WEBVTT - A Wounded Lion or a Beaten Mule: HF, TSLA, FOTSBA 0:00:02.720 --> 0:00:10.320 Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to 0:00:10.360 --> 0:00:13.280 The Money Stuff Podcast. You're a weekly podcast where we 0:00:13.320 --> 0:00:18.080 talk about stuff related to money. I'm Matt Levin and 0:00:18.120 --> 0:00:20.439 I write The Money Stuff COLMN for Bloomberg Opinion. 0:00:20.800 --> 0:00:23.400 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:00:23.440 --> 0:00:25.079 an anchor for Bloomberg Television. 0:00:26.360 --> 0:00:29.920 Katy, you know what my man career aspiration is, tell 0:00:29.960 --> 0:00:31.760 me still lose a billion. 0:00:31.480 --> 0:00:34.240 Dollars and come out better for it. 0:00:34.320 --> 0:00:38.800 Well you can't not. Yeah, well it's not the best 0:00:38.840 --> 0:00:42.199 possible career move. But up there, surprisingly I up there 0:00:42.200 --> 0:00:43.800 on the list of career moves that you can make 0:00:44.120 --> 0:00:46.080 is losing a billion dollars if you're a hedge fund 0:00:46.080 --> 0:00:49.000 trader or bank trader, because like, there's just got to 0:00:49.040 --> 0:00:52.720 be something special about you. If you use a billion dollars, well. 0:00:52.360 --> 0:00:55.680 You know what I always say, A wounded lion is 0:00:55.760 --> 0:00:56.520 still a lion. 0:01:00.160 --> 0:01:03.880 So The Shank Kumar has a great story about how 0:01:04.160 --> 0:01:07.600 hedgehund traders who lose money are in high demand and 0:01:07.680 --> 0:01:10.800 hopping among multi strategy hedgehunds, and it does feature a 0:01:10.840 --> 0:01:13.959 quote from a hedgehund re creator named Jason Kennedy who 0:01:14.000 --> 0:01:17.480 says even a wounded lion is still a lion, and 0:01:17.520 --> 0:01:20.680 the lion isn't mortally wounded, he will heal, and when 0:01:20.680 --> 0:01:24.199 he's fully back, that lion is worth a lot more money. 0:01:24.520 --> 0:01:25.200 I do love it. 0:01:25.240 --> 0:01:27.480 Like by the end of the metaphrase like also there's money, 0:01:27.680 --> 0:01:27.959 He's like. 0:01:27.959 --> 0:01:30.200 Wait, let me tie this back into what we're talking about. 0:01:30.520 --> 0:01:32.800 That's an incredible quote. Sometimes you read an article and 0:01:32.840 --> 0:01:34.960 you come across a passage that just makes you pause. 0:01:35.480 --> 0:01:36.240 That was this for me. 0:01:36.400 --> 0:01:38.920 Yes, I would definitely rather be a wounded lion than 0:01:39.160 --> 0:01:44.480 a beaten mule, which is a callback to our mailback episode. 0:01:43.680 --> 0:01:45.119 I'm the title of our episode. 0:01:45.240 --> 0:01:48.680 Jason Kennedy has a very optimistic take on this, that 0:01:49.520 --> 0:01:52.440 the lion will heal. Sometimes lions do get wounded and 0:01:52.480 --> 0:01:54.320 then they just die or they're never the same. 0:01:55.320 --> 0:01:57.840 I grew up in sort of an efficient markets world. 0:01:58.160 --> 0:02:01.880 I find it fascinating how quaint confident people are that 0:02:02.320 --> 0:02:07.040 they can identify investing skill. Clearly, people believe it and 0:02:07.120 --> 0:02:08.239 like they have good reason to believe it. 0:02:08.320 --> 0:02:08.440 Right. 0:02:08.440 --> 0:02:11.320 These are like large, successful firms that for many years 0:02:11.560 --> 0:02:15.200 produce good returns, but just fascinating to me that you 0:02:15.240 --> 0:02:17.160 can be like, Wow, this guy who lost a billion dollars, 0:02:17.200 --> 0:02:20.120 he's great, he's so skilled. You know, we'll get him 0:02:20.160 --> 0:02:21.640 on the on the downswing. 0:02:21.200 --> 0:02:22.240 And get him at a discount. 0:02:22.320 --> 0:02:24.840 Yeah, we'll get him at a discount and it'll be great, right, Yeah, 0:02:25.080 --> 0:02:27.640 as opposed to like the regime has changed, or he 0:02:27.720 --> 0:02:30.640 was lucky before or something, and now he's not a 0:02:30.680 --> 0:02:32.760 winded line. He's just the guy who loses money. 