WEBVTT - Impaled on the Obelisk 0:00:05.000 --> 0:00:09.479 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.880 --> 0:00:11.600 It's Thursday. 0:00:11.680 --> 0:00:15.440 I'm not going to the JP Morgan pub this Thursday week. 0:00:15.520 --> 0:00:16.120 I was fun. 0:00:16.480 --> 0:00:17.239 You were on the roof. 0:00:17.400 --> 0:00:19.200 We went to the roof. It was pretty cool. 0:00:19.520 --> 0:00:24.599 Like the very top part is like this obelisk into 0:00:24.680 --> 0:00:26.880 the sky, so we were gazing up at it and 0:00:26.920 --> 0:00:27.600 it was all that up. 0:00:27.640 --> 0:00:28.680 It was so cool. It was. 0:00:30.480 --> 0:00:30.680 God. 0:00:30.680 --> 0:00:33.760 I wanted to like free solo it, but it was 0:00:33.840 --> 0:00:34.479 so cold. 0:00:35.479 --> 0:00:35.839 It was. 0:00:37.800 --> 0:00:38.159 Rooftop. 0:00:38.240 --> 0:00:40.360 It was so snowy, and I see it was pretty terrified. 0:00:40.400 --> 0:00:41.240 It was totally safe. 0:00:41.680 --> 0:00:46.160 There was a fence. There was a fence. I'm sure 0:00:46.200 --> 0:00:47.040 there is, but. 0:00:47.920 --> 0:00:48.680 You were on the roof. 0:00:49.040 --> 0:00:53.360 I was. It was like a quick a quick lookout. 0:00:52.960 --> 0:00:53.120 You know. 0:00:53.159 --> 0:00:56.680 I waved to New Jersey. Then we got back in. God, 0:00:56.720 --> 0:00:59.560 it was so cool. Though, we have to go. We 0:00:59.640 --> 0:01:00.880 have to You really have to do. 0:01:01.160 --> 0:01:04.280 As you're talking about this, get some email invites being. 0:01:04.080 --> 0:01:07.759 Like come, yeah, well we need to take up one 0:01:07.800 --> 0:01:09.080 of them. 0:01:09.400 --> 0:01:11.680 Yeah, is there anything you got? 0:01:12.120 --> 0:01:14.479 I'm off the week after next Yeah, oh. 0:01:14.400 --> 0:01:15.959 My god, wait what week are you off? 0:01:16.280 --> 0:01:16.880 The sixteenth? 0:01:17.120 --> 0:01:18.800 Yikes, I'm off the week after that. 0:01:19.600 --> 0:01:22.240 Two weeks off. It's like very satisfying to have the end. 0:01:22.120 --> 0:01:24.120 In sight, you know, Yeah, no, I feel that. 0:01:24.280 --> 0:01:25.800 No, of course, I live for my work. 0:01:25.800 --> 0:01:28.160 And we'll be of course where you go. I mean, 0:01:28.200 --> 0:01:29.559 we can talk about this later. 0:01:29.880 --> 0:01:32.280 I'll tell you off, Mike. I'm going somewhere warm. 0:01:32.640 --> 0:01:33.840 I'm going somewhere cold. 0:01:33.959 --> 0:01:39.160 Nice. Yeah, all right, Hello and welcome to The Money 0:01:39.160 --> 0:01:42.560 Stuff Podcast, your weekly podcast where we talk about stuff 0:01:42.600 --> 0:01:46.360 related to money. I'm Att Levine and I write the 0:01:46.360 --> 0:01:48.000 Money Stuff column for Bloomberg Opinion. 0:01:48.840 --> 0:01:51.480 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:01:51.520 --> 0:01:53.080 an anchor for Bloomberg Television. 0:02:02.120 --> 0:02:04.400 We had an under the wire last week that that 0:02:04.600 --> 0:02:06.160 SpaceX and x I high were emerging. 0:02:06.360 --> 0:02:09.480 We were ahead of the curve, so slightly somewhere nearly 0:02:10.000 --> 0:02:10.480 on the curve. 0:02:10.560 --> 0:02:11.160 We're on the curve. 0:02:11.280 --> 0:02:13.760 I was going to say, we're picking up behind the curve. 0:02:13.919 --> 0:02:14.560 We're a little bit. 0:02:14.880 --> 0:02:17.360 We're picking up where we left off though, Yes, and 0:02:17.400 --> 0:02:21.079 that is on h It happened, SpaceX, It happened. 