We’ll be selling our shares in these companies after IPO - for tax-free gains.
We’ve been invested in SpaceX, OpenAI, and Anthropic for some time, and the growth has been exceptional.
When high-growth, pure-play companies go public, they often trade at silly prices as investors bid them up.
People buy stories.
They chase what’s hot.
Ignore valuation.
SpaceX is an incredible company.
That doesn’t automatically make it a great stock.
Your long-term return depends on two things:
- The earnings the business produces
- The price you pay for those earnings
I’m more than happy to sell our shares into those valuations and recycle the proceeds into opportunities that are more reasonably priced.
Normally, that kind of turnover would create significant tax drag.
But we generally hold these investments inside retirement accounts - preferably Roth IRAs.
That means when we sell after an IPO and redeploy the capital, the gains are tax-free inside a Roth and tax-deferred inside a traditional IRA.
If retirement account space is limited, you can still pair private equity with tax-aware long/short SMAs in taxable accounts to help offset gains and improve the overall tax picture.
So yes, I view these IPOs as exit liquidity.
And I’m all for it.