0:02:32.880 --> 0:02:33.679 He's a gazelle. 0:02:34.440 --> 0:02:38.560 So there's a lot of recent examples of this happening, basically, 0:02:38.800 --> 0:02:43.560 these battered former stars getting picked up, perhaps at a discount. 0:02:44.040 --> 0:02:46.600 I was struggling to find a success story. It felt 0:02:46.639 --> 0:02:47.720 like this article. 0:02:47.680 --> 0:02:50.119 Named a lot of bad examples or how this could 0:02:50.200 --> 0:02:52.600 go wrong. I wonder if this ever works out. 0:02:52.760 --> 0:02:54.480 It's weird, like you probably don't hear about the ones 0:02:54.520 --> 0:02:57.640 that work out, because like they're not going around bragging 0:02:57.680 --> 0:02:59.000 about how they lost a lot of money at their 0:02:59.040 --> 0:02:59.720 previous firms. 0:03:00.000 --> 0:03:01.200 They're back to just being lions. 0:03:01.600 --> 0:03:06.200 They're back to just being lions. But right, the other 0:03:06.280 --> 0:03:09.680 thing is that this has always been a thing that happens, Like, yeah, 0:03:09.680 --> 0:03:11.920 it is definitely there's been an uptick in it recently, 0:03:12.000 --> 0:03:14.720 just because there's been such a talent war among the 0:03:14.760 --> 0:03:17.280 big multi strategy hedge funds, and so there are all 0:03:17.280 --> 0:03:20.120 these people on very large compensation packages that are moving 0:03:20.120 --> 0:03:23.520 around between these firms. And if you run these firms, 0:03:24.320 --> 0:03:28.240 the people you can pick off from your competitors are 0:03:28.240 --> 0:03:31.480 often the people who have lost money. That's partly because 0:03:31.520 --> 0:03:34.160 like they're out of favor or whatever. Some of them, 0:03:34.200 --> 0:03:36.920 you know, potentially been fired, right because like traditionally these firms, 0:03:37.000 --> 0:03:38.520 if you have a big draw down, you get fired. 0:03:38.560 --> 0:03:41.600 Although the article mentions some of these people are stars 0:03:41.600 --> 0:03:43.320 who like that doesn't happen to like they have a 0:03:43.320 --> 0:03:44.920 big draw down and it's like, oh, it's okay, you 0:03:44.920 --> 0:03:47.080 can stay here, but they get picked off anyway. The 0:03:47.120 --> 0:03:50.520 other reason they're attractive is because they have to leave. Like, 0:03:50.560 --> 0:03:53.680 if you lose money, even if you don't get fired, 0:03:54.200 --> 0:03:56.680 you're now like below your high water mark, and so 0:03:56.720 --> 0:03:58.520 you have to earn back all the money you lost 0:03:58.560 --> 0:04:00.720 before you can get a big bonus again, you know, 0:04:00.800 --> 0:04:04.320 more or less traditionally, and so if that's the case, 0:04:04.360 --> 0:04:06.600 it's very tempting to quit and started a new firm 0:04:06.600 --> 0:04:08.760 where your high water mark is resent back to zero. 0:04:09.000 --> 0:04:11.040 Yeah, you're not in the penalty box. 0:04:11.440 --> 0:04:14.800 Yeah, and you know, the article points out that it's 0:04:14.800 --> 0:04:17.479 not great for investors, like particularly if you're in multiple firms, 0:04:17.600 --> 0:04:19.839 like and people are just moving around to like reset 0:04:19.880 --> 0:04:21.840 their high watermarks, Like you're not getting the benefit of 0:04:21.880 --> 0:04:22.600 the high water mark. 0:04:22.960 --> 0:04:25.680 That's true to that point. There was a quote from 0:04:25.920 --> 0:04:29.160 a woman who now is a performance coach. She used 0:04:29.160 --> 0:04:31.120 to be the ex head of a Georgia bank unit 0:04:31.120 --> 0:04:33.599 that linked investors with hedge funds, saying that after a 0:04:33.640 --> 0:04:37.520 bad year, the pitch is simple, check clean, sight, chill 0:04:37.800 --> 0:04:40.200 and let's be honest. Some of these deals are the 0:04:40.200 --> 0:04:42.960 definition of an offer you can't refuse. So it makes 0:04:43.000 --> 0:04:44.080 sense psychologically. 