1 00:00:02,720 --> 00:00:10,639 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We had a really 2 00:00:10,680 --> 00:00:12,920 Speaker 1: important update. We talked last week about the enhanced games 3 00:00:12,960 --> 00:00:16,720 Speaker 1: where people take drugs to be faster, and the one 4 00:00:16,760 --> 00:00:18,840 Speaker 1: hundred meters dash was run by a guy who is 5 00:00:18,880 --> 00:00:23,079 Speaker 1: not on drugs and afterwards he gloaded. They got to 6 00:00:23,120 --> 00:00:27,120 Speaker 1: get on that some more, which is just a perfect 7 00:00:27,840 --> 00:00:29,080 Speaker 1: use of the English language. 8 00:00:29,160 --> 00:00:31,000 Speaker 2: I mean it really you can apply it to so 9 00:00:31,000 --> 00:00:33,519 Speaker 2: many different areas of your life, including the podcast. 10 00:00:33,760 --> 00:00:35,440 Speaker 1: Arriving later at the podcast. 11 00:00:35,080 --> 00:00:38,479 Speaker 2: Hey it's okay, we have a tight on drugs. We 12 00:00:38,560 --> 00:00:40,040 Speaker 2: have a tight twenty nine minutes. 13 00:00:40,200 --> 00:00:46,959 Speaker 1: It's all right, no, no, no, keep banering, no more. 14 00:00:47,280 --> 00:00:48,240 Speaker 2: How about them Nicks? 15 00:00:48,479 --> 00:00:51,760 Speaker 1: Well yeah, the next Yeah, they're on more. 16 00:00:51,880 --> 00:00:53,720 Speaker 2: They certainly are they really? 17 00:00:55,080 --> 00:00:58,520 Speaker 1: This is a swearing then there's ever been on this podcast. Yeah, 18 00:00:58,520 --> 00:01:00,560 Speaker 1: the next one. Last night, we're recruiting the on Thursday. 19 00:01:00,760 --> 00:01:02,080 Speaker 2: Yeah, what's the next game? 20 00:01:02,120 --> 00:01:04,959 Speaker 1: You're exhausted because you're. 21 00:01:04,080 --> 00:01:05,520 Speaker 2: Watching partying at. 22 00:01:05,440 --> 00:01:07,200 Speaker 1: Expend game one the Jeffrey. 23 00:01:07,360 --> 00:01:10,720 Speaker 2: There's so many ways to get into this. For a second, 24 00:01:10,840 --> 00:01:11,600 Speaker 2: very quickly. 25 00:01:11,319 --> 00:01:14,160 Speaker 1: Say hello podcast, your weekly podcast, were talking about sepilated, 26 00:01:14,200 --> 00:01:17,720 Speaker 1: money and met Levine. Are the many fim your opinion and. 27 00:01:17,640 --> 00:01:20,040 Speaker 2: I'm Katie Greifeld. I should do it really slow since 28 00:01:20,040 --> 00:01:23,080 Speaker 2: you did it really fast. And I'm Katie Greifeld, a 29 00:01:23,160 --> 00:01:25,960 Speaker 2: reporter for Bloomberg News and an anchor for Bloomberg Television. 30 00:01:35,360 --> 00:01:39,360 Speaker 1: I did not watch the Knicks at all or at 31 00:01:39,360 --> 00:01:41,880 Speaker 1: the Jeffrey. But the Jeffrey is like a Bloomberg bar. 32 00:01:42,080 --> 00:01:44,319 Speaker 1: I know it's been to like farewell parties of the Jeffrey. 33 00:01:44,440 --> 00:01:47,160 Speaker 2: That's the thing. In your newsletter you described it as 34 00:01:47,400 --> 00:01:50,120 Speaker 2: a New York bar, which is so impersonal given that 35 00:01:50,520 --> 00:01:52,320 Speaker 2: you and I have literally been there together. 36 00:01:52,600 --> 00:01:56,560 Speaker 1: The Jeffrey is a Bloomberg bar h on the East 37 00:01:56,560 --> 00:02:00,240 Speaker 1: six eighth Street. It's also I learned this, I think 38 00:02:00,280 --> 00:02:02,840 Speaker 1: from a bloomber of person. The owner of the Jeffrey 39 00:02:03,240 --> 00:02:06,880 Speaker 1: is not just some bar owner. No, he is one 40 00:02:06,880 --> 00:02:10,480 Speaker 1: of the nations leading activist hedge fundlers. It's just like 41 00:02:10,520 --> 00:02:11,240 Speaker 1: a fun. 42 00:02:11,840 --> 00:02:14,880 Speaker 2: We should have lunch, we should he sounds really interesting. 43 00:02:15,120 --> 00:02:18,720 Speaker 1: So, yeah, the Jeffrey. Many many people send me this 44 00:02:18,840 --> 00:02:22,720 Speaker 1: story about the Jeffrey doing a promotion where if the 45 00:02:22,800 --> 00:02:26,640 Speaker 1: Knicks won on Wednesday night, if the next one Wednesday night, 46 00:02:26,680 --> 00:02:30,280 Speaker 1: which they did, then your bar tab at the Jeffrey 47 00:02:30,440 --> 00:02:33,840 Speaker 1: was free and so presumably the point of this promotion 48 00:02:34,080 --> 00:02:38,160 Speaker 1: is that a lot of people would storm into the 49 00:02:38,240 --> 00:02:42,000 Speaker 1: Jeffrey order you know, champagne and caviar or whatever one 50 00:02:42,040 --> 00:02:45,079 Speaker 1: gets to the Jeffrey that's expensive, and hope for the 51 00:02:45,160 --> 00:02:47,800 Speaker 1: Knicks to win so that their part tab would be free. 52 00:02:47,919 --> 00:02:50,959 Speaker 1: And if the Knicks lost, they would be like ah 53 00:02:51,000 --> 00:02:53,480 Speaker 1: and pay a thousand dollars for their night out and 54 00:02:53,720 --> 00:02:57,280 Speaker 1: the Jeffrey, you know, if the next lost would be 55 00:02:57,880 --> 00:03:01,399 Speaker 1: up these giant partabs. If the nixt won, there would 56 00:03:01,440 --> 00:03:04,919 Speaker 1: be out all these give artabs to the differy hedge. 57 00:03:05,480 --> 00:03:08,760 Speaker 2: Yes they did by going. 58 00:03:08,480 --> 00:03:12,000 Speaker 1: To Vegas and no, sorry, we're going to Calshi betting 59 00:03:12,040 --> 00:03:15,399 Speaker 1: on the next to it. And so this is very 60 00:03:15,440 --> 00:03:18,800 Speaker 1: like straightforward beat on the Knicks to win. But Kalchi 61 00:03:19,000 --> 00:03:20,360 Speaker 1: put out a pressless about it. 62 00:03:20,840 --> 00:03:22,440 Speaker 2: Calsh was excited, they loved it. 63 00:03:23,040 --> 00:03:25,320 Speaker 1: The bar like put out a video, you know, a 64 00:03:25,320 --> 00:03:27,560 Speaker 1: little video you know, promotion. But they also had like 65 00:03:27,560 --> 00:03:30,240 Speaker 1: a little like white boarded explanation of the hedge that 66 00:03:30,320 --> 00:03:36,280 Speaker 1: I think Calshi probably helped with. It's just like this 67 00:03:36,360 --> 00:03:39,680 Speaker 1: is from Calsh. Small businesses are exposed to real world 68 00:03:39,800 --> 00:03:42,760 Speaker 1: risk every single day, whether politics, sports, economics, with no 69 00:03:42,840 --> 00:03:46,040 Speaker 1: efficient way to manage it. Traditional insurance is expensive, slow, 70 00:03:46,080 --> 00:03:48,800 Speaker 1: and not built for this kind of operational exposure. Calshi 71 00:03:48,920 --> 