Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Katie some sort of take your children to Bloomberg Television day.
Speaker 3: Yeah. I feel like that's evidenced by all the children
Speaker 3: that are well, there are a lot of children walking
Speaker 3: at where are your kids?
Speaker 2: I have never once been informed in advance or frankly
Speaker 2: in real time about it take your child to workday.
Speaker 2: I just show up and all the kids are here,
Speaker 2: and they're like, oh, yeah, take your child the workday,
Speaker 2: And like I.
Speaker 3: Hear, I hear there's a lottery. Not everyone's allowed to
Speaker 3: bring their children, is my understanding.
Speaker 2: Okay, I wasn't informed with the lottery. It's fine, my
Speaker 2: kids have school. It's fine, it's fine.
Speaker 3: It's fun. I mean you're not getting anything done that day, right.
Speaker 2: Someone at Bloomber Opinion had.
Speaker 3: His kids here and a kid.
Speaker 2: I was like, a bad influence. I was like my
Speaker 2: daughter like first tried root beer here. But I saw
Speaker 2: two kids recording like on the camera in the lobby
Speaker 2: that's waking behind them, and I could see the prompter
Speaker 2: and it was like at Bloomberg News for kids, Yeah,
Speaker 2: It's like are they is that going to be aired?
Speaker 3: It's cute that they do that. Certainly not on my show.
Speaker 2: No, we're killing it.
Speaker 3: Man, You're a competitive I don't know why I want
Speaker 3: to go tackle those children. Get away from my prompt
Speaker 3: looking for.
Speaker 2: Your job In approximately twenty years.
Speaker 3: I thought I was having to worry about AI.
Speaker 2: Hello, Welcome to The Money Stuff Podcast, your weekly podcast
Speaker 2: where we talk about stuff related to money. I'm Matt
Speaker 2: Levine and I heard the Money Stuff Colm from Bloomberg Opinion.
Speaker 3: And I'm Katie Greyfeld, a reporter for Bloomberg News and
Speaker 3: an anchor for Bloomberg Television.
Speaker 2: Should we talked about the weather? I feel like we
Speaker 2: talked about the weather last week and now we're talking
Speaker 2: about the weather again. There's a very economically important local
Speaker 2: climatic zone, which is that apparently somewhere within Charligall Airport
Speaker 2: in Paris, there's a censor that tells you the temperature
Speaker 2: for like Paris. Yeah, and so polymarket takes quite a
Speaker 2: lot of bets on the weather in Paris. And at
Speaker 2: two points this month it's been reported the temperature in Paris,
Speaker 2: by which I mean the temperature at this one sensor
Speaker 2: in the airport spiked by like four or five degrees
Speaker 2: celsius in the space of a few minutes, causing very
Speaker 2: long shot bets on this temperature to pay off to
Speaker 2: the tune of tens of thousands of dollars. And so
Speaker 2: the French like meteorological service is investigating, and you know
Speaker 2: their tweets about someone took a hair dryer to Sharyl
Speaker 2: the Gahala and made thousands of dollars treating these weather
Speaker 2: derivatives so good.
Speaker 3: Yeah, I have to imagine there's going to be so
Speaker 3: many more cases like this.
Speaker 2: Right, I tried to write about it.
Speaker 3: I feel like you did successfully.
Speaker 2: Well, yeah, I wrote words about it, Like there's market
Speaker 2: manipulation in the world. Right, there's some stuff tapping right now,
Speaker 2: lying stuff, and there are derivatives on the underlying stuff,
Speaker 2: and people can manipulate the stuff to cause the derivatives
Speaker 2: to go up. And I've written about dozens of cases
Speaker 2: over the years. But like, what prediction markets have done
Speaker 2: is they've created a sort of infinite surface for market manipulation.