0:04:45.240 --> 0:04:48.080 Yeah, I wonder about chill, right, Like what are your 0:04:48.080 --> 0:04:51.359 incentives at your new firm? On the one hand, you 0:04:51.400 --> 0:04:54.080 want to prove that you still got. 0:04:53.920 --> 0:04:54.920 It, you're still lying. 0:04:55.279 --> 0:04:58.359 On the other hand, one thing the article points out is, 0:04:58.360 --> 0:05:01.320 like you get one of these, you can't continually lose 0:05:01.360 --> 0:05:04.760 a billion dollars. So if you lose a billion dollars, 0:05:04.760 --> 0:05:06.920 it's like you did great. You like took a lot 0:05:06.920 --> 0:05:09.000 of risk, You've learned from your mistakes, You move on, 0:05:09.400 --> 0:05:11.960 You got a new firm, it's great, but you lose 0:05:12.000 --> 0:05:14.560 it again that you're done, so like you haven't sentives 0:05:14.560 --> 0:05:16.200 to be more conservative at your new firm. 0:05:16.320 --> 0:05:18.480 Well to that point, we already have an example. There 0:05:18.560 --> 0:05:21.000 is this man, his name is Rob Banham. He was 0:05:21.040 --> 0:05:24.760 at point seventy two, then he moved to Citadel. He's 0:05:24.800 --> 0:05:27.719 already been let go after making tens of millions of 0:05:27.720 --> 0:05:31.400 dollars of more losses. So I guess he found his 0:05:31.440 --> 0:05:34.120 second strike right. 0:05:33.960 --> 0:05:39.800 Again, this is not would be classy, but it is 0:05:39.880 --> 0:05:42.600 possible that you lost a lot of money because you're 0:05:42.640 --> 0:05:45.599 really talented at losing money. Yeah, but no, I love 0:05:45.760 --> 0:05:49.800 I love the like edgehun compensation structure of like like, 0:05:49.839 --> 0:05:52.000 I think a lot of people would like to be 0:05:52.040 --> 0:05:55.120 able to find a system where if you lose money, 0:05:55.640 --> 0:05:58.640 that's your problem, right, Not so much in multi strategy funds, 0:05:58.680 --> 0:06:01.360 but I've said about this before with single manager hedge funds, 0:06:01.400 --> 0:06:03.400 where if they lose a lot of money for their 0:06:03.400 --> 0:06:05.280 investors and they're below their high water mark, they will 0:06:05.279 --> 0:06:08.599 shut down the fund and spend like six months doing 0:06:08.600 --> 0:06:11.520 penance on a beach, and then they'll like start a 0:06:11.520 --> 0:06:13.760 new fund with a new name, and the investors would 0:06:13.760 --> 0:06:15.840 be like, what the hell, Yeah, you got to earn 0:06:15.839 --> 0:06:18.119 back your high water work. And every so often people 0:06:18.120 --> 0:06:21.000 will be like, I'm going to indenture myself for years 0:06:21.240 --> 0:06:24.279 to my old investors and just earn back every penny 0:06:24.279 --> 0:06:28.200 of my how outter remark and not take and right 0:06:28.320 --> 0:06:30.560 like people do that, but not everyone does that. I 0:06:30.560 --> 0:06:33.240 think limited partners would love to have some incentive structure, 0:06:33.320 --> 0:06:38.160 some compstructure, some contract where they could make the losses 0:06:38.440 --> 0:06:41.400 fully the hedgemand manager's problem. But it's hard to do. 0:06:41.520 --> 0:06:43.640 It's hard to do. No one's quite cracked the good. 0:06:44.279 --> 0:06:45.680 The only thing I stud point out is after I 0:06:45.720 --> 0:06:49.200 wrote about this, I learned of a paper by Maury L. 0:06:49.279 --> 0:06:52.400 Say If a Duke called hedge fund Incentives, risk taking 0:06:52.400 --> 0:06:54.719 and asset prices. What I wrote about is like the 0:06:54.720 --> 0:06:57.520 hedgehend managers like including a multi shred firms have like 0:06:58.000 --> 0:07:01.320 incentives to optimize their b and their high water mark. 0:07:01.760 --> 0:07:04.359 So what that means is like, if it's getting to 0:07:04.360 --> 0:07:06.239 be the end of the year and you're up a lot, 0:07:06.800 --> 0:07:10.800 you like chill because you don't want to lose all 0:07:10.800 --> 0:07:13.240 the games you've made because those games provide your bonus. Right, 0:07:13.720 --> 0:07:15.640 if you're down a little bit, you have a lot 0:07:15.640 --> 0:07:18.720 of incentive to take big risks because if you're down 0:07:18.760 --> 0:07:20.520 a little bit or flat, you don't get a big bonus. 