FRMO Corporation (FRMO) Earnings Call Transcript & Summary

Good day, and welcome to the FRMO Corp. Annual Meeting of Stockholders. I would now like to turn the conference over to Thérèse Byars. Please go ahead.

Thank you, Carrie. Good afternoon, everyone, and welcome to the FRMO 2020 Annual Meeting of Shareholders. My name is Thérèse Byars, and I'm the Corporate Secretary of the company. The COVID-19 pandemic made an in-person meeting unfeasible. So we are hosting our first virtual-only annual meeting. While we will miss seeing those of you who have attended our in-person meetings in the past, the silver lining of a virtual meeting is that it allows us to reach a greater number of our shareholders. And now for a bit of housekeeping. Please note that this meeting is being recorded. However, no one attending via the webcast or telephone is permitted to use any audio recording device. As is our custom, we will conduct the business portion of our meeting first, and Mr. Stahl and Mr. Bregman will answer questions at the end. Though we might not be able to answer every question, we'll do our best to provide a response to as many as possible, and we will address unanswered questions in the summary transcript that will be posted on the company website in the coming weeks. We have received several questions in advance, but only validated stockholders may ask questions today in the designated field on the web portal. We'll cover all of those questions. We'll do the -- first, we'll do the ones we received in advance. The FRMO annual and quarterly reports as well as 2020 Letter to Shareholders can be found on our website at www.frmo corp.com. These items can also be viewed on the FRMO listing on the OTC Markets website by clicking on the Disclosure tab. It is now shortly after 3 p.m., and this meeting is officially called to order. It is my pleasure to introduce FRMO's 7 directors, all of whom are candidates for reelection. They are: Murray Stahl, Steven Bregman, Peter Doyle, Lawrence J. Goldstein, Lester J. Tanner, Allan Kornfeld and Jay P. Hirschson. Also present at this virtual meeting from our auditors, Baker Tilly US LLC, formerly known as Baker Tilly Virchow Krause LLP, are John Basile and Patrick Warch. They will be available during the question-and-answer session after the formal meeting to respond to appropriate questions. We now proceed to the report on the tabulation of the proxies for the 2 proposals. The Proxy Committee appointed by the FRMO Board of Directors is here this afternoon to represent the shareholders who gave their proxies to the committee. The Board of Directors fixed July 27, 2020, as the record date for determining stockholders entitled to vote at this meeting. An affidavit has been delivered attesting to the fact that the notice of the meeting, the proxy statement and the proxy card were mailed on or about August 3, 2020. The stockholder list shows that as of the record date, there were 44,032,781 shares of common stock outstanding and entitled to vote at this meeting. The inspectors of election report that proxies were received from FRMO shareholders holding approximately 34.5 million shares of common stock or 78.4% of the voting power on the record date. Therefore, this meeting is properly organized with a quorum present, and we may proceed. So -- excuse me, there are 2 items of business for this meeting. The first is the election of the 7 directors, who were nominated in accordance with the company's governing documents. The second item of business is the proposal to ratify the appointment of Baker Tilly US LLP as the independent registered public accounting firm of the company for the fiscal year ending May 31, 2021. The Board recommends a vote for on both items. It is now 3:04 p.m. on September 10, 2020, and the polls are still open. Any stockholder who hasn't yet voted or wishes to change their vote may do so by clicking on the Voting button on the web portal and following the instructions there. If you have already submitted your proxy, you do not need to vote again unless you wish to change your vote. And I'll just wait a moment to give people a chance to vote, not very long because -- well. [Voting]

Okay. I think that's enough. Now that everyone's had the opportunity to vote, I declare the polls for the 2020 FRMO Corp. Annual Meeting of Shareholders closed at 3:05 p.m. on September 10, 2020. Based on the preliminary report of the inspectors of election, all 7 director nominees have been duly elected to the Board with all nominees receiving 99% of the votes cast and 78% of the shares outstanding. The proposal to ratify the appointment of Baker Tilly US LLP as the independent registered public accounting firm of the company for the fiscal year ending May 31, 2021, has been approved with approximately 99% of the votes cast and 78% of the shares outstanding. There being no further business to come before this meeting, the formal part of this FRMO Corp. 2020 Annual Meeting of Shareholders is now adjourned. The next item on our agenda is the Chairman's report to the shareholders. Joining me on the line are Murray Stahl, Chairman and Chief Executive Officer; and Steven Bregman, President and Chief Financial Officer. Mr. Stahl will review key points related to the 2020 financial results. When he has finished his remarks, he and Mr. Bregman will answer questions. At that time, we will begin with the questions that we've received in advance of today's meeting. We will then take questions as they are entered on the web portal. We will answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. As noted earlier, unanswered questions will be addressed in the summary transcript posted on the company website in the coming weeks. And with that, I'll turn the meeting over to the Chairman of the Board, Mr. Murray Stahl.