Speaker 2: Like anything you can think of, there can be a
Speaker 2: prediction market on and the outcome of anything you can
Speaker 2: think of might be manipulable. And so if you are
Speaker 2: buying like grain futures, the weather in the Midwestern United
Speaker 2: States is an input to the price of those grain futures,
Speaker 2: but like a leader of air in the Midwestern United
Speaker 2: States is not is not a material input. But if
Speaker 2: you're buying the polymarket, like bet on the weather in Paris, contract,
Speaker 2: one tiny little spot causes the vets to pay off
Speaker 2: or not. There's always gonna be market manipulation. But like
Speaker 2: the prediction markets have just created this vast new possibility
Speaker 2: of things to manipulate.
Speaker 3: It's exciting, right, it.
Speaker 2: Kind of is.
Speaker 1: Yeah.
Speaker 2: I mean, I don't know, I feel stupid every time
Speaker 2: I write about it, but keep writing about it.
Speaker 3: I mean, it's clever, and some of them are clever
Speaker 3: and fun.
Speaker 2: I guess.
Speaker 3: I feel like I want to see photos or a
Speaker 3: diagram of like where this temperature sensor is. Yeah, I
Speaker 3: feel like they could fix this by just placing it
Speaker 3: higher rights drinking.
Speaker 2: Fountain like in the at the gate, you know, but
Speaker 2: it's probably not. It's probably like on a runway, yeah, right,
Speaker 2: because like you know, the weather in the actual airport
Speaker 2: is climate control.
Speaker 1: So yeah, it's I think.
Speaker 3: I don't actually eight degrees again, it would be in.
Speaker 2: Europe is less committitary conditioning. Then it's a good still.
Speaker 3: Still, that's yeah, still Yeah.
Speaker 2: I also wrote this week about bespoke parametric insurance. Yeah,
Speaker 2: so basically there's a good Bloomberg article about bad Bunny.
Speaker 3: I think it's bad Bunny.
Speaker 1: Yeah.
Speaker 2: He had a concert scheduled in like Columbia, and he
Speaker 2: worried about it being canceled for torrential rain. And he
Speaker 2: went to insurance companies to get cancelation insurance and they're like, wow,
Speaker 2: we can and sell your policy that pays off if
Speaker 2: it rains. But like the rain sensor is a mile
Speaker 2: away and it's like a very different microclimate where you are.
Speaker 2: And he was like, what if we built a weather
Speaker 2: station and it's not him, This is like insurance adjuster.
Speaker 2: They built a weather station inside the venue so that
Speaker 2: they could get paid out if it rained in the venue.
Speaker 2: The story was great because one of the things like
Speaker 2: it was like they could have built just like a
Speaker 2: rain collector.
Speaker 3: Yeah, but then you could manipulate.
Speaker 2: Then you could you could just get a watering can
Speaker 2: and pour water on it. It's like they had to
Speaker 2: build out a whole weather station because that you have
Speaker 2: all the confirmatory readings and if they just pour water
Speaker 2: into the weather to the rain sensor. Then they'll know
Speaker 2: appurrently the French Meteorological Service has this problem.
Speaker 3: Yeah, bad bunny. Should have just created a market on
Speaker 3: polymarket or kelcill.
Speaker 2: That's the thing, right. I wrote about this and I
Speaker 2: was like, oh, bespoke parametric insurance, and someone was like,
Speaker 2: is bespoke parametric insurance the same thing as a prediction market?
Speaker 2: And it's like kind of yeah, I'm glad the weather sensor.
Speaker 2: It's gonna be all we talk about. Famously boring topic
Speaker 2: of conversation, but coming up more and more often.
Speaker 3: It'll come up again talking about Avis. Yeah, do you
Speaker 3: know anything about as No.
Speaker 2: Davis budget is what it's called.
Speaker 3: That's too two or more different more have often used hurts.
Speaker 3: So I don't know much about AUS. I do know
Speaker 3: that the stock has been going insane ripped, and the
Speaker 3: consensus is that it's a short squeeze.
Speaker 2: What's interesting is this stog who was like one hundred
Speaker 2: dollars about a month ago, one hundred dollars a share
Speaker 2: and it is a It got to seven hundred and
Speaker 2: thirteen on Tuesday.
