A $350 billion Anthropic stock market flotation would seem, at first glance, like the sort of thing that happens only at the frothiest market peaks. Add in murmurs about another AI giant, ChatGPT maker OpenAI, going public and it’s easy to assume we’re reliving the late-1990s.
However, if you look at the signal that mattered most back then – equity issuance – today looks nothing like 1999.
So says portfolio manager and researcher Dr Owen Lamont, an expert in dotcom dynamics who has studied how managers behave when their shares are mispriced.
Firms tend to issue stock when they think it’s expensive and repurchase when it’s cheap. In the run-up to the 2000 crash, America’s biggest companies were issuing equity “hand over fist”. Cisco, Microsoft and their peers expanded their share counts even as retail investors poured in.
RM Block
Insiders were selling, outsiders were buying – classic bubble dynamics.
Today’s picture is the opposite. Of the five largest US companies, says Lamont, only one is issuing shares; the others are shrinking their floats. Current issuance levels look much like the past 20 years. Basically, the market is distributing cash to shareholders, not extracting it.
None of this rules out speculative pockets in AI, nor does it predict that an Anthropic IPO would be sensibly priced. However, net issuance is “arguably the single best predictor of long-term stock returns”, says Lamont, and today’s figures strongly suggest the market is not behaving like a bubble.
In 1999, issuance surged. Today, corporate America is buying back. Until that flips, the dot-com parallels don’t quite hold.