Okay. Thank you very much, Thérèse, and thanks, everybody, for tuning into us in this unusual format. So I'm going to deviate from practice ever so slightly because there is one question, actually, I think uniquely germane question that I'm going to address before any prepared remarks because I think the question should be answered because this is numerical. Somebody noticed inconsistency in certain numbers, which I'll reveal in a second that we made reference to in the shareholder letter, and the person is 100% right. So I'm going to take this opportunity to tell you about some numbers that appear in the shareholder letter that really need to be revised. And once they're revised, we're going to change not the text of the shareholder letter but just numbers that appear in certain fields. So the question really revolves around our ownership directly and indirectly on the Bitcoin Investment Trust, GBTC, and our ownership directly and indirectly of Texas Pacific Land Trust, TPL. And there's also some other questions that don't really reference the shareholder letter, but worthwhile taking the opportunity to deal with in this context, which is our ownership of the Miami Options Exchange, MIAX, and the role in leadership of Digital Currency Group and dual listings. So the actual direct and indirect ownership of GBTC in shares is 558,158 -- it's 155 -- it's 558,155 shares. The ownership of the Texas Pacific Land Trust, direct and indirect is 50,137. The other 2 items are Miami Options Exchange. So there it gets a little bit more complicated because the number I'm going to read to you is going to change. Let me state the number as it exists at the moment, and then I'll tell you why that number is going to change. At the moment, we did own some shares in Miami Options Exchange, but we greatly increased our ownership of the company when we did the share exchange of our ownership in Bermuda Stock Exchange for Miami. So our ownership of Miami, which we'll refer to as MIAX, is at the moment and also at the time we wrote the shareholder letter 603,393 shares. That ownership, based on the shares outstanding of Miami, MIAX, would give us a 0.83%, meaning a little bit less than 1% ownership of Miami. However the caveats, the caveats are you're probably aware that we are going to sell our ownership in the Minneapolis Grain Exchange for shares in MIAX. That's going to increase our ownership in MIAX. But since the entire Minneapolis Grain Exchange is being bought, the shares of Miami are also going to increase. So you might want an exact number, which I can't give you because some of the shareholders of Minneapolis have the option to take cash. And we don't know, at the moment, how many are going to take cash. So the number is going to go up of shares outstanding of Miami. And secondarily, there is also warrants outstanding at Miami. And those shares -- those warrants have yet to be exercised. And when they are, the shares outstanding are going to be greater. But then again, the cash on the balance sheet is going to be greater. So all that is yet to happen. We don't know what the number is. So at the moment, the best way to answer the question is we own a little bit less than 1% or 0.83% of MIAX. With regard to the Digital Currency Group, DCG. Digital Currency Group has 711,252 shares outstanding. We own directly 353 shares. We also own roughly, in round numbers, 5% of Horizon Kinetics, and Horizon Kinetics owns 354 shares of Digital Currency Group. So you do the math and you round that would give us another indirect 17 shares. So you could say that we own directly and indirectly 370 shares, and that equals more or less 1/20 of 1%, or in other words, 5 basis points. Or another way of expressing it, if we had 20 times the holding, we'd own 1% of Digital Currency Group. So I just apologize for the confusion, the errors, but I guess that's what happens when you have a big group of people who work remotely and they're not used to working in this mode. Anyway, I hope I've made that clear, and I hope that the information is now properly conveyed. And as I said before, we're going to make the appropriate notations and corrections in the shareholder letter shortly and it should be accurate. Yes. As of it now -- as regards the commentary for the year, let's just use the shareholder letter as a point of departure because the shareholder letter this year reads more like a history of really the last 6 years. In the last 6 years, it's been our belief that the inflationary pressures in the society are building. In any case, whether that's a true statement or a false statement, the most contrarian thing is inflation beneficiaries. And we, of course, being contrarians, we've directed our investment activity for the last 6 years, you can probably see from numbers I just read, towards -- largely towards inflation beneficiaries. So the issue comes up, is that going to impact Horizon at all. This is Horizon Kinetics. Is that going to change its investment approach? And a point of fact, yes, it's true that last number of years, Horizon and its investment philosophy has been doing a similar sort of thing and is moving in that direction as well. Now it's worthwhile pointing out that while we, in FRMO, and we in Horizon Kinetics are moving in that direction, the indexes, as you know, we write a lot about indexes, the indexes have been moving in exactly the opposite direction. So the energy exposure of the S&P 500, just to use one example, is something on the order of, as of this morning anyway, 2.3%. The gold exposure in the S&P 500 annual rate is negligible, it's a handful of basis points. And so on and so on and so forth. Now the real world is, we just looked at our health insurance bill for Horizon, and we just got hit with a 7.9% increase. So people will frequently ask me: I don't see any inflation. Where is it? And I could point to various commodity prices and I do pretty frequently, and it doesn't seem to impress very many people. So if they like, I can always send them a copy of our health insurance bill with a copy of last year's, and they can see what's happening. So the inflation -- you could talk about for starters is health care is almost 25% of GEP. We use a recognized national carrier. I won't name what it is. But the GEP includes, I think, a 25% weight or it's something like it for health care. Health care is, I think, the largest component as far as the GEP calculation is concerned. So if I may be permitted to round numbers, if 8% is the increase of 25% of the GEP, well, that's already 2% inflation in and of itself, without counting anything else. Now I give numbers like what has happened to the price of beef, or what has happened in the price of poultry in the last couple of years, certainly the last 12 months, and it's obviously a lot higher. But a much bigger issue is the issue of money issuance. All you have to do is look at the Federal Reserve website, this is the St. Louis Federal Reserve, and look at the money issuance for the last year, look at the money issuance last 2 years, the money issuance the last 3 years. Sooner or later, these things result in inflationary pressures. Now let's say, and this has basically been a constant throughout history, and I don't think you can find very many differences as far as that goes. And if you get a textbook or a good history of money in the last 2,000 years, you'll see that, you can go back to Roman Empire, you can look at revolutionary America and the period before it became an independent country, when they issued so-called Continentals, which were really the equivalent of government bonds, that was inflationary. I mean it's been a truism in history. But even if you ignore all that stuff, one thing you can't ignore is that for the last decade or so, the inflation beneficiaries, their returns are very low. Returns of capital are very low. And there's really no incentive to keep investing capital in something that gets a low rate of return. So as a consequence, as you can see from numbers I'll give you in a second, the supply of available commodities, it just has to shrink. So if you can do nothing other than believe in law of supply and demand, then you're not really interested in money creation or any of those statistics, you're going to come to a similar conclusion. So for example, it's hard to believe, but if you look at the Baker Hughes rig count, as the most recent reckoning, there's something like 254 rigs, oil drilling rigs active in North America right now. To give you an idea, it wasn't further than a year back, it was 1,000. So it's down by about 75%. And that 1,000 is significantly lower -- significantly, maybe 50% or 60% lower, what number was in June 2014. And even June 2014 wasn't the high number. There is no way the oil reserves are going to be replaced at that rig count. And in point of fact, the oil production, at least of the United States of America, if you believe statistics of the energy information, you see they're declining. So just give you some numbers. I know statistics are boring, but the only thing we have to base our conclusions on. The -- in mid-March, I guess, right before the onset of the coronavirus problems, the weekly -- well, the daily oil production in the United States of America was 13.1 million barrels, 13.1 million barrels a day. August 28 is the last reading we have, and we're at 9.7 million barrels a day. That's a big decrease. That number personally strikes me as a little low and maybe there was something happening that's unusual. So maybe the number comes out, I think it will be out in a day or 2. Maybe the next number is going to be higher. But the trend is still, I think, intact: The production is going down. A well that's fracked basically is going to have a 3% production decline in about a year, so it needs to be refracked. Now modern technology, you can refrack a well. I'd seen them [indiscernible] refrack 10 times. But if it needs to be -- if it isn't refracked, production is going to decline by 50%. And you can see the production is -- the well activity is declining everywhere in the United States, some regions more than others. So you would think if you believe in law of supply and demand, we are going to eventually see significantly higher prices, and to bring all that production back online, it's a lot of work. The process hasn't even started. Now maybe -- and this is pure speculation, maybe if we hadn't had the coronavirus problems, maybe the system wouldn't have had demand shock for oil and gas that it did have, and maybe things would be somewhat different. Like for example, I know this is statistic is going to be hard to believe, but it's true, nevertheless. The price of natural gas today, for all demand shocks and everything else, is actually higher than it was on December 31. Natural gas is rarely found independently, with natural gas referred to as associated natural gas meaning it's associated with an oil well. Stop drilling wells, and you're going to have less gas. It's just that simple. Not to mention that there is less drilling for natural gas in those few instances where it is found independently. So that's the layout. I personally think that the oil industry is about 2 years behind the gold industry. So the gold industry began its decline in spring of 2012. And the price of gold was roughly $1,800 an ounce. I think it got to a low of $1,000 an ounce or very close to $1,000 an ounce. It did recover somewhat. For a number of years, it was $1,200 an ounce. At $1,200 an ounce, no one can make money mining gold. So as a consequence, the reserve is being depleted and not being replaced. Eventually, supply and demand takes over and now the price of gold is comparably above $1,900 an ounce. That's just the way supply and demand works. And in the world of commodities, especially the hard commodities, the supply and demand cycles are much longer than the soft commodities. That's why we're talking about in 2020 a process that started in 2012 in relation to gold. So if it were a commodity like wheat, can only be stored for a long period