WEBVTT - Money Stuff: The Podcast: Guy on Twitter: PSUS, Left, ETFs 0:00:03.120 --> 0:00:08.400 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.600 --> 0:00:13.040 Hello listeners, Today John and I are bringing you something 0:00:13.119 --> 0:00:15.560 rather special. While we're off on our little break. We 0:00:15.560 --> 0:00:17.680 thought you would all enjoy listening to an episode of 0:00:17.760 --> 0:00:20.880 Money Stuff, the podcast. You may already be familiar with 0:00:20.880 --> 0:00:24.480 Bloomberg Opinion columnist Matt Levine. Matt rats the Money Stuff newsletter. 0:00:24.560 --> 0:00:26.640 He used to be an investment banker at Goldman, Sachs 0:00:26.720 --> 0:00:29.360 and m and a lawyer, and now he's a podcaster. 0:00:29.920 --> 0:00:32.199 Every week, Man's joined by Katie Greifeld, a journ us 0:00:32.200 --> 0:00:34.919 with Bloomberg News and an anchor for Bloomberg Television. They 0:00:35.000 --> 0:00:37.400 chat about quirky story from Wolf Street Finance in the 0:00:37.400 --> 0:00:40.479 world of business. It's fun, sometimes weird, but it's all 0:00:40.520 --> 0:00:43.720 about stuff related to money. Listen, enjoy, and be sure 0:00:43.720 --> 0:00:44.480 to subscribe. 0:00:46.400 --> 0:00:49.320 Hello, and welcome to The Money Stuff Podcast, your weekly 0:00:49.360 --> 0:00:54.000 podcast where we talk about stuff related to money. I'm 0:00:54.040 --> 0:00:56.080 Matt Levian and I read the Money Stuff column for 0:00:56.120 --> 0:00:57.400 Bloomberg Opinion. 0:00:57.240 --> 0:00:59.640 And I'm Katie Greythel, a reporter for Bloomberg News and 0:00:59.680 --> 0:01:03.640 an ink for Bloomberg Television. Katie, we got some news 0:01:03.640 --> 0:01:05.840 this week, Oh big time. We're going to talk about 0:01:05.920 --> 0:01:09.160 Bill Ackman. Obviously, we're going to talk about Andrew Left, 0:01:09.600 --> 0:01:11.319 which should be fun, and then we're going to talk 0:01:11.319 --> 0:01:15.720 about BONDI TFS, which maybe will maybe we'll be fun. 0:01:15.720 --> 0:01:24.800 We'll find out. 0:01:21.080 --> 0:01:23.039 Where to start. 0:01:23.360 --> 0:01:26.480 Oh my gosh. Yeah, So we went from twenty five 0:01:26.480 --> 0:01:29.120 billion dollars to two and a half to four billion 0:01:29.160 --> 0:01:31.640 dollars to two billion dollars. Now we're at I think 0:01:31.920 --> 0:01:32.759 zero dollars. 0:01:33.040 --> 0:01:34.680 There was kind of a pits up at ten billion 0:01:34.720 --> 0:01:35.039 as well. 0:01:35.240 --> 0:01:36.679 I know I was in there somewhere. 0:01:36.880 --> 0:01:41.119 There's a hard gap at ten billion, which which they 0:01:41.160 --> 0:01:42.160 did not hit the hard gap. 0:01:42.319 --> 0:01:45.560 No, no, So I don't even know what to say. 0:01:45.600 --> 0:01:49.320 I mean, this was pretty spectacular to follow. We knew 0:01:49.320 --> 0:01:52.440 that he was road showing this IPO of a closed 0:01:52.560 --> 0:01:56.880 end funds Pershing Square USA exactly. He has a European 0:01:56.960 --> 0:02:00.280 version which trades at a big discount, which is a 0:02:00.280 --> 0:02:03.640 material part of this story, and it kept getting downsized 0:02:03.840 --> 0:02:08.840 and now it was pulled entirely. They're reevaluating it. And 0:02:08.919 --> 0:02:11.679 along that path we got a letter that was released 0:02:12.120 --> 0:02:15.840 which maybe Bill Lackman didn't know was going to be released, 0:02:15.960 --> 0:02:18.200 and then we had some investors bowing out as well. 0:02:18.280 --> 0:02:23.320 Right. So the story started with they're doing a road 0:02:23.320 --> 0:02:26.120 show for this IPO. There was talk of it being 0:02:26.200 --> 0:02:28.800 twenty five billion dollars, which would be a lot of 0:02:28.919 --> 0:02:31.480 money for a closed end fund or just in general, 0:02:31.560 --> 0:02:34.240 it would be a very very very large IPEA. So 0:02:34.320 --> 0:02:36.600 he's got all these companies, right. So he runs a 0:02:36.600 --> 0:02:39.440 hedgehund called Pushing Square. There's a management company that runs 0:02:39.440 --> 0:02:41.480 the hedge funds, and that like collects the fees from 0:02:41.520 --> 0:02:44.120 the hedge funds and the clothes end funds. And he 0:02:44.200 --> 0:02:47.440 recently sold about a ten percents take in the management 0:02:47.480 --> 0:02:50.720 company to a few institutional and High night Worth investors. 