00:03:51,720 Speaker 1: changes the equation liquid transparent markets that let any business 72 00:03:51,760 --> 00:03:53,920 Speaker 1: take an upsetting position on the risks that affect their 73 00:03:53,920 --> 00:03:57,840 Speaker 1: bottom line. Also says, if the Knicks lease the bark likes, 74 00:03:57,840 --> 00:04:00,240 Speaker 1: I normally have revenue from the promotion, having paid only 75 00:04:00,280 --> 00:04:02,520 Speaker 1: a small premium for the peace of mind. No, it's 76 00:04:02,560 --> 00:04:05,640 Speaker 1: a sports bet, the Knicks for underdogs, and so like 77 00:04:05,800 --> 00:04:08,720 Speaker 1: I was looking, like I think historic, Like the pre 78 00:04:08,920 --> 00:04:12,800 Speaker 1: game price of the Knicks was about thirty six per 79 00:04:12,840 --> 00:04:16,200 Speaker 1: cents on the dollar, so you'd pay, you know, for 80 00:04:16,240 --> 00:04:19,599 Speaker 1: like a five thousand dollars head, you'd pay like eighteen 81 00:04:19,720 --> 00:04:25,920 Speaker 1: hundred dollars. Not bad, So it's not that small. Yeah anyway, Yeah, 82 00:04:25,960 --> 00:04:28,760 Speaker 1: so they bet on sports, and now betting on sports 83 00:04:28,839 --> 00:04:31,680 Speaker 1: is a hedge. And so many people send me this, 84 00:04:31,720 --> 00:04:33,880 Speaker 1: including after I write about because people don't originally unt 85 00:04:33,880 --> 00:04:34,520 Speaker 1: of money stuff. 86 00:04:34,880 --> 00:04:35,640 Speaker 2: It's really long. 87 00:04:35,760 --> 00:04:38,520 Speaker 1: It's sorry, sorry, sorry, he's. 88 00:04:38,360 --> 00:04:40,479 Speaker 2: Just got so many thoughts I summarize it. 89 00:04:41,080 --> 00:04:43,800 Speaker 1: So many people said to me, Yeah, because like my 90 00:04:44,000 --> 00:04:47,640 Speaker 1: view is that when people say prediction markets, they want 91 00:04:47,680 --> 00:04:49,520 Speaker 1: to be like Oh, it's we're hedging a real world risks. 92 00:04:49,680 --> 00:04:51,840 Speaker 1: But they're really talking about sports betting, and so this 93 00:04:52,320 --> 00:04:54,440 Speaker 1: is like the overlap of the vent diagram, where it's 94 00:04:54,520 --> 00:04:56,720 Speaker 1: like it's sports betting and it's hedging a real world risk, 95 00:04:56,839 --> 00:04:59,599 Speaker 1: which is not true because they are hedging a sports 96 00:04:59,640 --> 00:05:01,839 Speaker 1: bet like they didn't have to do this. They're hedging 97 00:05:01,880 --> 00:05:02,279 Speaker 1: on sports. 98 00:05:02,320 --> 00:05:06,080 Speaker 2: But whatever, Matt is banging the table, he is passionate 99 00:05:06,120 --> 00:05:08,640 Speaker 2: about this point. A few things. I do want to 100 00:05:08,680 --> 00:05:11,080 Speaker 2: say that this was up to one hundred dollars per guest, 101 00:05:11,200 --> 00:05:13,600 Speaker 2: so champagne and cavia are you could probably get like 102 00:05:14,160 --> 00:05:17,200 Speaker 2: a little bit of both. Also, tax and gratuity were 103 00:05:17,240 --> 00:05:21,520 Speaker 2: not included, so I mean the bartenders still made money regardless, 104 00:05:21,520 --> 00:05:26,440 Speaker 2: which is nice. Were you Were you aware of the 105 00:05:26,520 --> 00:05:32,040 Speaker 2: other promotion that they ran for their game against the Calves? Okay, 106 00:05:32,320 --> 00:05:35,799 Speaker 2: so for Game four of the Knicks versus the Calves, 107 00:05:36,400 --> 00:05:39,120 Speaker 2: the Jeffrey said that for each point in the Knicks 108 00:05:39,120 --> 00:05:41,800 Speaker 2: margin of victory, the bar would reduce patrons bill by 109 00:05:41,839 --> 00:05:45,040 Speaker 2: one percent. Yes, yeah, so it turned out to be 110 00:05:45,160 --> 00:05:47,720 Speaker 2: a blowout. As I understand, I barely understand. 111 00:05:48,720 --> 00:05:50,760 Speaker 1: You're not expecting to reduce the tab by twenty seven 112 00:05:50,800 --> 00:05:51,479 Speaker 1: percent or whatever. 113 00:05:51,640 --> 00:05:54,400 Speaker 2: No, it was thirty seven percent, which is nuts. So 114 00:05:54,440 --> 00:05:55,160 Speaker 2: the total tal. 115 00:05:55,240 --> 00:05:56,680 Speaker 1: By the way, like by game four, like the Knicks 116 00:05:56,720 --> 00:05:58,640 Speaker 1: had blown out everyone for the last like two series. 117 00:05:58,680 --> 00:06:02,200 Speaker 2: It's amazing. You might have predicted the total discount for 118 00:06:02,320 --> 00:06:06,240 Speaker 2: customers in that promotion amounted to twenty seven hundred and 119 00:06:06,279 --> 00:06:09,240 Speaker 2: fifty dollars. So it'll be interesting to see what Wednesday 120 00:06:09,320 --> 00:06:11,240 Speaker 2: night's game came out to. 121 00:06:11,640 --> 00:06:13,520 Speaker 1: I wonder if they will report that. I feel like 122 00:06:13,520 --> 00:06:15,400 Speaker 1: they don't have will obligations. 123 00:06:15,440 --> 00:06:17,800 Speaker 2: But the reason I know about what they did for 124 00:06:17,880 --> 00:06:20,919 Speaker 2: Game four was because there was a Bloomberg News article 125 00:06:21,320 --> 00:06:24,680 Speaker 2: that reads piked on the terminal, which is how I 126 00:06:24,720 --> 00:06:27,039 Speaker 2: got to know about this because again, the Jeffrey is 127 00:06:27,240 --> 00:06:30,160 Speaker 2: a Bloomberg bar, so obviously all your Bloomberg buddies were 128 00:06:30,600 --> 00:06:33,640 Speaker 2: sending it to you. Right, It's ry like if you're. 129 00:06:33,520 --> 00:06:38,640 Speaker 1: A bar owned by a hedge fund lawyer that has 130 00:06:38,680 --> 00:06:42,279 Speaker 1: two blogs from Bloomberg, then yes, you have very important 131 00:06:42,720 --> 00:06:45,480 Speaker 1: real world economic risks that you have to hedge by 132 00:06:45,520 --> 00:06:47,640 Speaker 1: doing sports betting on CALSHI. But by the way, you 133 00:06:47,680 --> 00:06:49,560 Speaker 1: can also do sports betting on a sports book like 134 00:06:49,600 --> 00:06:53,760 Speaker 1: it's legal now, like you could Kelshi will do a 135 00:06:53,880 --> 00:06:54,800 Speaker 1: nice whiteboard for you. 136 00:06:54,920 --> 00:06:56,920 Speaker 2: I don't know, is there anything else to say? I 137 00:06:56,960 --> 00:06:58,279 Speaker 2: just love it. I wish I could drink. 