0:07:20.520 --> 0:07:22.200 But if you're up a lot, you got a big bonus. 0:07:22.440 --> 0:07:24.000 And if you're down a lot, you don't do any 0:07:24.000 --> 0:07:25.320 worse than if you're down a little bit, So you 0:07:25.360 --> 0:07:28.280 might as well take big risks. And what else say 0:07:28.280 --> 0:07:31.640 if he finds is that one that's true? And two 0:07:31.720 --> 0:07:34.800 you can see it in asset prices where like basically 0:07:35.120 --> 0:07:38.120 more hi beta, more volatile stocks go up when a 0:07:38.120 --> 0:07:40.600 lot of hedgehunes are below their high water mark because 0:07:40.840 --> 0:07:43.000 they're gambling on redemption. And so like you actually see 0:07:43.400 --> 0:07:47.240 stock prices react to the year end of bonus structures 0:07:47.240 --> 0:07:48.200 of hedgelong managers. 0:07:48.720 --> 0:07:52.440 Man, so I'm gonna I'm going to borrow this paper 0:07:52.480 --> 0:07:54.920 for when I'm on television at the end of the 0:07:55.000 --> 0:07:57.880 year and things are going bananas. I'm just going to say, well, 0:07:58.040 --> 0:07:58.840 I guess a lot of heat. 0:07:59.800 --> 0:08:02.760 Yeah, anything that happens in the year, it's like probably 0:08:02.920 --> 0:08:06.720 someone like optimizing their bonus. 0:08:06.760 --> 0:08:09.680 I use it all the time, month end, quarter ends. Well, 0:08:09.720 --> 0:08:11.640 it looks like things are just weird today. I can't 0:08:11.640 --> 0:08:13.560 explain this tick in this stock. 0:08:13.680 --> 0:08:17.320 But right, I think that, as we've said on this podcast, 0:08:17.400 --> 0:08:19.960 the market is a conversation among four hedge funds. I'm like, 0:08:20.040 --> 0:08:20.920 you know, if they need their. 0:08:20.800 --> 0:08:37.160 Bonus's, it is time to talk about Elon Musk. 0:08:37.320 --> 0:08:40.199 It's been what at least at. 0:08:39.880 --> 0:08:42.000 Least a week, at least a single. 0:08:41.640 --> 0:08:44.240 Week, has it only been want to make anyway? Yeah, 0:08:44.240 --> 0:08:46.079 Elon Musk is back in the news this week. 0:08:46.320 --> 0:08:51.800 Yeah, well actually last Friday Friday. Yeah, you famously don't 0:08:51.800 --> 0:08:53.040 publish on Fridays. 0:08:53.720 --> 0:08:56.480 It's does the crafting email for this? 0:08:57.640 --> 0:09:01.600 Yeah, it takes hours. So Elon Moss one trillion dollars. 0:09:01.840 --> 0:09:03.240 I really don't like this framing. 0:09:03.280 --> 0:09:05.080 Everyone says this, everyone does. 0:09:05.440 --> 0:09:09.920 Elon Musk is the CEO of Tesla and the techno 0:09:10.040 --> 0:09:13.600 king of Tesla. There's also, controversially, let's say he's the 0:09:13.600 --> 0:09:14.480 founder of Tesla. 0:09:14.559 --> 0:09:16.120 That is a controversial statement. 0:09:16.320 --> 0:09:18.880 He didn't found Tesla, but he's the founder of Tesla, 0:09:19.080 --> 0:09:22.760 right for sure. For theoretical purposes, he's the founder of Tesla, 0:09:22.840 --> 0:09:25.600 and so like many founder CEOs, he's a big shareholder 0:09:25.640 --> 0:09:28.280 in Tesla and depends how you can because of like 0:09:28.320 --> 0:09:31.360 the weird option stuff, but he owns like twelve to 0:09:31.360 --> 0:09:32.600 twenty percent of Tesla. 0:09:33.080 --> 0:09:33.880 It's not enough. 