of time, so if it's not consumed, after a certain period of time, it's a practical matter, it's unusable. Gold can be stored for basically ever. And oil, a similar thing is true. So it takes a long time before production and reserves and consumption realign to the new reality. I don't know when the corona -- obviously, I don't know when the coronavirus crisis is going to be over and then the demand for hydrocarbons can return to some level of normalcy, but even it never does, the supply function is adjusting to the current demand function. So perhaps it'd never adjust. And maybe, maybe we never return to something approaching normalcy. Is that just the way it is? Now a lot of people ask this question. And I don't know if I get this question because I don't know what the questions are, but I'll address this part of it. A lot of people think that the world is going to transition to a carbon-free energy production, and this is very controversial of me to say because I'm not against carbon-free energy, it's just that it's extraordinarily difficult to do. It's not the kind of thing that can happen easily. So for example, the United States uses just electric power. We're not talking about motor vehicles or machinery or any of that stuff. United States uses, about 4 trillion -- 4 terawatts of power. One solar panel is 250 watts. That's 250 watts at maximum elevation of the sun. At 8:00 in the morning, it's not going to put out 250 watts. Can't, not possible. So its square footage is 17.5 square feet, a typical solar panel. So take 4 trillion, divide it by 250, if you lay them end to end, that's how many solar panels you need multiplied by 17.5%. And if you -- obviously, you're not going to lay them end to end. But just to give you an idea, that is the territory you need if you're going to produce 4 terawatts of power. And you're only going to produce 4 terawatts of power when the sun is shining, when it's not raining, when it's not snowing, when it's not cloudy and so on and so forth. And the real limiting factor is, you got to get right away for that land. Land is expensive, at least it's going to be in close proximity to where the panels are going to be used. And then secondarily, you are going to need water. And you might want to put it in a very sunny location, at least I would do it if I were building solar panels, in maybe a desert area where you get virtually no rainfall. Maybe that's a smart place to put it. But if you put it in a desert area, where there's not a lot of rainfall, a lot of dust gets on to solar panels. You have to wash them periodically. And now you're using water. So as I said, I'm not against eliminating fossil fuels, even though I'm investing in fossil fuels, I'm just pointing out the difficulty if you're really going to do this thing. It's something that has an engineering achievement. It's extraordinarily difficult. And even then, I don't think you're going to eliminate fossil fuels. I could be wrong on that. And I would say most people would disagree with that. That's why I go to this length of describing that. But in any event, there is our investments. And we're looking for other things, largely debt-free companies. One of the tragedies of the inflation beneficiaries are that it seems to logically follow to most managements of companies that if you really believe there's going to be inflation, you should borrow money because you'll pay back in inflated dollars. But the trouble is if you don't get the inflation, you don't have the inflated dollars. So you pay back, you only have current dollars, and that can be extraordinarily painful. Especially if the price of commodities drop, you have less dollars than you really thought you could have. So for us, the way to invest in commodities is to either have debt-free companies or largely debt-free companies. So TPL, Texas Pacific Land Trust, is obviously the biggest position in HK hard assets. Recently, be adding 2 other things. I'm not going to tell you anything about them other than to say that they're inflation beneficiaries and they're debt-free and even at today's depressed prices they produce a fair amount of cash flow and that's the unifying theme that even if the whole thing is wrong, there will be a copious amount of cash flow being produced. And it's certainly going to be a lot more cash flow than would have been invested and that would have been the case if one had invested in bonds. And the whole thing started 6 years ago with elimination of our bond portfolio. It became obvious to us that either there is going to be inflation or there is not going to be inflation. And if there's going to be inflation, then the bond portfolio is at risk. And there's not going to be inflation, well, the rates are so low the inflation beneficiaries are going to generate more cash flow anyway and even throw off some tax advantages. So right or wrong, we just thought it's a better way to invest, use to our capital. And I think it can result in a lot of intriguing investment management products. So I think in the coming months, you're going to see a lot of interesting things coming out of Horizon Kinetics, and it doesn't look like we're going to have a lot of competition in that field. So I look forward to some interesting things in that. Now I should say some things about cryptocurrency. And usually, people compare cryptocurrency to gold. Personally, I don't think it's necessarily a substitute for gold. Gold is not so much an inflation beneficiary other than the point that you -- sometimes you get inflation at the same time as you have political turmoil. So if you thought you're going to have political turmoil, you maybe want to have some gold because its value is not dependent upon the maintenance of the societal structure. Can have a lot of social displacement and still people recognize and accept gold in payment. In a world of lot of societal displacement, who knows, maybe it gets that bad the internet wouldn't even work. If the internet didn't work, you really don't want to have any cryptocurrency. On the other hand, the problem with gold. Problem with gold is if the price gets too high, you can always find more gold. The gold is available in the crust of the earth, as is silver. It's just that the deeper it is, the harder it is to extract, but it's there. So I have no doubt that gold were $2,500 an ounce supply of gold is going to go up. Cryptocurrency is unique in that sense, especially the ones we're invested in, like bitcoin, because the supply of coins is absolutely fixed. There's going to be, when all is said and done, 21 million in bitcoin, and we're not very far or at least in a couple of days, we're going to be at 18.5 million. And the other 2.5 million will be created between now and the year 2140. So you have a choice. Do you believe that there's going to be something called sovereign money or fiat money where governments have the right and the privilege to issue as much as they want and people just accept it, which is debasing their currencies, or people won't accept it. Now if they don't accept it, they're going to want something, which is the opposite, where there's a fixed issuance. We know how much there is. That's what bitcoin is. You've seen the evolution of a variety of funds in the Bitcoin Investment Trust that we're invested in, the Digital Currency Group that owns Grayscale, which owns the Bitcoin Investment Trust. I don't know if you know this, but the Bitcoin Investment Trust itself is now up to about $5 billion in assets under management. And Fidelity just started a Bitcoin fund, it's a private investment fund. I think the minimum investment is $100,000. It's not the only such fund. Anyway, there's roughly 18.5 million bitcoin that you could buy, some we own through the Bitcoin Investment Trust, which is a closed-end fund, and those bitcoins are not going to trade in the marketplace. Some we've mined, and we're not selling those. So the market value of all the bitcoin that's out there is probably something like $194 billion, $195 billion. Sounds like an extraordinary number. The M2 in the United States is something like, which is the money supply or the state of the money supply of United States of America, it's something like $18.5 trillion, and it grows virtually every week. That's in the United States of America. So what would happened in a world where people came to conclusion that they just want a small part of their portfolio, maybe only a handful of basis points, in the fixed issuance currency. You can see how radically transformative that would be, not just to the investment management business, but also to the position there [ backed ] by FRMO. We're not buying the Bitcoin Investment Trust. We actually invested a lot less money than we have market value right now, just appreciated manifold. And we've got it, and we're not interested in selling it. And we'll see what happens. So anyway, so we're expanding our investment management expertise in this area. We are expanding our mining expertise in this area. We're expanding our inflation beneficiary expertise in this area. And I'll say one other thing, and then I'll turn to questions, which is you might have noticed that we made an increased investment in Winland Electronics. We've also, last couple of days, bought some shares in the open market, and we now own roughly 28-ish percent. So basically, we swapped mining equipment, brand-new mining equipment for shares in Winland. And we're interested in electronics company. After all, and mining is a process of electronics. We're interested in finding ways to expand the mining business. It's our contention, I don't know if this is going to come to pass, but it's our contention that eventually, there'll be 2 kinds of bitcoin. There'll be the kind of bitcoin that's traded a lot and its providence is going to be uncertain. And there's the kind of bitcoin that's never traded, like, for example, newly mined bitcoin. So the units of bitcoin that we have in FRMO that we mined ourselves, we've never sold them, never traded. They are completely [ mid-bitcoins ]. Why is that important? Because bitcoin and its associated blockchain is a record of every transaction that ever happened. It's possible to use the blockchain to keep records on all sorts of things: medical record, stock transactions, you name it. And people are just working on that right now. So our theory is that for money laundering purposes, if somebody want to tokenize assets with bitcoin, they're going to want completely [ untransacted ] coins, and we believe they're going to have a lot of market value. So that's one of the reasons we're mining, and that's one of the reasons we're holding, other than the obvious, as I stated before, the investment characteristics. Now I said we've got a market value, market capitalization, maybe $194 million, $195 billion of bitcoin. Look at it this way, the market value of all the Brazilian reais, about $750 billion. It's probably 4x the size of bitcoin. It doesn't take a lot of imagination to see maybe the bitcoin to be worth just what the Brazilian reais is worth or maybe what the -- bitcoin to be worth what the Brazilian reais is worth and the Russian ruble is worth, which is another $360 billion, or what the South African rand to be worth and then another several hundred billion dollars and so on and so forth. You don't even need acceptance from the United States of America. You don't even need acceptance from European Union. You don't even need acceptance from the world at large. All you really need is acceptance in chronically inflationary economies, of which Brazil and South Africa are 2 examples, and you're going to have an outlandishly wonderful success. So that's the direction we're going in. You'll be seeing -- we're not finished doing things. You'll be seeing some more interesting things happening in not-the-distant future. And of course, we'll advise you when those things happen, if indeed, we can pull them off. And with that, maybe, Steve, you want to add some color and commentary on what I said before we turn to questions.