138 00:06:59,160 --> 00:07:01,840 Speaker 1: I feel like some markets are sports gambling now and 139 00:07:01,880 --> 00:07:19,760 Speaker 1: here we are. Let's not tell you about SpaceX this week. 140 00:07:19,800 --> 00:07:22,120 Speaker 1: We'll tell you about SpaceX last week. Week. 141 00:07:22,160 --> 00:07:25,440 Speaker 2: We're doing really well. And then you mentioned SpaceX. Uh, 142 00:07:26,160 --> 00:07:26,920 Speaker 2: I think it's not. 143 00:07:29,680 --> 00:07:31,040 Speaker 1: Google selling some stock like. 144 00:07:31,040 --> 00:07:33,000 Speaker 2: A lot, like a lot, like eighty billion. 145 00:07:32,760 --> 00:07:35,280 Speaker 1: Dollars more than spacexan. 146 00:07:36,640 --> 00:07:37,920 Speaker 2: Were adapted IPO. 147 00:07:37,640 --> 00:07:40,040 Speaker 1: It's actually eighty five billion AiZ. 148 00:07:40,600 --> 00:07:41,280 Speaker 2: It's nice, so. 149 00:07:41,280 --> 00:07:44,120 Speaker 1: Much demand for Google stock. Yeah, the eighty five billion 150 00:07:44,200 --> 00:07:46,600 Speaker 1: is like not quite right, because like forty billion of 151 00:07:46,640 --> 00:07:49,280 Speaker 1: that is an at the market offering. So it's not 152 00:07:49,320 --> 00:07:50,400 Speaker 1: like they just bashed out. 153 00:07:50,560 --> 00:07:52,400 Speaker 2: Ten billion is Berkshire Hathaway. 154 00:07:52,480 --> 00:07:54,880 Speaker 1: Ten billion is Berksu Hay. I'm going to count Berkshire Hasway. 155 00:07:54,920 --> 00:07:57,239 Speaker 1: That's the anchor order that counts. But the forty billion 156 00:07:57,280 --> 00:07:58,600 Speaker 1: is like they didn't bash it all out this week. 157 00:07:58,640 --> 00:08:00,520 Speaker 1: It's an out the market offering. So the next like 158 00:08:00,720 --> 00:08:03,120 Speaker 1: few months or whatever, when they feel like it, they'll 159 00:08:03,160 --> 00:08:06,360 Speaker 1: sell some stock and the total might come to forty billion, 160 00:08:06,480 --> 00:08:08,800 Speaker 1: or it might not. We don't get there. But yeah, 161 00:08:08,800 --> 00:08:13,000 Speaker 1: they did about thirty five billion of common stock and 162 00:08:13,080 --> 00:08:17,000 Speaker 1: mandatory convertible this week plus ten billion properately place the 163 00:08:17,000 --> 00:08:21,720 Speaker 1: Berkshire Hathaway to you know, pay for data centers, Yeah, 164 00:08:21,800 --> 00:08:24,800 Speaker 1: pay for pay for chips, pay for the boom. 165 00:08:25,040 --> 00:08:26,680 Speaker 2: I feel like there's a few different sign of the 166 00:08:26,720 --> 00:08:29,440 Speaker 2: times in here. One of them, which you highlighted in 167 00:08:29,480 --> 00:08:33,360 Speaker 2: your newsletter is that equity issuance net equity issuance was 168 00:08:33,360 --> 00:08:36,320 Speaker 2: declining for a long time, yea, and buybacks for like 169 00:08:36,360 --> 00:08:37,040 Speaker 2: the thing to do. 170 00:08:37,160 --> 00:08:39,600 Speaker 1: Yeah, and did like sixty billion in buybacks like last year. 171 00:08:39,679 --> 00:08:42,120 Speaker 2: Yeah. But now maybe we're starting to see that trend 172 00:08:42,200 --> 00:08:44,800 Speaker 2: reverse and companies are going to issue more stock. Also, 173 00:08:44,800 --> 00:08:46,080 Speaker 2: we have IPOs coming back. 174 00:08:46,280 --> 00:08:48,120 Speaker 1: It's just like a wild chips in the markets where 175 00:08:48,280 --> 00:08:52,520 Speaker 1: when you think about the big US companies, you know, 176 00:08:52,640 --> 00:08:54,760 Speaker 1: even five years ago, you would have said stotypically they're 177 00:08:54,840 --> 00:08:57,679 Speaker 1: capital light, right, Yeah, I joked for years like Facebook 178 00:08:57,760 --> 00:08:59,160 Speaker 1: is a website, you know, and it's like worth a 179 00:08:59,200 --> 00:09:02,280 Speaker 1: trillion dollars, right, it's a website. How capital intensive could 180 00:09:02,320 --> 00:09:04,480 Speaker 1: a website be? And like, you know the answer to 181 00:09:04,520 --> 00:09:06,200 Speaker 1: that question is right, I have a lot of data 182 00:09:06,200 --> 00:09:07,000 Speaker 1: centers to run your. 183 00:09:06,880 --> 00:09:07,680 Speaker 2: Website, yeah, Matt. 184 00:09:07,800 --> 00:09:10,160 Speaker 1: And also you have to pay a lot of people 185 00:09:10,160 --> 00:09:12,679 Speaker 1: a lot of money to run your website. But you know, 186 00:09:12,800 --> 00:09:15,600 Speaker 1: now there's just like beind a real change and how 187 00:09:15,600 --> 00:09:19,440 Speaker 1: capital intensive the like leading US businesses are, and that 188 00:09:19,760 --> 00:09:23,240 Speaker 1: just leads to a different financing universe where you know, 189 00:09:23,320 --> 00:09:27,160 Speaker 1: instead of raking in money and using it to buy 190 00:09:27,200 --> 00:09:29,800 Speaker 1: back stock, you're waking up and saying, wow, we need 191 00:09:29,840 --> 00:09:31,400 Speaker 1: so much money we have to sell stock. 192 00:09:31,640 --> 00:09:32,160 Speaker 2: Yeah. 193 00:09:32,240 --> 00:09:34,520 Speaker 1: I mean Google has been first of all, raking in money. 194 00:09:34,920 --> 00:09:37,000 Speaker 1: Secondly like selling debt, right, I mean, like you can 195 00:09:37,320 --> 00:09:40,000 Speaker 1: finance a certain amount of stuff with that. But ultimately, 196 00:09:40,040 --> 00:09:43,120 Speaker 1: you know, these are very highly rated, investment in grade 197 00:09:43,120 --> 00:09:46,840 Speaker 1: companies that have portress balance sheets, and eventually you're like, 198 00:09:46,880 --> 00:09:49,720 Speaker 1: you know what, I'd rather be more equity financed. 199 00:09:49,960 --> 00:09:53,040 Speaker 2: Yeah, so they're doing it. I always wonder in thinking 200 00:09:53,040 --> 00:09:55,760 Speaker 2: about that that shift in markets and you know, financing, 201 00:09:55,840 --> 00:09:59,600 Speaker 2: like what does this mean for investors who like hold 202 00:09:59,600 --> 00:10:03,280 Speaker 2: index ones because like Google shares, the alphabet shares went 203 00:10:03,320 --> 00:10:05,240 Speaker 2: down a bit, this is diluted, et cetera. But like, 204 00:10:05,679 --> 00:10:07,040 Speaker 2: what does it mean if you do see a c 205 00:10:07,280 --> 00:10:10,960 Speaker 2: change where there's just more equity issuance overall, I don't 206 00:10:11,000 --> 00:10:15,480 Speaker 2: really know. Yeah, like if you shift from from stock 207 00:10:15,559 --> 00:10:19,960 Speaker 2: buybacks net negative equity issuance to a world where it's positive, 208 00:10:20,360 --> 00:10:23,199 Speaker 2: I don't know what that means other than being interested 209 00:10:23,800 --> 00:10:25,720 Speaker 2: from the perspective of an investor. 