0:02:51.160 --> 0:02:54.040 And last week he sent a letter to those guys, 0:02:54.120 --> 0:02:58.160 those people who were investors in his management company, saying essentially, hey, 0:02:58.200 --> 0:02:59.920 it would be really helpful if you had put in 0:03:00.200 --> 0:03:04.160 orders in the Pushing Square USA closes Undfund IPO. And 0:03:04.200 --> 0:03:09.880 I read that letter and it seemed to me that 0:03:09.880 --> 0:03:13.000 that's not a good sign. I probably underplayed this when 0:03:13.040 --> 0:03:16.240 I wrote about it, because there are other possible interpretations, right, Like, 0:03:16.320 --> 0:03:20.080 one possible interpretation is that b. Lackman is just unusually 0:03:20.080 --> 0:03:23.280 candid about how the IPO process works to his management 0:03:23.320 --> 0:03:25.839 company investors, but it sort of seemed like he was saying, hey, guys, 0:03:25.840 --> 0:03:27.120 it would really help out a lot if you could 0:03:27.120 --> 0:03:29.280 put it in an order. Yeah. I used to be a 0:03:29.280 --> 0:03:32.720 capital markets banker and you would do a deal and 0:03:33.040 --> 0:03:35.360 you would get calls from investors and they would say, 0:03:35.400 --> 0:03:37.360 how's the deal going, And there's only one answer you 0:03:37.400 --> 0:03:39.240 can give them. You say, the deal is going great. 0:03:39.640 --> 0:03:42.680 There's so much demand. You really better put your order 0:03:42.680 --> 0:03:44.760 in because otherwise you're going to miss out. Because this 0:03:44.840 --> 0:03:46.600 deal is going so good, so many people wanted to 0:03:46.600 --> 0:03:48.960 buy it. You can't like necessarily lie if the deal 0:03:49.080 --> 0:03:51.200 is going poorly, but you say things like, oh, there's 0:03:51.240 --> 0:03:52.640 a lot of interest, we're having a lot of meetings. 0:03:52.680 --> 0:03:54.560 The feedback is really good. You should put in your 0:03:54.640 --> 0:03:56.960 order quick, right. You try to create the sense of excitement. 0:03:57.440 --> 0:03:59.280 If the deal is not going well, then like you 0:03:59.360 --> 0:04:02.040 might call up your best friend investor and say, hey, 0:04:02.040 --> 0:04:03.240 it would really help out if you had put it 0:04:03.240 --> 0:04:05.280 in a big order, because that would get us over 0:04:05.320 --> 0:04:08.160 the line, that would create some momentum. And it sort 0:04:08.160 --> 0:04:10.960 of seemed like that was what Acman was doing by 0:04:11.040 --> 0:04:13.240 sending this letter to the people who were already in 0:04:13.280 --> 0:04:16.560 his management company. Problem is if you do that publicly, 0:04:17.160 --> 0:04:20.599 everyone can read it, and no, that's a bad sign. 0:04:21.000 --> 0:04:23.240 So I do think that, like the letter did not 0:04:23.360 --> 0:04:26.320 necessarily help very much, because I do think that some 0:04:26.320 --> 0:04:29.240 people read it and think, well, this suggests that there's 0:04:29.240 --> 0:04:30.080 not a ton of demand. 0:04:30.360 --> 0:04:32.280 Yeah, And I was just going to bring up bow 0:04:32.400 --> 0:04:35.360 Posts because he did name a few investors in that 0:04:35.680 --> 0:04:37.720 letter to investors saying hey, it would help if you 0:04:37.760 --> 0:04:41.200 could invest more. He mentioned that bow Post Capital had 0:04:41.320 --> 0:04:43.960 previously committed to investing one hundred and fifty million dollars, 0:04:43.960 --> 0:04:48.480 and then Bloomberg News broke the news that actually they 0:04:48.520 --> 0:04:54.800 were pulling out. There weren't reasons given, but reportedly he 0:04:54.839 --> 0:04:55.760 didn't like being named. 