Some color and commentary. Isn't something...

Yes. If you have any.

Something topical. Murray and I were actually discussing before the call began the great difficulty in persuasion, of getting people to be open to a new idea or a change from that to which they are accustomed, very, very difficult. I'm not very good at it. Particularly when what they believe in is something that has been the case and is widely practiced and accepted generally by the people as well for a long time. And I think I have this idea that history really happens at inflection points when that which was and was accepted as normal changes and it seems to change suddenly. And there's people -- people don't see it. And if they did see it, then perhaps the existing process wouldn't seem so true and immutable. So with respect to inflation, one challenge to people's ideas about it is that a sustained, chronic high inflationary period hasn't existed for 40 years. We had a full decade of it, the 1970s. But today's investors, professional or not, by and large, don't have a history of it. They're not taught it. They don't have a sensitivity to it. And their minds aren't oriented that way. And the statistics they see don't seem to support it, whether it's the CPI figures or other such figures, and therefore, they don't look any more closely. It's very difficult to get people to change that way. On the other hand, I suppose for those investors, there seem to be more of them on the margin, some of our respected investors who were, let's say, considered independent thinkers, more and more of them are coming to that idea. And the pricing of inflation beneficiary assets is, paradoxically, more attractive when nobody is expecting it. So it also creates the challenge, the problem for the many, it also creates an opportunity for the few. That's -- I'm not adding anything new, it's just really kind of a broader reflection on what Murray has been talking about.

Okay. Well, thanks, Steve. Thérèse, I think, maybe now is a good time to commence with the questions, if you're ready for that.

I am ready for that. Okay. The first one is: Could you speak about the performance and the state of your strategies in the path-dependent ETF/ETNs that you are short? Given the market drop in March, one would have expected you'd be able to close out some of those shorts at attractive prices. However, it seems instead, there was a $21 million outflow to cover the shorts and a large realized loss from investments. Some detail here would be great.

Okay. Well, we didn't we didn't lose $21 million. This is nothing remotely close to that. The losses that you see on the financial statement for our quarter, I think we talked about last quarter, is largely the markdowns of the partnerships, which basically have TPL in it, Horizon Kinetics assets as an example and some TPL we owned. Now we had 2 choices. Choice number one, we can just leave the transactions alone; or we can do another thing, we can recreate the same position with a different security and basically realize the tax loss. So we have -- so we had a lot of unrealized gains. The idea was to realize, I think the number is about $5 million -- to realize about $5 million in losses and give ourselves a tax credit and just reestablish the same thing with a different security. The security itself has basically the same character, but it's a different CUSIP number. So the choices were leaving the position untouched and doing nothing and maybe riding it out and not getting a tax credit or swapping, realizing loss, keeping the same position and riding it out because it's the same exposure, and we picked the latter. And I think when you see the financial statement for August 31, I think you'll come to conclusion, I think it was the right thing to do. Of course, that's hindsight is 2020. We know that when we did it. But anyway, such as it was, that was the logic of doing it. Now the whole idea of a path-dependent security is you know what the outcome is going to be. You don't know when it's going to happen. So you might as well ride the thing out. You can hedge it with options. If you're worried about it or you cannot or you can partially hedge your position, but you know what the outcome is going to be. Basically, in a path-dependent security, all you're really doing is you're saying to someone, "The market is very dangerous. And therefore, I'm willing to allow you to take your equity mark-to-market losses, put it on my books, but I'm going to charge you something for it." Now you might say, "What is that charge?" Obviously, the path-dependent securities can return to normal, but that's not all that you get. So normally, and I'm going to this degree of detail, but I think the question warrants it, so if you were to go on the CBOE website, and look at VIX, so the VIX at the moment is, well, the future is what we're talking about, the October futures are in the 30s. So you compare the October future to the September future, you'll see it's in contango. And the number changes every minute. So I'm not looking at it right now, but that contango is roughly 15%. So if you're sure to path-depend the ETF, it is basically long, the VIX futures, it has to be long, an equal number of days, every day that it trades. So there's the September 16 future, there's an October whatever future or 30 days later. And basically, if this were October 17, you now would have to have a 3% position in November future. So every day, you have to keep a 30-day maturity or roughly a 30-day time [ to exploration ], you are having negative roll yield. So why shouldn't we be in a security like that? That's a great deal. We're going to have mark-to-market losses with TPL anyway. The price of oil goes up, and the price of oil goes down, and different things happen. So you're going to see -- anyway, when you get around to seeing the August 31 balance sheet, I think you'll get a better appreciation of the balance sheet is, give or take, kind of back to normal. If you want to -- knowing that's going to change every month anyway. So anybody. So those are the choices. We could realize the loss, get a tax benefit and still keep the same position; we cannot realize a loss and not get a tax benefit. And one of the headaches of being FRMO is, and I think you'll see it in our -- many of our quarterly reports, there are quarters when income is passed through to us from the partnership. We didn't do a trade. We're paying taxes on it. And we actually -- during the quarter, we actually have mark-to-market losses. Gains are passed out to us from various securities we have, and we didn't do a trade. And we're writing a $1 million check. So it seemed like a good idea, at least to the degree we could do it to get to tax credit. And I hope that's enough color for the moment anyway. And more on that when you see the quarterly statements.