210 00:10:25,800 --> 00:10:28,200 Speaker 1: Right. One thing that's just like sort of philosophically interesting is, 211 00:10:28,200 --> 00:10:29,960 Speaker 1: you know, we got a question on our last mailbag, right, 212 00:10:30,040 --> 00:10:31,880 Speaker 1: like what does the company stock price matter after it 213 00:10:31,920 --> 00:10:34,720 Speaker 1: goes public? Right? And like you they are great answers 214 00:10:34,720 --> 00:10:36,360 Speaker 1: to that, and I was like, oh, the market for 215 00:10:36,400 --> 00:10:40,079 Speaker 1: corporate control. Oh, but like the answer to that a 216 00:10:40,160 --> 00:10:43,120 Speaker 1: few months ago was not, Well, companies sell stock all 217 00:10:43,120 --> 00:10:44,680 Speaker 1: the time, so they need a high stock price so 218 00:10:44,720 --> 00:10:47,480 Speaker 1: they can you know, raise money without diluting share elders 219 00:10:47,520 --> 00:10:50,600 Speaker 1: too much. Because that is not how public companies think 220 00:10:50,960 --> 00:10:53,800 Speaker 1: until this week. And now it's like, well, you know, 221 00:10:53,960 --> 00:10:56,439 Speaker 1: stock price matter is because you got to build data centers, 222 00:10:56,440 --> 00:10:59,880 Speaker 1: like you'll be thinking about your cost of financing, and 223 00:11:00,080 --> 00:11:02,840 Speaker 1: the higher your stock prices, the cheaper your equity financing is. 224 00:11:03,400 --> 00:11:05,760 Speaker 1: So for one thing, it just changes how companies think 225 00:11:05,760 --> 00:11:08,440 Speaker 1: about their stocks. But for anything, like, I've lived my 226 00:11:08,480 --> 00:11:11,480 Speaker 1: life in a financial world where the stuff that you 227 00:11:11,559 --> 00:11:15,120 Speaker 1: do on the stock market is mostly not directly tied 228 00:11:15,440 --> 00:11:19,760 Speaker 1: to building factories to make widgets, you know, Like the 229 00:11:19,800 --> 00:11:22,480 Speaker 1: stock market is not primarily a way for companies to 230 00:11:22,559 --> 00:11:25,040 Speaker 1: raise money to do stuff. And if you are buying 231 00:11:25,080 --> 00:11:29,000 Speaker 1: stock on the stock market, it's vanishingly unlikely that you 232 00:11:29,040 --> 00:11:31,120 Speaker 1: are buying it from a company that will use your 233 00:11:31,200 --> 00:11:33,400 Speaker 1: money to make a you know, to do stuff. Right, 234 00:11:33,760 --> 00:11:36,840 Speaker 1: It's all just like a sort of like secondary trading 235 00:11:36,880 --> 00:11:39,959 Speaker 1: market where like ultimately the price of the stock sort 236 00:11:40,000 --> 00:11:43,040 Speaker 1: of reflects back into the company's capital allocation decision. But 237 00:11:43,040 --> 00:11:46,880 Speaker 1: it's not like you're giving the company to money. But 238 00:11:46,920 --> 00:11:48,560 Speaker 1: now it's like, yeah, you're giving the company money. Like 239 00:11:48,600 --> 00:11:50,559 Speaker 1: the thing that you're doing as an index one investor 240 00:11:50,600 --> 00:11:53,440 Speaker 1: really is like giving your cash to big companies to 241 00:11:53,520 --> 00:11:56,200 Speaker 1: build the AI future or whatever. Yeah, unless you don't 242 00:11:56,200 --> 00:11:56,400 Speaker 1: like that. 243 00:11:57,240 --> 00:12:00,960 Speaker 2: Also, what does the stock price matter after company goes public? 244 00:12:01,000 --> 00:12:04,480 Speaker 2: It matters for the employees in terms of their net worth, 245 00:12:04,600 --> 00:12:08,080 Speaker 2: Which leads me to an interesting nugget about this ATM 246 00:12:08,120 --> 00:12:11,120 Speaker 2: program that I want to get your thoughts on, because 247 00:12:12,160 --> 00:12:14,719 Speaker 2: in it it was buried that the ATM program is 248 00:12:14,760 --> 00:12:17,840 Speaker 2: intended primarily to facilitate, for a period of time, an 249 00:12:17,840 --> 00:12:22,120 Speaker 2: administrative change in how alphabet makes tax obligations associated with 250 00:12:22,120 --> 00:12:25,480 Speaker 2: employee equity grants. This approach will mimic a cell to 251 00:12:25,520 --> 00:12:29,760 Speaker 2: cover model. Upon vesting of restricted stock units, shares will 252 00:12:29,800 --> 00:12:32,360 Speaker 2: still be delivered to employees net of taxes, and the 253 00:12:32,400 --> 00:12:35,960 Speaker 2: company will use corporate cash to settle taxes on behalf 254 00:12:36,040 --> 00:12:39,760 Speaker 2: of employees. The company intends to issue stock for equivalent 255 00:12:39,760 --> 00:12:43,400 Speaker 2: proceeds through its ATM program. So that's interesting. So basically 256 00:12:43,400 --> 00:12:47,319 Speaker 2: they're going to pay the taxes for their employees. 257 00:12:47,320 --> 00:12:49,839 Speaker 1: Yeah, which they do already, but they're going to pay 258 00:12:49,880 --> 00:12:54,199 Speaker 1: them with stock now basically, Yeah, I wrote and we 259 00:12:54,280 --> 00:12:57,280 Speaker 1: talked about like the idea that companies do not use 260 00:12:57,320 --> 00:13:00,440 Speaker 1: the stock market to raise money and the net equitations, 261 00:12:59,800 --> 00:13:05,840 Speaker 1: and I got pushfact like, in fact, these companies too, 262 00:13:07,320 --> 00:13:10,840 Speaker 1: in a sense issue stock to raise money, but they 263 00:13:10,880 --> 00:13:14,120 Speaker 1: do it in a barter system where instead of issuing 264 00:13:14,120 --> 00:13:16,720 Speaker 1: stock to raise money to pay giant salaries to employees, 265 00:13:16,760 --> 00:13:20,160 Speaker 1: they just pay the giant salaries to employees in stock. Right, 266 00:13:20,240 --> 00:13:22,640 Speaker 1: And so if you're an employee and these big tech companies, 267 00:13:22,640 --> 00:13:24,880 Speaker 1: you get paid a lot in stock where stock options 268 00:13:24,880 --> 00:13:27,600 Speaker 1: are restricted stock. And so a lot of how companies 269 00:13:27,679 --> 00:13:32,840 Speaker 1: fund themselves is by using stock to pay employees, which is, 270 00:13:32,960 --> 00:13:35,440 Speaker 1: you know, economically equivalent to selling stock to the general 271 00:13:35,480 --> 00:13:37,720 Speaker 1: public to get cash and then using the cash to 272 00:13:37,720 --> 00:13:41,520 Speaker 1: pay the employees. Right, but has you know, like accounting 273 00:13:41,559 --> 00:13:44,080 Speaker 1: and optical and