Speaker 3: Wow, it must have been a great earnings report.
Speaker 2: Yeah, say, the consensus is that it's not earnings DRIPPN.
Speaker 2: But it's not a fundamental.
Speaker 3: Their report on the twenty ninth of April.
Speaker 2: Right, maybe people have an inside you on the but
Speaker 2: I don't think so. The phrase that is normally thrown
Speaker 2: out a short squeeze and a couple of good reasons
Speaker 2: for it, when is that is a heavily shortened stock.
Speaker 2: He's like, short interest is like a somewhat mysterious thing
Speaker 2: to report, and you often get it onto ala. But
Speaker 2: something like sixty percent of the shares have been shorter.
Speaker 2: It's a little lot. But the other reason that people
Speaker 2: talk about a short squeeze, and I wrote about this
Speaker 2: last week, is that two hedge funds own one hundred
Speaker 2: and eight percent of the stock, which if you do
Speaker 2: some simple math, like if you want one hundred and
Speaker 2: eight percent of the stock and you call in all
Speaker 2: of your borrow, then there's no borrow to be found. Now,
Speaker 2: it's not that's not exactly what happened here. One thing
Speaker 2: that has happened is I've gotten several emails from people
Speaker 2: being like, is there actually a short squeze? Because like
Speaker 2: there's no reports of hedge funds being like carried out
Speaker 2: like you know, like in gamestat where like, you know,
Speaker 2: a big hedge fund closed because of the game stop
Speaker 2: short squeeze. Yeah, there's not really any reports that here.
Speaker 2: Bloomberg has been reporting that people were adding short positions
Speaker 2: as the stock was going up and have now made
Speaker 2: billions of dollars more than all of setting the billions
Speaker 2: of dollars they lost on the way up. Yeah, it's interesting.
Speaker 2: So these two hedgehunds own one hundred eight percent of
Speaker 2: the stock, but they don't really They own like sixty
Speaker 2: nine percent of the stock, right, and then they have
Speaker 2: big swap positions where like you know, traditionally, the way
Speaker 2: a swap works is like a bank writes the hedge
Speaker 2: fund of contract time, we'll give you the upside in
Speaker 2: the stock and you'll lose the downside, and the bank
Speaker 2: hedges it by buying stock. But it doesn't have to
Speaker 2: hedge it by buying stock. One thing I was thinking
Speaker 2: about is that if short sellers want to be short
Speaker 2: a lot of the stock, and if like these two
Speaker 2: hedge funds are called SRS and Pentwater want to be
Speaker 2: long a lot of the stock, they can just do
Speaker 2: a bet with each other. The hedge fund says if
Speaker 2: the stock goes up, I'll pay you, and if the
Speaker 2: stock goes down, you'll pay me. Right, that's a swap.
Speaker 2: And what might be happening here is that that might
Speaker 2: be happening. What might be happening is that the short
Speaker 2: sellers are short the stock on swap, SRS and Pentwater
Speaker 2: are along the stock on swap. The bank is sitting between
Speaker 2: them and basically brokering a bat between the short hedge
Speaker 2: funds and the long hedge funds. And then there's no
Speaker 2: short screeze. Everything's easy, you know. I mean, there's a
Speaker 2: little bit of short squeze youet, like collateral calls, but
Speaker 2: basically you can just sit there until the world returns
Speaker 2: to reality.
Speaker 3: I do also like the psychological maybe theory that if
Speaker 3: enough people think there's a short squeeze happening, yeah, more
Speaker 3: people are going to pile in, right, regardless of whether
Speaker 3: it's truly happening at scale.
Speaker 2: Yeah, because like a short squeeze is almost like a
Speaker 2: magical incantation for a meme stock. Right, You're gonna have
Speaker 2: a stock go up seven x without a short squeeze
Speaker 2: just because retail investors thinks there's a short squaze, right,
Speaker 2: I mean that's you know, that's game stop. Yeah, well
Speaker 2: there there was one probably, but right, and like the
Speaker 2: setup here with the huge amount shorted and the huge
Speaker 2: amount long really encourages someone to think, ooh a short
Speaker 2: squeeze and then pile into it. So curse to me
Speaker 2: that my writing about it last week.
