1 00:00:03,120 --> 00:00:08,280 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:12,080 --> 00:00:14,800 Speaker 2: Hello and welcome to the Money Stuff Podcast. You're a 3 00:00:14,800 --> 00:00:18,680 Speaker 2: weekly podcast where we talk about stuff related to money. 4 00:00:19,640 --> 00:00:21,960 Speaker 2: I'm Matt Levin and I write the Money Stuff column 5 00:00:22,079 --> 00:00:23,520 Speaker 2: he Bloomberg Opinion. 6 00:00:23,239 --> 00:00:25,800 Speaker 1: And I'm Katie Greifeld, a reporter for Bloomberg News and 7 00:00:25,840 --> 00:00:27,320 Speaker 1: an anchor for Bloomberg Television. 8 00:00:28,480 --> 00:00:30,120 Speaker 2: What are we talking about today, Katie? 9 00:00:30,160 --> 00:00:33,040 Speaker 1: We're going to talk about a Donnie Sure, what's going on. 10 00:00:33,680 --> 00:00:36,639 Speaker 1: We're going to talk about micro strategy. There's a lot 11 00:00:36,640 --> 00:00:38,720 Speaker 1: to say there, and we're going to talk about short selling, 12 00:00:38,760 --> 00:00:41,720 Speaker 1: which is one of the favorite topics in the money 13 00:00:41,720 --> 00:00:42,479 Speaker 1: Stuff universe. 14 00:00:43,520 --> 00:00:45,800 Speaker 2: That's good or saying yeah, you don't care about. 15 00:00:45,560 --> 00:00:57,080 Speaker 1: It, I'm going to politely agree. This was interesting. So 16 00:00:57,520 --> 00:01:00,680 Speaker 1: got I'm a Donnie. US prosecutor's a qu a Donnie 17 00:01:00,720 --> 00:01:03,960 Speaker 1: who is one of the world's richest people of promising 18 00:01:04,000 --> 00:01:06,399 Speaker 1: to pay more than two hundred and fifty million dollars 19 00:01:06,440 --> 00:01:11,399 Speaker 1: in bribes to Indian government officials to win solar energy contracts. 20 00:01:11,400 --> 00:01:14,440 Speaker 1: This was very interesting on a number of different levels. 21 00:01:14,600 --> 00:01:16,560 Speaker 2: Yeah, I don't read a lot about brivary I love 22 00:01:16,600 --> 00:01:19,440 Speaker 2: bribary cases. I read about them some it's so interesting. 23 00:01:19,680 --> 00:01:21,560 Speaker 2: One thing that's interesting is like usually when you have 24 00:01:21,560 --> 00:01:24,480 Speaker 2: a bribery case, it's like and then they handed the 25 00:01:24,520 --> 00:01:26,840 Speaker 2: bag of cash to the official right, or like there's 26 00:01:26,880 --> 00:01:29,560 Speaker 2: emails being like the official would really like to buy 27 00:01:29,560 --> 00:01:32,200 Speaker 2: his mansion now here. It's like all of the like 28 00:01:32,319 --> 00:01:36,480 Speaker 2: emails they quote sound legitimate because what it says is like, 29 00:01:36,880 --> 00:01:39,920 Speaker 2: to win these power contracts, they had to pay incentives 30 00:01:40,319 --> 00:01:43,480 Speaker 2: to the state power companies, And so they would say 31 00:01:43,520 --> 00:01:46,119 Speaker 2: things like we need to pay incentives to the state 32 00:01:46,160 --> 00:01:49,040 Speaker 2: power companies. And it's like, well that sounds fine. Paying 33 00:01:49,040 --> 00:01:53,560 Speaker 2: the state power companies rebate for buying power seems fine. 34 00:01:53,680 --> 00:01:57,680 Speaker 2: Now paying the state power company executives two hundred million 35 00:01:57,760 --> 00:02:01,160 Speaker 2: dollars is that? But so the stuff they quote makes 36 00:02:01,160 --> 00:02:03,360 Speaker 2: it clear that it's going to these people personally. You know, 37 00:02:03,400 --> 00:02:06,680 Speaker 2: I read a lot about like how if you were 38 00:02:06,760 --> 00:02:09,240 Speaker 2: to pay bribes. None of this is ever legal advice, 39 00:02:09,360 --> 00:02:10,680 Speaker 2: but I read a lot about how if you were 40 00:02:10,720 --> 00:02:13,520 Speaker 2: to pay bribes, you should try to make them look 41 00:02:14,040 --> 00:02:17,720 Speaker 2: business like and not like a sack of cash and 42 00:02:17,800 --> 00:02:21,280 Speaker 2: like winking emails saying I've given you the chickens, but 43 00:02:21,480 --> 00:02:24,000 Speaker 2: just like, yes, we're paying incentives to make a commercially 44 00:02:24,080 --> 00:02:25,920 Speaker 2: viable contract with the state power company, you know, and 45 00:02:25,919 --> 00:02:28,120 Speaker 2: if it happens to go to the executives personally, then 46 00:02:28,360 --> 00:02:29,480 Speaker 2: like you can prove it. 47 00:02:29,639 --> 00:02:32,360 Speaker 1: Hearing you describe that kind of reminds me of the 48 00:02:32,480 --> 00:02:35,760 Speaker 1: Eric Adams emails with the airline, and one of his 49 00:02:35,800 --> 00:02:37,520 Speaker 1: staffers was like, no, you got to make it look 50 00:02:37,560 --> 00:02:40,200 Speaker 1: a little legit. He put that in an email or 51 00:02:40,280 --> 00:02:42,280 Speaker 1: she I don't know, yeah, put that in an email. 52 00:02:42,360 --> 00:02:44,720 Speaker 2: I only read like the charging documents from the SEC 53 00:02:44,760 --> 00:02:47,200 Speaker 2: and from the Department of Justice, and so one assumes 54 00:02:47,240 --> 00:02:51,079 Speaker 2: they have evidence and testimonies saying oh, yeah, we gave 55 00:02:51,120 --> 00:02:55,240 Speaker 2: them the money personally. But it's actually weird because it's like, 56 00:02:55,360 --> 00:02:57,880 Speaker 2: for one thing, these numbers are so large. If you're 57 00:02:57,880 --> 00:02:59,960 Speaker 2: paying two hundred million dollars, it doesn't sound like you're 58 00:03:00,080 --> 00:03:02,959 Speaker 2: paying two hundred million dollars to the power company. It's 59 00:03:02,960 --> 00:03:04,000 Speaker 2: like that's a big bribe. 60 00:03:04,240 --> 00:03:06,239 Speaker 1: Oh yeah, two hundred and fifty million. 61 00:03:06,520 --> 00:03:09,160 Speaker 2: Yeah. And the bribes are weird because it's like one 62 00:03:09,200 --> 00:03:11,360 Speaker 2: of them is like they did deals with different Indian 63 00:03:11,400 --> 00:03:13,880 Speaker 2: states and so one of them it's like they paid 64 00:03:13,919 --> 00:03:15,880 Speaker 2: several hundred thousand dollars. So yeah, that sounds like a 65 00:03:15,880 --> 00:03:17,520 Speaker 2: bride and when I was like, they paid several hundred 66 00:03:17,560 --> 00:03:20,360 Speaker 2: million dollars, Like that sounds like a legitimate business expense. 67 00:03:20,560 --> 00:03:21,280 Speaker 1: Yeah. 68 00:03:21,320 --> 00:03:23,120 Speaker 2: And like also the guy who got two hundred thousand 69 00:03:23,160 --> 00:03:25,760 Speaker 2: dollars must be annoyed reading this indictment, like I could 70 00:03:25,760 --> 00:03:28,680 Speaker 2: have gotten two hundred million dollars. Strange. 71 00:03:28,880 --> 00:03:33,640 Speaker 1: Something that maybe you can expand upon is how this 72 00:03:33,840 --> 00:03:38,200 Speaker 1: ties into the US, Like US prosecutor, yes, are alleging 73 00:03:38,240 --> 00:03:40,760 Speaker 1: that he bribed the Indian government. Like why is the 74 00:03:40,880 --> 00:03:41,800 Speaker 1: US getting involved? 