0:02:21.360 --> 0:02:24.240 This is the thing. I come from the world of 0:02:24.600 --> 0:02:28.320 public company mergers, where like, you negotiate a deal for 0:02:28.320 --> 0:02:30.160 a few weeks, and you sign a deal, and then 0:02:30.160 --> 0:02:32.040 you announce the deal and then like six months later 0:02:32.040 --> 0:02:35.080 it closes and the Elon Musk has done that. He 0:02:35.160 --> 0:02:39.239 did the Twitter merger, which took at least forty years 0:02:39.280 --> 0:02:43.799 off my life. But when he decides to merge Xai 0:02:43.840 --> 0:02:47.640 and SpaceX, like from a glimmer in his eye to 0:02:48.040 --> 0:02:50.720 the deal is closed, is like, I don't know what 0:02:50.880 --> 0:02:53.840 four days like, Yeah, it's really incredible speed. 0:02:54.240 --> 0:02:57.200 Well, as you sort of lay out in the newsletter, 0:02:57.240 --> 0:03:01.720 he's negotiating with himself and then signing it himself. 0:03:02.120 --> 0:03:04.600 Yeah, it's great. It'll be interesting to learn from the 0:03:04.600 --> 0:03:06.600 eventual IPO filing. I don't know how much of these 0:03:06.600 --> 0:03:09.920 companies Elon Musk owns, right, But he's not the sole 0:03:10.000 --> 0:03:12.000 shareholder of either one. Right, there's a lot of employees, 0:03:12.040 --> 0:03:16.760 there's outside investors. But it seems like he owns or 0:03:16.800 --> 0:03:20.040 at least a majority of both companies, or at least 0:03:20.040 --> 0:03:22.440 the majority of the voting power of both companies, because 0:03:22.480 --> 0:03:24.480 he could just kind of do the merger himself. He's 0:03:24.520 --> 0:03:27.720 the controlling executive of both, he controls the board of both, 0:03:27.760 --> 0:03:29.840 and he's most importantly the controlling sholder of both. So 0:03:29.919 --> 0:03:32.720 like when the deal is submitted to a shareholder vote, 0:03:32.720 --> 0:03:35.280 it's submitted to him, and he says yes, and so 0:03:35.280 --> 0:03:38.640 you can do it really fast. In addition to him 0:03:38.960 --> 0:03:41.880 being legally the controlling shareholder, also like all of the 0:03:41.880 --> 0:03:46.160 shareholders both love him and fear him. My sense is 0:03:46.240 --> 0:03:49.160 this is true. You can imagine some SpaceX shelders saying 0:03:49.560 --> 0:03:54.160 SpaceX is a very valuable company. It is worth more 0:03:54.640 --> 0:03:58.440 than four times as much as x Ai. They say 0:03:58.440 --> 0:04:00.600 it's a one point twenty five trillion dollars valuation for 0:04:00.600 --> 0:04:03.000 the commanded company, one trillion for SpaceX, I'm two hundred 0:04:03.000 --> 0:04:06.000 and fifty billion for Xai. Those numbers are kind of 0:04:06.040 --> 0:04:08.960 fake because no money is changing hands, so there's no 0:04:09.080 --> 0:04:10.120 actual dollar value. 0:04:10.200 --> 0:04:10.360 Right. 0:04:10.400 --> 0:04:12.120 Those numbers are like kind of in the ballpark of 0:04:12.160 --> 0:04:14.440 what other transactions have valued the met But this doesn't, 0:04:14.480 --> 0:04:17.360 you know, whatever he wants, but the proportion matters, right, 0:04:17.400 --> 0:04:20.119 Like if you say SpaceX is a trillion dollar company, 0:04:20.120 --> 0:04:22.159 in Xai is a trillion dollar company, then Xai gets 0:04:22.160 --> 0:04:24.680 half the company. If you say you know what they did, 0:04:24.720 --> 0:04:28.039 then Xai gets twenty percent of the company. And you 0:04:28.080 --> 0:04:31.520 can imagine that SpaceX shelter like say an employee or 0:04:31.520 --> 0:04:36.599 former employee saying that's not right like SpaceX is good. 0:04:36.680 --> 0:04:39.039 I like SpaceX, I don't like Xai, which is, you know, 0:04:39.160 --> 0:04:42.599 to some extent the successor of Twitter, and being mad 0:04:42.640 --> 0:04:44.920 about the deal price, but like there's nothing they can do, 0:04:45.040 --> 0:04:49.520 nothing to do at all. I wrote that this is 0:04:49.560 --> 0:04:52.119 made easier by the fact that they are private companies. Yes, 