0:04:56.360 --> 0:04:58.760 Yeah, I mean, no one wants to be named as 0:04:58.800 --> 0:05:01.120 the endorser for a deal. Nless, I've sort of explicitly 0:05:01.120 --> 0:05:03.080 agreed to that. I think the Blueberg story suggested that 0:05:03.120 --> 0:05:06.839 there's some political seth Klerman as a Democrat and Bill 0:05:06.880 --> 0:05:09.760 Ackman has become like a very vocal Trump supporter. But 0:05:09.920 --> 0:05:11.920 I don't know. I think that either of those are 0:05:11.960 --> 0:05:15.240 possible explanations. But like, here's another explanation. If you interpreted 0:05:15.240 --> 0:05:17.240 that letter to mean there's not a ton of demand. 0:05:17.600 --> 0:05:20.080 Then even if you were already in the book, you 0:05:20.120 --> 0:05:22.160 would take your order out of the book, right, yeah, 0:05:22.200 --> 0:05:24.039 Because this is the problem with this thing is like, 0:05:24.320 --> 0:05:28.600 you can be a long term investor, right, you can say, 0:05:28.600 --> 0:05:30.360 I like Bill Ackman. I think that he's going to 0:05:30.480 --> 0:05:32.359 compound my money at a high rate, and so I 0:05:32.360 --> 0:05:35.760 want to be invested in his fund, and I'll invest 0:05:35.920 --> 0:05:38.680 you know, this month and hold it for ten years 0:05:38.760 --> 0:05:40.839 and expect Bill Ackman to compound my money for me. 0:05:42.040 --> 0:05:46.520 But the problem is that on the first day of trading, 0:05:46.600 --> 0:05:48.240 this thing is either going to trade up or it's 0:05:48.240 --> 0:05:51.520 going to trade down. And as you said, his existing 0:05:51.640 --> 0:05:53.880 clothes unfund trades at a big discount to its net 0:05:53.920 --> 0:05:57.400 acid value. Most closed un funds traded discounts to their 0:05:57.400 --> 0:06:01.720 net acid value. And so if you're an investor, instead 0:06:01.760 --> 0:06:04.400 of buying the shares at fifty dollars in the IPO, 0:06:04.440 --> 0:06:06.520 you might say, well, I'll just wait until the next 0:06:06.600 --> 0:06:08.600 day and I'll buy them at a discount. I'll buy 0:06:08.600 --> 0:06:11.160 them at like forty five or whatever. So it would 0:06:11.160 --> 0:06:12.920 be sort of silly to buy in the IPO if 0:06:12.960 --> 0:06:16.200 you could wait to buy at a discount. The whole 0:06:16.200 --> 0:06:18.680 point in the IPO process is for Bill Acmin to 0:06:18.760 --> 0:06:20.680 tell people, no, no, it's going to trade it at 0:06:20.680 --> 0:06:22.599 a premium, right, And so he makes that case in 0:06:22.600 --> 0:06:24.480 this letter that he sent these investors and that was 0:06:24.520 --> 0:06:26.920 then made public sort of by accident. He makes the 0:06:26.960 --> 0:06:28.520 case that is going to trade at a premium. You know. 0:06:28.680 --> 0:06:31.720 The essential case is that a lot of retail investors, 0:06:31.960 --> 0:06:34.559 for one reason or another, aren't going to get shares 0:06:34.560 --> 0:06:36.479 in the IPO. Like the main one is that most 0:06:36.839 --> 0:06:39.839 retail investors, most retail brokerages aren't going to get allocated 0:06:39.920 --> 0:06:42.960 anything in the IPO. Also, there are some European retail 0:06:42.960 --> 0:06:45.320 investors who would want to buy shares, but who can't 0:06:45.320 --> 0:06:47.880 buy them in the IPM. So all these retail investors 0:06:48.080 --> 0:06:50.960 want to buy shares in the Bill Ackman IPO, they 0:06:50.960 --> 0:06:52.960 can't buy it at the time of the IPO, so 0:06:53.000 --> 0:06:55.080 they'll buy it the next day in the aftermarket, and 0:06:55.120 --> 0:06:57.480 there'll be so much retail demand and maybe so much 0:06:57.480 --> 0:07:00.320 institutional demand that the IPO will trade up, and if 0:07:00.360 --> 0:07:02.120 you wait to buy in the aftermarket, you'll have to 0:07:02.120 --> 0:07:04.599 pay fifty five dollars a share instead of fifty dollars 0:07:04.680 --> 0:07:08.760 a share. But the IPO was so big that the 0:07:08.920 --> 0:07:11.120 