The RSA and associated Term Sheet can be found here:

https://ir.echostar.com/static-files/7d22aa28-8f85-4694-b303-4547598dd8e1

As a reminder before we get into the details, the key drivers of our EchoStar valuation can be ranked in the following order:

1. SpaceX valuation

2. AT&T spectrum sale

3. Value of remaining spectrum

4. Ability to mitigate tax liabilities and lease termination costs

5. Legacy OpCo business (PayTV, Hughes, Retail Wireless)

This RSA (almost) exclusively concerns the legacy PayTV business.

TLDR: impact is neutral and has little bearing on our overall valuation.

It is mainly relevant in so far as it involves Parent support to a non-recourse segment and so for EchoStar to pursue this management must have visibility on a sale to DirectTV.

While it makes little difference on a numbers basis, the clean-up could facilitate a transition towards a “Space Investment HoldCo” as the Company repositions itself with a new shareholder base.

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The fear of a Private Credit induced systemic risk has sparked indiscriminate sell-off in financials across the board: Banks, BDCs and Alternative Asset Managers.

We’ve already touched upon in previous posts why we believe Alts do not belong in the same boat as Banks / BDCs. These are asset-light, high margin, fee-based businesses. Moreover the largest franchises today have effectively insulated themselves from any single point of failure through product and funding source diversification. Speak to large institutional LPs and they remain for the most part very positive on allocations to privates. These are multi-year decisions that do not get rebalanced overnight as a function of media sentiment.

It is not our job to argue with the market though and we will happily take what it offers. Some highlights:

• Blackstone: down 31% YTD and 47% off ATH

• Apollo: down 28% YTD and 45% off ATH

• KKR: down 33% YTD and 50% off ATH

While Alts are coming off arguably elevated levels, we are entering interesting territory relative to where these businesses have historically traded in terms of FRE multiples.

The debate when evaluating an appropriate multiple and differentiating between managers boils down to (and these are all correlated):

1. Growth prospects

2. Fee-stream stickiness and soft factors (reputation, process, goodwill)

Growth

Over the past 5 years the top franchises have experienced tremendous growth as the industry consolidated and the largest players disproportionally benefited from increasingly concentrated allocations from LPs.

Over that period AUM has grown >2x and which has turbo-charged FRE 2-5x. Worth noting that the mix of FRE has also “improved” in the sense that it has become predominantly weighted towards base management fees.

This is in contrast to their Private Equity origins (when performance fees were the main profit driver) but a necessary transformation as they became public entities (with higher multiples being assigned to predictable, long-term revenue streams).

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If you follow us on X you will know that we have advocated being long tankers since around October last year. Our thesis was anchored in improving fundamentals with the added asymmetric overlay that the sector stood to be a major beneficiary of continued geopolitical tension (and in particular ongoing developments in Venezuela / Iran).

Shipping is notoriously volatile and prone to boom and bust capital cycles due to (i) a primarily spot-based charter market and (ii) fragmented supply (shipyards) with a delayed 2-3 year newbuild cycle.

The two key drivers to look out for in the space are:

1. Ton-miles (distance covered)

2. Fleet supply (newbuild orderbook vs. scrapping)

The past decade has seen an increase in ton-miles for both crude carriers and product tankers as a result of rising long-haul flows and refinery closures. More recently concerns over a near-term oil glut has also helped shift the oil curve into contango thus incentivising demand from floating storage.

On the supply-side we are coming off a historically weak orderbook which has been offset by the development of the shadow fleet. These are non-compliant tankers being operated past their useful life of ~20 years and transporting sanctioned crude and refined products. The shadow fleet represents a very significant ~20% of the total fleet and the recent crackdown over the past few months has helped accelerate scrapping of these older vessels.

Prior to the Iran news, these developments have been playing out nicely. VLCC rates have skyrocketed past $100k / day and in 2026 we are so far operating at levels 2-4x the historical average over the past decade (!)

The names we have been tracking (Frontline, Scorpio Tankers, Hafnia, Torm) are all up 30-70% since October as at Friday close.

We impatiently wait for the Monday open to see the market reaction to the news. Whilst we believe a closure of the Strait of Hormuz (>30% of oil throughput) remains unlikely, the Iran news is unequivocally positive for the sector.