Okay. The next question. Can you mention the percent of Digital Currency Group and MIAX that are currently owned by FRMO?

Yes. I think I did it in the preamble, but I'll do it again. So we own -- let's do MIAX first. We own 603,393 shares. Based on the currently outstanding shares of MIAX as they exist today, that's 0.83% or a little bit less than 1% of MIAX and the caveats. Caveat number one, we own a fair quantity of Minneapolis Grain Exchange, and it's being acquired, in the process of being acquired by MIAX. So we're going to take MIAX stock. So obviously, we're going to own more. You probably won't know how many shares and we don't know exactly what percent ownership because we don't know, nor can we know, how many people are going to take cash from Minneapolis Grain Exchange and how many people are going to have stock. All we can say is we're going to own more shares of MIAX, and there's going to be more MIAX shares outstanding. But at the moment, anyway, it's 0.83%. And when we have a different number, which you might have in about 3 to 6 months, we'll report that number. But this is the number -- anyway, this is the number as it is at the moment. I guess theoretically, any merger could for 1,000 reasons fall through. So this is the best hard and fast number we have at the moment. Now Digital Currency Group. We own -- this is FRMO, 353 shares of Digital Currency Group. The Digital Currency Group has 711,252 shares outstanding. So you divide 353 by 711,252. That works out to from an around about 5 basis points, roughly 5 basis points. Now it's actually a little bit higher than that because Horizon Kinetics owns 354 shares of Digital Currency Group and we own 5% roughly of Horizon Kinetics. So [ we went into ] fractional shares. You could say, theoretically, on a look-through basis, we own an extra 17 shares by our ownership of Horizon Kinetics. You could say, directly and indirectly, we own 353 plus 17 or 370 shares, divide it by 711,252, equals -- it's still going to be roughly 5 basis points. I just -- if I included more decimal points, it's a little bit higher than 5 basis points. That's basically our ownership of the 2. I hope it answers the question.

Okay. There are Form 4s at the SEC for the purchase of REN fund shares, listing FRMO and [ FRM Nexus ] as beneficial owners, is there a strategy behind purchasing REN fund shares? And is [ FRM Nexus ] now an active entity with its own strategy?

The second part first. [ FRM Nexus ] is not an active entity with its own strategy. [ FRM Nexus ] and FRMO basically do the same thing other than rounding errors. So they're doing the same thing. There's no difference. It's all FRMO. So we would like to, I don't think it's any secret, expand our close-end fund business, if it's possible to do that. There is some interesting things going on in the REN fund. One of the things going on is that there's a big tax loss carryforward in the REN fund. And I just got through saying in relation to path-dependent ETFs, taxes to us are a big deal because it's just cash outlay, and we want to minimize it. So if there's a way we could make use of those tax loss carryforwards, we'd be very interested in doing it. Not that we have a specific plan to do it, but it's not a small tax loss carryforward. And if there's a way to make use of it, we would love to make use of it. Secondly, REN fund is a very substantial discount to net asset value. So we're buying some of the same securities that we otherwise buy anyway, except we're buying it cheaper. So on days when the REN fund is a 15% discount to net asset value, I say, TPL is in the REN fund. We're buying TPL at 15% discount to where it trades at. So why -- if we like it, why would we not do that. And of course, cash. There's cash in the REN fund, and we're buying that at a discount to net asset value as well. And we also think the net asset value is going to rise. So I can't tell you exactly what we're going to do with the REN fund, but we have some ideas. And I guess stay tuned, and we'll see if they work or not.

Okay. As long-term shareholders, we appreciate the open and very informative reporting on our FRMO investment. We note that the building of assets in the various exchanges, the cryptocurrency space and the Texas Pacific Land Trust, among others, has established substantial and important positions in businesses that can result in dramatic future returns. However, the FRMO share price as of today, and that's when the questioner wrote this, is only 1/3 of the late 2007 peak and about 1/2 of the 2018 peak. In the bull run we have experienced in the last decade, the lack of paper returns has been somewhat frustrating. It seems there has been very little insider buying by the company's directors as well as FRMO's buying back its own shares. On multiple occasions, Murray has spoken about the difficulty in finding significant investment opportunities. With FRMO's large cash position and the company's undervalued asset base, it would seem that FRMO is a significantly undervalued investment opportunity. Wouldn't now be a perfect time to buy back a large number of its own shares?

A lot of good questions here. First one is we actually, several months ago, we actually did buy back some shares. So we did that. The larger question, however, is, yes, it's true, we have a large cash balance because we have difficulty in finding investments. So it seems the next logical thing would be, "Well, you had difficulty finding investments and you believe yourself and we agree with you, we think you're undervalued, why don't you just buy your own shares back?" The problem with that is, if we ever found -- markets do change. If we ever found, if we ever got to the point where we could find undervalued investments, we wouldn't have the money to buy the things we wanted to buy. That's the paradox of it. So it's a question of balance. So one of the things that I think you're going to see happening in HK hard assets, or let me go back a little historically, before we had HK hard assets, we had a bond portfolio. And before the last 6 years, the bond portfolio threw off a fair amount of cash, and we used it to fund investments. We didn't make huge investments, but we had a cash flow that was apart and distinct from the business cash flow. And what's eventually going to happen is with HK hard assets, the cash flow is building. And at some point, HK hard assets is going to pay a dividend to its shareholders, one of which is FRMO, another one is yours truly. So when we build it up enough, there will be cash flow. So if we take the stock -- we take the cash, we can buy back the FRMO stock, but we're going to have less cash on the balance sheet. We're not going to be able to build up the cash flow and therefore, have the dividends for FRMO that we believe ultimately, we're going to have. And then secondarily, if we [ refuel ] undervalued investment, we would have it. And then another point, which I hasten to mention is, FRMO is not exactly -- I think it's fair to say this, the most liquid stock. So we could theoretically buy up the float. And then people will say, well, but I would love to buy your stock. It seems undervalued, but I can't find any. There may -- a lot of people today say that as well. So I don't know that there's a holistic answer to everything. We did buy back some stock. And I guess, we're trying to find a balance. One could argue where the balance is. Another point is it's not obvious, but -- and we really should point this out more. But Horizon Kinetics actually owns not unreasonable piece of FRMO stocks. Horizon Kinetics actually buys FRMO on a daily basis. And Horizon Kinetics has a 10b5-1 program in effect somewhere on some SEC website, I think, you can find a description of it. So I guess, one way or another, we are buying our stock back, either directly or indirectly, through Horizon Kinetics. So we're trying to find the balance. Perhaps we haven't found the right balance, but all those points are -- they are front and center on our thinking. So thanks for bringing it up.