75 00:03:41,880 --> 00:03:45,000 Speaker 2: Okay, So part of the answer is the US loves 76 00:03:45,000 --> 00:03:48,000 Speaker 2: to get involved. Like there are much crazier cases than this, right, 77 00:03:48,040 --> 00:03:50,560 Speaker 2: I love like Olympic doping cases where it's like, you know, 78 00:03:50,960 --> 00:03:55,080 Speaker 2: in Paris, a foreign athlete gets drugs from a foreign 79 00:03:55,240 --> 00:03:58,440 Speaker 2: doctor and the US is like, ah, that's undermining international 80 00:03:58,440 --> 00:03:59,520 Speaker 2: sport and they'll bring charges. 81 00:03:59,600 --> 00:04:01,600 Speaker 1: Well, you know, you know when an American athlete could 82 00:04:01,640 --> 00:04:02,320 Speaker 1: have won that race. 83 00:04:02,840 --> 00:04:04,120 Speaker 2: That's a good point, thank you. 84 00:04:04,320 --> 00:04:06,880 Speaker 1: I think about this a lot anyways. 85 00:04:06,560 --> 00:04:10,120 Speaker 2: Go on doping your horse. But everything sort of flows 86 00:04:10,120 --> 00:04:12,160 Speaker 2: through New York, you know. Like part of the answer 87 00:04:12,240 --> 00:04:15,520 Speaker 2: is that a Donnie Green, which is the a Donnie 88 00:04:15,560 --> 00:04:17,720 Speaker 2: Group entity that allegedly paid the bribes, like they had 89 00:04:17,720 --> 00:04:19,840 Speaker 2: like a partner on these power deals, and that's a 90 00:04:19,920 --> 00:04:22,839 Speaker 2: company called the Azure Global Power and that was for 91 00:04:22,880 --> 00:04:26,320 Speaker 2: a while listed in New York. But the main answer, 92 00:04:26,520 --> 00:04:29,839 Speaker 2: particularly in like the SEC case, is that a Donnie 93 00:04:29,880 --> 00:04:34,720 Speaker 2: Green issued bonds. They did like an international dollar nominated 94 00:04:34,880 --> 00:04:37,600 Speaker 2: bond offering, and some of those bonds were sold to 95 00:04:37,680 --> 00:04:42,280 Speaker 2: US investors, and so allegedly they defrauded US investors. And 96 00:04:42,480 --> 00:04:45,320 Speaker 2: it's very interesting. Freud I wrote that this is basically 97 00:04:45,320 --> 00:04:48,359 Speaker 2: a green washing case because what happens is they issue 98 00:04:48,360 --> 00:04:50,560 Speaker 2: these bonds in twenty twenty one when they're paying the bribes, 99 00:04:51,279 --> 00:04:54,480 Speaker 2: and they're allegedly paying the bribes, and they paid the 100 00:04:54,520 --> 00:04:57,480 Speaker 2: bonds back in twenty twenty four. So like nobody lost 101 00:04:57,480 --> 00:05:01,280 Speaker 2: any money. The investors are fine, the US investors a fine. 102 00:05:01,640 --> 00:05:03,880 Speaker 2: How are they defrauded? Well, they were defrauded, because the 103 00:05:03,920 --> 00:05:06,360 Speaker 2: SEC makes a big point of saying, look at all, 104 00:05:06,440 --> 00:05:09,120 Speaker 2: like the ESG promises that a Donnie puts in the 105 00:05:09,120 --> 00:05:13,120 Speaker 2: bond offering, like they're like, not only are we a 106 00:05:13,160 --> 00:05:17,080 Speaker 2: renewable power company, but we're also one that works in 107 00:05:17,120 --> 00:05:20,640 Speaker 2: developing countries and doesn't pay bribes and like you can 108 00:05:20,680 --> 00:05:23,080 Speaker 2: imagine being an ESG investor in twenty twenty one and saying, 109 00:05:23,080 --> 00:05:26,080 Speaker 2: I would love to put money into a company that 110 00:05:26,120 --> 00:05:28,159 Speaker 2: does like renewable power which is green and very like 111 00:05:28,240 --> 00:05:31,719 Speaker 2: E and also works in developing countries, so it's like, 112 00:05:31,839 --> 00:05:34,760 Speaker 2: you know, providing clean power to places where it's like 113 00:05:34,760 --> 00:05:36,560 Speaker 2: not as easy to fund solar projects. So it's like 114 00:05:37,000 --> 00:05:39,839 Speaker 2: s And then it doesn't pay bribes because like a 115 00:05:39,880 --> 00:05:42,839 Speaker 2: lot of you know, energy projects in developing countries, you 116 00:05:42,880 --> 00:05:43,960 Speaker 2: worry about it they pay bribes. 117 00:05:44,000 --> 00:05:44,320 Speaker 3: Good G. 118 00:05:44,640 --> 00:05:47,960 Speaker 2: It's some good G. And like the SEC says that 119 00:05:48,279 --> 00:05:51,760 Speaker 2: Donnie Green position itself as a leader in environmentally conscious, 120 00:05:51,760 --> 00:05:55,680 Speaker 2: socially responsible and good corporate governance principles, and it sought 121 00:05:55,720 --> 00:05:59,040 Speaker 2: to differentiate itself from its peers and other potential investments 122 00:05:59,120 --> 00:06:01,919 Speaker 2: or issuers and developing countries that might be susceptible to 123 00:06:01,960 --> 00:06:05,600 Speaker 2: corruption and bribery issues. Oh, if you're an ESG investor, 124 00:06:05,640 --> 00:06:08,560 Speaker 2: like you're looking at solar projects and development countries and like, oh, 125 00:06:08,600 --> 00:06:11,000 Speaker 2: these probably pay bribes and that's not very ESG. But 126 00:06:11,040 --> 00:06:13,560 Speaker 2: then Donnie's like, we do solar projects in India and 127 00:06:13,600 --> 00:06:15,760 Speaker 2: we don't pay bribes, and you're like, great, and those 128 00:06:15,760 --> 00:06:18,960 Speaker 2: people were defrauded because they allegedly invested in a company 129 00:06:19,080 --> 00:06:19,960 Speaker 2: that did pay bribes. 130 00:06:20,080 --> 00:06:22,120 Speaker 1: Yeah. So there you go a detail that I love 131 00:06:22,160 --> 00:06:25,359 Speaker 1: about this whole thing. You talk about a Donnie Green, 132 00:06:25,760 --> 00:06:29,560 Speaker 1: you think about gotam a Donnie himself. The reason why 133 00:06:29,600 --> 00:06:32,599 Speaker 1: he is so rich and like so systemically important to 134 00:06:33,120 --> 00:06:36,560 Speaker 1: the government and their ambitions and also the Indian stock market. 135 00:06:36,680 --> 00:06:40,040 Speaker 1: He made his money in coal mining. Oh sure, and 136 00:06:40,120 --> 00:06:42,080 Speaker 1: like this is all part of his broader reinvention. 137 00:06:42,720 --> 00:06:45,479 Speaker 2: Well yeah, although like that's actually not that uncommon, Like 138 00:06:45,560 --> 00:06:47,880 Speaker 2: a lot of like energy and infrastructure companies are like 139 00:06:48,040 --> 00:06:50,279 Speaker 2: we also do green energy because like if you're in 140 00:06:50,320 --> 00:06:52,720 Speaker 2: the energy business, you have some advantages and like yeah, 141 00:06:52,839 --> 00:06:55,360 Speaker 2: entering energy contracts better solar energy. 142 00:06:55,480 --> 00:06:55,680 Speaker 3: Yeah. 143 00:06:55,720 --> 00:06:59,359 Speaker 1: I just like that he became greener and also allegedly 144 00:07:00,200 --> 00:07:03,960 Speaker 1: that's true pp Yeah yeah, well you say started doing 145 00:07:04,720 --> 00:07:06,560 Speaker 1: We don't know that's true, you know, I. 146 00:07:06,480 --> 00:07:09,200 Speaker 2: Mean obviously, like there's the there's like the Hindenburg allegations 147 00:07:09,200 --> 00:07:09,720 Speaker 2: a while back. 148 00:07:09,840 --> 00:07:11,520 Speaker 1: Yeah, January twenty twenty three. 149 00:07:11,800 --> 00:07:14,960 Speaker 2: Yeah, so I don't think this is like particularly confirmatory 150 00:07:15,000 --> 00:07:17,520 Speaker 2: of those, but it's a sort of general. 