In the immediate term we will see re-routing, insurance premiums rise (or straight out cancelled) and perhaps an increase long-term charters as operators seek to secure supply. The Houthis have already resumed attacks on the Red Sea corridor which will drive product tanker rates higher as well.

In the medium term any regime-change will accelerate mass-scrapping of the shadow fleet and we will see further structural shifts in long-haul routes and refinery flows.

If the Strait of Hormuz were to be compromised even temporarily the spike in rates would be absolutely unprecedented

What do we do from here? We think an Iranian regime change does warrant a fundamental re-rate of the sector. We are also aware that current charter rates are planting the seeds for increased overbooks and will become increasingly cautious as things pick-up.

If you have been involved in this trade over the past 2-3 months, congrats.

We think trimming up to 50% into next weeks price action depending on the strength of the move is justified.

EchoStar ramping up

Bloomberg reported on Friday that SpaceX is looking to file for an IPO in the coming weeks, which keeps them on track for a June listing. Very much looking forward to getting our hands on the S-1! On a red day in the market SATS delivered a +10% intraday reversal on the news. Hopefully some of you managed to accumulate under $110 / share beforehand.

Bloomberg also reported a valuation target of $1.75T and we’ve updated the tables below to show what that that would look like.

We thing a $175-230/share range should be in play over the coming months.

As a point of reference SpaceX is now trading at a $1.64T valuation on Hyperliquid HIP-3 markets with annualised funding hovering around ~32% (in other words an implied forward valuation of ~$1.8T on a June IPO.

EchoStar will also be reporting earnings this coming week and we will be posting on our updated NAV ex-SpaceX views if there is anything material.

Nordic Semiconductor: the long game

Some anecdotal evidence over the past 1-2 weeks confirming to us that Nordic’s nRF9151 chip is well positioned to be the leading player in long-range low power IoT.

Firstly, Deutsche Telekom just launched the world's first multi-orbit IOT roaming (seamless coverage across cellular, LEO and GEO) using Nordic Semiconductor’s nRF9151 chip. As a reminder this is the first 3GPP-compliant cellular IoT module to support terrestrial NB-IoT/LTE-M as well as NB-NTN over GEO and LEO.

Additionally there was panel with META sparking speculation that Nordic’s long-range cellular solutions will have a role in future AI glasses architecture.

Nordic Semiconductor is a long-term hold for us. Its long-range segment only represents <10% of Nordic Semiconductor’s business today and we expect the stock to re-rate as their TAM within the space-enabled economy becomes clearer to everybody.

In the meantime, we continue to take downside protection comfort from the recent M&A of their closest competitor at levels implying a 3x from Nordic’s current share price.

Also because indiscriminate selling typically generates opportunities for anyone willing to do the work and look past the headlines.

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I’ve been critical of many aspects of the private credit bubble as GPs battle for AUM growth amid a “race to the bottom” in terms of underwriting standards.

The objective of this post is to briefly separate fact from fiction before taking a closer look at whether the current debacle is a source of opportunity.

For background I have >12 years experience at various Megafund GPs and am well-versed in the credit space. I regularly speak with major GPs and LPs.

Fact or Fiction: Private Credit is a larger share of the economy and underwriting standards have been deteriorating

Yes this is absolutely true. Bank regulation has allowed an entire non-bank lending ecosystem to develop and fill the vacuum. The AUM of Credit related strategies has effectively 10x’d since the GFC:

Private Credit truly accelerated when we went into a rate-hiking cycle. Equities and related strategies were getting hammered post Covid bubble. Meanwhile, there were opportunities to lend on a senior secured basis at SOFR + 700-900 implying all-in rates at >12% in cash flowing businesses. This type of product is incredibly attractive to large institutional LPs that need to deploy at scale and are downside protection oriented.

GPs were scrambling for exposure, those that were behind such as Caryle were offering zero incentive fees to LPs.

A ton of capital went into the space that subsequently needed to be deployed. Meanwhile competition from banks and recovering capital markets shifted the supply demand balance. Past 24-36 months we have seen a significant amount of spread compression, weaker documentation (cov-lite loans) and an increase in the use of PIK interest (non-cash, back-ended interest).