Okay. The same questioner has another part to this and it says the branding of a corporate name is an important vehicle to many successful companies. Our name, FRMO, is a difficult name to remember and even to type without being auto corrected. The name also does not represent or imply the business we are in. If it's a goal of our company to establish a strong brand and identification, would you consider a name change that would describe the company as a more recognizable business within the industry it serves?

Yes. The answer is unequivocally, yes. So the best person to think of names. I think there was a time when I gave it some thought. I didn't think I had any brilliant ideas, but I opened it up to all the shareholders. I don't have monopoly on ideas for names. So anybody who has a good idea in that respect, I'll certainly consider it. And don't be shy about sending us your suggestions. So I'm very open to that. And if it has a good thought, please send it in, and we'll give it every consideration.

Okay. The next question, how can FRMO shareholders value the holdings of Miami International Holdings, which we also call MIAX, since it appears to be a private company?

Okay. Well, one way to do it is we actually valued it for good or ill on the financial statement. We gave it a value of $7-plus, which I remember exactly what it is. We gave the value of $7-plus a share. Secondarily, in the transaction, Minneapolis Grain Exchange and MIAX, the shares are going to be valued by an independent entity. And you can look at that. But thirdly, there are a lot of interesting things happening at the MAIX that it's probably better that MIAX speaks for itself, but I don't know that -- I think it's fair to say that some of this stuff is just not reflected in the value assigned to the company, one of which is, and this is publicly available information. So one of the issues with MIAX is that our theory of exchanges was simply that you need 2 things: you need technology, you need licenses. And in my way of looking at life, I thought the licenses are harder to get than technology. Technology is -- really is the product of human ingenuity. And if you have the money, you can hire people, and the humans are ingenious, and they'll come up with brilliant technology. The license, you can have all the money in the world, regulators don't want to give you a license to do something, you're just out of luck. So it's not reflected in any value we carry on the FRMO financial statement. But hear this, on August 14, sometime -- many days ago, the MIAX got approval, and this is public information, got approval to launch an equities exchange, which is called MIAX PEARL Equities, and I believe the first day of trading is going to be September 25, 2020. Let me tell you why that's important. It's important because MIAX at the moment is largely an options exchange. And if you're an exchange, the most important thing to an exchange is volume because the costs more or less stay the same, even if volume goes up because it's more transactions on the same technology platform. If you have an equities exchange, additional options exchange where a lot of people would trade equities versus stock and stock versus equities. Most option traders do that sort of arbitrage. And Miami wasn't a position to capitalize on that until they got this license. That radically, in my opinion, radically changes the value. And you might ask me how radically does it improve the value? Well, we'll have to wait until after September 25 and see how radically the volume improves. But I actually think that's important. And then with regard to Minneapolis, don't forget, MIAX is now going to be -- with the merger of Minneapolis is going to be also a futures exchange with a clearing house. Clearing house, getting a clearing house license, not easy to do. So I believe the exchange which is a future, it applies to every exchange, but I'll throw MIAX into the group, that the securities that trade unexchanged today represent primarily interest in corporations. Even an option, it's just an option is a right to buy interest in the corporation. So people want to express an economic view via interest in corporations. You might say, I think the GEP is going to go up, as an example. Okay. Well, maybe you're right. But then GEP really does go up, but maybe the value of equities in general was too high. Your analysis of economy was brilliant. But unfortunately, the equities were too richly priced and they go down anyway. So what was the goal of all the brilliance? What was the point of it? So I believe the exchanges of the future are going to give you -- they're going to create securities where you have the opportunity to invest exactly in accordance with your economic theory. So you believe the GEP is going to go up. There's actually going to be a security. I'm not saying it's going to be MIAX, it's going to be somewhere, just to give you a sense of what -- why futures is so important to add to this exchange. It's going to be a security, and you're going to say, if GEP goes up by more than 2%, you get paid whatever. And if GEP doesn't go up, it goes down, you have to pay somebody else. And therefore, securities are going to be created that pertain with precision to people's views on currencies or interest rates or economies or what have you. The nature of exchanges are going to change radically. And if you wouldn't express a certain view, equity is in bonds, bonds, in particular, because you see what the yields are right now, I don't know that you can express the views you have by capital markets or one can express one's views that capital markets with conventional securities. So there's just huge opportunities out there. If you can get the license married with the technology. And that's what's happening in MIAX. So equities, options, clearing house, don't forget Bermuda, which is another national exchange, which, by the way, is a monopoly, which has certain relationships with Europe that could prove to be valuable. There's a lot of great stuff going on there. A lot of great stuff going on there. And if you're asking me, I know the question -- the thrust of the question is, well, what's the price of -- give me a number, and I can't -- obviously, I can't give you a number. I just think that wonderful things are going to happen. And we'll just have to wait and see if they do. So I hope that's enough detail.

Okay. The next question: Is FRMO seeing investment opportunities with the likely reversion of ETF/index funds with heavyweights and the so-called FAANG, that's Facebook, Apple, Amazon, Netflix and Google or similar investment opportunities?

Well, the best way to answer the question is, it's a -- this is going to be a process. This is not going to change radically on a day-by-day basis. This is a process that's going to take a long period of time. The problem is from the index/ETF point of view, you now have concentrations. The whole idea behind the index is, you can quickly get diversified. But if you're not going to be diversified, if you be concentrated, yes, it's an index in name, but it's not a diversified investment. So the area of indexation if you just can't get exposure to doesn't exist. Or if it does exist, it's marginal exposure, like before I mentioned, precious metals exposure in indexes. It basically doesn't exist unless you buy a gold miners index, but even a gold miners index itself is concentrated because it's based on market capitalizations. So it's much more difficult to get a true geographic exposure to gold, if you're going to use indexes. That being the case, it's a major opportunity for asset managers to create exposures, except even the asset managers are gone. Now you can understand why we're going the direction that we're going. So if we're going to convince people that you need different exposures, we got to eat our own cooking. We have to -- we got to do it first, which is now you understand why it is HK hard assets and you understand why we have the orientation we have. It's going to happen, but we're talking about trillions upon trillions of dollars of investment. And the nature of investing basically has to change, like as an example. In modern portfolio theory, the beta of the S&P is defined to be 1. Beta is a measure of variability. It doesn't matter how concentrated technology the S&P 500 is, the beta is always going to be 1 by definition. So what if it were -- to take it to an extreme case, what if it were 99% technology, is it defensible to say, the beta of the S&P is 1. At some point, people are going to see the flow in the logic, but as I said, it's a process. I don't think it's going to be a magic bullet. Maybe I'm wrong about that. But it took really 3 decades to bring indexation to level to dominant strategy. So having taken 3 decades to make a dominant strategy, I guess, I see anything is directly possible. It's hard to believe that in 3 months it's going to go to another strategy or to a much far less important strategy for the simple reason that the active managers with the records who do something different don't exist anymore, they're gone. They would have to be created if you're going to have an alternative to indexation. And that's going to take time in my view. So I hope that answers the question.