0:04:52.640 --> 0:04:55.400 all of Elon Musks companies either reformed in or have 0:04:55.640 --> 0:04:58.760 kind of moved to Texas, so they're incorporated in Texas, 0:04:59.440 --> 0:05:03.360 and nobody really knows what exactly would happen if these 0:05:03.360 --> 0:05:07.159 were Texas public companies. But Texas does allow you to 0:05:07.240 --> 0:05:10.720 kind of prevent small shareholders from bringing derivative lawsuits. So 0:05:10.760 --> 0:05:12.680 there's some chance that he could do this kind of 0:05:12.720 --> 0:05:16.040 stuff even with two public companies, or there's some chance, 0:05:16.160 --> 0:05:19.520 some chance when he emerges Tesla and SpaceX. 0:05:19.640 --> 0:05:20.840 Yeah, then we'll have there's some. 0:05:20.920 --> 0:05:22.440 Chance that like no one will be able to say 0:05:22.480 --> 0:05:23.720 anything about it. We'll see, we'll see. 0:05:23.880 --> 0:05:25.760 I was going to say, I wish we were about 0:05:25.800 --> 0:05:27.840 to find out in this case, you know, if one 0:05:27.839 --> 0:05:30.640 of them was public. But it's a good point that eventually, 0:05:30.680 --> 0:05:34.719 when we do finally reach the convergence and SpaceX and 0:05:34.720 --> 0:05:35.640 Tesla merged. 0:05:35.360 --> 0:05:38.880 It's going to Ruin to run a vacation of mine. 0:05:39.400 --> 0:05:41.920 I wonder if it's the one in two weeks, but yeah, 0:05:41.960 --> 0:05:42.640 it's gonna be great. 0:05:42.920 --> 0:05:43.400 Yeah. 0:05:43.680 --> 0:05:47.560 I also like the point made in here that you know, 0:05:47.600 --> 0:05:51.440 the narrative has been that SpaceX is going to fund 0:05:52.360 --> 0:05:55.120 building data centers in space, or it's going to fund 0:05:55.279 --> 0:06:00.000 XAI in some form, but it's pointed out that SpaceX 0:06:00.160 --> 0:06:03.400 generated around fifteen billion dollars in revenue last year. At 0:06:03.400 --> 0:06:05.919 this point made by Martin Piers, it's more about the 0:06:05.960 --> 0:06:08.039 fund raising ability of SpaceX. 0:06:08.120 --> 0:06:12.920 Yeah, SpaceX is a self funding company, right. SpaceX has 0:06:12.960 --> 0:06:16.360 done recent employee tenders where the company itself has used 0:06:16.360 --> 0:06:19.680 its free cash flow to buy stockback from employees. And 0:06:19.720 --> 0:06:21.680 so why does SpaceX need to go public? Well, maybe 0:06:21.680 --> 0:06:23.960 they have like some vast new rocket program that they 0:06:24.000 --> 0:06:27.279 need to fund, but like, really it's to fund data 0:06:27.279 --> 0:06:28.200 centers in space. 0:06:28.279 --> 0:06:28.440 Right. 0:06:28.680 --> 0:06:34.000 They don't necessarily need public money to shoot rockets into space. 0:06:34.080 --> 0:06:36.599 They need it to sweep eaxs. 0:06:36.760 --> 0:06:38.440 This is like a little stuff in space. 0:06:38.560 --> 0:06:41.880 Like it probably makes sense from a corporate finance perspective 0:06:41.920 --> 0:06:44.720 for SpaceX as SpaceX to be public, but like it 0:06:45.000 --> 0:06:48.360 really helps to raise money for XAI or for AI 0:06:48.480 --> 0:06:51.160 type activities or data centers in space, and so this 0:06:51.320 --> 0:06:53.880 is a way for Elon Musk to take these somehow 0:06:53.960 --> 0:06:57.760 even more capital intensive business than shooting rockets into space 0:06:57.960 --> 0:07:00.400 and sweeping it into a fundraising are or not. 0:07:00.560 --> 0:07:04.120 It is amazing to me how many people and ourselves 0:07:04.160 --> 0:07:06.520 included kind of are saying data centers in space with 0:07:06.560 --> 0:07:09.239 a straight face. Orbital data centers is also a phrase 0:07:09.279 --> 0:07:09.760 that I've heard. 0:07:09.960 --> 0:07:15.239 Yeah, a lot of people are very very skeptical about 0:07:15.280 --> 0:07:18.239 the idea of data centers in space. 