Fact or Fiction: Private Credit is a systemic risk

The media and X are always quick to jump to extremes though when the reality is much more nuanced.

To answer this question, lets remind ourselves of the fundamental difference between GPs, BDCs and Banks and where the end-risk lies:

Banks: make money by earning an excess spread on its customer deposits.

Banks operate on a fractional reserve model and are often leveraged up to 10-1. Any default in its loan book directly affects its P&L. Customer deposits are FDIC insured but only up to a certain amount. Post GFC regulatory capital requirements are much more restrictive. Banks need to carefully manage duration given the short-term nature of deposits.

Alternative Investment GPs: asset-light fee based model, manage capital on behalf of third-party clients

Large GPs will be diversified across several verticals (Private Equity, Real Estate, Credit, Infrastructure, Secondaries etc.). Other than a small GP commitment, they do not put their balance sheet at risk.

Instead they raise capital, predominantly from institutional LPs ranging from SWFs to Pension Funds to Family Offices. Unlike with bank customer deposits, these LPs are specifically seeking investment returns in a given strategy.

In Private Credit the GP will earn a fee stream on the fund split between management (~1-1.5% of AUM) and incentive (8-10% subject to outperforming a hurdle of ~6% over the fund-life). This model is effectively borrowed from classic Private Equity fund structures, except with lower fees.

In particular the incentive fee is much less meaningful given a fund’s target MOIC will typically be closer to 1.3x than 2.0x and as a result Private Credit has predominantly been an AUM game.

Most funds are “closed-end”. This means that there are no redemption mechanics and LPs only get their capital back once the fund is past its investment period and starts liquidating assets.

In addition to closed-end fund structures, GPs in general have been looking for ways to accumulate more AUM by accessing new pools of capital and generate product offerings with different duration profiles. Interval Funds, BDCs are all a product of this.

BDCs are just a subset of vehicles managed by Private Credit GPs.

BDCs are wrapper enabling a broader base of investors to participate in a given strategy. BDCs can be publicly traded (with liquidity available through the secondary market) or not (in which case there are typically redemption rights at NAV subject to % of NAV limitations). These vehicles make sense for GPs as they offer evergreen (semi-permanent) capital pools off which they earn a management fee in addition to accessing a more diverse investor base.

So is this systemic?

In the case of the GFC, bank balance sheets were significantly levered and customer deposits were at risk given the excessive push into subprime mortgage origination and trading. A 1% negative move could effectively wipe out the entire market cap of the bank.

A typical Private Credit fund is much more akin to Private Equity or VC in that the end-risk sits with LPs and while there may be some moderate use of leverage, we are talking maybe 30-40% on a Private Credit strategy where the underlying itself is typically <50% LTV, so call it <25% see-through LTV.

Fundamentally loan losses will tend to track the broader credit cycle:

Let’s say a Private Credit fund experiences defaults of 15% in its fund (which would match GFC levels), then you could still expect it to return ~1x to LPs on an unlevered basis (interest, par repayments, sub-par recoveries).

This is no different from any given investment strategy offering sub-par returns to investors. A 4% move in the S&P is $2.5T which is larger than all the credit-related AUM. If GIC, QIA, Norges suffered a 2% loss on their assets would that be systemic to the US economy?

The reason the topic blew up this week was to do with one of Blue Owl’s non-traded BDCs in the face of potentially accelerated redemptions. This is a typical duration mismatch issue and the reason why I tend to disagree with evergreen type vehicles for illiquid products. This does not mean that the underlying loans are all zeros (again, look at default rates through the credit cycle…).

To put into perspective here are the performance metrics through 2025 in their credit segment:

What happened with OBDC II is quite similar to what happened with Blackstone on BREIT (I would argue that was worse).

When retail investors (even if HNW) are affected the topic always gets more political but is it fundamentally different folks losing millions on SPACs or Crypto? Is there a trigger for this to be too big to fail (large derivative exposure, housing crisis, customer deposits at risk)?

To me if there is a canary in the coal mine in the broader credit space it is potentially with life insurance where an excessive amount of product is being placed with sometimes creative ratings practices, but so far when I look at the metrics there is nothing that raises alarm bells to me.