really essential question is is there going to be enough 0:07:11.160 --> 0:07:14.160 institutional demand in the aftermarket? Is there going to be 0:07:14.200 --> 0:07:17.360 institutional demand the next day? And there were just kept 0:07:17.400 --> 0:07:20.560 being indications that there was just not enough institutional demand 0:07:20.600 --> 0:07:24.640 to like price a really tight large IPO. And so 0:07:25.200 --> 0:07:28.040 if you thought that there wasn't that much institutional demand, 0:07:28.040 --> 0:07:29.640 then you'd say, well, it'll trade down to forty five 0:07:29.680 --> 0:07:31.560 and I'll wait until the buy the next day, and 0:07:31.600 --> 0:07:34.080 then there will be no institutional demand. Right, If everyone's 0:07:34.080 --> 0:07:35.520 going to wait to buy it, then no one will 0:07:35.560 --> 0:07:36.440 buy it in the IPA. 0:07:36.520 --> 0:07:39.080 Well, two points on that, the first one being this 0:07:39.240 --> 0:07:42.440 statement that they put out. Did acknowledge that they said 0:07:42.440 --> 0:07:45.720 that this question that's the whole thing? Yeah, basically, would 0:07:45.760 --> 0:07:48.440 investors be better served waiting to invest in the aftermarket 0:07:48.440 --> 0:07:51.240 than the IPO? Yes, it sounds like I mean, if 0:07:51.280 --> 0:07:53.160 you just look at the history of closed end funds. 0:07:53.480 --> 0:07:57.560 Also to the point of retail demand, I mean, Bill 0:07:57.600 --> 0:08:01.240 Lackman has a million something follow on Twitter, which is 0:08:01.280 --> 0:08:04.640 a lot. That's a huge audience, but it seems quite 0:08:04.680 --> 0:08:10.200 tricky to turn followers into investors. That's not necessarily guaranteed. 0:08:10.480 --> 0:08:13.280 And you think about the following that he has on Twitter. 0:08:13.440 --> 0:08:16.800 I would imagine that the majority of those people, or 0:08:16.800 --> 0:08:20.520 at least a sizable portion, aren't necessarily following him for 0:08:20.600 --> 0:08:21.880 his investing acumen. 0:08:22.200 --> 0:08:25.040 He'd be sad. I mean, I hear you, right. I 0:08:25.080 --> 0:08:27.760 mean he's he's courting controversy and a lot of Twitter 0:08:27.800 --> 0:08:30.880 opinions and not mainly tweeting about. Part of that, by 0:08:30.880 --> 0:08:33.920 the way, is like he has said that he wants 0:08:33.920 --> 0:08:36.439 to be able to tweet more about investing and because 0:08:36.480 --> 0:08:38.560 of like the legal structures that he currently operates, and 0:08:38.600 --> 0:08:40.920 he can't just go have his toc pics on Twitter, 0:08:41.240 --> 0:08:44.600 and once he launches Pershing Threw USA, he can. But yeah, 0:08:44.600 --> 0:08:46.280 I hear you, right, I mean, like his Twitter following 0:08:46.320 --> 0:08:47.680 is not purely about investing. 0:08:48.000 --> 0:08:50.280 What I am wondering is what this means for the 0:08:50.360 --> 0:08:54.480 overall Pershing Square IPO. Because he did sell that ten 0:08:54.520 --> 0:08:58.920 percent stake for a billion dollars, just over a billion dollars, 0:08:58.960 --> 0:09:02.600 And I mean they've said that the success of this 0:09:03.240 --> 0:09:06.800 pie sus IPO is very important to the eventual IPO 0:09:07.280 --> 0:09:08.240 of Pershing Square. 0:09:08.520 --> 0:09:10.600 Oh yeah, I mean he sold a ten percent stake 0:09:10.600 --> 0:09:12.600 in the management company. The management company is just like 0:09:12.840 --> 0:09:15.320 the thing that collects fees from the funds that he runs. 0:09:15.400 --> 0:09:17.520 Right right now, he runs about eighteen billion dollars worth 0:09:17.559 --> 0:09:20.160 of funds, and they sold the stake in the management 0:09:20.160 --> 0:09:22.680 company at a ten billion dollar valuation. It's sort of 0:09:22.720 --> 0:09:26.000 crazy to imagine that the entity that collects fees on 0:09:26.120 --> 0:09:29.640 eighteen billion dollars worth of funds is worth ten billion dollars, right, 0:09:29.760 --> 0:09:31.880 They can't be right, right? That implies that he would 0:09:31.880 --> 0:09:34.520 take like half of the value from his investors' funds 0:09:34.559 --> 0:09:37.160 for himself or for his investors. Now, the only way 0:09:37.200 --> 0:09:38.880 you can get to a ten billion dollar valuation for 0:09:38.920 --> 0:09:43.040 the management company is if you think that the management 0:09:43.080 --> 0:09:45.760 company is very soon going to manage a lot more money. 