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Tren Griffin Profile picture
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9 Mar, 7 tweets, 3 min read
To obtain extra credit, please explain the process the buyers used to purchase these Twitter 0% convertible senior notes due 2026 (the "notes").

"Initial conversion price of approximately $130.03 per share."

You must show your work to get full credit. prnewswire.com/news-releases/…
"The low interest rate environment, coupled with high equity valuations and high volatility in markets amounts to a 'triumvirate' that leads to very attractive convertible pricing”, he said."

Answering "triumvirate" isn't an acceptable answer. Sorry. google.com/amp/s/amp.ft.c…
Is this statement correct? Use example based math to support your answer.

"market volatility also provided hedge funds with an opportunity to profit. They buy the convertible bonds of companies whose stock has soared and hedge their position by shorting." google.com/amp/s/mobile.r…
Howard Marks on convertible arbitrage (June 6, 2005) oaktreecapital.com/docs/default-s…
Ed Thorp on convertible arbitrage: google.com/amp/s/25iq.com…
I'm getting DMs asking for some help on doing the math to get full credit for an answer. You might want to use:

Package ‘RQuantLib’ cran.r-project.org/web/packages/R…

Or

Valuing Convertible Bonds Using QuantLib Python gouthamanbalaraman.com/blog/value-con…

You are welcome!
My Neighbor's Dog: "Twitter is monetizing volatility by selling convertible bonds since long-term call options on volatile stock can be valuable."

Me: "Hmm."

Neighbor's Dog: "No dividends reduces cost of shorts."

Me: "Seems like a lot of work. I put it in the 'too hard' pile."

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More from @trengriffin

Tren Griffin Profile picture
7 Mar
1/ Helping Bill Gates write his first two books was great fun for me. The process was an opportunity to ask him questions (eg, his experiences with DEC). He's usually reluctant to talk about the past but the book writing process was an exception. Here's a picture of a DEC PDP-10:
2/ “Under Ken Olsen, Digital pioneered the minicomputer and later scalable hardware architecture (VAX). When PCs became popular, Ken followed his engineering inclinations and built a better one — only better, in this case meant incompatible with the Intel standard." Bill Gates
3/ “Olsen accomplished an amazing amount. He persevered through ups and downs, driving things forward and had a commitment. DEC faced the challenges of a changing industry, but when you look back on what he did, it was very impressive. I actually grew up on a DEC computer.” BG
Read 8 tweets
Tren Griffin Profile picture
6 Mar
1/ I helped my late friend Dan Kohn write this essay in 2001:

"Items are 'nonrival" when we can all make use of them without anyone having to give them up. If I copy your CD, you’re none the worse for it (nonrival), but if I steal your car, you will probably be upset (rival)."
2/ "Goods are "nonexcludable" when it becomes impractical to stop everyone from making use of the item, once one person can...

....the cost of providing the item to one consumer [can be for some goods] the same as providing it to any number of consumers."tidbits.com/2001/10/22/ste…
3/ Mauboussin: "intangible assets have characteristics that are different from physical capital or
labor. ...intangible-based companies can defy the conventional economic concept of diminishing marginal returns and in fact realize increasing returns." morganstanley.com/im/publication…
Read 5 tweets
Tren Griffin Profile picture
6 Mar
What business is this?
What business is this? Both this business and the last business just filed a S-1.
Which business is Applovin
sec.gov/Archives/edgar…

Coursera sec.gov/Archives/edgar…
Read 4 tweets
Tren Griffin Profile picture
4 Mar
#10 came in a hot thermally given that flamethrower effect, but the touchdown of the metal was ~ soft. Iterative product development at this scale is fascinating to watch. That it landed at all is impressive engineering.

Rapid disassembly of #10 was hot! google.com/amp/s/www.cnbc… Image
What people focus on is the rocket (i.e., a tube filled with highly explosive materials) but by far the most important determinant of Starlink's success is the cost and performance of the ground terminals customers use. Vastly more cash will be spent on the ground than in space. Image
3/ More important than the #10 Starship soft landing would be the creation of high volume factory for the Starlink user terminals. A job posting suggests a ground terminal factory will be built in Austin. Solving a chicken and egg problem is a challenge. cnbc.com/2021/03/02/spa…
Read 5 tweets
Tren Griffin Profile picture
1 Mar
This podcast with John Malone is self-recommending. He describes Bill Gates arriving for a meeting with a pizza and a beer 6-pack telling him to "Forget hardware since there's nothing in hardware that can't be emulated in software." Malone: "Damn, I should have listened to him."
If you don't at least bookmark this John Malone interview you are a damn fool. If you pay attention you can hear someone with a circle of competence mindset. For example, generating value as an operator who understands cash flow and leverage isn't the same skill as stock picking.
John Malone: "Every business comes down to the quality of the management. It is not important that I know the business, but it is important that they know the business. I can help them with finance, but they need to have the vision, the drive and the team building skills."
Read 14 tweets
Tren Griffin Profile picture
28 Feb
1/ Warren Buffett yesterday:

"The best results occur at companies that require minimal assets to conduct high-margin businesses – and offer goods or services that will expand their sales volume with only minor needs for additional capital."

Who are these businesses?
2/ Michael Mauboussin describes the types of businesses which rely on intangible assets in this chart from his recent post: morganstanley.com/im/publication… Image
3/ "Berkshire’s depreciated cost of [its] domestic “fixed assets” is $154 billion....Berkshire owns American-based property, plant and equipment – the sort of assets that make up the “business infrastructure” of our country – exceeding the amount owned by any other U.S. company."
Read 6 tweets

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