$OBDC, Blue Owl’s largest listed BDC

Take Blue Owl Capital Corp which is Blue Owl’s largest publicly traded BDC.

If you actually comb through the underlying metrics you will see that:

• 79% of its underlying assets are senior secured loans

• It only has 11% exposure to SAAS

• Interest coverage on its portfolio is 2x

• Book is mostly cash pay, almost no PIK

Right now OBDC is trading at an implied 13% debt yield which is quite attractive. I am keeping tabs on this name as well as other BDCs. The key is to properly filter through the ones that have the higher quality loan books. The information is all readily available for those willing to do the work.

What about the asset managers and at what point is OWL a buy?

Big picture GPs have fantastic business models. They generate high margin, toll-like income on a very scalable business. Shares have gone up 3-5x over the past 5 years and so I believe a lot of the sell-off is related to multiple compression as expectations around AUM growth temper. Again, they do not experience P&L the way a bank does if their funds do poorly. The management fee is there no matter what. The main question is whether they can keep on raising funds and growing AUM. So far, the trend has been for large GPs to get larger as LPs have been concentrating their allocations. I expect this to continue to be the case.

Having said this, I don’t think they are particularly cheap despite the recent sell-off. Blue Owl on the other hand looks potentially very interesting particularly if it keeps selling off and gets to the $8-9/share range. Two points to note:

1) While 60% of its FRE is credit, it operates two other segments including a GP stakes business (formerly Dyal) which is a unique segment in a market where GPs have been actively consolidating north of >15x FRE

2) At 11x FRE $OWL is trading at a hefty discount to peers. I think there is a valid debate in terms of the multiple that you would ascribe on its direct-lending operations in a worst case scenario with accelerated redemption on its non-traded BDCs (which is a subset of a subset)

I think the non-credit business is worth at least $8B (15x GP stakes, 12x Real Assets) and there would be considerable appetite from the likes of $BAM $BN

You are then creating the residual credit business at 4.5-6.2x FRE which even in a run-off scenario is very attractive.

“What the wise man does in the beginning, the fool does in the end.”

Stay in the investing world long enough and you will develop a fierce ability for pattern recognition. New narratives, same capital cycles and investor behaviour.

CVC is staring at a massive write-down on its €1.5B investment in the French Football Ligue’s commercial rights after less than 3 years.

Ares has marked its residual loan in Eagle Holdings, owner of French club Olympique Lyonnais, down to 32c.

In each instance both firms were latching on to a headline thematic while wearing blinders to its evolving nuances.

This is what happens when an asset class gains in popularity, invites excess capital and spawns an ecosystem incentivised to do deals.

In Part 1, I leverage French public disclosures to re-underwrite the CVC deal.

This short exposé is also intended to illustrate 3 investing takeaways:

1. Thematic exposure to an upcycle is only half the battle

2. Deep in a trend, nuance matters

3. Value (almost) always accrues to the top

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The Golden Era of Media Sports Rights

For the past few decades major sports assets significantly outperformed the S&P. This phenomenon accelerated in 2012 as live sports became a core differentiator for cable networks battling content unbundling through the emergence of OTT services.

NBA and NFL franchises experienced a meteoric rise with valuations returning 6-8x on the back of blockbuster broadcasting deals.

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Sk Square

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Investor letters can be a great source of investment ideas but you always have to do your own work (no matter the investment hero).

Let’s breakdown the thesis before running some numbers on potential outcomes.

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Layers of discount

As I alluded to in my X post I am usually wary of one dimensional NAV discount stories. There are countless listed HoldCos, REITS, closed-end funds and more that languish in sideways price action with no real catalyst or momentum.

What made SK Square immediately interesting to me is that there are 3 embedded layers of discount here and each one has a plausible potential to re-rate:

1. SK Hynix: memory cycle re-rate

2. SK Hynix: Korea discount

3. SK Square: HoldCo (+ Korea) discount

Memory cycle re-rate

SK Hynix is one of three key players in DRAM memory alongside Samsung and Micron in what has historically been a very cyclical and commoditised industry characterised by brutal price swings.

The supply shortage and strategic nature of memory chips in AI inference and compute has been well documented by now and is at the heart of what many argue to be a structural shift away from past cycles.

