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So I just listened to the CLNY presentation, and here are some thoughts.

First, it looks like they've got a real CEO in there who knows the business they're moving into well. He built a former company from the ground, and then sold to AMT.

I like the fact that they're narrowing their focus to digital, though it's still more broad than the kind of narrow focus that the market rewards today. But it almost couldn't possibly be more broad than what they're doing today. And this narrowed focus consists of areas that Ganzi knows.

However, the focus is not that narrow, and so one of the analysts on the call pushed back on their scope, and Ganzi did a reasonable job responding, though I don't know whether it will actually work on the ground. He said that he had to be convinced first of this digital focus, but argued that when dealing with tech players, they need a more comprehensive partner. Significantly, he pointed to how AMT and others were moving to a somewhat broader focus, as CLNY was planning.

As you've probably seen, Ganzi will make out like a bandit -- a $100 mn incentive -- if the stock exceeds $10 for 90 consecutive days within five years (IIRC).

However, I do wonder whether they're buying at the top of the market here. That said, we're dealing with a secular bull market on digital, so while they may be buying at a top, it's probably only a local top. They'll need a lot of capital to make this work, and they have access to a fair bit. We should see some significant moves by the end of the year in terms of buying and selling, and they intend to be 90% of the way there in ~24 months. So it's a relatively speedy transition.

So all this means that buybacks are probably off the table. It's possible that they may be completing their current authorization given that the stock is SO low, but only a possibility. Anyway, we'll know soon. But those preferreds may stick around for a while.

In addition, Barrack seemed to hint that the dividend would have to come down, given the lower yields on digital assets. But that's the price for growth. I also got the impression that they'd be moving out of their lumpy opportunistic investments business, which would be good for valuations, but I may have misheard that.

So a fair bit to like with the plan, though my biggest concern is that they're a Johnny-come-lately to the digital sector and would likely be overpaying for assets. That said, it looks like they have a proven winner in the space in the new CEO.

Maybe I'll think of some more.

Jim
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