tax benefits and so people you know, 274 00:13:44,120 --> 00:13:47,480 Speaker 1: do a lot of pay in stock. But the way 275 00:13:47,880 --> 00:13:49,320 Speaker 1: that that works is you still have to pay them 276 00:13:49,360 --> 00:13:52,760 Speaker 1: a little in cash, which is traditionally the normal way 277 00:13:52,760 --> 00:13:55,720 Speaker 1: you do this. You deliver the stock, and they have 278 00:13:55,760 --> 00:13:58,440 Speaker 1: some big tax obligation when you deliver the stock, and 279 00:13:58,480 --> 00:14:01,160 Speaker 1: typically what you do is you deliver net so like 280 00:14:01,360 --> 00:14:03,080 Speaker 1: you know, you deliver them sixty percent of the stock, 281 00:14:03,080 --> 00:14:06,760 Speaker 1: you withhold forty percent for taxes, and instead of like 282 00:14:07,200 --> 00:14:09,439 Speaker 1: sending the stock to the irs, you send the cash 283 00:14:09,480 --> 00:14:11,720 Speaker 1: to the irs. It's it costs you cash. If you're 284 00:14:11,760 --> 00:14:17,440 Speaker 1: Google or whatever and need to conserve cash, you might 285 00:14:17,600 --> 00:14:20,960 Speaker 1: do what Google is doing here, which is still the 286 00:14:21,040 --> 00:14:23,360 Speaker 1: same thing, which is you deliver the net shares to 287 00:14:23,440 --> 00:14:26,440 Speaker 1: the to the employees, you withhold the taxes. You send 288 00:14:26,520 --> 00:14:29,240 Speaker 1: the cash for the taxes to the IRS, except that 289 00:14:29,680 --> 00:14:33,080 Speaker 1: you get that cash by selling stock. So every time 290 00:14:33,160 --> 00:14:36,080 Speaker 1: they need to withhold money to pay employee tax bill, 291 00:14:36,680 --> 00:14:38,840 Speaker 1: they sell a little bit of stock under the ATM 292 00:14:38,880 --> 00:14:42,520 Speaker 1: program and use that to pay the taxes. So they 293 00:14:42,560 --> 00:14:47,239 Speaker 1: are issuing stock toories cash to meet their employment comp publications. 294 00:14:47,440 --> 00:14:50,720 Speaker 2: That's interesting because I read that. I didn't know that 295 00:14:50,720 --> 00:14:52,960 Speaker 2: they were already doing that, and I just wondered if 296 00:14:52,960 --> 00:14:55,480 Speaker 2: it fit into like the broader discussion we've been having 297 00:14:55,560 --> 00:14:59,800 Speaker 2: on AI talent wars and how fiercely competitive it is. 298 00:15:00,160 --> 00:15:02,960 Speaker 1: Like the reason Google is selling eighty five billion dollars 299 00:15:03,000 --> 00:15:05,400 Speaker 1: are stuck is you know AI, right, And so some 300 00:15:05,520 --> 00:15:08,320 Speaker 1: of that is like Capex to build you know, data 301 00:15:08,360 --> 00:15:10,840 Speaker 1: centers and like their chip program, But some of it 302 00:15:10,880 --> 00:15:15,000 Speaker 1: is just salaries, and the salaries are stuck and that's 303 00:15:15,040 --> 00:15:17,200 Speaker 1: expensive too, and you know there's a there's a limit 304 00:15:17,280 --> 00:15:19,160 Speaker 1: on that much you can do without raising equity. 305 00:15:19,480 --> 00:15:22,200 Speaker 2: For sure, can I read you a headline without contacts 306 00:15:22,200 --> 00:15:23,760 Speaker 2: that just crossed and you can tell me if you 307 00:15:23,760 --> 00:15:24,800 Speaker 2: don't want to talk about it? 308 00:15:24,880 --> 00:15:30,320 Speaker 1: Sure? Is it good? Free register? I bet I'm not 309 00:15:30,320 --> 00:15:31,320 Speaker 1: going to want to talk about it. 310 00:15:31,800 --> 00:15:37,360 Speaker 2: Jane Street is planning to build data center. Yes, yes, 311 00:15:37,880 --> 00:15:40,160 Speaker 2: the headline is Jane Street plants new data center as 312 00:15:40,200 --> 00:15:44,320 Speaker 2: compute power runs scarce. So Jane Street also getting in. 313 00:15:44,360 --> 00:15:47,480 Speaker 1: Sure, like All the big quant firms have been AI 314 00:15:47,640 --> 00:15:49,560 Speaker 1: firms forever, right. I mean they have like a big 315 00:15:49,600 --> 00:15:53,240 Speaker 1: machine learning model that takes stock prices and predicts future 316 00:15:53,240 --> 00:15:56,800 Speaker 1: stock prices, and so you know, they need data centers 317 00:15:56,800 --> 00:15:59,160 Speaker 1: and all the rest of it. It's the same model 318 00:16:00,120 --> 00:16:04,040 Speaker 1: frontier AI lab or you're a you know, electronic quantrating 319 00:16:04,040 --> 00:16:05,760 Speaker 1: for him, it's the same thing. That's why deep seek 320 00:16:05,840 --> 00:16:07,080 Speaker 1: is both it's it's the. 321 00:16:07,000 --> 00:16:08,680 Speaker 2: Same models, turtles all the way down. 322 00:16:08,800 --> 00:16:11,480 Speaker 1: Yeah. Yeah, the data centers are bigger when you're doing 323 00:16:11,840 --> 00:16:14,160 Speaker 1: like a frontier AI lab, but it's the same idea. 324 00:16:14,200 --> 00:16:16,360 Speaker 2: I just feel like I should be building a data center. 325 00:16:17,000 --> 00:16:18,840 Speaker 2: Why am I sitting in this room talking about it. 326 00:16:18,960 --> 00:16:22,320 Speaker 1: I just like living my lip in a way that 327 00:16:22,360 --> 00:16:39,160 Speaker 1: I do not need to build a data center. We're 328 00:16:40,120 --> 00:16:41,040 Speaker 1: shoot him on the pod. 329 00:16:41,640 --> 00:16:44,680 Speaker 2: Yeah, I mean he's not sentenced until August thirty first, 330 00:16:44,800 --> 00:16:46,040 Speaker 2: so he's out and. 331 00:16:46,040 --> 00:16:50,000 Speaker 1: About and like pretty vocal and like not wrong. Yeah, 332 00:16:50,320 --> 00:16:52,280 Speaker 1: he was going to be kind of short selling this week, 333 00:16:52,280 --> 00:16:56,200 Speaker 1: did you see. Yeah, the prosecutor who prosecuted him tweeted 334 00:17:00,000 --> 00:17:02,800 Speaker 1: Los Angeles Federal Jury. This is quoting the presetar. Los 335 00:17:02,840 --> 00:17:05,960 Speaker 1: Angeles Federal Jury has found Andrew Left guilty of market manipulation. 336 00:17:06,040 --> 00:17:09,440 Speaker 1: He used media appearances and his company to illegally influence 337 00:17:09,520 --> 00:17:14,960 Speaker 1: share prices and make quick profits, known as shortingh He 338 00:17:15,040 --> 00:17:16,959 Speaker 1: later walked I back a little bit to like shorting 339 00:17:17,000 --> 00:17:19,359 Speaker 1: is not illegal, but like you know that he thinks 340 00:17:19,400 --> 00:17:22,480 Speaker 1: it is. Yeah, but yeah, Andrew Left did some short 341 00:17:22,480 --> 00:17:28,160 Speaker 1: selling charge with market medization convicted this week. Not great 342 00:17:28,200 --> 00:17:28,879 Speaker 1: for short selling. 