0:07:18.320 --> 0:07:20.480 Well, I keep just thinking about where else can we 0:07:20.520 --> 0:07:22.920 put data centers? Why do they have to go in space? 0:07:23.160 --> 0:07:27.680 Would the ocean be easier in terms of weird frontiers 0:07:27.680 --> 0:07:29.760 where we could put data centers? Like how did we 0:07:29.880 --> 0:07:32.720 land on space as a realistic option. 0:07:33.320 --> 0:07:34.760 I don't know that anyone's light it on it as 0:07:34.760 --> 0:07:38.320 a realistic option. But Elon Musk I really like science 0:07:38.360 --> 0:07:40.920 fiction for sure. He references is actually in the space 0:07:41.200 --> 0:07:44.440 XA merger announcement. There's a notion that, like there are 0:07:44.440 --> 0:07:50.320 some civilizations that harness energy from their planet. Just look 0:07:50.400 --> 0:07:51.000 so tired. 0:07:51.200 --> 0:07:52.280 No, I'm here, I'm here. 0:07:52.840 --> 0:07:55.920 There's some civilizations they can harness some large proportion of 0:07:55.920 --> 0:07:58.560 the energy on their planet. But then there are the 0:07:58.600 --> 0:08:03.560 better civilizations that can harness most of the energy of 0:08:03.600 --> 0:08:08.200 the star they orbit, and then they're even better the Sun. Yeah, 0:08:08.240 --> 0:08:10.480 and then they're even better civilizations that can harness like 0:08:10.480 --> 0:08:12.760 whole galaxies of energy. And so if you have all 0:08:12.760 --> 0:08:14.480 of the energy of the Sun at your disposal, you 0:08:14.520 --> 0:08:20.040 can like travel between galaxies or whatever. And so that 0:08:20.160 --> 0:08:23.720 sounds so stupid, but Elon Musk, like one of his 0:08:24.200 --> 0:08:27.640 main dreams is to honest all of the energy of 0:08:27.640 --> 0:08:31.160 the Sun. And to do that, you put I'm sorry, 0:08:31.160 --> 0:08:33.040 you put a shellow satellites around the Sun that like 0:08:33.040 --> 0:08:34.600 take all of the energy from the Sun so that 0:08:34.640 --> 0:08:37.640 they run the data centers, so like you know, a 0:08:37.640 --> 0:08:39.560 little beam of light gets through so that we can 0:08:39.600 --> 0:08:41.520 like live on Earth and the rest of the Sun's 0:08:41.600 --> 0:08:43.679 energy goes to the data centers. So Elon Musk can 0:08:43.720 --> 0:08:46.000 be like the data centers are harnessing the power of 0:08:46.040 --> 0:08:46.400 the Sun. 0:08:46.559 --> 0:08:48.320 This is, honest to God, the first time I've ever 0:08:48.360 --> 0:08:49.319 heard of this. 0:08:49.880 --> 0:08:53.320 Yeah, I learned of it from the announcement that references 0:08:53.360 --> 0:08:56.720 the Russian scientists who who came up with these tiers 0:08:56.720 --> 0:08:59.760 of civilizations and then I read a portion of his 0:08:59.800 --> 0:09:05.439 Wikipedia page and now I'm telling you and you're weeping. 0:09:05.760 --> 0:09:08.240 Well, the thing is, I'm feeling really sick. I'm like 0:09:08.360 --> 0:09:11.480 brewing something right now. I'm also reading this like really 0:09:11.600 --> 0:09:16.760 trippy garbage like magic slash science fiction book right now, 0:09:16.880 --> 0:09:18.880 and like I'm at the point I'm eighty one percent 0:09:19.040 --> 0:09:20.600 of the way through it, so I'm going to finish it. 0:09:20.640 --> 0:09:23.800 But it's basically just like kind of garbage, Like you 0:09:23.920 --> 0:09:26.040 just threw a breath right now, and it's like I. 0:09:26.040 --> 0:09:28.320 Read this badgeic sci fi garbage and then you come 0:09:28.320 --> 0:09:29.480 into work and it's more of it. 0:09:29.559 --> 0:09:31.840 I feel like I'm dissociating. Am I on the pass? 0:09:33.200 --> 0:09:33.640 Yeah like that? 0:09:33.840 --> 