Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to the Money Stuff Podcast. You're a
Speaker 2: weekly podcast where we talked about stuff related to money.
Speaker 2: I'm Matt Levine and I write the Money Stuff column
Speaker 2: for Bloomberg Opinion.
Speaker 1: And I'm Katie Greifeld, a reporter for Bloomberg News and
Speaker 1: an anchor for Bloomberg Television.
Speaker 2: What are you telling about today, Katie?
Speaker 1: We're going to be talking about Purdue Pharma and non
Speaker 1: consensual third party releases. We're going to be talking about
Speaker 1: empty voting, and then we're going to talk about cryogenics. Yeah,
Speaker 1: the blood Farman.
Speaker 2: Yeah. But before that, there's only one piece of news
Speaker 2: this week.
Speaker 1: Yeah, come on, let's go. You gotta puppy. Tell us
Speaker 1: about this puppy. I've seen a ton of pictures and
Speaker 1: I want to hear you describe her for the audience.
Speaker 2: She is extremely cute. She is a wheat and terrier.
Speaker 2: She's eleven weeks old, is like mostly brown, like whetons
Speaker 2: are sort of beige when they grew up, but when
Speaker 2: they're babies, they're mostly brown, with like a black nose
Speaker 2: and black paws and a little white spot on her tummy.
Speaker 1: Yeah, it's pretty good man. Yeah, she has that cute
Speaker 1: dark face though, oh yeah, does she keep that? Like,
Speaker 1: how does it work with wheatons?
Speaker 2: All of their fur lightens and it becomes more uniform,
Speaker 2: but sometimes their muzzle is darker than the rest of them,
Speaker 2: but it won't stay black.
Speaker 1: Okay. Interesting because my parents have an Irish wolf found
Speaker 1: and we got her as a puppy. They did. I
Speaker 1: don't live with my parents, and she started out much
Speaker 1: darker and like her face was a bit darker and
Speaker 1: then she lightened out. So you're physically here, but I
Speaker 1: feel like you're probably thinking about the puppy I'm thinking about. Yeah,
Speaker 1: but you know what else we're thinking about?
Speaker 2: Non consentual third. Yes, Wow, we stuck transition.
Speaker 1: You were so right Purdue Pharma. This decision actually came
Speaker 1: down a little bit ago.
Speaker 2: Yeah, it's in the news this week and I read
Speaker 2: about it this week because they went back to bankruptcy
Speaker 2: court and they keep doing stuff. But basically if Perdue
Speaker 2: Pharma opioid manufacturer make Toxi Content responsible for untold devastation
Speaker 2: owned by the Sackler family and it went bankrupt a
Speaker 2: few years ago to basically deal with like fairly paying
Speaker 2: out the opioid claims from you know, victims and victims
Speaker 2: families and also like state attorney generals and as part
Speaker 2: of the bankruptcy, you know, basically like there's not that
Speaker 2: much money left in Purdue, although what's left is basically
Speaker 2: like we're going to continue to sell exi content and
Speaker 2: give the proceeds to the people who became addicted to
Speaker 2: oxy content. Right, they reached this deal to pay out
Speaker 2: the victims where they would take what's left of Purdue
Speaker 2: and give them, you know, money out of the continuing business.
Speaker 2: And they would also take six billion dollars give or
Speaker 2: take from the Sackler family who had owned Perdue, who
Speaker 2: had taken a lot of money out of Purdue over
Speaker 2: the years because it was this profitable company that made
Speaker 2: them billionaires, and they reached this deal with it. Sacklers
Speaker 2: would kick in six billion dollars and in exchange for that,
Speaker 2: the bankruptcy court would say, no one can sue the
Speaker 2: Sacklers anymore over opio It's their liability is capped at
Speaker 2: the six billion dollars they're putting back into the predy bankruptcy.
Speaker 2: And this was a controversial thing in bankruptcy law, where
Speaker 2: some bankruptcy courts thought you can do this. You can say,
Speaker 2: we're going to do what are called non consensual third
Speaker 2: party releases. We're going to say everyone's lawsuits against these
Speaker 2: people who are not in bankruptcy but are like connected
Speaker 2: to the bankruptcy, everyone's lawsuits are extinguished forever, and the
Speaker 2: bankruptcy court is just sort of like a powerful arbiter
Speaker 2: or a fairness could extinguish those claims. And this was
Speaker 2: controversial at the time and eventually went to the Supreme Court,
Speaker 2: and last month the Supreme Court said, no, you can't
Speaker 2: do that. Only essentially the company that's in bankruptcy can
Speaker 2: have all of its lawsuits terminated, so the sacklers can't
Speaker 2: get this sort of like universal release from liability. And
Speaker 2: so one thing that means is like the deal is
Speaker 2: off the sacklers. We're going to kick in six billion
Speaker 2: dollars of their mon It's not like sitting in a
Speaker 2: bank account. It's like in these trusts, it's overseas. It's
Speaker 2: like it'd be hard to get that money without them
Speaker 2: voluntarily giving it to you. And they said, we'll give
Speaker 2: you the six billion dollars. We'll still be rich. I
Speaker 2: keep a lot of the money who took out of
Speaker 2: Purdue over the years. But this way you'll certainly get
Speaker 2: the six billion dollars, which is better than you do
Speaker 2: if you had to try to sue US and foreign
Speaker 2: courts and all this stuff. And now that deal is
Speaker 2: off because the Supreme Court said the Sacklers can't get
Speaker 2: what they want from that deal. They can't get a
Speaker 2: total release from claims, and so now it's sort of
Speaker 2: in this limbo. And the thing that happened this week
Speaker 2: is that you know, it's back in the bankruptcy court,
Speaker 2: and the Purdue creditors, the people who are trying to
Speaker 2: get money out of Purdue, basically said they're going to
Speaker 2: file a lawsuit or they are seeking permission to file
Speaker 2: a lawsuit against the sacklers, trying to get money from
Speaker 2: the sacklers to kick back into the bankruptcy estate. Because
Speaker 2: that's kind of like how this goes. When the Supreme
Speaker 2: Court says you can't do this universal sediment, the next
Speaker 2: thing that happens is that Purdue itself sues the Sacklers
Speaker 2: to try to get some money out of them.
