The Buried $150B Bet Inside the Top 20 U.S. Stocks

**SPEAKER_1** (0:00)
The rise of ETFs has transformed the model portfolio from a one-size-fits-all solution into a highly customizable offering. Join BlackRock at the break to hear Elise Terry, Managing Director and Head of US iShares at BlackRock, explain how this flexibility allows advisors to deliver more personalized advice and deepen their client relationships.

**Telis Demos** (0:25)
Hi, everyone. I'm Telis Demos. Welcome to another episode of WSJ's Take On the Week. We've got another special episode. We've been doing a lot of special episodes lately. It's summertime, you know, so you've got to you got to mix it up. And so I'm joined today by Spencer Jakab.
You've heard his voice on WSJ podcast many times. Spencer, welcome.

**Spencer Jakab** (0:43)
Hey, thanks for having me.

**Telis Demos** (0:44)
For those who don't know, Spencer. Well, Spencer was my editor on Heard on the Street for a long time. And now Spencer writes our morning Markets AM newsletter.
So what is your title officially these days?

**Spencer Jakab** (0:59)
I'm a newsletter guy.

**SPEAKER_1** (1:00)
Newsletter guy.

**Spencer Jakab** (1:01)
Head newsletter guy in charge. Yeah, it's still free, by the way, for anyone listening. Just Google Markets AM and you can get it.

**Telis Demos** (1:08)
It's a fantastic read. I do. I do. If you're not already getting it, you absolutely should.
And so today we wanted to talk about the reason I brought Spencer in is because he wrote something really interesting lately about the role that private markets are playing in what's going on in the public markets. And I also came across some really interesting research on this topic from our guest, Kaitlin Hendrix. Kaitlin, hello. Hi.

**Kaitlin Hendrix** (1:31)
Thanks for having me.

**Telis Demos** (1:33)
Kaitlin is the Asset Allocation Research Director at Dimensional Fund Advisors.
And I know in this show we've been talking a lot lately about the IPO market and looking at companies that recently transitioned from the private market to the public market, such as SpaceX, for example, right? And so looking at SpaceX and what's happened to it, it's now trading actually below its IPO price as we're talking now. So it went up a bunch. Now it's back down. And so, you know, you might wonder, like, well, who made money in SpaceX, right? Because even if you'd bought it in the IPO, you wouldn't have. Well, if you'd bought it way before it went public, when it was a tiny private company, when it was still just sort of a germ of an idea and you had somehow gotten your hands on some stock, well, you'd probably still be making money, right? Somebody, I mean, just a trillion dollar company, somebody made money there, right? And so all of this talk of the IPO markets maybe begs the question of whether or not we should be looking at actually these companies way sooner in the private markets. And there's no shortage of people these days who will urge you to invest in the private markets. There are funds that focus on that. So I wanted to dive a little deeper into that topic. And like I said, Spencer had been writing about it. And Kaitlin, the thing that I came across that you wrote that jumped out at me was about private market exposure in the public markets. I thought this was a really interesting way to look at it.
So tell me about what you were writing about.

**Kaitlin Hendrix** (2:55)
Yeah, it's hard to unpack, but we looked at the 20 largest US companies, which account, by the way, for 40% of the market cap in the US.,
and we said these companies have exposure to a lot of private companies. So you think about trying to get in early.
Alphabet, Amazon, Nvidia all have multi-billion dollar stakes in Anthropic. So that direct investment is a way that everyday investors who are buying those large public companies can have this indirect exposure to those private companies. And so we dug into the accounting statements. We looked through all the 10Ks for these 20 companies, and we found about 100 to 150 billion dollars of direct investment in private companies. And so that's one way that investors can have that exposure.

**Telis Demos** (3:45)
So what's an example of that? What's an example of like a big public company that plays VC essentially, right? And buys stakes in private companies?

**Kaitlin Hendrix** (3:51)
Yes. So Anthropic is a big one. But then on top of that 100...

**Telis Demos** (3:54)
Who owns Anthropic? Like what big public company?

**Kaitlin Hendrix** (3:56)
Amazon, Alphabet, Microsoft, Nvidia. So a lot of these major names hold these stakes in Anthropic.

**Telis Demos** (4:03)
So when I have my S&P 500 index fund, which is over in there appropriately indexed, but very heavily weighted toward these companies, I'm getting that exposure as well, right?