0:09:46.520 --> 0:09:49.200 And I think, obviously the case that was made to 0:09:49.240 --> 0:09:53.920 these management company investors is we are going to transform 0:09:53.960 --> 0:09:57.600 from a smallish hedge fundition manager to a sort of 0:09:57.640 --> 0:10:00.400 more institutional asset manager that attracts it's a lot of 0:10:00.400 --> 0:10:03.720 retail interest and a lot of institutional interest, and runs 0:10:03.960 --> 0:10:06.600 tens of billions of dollars and has a publicly traded 0:10:06.640 --> 0:10:09.960 permanent capitol vehicle and has like this steady stream of 0:10:10.480 --> 0:10:14.040 large earnings from running large amounts of money and then 0:10:14.400 --> 0:10:15.880 you know, I think if you were investing in the 0:10:15.880 --> 0:10:19.680 measurment company, somewhere in your mind was the notion of 0:10:19.720 --> 0:10:22.880 a twenty five billion dollar pieces IPO and a zero 0:10:22.960 --> 0:10:26.320 dollar pieces IPO makes that case more challenging. The other 0:10:26.400 --> 0:10:28.000 thing I want to say about the management company is 0:10:28.200 --> 0:10:31.480 so I wrote on Thursday about the problem here, which 0:10:31.520 --> 0:10:35.679 is that it's very hard to sell these shares at 0:10:35.760 --> 0:10:38.440 nav because you expect to close on fund to trade 0:10:38.440 --> 0:10:42.080 at a discount. Everyone wants a discount. Well, how do 0:10:42.160 --> 0:10:44.480 you sell the shares at a discount? Because the shares 0:10:44.480 --> 0:10:45.960 are just a it's a pot of money, right, So 0:10:46.000 --> 0:10:48.480 you can't sell you know, one hundred dollars worth of 0:10:48.480 --> 0:10:50.520 money at ninety dollars because then you only have ninety dollars. 0:10:51.040 --> 0:10:53.679 So how do you create a discount? And I wrote 0:10:53.679 --> 0:10:56.640 about some possible ways to do that, which come down 0:10:56.720 --> 0:10:59.439 to kind of pershing square putting in some money, with 0:10:59.440 --> 0:11:02.040 several reader emailed me immediately to be like, well, here's 0:11:02.040 --> 0:11:03.920 the obvious way to do it. The obvious way to 0:11:04.080 --> 0:11:06.600 do it is to put some of the management company 0:11:06.679 --> 0:11:09.640 into pieces. So instead of really I've been seating the 0:11:09.640 --> 0:11:12.079 fund with like a billion dollars of his own money 0:11:12.160 --> 0:11:15.360 for free. He could see it with ten percent of 0:11:15.480 --> 0:11:19.480 pushing square the management company for free, and then Pieces 0:11:19.520 --> 0:11:22.800 would have a net asset value more than just the 0:11:22.840 --> 0:11:26.360 cash that investors put in. And then the investors say, okay, 0:11:26.360 --> 0:11:28.040 I'm getting a discount and they put in their money, 0:11:28.440 --> 0:11:31.880 and this is a good idea. And you know, someone 0:11:31.960 --> 0:11:35.480 drew the analogy to like Vanguard, where Vanguard investors do 0:11:35.600 --> 0:11:37.360 own a piece of the management company. It's because it's 0:11:37.400 --> 0:11:40.800 a mutual company. But the problem here is you sort 0:11:40.800 --> 0:11:43.200 of already promised the management company in an IPO to 0:11:43.200 --> 0:11:45.199 these other investors, right, so to say we're going to 0:11:45.320 --> 0:11:48.200 push the management company into pieces is a little bit 0:11:48.200 --> 0:11:51.600 more challenging. So what does it mean for the for 0:11:51.640 --> 0:11:53.760 the IPO added, it's like a setback, right, I mean 0:11:53.800 --> 0:11:58.400 the IPO was I think premised on the Pieces IPO 0:11:58.480 --> 0:12:01.040 going really well, and with him having a hard time 0:12:01.080 --> 0:12:05.480 raising money for Pieces, it's harder to get to a 0:12:05.520 --> 0:12:07.600 ten billion dollar valuation for the management company. 