0:09:33.960 --> 0:09:36.520 It's not enough, but it's a lot, right, And you 0:09:36.559 --> 0:09:39.920 look at a lot of like these big tech companies 0:09:39.960 --> 0:09:42.640 that are run by their more or less founders. They 0:09:42.640 --> 0:09:45.719 don't get huge compensation packages, and they don't get huge 0:09:45.760 --> 0:09:49.120 compensation packages because like it's just assumed that, like they 0:09:49.559 --> 0:09:52.280 profit from the upside in the company by owning a 0:09:52.280 --> 0:09:54.960 lot of the company. So like Jeff Bezos rand Amazon, 0:09:54.960 --> 0:09:57.080 and you know, Mark Zuckerberg runs Meta, Like these people 0:09:57.360 --> 0:10:00.800 don't get paid hundreds of billions of dollars. They just 0:10:00.840 --> 0:10:02.920 own hundreds of billions of dollars of stock, and like 0:10:03.160 --> 0:10:05.280 when they do good stuff, the stock goes up. And 0:10:05.360 --> 0:10:08.920 so anyway, Elon Musk is not like that for reasons, 0:10:09.320 --> 0:10:12.560 and he instead gets huge compensation packages. And the board 0:10:12.960 --> 0:10:16.080 or Tessa's ass shareholders to vote on a new package 0:10:17.080 --> 0:10:20.840 that targets growing Tesla from the day about a trillion 0:10:20.840 --> 0:10:23.560 dollar company into a eight point five trillion dollar. 0:10:23.360 --> 0:10:26.040 Company, which is two in videos, two. 0:10:25.920 --> 0:10:29.199 In videos, yeah, right, more two in videos now, yeah, 0:10:29.240 --> 0:10:32.959 who knows what year, But if he succeeds in growing 0:10:32.960 --> 0:10:36.200 Tesla to an eight point five trillion dollar company, they 0:10:36.240 --> 0:10:38.520 will give him a trillion dollars worth of stock, which 0:10:38.559 --> 0:10:41.280 is great, but like, also he will have a trillion 0:10:41.280 --> 0:10:44.200 dollars worth of stock anyway, Like, he already owns a 0:10:44.240 --> 0:10:46.559 lot of stock, and if he eight point five times 0:10:46.600 --> 0:10:48.960 the company, then the stock will be worth a trillion dollars. 0:10:50.080 --> 0:10:52.440 So like, it's not like they sat down and thought, 0:10:53.080 --> 0:10:55.120 if we give elan musk at trillion dollars, he will 0:10:55.120 --> 0:10:56.880 turn this into an eight point five trillion dollar company. 0:10:56.920 --> 0:10:59.160 It's like, if we give another trillion dollars on top 0:10:59.200 --> 0:11:01.120 of the trillion dollars he already get for that, then 0:11:01.160 --> 0:11:04.880 I'll turn it into an eight point five trillion dollar company. 0:11:04.960 --> 0:11:07.360 It's not a trillion dollar it's like whatever, it's if 0:11:07.360 --> 0:11:09.200 he does this, he would have a trillion dollars anyway, 0:11:09.200 --> 0:11:11.560 because he's a big shelter. This is all in the 0:11:11.600 --> 0:11:14.200 shadow of like he had this comp package that Adella 0:11:14.280 --> 0:11:16.720 reports strike down, and like the judge at the time wrote, 0:11:16.760 --> 0:11:25.040 like the board did not analyze whether it was necessary 0:11:25.080 --> 0:11:26.880 to give him all of this given that he's a 0:11:26.920 --> 0:11:30.120 huge shareholder anyway, and like the comp set, the Zuckerbergs 0:11:30.120 --> 0:11:32.440 of the world don't get, you know, trillion dollar Paybay 0:11:32.480 --> 0:11:35.880 just they benefit from their share ownership. Once again, the 0:11:35.920 --> 0:11:38.120 board does not think that Elon Musk gets much incentive 0:11:38.120 --> 0:11:40.720 effect from the shares he already owns. Yeah, they're just 0:11:40.760 --> 0:11:43.120 like he needs more shares, and it's like clearly not 0:11:43.280 --> 0:11:46.800 true that he is being incentivized by a trillion dollars. 