Steve Eisman’s former “Big Short” partners are warning that the wave of giant IPOs could put pressure on stocks by flooding the market with new shares.
Porter Collins and Vincent Daniel, who worked with Eisman at FrontPoint during the famous housing-market bet and now invest their own money through Seawolf Capital, say most of their capital currently sits in gold.
Speaking with Eisman on The Real Eisman Playbook, Collins pointed to Anthropic as the next major IPO that could test his concern. He said the AI company is likely to need access to public markets, adding another large block of stock after SpaceX.
“Just like SpaceX, it’s bad for the market because it’s supply,” Collins said.
New Stock Supply Could Pressure Markets
Collins said heavy stock issuance has played a role in previous market downturns, pointing to 1929 and 2000.
“That’s what usually has killed markets,” he said. “It’s just supply demand. It’s kind of that simple.”
U.S. IPO issuance reached $137.6 billion through August, up 464.1% year over year, according to SIFMA.
SpaceX (NASDAQ:SPCX) raised roughly $85.7 billion in net proceeds in its record June IPO. More shares have since become available for trading through insider unlocks, including 911.5 million shares in August.
Anthropic may seek to raise as much as $100 billion at a roughly $2 trillion valuation.
Polymarket traders give the AI company a 59% chance of going public by Oct. 31 and an 84% chance by year-end, with more than $3 million traded across its IPO-date market.
Goldman Asks the Same Question
Goldman Sachs Group Inc. (NYSE:GS) raised almost exactly the same question in July: “Can the market actually absorb all this new stock?”
IPO researcher Jay Ritter told Goldman there is evidence that high new-issue volume predicts weaker future market returns, although its predictive power is limited.
Owen Lamont of Acadian Asset Management highlighted another warning sign. Historically, periods combining heavy equity issuance with major capital-spending booms, including the late-1990s technology cycle, have generally been followed by disappointing returns for shareholders.
Goldman’s discussion also offered a counterpoint. Ritter said U.S. companies have recently returned roughly $1.6 trillion annually through dividends and buybacks, giving today’s much larger market substantial capacity to absorb new shares.
Big Short Veterans Bet on Gold
While Collins sees heavy stock issuance as a risk to equities, the pair’s gold bet comes from a broader concern about government debt and money creation.
Daniel argued that rising interest costs leave Treasury Secretary Scott Bessent needing lower rates, while Collins said large tax increases are politically unlikely.
“I think they’re going to have to print a lot of money,” Collins said.
Gold traded around $4,286 an ounce Tuesday, about 23% below its January record of $5,595, as higher oil prices fueled inflation fears and expectations of a Fed hike Wednesday. SPDR Gold Shares (NYSE:GLD) offers investors exposure to bullion.
“If something really goes bad, I know they’re going to helicopter print money,” Collins said. “And if status quo happens, I know they’re going to keep printing money.”
“I think that’s where the majority of our capital sits,” he added. “And I’m pretty bullish on it.”
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