Kazakhstan has increased coal production 4.5% to 108 million tons this year to satisfy global demand. The reasons for this are probably twofold — the European energy crisis, and the record amount of coal that 2022’s naughtiest boy, Sam Bankman-Fried, is set to receive from Santa.

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The lowdown

• 🎵 Justin Bieber to sell his music rights to Blackstone-backed Hipgnosis Songs Capital for $200 million.

• 🔎 US software company Palantir signs 75 million pound deal with UK’s Ministry of Defence.

• 🏈 YouTube TV and the NFL close to inking a deal for subscription only ‘Sunday Ticket’ games.

Flex your finance muscle 💸💪

Following on from yesterday’s featured story about methods being used to preserve valuations, today we are looking at:

‘Dirty’ term sheets

As Benchmark Capital Partner Bill Gurley has put it in the above tweet, a ‘dirty’ term sheet is one that embeds the IRR mechanics in a term other than price. On the face of it, these term sheets accept a company’s existing valuation, but upon closer inspection, contain terms that favor new investors over existing investors.

According to the FT ($), dirty term sheets are currently being signed which allow for new investors to double their investment before other shareholders are paid in the event of a sale or bankruptcy. In this situation, an investor is buying in at the existing valuation but may generate a superior return due to a term that guarantees a certain multiple on their investment in certain exit events. Hence, the IRR is affected by a term other than price.

Featured Stories

Cathie Wood’s annus horribilis

The performance of ARK Investment Management’s various funds has been abysmal as the graph below demonstrates.

The technology-focused funds have performed terribly – on both absolute and relative terms. The S&P 500 – the primary benchmark of the largest fund, the ARK Innovation ETF – is, by comparison, down a mere 17.42%.

ARK CEO Cathie Wood is known for her sometimes outlandish predictions – for instance, that the price of bitcoin will reach $1 million by 2030. The ARK Innovation ETF’s largest positions include Zoom and Tesla.

Cathie Wood defended her bets earlier this month in some investor commentary, concluding that ‘profitless’ tech companies will eventually show greater returns than those that have sacrificed growth to cater to short-term-minded shareholders. Like any good captain, she is choosing to go down with the ARK.

The content we're consuming today

• WSJ: Meta CEO Mark Zuckerberg Testifies in FTC Case to Block Virtual-Reality Deal ($).

• FT: Lessons from the gilts crisis ($).

Off-balance sheet items

• This video looks at the science of eggnog and leaves you with a traditional recipe for aged eggnog. (This newsletter disclaims all responsibility with respect to salmonella poisoning.)

The bottom line