151 00:07:17,280 --> 00:07:19,400 Speaker 1: Like I was wondering about that. I was trying to 152 00:07:20,200 --> 00:07:23,480 Speaker 1: rack my brain for that information, and I guess I 153 00:07:23,480 --> 00:07:24,240 Speaker 1: could have looked it up. 154 00:07:24,280 --> 00:07:27,640 Speaker 2: But the Hindenburg stuff is like very miscellaneous. It's not 155 00:07:27,760 --> 00:07:31,400 Speaker 2: like Donnie is bad because of this one bad thing 156 00:07:31,400 --> 00:07:33,960 Speaker 2: they did. It's like, oh, look at this nephew, right, 157 00:07:34,040 --> 00:07:36,960 Speaker 2: So it's a little hard to like, somewhere in the 158 00:07:37,000 --> 00:07:39,440 Speaker 2: Hindenburg report there might be like something about this, but 159 00:07:39,480 --> 00:07:42,080 Speaker 2: it's hard to tell. I was gonna say something else. 160 00:07:42,160 --> 00:07:46,360 Speaker 1: What was it we were talking about before Edinburgh cold bribes? 161 00:07:50,480 --> 00:07:55,120 Speaker 1: We could talk about Donald Trump a little bit, like 162 00:07:55,160 --> 00:07:58,560 Speaker 1: it would be interesting to see what happens here with 163 00:07:59,080 --> 00:08:01,000 Speaker 1: a new US attorney in New York. 164 00:08:02,080 --> 00:08:03,240 Speaker 2: Yes, I want to get to that, but I want 165 00:08:03,240 --> 00:08:04,520 Speaker 2: to go back to the thing I was going to say. 166 00:08:04,560 --> 00:08:09,480 Speaker 2: A Donnie himself is very closely associated with power in 167 00:08:09,520 --> 00:08:12,040 Speaker 2: de He's like most with Mody and like he's a 168 00:08:12,040 --> 00:08:16,480 Speaker 2: political figure as well as a business figure. And it's 169 00:08:16,520 --> 00:08:18,640 Speaker 2: interesting to me if you read this case. The way 170 00:08:18,720 --> 00:08:22,640 Speaker 2: that the deal works is that step one, a Donnie 171 00:08:22,640 --> 00:08:26,480 Speaker 2: Green wins this enormous contract with the Indian federal government 172 00:08:26,880 --> 00:08:29,840 Speaker 2: green power thing, and then step two, to like make 173 00:08:29,840 --> 00:08:31,440 Speaker 2: that contract work, they have to go out and win 174 00:08:31,480 --> 00:08:35,720 Speaker 2: contracts with each Indian states power company, and like allegedly 175 00:08:36,559 --> 00:08:39,160 Speaker 2: they win the power contract, the federal contract first, and 176 00:08:39,200 --> 00:08:41,440 Speaker 2: then they go out and start bribing the state governments. 177 00:08:42,760 --> 00:08:46,440 Speaker 2: There's no suggestion that they won the federal contract illegitimately, 178 00:08:46,840 --> 00:08:49,120 Speaker 2: which is like it's a little interesting. I don't know. Yeah, 179 00:08:49,160 --> 00:08:52,760 Speaker 2: they're like so politically connected in the Indian federal government. 180 00:08:52,800 --> 00:08:55,199 Speaker 2: It's like, it's like interesting that they're like pan bribes 181 00:08:55,240 --> 00:08:57,440 Speaker 2: that say, it's just on the rais an eye brat 182 00:08:58,120 --> 00:08:58,720 Speaker 2: Donald Trump. 183 00:08:59,000 --> 00:09:02,839 Speaker 1: Donald Trump. So Donnie really likes Donald Trump, at least 184 00:09:02,840 --> 00:09:07,280 Speaker 1: according to his social media presence after Trump. I think, yeah, I. 185 00:09:07,200 --> 00:09:10,160 Speaker 2: Think, if you're a business person, this is not true 186 00:09:10,160 --> 00:09:12,160 Speaker 2: in twenty sixteen, but it's true in twenty twenty four. 187 00:09:12,160 --> 00:09:14,480 Speaker 2: If you're a business person, you really like Donald Trump 188 00:09:14,640 --> 00:09:16,319 Speaker 2: according to your social media presence. 189 00:09:16,440 --> 00:09:19,520 Speaker 1: Yeah, that's actually that's very true across nationalities. 190 00:09:19,800 --> 00:09:22,640 Speaker 2: It's just like, why not, Well, on that trem. 191 00:09:22,360 --> 00:09:25,800 Speaker 1: He didn't just congratulate him. He also committed to invest 192 00:09:25,880 --> 00:09:28,520 Speaker 1: ten billion dollars in the US create as many as 193 00:09:28,600 --> 00:09:30,079 Speaker 1: ten thousand jobs. 194 00:09:30,200 --> 00:09:30,800 Speaker 2: Incentives. 195 00:09:31,080 --> 00:09:34,160 Speaker 1: Yeah, incentives sometimes are another word for bribes. 196 00:09:34,200 --> 00:09:37,880 Speaker 2: But yeah, though again it's like if he committed to 197 00:09:37,960 --> 00:09:41,960 Speaker 2: invest ten billion dollars in the United States, that's a 198 00:09:41,960 --> 00:09:45,400 Speaker 2: good incentive. That's like, the United States in this relationship 199 00:09:45,440 --> 00:09:48,200 Speaker 2: is the principal. If he committed to invest ten billion 200 00:09:48,240 --> 00:09:52,840 Speaker 2: dollars in Trump Media, then that would be that that's like, 201 00:09:53,080 --> 00:09:55,319 Speaker 2: that's the agent. But now I don't I don't think 202 00:09:55,320 --> 00:09:59,360 Speaker 2: that's happening. I remember in the first Trump administration being 203 00:09:59,400 --> 00:10:04,479 Speaker 2: interested in what sort of foreign corupt Practices Act prosecutions 204 00:10:04,640 --> 00:10:08,839 Speaker 2: there would be given Trump's whole thing. And I remain 205 00:10:08,880 --> 00:10:13,360 Speaker 2: interested in the second Trump administration about that because in 206 00:10:13,400 --> 00:10:16,760 Speaker 2: the first administration Trump owned a hotel or foreign governments 207 00:10:16,760 --> 00:10:19,640 Speaker 2: would put people up at high rates. But now there's 208 00:10:19,679 --> 00:10:22,160 Speaker 2: like there's Trump Media. There's like a lot going on. 209 00:10:22,480 --> 00:10:35,640 Speaker 3: So we'll see, we'll see. 210 00:10:38,200 --> 00:10:42,080 Speaker 1: Oh my gosh, micros Strategy, Micro's strategy is buying so 211 00:10:42,240 --> 00:10:45,600 Speaker 1: much bitcoin. Micro strategy shares are going up so much. 212 00:10:46,240 --> 00:10:50,640 Speaker 1: Micro Strategy has another short cellar after it. Where do 213 00:10:50,640 --> 00:10:51,360 Speaker 1: you want to start? 214 00:10:51,840 --> 00:10:55,360 Speaker 2: Its strategy is so interesting, but it's so simple, it's 215 00:10:55,400 --> 00:10:59,000 Speaker 2: so simple. We were talking to John Collison. I remember 216 00:10:59,080 --> 00:11:05,040 Speaker 2: on this podcast he argued for the view that companies 217 00:11:05,240 --> 00:11:09,280 Speaker 2: should focus on doing their business well and that a 218 00:11:09,360 --> 00:11:12,559 Speaker 2: company that spends too much time focused on like doing 219 00:11:12,640 --> 00:11:16,040 Speaker 2: stuff with stock or like optimizing its stock. Probably just 220 00:11:16,880 --> 00:11:20,679 Speaker 2: doing stock trades is probably it's probably a bad idea, 221 00:11:20,679 --> 00:11:23,440 Speaker 2: and you should focus on building the great business. Mega 222 00:11:23,520 --> 00:11:26,520 Speaker 2: said he has a business, right runs an enterprise. 