0:12:07.720 --> 0:12:10.280 There's also the question of why does he want to 0:12:10.280 --> 0:12:12.600 be public, Like why does he want to take the 0:12:12.640 --> 0:12:16.760 overall hedge fund company public? I mean, there aren't many 0:12:16.840 --> 0:12:20.560 of them The obvious example is the Sculptor Rhythm thing, 0:12:20.679 --> 0:12:23.079 which didn't exactly turn out well, which also had Bill 0:12:23.160 --> 0:12:24.000 Lackman involvement. 0:12:24.280 --> 0:12:26.800 Yeah, minor involvement. Yeah, I don't know. You know, the 0:12:26.840 --> 0:12:29.600 reason for launching the Clothes End Fund is quite straight apward, right, 0:12:29.600 --> 0:12:31.720 I mean, you have permanent capital vehicle. You get to 0:12:31.720 --> 0:12:33.679 go on TV and twet your stock picks and then 0:12:33.679 --> 0:12:35.960 hopefully you can create some momentum in your stocks. 0:12:36.080 --> 0:12:39.560 I mean, he could just launch an ETF. I'll just 0:12:39.600 --> 0:12:42.960 say it. I know, I know, permanent capital. That's very exciting. 0:12:43.440 --> 0:12:47.959 I still don't quite understand clothes and funds. I get 0:12:48.000 --> 0:12:50.680 it from the manager's point of view, permanent capital, that 0:12:50.760 --> 0:12:53.160 seems really great. But from the investor point of view, 0:12:53.440 --> 0:12:55.560 I don't know why you would do that. 0:12:55.720 --> 0:12:57.200 No, I think he can make a good case for 0:12:57.280 --> 0:13:00.200 that here because he is not possibly like takeover or 0:13:01.040 --> 0:13:05.080 inclined investor. Then knowing how much money you have for 0:13:05.160 --> 0:13:07.440 the long term is actually really important, right. I mean, 0:13:07.440 --> 0:13:10.520 if you have an ETF and they're withdrawals and you 0:13:10.520 --> 0:13:12.880 still have of your positions, right, that is easy to 0:13:12.920 --> 0:13:15.000 do if you are just the index one, right, But 0:13:15.000 --> 0:13:17.600 it's harder to do if you are doing the kinds 0:13:17.600 --> 0:13:20.280 of trades that the Lagmann wants to do, which are 0:13:20.320 --> 0:13:23.200 like these like long term fundamental equity and trades, but 0:13:23.240 --> 0:13:25.520 also like you know, derivative trades. I mean, like some 0:13:25.559 --> 0:13:28.760 of their track record is from CDX beats going into COVID, 0:13:29.080 --> 0:13:31.240 and again that's harder to do if your capital can 0:13:31.320 --> 0:13:34.120 vanish every night. So I think that from his perspective, 0:13:34.280 --> 0:13:36.559 it's obviously good to have permanent capital. And I think 0:13:36.559 --> 0:13:39.080 he can make the case to investors that actually, like 0:13:39.280 --> 0:13:41.760 permanent capital is the way that I create value and 0:13:41.960 --> 0:13:43.880 ETF doesn't make sense for the for the kind of 0:13:43.880 --> 0:13:45.720 investing that I do. I think that's a reasonable case. 0:13:46.080 --> 0:13:46.520 Yeah. 0:13:46.559 --> 0:13:48.319 So the question of why does he want to take 0:13:48.320 --> 0:13:50.040 the manager company public, I don't know. I mean some 0:13:50.080 --> 0:13:52.560 of it is like I think anyone else, like, you know, 0:13:52.600 --> 0:13:55.440 you want some legacy, right, I Mean, there's this perception 0:13:55.520 --> 0:13:58.920 that with like the sort of famous hedge fund managers 0:13:58.920 --> 0:14:01.920 of like Acman's vent. It's like there's a perception that 0:14:01.960 --> 0:14:04.880 the management company is like that one guy. And I 0:14:04.920 --> 0:14:06.439 think that they would like to have a proof of 0:14:06.480 --> 0:14:10.319 concept that actually it's an institution and really the investing 0:14:10.320 --> 0:14:12.240 team has kind of