0:11:46.800 --> 0:11:49.160 What's happening here is that Elon Musk wants to own 0:11:49.200 --> 0:11:52.360 twenty five percent of the company, and so the board 0:11:52.400 --> 0:11:53.800 is like, how do we get him twenty five percent 0:11:53.840 --> 0:11:55.800 of the company, And they just give him twenty five 0:11:55.800 --> 0:11:57.319 percent of the company. They'd be like, well, if we 0:11:57.320 --> 0:11:59.120 don't give him twenty five percent of the company, you'd quit. 0:11:59.200 --> 0:12:01.959 So here it is right, but that like looks really bad. 0:12:02.840 --> 0:12:05.000 Even to a Texas court, that would look bad. So 0:12:05.040 --> 0:12:06.320 what they're doing is they're saying, oh, we have like 0:12:06.360 --> 0:12:09.440 these super ambitious performance calls, and if he meets these goals, 0:12:09.480 --> 0:12:11.840 then we'll give them a trillion dollars. It's probably a 0:12:12.040 --> 0:12:16.199 reasonable solution. But it's so like he's owned like twenty 0:12:16.200 --> 0:12:18.760 five percent of Tesla, then he sold down like by 0:12:18.800 --> 0:12:21.640 Twitter and stuff. It's very strange that he just he 0:12:21.679 --> 0:12:24.240 thinks he deserves to perpetually own twenty five percent of 0:12:24.240 --> 0:12:25.680 Tesla and the board is like, well you have to 0:12:25.679 --> 0:12:26.160 give it to m. 0:12:26.360 --> 0:12:30.480 Well, people have tried to stop him from what from 0:12:30.520 --> 0:12:32.320 owning that much or I don't know, you think about 0:12:32.360 --> 0:12:34.640 the twenty eighteen experience, Yeah. 0:12:34.440 --> 0:12:36.959 Right, I think that. You know. Elan mess says, the 0:12:37.000 --> 0:12:40.160 funniest thought comes the most likely, Like you could sue. 0:12:40.559 --> 0:12:44.839 You could takes us to stop this. Everyone assumes you 0:12:44.880 --> 0:12:48.480 would lose, but anyone really knows that's true. I am 0:12:48.559 --> 0:12:50.920 really what if someone sued in one? Wouldn't that be funny? 0:12:51.000 --> 0:12:54.520 That wouldn't be funny. Maybe not the funniest thing though, 0:12:54.559 --> 0:12:55.559 so it probably won't happen. 0:12:55.679 --> 0:12:57.440 He'd be so mad that I think it'd be pretty. 0:12:57.200 --> 0:12:59.880 Funny, but whatever, Okay, I am curious to see what 0:13:00.040 --> 0:13:03.680 happens over the next decade. Obviously, because eight point five 0:13:03.720 --> 0:13:06.400 trillion dollars, I mean, the first you think about the 0:13:06.679 --> 0:13:10.440 incentive structure that was put in place the first time around. 0:13:11.040 --> 0:13:13.480 That was very ambitious as well. 0:13:13.320 --> 0:13:15.520 And he did it when he got his twenty eighteen package, 0:13:15.559 --> 0:13:17.840 Like the idea of making Tesla a trillion dollar company, 0:13:18.160 --> 0:13:20.120 which is not exactly the target, but like yeah, which 0:13:20.120 --> 0:13:22.240 he did would have seemed kind of absurd, and then 0:13:22.240 --> 0:13:24.959 he did it in fairly short order. Yeah, I don't know, 0:13:25.080 --> 0:13:26.040 a decade, a long time. 0:13:26.240 --> 0:13:27.839 One of the things that you mentioned in your column 0:13:27.920 --> 0:13:32.600 is that Elon Musk the world's richest man that briefly 0:13:32.640 --> 0:13:36.760 became not true this that's right, Larry Elson briefly became. 0:13:36.480 --> 0:13:37.480 The world's richest man. 0:13:37.520 --> 0:13:39.760 Now they're I don't know, I think like a billion 0:13:39.800 --> 0:13:42.520 dollars separates them at this exact moment. But you think 0:13:42.520 --> 0:13:45.520 about the future, I think the exact think one. 0:13:45.400 --> 0:13:46.960 Or both of them is like watching the chart as 0:13:47.000 --> 0:13:47.720 the lens crossed. 0:13:47.720 --> 0:13:49.840 I would like to think that both of them are. 0:13:49.960 --> 0:13:54.440 But in any case, obviously Oracle had insane earnings and 0:13:54.559 --> 0:13:56.200 had an insane outlook. 0:13:55.800 --> 0:13:58.400 And uh like flatish earnings on insane look. 0:13:58.440 --> 0:14:00.319 But yeah, well that's it's mostly out. 0:14:00.840 --> 0:14:03.520 Yeah, and you think about the billings growth and whatever 0:14:03.920 --> 0:14:05.880 and where the future is going to go. It really 0:14:06.000 --> 0:14:09.720 just underscored why Elon wants to turn Tesla into an 0:14:09.760 --> 0:14:14.360 AI company, because, Okay, maybe evs still are the future. 