Benjamin Felix

So part of that is just them acquiring XAI and their valuation increasing on that basis.

But I think it's probably like a two X even over that combined valuation anyway.

So this blog post from MSCI asks, what would happen to the index, to this MSCI All Country World IMI Index, IMI, Investable Market Index, so it's pretty much all stocks that exist.

What would happen to the index if the 10 largest companies from the MSCI All Country Venture Backed Private Company Index went public?

they comment that since the free float at the time of listing is unknown, as of now, we'll know when they list, they go through a few different scenarios.

At a 5% float, which again is what SpaceX is expected to go public with, only four of the 10 large private companies that they're looking at would actually achieve index inclusion based on MSCI's inclusion rules.

So again, we come back to that case where not all of these companies would be index eligible.

MSCI has different criteria than CRISP or S&P, but based on their rules, four of the 10 would be eligible at a 5% float.

At a 10% float, seven of the 10 companies would achieve index inclusion, but they'd be pretty small weights in the index.

And there's a chart that we can hopefully include in the video that shows the ranking of these companies in the market by size.

But what's interesting is that while the overall market weights in percentage terms would not be huge,

Even in a 25% float scenario, MSCI finds that the dollar flows just for funds tracking MSCI indices would be huge with newly listed private companies receiving billions of dollars in investment and the largest existing public companies seeing billions in outflows.

I think those flows are really what matter to index fund investors because even a small percentage change, if it's billions of dollars changing, moving from one equity to another, that's kind of what matters for the index funds who are being forced to buy and sell shares.

I think there are probably some interesting tax considerations here too.

I don't know enough about how exactly that would play out with US listed ETFs because they do have some mechanisms to reduce

tax, but this would be a lot of buying and selling.

It'll be interesting to see how that plays out too.

So just to recap, index funds, depending on the rules of the specific indices they track, may or may not invest in these mega IPOs.

And even if they do, it's likely going to be at a weight reflecting their public float, unless we're talking about the NASDAQ 100, which as of recently would use its newly adopted float factor, which again is more conservative than their previous methodology of using the total market capitalization.

So that's kind of where we're at.