SK Hynix in particular is the leader in high bandwidth memory (HBM) with a >50% market share. Most notably, HBM is driving a disproportionate amount of AI compute demand growth and is characterised by added complexity compared to traditional DDRx DRAM, resulting in significant pricing premium (in the range of 3-5x).

Whilst we can debate the stickiness and differentiation of the HBM market within the new paradigm of AI compute, an interesting side note is that the memory boom of the early 90s (which was characterised by significantly more intense competition) resulted in at least 5 years of upcycle.

The Korea discount

The South Korean stock market has perennially traded at a discount to global peers for reasons as diverse as Chaebol market structure, corporate governance concerns, capital allocation efficiency and market access. Similar to what we have been seeing in Japan in recent years, there has been a strong desire from the government to shed legacy concerns and appeal to both domestic and foreign investors. In 2024 South Korea introduced the Corporate Value-Up Program with a view to incentive corporate transparency and shareholder alignment on core KPIs. While the jury is still out on the full effectiveness of these measures, South Korea has been one of the top-performing stock markets since the end of 2024. Even with this rally however the discount still persists.

SK Hynix is no exception to the rule. Despite its technological leadership in HBM which should arguably place it at an advantage versus peers, SK Hynix currently trades at only 6.1x 2026E consensus earnings compared to a forward P/E closer to 12x for Micron.

Independent of whether the South Korean market continues on its upward trajectory, SK Hynix is considering issuing an ADR which could also be a significant catalyst in helping close the valuation gap.

HoldCo discount

In late 2024 Sk Square released its 2025 Value-Up plan in which it identifies the reduction of the HoldCo NAV discount as the single most important KPI.

In addition to specifying a medium-term target of 30%, management have made share buybacks an important component of their overall strategy. Considering SK Hynix constitutes >96% of SK Square’s NAV and is the second largest and most liquid component of the KOSPI, it stands to reason that SK Square’s discount should be at the lower-end of peers (note: we think ~30% is reasonable as it also implicitly allows for CGT and other leakage).

One suggestion Third Point puts forward as a strategy to take advantage of the HoldCo discount in the short-term is to raise capital collateralised by SK Hynix to repurchase shares in SK Squared. Doing so at these levels would be very attractive and by compounding the discount at both levels this could also be its own catalyst towards driving the medium term NAV discount lower.

Putting it all together

I have re-created the SK Square NAV analysis updated as at 10-Feb-26. Note that outside of SK Hynix, the remaining holdings are predominantly private investments which are marked at historical deal values. We assume these are static and given these represent less than 4% of NAV have minimal impact on the analysis.

In our “base case” we are assuming a SK Hynix margin loan at 20% LTV resulting in KRW 26T which SK Square utilises to repurchase its shares at a level ~7.5% north of current prices. This would equate to a 32.7% reduction in shares outstanding. We then take the 2026E Bloomberg consensus earnings and apply a 9.0x multiple which is the mid-point between SK Hynix and Micron today. If the Company can hit its 30% NAV discount target, this would result in a price per share of KRW 1,342,264 which would represent a 141% uplift.

I do not think these assumptions are particularly heroic and could in fact surprise to the upside if SK Hynix continues to beat expectations.

We love situations like this where we are buying value but there is a real opportunity for momentum and positive reflexivity.

We are making the underlying excel available to paid subscribers, please feel free to download and play around with your own assumptions on this one.

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Despite obvious contagion risk, the prevailing view at the time was that the universe was bifurcated towards the "strong" and "weak"

Whilst Evergrande dragged the weaker developers down with it, there was a flight to safety to what the market considered to be "blue-chip" developers

This created a very interesting 3-4 months window where a handful of China RE bonds were trading at or even above par

In January 2022, the bonds of Logan for example were trading well above par at ~104

What was the probability at that time that China would see a prolonged real estate downturn?