Speaker 3: Is this your fault.
Speaker 2: Not a lot of meme stops are born in money stuff.
Speaker 2: But who knows?
Speaker 3: There was an interesting jp we're going to down.
Speaker 2: No other fundamentals, don't justify.
Speaker 1: This, Yeah, exactly.
Speaker 3: It downgraded them to underweight from neutrals, saying it has
Speaker 3: an unsustainable valuation not supported by them.
Speaker 2: Raise their price target, yes, because their pricever is like
Speaker 2: one hundred bucks or whatever. And then it goes to
Speaker 2: seven hundred and they're like, okay, well now it's a
Speaker 2: sell at two hundred.
Speaker 3: Well they boosted the price target to account for capital
Speaker 3: markets opportunity. And this is what I wanted to bring
Speaker 3: to your attention that they wrote we view the recent
Speaker 3: extraordinary quote short squeeze driven rally and avis budget shares
Speaker 3: as a potentially significant opportunity for management to create lasting
Speaker 3: value via opportunistic capital market transactions.
Speaker 2: I was thinking about that when you're a meme stock
Speaker 2: and you say, okay, we're going to rip off an ATM.
Speaker 2: Like that works, right, That's become like a standard piece
Speaker 2: of the playbook. Now you to at the market stock
Speaker 2: offering to take advantage of your memestock status. It's tougher
Speaker 2: when you are like nominally purely a short squeeze, because
Speaker 2: the thing about a stock offering is that like alleviates
Speaker 2: the short squeeze problem. Right, you can sell the shares
Speaker 2: to the shorts or whatever. Right. Yeah, So when people
Speaker 2: are like really amped for short squeezes, they get mad
Speaker 2: if the company talks about issuing stock because that like
Speaker 2: somehow dew flights to the short squeeze. But sure, right,
Speaker 2: I mean if your stack's at seven hundred, sew some stock. Yeah,
Speaker 2: And I was wondering if they if they would do
Speaker 2: some sort of at the market offering. And it's it's trickier.
Speaker 3: Yeah, has the moment passed?
Speaker 2: The stock was down Tuesday was the peak, and it's
Speaker 2: you know, we're recording this on Thursday, it's up two
Speaker 2: hundred and thirty dollars or something, which is you know, yeah,
Speaker 2: like has the moment passed? It's doubled in the last
Speaker 2: month for no reason. It's still a good deal, but
Speaker 2: it's not seven hundred.
Speaker 3: Well, at least JP Morgan thinks that what's the price
Speaker 3: start now? Their price target is one hundred and sixty
Speaker 3: five dollars. It was one hundred and twenty three dollars.
Speaker 3: We'll see earnings are next week.
Speaker 2: You can be a Bye at one twenty three and
Speaker 2: the stocks at one hundred, and then you're a cell
Speaker 2: at one sixty five when the stock is at seven hundred.
Speaker 1: There you go, speaking of stocks.
Speaker 2: Should I about SpaceX?
Speaker 1: Yeah?
Speaker 3: Probably public. I can't wait.
Speaker 2: You'll have to wait. It's supposedly going public in June.
Speaker 3: I know there's no real guarantee of that, that's true,
Speaker 3: especially if they want to do some interesting M and A.
Speaker 2: I love it so much. Decided to buy Cursor, Yeah,
Speaker 2: for like reasons, like they're.
Speaker 3: A fundamental reasons.
Speaker 2: Yeah. Then Thomson stra Techery has a nice piece about
Speaker 2: why this makes sense, right, I mean, like SpaceX has
Speaker 2: SpaceX is a rocket company, but it's also an AI company,
Speaker 2: And as an AI company, it's like quite good at
Speaker 2: getting chips and building data centers and just sort of
Speaker 2: like infrastructure. Yes, but you know it's a hot mess
Speaker 2: in terms of building a model, and so it seems
Speaker 2: a little bit like they're importing a AI lab into that,
Speaker 2: you know, use their AI infrastructure, which makes sense, right.
