Is that the right way to view it? If you believe Listerine isn't going anywhere, at that price you're making a reliable 7.5% return that should track with inflation. On something you presumably could sell just as easily as you bought. Doesn't sound that bad!
You can earn LIBOR + 7% on a BB rated CLO (Collateralized Loan Obligation) bond. Since you earning a floating rate (LIBOR) plus 7%, you would be far better protected against interest rate increases. The Listerine royalty is a perpetuity, which means that its value declines very rapidly when interest rates increase.
The value of the Listerine royalty has some natural immunity to inflation because the price of Listerine would increase with inflation, but it is difficult for manufacturers to pass on costs when it comes to retail consumer products like Listerine. The CLO bond is floating rate, so it is also protected somewhat against inflation.
You would need to dig into all the details of the Listerine mouthwash business before investing, and those granular details are unlikely to be available from the owner (Johnson & Johnson). The CLO bond will be backed by underwritten loans to 100+ large, private American companies across all different industries, so the commercial risk is far lower due to the diversification benefit of a CLO. The CLO structure itself also ensures that chances of the CLO BB bond defaulting are very low. The default risk can be reduced further by investing in multiple CLOs. You could also diversify beyond CLOs through other kinds of floating rate securities that have a similar LIBOR + 7% yield, for example Mortgage Backed Securities. With $1.5 million, you could construct a very nice structured credit securities portfolio for any target yield and risk level that you're looking for.
By the looks of this auction, the Listerine royalty is not easy at all to buy or sell. A BB rated CLO bond would be more liquid than this, and if you can afford to invest $1.5 million in a mouthwash royalty then you can also get an investment broker who can help you buy and sell structured credit bonds and perhaps even lend you money to increase your leverage if you want to.
The Listerine royalty belongs in a huge investment portfolio, such as a pension plan or hedge fund, where they have so much capital that needs to be deployed that they are forced to invest in highly obscure things like mouthwash royalties.
Im not sure your perpetuity model fully applies. It’s not a fixed rate perpetuity but adjusts with positive correlation to, presumably, inflation + growth + idiosyncratic brand value movement.
New loans have moved to SOFR as of Jan 1, 2022. There are still a lot of LIBOR linked loans outstanding. It will take some time for references to LIBOR to disappear from the market.
Why are you comparing a BB rated bond to a cash flow from an American staple of consumption for a hundred years? Everyone knows more risk comes with higher yield. That fact doesn't make one or the other inherently better: just a different position on the risk/yield curve.
Because the BB bonds are currently yielding LIBOR + 7%. A royalty stream is similar to a bond in the sense that you pay a price today to own an asset that will pay an uncertain stream of future cashflows over time.
Having a finite maturity date is generally preferable over a perpetuity ("forever"). I explained above that the value of a perpetuity declines rapidly when interest rates rise (and interest rates will be rising in the near future). For example, the government of Austria recently issued a 100 year bond, which then fell nearly 50% in value as interest rates increased. A perpetuity is even worse than a 100 year bond.
With a finite maturity, you invest (let's say) $2 million, earn your yield for 5 years (let's say LIBOR + 7%) and then you get your $2 million back and you can decide then how to best re-invest your money at that time given the situation. There is a reinvestment risk here, where after 5 years you might not be able to find similarly attractive investments but unless you an insurance company or a pension fund trying to meet very specific long-term obligations you don't really need to worry about super long-term reinvestment risk. On the flip side, if you get your money back after 5 years you might be able to find an even better investment, and that kind of optionality is very valuable.
> earn your yield for 5 years (let's say LIBOR + 7%) and then you get your $2 million back and you can decide then how to best re-invest your money at that time given the situation
You have an 80% chance of getting your money back with BBs.
Also, I didn't read the specs on the Listerine contract, but I assume that if they raise the price of Listerine, then royalties scale with it. While in short term consumer staple prices are sticky, they scale with inflation over the long haul.
I'm not convinced you could flip it for a profit quickly (taking in capital gains) and like property... there is a history of sales. You'd have to wait a period of time (>1 years) before selling it again, you'd never really realize that 7.5%.
As a safe counter example, for less money, I bought a condo in a popular beach community with low inventory and a lot of short term rentals. In the last year the property value has increased by a solid 23%. I could have also rented it out for revenue.
Depending on which numbers you plug in, the bidders seem to be evaluating it about where you'd expect. It's presumably pretty low risk but not risk free, it's presumably fairly liquid but it's a rather unusual asset, and it presumably tracks inflation pretty well. Add all that together and I certainly expect better than essentially risk free, highly liquid investments but not outrageously so.
There is some threshold where it absolutely impacts productivity. If you haven't seen this in action, you're lucky, I've ran into more than one Engineer who is otherwise very smart but somehow never learned to type.
For sure. If you're a hunt-and-peck typer, it makes meetings where we're waiting for someone to finish typing unbearable. If you're even somewhat competent at typing, then I don't think it's a big pain point.
If it helps (not that ITV has anything _worth_ watching), I think TV stations recognize this - both ITV and Channel 4 have ad-free on demand options for a few pounds a month
It's going to depend on the country, and exactly what you dig up (bones is going to be different than gold coins). But in the US, dig up a gold bowl in your backyard? You'd do well to contact a museum or something, but it's yours.
If you're interpreting that as 1 Michael Phelps = 10,000 calories, you're in luck! The average humans contain about 125k Calories [0]. Not all easily accessible of course, but fine for a hungry brown bear.
Depending on how many shortcuts you take and how much resources you have, it could.
If it's naïevely rendered, 66 seconds times 30fps is 1800 frames, 10 minutes rendering per frame, 12 days. This scene is very simple, so I think 10 minutes is a bit much, but in any case it's not an unreasonable statement.
(The scene is so simple I feel that with PBR and some fancy postprocessing you could come very close in real time even without their RTX tech.)
My understanding about planetary protection is that you don't want to contaminate the new environment, because then you can't say for certain (that easily) if the life you are detecting is native to the environment or the contamination.
I also understand that the native population of the Americas suffered badly from the diseases carried in by the europeans. But those diseases landed in an environment much like the one they evolved in. The humans were humans, the atmosphere were the same, the temperature were the same, etc.
If the space-probe gets contaminated with some earthly bacteria, virus or prion they not only have to survive the travel there, but then they have to quickly adapt to the new environment. Different temperature, different chemical composition, different life forms. How often does it happen that you sneeze at a fungi and the fungi gets infected with your cold? Doing one of these adaptation alone is a big ask, doing all of them at once would be a huge leap.
Imagine that you move to a new place. You move there in a salted barrel, not designed for human occupancy. The locals speak a different language, have different customs, you can't get food you are used to and the climate is way out of your comfort zone. Would you be outcompeting the locals quick? I don't think so.
I wouldn't worry about wiping out a whole ecosystem unless the ecosystem is much much more similar to our own's.
But of course being cautious is always a good idea. Furthermore I already think we should avoid contamination. If for no other reasons than to avoid arguments about what the detected life really means.