223 00:11:26,200 --> 00:11:29,280 Speaker 1: Software nominally a software Yeah. 224 00:11:29,160 --> 00:11:34,480 Speaker 2: Right, totally has a business. But one gets the sense 225 00:11:35,120 --> 00:11:37,280 Speaker 2: that most of what it's executives focused on day to 226 00:11:37,360 --> 00:11:40,199 Speaker 2: day is is sharing lots of stock and using the 227 00:11:40,240 --> 00:11:41,400 Speaker 2: proceeds to buy lots of bitcoin. 228 00:11:41,480 --> 00:11:42,840 Speaker 1: How do we get more bitcoin? 229 00:11:43,160 --> 00:11:45,000 Speaker 2: And then talking up the fact that they've bought more 230 00:11:45,000 --> 00:11:48,600 Speaker 2: bitcoin with the proceeds from selling stock. And I don't 231 00:11:48,640 --> 00:11:51,120 Speaker 2: know how that has affected the customers or their enterprise 232 00:11:51,160 --> 00:11:54,520 Speaker 2: software business. I don't know if like the enterpres yeah, 233 00:11:54,520 --> 00:11:58,520 Speaker 2: I know, right, but as a shareholder value maximization strategy, 234 00:11:58,600 --> 00:12:01,760 Speaker 2: right now, they've made the right choice, like clearly, like 235 00:12:01,800 --> 00:12:04,440 Speaker 2: they have made their stock go up so much by 236 00:12:04,480 --> 00:12:07,880 Speaker 2: doing this insane perpetual motion trade. Where there are stock 237 00:12:07,920 --> 00:12:10,520 Speaker 2: trades that, like I wrote, like one hundred and fifty 238 00:12:10,520 --> 00:12:12,439 Speaker 2: percent premium to the value of the underlying bitcode, it's 239 00:12:12,440 --> 00:12:14,760 Speaker 2: actually more than that because you take into leverage and stuff. 240 00:12:16,200 --> 00:12:18,480 Speaker 2: Let's say there's stock trades like three times the price 241 00:12:18,520 --> 00:12:22,040 Speaker 2: of like their underlying bitcoin, And so they just sell 242 00:12:22,280 --> 00:12:24,320 Speaker 2: a dollar worth of stock, they use it to buy 243 00:12:24,320 --> 00:12:26,240 Speaker 2: a dollar worth of bitcoin, and their stock goes up 244 00:12:26,240 --> 00:12:29,200 Speaker 2: by three dollars. So they just perpetually expanding their market cap. 245 00:12:29,880 --> 00:12:33,200 Speaker 2: And like, when I think about that trade, you know, 246 00:12:33,200 --> 00:12:35,560 Speaker 2: we talked about the Destiny Attack one hundred fund, where 247 00:12:35,600 --> 00:12:37,880 Speaker 2: like it was trading at like a thousand percent premium 248 00:12:38,000 --> 00:12:41,640 Speaker 2: to the underlying private company shares because you could get 249 00:12:41,640 --> 00:12:43,240 Speaker 2: those shoes. And so I was like, why they should 250 00:12:43,240 --> 00:12:45,640 Speaker 2: is your stock because that'll compress the premium, right, Like 251 00:12:45,720 --> 00:12:48,200 Speaker 2: you sell more stock, that puts selling pressure on your stock. 252 00:12:48,240 --> 00:12:50,760 Speaker 2: Your stock goes down. Meanwhile you buy the underlying assets, 253 00:12:50,840 --> 00:12:53,640 Speaker 2: the underlying assets go up. You sort of eventually get 254 00:12:53,640 --> 00:12:56,040 Speaker 2: to a place where you're fairly valued. That's what micro 255 00:12:56,080 --> 00:12:58,560 Speaker 2: shategy is doing. But the premium keeps going up, like 256 00:12:58,600 --> 00:13:00,640 Speaker 2: it doesn't work. Like it worked great for them, but 257 00:13:00,640 --> 00:13:03,600 Speaker 2: it doesn't like actually compress the premium. So eventually they 258 00:13:03,600 --> 00:13:06,560 Speaker 2: will have a market cap greater than like the entire 259 00:13:06,559 --> 00:13:09,360 Speaker 2: world's economy because they found a perpetual motion machine. 260 00:13:09,520 --> 00:13:13,040 Speaker 1: And I look forward to that reality. It is interesting. 261 00:13:13,080 --> 00:13:16,480 Speaker 1: I mean I have my ETF glasses on all the time. 262 00:13:16,520 --> 00:13:21,280 Speaker 1: But there's all of these. But no, there's leveraged micro 263 00:13:21,320 --> 00:13:25,320 Speaker 1: strategy and ETFs that are doing incredible trading volume, which 264 00:13:25,360 --> 00:13:27,439 Speaker 1: is nuts. There's been a couple of days where like 265 00:13:27,480 --> 00:13:30,400 Speaker 1: they've been the most traded stock, which is crazy. And 266 00:13:30,440 --> 00:13:34,480 Speaker 1: there is a theory out there that, you know, some 267 00:13:34,520 --> 00:13:36,760 Speaker 1: of the people I follow on Twitter or x are 268 00:13:36,920 --> 00:13:41,280 Speaker 1: entertaining that whether all the money that's coming into these 269 00:13:41,280 --> 00:13:45,280 Speaker 1: ETFs is like just part of the reason why you 270 00:13:45,400 --> 00:13:48,600 Speaker 1: have that big premium. Like Mike Green overhead Simplify has 271 00:13:48,640 --> 00:13:51,600 Speaker 1: made the case that yes, like some of these ETFs 272 00:13:51,679 --> 00:13:55,920 Speaker 1: have powered micro strategy just just like this insane premium. 273 00:13:55,960 --> 00:14:00,000 Speaker 1: Maybe that's why it's not getting arbitraged away. 274 00:14:00,160 --> 00:14:01,800 Speaker 2: I hope that's not true. It just seems like such 275 00:14:01,840 --> 00:14:03,559 Speaker 2: a tail wagging the dog situation. 276 00:14:04,720 --> 00:14:07,720 Speaker 1: So yeah, yeah, it's just like one of the thought exercises. 277 00:14:07,840 --> 00:14:11,240 Speaker 2: One thing that I've heard argued is that micro strategy 278 00:14:11,360 --> 00:14:15,240 Speaker 2: is a pot of bitcoin. Why would you buy it 279 00:14:15,520 --> 00:14:18,760 Speaker 2: at a three times premium to the underlying bitcoin rather 280 00:14:18,800 --> 00:14:22,720 Speaker 2: than buying bitcoin or a bitcoin ETF or something like that. 281 00:14:23,840 --> 00:14:26,000 Speaker 2: One answer is, like, you want to see where this 282 00:14:26,040 --> 00:14:27,920 Speaker 2: is going, and you think the premium will expand, which. 283 00:14:27,760 --> 00:14:30,520 Speaker 1: Is like you know, like science experiment. 284 00:14:30,480 --> 00:14:32,760 Speaker 2: Like you could have a theory that the premium will expand. 285 00:14:33,000 --> 00:14:35,000 Speaker 2: Like micro Strategy is argued, like we're actually a better 286 00:14:35,000 --> 00:14:37,280 Speaker 2: way to hold bitcoin because we can get leverage. You 287 00:14:37,320 --> 00:14:39,800 Speaker 2: can't get leveraged, like you can leverage your bitcoin, but 288 00:14:39,840 --> 00:14:41,960 Speaker 2: like you're trying get three x the bitcoin, So it's 289 00:14:41,960 --> 00:14:43,800 Speaker 2: like it's it's not it's not really a leverage plan. 290 00:14:44,280 --> 00:14:47,040 Speaker 2: We would have a fundamental view that the premium will expand. 291 00:14:47,280 --> 00:14:50,120 Speaker 2: Another thing is like for some reason, you cannot own 292 00:14:50,760 --> 00:14:54,200 Speaker 2: any other bitcoin instrument, and so you own this thing. 