The trade set-up was straightforward: short Logan bonds (and comparable names) at 104 with a very low cost of carry (~1-2% per annum) and a high degree of probability that the contagion would worsen within a short time frame

Sure enough, Logan bonds traded all the way down to 27c in the space of 9 months

Example 2: $SATS Convertible Bonds (EchoStar)

Only 8 months ago, you could buy $SATS 2030 convertible bonds in the low 90s at an implied YTM (yield to maturity) of ~6%

This was in the midst of the FCC debacle where the forced shift in business model created some capital structure dislocation

The advantage with credit is that, so long as you do the fundamental work right you are rewarded with defined return profiles and hard catalysts (maturity dates)

A sharp analyst will have done the work around the strategic value of the spectrum licenses and taken a view around the probability and extent to which the converts could get back ITM (in addition to being fully comfortable that the 2030s were par paper in any liquidation)

So you essentially had an uncapped return profile to the upside where at worst you were clipping your 6% YTM

Of course we know what a blockbuster trade this ended up being with converts up 3.7x from trough in less than a year

Asymmetry is the holy grail which underpins low drawdown / high sharpe track records. Having many instruments in your toolkit and knowing how to best express a view is what defines a great money manager

A 10x in the making: on the cusp of a multi-year re-rate

Nordic Semiconductor (NOD.OL $2.5B mkt. cap) is a fabless semiconductor company based in Norway with a market leading position in the IoT connectivity market (specifically low-power wireless).

On an LTM (Sep’25) basis Nordic generated $60m EBITDA on $648m of sales.

Its closest comp, Silicon Labs ($742m LTM Sales but negative EBITDA) is in the process of getting acquired by Texas Instrument for $7.5b ($4.9B market cap pre-offer). This represents roughly 3x the size of NOD despite NOD being of similar size and profitable.

We think a 3x outcome would be a low case for NOD.

The market is fundamentally under appreciating the Company’s mid to long-term potential and is evaluating its prospects based on a legacy model:

• Workhorse nRF52 chip (90% of sales) that has low wallet share (1$ ASP)

• Hardware only business tied to cyclical volumes

• High fixed cost base resulting at times in negative operating leverage

• Multiples “look rich” at face value on a look back basis

Our variant perception:

• Technology leader in the midst of product roll-out after years of R&D

• Recent M&A positions it as a full stack player (hardware, software, cloud)

• New TAM in EdgeAI and Satellite IoT is heavily discounted

As a result we expect double-stacked growth from (i) significantly increased wallet capture and (ii) to 8-10% volume growth from fast-evolving end-markets.

We anticipate “New NOD” to compound its revenue base to >$4B by 2030 with significantly improved operating leverage to boot, resulting in a ~$30B Company.

We also like the fact that the stock is listed on the Oslo Stock Exchange leaving further re-rate potential as the stock gains broader global recognition.

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Echostar Nav And Spacex Ipo Sensitivity (updatedvf)

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Around September last year we saw a take-private of Electronic Arts.

At first glance this transaction was most notable for its headline EV of $55B. A consortium of PIF, Silverlake and Affinity were able to cajole together an equity ticket of $36B to fund the largest LBO in history, topping the infamous KKR-TPG led takeover of TXU which marked the peak of the market pre-GFC.

Buyouts are back, baby!

Digging deeper

What subsequently piqued the interest of eagle-eyed observers was less obvious. One instrument within the EA capital structure, the 2051 bonds, had a CoC (change of control) put at par.

Clearly no one trading these bonds ever believed there was a remote chance in hell a Company of this size would ever get taken private. As such, they were trading on a YTM (yield-to-maturity) basis and given the long duration / low coupon combo in a higher rate environment this meant that the dollar price for the bonds was in the 60s.

The bonds subsequently gapped up 30 points on the day of the announcement. What a boon for all those real money bond holders who thought they were just clipping a coupon!

This led me to investigate further as to whether there were any other large cap issuers with similar duration bonds benefiting from CoC provisions.

My screen returned two names, namely eBay and, you’ve guessed it, PayPal.

An alternative trade on PayPal

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The interplay of scarcity, legacy and nascent markets offer ripe conditions for the discerning arbitrageur

What if you could long SpaceX at an implied $500B valuation and lock-in a valuation of $1.5T? Today we are going to look to at how to take advantage of the emergence of HIP-3 markets to construct trade set-ups with unique R/R profiles.