Speaker 2: It turns out like the big use case for AI
Speaker 2: right now is coding tools and XAI fell behind in
Speaker 2: the coding tools race and Cursor had a lead in
Speaker 2: the coding tools race, and you know, maybe even the
Speaker 2: MOS of chips will help with that. So it makes sense.
Speaker 2: But the problem with it is that theoretically SpaceX is
Speaker 2: going public in June, yeah, and it's.
Speaker 3: April and not for much longer either.
Speaker 2: No, And traditionally, when you go public, you like, you know,
Speaker 2: disclose information about your business, and like SpaceX's business is
Speaker 2: changing from week to week, as you can tell from
Speaker 2: the fact that it's called SpaceX and we're talking about
Speaker 2: its AI business.
Speaker 3: Yeah, well, data centers in.
Speaker 2: Space, Data centers in space.
Speaker 3: Absolutely, it's real, Matt, it's.
Speaker 2: Something, it's it's it's really going to be a part
Speaker 2: of the pitch. But the point is you can't like
Speaker 2: acquire Cursor, generate pro form of financials, put the pro
Speaker 2: form of financials into the prospectus, run it by the
Speaker 2: SEC get the auditors to seign off, educate the research
Speaker 2: analysts about it, and go public in June. If you're
Speaker 2: signing that deal in April. So they're not doing that.
Speaker 2: They're like, we're gonna buy Cursor, but we gotta do
Speaker 2: it after the IPI, So just put a pin in that,
Speaker 2: telling everyone we're planning it now, but no promises, no
Speaker 2: promises that are certain enough to require us to realize
Speaker 2: the IPI perspectives.
Speaker 3: I wonder if in the meantime you see another bitter emerge.
Speaker 2: It's an interesting question. I was thinking the opposite, which is,
Speaker 2: like Elon Musk has some track record of changing his
Speaker 2: mind about m and a mm hmm, particularly here, Like
Speaker 2: it seems apparent that this is not like they're signing
Speaker 2: a deal and then meeting once a week on a
Speaker 2: conference room to negotiate into CREATIONIA. It's pretty clear that
Speaker 2: like those guys are going to work at SpaceX tomorrow,
Speaker 2: you know, so, like they have a lot of time
Speaker 2: to fall out of love with Elon Musk, or for
Speaker 2: him to fall out of love with them, and if
Speaker 2: he changes his mind, he has to pay a ten
Speaker 2: billion dollar breakup fee. Break up He's like traditionally are like,
Speaker 2: you know, on the order of two percent of deal,
Speaker 2: and this one is seventeen percent of deal value.
Speaker 3: I was going to say, I mean even compared to
Speaker 3: like the Warner Brothers Discovery breakup like this.
Speaker 2: It's an enormous breakup fee.
Speaker 1: Yeah.
Speaker 2: And here's why. One because it's not like a signed deal.
Speaker 2: It's a little bit weirder, so it's like buying an
Speaker 2: option rather than like really signing a deal with a
Speaker 2: breakup fee. And two, he has a track record, you.
Speaker 3: Know, Twitter, which is part of XAI.
Speaker 2: Which is part of When Musk was like trying to
Speaker 2: get out of the Twitter deal, I had so many
Speaker 2: people email me and I kept thinking about it, like,
Speaker 2: is this going to affect his ability to do m
Speaker 2: and A in the future. Will people be hesitant to
Speaker 2: sign MNA deals with Elon Musk in the future after
Speaker 2: he flaked on this one? And he's the answer, Yeah,
Speaker 2: you gotta pay a lot of money.
Speaker 3: Because it is interesting that Musk's ambitions here are bumping
Speaker 3: up against like real human timelines. If he did want
Speaker 3: to really buy Cursor, he can't do it before the IPO.
Speaker 3: It just physically can't happen.