293 00:14:54,560 --> 00:14:56,000 Speaker 2: I don't know, I don't know who that would be. 294 00:14:56,600 --> 00:15:01,120 Speaker 2: I have heard people say iras, you can't buy the 295 00:15:01,240 --> 00:15:03,440 Speaker 2: Queen ETF and your IRA, but you can buy micro 296 00:15:03,480 --> 00:15:06,440 Speaker 2: Strategy in your IR which sounds terrifying. This is perhaps 297 00:15:06,440 --> 00:15:08,960 Speaker 2: a less institutionally held stock than like a lot of 298 00:15:09,000 --> 00:15:12,720 Speaker 2: other stocks, perhaps, but there are some institutional investors in it. 299 00:15:12,760 --> 00:15:15,120 Speaker 2: And you could imagine being an equity fund manager where 300 00:15:15,120 --> 00:15:17,040 Speaker 2: your mandate is like you can't really buy ETFs in 301 00:15:17,040 --> 00:15:21,560 Speaker 2: your equity fund, but like can you buy this corporate stock? 302 00:15:21,720 --> 00:15:22,600 Speaker 1: Yes you can, you. 303 00:15:22,600 --> 00:15:25,120 Speaker 2: Can, and like if you like you're like an equity 304 00:15:25,120 --> 00:15:26,920 Speaker 2: fund manager is like, really, I love bitcoin, this is 305 00:15:26,920 --> 00:15:30,640 Speaker 2: like your best way to get Yeah, the three X celebrity, Yes, maybe, 306 00:15:30,640 --> 00:15:34,480 Speaker 2: but like there's something amazing going on. Oh yeah, and 307 00:15:34,520 --> 00:15:37,960 Speaker 2: they are like capitalizing on it to the health. 308 00:15:38,040 --> 00:15:40,000 Speaker 1: Well to that point, maybe one of the reasons why 309 00:15:40,080 --> 00:15:43,520 Speaker 1: you buy micro Strategy at this premium is because you 310 00:15:43,600 --> 00:15:46,320 Speaker 1: love Michael Sailor, Like he does have a cult following. 311 00:15:46,760 --> 00:15:49,800 Speaker 2: Yes, you know who's not doing that trade Michael Sailor. 312 00:15:51,560 --> 00:15:54,560 Speaker 1: Yeah, that's true. And I know there's this daily Mail 313 00:15:54,720 --> 00:15:56,960 Speaker 1: cover from like March two thousand that's been making the 314 00:15:57,040 --> 00:16:00,840 Speaker 1: rounds on X about him losing like six billion dollars 315 00:16:00,880 --> 00:16:04,320 Speaker 1: in a day on micro Strategy, and it's just amazing 316 00:16:04,360 --> 00:16:08,120 Speaker 1: to think that just the evolution of this company and 317 00:16:08,240 --> 00:16:11,160 Speaker 1: the evolution of Michael Saylor, and he's now obviously a 318 00:16:11,280 --> 00:16:12,200 Speaker 1: very wealthy man. 319 00:16:12,720 --> 00:16:17,760 Speaker 2: To be clear, I really respect. Respect is maybe not 320 00:16:17,800 --> 00:16:18,240 Speaker 2: the right word. 321 00:16:18,840 --> 00:16:20,560 Speaker 1: I really cherish and in mind. 322 00:16:20,760 --> 00:16:23,760 Speaker 2: I cherish and MMA is by the idea of like, 323 00:16:24,400 --> 00:16:26,840 Speaker 2: we run a software company, but that's boring, so we're 324 00:16:26,880 --> 00:16:28,960 Speaker 2: just going to get all in. I'm buying as much 325 00:16:29,000 --> 00:16:31,160 Speaker 2: bitcoin as we can and it does so well. 326 00:16:31,400 --> 00:16:35,480 Speaker 1: Yeah, well, so you said, you know, it's a pot 327 00:16:35,480 --> 00:16:38,760 Speaker 1: of bitcoin. Yeah, and so it owns about thirty billion 328 00:16:38,800 --> 00:16:41,600 Speaker 1: dollars worth of bitcoin and its market cap is one 329 00:16:41,680 --> 00:16:44,000 Speaker 1: hundred and five billion dollars. And I think it's interesting 330 00:16:44,040 --> 00:16:46,840 Speaker 1: to compare that to like a traditional asset manager, like 331 00:16:46,880 --> 00:16:49,040 Speaker 1: a black Rock, who has a market cap of like 332 00:16:49,040 --> 00:16:52,080 Speaker 1: one hundred and fifty three billion dollars with eleven something 333 00:16:52,160 --> 00:16:53,560 Speaker 1: trillion dollars in assets. 334 00:16:53,960 --> 00:16:56,280 Speaker 2: Yeah, but this is not the market cap of the manager. 335 00:16:56,320 --> 00:16:57,640 Speaker 2: This is the market cap of the fund. 336 00:16:58,080 --> 00:16:58,280 Speaker 1: Yeah. 337 00:16:58,400 --> 00:17:00,120 Speaker 2: This is a fund that trades at three x the 338 00:17:00,160 --> 00:17:01,440 Speaker 2: value of its underlying stuff. 339 00:17:01,520 --> 00:17:01,840 Speaker 3: Yeah. 340 00:17:01,920 --> 00:17:03,560 Speaker 1: Yeah, it's not actually a fund. 341 00:17:03,560 --> 00:17:06,280 Speaker 2: Right, It's not actually a fund, it's just it just 342 00:17:06,400 --> 00:17:09,680 Speaker 2: is a fund as a software company. 343 00:17:09,840 --> 00:17:13,720 Speaker 1: It's a fun slash software company that now Citron is 344 00:17:13,920 --> 00:17:14,600 Speaker 1: trying to short. 345 00:17:14,760 --> 00:17:18,040 Speaker 2: Yeah. So this is like a famous widow maker, right, 346 00:17:18,240 --> 00:17:20,320 Speaker 2: because people have noticed this for a long time, Yeah, 347 00:17:20,440 --> 00:17:22,680 Speaker 2: and have tried to short it and then carry out. 348 00:17:23,200 --> 00:17:26,800 Speaker 1: Carry Stale did it just in March, and I was 349 00:17:26,800 --> 00:17:28,320 Speaker 1: seeing a look at it. They did the same thing 350 00:17:28,840 --> 00:17:32,760 Speaker 1: long bitcoin short micro strategy. Their reasoning at the time 351 00:17:32,960 --> 00:17:35,640 Speaker 1: was that they're trading history and basic common sense suggests 352 00:17:35,640 --> 00:17:40,520 Speaker 1: that the current inflam right there, premium will contract much 353 00:17:40,560 --> 00:17:43,520 Speaker 1: as it has on prior occasions, providing a compelling opportunity 354 00:17:43,560 --> 00:17:47,560 Speaker 1: for a pair trade. Since that Bloomberg News article, micro 355 00:17:47,600 --> 00:17:50,959 Speaker 1: strategy is up one hundred and seventy five percent and 356 00:17:51,040 --> 00:17:52,439 Speaker 1: bitcoin is up thirty eight percent. 357 00:17:53,359 --> 00:17:56,920 Speaker 2: I mean they're right, like, yeah, before the end of 358 00:17:56,960 --> 00:17:58,840 Speaker 2: the universe that premium will contract. 359 00:17:58,840 --> 00:18:00,560 Speaker 1: Are the heat death of the year universe? 360 00:18:00,840 --> 00:18:03,920 Speaker 2: But like before carrots Dell gets out of the trade, 361 00:18:03,920 --> 00:18:07,560 Speaker 2: who knows, Yeah, right it is has a famous whoto maker. 362 00:18:08,080 --> 00:18:10,800 Speaker 2: Sidron didn't like put out a report being like we're 363 00:18:10,840 --> 00:18:13,800 Speaker 2: all in on anti micro strategy. They were like, we're 364 00:18:13,840 --> 00:18:15,760 Speaker 2: hedging our long bitcoin with a little bit of short 365 00:18:15,800 --> 00:18:18,919 Speaker 2: micro strategy. But yeah, the same basic trade. Yeah, and 366 00:18:18,960 --> 00:18:22,320 Speaker 2: the stock went down, which I was impressed by, Like 367 00:18:22,760 --> 00:18:24,760 Speaker 2: I write about how I heard this is and nobody 368 00:18:24,800 --> 00:18:25,440 Speaker 2: sells it, so. 369 00:18:25,480 --> 00:18:28,520 Speaker 1: I don't know, amazing. Maybe you didn't tweet about it enough, 370 00:18:28,560 --> 00:18:31,360 Speaker 1: because that's what Ciitron did. It was cool to see that, 371 00:18:31,680 --> 00:18:33,600 Speaker 1: but you I don't know. I want to make the 372 00:18:33,640 --> 00:18:36,960 Speaker 1: common sense argument that oh, maybe it went down on 373 00:18:37,000 --> 00:18:39,080 Speaker 1: this specific one just because it's come up so much, 374 00:18:39,160 --> 00:18:41,560 Speaker 1: But I feel like that's never stopped. 