0:09:35.240 But anyway, that's why. 0:09:34.920 --> 0:09:37.800 Anyway, thank you for walking me through that. 0:09:38.160 --> 0:09:40.960 I had just realized we're trying to harness the energy 0:09:40.960 --> 0:09:41.720 of the sun. 0:09:41.760 --> 0:09:43.760 So they get a grand sci fi level. That's the 0:09:43.760 --> 0:09:46.240 intention in terms of like, well the data centers work, 0:09:46.320 --> 0:09:49.000 like yeah, I done knows, Yeah whatever, you know who 0:09:49.040 --> 0:09:52.040 I want to spend a minute talking about who Twitter's 0:09:52.120 --> 0:09:52.880 bondle this? 0:09:53.760 --> 0:09:53.960 Yeah? 0:09:54.280 --> 0:09:57.920 Do you remember when people, when people like me were like, man, 0:09:58.360 --> 0:10:02.760 what a bad deal to agree to fund Elon's Twitter 0:10:02.840 --> 0:10:05.720 buyout with debt that like now trade that yeah, back 0:10:05.760 --> 0:10:08.160 then traded like you know, forty cents on the doll. 0:10:08.160 --> 0:10:09.480 A short sighted thing to say. 0:10:10.000 --> 0:10:12.640 Now if Twitter needs to pay back, like it's like 0:10:12.679 --> 0:10:18.200 thirteen billion dollars of debt. Like like that's like you know, 0:10:18.320 --> 0:10:21.240 one minute of fundraising for Twitter, which is now called 0:10:21.240 --> 0:10:25.560 the SpaceX quaint. Anyway, everyone always. 0:10:25.200 --> 0:10:26.720 Wins, Everyone always wins. 0:10:27.080 --> 0:10:29.440 Yeah, I've read about this a little bit this week too. 0:10:29.960 --> 0:10:34.280 The SpaceX IPO team are working on changing the rules 0:10:34.280 --> 0:10:38.400 for index eligibility so that SpaceX can be put into 0:10:39.720 --> 0:10:43.800 at least some big stock indexes earlier than like normally 0:10:43.880 --> 0:10:45.480 for like that and as like one hundred ear the 0:10:45.559 --> 0:10:49.120 SMP three months. Yeah, it's like some some period of months, 0:10:49.200 --> 0:10:51.200 and they want it to be fast. They're going to 0:10:51.200 --> 0:10:52.600 be in the business in the next year of moving 0:10:52.640 --> 0:10:56.199 an enormous amount of stock from like early SpaceX investors 0:10:56.240 --> 0:10:59.120 to index funds, and they want to move that stock efficiently. 0:10:59.400 --> 0:11:00.920 It makes lot of sense. 0:11:00.920 --> 0:11:02.520 It does. It can't really fault it. 0:11:02.559 --> 0:11:04.800 I will say it's interesting that like SpaceX in terms 0:11:04.840 --> 0:11:06.800 of private companies is kind of in a league of 0:11:06.800 --> 0:11:08.560 its own, like sort of. 0:11:08.520 --> 0:11:10.520 Like it's becoming more of a thing, right. I mean, 0:11:10.640 --> 0:11:12.520 one reason that it seems like they're having traction with 0:11:12.520 --> 0:11:14.840 like the index companies, there's a backlog behind them of 0:11:14.920 --> 0:11:18.160 other multi hundred billion dollar companies that everyone wants to owner. 0:11:18.200 --> 0:11:20.080 It's like, yeah, this should be in the index as 0:11:20.080 --> 0:11:20.520 soon as they can. 0:11:20.640 --> 0:11:22.959 Well, part of the reason I say this it relates 0:11:22.960 --> 0:11:24.880 back to ETFs. Don't worry for sure. 0:11:24.920 --> 0:11:25.120 Sure. 0:11:25.440 --> 0:11:28.640 Barron Capital which is a firm founded by Ron barn 0:11:28.679 --> 0:11:32.080 who is like a long time Elon Musk investor. He 0:11:32.160 --> 0:11:36.160 loves Elon Musk companies. They recently launched an ETF. The 0:11:36.200 --> 0:11:40.880 ticker is Ron b which I love, and they own 0:11:41.280 --> 0:11:45.559 a pretty sizable chunk of SpaceX in the ETF. The 0:11:45.640 --> 0:11:48.440 number of shares that they hold stays static, but as 0:11:48.440 --> 0:11:51.200 the asset levels of the funds go around, some days 0:11:51.200 --> 0:11:53.320 it'll be like twenty two percent of the fund, some 0:11:53.400 --> 0:11:55.480 days it'll be eleven percent of the fund, which is 0:11:55.559 --> 0:11:59.480 interesting because the SEC has a fifteen percent cap on 0:11:59.520 --> 0:12:05.520 a liquid assets for ETFs, but the company confirmed that 0:12:06.240 --> 0:12:10.800 they classify it as less liquid. There's four liquidity tiers, 0:12:11.720 --> 0:12:14.520 highly liquid, moderately less liquid, and then E liquid. But 0:12:15.080 --> 0:12:21.480 SpaceX for their purposes by their definition is less liquid. 0:12:21.600 --> 0:12:23.240 I don't think pretty quick. 0:12:23.360 --> 0:12:25.160 Yeah, that's the thing that's kind of what I mean. 0:12:25.200 --> 0:12:26.640 It's in like a league of its own. It's a 0:12:26.640 --> 0:12:29.920 private company, but it's pretty liquid and it makes sense. 0:12:29.720 --> 0:12:32.760 That attention to it, and it's like everyone knows that 0:12:32.880 --> 0:12:33.640 IPI is coming. 0:12:33.960 --> 0:12:51.360 Yeah, should we talk about dats? 0:12:51.760 --> 0:12:52.120 Yeah? 0:12:52.320 --> 0:12:54.640 I was wondering when we were going to talk about 0:12:54.640 --> 0:12:56.960 closed end fund activism again, it's been a while. 0:12:57.360 --> 0:13:01.280 Have we talked about think about the dawn of this podcast? 0:13:01.360 --> 0:13:01.480 Oh? 0:13:01.559 --> 0:13:04.600 Yeah, I don't know if we just talked about it 0:13:04.640 --> 0:13:07.319 a lot in for ten podcasts, but I'm pretty sure 0:13:07.320 --> 0:13:08.720 we talked about it on real podcasts. 0:13:08.720 --> 0:13:11.920 You and I have talked microphones about clos and close 0:13:11.960 --> 0:13:14.400 in fund activism, close and fund activism as one, I 0:13:14.400 --> 0:13:16.320 guess we've talked about the Blackmen closed un funds. 0:13:17.040 --> 0:13:17.199 One. 0:13:17.240 --> 0:13:20.160 We've definitely talked about boas Weinstein. 0:13:19.720 --> 0:13:23.520 On the front of the pod. The leading closed unfund 0:13:23.559 --> 0:13:25.960 activists or closing fund activism is like, you know, you 0:13:26.040 --> 0:13:29.720 have a closed end fund, which is a company that 0:13:29.840 --> 0:13:32.640 buys investments and also lists its own shares on the 0:13:32.679 --> 0:13:35.319 public slock market, and like sometimes they closed end fund 0:13:36.559 --> 0:13:38.960 the fund's own shares will trade at a discount to 0:13:39.240 --> 0:13:41.839 the net asset value, and then some activists will buy 0:13:41.880 --> 0:13:44.280 up some shares and run a proxy fight and try 0:13:44.320 --> 0:13:46.240 to kick out the management of the fund so that 0:13:46.280 --> 0:13:49.120 they can liquidate the fund, sell all the underlying stuff 0:13:49.120 --> 0:13:51.000 at net asset value and like return money to the 0:13:51.040 --> 0:13:55.240 shareholders and capture that discount. This is the thing, you know, 0:13:55.320 --> 0:13:57.800 it's like controversial, but as it gets you know, yelled 0:13:57.800 --> 0:14:01.679 at by Blackrock or wherever, sometimes activists wins, sometimes they lose. 0:14:02.080 --> 0:14:05.880 Sometimes the underlying fund managers make the case that there's 0:14:06.000 --> 0:14:08.200 actually some long term value and that it is short 0:14:08.240 --> 0:14:12.160 sighted to liquidate the fund and capture the discount. Sometimes 0:14:12.240 --> 0:14:18.920 that case doesn't work anyway. DATS Digital asset treasury companies 0:14:18.960 --> 0:14:21.840 were all the raids last year, led by Strategy formerly 0:14:21.880 --> 0:14:24.040 micro Strategy, which is you know a huge pot of bitcoins, 0:14:24.080 --> 0:14:26.760 which I know we gotta talk about strategy too, but 0:14:26.880 --> 0:14:30.240 let's talky about activism first. All these companies were formed 0:14:30.280 --> 0:14:33.840 that would buy crypto like bitcoin are you know, different 0:14:33.880 --> 0:14:36.800 companies specialized in different things, and they would make it 0:14:36.920 --> 0:14:38.320 have a big pot of crypto and it would trade 0:14:38.320 --> 0:14:40.960 it like a huge premium to the net asset value. 