I think it does. Okay. The next one relates to Winland and the question is: I'd like to better understand the accounting and valuation for Winland's trade claims. The shareholder letter states that the crypto-related claims are worth about $600,000, but Winland's recent interim report list them at $350,000. Also, could you provide the rationale for the transfer of crypto mining equipment to Winland in exchange for FRMO's further share participation?

Okay. Let's do the second part first. So the idea is very simple. If you want to build a big cryptocurrency business, we might need outside capital. And we think FRMO is undervalued. So I really wouldn't want to issue any FRMO shares for that purpose. So the idea is, outside of -- there are a lot of things going on at FRMO, and it could well be that the market doesn't pay a lot of attention to the crypto mining assets. You could even argue the markets don't pay a lot of attention to a lot of things that FRMO does. So if you can move in the company where the cryptocurrency mining is dominant, and I think there -- you can see some fiscal logic to this, look at the change in the price-to-book value ratio of Winland pre deal and post deal. So I know there's not a lot of trading not a lot to base it on, but nevertheless, it is a radical difference in valuation. So maybe there's some truth in that. And maybe there's a possibility to make it a bigger business. Even if not, Winland is going to have the crypto assets. It's not that FRMO is getting a crypto business, it's just that the crypto assets, the mining assets that we send to Winland as they accumulate crypto bitcoin or other cryptos that we begin to stockpile, we want to see how the market values that. And they might value it in a very different way than they value crypto inside of FRMO with all the various things they do. So by no stretch of imagination is FRMO getting out of the cryptocurrency mining business. We're still going to be there. And at the right point, we're going to buy more cryptocurrency mining equipment. We -- in FRMO we accumulate more coins each and every day. Yes, it'd be a tremendous number, we accumulate more coins each and every day. Regard to the valuation of the assets. So basically, the trade claim, known as -- the trade claim in question that you're referring to is a Mt. Gox trade claim. So let me just describe what it was. So Mt. Gox was a bankruptcy. So Mt. Gox basically got hacked many years ago. And the thing is that Mt. Gox still had a lot of crypto. Didn't lose all its crypto, lost some of its crypto. So the people who were clients of Mt. Gox were entitled to their pro rata share of the crypto that left, which is actually a quite considerable sum of crypto. And basically, it's locked up in there. So it's in a Japanese bankruptcy court. And the legal process moved very slowly. So some people said, I want my cash now. I don't want to wait till the Japanese bankruptcy court releases the bitcoin, who knows what the bitcoin is going to be worth whenever that happens. I know what Bitcoin is worth today. So basically, you have to -- you can't value it exactly based on the amount of bitcoin that's there because you have to discount it by something, and that's a matter of subjectivity. Secondarily, what happens is bitcoin appreciates. It's not like a normal trade claim where someone owes you $1,000, and you might value it at $0.80 a dollar and $0.70 a dollar, which you might not even collect the face amount. But if you did, that's what it is. In the case of -- in the case of Mt. Gox, bitcoin has actually been appreciating, and who knows at the time where it's going to be. So it was a way of buying bitcoin, owning bitcoin cheaper than buying it in the open marketplace. And as I said, you have to discount it, and that can only be a subjective judgment. So I don't know exactly. I can't give you a formula at which they valued it. But I guess in the vernacular of discounting things, they refer to it as a haircut. So I think it's fair to say that it's conservatively valued. How conservatively I just -- I don't remember what the formula is. It was explained to me, but don't have that -- I don't have that level of retention. I have to look at a document to find out what it is. I think it's conservative. I hope that answers the question.

I think so. Let's see now that we have a couple that are MIAX related, and maybe you've already touched on this. One part of it is: What is the latest on the MIAX spikes futures? And then related to MIAX: What percentage ownership will each of Horizon and FRMO have in the Miami international Exchange after the merger with MGEX? Have there -- okay, it's something else. Okay. Go ahead.

Okay. Well, let's just do the second thing. So I don't have a hard and fast number yet because the value of the Minneapolis Grain Exchange exceeds $100 million. And some people are going to have the right to take cash. How many are going to take cash, I really don't know. I'm sure some will. So therefore, I can't calculate the number of shares that are going to be outstanding of MIAX after deal is consummated. So when the deal is consummated, I'll have a hard and fast number, and I'll share it at the time. But I will say this that our ownership, any way you look at it, and whatever the outcome is, our ownership of MIAX in percent terms is going higher. There's no question about that. So we'll have to -- we'll just wait and see for the actual number. In terms of the spikes, I really should let Miami talk about the spikes. So I'll just talk about what the issue is. You can understand what the issue. And I believe it's -- when you hear the issue, you'll understand it's, in my view, and this is my personal opinion, and I could be wrong, I think it's very likely to be resolved. So the spike is a comparator to the VIX. And the only -- the major difference is the VIX is based on options on the S&P futures, which are clearly commodity. The spike is based on options on the S&P Spider, which is an ETF. And you might say S&P future, S&P Spider, it's the S&P 500, you might say, "What's the difference?" Well, the difference is the S&P future has a fair value component, meaning when you buy the future, you don't get the dividend. And you don't put up 100% of the value. So there's a [ time ] value of money aspect to it. So the S&P future actually has a modestly different value than the S&P Spider. So you could argue that, well, the S&P Spider, it's the S&P 5 -- it's the actual S&P 500. That's the better -- that's a more reliable number. And therefore, in that sense, maybe a better off, but there's less noise, fiscal noise in the spike, which is based on the Spider than is based on the S&P future. Okay, well and good. The trouble is that from a regulatory point of view, and this is a very extract point, so I'm going to try to make it as simple to understand because you're going to say, "How could this be?" But I assure you it is. The regulatory authority says you're going to have an index, you have to have a broad-based index. So in index, I believe the number is if you have an index based on less than 10 equities, it's not broad-based. And it requires a different kind of regulation. Index is broad-based. You'll say, "Okay, but if the S&P Spider has 500 securities in it, that's got to be broad-based. Well, in a regulatory sense, yes, the S&P Spider is 1 security. Yes, that security contains 500 securities, but the S&P 500 Spider is 1 CUSIP number. And you could argue that it's 1 security. And therefore, it's not broad-based. That requires a different kind of regulation than the VIX future because even though it also is theoretically 1 security, but that's a future and comes under a different kind of regulation than a single security known as the S&P 500 Spider, even though it actually represents 500 stocks. That's basically a legal issue. And you might say it's very abstruse. And why would we get to that point? Well, that's the point it is. And I'm not the one involved in the day-to-day. I think now that I've described the issue, I think you can see that there's a resolution to it. What exactly the resolution is I'm not in a position to be able to relate that. But I think I described the issue. And I think you can see why it is what it is. It's not a big deal in my view. I believe it's resolvable. So -- but that's me, and I am not a member of the bar association. But my layman's knowledge of law and my knowledge of indexes, my view is, and just my view, take it for what it is, my view, I believe it's resolvable. So now you understand the issue and you can handicap it as well as I can. That's what's going on.