1. Hyperliquid and the growth of HIP-3 markets

For the purpose of this post I will assume that you are reasonably familiar with Hyperliquid and perpetual forwards. If you are coming from CT you can skip directly to Section 2. The brief summary is included below but for a more detailed overview you can refer to: https://hyperfoundation.org/

Hyperliquid is a decentralised exchange (DEX) which has now reached $3.8T in cumulative notional trading volume. What has underpinned its growth in market share is the team’s relentless focus on infrastructure and user experience which has now arguably surpassed that of traditional CEXs such as Binance or Bybit (all while being transparent and permissionless).

Hyperliquid has been a key innovator in the space and is at the forefront of becoming the “everything exchange”.

Here is a clip of Bob Diamond (former Barclays CEO) discussing Hyperliquid:

Perpetual forwards (along with stablecoins) have been one of crypto’s stickiest and notable inventions. At a basic level it allows parties to get notional exposure to an underlying asset (long or short) with no associated expiry. A funding rate mechanism is in place to ensure the trading price is closely linked to the underlying. When notional longs exceed shorts, the funding rate is positive and is paid to the shorts (and vice-versa).

Recently Hyperliquid introduced HIP-3, enabling new markets to be built on top of its platform. This includes equities, commodities and more relevant to our topic of the day: pre-IPO markets.

In a short amount of time HIP-3 markets have exploded in volume reaching over $4B in Daily Traded Volume this week. In other words these markets are getting increasingly liquid, while still being relatively nascent. Ripe for opportunity.

For a more mathematical overview of Perpetual Forwards and why we believe trading of equity perpetuals will soon crossover to TradFi and dominate existing derivative products, you can refer to the below article from Jez (@izebel_eth on X).

oldcoin bad, newcoin good

Non-Arbitrage Conditions for Perpetual Forwards

This paper explores how a perpetual future’s mark price should respond to known future changes in oracle price. This will be a common scenario as equity perpetual oracles handle rolling contracts, with pronounced effects for high dividend paying stocks. The solution is to found stepping backwards using non-arbitrage conditions. We show that under such c…

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5 months ago · 53 likes · jez

2. SpaceX on HIP-3

Lets take a look more specifically at the market for SpaceX.

Currently one can buy SpaceX shares at a valuation of $1.26T.

Given the high demand to get long, the annualised borrow or funding rate is elevated at 40.5%. In other words, longs have to pay shorts 40.5% per annum on their notional exposure in order to remain long.

Given that pre-IPO markets are characterized by a clear “event”, the IPO, one way to think about this is the implied forward valuation of SpaceX shares which is a function of a) current valuation b) funding rate and c) expected IPO date. In other terms for longs to breakeven, given the carry costs, they would require SpaceX to IPO north of $1.45T by June (rumoured IPO date). If the IPO were to be delayed till Dec-26, this would rise to $1.85T.

Below is a range of implied forward valuations based on the current price, varying funding rates and IPO dates:

Looking at it from the short side, you are accruing positive carry and the further the IPO date gets pushed out the more “in the money” the position is.

This construct is very attractive and allows us to implicitly hedge any long exposure against both time decay and valuation.

As a side note, I prefer equity perps as the more nuanced and flexible tool as compared to prediction markets. An additional benefit of setting this trade up on Hyperliquid HIP-3 is the speculation that the next airdrop will skew rewards towards HIP-3 market participants. The first $HYPE airdrop was perhaps the most profitable of all time (and the overall prospects for $HYPE will be the topic of another post in the future).

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So the stars are aligning and we finally have a timeline on a potential SpaceX IPO. Followers on X will know that we have been involved in EchoStar since the original spectrum sale to SpaceX was announced back in September and we cannot be more excited for what 2026 has in store for the name. 

While the share price was languishing in the $70-80 zone, we were banging our fist on the table at the opportunity of investing in an “orphan” entity (having been a distressed capital structure for sometime) transitioning to the number one vehicle of choice for possibly the most anticipated IPO ever - a rare combination of deep value meets hyper growth and the definition of a true asymmetric set-up.

With some more clarity on timeline and valuation and with the recent pull-back to $113 / share, the R/R today looks arguably even better.

Firstly, let’s recap our NAV calculation for EchoStar and in particular the non-SpaceX component.

Updated NAV Analysis

Let's dive deeper into some of the swing factors at play:

1) Value ex-Space X:

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