0:14:40.960 --> 0:14:43.280 And so everyone did this trade like in summer of 0:14:43.320 --> 0:14:46.960 last year, and then it collapsed, like the prices came down, 0:14:47.240 --> 0:14:49.320 but also the premiums collapse, and now a lot of 0:14:49.320 --> 0:14:51.760 these doubts are trading it discounts to net asset value. 0:14:51.880 --> 0:14:55.520 And so now you're starting to see glimmers of activism 0:14:55.600 --> 0:14:58.360 against stats where someone will be like, I can buy 0:15:00.040 --> 0:15:02.880 stock in this pot of bitcoin in the stock traits 0:15:02.920 --> 0:15:04.920 at like eighty percent of none asset value. So if 0:15:04.960 --> 0:15:07.000 I pay eighty cents, I can get a dollar worth 0:15:07.000 --> 0:15:09.840 a bitcoin. And the only problem is I got to 0:15:09.920 --> 0:15:11.880 crack open the pot and take out the bitcoin. And 0:15:11.920 --> 0:15:16.600 so you do things like pressure the management to do 0:15:16.680 --> 0:15:19.000 buybacks or maybe lots of proxy facs. We haven't seen 0:15:19.000 --> 0:15:21.680 proxy fights yet, but like we've seen activist filings, and 0:15:22.520 --> 0:15:25.160 the proxy fights will be so good because if you 0:15:25.240 --> 0:15:28.800 run a digital ASSEID treasury company, like yeah, you kind 0:15:28.840 --> 0:15:32.280 of you know, colorful character, and if you're taking a 0:15:32.400 --> 0:15:34.000 run at them as an activist, you're probably kind of 0:15:34.000 --> 0:15:36.040 a colorful character too, and so there'll be some good 0:15:36.040 --> 0:15:36.760 proxy fights. 0:15:36.960 --> 0:15:38.480 I have two things, maybe three. 0:15:38.640 --> 0:15:41.560 I think this is really fun, like the concept of 0:15:41.600 --> 0:15:46.120 bringing the closed end fund activism playbook to crypto, because 0:15:46.480 --> 0:15:50.080 I feel like crypto market structure and equity market structure 0:15:50.200 --> 0:15:53.160 they blend together in some ways, or at least parallel 0:15:53.200 --> 0:15:54.920 each other, and this is just another way. 0:15:55.080 --> 0:15:56.720 Well, but this is to be clear, just equity, like 0:15:56.840 --> 0:16:00.240 these are companies with stocks. And in fact, I think 0:16:00.240 --> 0:16:02.760 the controversy is that a lot of digital aid treasury 0:16:02.800 --> 0:16:05.200 companists will say, no, no, no, we're not a close 0:16:05.280 --> 0:16:08.240 that fund. We're operating business. We're creating a lot of value. 0:16:08.360 --> 0:16:11.080 For you. To just take our crypto and liquidate it 0:16:11.120 --> 0:16:14.760 to capture the discount is totally destructive of long term value. 0:16:14.880 --> 0:16:16.800 And then other people are like, no, you're a product bitcoins. 0:16:16.840 --> 0:16:18.560 Come on, yeah, we'll see, we'll see. 0:16:18.400 --> 0:16:23.720 Who index classification. They have to be operating businesses. 0:16:24.120 --> 0:16:27.240 Yeah, they argue that they're operating businesses, and so far 0:16:27.360 --> 0:16:30.640 they have more or less with the index classifiers. 0:16:30.480 --> 0:16:34.080 The right to you with the might of the pen, 0:16:35.160 --> 0:16:38.120 a swipe of the keyboard. The other thing is this 0:16:39.000 --> 0:16:42.320 brought back just a myriad of memories of the gray 0:16:42.320 --> 0:16:43.320 scale Bitcoin trust. 