Okay. The next says: I was interested to read in the shareholder letter that "the securities exchange industry recognizes the limitations as well as the dangers of the current indexation movement. The professional investment management industry is moving in the opposite direction." Please explain more about how the securities exchange industry is indicating its recognition of these limitations and how they might take advantage of an unwind in indexation.

Okay. Well, obviously, the whole purpose of having an index is getting instantaneous diversification. So if you're going to be concentrated, you're not diversified. And legally speaking, you're still an index. But philosophically speaking, you're not doing what an index is supposed to do. You're taking a bet. And just like an active manager is taking a bet. Now maybe that bet could be right or that bet could be wrong, but it's a bet. So people are looking for other exposures. The problem is it is extraordinarily difficult to actually find other exposures. So we talk about the inflation exposure. So just imagine. Let's say that people agreed with us. Let's just say they did that I agree with you we would like to have a lot more inflation exposure. By the way, in the world there is literally over $100 trillion of assets to manage. Let's say, and I'm throwing out a number just for luster purposes, it means nothing other than illustration. Let's say, of the trillions upon trillions and trillions of dollars, let's say, it's well in excess of $100 trillion, it may be $200 trillion, let's say, the world decided, "I think there's 1 in 20 chance of 5% of inflation -- 5% chance of inflation? Yes, help us -- give us a 5% exposure to inflation." How can we possibly do that? There's not enough market capitalization to even do it. Once you get beyond Exxon and Chevron, which are big capitalization companies, look at what's out there. There's not a lot of market capitalization out there. That's energy. Go away from energy, go into forest products, agriculture, precious metals, there's really not a lot at all. So it's all well and good to say it. But actually doing it, the execution, I don't know how you could actually do it. So this seemed to us, we couldn't propose it. First of all, just ethically, we couldn't propose that we're actually doing it ourselves. And secondly, just from our own selfish point of view, if we actually were successful and convinced people, we'd be in a rush with everybody else trying to buy these assets at ridiculously high prices because the amount of money, even assuming a very low consensus probability of inflation, there's so much money that could go into it relative to the market value of what it is. You have to go in first. You just have to. Otherwise, it's an exercise in futility. So the difficulty is, and now that you understand that point, how is the world going to have -- and you could decide what a meaningful exposure is. But how is the world going to have a meaningful exposure in something else when the market capitalization of that something else is very low? So if people have cited an inflation as just one example, it could be other things. So what if it were art? Hey, you could say art is inflation beneficiary. But what if it was? People have done it. Most art is not liquid. Most people are not interested in selling, that it's not homogeneous. How would you actually go bad? And then if you did it, how would you go about valuing it? So I mean, the -- when you say it different than what anyone says, a different asset class, I guess it's limited only by the power of the human imagination. Look at the big technology stocks, and we have -- now have $2 trillion market capitalizations. It's just one stock. Find an asset class that's arguably different from the S&P. Whereas one stock, the biggest stock in the S&P, has over a 200 -- has over a $2 trillion market capitalization, find me one asset class, an asset class, not a stock, that is ending close to a $2 trillion market capitalization. The whole energy industry, if you bought everything, is -- it's in the hundreds of billions of dollars. And even then, it isn't pure energy because Exxon, Chevron, British Petroleum, they're also -- they also have alternative energy. They also have chemicals. There's a lot of things going on there. So even if you bought those companies, you're still not pure energy. If you want to do exploration and production, market capitalization is a fraction, a small fraction of the biggest stock in the S&P 500. And there are plenty of stocks that rival that market capitalization. So how would you actually do it? You could say real estate, but that's not liquid. There's REITs, true, but if you took every REIT in the world and add them all up, it's not even a small part. If you bought every REIT that was publicly traded, you wouldn't get to the market capitalization of just the biggest stock in the S&P. You wouldn't even be close to it, even if you could even do it. But obviously, it's a ridiculous example. Are you really going to buy 100% of every publicly traded REIT? And then they wouldn't be publicly traded. Then they wouldn't be liquid. What good is that going to do you? If you said, "I would like to buy 5% of every publicly traded REIT, so every real estate exposure," and what have you really done? That's a lot of buying. And how much has the world really diversified itself? Not a lot. Orchestrated. I'm trying to bring out the point that to orchestrate this is unbelievable. And by the way, I'm just talking about stocks. The publicly traded debt in the United States, not just treasury debt but all forms of debt, it's probably $40 trillion. So people are owning $40 trillion worth, and more is issued every day, $40 trillion of debt, and the yield's almost 0. So let's say you wanted to get that $40 trillion into something that had a better return. What exactly would you buy? It's always possible to sell a few million dollars of bonds, and you can buy a few million dollars of some security we have. You can always do that. But in the context of the numbers that we're talking about, it's just meaningless. That's the orchestration problem. See, everybody thinks that, and they're very, very, in my humble opinion, misguided to think this, they think that, "Well, these indexes is dominated by these unbelievably liquid securities. And I know the tree doesn't go to the sky. And one day, I'm going to have to get out. And when I do, it's going to be incredibly liquid." Okay. That might be true, then you'll be in a money market fund for a day or 2. And then what? What are you actually going to invest in? So there's a certain probability. We all have different views on what it may be. I myself think that a big risk is inflation, but I might be wrong. But let's say people agree with me. How could they possibly deploy into inflation beneficiaries, I mean, any significant amount of money? So it's just not even conceivable. And there are other investment themes that aren't even that good. They only have even liquidity of the inflation beneficiaries. So you see what the problem is. It's a big problem. I think the problem is recognized. I don't think anybody knows what to do about the problem. We're going in this direction because we think there is a certain probability of inflation. It's not 0. So for example, if you thought there's a 100 chance of inflation, then logically, you should put 1% of your money on inflation beneficiaries. If you think there's a 2% chance of inflation, you should put 2% on inflation beneficiaries. So add up all the publicly traded assets in the United States of America, and 2% of that number to go into inflation beneficiaries, not possible. That's not possible. Now you understand where we're coming from. So we end up being right, only in the sense that we're convinced not that we have inflation, but we merely got consensus on, there's a 2% probability there's going to be inflation. You can see with the -- how gigantic the orchestration problem is, let alone if we actually had the inflation. Can you imagine what would happen? Who would want to own a low coupon bond? The answer is nobody. And then there's all the private securities like bank debt. What happens in private equity? And on and on and on it goes. So I hope that answers the question.

Okay. We're coming to the end of the questions. There are basically 3 more, 2 are -- 1 is about the ETF side, and 2 are about crypto. And one, I'll give you this one. It's probably a short answer. HK Hard Assets' percentage of their ownership by FRMO is increasing in each quarter. Is there an ongoing buy-in plan in place with the HK Hard Assets?