0:14:14.400 --> 0:14:17.720 They don't feel as immediately the future as AI is 0:14:17.960 --> 0:14:18.400 right now. 0:14:18.600 --> 0:14:22.280 Oh yeah, right, I mean you can point to your billings, 0:14:22.680 --> 0:14:25.800 your like potential future sales as a DA company to your. 0:14:25.760 --> 0:14:28.640 Three hundred billion dollars worth of contracts that you signed 0:14:28.640 --> 0:14:29.240 with open Ai. 0:14:29.680 --> 0:14:31.560 It's you know, it's sort of worth that much in 0:14:31.680 --> 0:14:34.760 market cup, right. That's why Elon Musk is turning his 0:14:34.840 --> 0:14:40.160 focus to AI, and it's also why Tesla needs to 0:14:40.280 --> 0:14:41.920 pay up to keep him, right, because there are more 0:14:41.920 --> 0:14:45.440 obvious AI players like his AI company. Also in the 0:14:45.480 --> 0:14:49.840 Tesla proxy, yeah, there's a shareholder proposal to invest in Xai. 0:14:50.440 --> 0:14:54.440 And it's funny because like there's some business rationale for 0:14:54.480 --> 0:14:59.360 Tesla to invest in XI companies put the chat out 0:14:59.360 --> 0:15:00.440 on the dashboard. 0:15:00.040 --> 0:15:02.440 Which they've done I think talk to your car. 0:15:02.640 --> 0:15:05.120 Yeah, But so like there's some business case. There's a 0:15:05.200 --> 0:15:08.080 there's a very big, like Elon Musk personal business case, 0:15:08.080 --> 0:15:13.000 which is that Tesla is not the most obvious AI company, right, 0:15:13.000 --> 0:15:15.280 it's not going to capture the public imagination the way 0:15:15.400 --> 0:15:18.760 like Oracle is. But then like Xai, which is a 0:15:18.800 --> 0:15:22.000 more obvious AI play, plays are very expensive and it 0:15:22.040 --> 0:15:24.320 needs money, and Tesla has money, so like it does 0:15:24.400 --> 0:15:27.680 make sense for Elon Musk to like merge them or 0:15:27.720 --> 0:15:29.960 like take some Tesla money and give a TEXTI or whatever. 0:15:30.720 --> 0:15:34.160 But even in the current situation. Even in Texas, it 0:15:34.200 --> 0:15:38.240 doesn't seem a little hard for Tesla to just decide 0:15:38.280 --> 0:15:40.840 on the CEO's whim to invest billions or dollars in 0:15:40.880 --> 0:15:44.400 the CEO's other company. But if the cherlders. 0:15:44.040 --> 0:15:46.240 Asked for it, yeah, that's true. 0:15:47.280 --> 0:15:49.520 And then it's funny because like someone tweeted about it 0:15:49.560 --> 0:15:52.120 and Elon Musk was like, it's not up to me. 0:15:52.200 --> 0:15:53.800 The shareolders have to ask far and so like some 0:15:53.920 --> 0:15:58.800 chrelder duly like went and proposed exactly and then like 0:15:58.880 --> 0:16:02.000 you know, the shareholders overwhelming the button favor and then 0:16:02.040 --> 0:16:03.760 the word are like that did they give surely what 0:16:03.760 --> 0:16:05.720 they want? Well, we're going to give Elan his money, 0:16:05.720 --> 0:16:08.600 and then someone will negotiate it. It's not how one 0:16:08.600 --> 0:16:11.760 normally runs a company, but it's like it's happening. 0:16:11.840 --> 0:16:30.360 It's runs a company, all right, Eric Adams, thank you 0:16:30.640 --> 0:16:34.400 to Front of the Show Bill Ackman, the actual Bill Ackman, 0:16:34.480 --> 0:16:37.640 for teeing us up for this too delating conversation. 0:16:38.160 --> 0:16:41.240 Friend of the Show by Lackman went on Twitter to 0:16:41.280 --> 0:16:43.800 try to persuade Eric Adams to drop out of the 0:16:43.840 --> 0:16:47.680 New York City mayoral race, which is a for our purposes. 0:16:47.720 --> 0:16:50.600 Let's say three way race between Zori Mundanni. 0:16:50.200 --> 0:16:53.240 Who's you know, fan favorite. 