0:16:43.480 --> 0:16:45.560 Yeah, sure that did operate as. 0:16:45.440 --> 0:16:48.440 A closing fund, and they are so eager to convert 0:16:48.440 --> 0:16:50.040 it to an ETF so they could get rid of 0:16:50.080 --> 0:16:50.720 their discount. 0:16:50.880 --> 0:16:52.520 Yeah, and they had a weirder governance and so you 0:16:52.520 --> 0:16:54.840 couldn't like just do a proxy fight. But like people 0:16:54.880 --> 0:16:57.440 were mad at them for not closing the discount earlier, 0:16:57.440 --> 0:16:59.160 and then they did, in fact want to convert to 0:16:59.160 --> 0:17:01.840 a and then they did. I know that your next 0:17:01.960 --> 0:17:05.600 sentence will be these dats should convert to eds, but 0:17:05.680 --> 0:17:06.840 I disagree and they disagree. 0:17:06.880 --> 0:17:08.080 So yeah, so I'm very. 0:17:08.000 --> 0:17:10.600 Excited for like a wave of this, in part because 0:17:10.640 --> 0:17:12.879 like one thing that is happening is the price of 0:17:12.880 --> 0:17:16.679 bitcoin is collapsing, Like the premiums of these dats are collapsing. 0:17:17.119 --> 0:17:21.760 And today Thursday, February fifth, Strategy was at least at 0:17:21.800 --> 0:17:23.560 some point trading below net asset value. 0:17:23.640 --> 0:17:25.639 I mean I think their break even or whatever you 0:17:25.640 --> 0:17:29.440 want to call it is seventy six thousand dollars per 0:17:29.480 --> 0:17:31.160 bitcoin or about there. 0:17:31.320 --> 0:17:33.600 Well there's two things. There's like their cost pass yeah, 0:17:33.600 --> 0:17:36.320 which like if they trade below their cost basis, then 0:17:36.440 --> 0:17:42.440 arguably their bitcoin buying has been money losing, right yeah, yeah, 0:17:42.480 --> 0:17:44.359 And like they're proxy for bitcoins. That's fine, like if 0:17:44.400 --> 0:17:47.160 bitcoin goes down, like they'll go down. But the other 0:17:47.160 --> 0:17:50.280 thing that's happening is like their stock at least briefly 0:17:50.280 --> 0:17:53.240 traded below net acid value. The whole point of strategy 0:17:53.280 --> 0:17:55.560 is like paying a premium to own strategy because they 0:17:55.600 --> 0:17:58.199 were doing something that made their pot of bitcoins more 0:17:58.280 --> 0:18:01.399 valuable than just the pot of bitcoins, and now the 0:18:01.440 --> 0:18:03.959 market has completely moved away from that, and now they 0:18:04.000 --> 0:18:06.480 trade it roughly or even a little below the value 0:18:06.480 --> 0:18:07.320 of their bitcoins. 0:18:07.440 --> 0:18:09.600 I'm actually scared to check where bitcoin is right now. 0:18:09.640 --> 0:18:11.520 When we stepped into this recording, it was down like 0:18:11.560 --> 0:18:13.640 ten percent on the day I think to it was like. 0:18:13.600 --> 0:18:14.919 At sixty five thousand dollars. 0:18:15.080 --> 0:18:16.480 Yeah, yeah, yeah, which is. 0:18:16.480 --> 0:18:19.320 Down, Like yeah, it's it's been a b lovebath. I'm 0:18:19.320 --> 0:18:22.439 like part of what's happening. There's reporting of like you know, 0:18:22.600 --> 0:18:24.800 for sty leveraging or whatever, but like one thing that's 0:18:24.840 --> 0:18:28.440 happening is like a big chunk of bitcoin is held 0:18:28.440 --> 0:18:33.760 by strategy particularly and deats in general, and you do 0:18:33.840 --> 0:18:35.080 wonder what will happen with. 0:18:35.119 --> 0:18:37.800 Those, right, I mean I do wonder? Can you tell me? 0:18:38.000 --> 0:18:38.280 Well? 0:18:38.320 --> 0:18:40.960 So, like, for instance, the dat that I wrote about 0:18:41.080 --> 0:18:44.000 this week that faced an activist is a bitcoin one 0:18:44.000 --> 0:18:47.040 called empery, and it has announced that it will either 0:18:47.160 --> 0:18:49.080 take you know, borrow money or sell bitcoming, but it 0:18:49.160 --> 0:18:51.919