Speaker 2: You say, physically, Like the jerker is always that Elon
Speaker 2: Musk is constrained only by the laws physics about the
Speaker 2: laws of friends at the SEC, and you could imagine,
Speaker 2: you know, him yelling at the lawyers who like, please
Speaker 2: don't close another deal between now and the IPO. You
Speaker 2: can imagine being like, ad, it's just doing physically impossible.
Speaker 2: For whatever reason they didn't do it, they decided to
Speaker 2: hold off.
Speaker 3: It pours cold water also on some of the speculation
Speaker 3: of SpaceX combining with Tesla, because it kind of I
Speaker 3: don't think for the IPO it does.
Speaker 2: It's not going to come out before the IPO.
Speaker 3: Yeah.
Speaker 2: So the other thing that I wrote about SpaceX this
Speaker 2: week is that SpaceX is going public with dual class stock,
Speaker 2: so I don't know the perspectives is not public and
Speaker 2: like it's you know, they're blanks anyway. But I don't
Speaker 2: know how much Elon Musk owns, but like he will
Speaker 2: have ten times voting stock he shares with ten votes
Speaker 2: per share, so he will control SpaceX probably, which makes
Speaker 2: sense because one, if you're investing in SpaceX, you are
Speaker 2: clearly buying into the Elon Musk machine. And two, from
Speaker 2: his perspective, you know, like he said about Tesla, I
Speaker 2: don't want to build a robot army at Tesla if
Speaker 2: I don't control it. And all the more so when
Speaker 2: he's building like an intergalactic robot army to colonize Mars
Speaker 2: and data center, you know, all this stuff, like he
Speaker 2: needs to control it. So I get it. He's going
Speaker 2: to control SpaceX. It's going to go public with du
Speaker 2: a class stock. Tesla did not go public with du
Speaker 2: a class stock. And you can't really add it afterwards,
Speaker 2: like even if you get the shaoulders to vote to
Speaker 2: approve it, like the stock exchange rules like they don't.
Speaker 2: They don't like it. So he can't really add du
Speaker 2: a class stock in Tesla. And so there's these weird things.
Speaker 2: Every few years he gets a trillion dollar payback that
Speaker 2: then we talk about, you know, whether that's legal. It
Speaker 2: wouldn't be a trillion dollar pay package if they're just
Speaker 2: like you get ten times as many votes. Anyway, there
Speaker 2: is an obvious solution to all of these problems, which
Speaker 2: is you take SpaceX public with dual class stock. Elon
Speaker 2: Musk controls the votes and then two weeks later, maybe
Speaker 2: two weeks is optimistic. Two months later and then the
Speaker 2: combined company has doll class stock and Elon Musk controls
Speaker 2: both of them forever, and like they both you know,
Speaker 2: there's some overlap in like they're both building robot armies.
Speaker 3: Yes, like you know you only need one company building
Speaker 3: robot robot army.
Speaker 2: Well, you wouldn't want the robot armies to fight.
Speaker 3: I mean I would like.
Speaker 4: To see that.
Speaker 2: Yes, actually that would be probably probably like give them
Speaker 2: good for humanity. Elon Musk's root armies fight and annihilate
Speaker 2: each other, like somewhere off the shoulders of Oryon, you know, like.
Speaker 1: Just a theory.
Speaker 3: I want to get your take on. Is you know
Speaker 3: Tesla reported earnings on Wednesday, broke those on live TV.
Speaker 3: But right now Tesla is the only public option to
Speaker 3: get into the Elon Musk machine, as you call it.
Speaker 3: I do wonder if SpaceX going public takes the shine
Speaker 3: off of Tesla and sort of collapses the Elon Musk
Speaker 3: premium there.
Speaker 2: I think it's very possible. I think it's so interesting
Speaker 2: to me that Tesla spends so much time talking about
Speaker 2: AI and robots, and it's like you got to sprinkle
Speaker 2: a little of the AI dust on both of them.