343 00:17:29,160 --> 00:17:31,639 Speaker 2: No, I'm going to steal a line from Carson Block. 344 00:17:31,920 --> 00:17:36,879 Speaker 2: Muddy Waters Research tweeted this rate before we started recording. 345 00:17:37,160 --> 00:17:39,280 Speaker 2: It's a very long tweet. It's like a Bill Ackman 346 00:17:39,400 --> 00:17:42,919 Speaker 2: length tweet. But he said that the jury convicted Andrew 347 00:17:42,960 --> 00:17:46,720 Speaker 2: of not actually believing the opinions he stated in his tweets, 348 00:17:47,200 --> 00:17:48,080 Speaker 2: which is interesting. 349 00:17:48,320 --> 00:17:50,119 Speaker 1: I think it is pretty clearly legal to do the 350 00:17:50,200 --> 00:17:53,359 Speaker 1: following research a company find out that it's a fraud, 351 00:17:53,800 --> 00:17:56,520 Speaker 1: short at stock, do active as shorting. I announce it 352 00:17:56,560 --> 00:17:58,639 Speaker 1: your short announced that it's a fraud, put out your research, 353 00:17:59,200 --> 00:18:03,679 Speaker 1: wat's the stock up, and then have a paper profit 354 00:18:03,800 --> 00:18:06,840 Speaker 1: from the stock dropping. But what Andrew Left did that 355 00:18:07,119 --> 00:18:10,760 Speaker 1: upset prosecutors was two things. One is that he closed 356 00:18:10,800 --> 00:18:20,440 Speaker 1: his positions very soon after tweeting, and that is ugly right, 357 00:18:20,880 --> 00:18:23,960 Speaker 1: if you take all of your profits from the immediate 358 00:18:24,000 --> 00:18:26,160 Speaker 1: reaction to your tweet rather than from like the stock 359 00:18:26,240 --> 00:18:29,120 Speaker 1: ultimately going to zero because it's a fraud, then like 360 00:18:29,680 --> 00:18:31,720 Speaker 1: is that because you really thought the stock was going 361 00:18:31,760 --> 00:18:34,400 Speaker 1: to zero or because you were just trying to manipulate 362 00:18:34,400 --> 00:18:37,119 Speaker 1: retail investors to sell the stock and you were like 363 00:18:37,280 --> 00:18:39,720 Speaker 1: buying into their demand. And if you do it the 364 00:18:39,720 --> 00:18:42,119 Speaker 1: other way, if you say I love the stock that 365 00:18:42,160 --> 00:18:44,919 Speaker 1: you've got a cure for cancer, and people buy the 366 00:18:44,960 --> 00:18:47,239 Speaker 1: stock and it goes up and you immediately sell all 367 00:18:47,320 --> 00:18:50,800 Speaker 1: of your stock, that really looks like a pump and dump. 368 00:18:51,040 --> 00:18:52,800 Speaker 1: And by the way, like Andrew Left did some of 369 00:18:52,840 --> 00:18:55,840 Speaker 1: that right, but he didn't for like Nvidia, where like 370 00:18:56,320 --> 00:19:00,840 Speaker 1: you know, if you bought into his tweets, you did great, 371 00:19:01,119 --> 00:19:03,960 Speaker 1: So it's fine, except that he was convicted of frauder day. 372 00:19:04,440 --> 00:19:05,920 Speaker 1: So like one thing that he did was to close 373 00:19:05,960 --> 00:19:08,040 Speaker 1: out his position very quickly, which I don't have a 374 00:19:08,119 --> 00:19:11,520 Speaker 1: huge problem with, but like it's ugly. And the other 375 00:19:11,560 --> 00:19:13,720 Speaker 1: thing he did is that there's like evidence there's like 376 00:19:13,880 --> 00:19:18,240 Speaker 1: internal messages that don't say like I don't believe this opinion, 377 00:19:18,560 --> 00:19:22,440 Speaker 1: but sort of sound like he was pretty sloppy and 378 00:19:22,720 --> 00:19:25,720 Speaker 1: wasn't putting out reports because he had done months of 379 00:19:25,720 --> 00:19:29,719 Speaker 1: deep fundamental research and was deeply convinced of his thesis. 380 00:19:29,760 --> 00:19:31,919 Speaker 1: But he was putting them at because he thought, if 381 00:19:31,960 --> 00:19:34,000 Speaker 1: I put out this report, the stock will drop and 382 00:19:34,040 --> 00:19:38,359 Speaker 1: I'll immediately take profits. And I don't think there's like 383 00:19:39,080 --> 00:19:41,840 Speaker 1: smoking gun, slammed on evidence over there, those things. But yeah, 384 00:19:41,920 --> 00:19:43,879 Speaker 1: like I can see how he was convicted. It's just 385 00:19:43,920 --> 00:19:46,600 Speaker 1: like it's very troubling because like there's no bright line anywhere, 386 00:19:46,960 --> 00:19:49,760 Speaker 1: you know, when he was charged. One thing that Andrew 387 00:19:49,800 --> 00:19:51,520 Speaker 1: Left did as a sort of publicity stunt was that 388 00:19:51,560 --> 00:19:55,520 Speaker 1: he like sent the SEC letters saying, please, like publish 389 00:19:55,520 --> 00:19:59,000 Speaker 1: a rule about how long I have to maintain a position, 390 00:19:59,240 --> 00:20:00,679 Speaker 1: Like I just want to Well, if you tell me, 391 00:20:00,680 --> 00:20:03,680 Speaker 1: I'll do it. Like if I'm not allowed to cover 392 00:20:03,720 --> 00:20:05,760 Speaker 1: my shorts for twenty four hours after I tweet them 393 00:20:05,760 --> 00:20:07,280 Speaker 1: I'm short, then like fine, I will do that. But 394 00:20:07,400 --> 00:20:09,479 Speaker 1: like I don't know what the rule is. There's no 395 00:20:09,480 --> 00:20:12,560 Speaker 1: bright line. Tell me what the rule is. And the 396 00:20:12,600 --> 00:20:15,320 Speaker 1: SEC ignored him, And I think the SEC is right 397 00:20:15,359 --> 00:20:19,080 Speaker 1: to ignore him because it's clearly just a matter of intent, right, 398 00:20:19,240 --> 00:20:21,520 Speaker 1: Like if you really truly believe this company is a 399 00:20:21,520 --> 00:20:23,919 Speaker 1: fraud and you short the stock and you say this 400 00:20:23,960 --> 00:20:26,240 Speaker 1: company is a fraud and the stock falls ninety percent, 401 00:20:27,160 --> 00:20:29,480 Speaker 1: and you're like, well, there's a matter of risk management. 402 00:20:30,119 --> 00:20:32,080 Speaker 1: I've you know, made ninety percent of the profits I 403 00:20:32,119 --> 00:20:34,680 Speaker 1: was hoping to make, and like, I need to conserve 404 00:20:34,680 --> 00:20:36,399 Speaker 1: capital and move on to the next trade. I'm going 405 00:20:36,440 --> 00:20:40,480 Speaker 1: to cover. And then like you announce your cover, you're 406 00:20:40,480 --> 00:20:42,919 Speaker 1: honest about like maybe it's fine. Maybe it's fine if 407 00:20:42,920 --> 00:20:45,639 Speaker 1: you have like a really good, well documented process. But 408 00:20:45,680 --> 00:20:47,480 Speaker 1: if you have a very sloppy process and you cover 409 00:20:47,520 --> 00:20:48,960 Speaker 1: in five minutes, then that looks bad. 410 00:20:49,119 --> 00:20:51,399 Speaker 2: Yeah, I was gonna say, it's hard to prove intent. 