375 00:18:41,480 --> 00:18:43,719 Speaker 2: Yeah, like who knows, right, Like there's a lot going on, 376 00:18:43,840 --> 00:18:47,800 Speaker 2: including you know, micro Strategy is in the middle of 377 00:18:47,840 --> 00:18:50,520 Speaker 2: selling twenty one billion dollars worth of stock. They sold 378 00:18:50,560 --> 00:18:52,560 Speaker 2: like four point six billion dollars of stock last week. 379 00:18:53,000 --> 00:18:56,000 Speaker 2: Sorry not last week. It's yeah, it actually was last week. 380 00:18:56,080 --> 00:18:58,399 Speaker 1: I was this week, but time is a flat circle. 381 00:18:58,800 --> 00:19:01,919 Speaker 2: Well, but the point is, like they disclose like this 382 00:19:02,040 --> 00:19:04,359 Speaker 2: Monday that it's WLD four point six billion dollars or 383 00:19:04,359 --> 00:19:07,440 Speaker 2: stock last week. They're probably doing roughly that clip this week, 384 00:19:07,480 --> 00:19:09,080 Speaker 2: so like, you know, maybe the stock went down because 385 00:19:09,080 --> 00:19:11,840 Speaker 2: they were like sold a bunch of stock. In any case, 386 00:19:11,840 --> 00:19:14,879 Speaker 2: they're selling stock buying bitcoin. Bitcoin is going up to 387 00:19:14,920 --> 00:19:18,800 Speaker 2: one hundred thousand dollars. There is no reason that what 388 00:19:18,880 --> 00:19:23,960 Speaker 2: they're doing should increase the premium. But like taking a 389 00:19:23,960 --> 00:19:28,120 Speaker 2: step back, if you're all in on bitcoin, having enormous 390 00:19:28,320 --> 00:19:32,040 Speaker 2: firepower to buy all out of bitcoin makes bitcoin go 391 00:19:32,160 --> 00:19:34,360 Speaker 2: up and it makes your strategy look better. Right, If 392 00:19:34,359 --> 00:19:36,680 Speaker 2: micro Strategy was buying bitcoin and bitcoin is going down, 393 00:19:36,760 --> 00:19:38,439 Speaker 2: like people would be like, yeah, that's annoying, right, But 394 00:19:38,440 --> 00:19:40,359 Speaker 2: they're buying bitcoin. Bitcoin is going up. People like, oh, 395 00:19:40,359 --> 00:19:42,520 Speaker 2: their geniuses. Look, they keep buying bitcoin. It keeps going up. 396 00:19:42,520 --> 00:19:45,200 Speaker 2: So it's like there is like a virtuous cycle component 397 00:19:45,240 --> 00:19:48,440 Speaker 2: to it, where like they're enormous buying firepower gives them 398 00:19:48,440 --> 00:19:51,320 Speaker 2: some momentum, like both in terms of like the value 399 00:19:51,320 --> 00:19:53,320 Speaker 2: of their assets and also in terms of like how 400 00:19:53,359 --> 00:19:55,240 Speaker 2: they look to the market because they look like they're 401 00:19:55,320 --> 00:19:56,399 Speaker 2: buying a thing that goes up. 402 00:19:56,520 --> 00:20:01,000 Speaker 1: Yeah, well, good game, Michael Saylor, whatever you are on 403 00:20:01,040 --> 00:20:19,280 Speaker 1: your yacht in Miami. Shall we keep talking about short 404 00:20:19,359 --> 00:20:22,920 Speaker 1: selling and short squeezes? And sure you wrote this week 405 00:20:22,960 --> 00:20:24,400 Speaker 1: that short squeezes are legal now. 406 00:20:24,640 --> 00:20:26,879 Speaker 2: So I wrote this week about the appeals cart decision 407 00:20:26,920 --> 00:20:29,880 Speaker 2: from last month. Sorry it's a slow week. 408 00:20:31,720 --> 00:20:33,640 Speaker 1: Yeah, I was wondering, like what's what's the next? 409 00:20:34,000 --> 00:20:37,320 Speaker 2: So often, you know, things just sit on the back 410 00:20:37,320 --> 00:20:39,200 Speaker 2: burner for a while, and I'm like, well today I'm 411 00:20:39,240 --> 00:20:39,880 Speaker 2: going to write. 412 00:20:39,680 --> 00:20:42,600 Speaker 1: About let's look at what happened last month. 413 00:20:43,080 --> 00:20:45,920 Speaker 2: You know, you can't always be it makes. 414 00:20:45,760 --> 00:20:48,400 Speaker 1: For a great podcast, Yeah right. 415 00:20:48,680 --> 00:20:51,159 Speaker 2: We love to read timely. So I read this week 416 00:20:51,560 --> 00:20:54,600 Speaker 2: about something that happened last month, which is appeals court 417 00:20:55,080 --> 00:20:58,679 Speaker 2: decided that it's okay to do a short squeeze. So 418 00:20:58,720 --> 00:21:03,320 Speaker 2: it is is like companies most prominently overstock dot com 419 00:21:03,720 --> 00:21:07,480 Speaker 2: I thought they invented it. Someone emailed me with Pegasus 420 00:21:07,480 --> 00:21:12,600 Speaker 2: Wireless might have invented this. I wasn't following shorts squeze anyway. 421 00:21:12,720 --> 00:21:16,520 Speaker 2: Companies do this thing from time to time where they 422 00:21:16,560 --> 00:21:18,840 Speaker 2: try to squeeze out their shorts. So a company will 423 00:21:18,880 --> 00:21:21,359 Speaker 2: get mad at short sellers. They'll think, oh, there's naked 424 00:21:21,359 --> 00:21:23,800 Speaker 2: short sellers like those story. They'll just be mad at 425 00:21:23,840 --> 00:21:26,639 Speaker 2: like people betting against them. And so they'll say, what 426 00:21:26,640 --> 00:21:30,119 Speaker 2: we're gonna do is we're gonna give each shareholder some 427 00:21:30,560 --> 00:21:34,040 Speaker 2: magic token. Now it's a crypto thing, like overstocked it 428 00:21:34,160 --> 00:21:35,560 Speaker 2: with a crypto thing. But it doesn't have to be 429 00:21:35,600 --> 00:21:38,119 Speaker 2: a crypto thing. It can be like a paper certificate 430 00:21:38,160 --> 00:21:40,560 Speaker 2: saying you're entitled to you know, ten percent of the company, 431 00:21:40,960 --> 00:21:44,560 Speaker 2: and you give them this magic thing in a way 432 00:21:44,920 --> 00:21:48,160 Speaker 2: that can't be traded. So people who get the magic 433 00:21:48,200 --> 00:21:50,919 Speaker 2: thing can't sell it. And what that means is that 434 00:21:51,000 --> 00:21:54,240 Speaker 2: short sellers can't buy it. And so if you're a 435 00:21:54,280 --> 00:21:57,080 Speaker 2: short seller, you borrowed stock from someone else, you sold 436 00:21:57,080 --> 00:21:59,200 Speaker 2: the stock short, and you owe the person you borrowed 437 00:21:59,200 --> 00:22:02,960 Speaker 2: the stock from the stock back and whatever else comes 438 00:22:03,000 --> 00:22:04,720 Speaker 2: with the stock. So I stock is a dividend, you 439 00:22:04,760 --> 00:22:06,560 Speaker 2: have to pay them a dividend. If there's a spinoff, 440 00:22:06,560 --> 00:22:08,439 Speaker 2: you have to give them shares of the spinoff. If 441 00:22:08,480 --> 00:22:11,119 Speaker 2: the company gives out this magic token, then the short 442 00:22:11,119 --> 00:22:15,000 Speaker 2: sellers owe the magic token back to their share lenders. 