transitioned away from him, and it's 0:14:12.280 --> 0:14:16.439 not just him, and it's a permanent entity that will 0:14:16.679 --> 0:14:20.000 exist forever and provide wealth for him forever, right, instead 0:14:20.000 --> 0:14:22.520 of like when he quits, the thing vanishes. So I 0:14:22.560 --> 0:14:25.480 think there's a temptation for anyone who runs a company 0:14:25.520 --> 0:14:28.040 to take that company public so you can, you know, 0:14:28.160 --> 0:14:31.240 take money off the table and have permanent shares instead 0:14:31.280 --> 0:14:33.640 of just like your own labor. But right, the track 0:14:33.680 --> 0:14:34.960 record of it is kind of challenging. 0:14:35.280 --> 0:14:37.960 Yeah, well, let's see if pieces gets off the ground 0:14:38.000 --> 0:14:41.400 when it comes to the eventual pershing square IPO. Apparently 0:14:41.760 --> 0:14:45.960 he's already thought of how to make this structure work. 0:14:46.000 --> 0:14:48.480 That was also in the press release that don't. 0:14:48.280 --> 0:14:51.320 Get excited, Yeah, excited to see like next week's piece 0:14:51.360 --> 0:14:54.240 of structure. I think putting part of the management company 0:14:54.240 --> 0:14:56.400 into it, putting some cash into it that doesn't come 0:14:56.400 --> 0:15:00.840 from investors or possibilities. Yeah, you know, I wrote it 0:15:00.880 --> 0:15:04.360 in a foot like SPACs do kind of provide the 0:15:04.400 --> 0:15:07.680 technology for this, right, Like get spac at a very 0:15:07.760 --> 0:15:10.480 high level, is a sponsor puts in some money to 0:15:10.520 --> 0:15:13.520 pay the startup costs, then the sponsor kind of sells 0:15:13.560 --> 0:15:16.840 shares at net asset value to investors, and then if 0:15:16.840 --> 0:15:19.120 the sponsor does a good job and finds a good deal, 0:15:19.520 --> 0:15:22.680 the sponsor gets a lot of like free upside. So 0:15:22.720 --> 0:15:26.720 there's this like carter, where like if the thing is 0:15:26.840 --> 0:15:30.920 those kind of me the shareholders get all their money back, 0:15:31.000 --> 0:15:35.200 so they are protected against the problems of investing it 0:15:35.240 --> 0:15:37.760 at NAV and then having the NAV go down. If 0:15:37.760 --> 0:15:41.960 the thing does poorly, then the manager the sponsor eats 0:15:42.040 --> 0:15:44.360 the loss, and if the thing does really really well, 0:15:44.720 --> 0:15:47.200 the shareholders give up some of the upside and it 0:15:47.200 --> 0:15:49.000 goes to the sponsor, and so the sponsor has the 0:15:49.000 --> 0:15:51.400 sort of asymmetric trade where the sponsor puts in some 0:15:51.480 --> 0:15:53.680 money that's at risk, but then if it does really well, 0:15:53.720 --> 0:15:55.640 the sponsor makes a lot of money. You can imagine 0:15:55.680 --> 0:15:59.000 a structure like that for pieces, where you know, Bill 0:15:59.040 --> 0:16:03.280 Ackman seeds it with money, and if it trades below 0:16:03.400 --> 0:16:05.840 net asset value, he kind of bears the first loss 0:16:06.080 --> 0:16:08.200 so that the investors who buy in the IPO still 0:16:08.240 --> 0:16:09.800 get at least the amount of money they put in. 0:16:10.280 --> 0:16:11.960 And then if the thing does really well, he gets 0:16:11.960 --> 0:16:15.280 warrants or something so that he gets upside to compensate 0:16:15.320 --> 0:16:17.400 him for that like, that's a structure that could work. 0:16:17.560 --> 0:16:19.720 You could do something like that. That's easy enough. 0:16:19.880 --> 0:16:20.960 That's some good ideas here. 0:16:21.200 --> 0:16:23.560 Party wants to, you know, quit podcast and then go 0:16:23.680 --> 0:16:27.000 structure pieces mark two. But most of me, it doesn't. 0:16:27.000 --> 0:16:43.280 Most of me just wants the podcast about it. Andrew Left. 0:16:43.760 --> 0:16:46.520 Andrew Left, So this story broke. I think it was 0:16:46.560 --> 0:16:47.360 on Friday. 