411 00:20:51,680 --> 00:20:56,280 Speaker 1: It's hard to prove intense. And I think that the 412 00:20:56,400 --> 00:20:59,480 Speaker 1: prosecutors were obligated to prove that Andrew Left had the 413 00:20:59,480 --> 00:21:03,159 Speaker 1: bad and they convinced the jury that he had the 414 00:21:03,160 --> 00:21:05,800 Speaker 1: bad intent because like the way you prove intent is 415 00:21:06,040 --> 00:21:09,280 Speaker 1: they have messages from him to like his buddies, saying 416 00:21:09,320 --> 00:21:12,320 Speaker 1: things like, I have a hot voice in cannabis. It's 417 00:21:12,400 --> 00:21:14,040 Speaker 1: it's cannabis but spelled. 418 00:21:14,280 --> 00:21:18,959 Speaker 2: Cannabass, delicious fish. 419 00:21:17,520 --> 00:21:19,560 Speaker 1: I have a hot voice in cannabis. Let's take advantage 420 00:21:19,560 --> 00:21:22,120 Speaker 1: of it. I don't know. Doesn't that sound like he's 421 00:21:22,160 --> 00:21:24,960 Speaker 1: trying to get retail traders to dump the stock rather 422 00:21:25,000 --> 00:21:27,520 Speaker 1: than he believes that these companies are front But the things, 423 00:21:27,560 --> 00:21:30,720 Speaker 1: it's like it can be both, right, Like it's clearly both, 424 00:21:31,000 --> 00:21:34,200 Speaker 1: like he clearly believed these companies were bad. And also 425 00:21:34,320 --> 00:21:36,920 Speaker 1: like at this trial they had people testify who are 426 00:21:36,920 --> 00:21:39,320 Speaker 1: like I put my life savings to these cannabis stocks 427 00:21:39,520 --> 00:21:42,320 Speaker 1: and then he told me they were frauds and they 428 00:21:42,359 --> 00:21:44,760 Speaker 1: went down. I lost my life savings. What a monster. 429 00:21:44,800 --> 00:21:47,600 Speaker 1: It's like, no, they were frauds, like they stayed down. Yeah, 430 00:21:47,800 --> 00:21:50,480 Speaker 1: it's not like it's only they went down momentarily because 431 00:21:50,480 --> 00:21:52,640 Speaker 1: he was lying, Like they stayed down, like he was right. 432 00:21:53,160 --> 00:21:55,680 Speaker 1: And again like he was convicted of pumping and dumping 433 00:21:55,760 --> 00:22:00,600 Speaker 1: in Vidia. Yeah, in Vidia in like two thousand seventeen 434 00:22:00,720 --> 00:22:04,040 Speaker 1: ors on that great trade buying in video. 435 00:22:04,480 --> 00:22:07,320 Speaker 2: Who is influential enough that they could pump and dump in. 436 00:22:07,760 --> 00:22:10,679 Speaker 1: Before it was like in video It's still it was 437 00:22:10,680 --> 00:22:12,119 Speaker 1: a good trade if you bought in video. 438 00:22:12,680 --> 00:22:15,320 Speaker 2: Yeah. Well, it sounds like Andrew Left is going to 439 00:22:15,359 --> 00:22:15,879 Speaker 2: appeal this. 440 00:22:16,560 --> 00:22:19,240 Speaker 1: It's awesome really, like I could see this going anither way, 441 00:22:19,280 --> 00:22:21,240 Speaker 1: But I'm I think most people in finance are kind 442 00:22:21,240 --> 00:22:25,560 Speaker 1: of sympathetic to Andrew Left here, Like the messages are 443 00:22:25,560 --> 00:22:28,920 Speaker 1: not all great, but like it's really it's a very 444 00:22:28,960 --> 00:22:30,280 Speaker 1: blurry situation where you. 445 00:22:30,320 --> 00:22:33,600 Speaker 2: Got who among us US hasn't sent a sloppy. 446 00:22:34,880 --> 00:22:36,639 Speaker 1: Everything is security is right. You can't really hold a 447 00:22:36,680 --> 00:22:38,040 Speaker 1: little securities right against people. 448 00:22:38,040 --> 00:22:42,040 Speaker 2: But he also testified in his own defense, which is unusual. 449 00:22:42,160 --> 00:22:44,119 Speaker 1: I think he's gonna say everyone says it's unusual. 450 00:22:44,119 --> 00:22:45,680 Speaker 2: I'm going to say, you're a lawyer. 451 00:22:46,640 --> 00:22:47,560 Speaker 1: I'm not a real lawyer. 452 00:22:48,000 --> 00:22:50,120 Speaker 2: You're more of a lawyer than I am. 453 00:22:50,359 --> 00:22:52,359 Speaker 1: No. I know a lot of real criminal defense layers, 454 00:22:52,400 --> 00:22:56,200 Speaker 1: and they all, for the most part share the view 455 00:22:56,240 --> 00:22:58,399 Speaker 1: of every other criminal defenseiler in the world is that 456 00:22:58,520 --> 00:23:00,960 Speaker 1: you should never testify on your own defense. But me, 457 00:23:01,040 --> 00:23:03,000 Speaker 1: it's just the guy. I'm like, I don't know if 458 00:23:03,000 --> 00:23:05,240 Speaker 1: you think you're in It's like they bet Andrew left 459 00:23:05,320 --> 00:23:08,600 Speaker 1: was a belligerent but credible witness, Like I bet he 460 00:23:08,720 --> 00:23:12,400 Speaker 1: did a good job. Apparently not good enough, but well again. 461 00:23:12,520 --> 00:23:15,800 Speaker 2: Sentencing on August thirty first sounds like he's going to appeal. 462 00:23:15,920 --> 00:23:17,800 Speaker 1: I think the right outcome here is that he should 463 00:23:17,800 --> 00:23:21,679 Speaker 1: be convicted, and he should get zero days in prison. 464 00:23:21,960 --> 00:23:23,480 Speaker 1: I think it's like, yeah, he did a little light 465 00:23:23,520 --> 00:23:26,880 Speaker 1: security sprout, it's fine, but like he didn't hurt anyone. 466 00:23:27,520 --> 00:23:30,040 Speaker 2: There is the question about what effect this is going 467 00:23:30,080 --> 00:23:31,160 Speaker 2: to have on short cellars. 468 00:23:31,200 --> 00:23:34,720 Speaker 1: Yea, it is back when he got charged. Kristol is 469 00:23:34,760 --> 00:23:36,840 Speaker 1: another like active at short seller. They put out some 470 00:23:36,880 --> 00:23:40,760 Speaker 1: report on some company that had this big, like sarcastic 471 00:23:40,840 --> 00:23:43,479 Speaker 1: disclaimer at the end that was like, we don't know 472 00:23:44,400 --> 00:23:46,440 Speaker 1: like what we're allowed to do now, but you should 473 00:23:46,520 --> 00:23:49,320 Speaker 1: just assume that we covered our short immediately. Yeah, which 474 00:23:49,320 --> 00:23:51,560 Speaker 1: I don't think works as a disclaimer, but. 475 00:23:51,400 --> 00:23:53,200 Speaker 2: We definitely discussed that on this podcast. 