443 00:22:15,320 --> 00:22:17,840 Speaker 2: If they can't get the magic token because it doesn't trade, 444 00:22:18,280 --> 00:22:21,680 Speaker 2: then they can't fulfill their obligation and they fall into 445 00:22:21,680 --> 00:22:26,040 Speaker 2: a black hole. That's the idea. And so the effect 446 00:22:26,119 --> 00:22:28,640 Speaker 2: of this is that do you announce, oh, we're gonna 447 00:22:28,640 --> 00:22:31,320 Speaker 2: pay out this magic token in like a week, and 448 00:22:31,359 --> 00:22:33,880 Speaker 2: then before you pay the magic token, all the short 449 00:22:33,880 --> 00:22:36,000 Speaker 2: sellers say, oh wait, if that happens, then I'll be, 450 00:22:36,320 --> 00:22:38,080 Speaker 2: you know, in this black hole. And so I have 451 00:22:38,080 --> 00:22:40,280 Speaker 2: to buy back my stock now to avoid that. And 452 00:22:40,320 --> 00:22:42,680 Speaker 2: so the short sellers all buy back their stock and 453 00:22:43,160 --> 00:22:45,520 Speaker 2: the stock goes up, and the short sellers lose money 454 00:22:45,520 --> 00:22:48,399 Speaker 2: and are sad, and you, as the CEO, are happy 455 00:22:48,440 --> 00:22:50,719 Speaker 2: because one your stock went up and frankly, you are 456 00:22:50,720 --> 00:22:53,680 Speaker 2: probably selling stock into that rally, because of course you're 457 00:22:53,760 --> 00:22:56,840 Speaker 2: this kind of ceo. But then two, the short sellers 458 00:22:56,840 --> 00:22:58,760 Speaker 2: lost money, and like that's what you really wanted because 459 00:22:58,760 --> 00:23:03,080 Speaker 2: you hate them, And this is like a controversial thing 460 00:23:03,119 --> 00:23:05,399 Speaker 2: because it just so clearly is like a form of 461 00:23:05,480 --> 00:23:08,439 Speaker 2: market manipulation, right, Like you're creating artificial demand for the 462 00:23:08,440 --> 00:23:11,800 Speaker 2: stock by doing this weird non traded dividend that like 463 00:23:11,920 --> 00:23:15,600 Speaker 2: clearly has no corporate finance purpose. Like clearly giving people 464 00:23:15,840 --> 00:23:18,679 Speaker 2: a non traded thing is not good for your shareholders 465 00:23:18,720 --> 00:23:21,359 Speaker 2: compared to giving them a traded thing. But you do 466 00:23:21,480 --> 00:23:24,720 Speaker 2: it to hose the short sellers, and the SEC hates 467 00:23:24,760 --> 00:23:29,399 Speaker 2: it and has brought fraud charges against a company that 468 00:23:29,720 --> 00:23:33,280 Speaker 2: is something kind of like this. And when Overstock tried 469 00:23:33,280 --> 00:23:35,840 Speaker 2: to do this a couple of years ago, the SEC 470 00:23:36,680 --> 00:23:39,000 Speaker 2: kind of told them to knock it off, and so 471 00:23:39,080 --> 00:23:41,800 Speaker 2: they had to delay their dividend. Ultimately, Overstock decided, we'll 472 00:23:41,840 --> 00:23:44,399 Speaker 2: just do a traded dividend, and so what happened is 473 00:23:44,640 --> 00:23:49,120 Speaker 2: they announced this weird magic token thing. The short sellers 474 00:23:49,560 --> 00:23:51,720 Speaker 2: got nervous and like covered some of the shorts, and 475 00:23:51,760 --> 00:23:54,320 Speaker 2: the stock went up, and the Sea of our stock 476 00:23:54,400 --> 00:23:56,680 Speaker 2: sold a lot of his own personal stock into that rally, 477 00:23:57,119 --> 00:23:59,280 Speaker 2: and then ultimately over Stocks said never mind, We're not 478 00:23:59,359 --> 00:24:00,920 Speaker 2: kind of do that and it's not going ba time. 479 00:24:01,440 --> 00:24:03,560 Speaker 2: And they said never mind because the SEC stopped them. 480 00:24:03,680 --> 00:24:06,280 Speaker 2: But it's never been clear that it's illegal, and so 481 00:24:06,760 --> 00:24:11,760 Speaker 2: some short sellers who got squeezed by Overstock sued Overstock 482 00:24:12,200 --> 00:24:17,119 Speaker 2: and they lost and the court said, well, this maybe 483 00:24:17,200 --> 00:24:20,840 Speaker 2: creates an artificial price, but there's no deception involved, like 484 00:24:21,400 --> 00:24:23,879 Speaker 2: they said very clearly what they were doing, and so 485 00:24:24,520 --> 00:24:27,000 Speaker 2: if there's no deception, it can't be market manipulation. You 486 00:24:27,040 --> 00:24:29,760 Speaker 2: have nothing to sue for. So that's that's the current 487 00:24:29,760 --> 00:24:30,439 Speaker 2: state of things. 488 00:24:30,760 --> 00:24:32,840 Speaker 1: So it's like you said, it's legal. 489 00:24:32,640 --> 00:24:35,879 Speaker 2: Now, yeah, you know, it's like it's the Tenth Circuit. 490 00:24:35,920 --> 00:24:38,320 Speaker 2: So it's not like where most securities cases are brought. 491 00:24:38,480 --> 00:24:40,880 Speaker 2: It's not clear what would happen if the sec brought 492 00:24:40,880 --> 00:24:43,119 Speaker 2: a case like this is private short sellers who no 493 00:24:43,119 --> 00:24:45,560 Speaker 2: one really sympathizes with. But yeah, it kind of seems 494 00:24:45,600 --> 00:24:47,119 Speaker 2: like it's like it's legal to do this. 495 00:24:47,520 --> 00:24:49,040 Speaker 1: I feel like you wrote about this just so you 496 00:24:49,040 --> 00:24:50,840 Speaker 1: could write about that guy that you love. 497 00:24:51,000 --> 00:24:54,880 Speaker 2: Yeah. Phil Falcom did an amazing short squeeze with these 498 00:24:54,920 --> 00:24:57,840 Speaker 2: bonds that are delightfully called the max Zips in like 499 00:24:57,920 --> 00:25:02,440 Speaker 2: two thousand. He bought these distressed bonds because he thought 500 00:25:02,440 --> 00:25:04,280 Speaker 2: they were an investment, and then like he found out 501 00:25:04,280 --> 00:25:07,680 Speaker 2: that his prime broker was also shorting them, and he 502 00:25:07,760 --> 00:25:10,439 Speaker 2: got so mad, which is rude. And he got so 503 00:25:10,560 --> 00:25:12,840 Speaker 2: mad that he bought up more and more bonds until 504 00:25:12,840 --> 00:25:15,199 Speaker 2: he owned like one hundred and thirteen percent of the 505 00:25:15,240 --> 00:25:17,600 Speaker 2: bonds because like, you know, he'd buy all the bonds 506 00:25:17,640 --> 00:25:20,800 Speaker 2: and then the prime broker would be like, I'm going 507 00:25:20,840 --> 00:25:22,720 Speaker 2: to short some more bonds, and Phil Falcon I'd be like, ah, right, 508 00:25:22,720 --> 00:25:24,280 Speaker 2: buy those two, and like he ended up owning more 509 00:25:24,320 --> 00:25:27,280 Speaker 2: than one hundred percent of the bonds, and then he 510 00:25:27,359 --> 00:25:29,600 Speaker 2: like called in his borrow, like he called the prime 511 00:25:29,640 --> 00:25:31,240 Speaker 2: broker and said, I want all my bonds that you 512 00:25:31,280 --> 00:25:35,080 Speaker 2: owe me, and the prime breker is like, okay, I'll 513 00:25:35,119 --> 00:25:37,080 Speaker 2: go find them. And the prime breaker tried to buy 514 00:25:37,119 --> 00:25:40,320 Speaker 2: them and there was no one selling, and so ultimately 515 00:25:40,400 --> 00:25:46,080 Speaker 2: they got on a call with Phil Falcon and Falcon said, 516 00:25:46,160 --> 00:25:48,680 Speaker 2: just keep bidding. Sometimes you are just on the wrong 517 00:25:48,720 --> 00:25:52,320 Speaker 2: side of the trade, which is amazing, Yeah, And then 518 00:25:52,400 --> 00:25:55,960 Speaker 2: Phil Falcone also said somebody owns more than one hundred 519 00:25:56,000 --> 00:25:58,080 Speaker 2: percent of these bonds, which is probably why you can't 520 00:25:58,080 --> 00:26:01,160 Speaker 2: buy them. And the prime worker is like, what, how 521 00:26:01,200 --> 00:26:05,399 Speaker 2: do you know that? Because I owned them. God it incredible, 522 00:26:05,840 --> 00:26:07,920 Speaker 2: And then the SEC sued him and said it was 523 00:26:07,960 --> 00:26:09,560 Speaker 2: marketing mapulation. Then he got in trouble. 