Speaker 2: You know, you can't just do all the AI stuff
Speaker 2: in the AI company, because then you don't have the
Speaker 2: AI stuff in the other company. It's possible that the
Speaker 2: only public musk company, Premium, goes away, but then the
Speaker 2: possible merger with SpaceX Premium comes in and so nothing.
Speaker 3: Yeah, there's a passing of the baton there.
Speaker 2: I don't know.
Speaker 3: Yeah, Tessa's trading. It's something like one hundred and eighty
Speaker 3: three times forward earnings.
Speaker 2: By the way, Yeah, SpaceX is allegedly going public at
Speaker 2: one hundred times forwards revenue.
Speaker 3: It's going to be so fun. I keep thinking about
Speaker 3: what I need to do between now and the time
Speaker 3: I give birth, Like the events I have to live through.
Speaker 3: I have to live through Milkin, and I have to
Speaker 3: live through the SpaceX Ipo. I have to see them, right,
Speaker 3: and then I can have a child.
Speaker 2: Right, So please go publican dream life highlights in the
Speaker 2: coming year SpaceX Ipo.
Speaker 3: Birth of I'm to tell my child about this.
Speaker 2: Mommy, Where were you space Ex went public?
Speaker 4: Let me tell you.
Speaker 3: I hate the word zumping.
Speaker 2: Oh yeah, I was talking to my group chat about
Speaker 2: how much we all hate the work.
Speaker 3: Okay, this is America, right.
Speaker 2: I did not realize it's like a British real estate term,
Speaker 2: and so I'm less offended by it now because it
Speaker 2: likes sure fair, But no, it's a it's the term
Speaker 2: for like when you have a deal to buy a
Speaker 2: house and then someone else offer the higher price and
Speaker 2: you lose your deal to why house. And so there's
Speaker 2: a Bloomberg story this week about that happened dads fund
Speaker 2: portfolio managers. Yes, because the market for portfolio managers that
Speaker 2: multi strategy hedge funds is so tight that people who
Speaker 2: have quit their jobs and accepted new offers to go
Speaker 2: to other hedgephnes or while on gardening move getting poached
Speaker 2: at still higher offers to go to still other hedgephones
Speaker 2: are often to go back to their original hedge one.
Speaker 2: And what I read about is like there's a time
Speaker 2: value of hedgehod portfolio managers, where like ordinarily if you
Speaker 2: hire a hedge fund manager, if you hire a portfolio manager,
Speaker 2: you should expect to have to wait about a year
Speaker 2: for them to serve out their gardening leave. And that's
Speaker 2: a long time to wait, and you've got big plans.
Speaker 2: And so if you can find someone who's already served
Speaker 2: out eleven months of their gardening leave, they can start
Speaker 2: next month. Yeah, and so the hedge fund managers who
Speaker 2: are currently sitting out on gardening leave are in some
Speaker 2: sense the most desirable candidates, and so of course people
Speaker 2: bid them up.
Speaker 3: Yeah. A different term which I like is interception trade,
Speaker 3: which is good American football term that you just say
Speaker 3: you have to get the timing just right, which is
Speaker 3: called that hard. Well, yeah, but it's made easier if
Speaker 3: you are a recruiter and you have list yea of
Speaker 3: who you've placed in.
Speaker 2: You get someone a nice deal at a new hedge fund,
Speaker 2: and you set a calendar reminder for like eleven and
Speaker 2: a half months to check in with them so you
Speaker 2: can get them a higher offer. It is pretty evil.
Speaker 2: The thing that I most endorsed is like people get
Speaker 2: in that bag by negotiating up their offers, Like I'm
Speaker 2: all for it.
Speaker 3: Well, I love this quote. It's from Mark Greenberg, who
Speaker 3: is a former managing director at Point seventy two who
Speaker 3: now trained traders. You're talking about a group of people
Speaker 3: who are economic animals. They'll pay lip service to quality
Speaker 3: of life and where they live and the type of
Speaker 3: people that they're working for. But at the end of
Speaker 3: the day. One of the reasons the large firms have
Speaker 3: been so successful is because they can pay more they can.
