be talking about say 100 billion a year of annualized run rate. This is the fastest growing company. I just got done talking to my old friend, Jeff Bernstein, about what makes a great generational company, and it has to radically change consumer or business behavior. I think Anthropic is doing both of those.

Nicole (3:18)

Yeah, I saw you also have other names, CrowdStrike, Shopify, Dell, I mentioned already, Nvidia is in there, and Carpet Palantir, so all those founders. When you look at things, I know you're watching the rate environment, and oil, and how people are investing. How interested are you in the daily headlines, or is that noise? Because the founders have so much skin in the game, that's less important.

Michael Monaghan (3:42)

I think, Nicole, that's my favorite question, is we've built a strategy that pulls us away from the daily, weekly, and monthly noise, and we can invest in these great founders over very long periods of time. We don't have to worry about the rate environment. We don't have to worry about the macro environment, because our founders tend to navigate, and any of those rate changes over very long periods of time, you don't even see them in the long-term stock charts. So we've built a strategy that allows us to escape the daily, weekly, and monthly noise.