524 00:26:09,640 --> 00:26:12,359 Speaker 1: I do love him sending them on just like a 525 00:26:12,400 --> 00:26:17,119 Speaker 1: wild goose chase, only just keep bidding a lot of 526 00:26:17,119 --> 00:26:20,400 Speaker 1: life lessons there. Did he make money ultimately, I mean 527 00:26:20,520 --> 00:26:21,640 Speaker 1: the SEC sued him. 528 00:26:22,480 --> 00:26:26,520 Speaker 2: It's sort of like the subsequent sec an things and 529 00:26:27,359 --> 00:26:29,240 Speaker 2: problems were probably not worth it to him in the 530 00:26:29,280 --> 00:26:31,000 Speaker 2: long run. He did make money on the trade. 531 00:26:31,119 --> 00:26:33,879 Speaker 1: That's good. And also he did win something which is 532 00:26:34,000 --> 00:26:37,320 Speaker 1: very real, and that is frequent mentions in the money 533 00:26:37,320 --> 00:26:37,959 Speaker 1: stuff column. 534 00:26:38,160 --> 00:26:41,320 Speaker 2: Much Yeah, but you know it's it's like is that 535 00:26:41,400 --> 00:26:45,760 Speaker 2: trade legal now? Well, the problem is that, like I 536 00:26:45,800 --> 00:26:50,600 Speaker 2: don't think he did anything really deceptive, but he wasn't 537 00:26:50,640 --> 00:26:52,800 Speaker 2: like going around telling everyone that he was buying more 538 00:26:52,800 --> 00:26:54,560 Speaker 2: than all of the bonds until he had actually done 539 00:26:54,560 --> 00:26:56,240 Speaker 2: it and then he was telling everyone because it's yeah, 540 00:26:56,600 --> 00:26:59,359 Speaker 2: but there is some difference between that and like the 541 00:26:59,440 --> 00:27:03,200 Speaker 2: oversicked case, where it's like these companies are really really clear. 542 00:27:03,280 --> 00:27:04,920 Speaker 2: They're like, we're going to go out and get those 543 00:27:04,960 --> 00:27:08,760 Speaker 2: shorts and so there's like no deception at all there. 544 00:27:09,200 --> 00:27:11,720 Speaker 2: Sometimes there is like sometimes they're like a little KOI 545 00:27:11,800 --> 00:27:14,320 Speaker 2: about it because the SEC doesn't like it when you 546 00:27:14,359 --> 00:27:15,919 Speaker 2: say I'm just going to go out and burn the shorts. 547 00:27:16,800 --> 00:27:18,560 Speaker 2: But like they can't be that CHOI because they really 548 00:27:18,640 --> 00:27:20,600 Speaker 2: hate short sellers and so they really are going around 549 00:27:20,600 --> 00:27:23,320 Speaker 2: on Twitter all day being like those short sellers. Yeah, 550 00:27:23,400 --> 00:27:26,400 Speaker 2: I'm excited for Elon Musk to like learn about this decision. 551 00:27:26,440 --> 00:27:29,480 Speaker 1: And I feel like he's a little bit busy right now. 552 00:27:29,680 --> 00:27:31,880 Speaker 2: I think he is not spending a lot of time 553 00:27:32,080 --> 00:27:34,879 Speaker 2: thinking about how much he hates short sellers right now. 554 00:27:35,480 --> 00:27:38,600 Speaker 2: But I'm fairly confident that the time will come again 555 00:27:38,640 --> 00:27:41,080 Speaker 2: when Elon Musk spends a lot of time thinking about 556 00:27:41,080 --> 00:27:43,560 Speaker 2: how much he hates short sellers. Yeah, and when he does, 557 00:27:44,119 --> 00:27:46,160 Speaker 2: there's like a whole new technology for him. 558 00:27:46,480 --> 00:27:49,719 Speaker 1: Well, he'll be good to that point. Carson Block from 559 00:27:49,760 --> 00:27:53,639 Speaker 1: Muddy Waters was on Bloomberg Television sometime on Thursday, and 560 00:27:53,680 --> 00:27:56,600 Speaker 1: he said that he does expect more anti short seller 561 00:27:56,680 --> 00:27:59,960 Speaker 1: rhetoric under Trump. The exact quote is, we've already had 562 00:28:00,119 --> 00:28:02,720 Speaker 1: some rhetoric. We might have some more anti short seller rhetoric. 563 00:28:02,920 --> 00:28:04,800 Speaker 1: He didn't know. He doesn't think that Trump and Musk 564 00:28:04,880 --> 00:28:09,000 Speaker 1: believe that short sellers are responsible for their company stocks falling, 565 00:28:09,240 --> 00:28:12,200 Speaker 1: et cetera. But we know Elon Musk Cage short sellers. 566 00:28:12,280 --> 00:28:14,520 Speaker 2: Yeah. And by the way, what's his name block, No, 567 00:28:14,920 --> 00:28:18,280 Speaker 2: Devin Nuns. Yeah, the chief executive officer of Trump Media 568 00:28:18,280 --> 00:28:21,480 Speaker 2: and Technology Group has like written letters to Congress about, oh, 569 00:28:21,560 --> 00:28:24,760 Speaker 2: the naked short sellers are getting our stock, which I 570 00:28:24,760 --> 00:28:27,040 Speaker 2: think it is very, very very hard to argue that 571 00:28:27,119 --> 00:28:29,800 Speaker 2: the stock of Trump Media and Technology Group has been 572 00:28:30,119 --> 00:28:35,480 Speaker 2: systematically manipulated down to reflect less than its fundamental value. 573 00:28:35,600 --> 00:28:39,600 Speaker 2: But you know, there's like, oh, there's weird fails, there's 574 00:28:39,720 --> 00:28:43,240 Speaker 2: naked short selling. So you've already seen, you know, from 575 00:28:43,320 --> 00:28:47,760 Speaker 2: the Trump camp, a increase in anti short seller rhetoric, 576 00:28:47,960 --> 00:28:51,200 Speaker 2: and there's anyways to burn short sellers, including like the 577 00:28:51,240 --> 00:28:53,680 Speaker 2: government can say it's illegal, which has happened in my 578 00:28:54,480 --> 00:28:59,640 Speaker 2: you know, financial career, but otherwise, Yeah, And that was 579 00:28:59,640 --> 00:29:00,760 Speaker 2: the Money Stuff Podcast. 580 00:29:00,880 --> 00:29:02,920 Speaker 1: I'm Matt Levian and I'm Katie Greifeld. 581 00:29:03,280 --> 00:29:06,080 Speaker 2: You can find my work by subscribing to the moneystuffnewsletter 582 00:29:06,120 --> 00:29:07,240 Speaker 2: on Bloomberg. 583 00:29:06,800 --> 00:29:09,440 Speaker 1: Dot com, and you can find me on Bloomberg TV 584 00:29:09,640 --> 00:29:13,280 Speaker 1: every day on Open Interest between nine to eleven am Eastern. 585 00:29:13,400 --> 00:29:15,080 Speaker 2: We'd love to hear from you. You can send an 586 00:29:15,080 --> 00:29:18,280 Speaker 2: email to Moneypod at Bloomberg dot net. Ask us a 587 00:29:18,360 --> 00:29:19,800 Speaker 2: question and we might answer it on air. 588 00:29:20,240 --> 00:29:22,440 Speaker 1: You can also subscribe to our show wherever you're listening 589 00:29:22,480 --> 00:29:24,520 Speaker 1: right now and leave us a review. It helps more 590 00:29:24,520 --> 00:29:25,440 Speaker 1: people find the show. 591 00:29:26,120 --> 00:29:29,360 Speaker 2: The Money Stuff Podcast is produced by Anamasarakus and Moses 592 00:29:29,360 --> 00:29:30,080 Speaker 2: onm Our. 593 00:29:30,120 --> 00:29:32,120 Speaker 1: Theme music was composed by Blake Maples. 594 00:29:32,360 --> 00:29:33,920 Speaker 2: Brendan Francis nunim is our. 595 00:29:33,760 --> 00:29:36,960 Speaker 1: Executive producer, and Stage Bauman is Bloomberg's head of podcasts. 596 00:29:37,280 --> 00:29:39,600 Speaker 2: Thanks for listening to The Money Stuff Podcasts. 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