476 00:23:53,359 --> 00:23:55,600 Speaker 1: Right, no one knows what the rules are, and like 477 00:23:56,760 --> 00:23:58,600 Speaker 1: the rule, there's a rule, right, the rule is like 478 00:23:58,680 --> 00:24:00,200 Speaker 1: don't have a bad intent. 479 00:24:00,400 --> 00:24:02,160 Speaker 2: But be good, be good. 480 00:24:02,240 --> 00:24:02,520 Speaker 1: Yeah. 481 00:24:02,680 --> 00:24:04,520 Speaker 2: There were interesting numbers in this story from the Wall 482 00:24:04,560 --> 00:24:08,360 Speaker 2: Street Journal on the chilling effect that basically this case 483 00:24:08,400 --> 00:24:10,560 Speaker 2: and probably other things have had on the short selling 484 00:24:10,560 --> 00:24:13,280 Speaker 2: industry overall. That apparently there were thirty one activist short 485 00:24:13,320 --> 00:24:15,640 Speaker 2: selling funds that have published research so far this year. 486 00:24:16,119 --> 00:24:19,399 Speaker 2: That compares to fifty five in twenty twenty. That is, 487 00:24:19,440 --> 00:24:22,920 Speaker 2: according to research firm breakout points by the way, Like. 488 00:24:23,160 --> 00:24:25,400 Speaker 1: What else has changed between now and twenty twenty is. 489 00:24:25,640 --> 00:24:26,640 Speaker 2: The lines going up. 490 00:24:26,920 --> 00:24:30,400 Speaker 1: The line's going up, and particularly the line's going vertically 491 00:24:30,480 --> 00:24:37,000 Speaker 1: up at certain dubious smallish cap stocks that were heavily shorted. Right, Yes, 492 00:24:37,320 --> 00:24:39,880 Speaker 1: the memestock thing was not great for activist short sellers either. 493 00:24:40,040 --> 00:24:43,359 Speaker 2: Fair point, fair point, there's a number of potential factors there. 494 00:24:43,800 --> 00:24:45,720 Speaker 1: This is bad. Like if you say a stock is 495 00:24:45,760 --> 00:24:48,720 Speaker 1: good and the stock goes up and you immediately sell, 496 00:24:48,880 --> 00:24:50,639 Speaker 1: that's a pump it dump. That looks bad, right, But 497 00:24:50,680 --> 00:24:52,399 Speaker 1: if you say a stock is bad and the stock 498 00:24:52,440 --> 00:24:55,920 Speaker 1: goes down and you immediately cover, like that is symmetric, 499 00:24:56,000 --> 00:25:00,240 Speaker 1: but it's it's like it's prudent risk management. Yeah, hard 500 00:25:00,240 --> 00:25:02,920 Speaker 1: to be a short seller and you're like lightly capitalized 501 00:25:03,119 --> 00:25:05,840 Speaker 1: and you're at a lot of risk. And if you 502 00:25:06,440 --> 00:25:09,359 Speaker 1: do the work of identifying the problem in a company 503 00:25:09,400 --> 00:25:11,840 Speaker 1: and the market reacts to your identifying the problem and 504 00:25:11,880 --> 00:25:13,520 Speaker 1: you're like, Okay, my work here is done. I'm going 505 00:25:13,600 --> 00:25:15,679 Speaker 1: to cover this and move on. Like I am sympathetic 506 00:25:15,720 --> 00:25:19,480 Speaker 1: to that, and that is now much riskier. 507 00:25:19,920 --> 00:25:21,800 Speaker 2: Well, it seems like the neatest solution would be the 508 00:25:21,800 --> 00:25:25,240 Speaker 2: one that you already mentioned, which is basically what Andrew 509 00:25:25,280 --> 00:25:27,920 Speaker 2: left ask the sec to do, which is tell. 510 00:25:27,760 --> 00:25:30,439 Speaker 1: Me how old it's an intent thing? 511 00:25:30,920 --> 00:25:31,840 Speaker 2: How do you prove that? 512 00:25:32,160 --> 00:25:33,680 Speaker 1: And by the way, like you know, having to wait 513 00:25:33,720 --> 00:25:35,720 Speaker 1: a day is makes the responishment harder. But how do 514 00:25:35,760 --> 00:25:37,639 Speaker 1: you prove intent? Like you don't write emails saying like 515 00:25:37,680 --> 00:25:39,479 Speaker 1: I have a hot voice and cannabis, let's take advantage 516 00:25:39,520 --> 00:25:39,679 Speaker 1: of it. 517 00:25:39,680 --> 00:25:42,800 Speaker 2: Well that's easy, yeah, you say. 518 00:25:42,600 --> 00:25:44,840 Speaker 1: That, But like, as someone who writes a lot about 519 00:25:44,840 --> 00:25:47,000 Speaker 1: like securities, fraad Case has, like the hardest thing in 520 00:25:47,040 --> 00:25:50,560 Speaker 1: the world is not putting your criminal intent and your 521 00:25:50,920 --> 00:25:52,040 Speaker 1: messages to your buddies. 522 00:25:52,080 --> 00:25:55,200 Speaker 2: I guess I just don't do enough crimes, you know, God, I. 523 00:25:55,119 --> 00:25:59,920 Speaker 1: Mean I try to every so often. I fedotic sense. 524 00:26:00,000 --> 00:26:02,719 Speaker 1: I want a dumb text and be like, not o crimes, 525 00:26:02,720 --> 00:26:04,600 Speaker 1: but just you know, like the texts I would move 526 00:26:04,640 --> 00:26:05,920 Speaker 1: on on the front page of the Wall Street Journal, 527 00:26:05,960 --> 00:26:08,840 Speaker 1: and I think, have I learned nothing from my career? 528 00:26:18,320 --> 00:26:19,880 Speaker 1: And that was the Money Stuff podcast. 529 00:26:20,200 --> 00:26:22,359 Speaker 2: I'm Matt Levine and I'm Katie Greifeld. 530 00:26:22,520 --> 00:26:24,680 Speaker 1: You can find my work by subscribing to the Money 531 00:26:24,680 --> 00:26:27,280 Speaker 1: Stuff newsletter on Bloomberg dot com. 532 00:26:27,119 --> 00:26:29,560 Speaker 2: And you can find me on Bloomberg TV every day 533 00:26:29,600 --> 00:26:32,520 Speaker 2: on the Clothes between three and five pm Eastern. 534 00:26:33,200 --> 00:26:35,199 Speaker 1: We'd love to hear from you. You can send an 535 00:26:35,240 --> 00:26:38,480 Speaker 1: email to money Pod at Bloomberg dot net, ask us 536 00:26:38,480 --> 00:26:40,480 Speaker 1: a question and we might answer it on the air. 537 00:26:40,880 --> 00:26:43,440 Speaker 2: You can also subscribe to our show wherever you're listening 538 00:26:43,520 --> 00:26:45,400 Speaker 2: right now and leave us a review. It helps more 539 00:26:45,400 --> 00:26:46,240 Speaker 2: people find the show. 540 00:26:46,960 --> 00:26:51,280 Speaker 1: The Money Stuff Podcast is produced by Anamasarakis, Moses Onm 541 00:26:51,680 --> 00:26:53,720 Speaker 1: and Alexis HoTT Our. 542 00:26:53,760 --> 00:26:55,639 Speaker 2: Theme music was composed by Blake. 543 00:26:55,359 --> 00:26:59,879 Speaker 1: Maples Amy Keen as our executive producer. Thanks for listening 544 00:26:59,880 --> 00:27:02,359 Speaker 1: to The Money Stuff Podcast. We'll be back next week 545 00:27:02,400 --> 00:27:09,480 Speaker 1: with more stuff. M