Speaker 2: Right, this is also pure like it's just like you're
Speaker 2: good at profiting from optionality and spotting opportunities, Like it
Speaker 2: would be disappointing if you weren't doing this.
Speaker 3: Yeah, it does seem like a vicious price spirral, though,
Speaker 3: you know, what does it end?
Speaker 2: It doesn't end, you know, it ends if the strategy
Speaker 2: is not working. I don't know. I should mention there's
Speaker 2: as a lawsuit. Yeah, Schoenfeld suit a guy who worked
Speaker 2: at Millennium. Schoenfeld did like long, painful, vigorous negotiations to
Speaker 2: hire him. They signed an employment agreement with him, They
Speaker 2: signed a confidentiality agreement, and of course, of course, once
Speaker 2: he has that, he goes to his bosses at Millennium
Speaker 2: and is like, so, and Millennium.
Speaker 3: What do you think matched?
Speaker 2: And stay Yeah, which like you know, more powered to him.
Speaker 2: Schonfeld suit him Yeah, million dollars.
Speaker 3: His name is Adam Grunfeld, which is sort of like Graefeld.
Speaker 3: But yeah, apparently he held himself out during negotiations as
Speaker 3: a long term addition to Schoenfeld, capable not only of
Speaker 3: generating returns through his own trading strategies, but also contributing
Speaker 3: to the firm's intellectual capital. Of course, that's something it
Speaker 3: doesn't see. It doesn't seem that different of a playbook
Speaker 3: than any other industry, you know, sort of interview and
Speaker 3: chop yourself around and then you bring it back.
Speaker 2: The unusual thing is getting sued.
Speaker 1: Yeah.
Speaker 3: Yeah, Also, eleven million dollars is quite enough. But to
Speaker 3: that point, apparently Schoenfeld said that it had contemplated the
Speaker 3: possibility that Grunfeld might reneg on.
Speaker 2: The Yeah, every job in the world.
Speaker 3: Yeah, but I guess we're talking about a lot more
Speaker 3: dollar signs and like you said, lawsuits.
Speaker 2: So yeah, it's very striking. One thing I was thinking
Speaker 2: about when I first read about the interception trade was
Speaker 2: the reason the interception trade works is that someone who
Speaker 2: is eleven months into their twelve month gardening leave is
Speaker 2: more valuable than someone who's just you know, who's got
Speaker 2: their current job and has twelve months of gardening leave
Speaker 2: to serve. And like, one way to prevent that would
Speaker 2: be if your new job gave you a non compete
Speaker 2: before starting at your new job. But I don't think
Speaker 2: you can do it. I don't think you can sign
Speaker 2: a new non compete while you're still in the non
Speaker 2: compete from your old.
Speaker 3: Job, right, Yeah, but maybe that kind of.
Speaker 2: Happened here, Yeah, right where he signed the employment agreement.
Speaker 2: And so they're like, no, no, no, you can't leave to
Speaker 2: your original job because you already signed our employment agreement.
Speaker 2: It's almost like he has a non compete with his
Speaker 2: original job.
Speaker 1: Damn not.
Speaker 3: Really, couldn't Millennium foot to eleven million dollars?
Speaker 2: If you're leaving a job that has restricted stock, it's
Speaker 2: fairly traditional for your new employer to make you whole. Right,
Speaker 2: couldn't Millennium foot the eleven million dollar belt sure of it?
Speaker 2: Rather than if no one has to? I don't know.
Speaker 2: I mean, like, the argument is that he signed a
Speaker 2: binding employment agreement with an eleven million dollars liquid liquidated damages,
Speaker 2: Claus saying, if you don't show up for any reason,
Speaker 2: you have to pay US eleven million dollars to compensate
Speaker 2: for our lost opportunity here, which is not crazy, Like,
Speaker 2: it's just, you know, it's not how It's not how
Speaker 2: the world works in most employment situations, but apparently maybe
Speaker 2: it works in punch ups and that was The Money
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