0:16:54.280 --> 0:16:58.640 Odd lots cast, betting market favorite, polling favorite, Zora Mundannie, 0:16:58.920 --> 0:17:02.120 and then there's Andrew who's heard of him Bill Ackman 0:17:02.240 --> 0:17:07.920 favorite yep. And then there's Area Adams is the current 0:17:07.960 --> 0:17:10.159 mayor and seems to have no shot. But so like 0:17:10.160 --> 0:17:13.800 a prediction market, the polymarket has zorround at like eighty percent, 0:17:13.800 --> 0:17:17.280 odds Cuomo like eighteen percent, and then like you know, 0:17:17.320 --> 0:17:19.240 Adams like one or two percent or something like that. 0:17:19.720 --> 0:17:22.199 And so Bill Ackman went on Twitter to be like, 0:17:22.960 --> 0:17:25.760 Arian Adams drop out, because I'm Donnie, seems to have 0:17:25.840 --> 0:17:28.880 a plurality, and so like if everyone else drops out, 0:17:28.880 --> 0:17:31.240 then like maybe a Cuomo consolidate's enough support to win. 0:17:31.640 --> 0:17:33.720 So if Aria Adams drops out, that like really materially 0:17:33.760 --> 0:17:38.760 improves Cuomo's chances. And so Acman went on Twitter to 0:17:38.760 --> 0:17:42.199 be like, er Adams drop out. But he also said, 0:17:42.960 --> 0:17:45.280 and to fund your future, you could place a large 0:17:45.320 --> 0:17:48.360 bet on Andrew Cuomo and then announce your withdrawal from 0:17:48.359 --> 0:17:51.080 the race. There is no insider trading on polymarket. 0:17:51.400 --> 0:17:54.280 What a crazy thing to say. I mean, God, plus, 0:17:54.480 --> 0:17:55.320 he's not even wrong. 0:17:55.840 --> 0:17:59.240 He's wrong in the sense that he says you could 0:17:59.280 --> 0:18:01.399 place a large bet on uncoma. I don't think that's true. Like, 0:18:01.400 --> 0:18:03.200 I don't think the liquidity in these markets is enough 0:18:03.240 --> 0:18:07.320 for like, Like one thing we know about Eric Adams 0:18:07.359 --> 0:18:12.000 is that he enjoys like playing trips. Yes, I don't 0:18:12.040 --> 0:18:14.720 think you could make a ton of money betting on 0:18:14.760 --> 0:18:19.720 anentercroma some liquidity. But like, as a general proposition, is 0:18:19.760 --> 0:18:25.320 this a thing that will become popular in politics, which 0:18:25.359 --> 0:18:28.280 is betting against yourself and then dropping out of the race. 0:18:28.560 --> 0:18:33.440 Yeah, I would like to see that world that future actualized. 0:18:33.440 --> 0:18:35.000 I think it would be funny and it would provide 0:18:35.040 --> 0:18:37.040 a lot of fodder for this podcast. 0:18:37.119 --> 0:18:39.800 Oh yeah, oh yeah, right, I mean, because like traditionally 0:18:39.840 --> 0:18:42.360 you're not you're not supposed to pay people to drop 0:18:42.400 --> 0:18:45.520 out of political races. Seems a little it seems a 0:18:45.520 --> 0:18:48.520 little bribby. But then like the prediction markets are sort 0:18:48.520 --> 0:18:52.000 of like a distributed way for dropping out of your race. 0:18:52.080 --> 0:18:55.159 And I mean trading, and Bi Lackman didn't say I 0:18:55.200 --> 0:18:57.000 will be on the other side of this trade, so 0:18:57.400 --> 0:18:58.240 that was good, right. 0:18:58.280 --> 0:19:00.080 I Mean, one thing I wrote about this is that 0:19:00.200 --> 0:19:02.600 there's not a ton of liquidity. Eric Adams couldn't make 0:19:02.640 --> 0:19:06.840 a ton of money by doing this unless someone where 0:19:06.880 --> 0:19:08.359 to step in and be on the other side of 0:19:08.400 --> 0:19:10.880 the trade, which again he didn't offer, but like would 0:19:10.880 --> 0:19:13.080 have been you know, it would be the logical next step. 0:19:13.600 --> 0:19:15.800 But then the other question is is he right about 0:19:15.960 --> 0:19:18.760 there being no insider trading and nobody really knows. 0:19:18.920 --> 0:19:21.960 Yeah, it's like don't know until you try. 0:19:21.840 --> 0:19:25.960 Or for years afterwards. So, by the way, another independent 0:19:26.000 --> 0:19:28.720 reason that Eric Adams couldn't do that is because no 0:19:28.760 --> 0:19:32.119