0:16:47.680 --> 0:16:49.360 That's right, because I wrote on Friday and then I 0:16:49.360 --> 0:16:51.920 published on Saturday. Because I didn't hit the send button 0:16:51.960 --> 0:16:55.960 on my email. That's really I don't that is. 0:16:56.000 --> 0:17:00.160 Made mistake there amateurs. 0:16:59.280 --> 0:17:01.760 To call him on Friday on the web and the terminal, 0:17:02.200 --> 0:17:06.280 and then I didn't hit send on the email, and 0:17:06.320 --> 0:17:09.520 no one told me until I told my wife I 0:17:09.640 --> 0:17:11.520 published the column, and she's like, oh, I didn't get it. Next. 0:17:11.840 --> 0:17:14.240 Wow. I feel like there's some arbitrage to do there. 0:17:14.359 --> 0:17:16.480 If you had the inside information about my column, you 0:17:16.480 --> 0:17:18.760 could have traded Andrew Left features a day early. I 0:17:18.760 --> 0:17:19.119 don't know. 0:17:19.480 --> 0:17:22.040 I bring that up the timeline because it feels crazy 0:17:22.040 --> 0:17:23.640 that we haven't talked about this yet. 0:17:23.880 --> 0:17:25.399 Yeah, we just missed it last week. 0:17:25.600 --> 0:17:27.199 So set the scene for us at the table. 0:17:27.520 --> 0:17:31.760 So Andrew Left is a guy on Twitter. There's a 0:17:31.800 --> 0:17:34.440 lot of people like this who are activists short sellers. 0:17:34.440 --> 0:17:36.720 So what he does is he finds companies that he 0:17:36.720 --> 0:17:40.840 thinks are bad, sometimes on valuation, often because he thinks 0:17:40.880 --> 0:17:45.040 they're frauds, and he shorts their stock and then he 0:17:45.119 --> 0:17:49.040 publishes angry reports saying what a fraud they are, and 0:17:49.080 --> 0:17:52.160 then he tweets those reports and then their stock goes down, 0:17:52.880 --> 0:17:54.800 and that's how he makes money. A lot of these 0:17:54.840 --> 0:17:58.080 people are guys on Twitter who may or may not 0:17:58.400 --> 0:18:01.600 have something like Ahead fund or something called a hedge fund. 0:18:01.960 --> 0:18:04.480 But when Andrew Left got in trouble last week the SEC, 0:18:05.000 --> 0:18:06.880 one of its complaints about him was that he wasn't 0:18:06.920 --> 0:18:08.879 really running a hedge fund. He didn't know outside money. 0:18:09.080 --> 0:18:11.639 He was just a guy investing his personal account. I 0:18:11.680 --> 0:18:15.639 assume a lot of activists shorts are just guys investing 0:18:15.640 --> 0:18:17.960 their personal accounts. But it just sounds nicer. So Andrew 0:18:18.040 --> 0:18:20.800 Left is Andrew Left, but he's also Sitron Research, which 0:18:20.840 --> 0:18:23.240 just sounds fancier than just being a guy on Twitter. 0:18:23.560 --> 0:18:25.600 And honestly, I think he's kind of earned it, like 0:18:25.640 --> 0:18:29.399 he's had a good track record of spotting frauds. You know, 0:18:29.440 --> 0:18:33.440 he really was instrumental in spotting big problems at Valiant 0:18:33.440 --> 0:18:36.320 Pharmaceuticals a few years ago in a way that really 0:18:36.320 --> 0:18:38.520 took billions of dollars off that market cap and was 0:18:39.240 --> 0:18:42.200 good investigative work. And he has a good track record 0:18:42.240 --> 0:18:44.640 of finding companies that will go down. So that's his deal. 0:18:44.680 --> 0:18:47.160 And last Friday, the SEC and the Department of Justice 0:18:47.200 --> 0:18:51.879 brought charges against him for doing alleged fraud. And basically 0:18:51.960 --> 0:18:54.239 they're accusing him of doing a reverse pupping dump. Right 0:18:54.240 --> 0:18:56.399 instead of like saying hey, you should buy the stock 0:18:56.880 --> 0:18:59.040 and then selling it, he said hey, you should short 0:18:59.040 --> 0:19:01.280 the stock, and then he bought it. So their accusation 0:19:01.359 --> 0:19:03.560 is that he would shorten these stocks. He would publish 0:19:03.760 --> 0:19:06.919 angry reports calling them frauds, and then kind of the 0:19:06.960 --> 0:19:09.520 minute he published the stock would go down and he 0:19:09.560 --> 0:19:12.879 would buy back the stock. So five minutes or an 0:19:12.880 --> 0:19:15.480