Speaker 1: Raises the question of what does this mean for other
Speaker 1: bankruptcy cases, if you don't have non consensual third party
Speaker 1: releases just practically or pragmatically speaking, whatever you want to
Speaker 1: say it, that seems like it would get pretty messy
Speaker 1: pretty quickly.
Speaker 2: Yeah, this is an unusual case, and that the sacklers
Speaker 2: are so personally identified with this and like they have
Speaker 2: a lot of money. But right, there are a lot
Speaker 2: of these what are called best toward bankruptcies where it's
Speaker 2: not just like a company owes money and like doesn't
Speaker 2: have enough money to pay it back, but it's like
Speaker 2: aspestos and tobacco, like the company does something dramatically harmful
Speaker 2: and ends up owing much more money than it ever made,
Speaker 2: and it's like people are looking around for third parties,
Speaker 2: often who made a lot of money running those companies,
Speaker 2: and if you can't get the third party release, then
Speaker 2: like those people are less likely to contribute to the bankruptcy. Now,
Speaker 2: it's an unusual case here because the sacklers took so
Speaker 2: much money out of who do and are quite rich,
Speaker 2: and so getting their money is like really important to
Speaker 2: the bankruptcy. There are a lot of other cases where
Speaker 2: it's like the company itself is the main source of
Speaker 2: money and so like you can still really claims against
Speaker 2: the company. That's what bankruptcy is, right, Like, the bankruptcy
Speaker 2: process is designed to end all lawsuits against Purdue and
Speaker 2: sort of parcel out the money among everyone who had
Speaker 2: a claim. But it's just that's Purdue, right, Purdue is
Speaker 2: in bankruptcy pre.
Speaker 1: Due pharma, perdue pharma, as we've been instructed to call it.
Speaker 2: Yes, right, when I wrote about this, I did occasionally
Speaker 2: call it Purdue, and I got an email from a
Speaker 2: student at Pretty University saying it is not the same thing.
Speaker 2: Please call it predy.
Speaker 1: Far school allegiance just runs deep.
Speaker 2: It's fair. You don't want to be associated with bad stuff.
Speaker 2: But anyway, you know that here, like most of the
Speaker 2: money went out to the sacklers, and so it's particularly
Speaker 2: important to have their contributions.
Speaker 1: So those two numbers, there are eleven billion dollars what
Speaker 1: the sacklers took from Purdue Pharma and six billion dollars
Speaker 1: what they've agreed to give to the victims. If they
Speaker 1: had agreed to give ten billion dollars, if their eleven
Speaker 1: billion dollars, do you think that we'd be having this conversation.
Speaker 2: First of all, they say all these public statements that
Speaker 2: a lot of that money they didn't really take out
Speaker 2: eleven billion dollars, it's like a lot of money when
Speaker 2: to paying taxes and so like. Really the six billion
Speaker 2: is much closer to all of the money that they
Speaker 2: took out than it is to half of the money
Speaker 2: that they took out or the No one thinks they're
Speaker 2: going to be poor after this, Yeah, but uh no,
Speaker 2: I mean the answer is no. The Supreme Court decided
Speaker 2: not a fairness question, but a legal question. I think
Speaker 2: it's tainted by the fact that people are really angry
Speaker 2: at the Sacklers. And I think there are a lot
Speaker 2: of other bankruptcy cases where the third party release was
Speaker 2: less controversial and like was clearly useful to getting a
Speaker 2: deal done, and like the Supreme Court took a case
Speaker 2: where the third party is particularly unsympathetic, where it's these
Speaker 2: billionaires who like sort of cause the help gide epidotg.
Speaker 2: But if you just like read the reasoning of the
Speaker 2: Supreme Court case, it has nothing to do with Rather,
Speaker 2: the settlement is fair and had they kicked in one
Speaker 2: hundred percent of their money and agreed to work for
Speaker 2: the victims for the rest of their lives, it's still
Speaker 2: they wouldn't get a third party release.
Speaker 1: So so no, we could talk about the descent.
Speaker 2: Yeah, I mean, like, I just it's a hard case.
Speaker 2: Like I think that bankruptcy is this weird area of
Speaker 2: law where it's like the bankruptcy court has a lot
Speaker 2: of power to kind of craft the deal that seems
Speaker 2: fairest to it, right, Like, it really is the case
Speaker 2: that bankruptcy gets rid of all of the lawsuits against Perdue, right,
Speaker 2: Like everyone has claims against Perdue, and the bankruptcy court says,
Speaker 2: all those claims are gone forever, and in exchange, you
Speaker 2: get whatever you get from the bankruptcy settlement, which could
Speaker 2: be pennies on the dollar, could be nothing. It extinguishes
Speaker 2: all the claims. Like that's what bankruptcy is. It's like
Speaker 2: dividing up and ending all the claims against the company.
Speaker 2: And because of that, bankruptcy courts are really in the
Speaker 2: business of like trying to craft fair deals and then
Speaker 2: like sort of imposing them on people who are making
Speaker 2: everyone unhappy. Basically like imposing a deal on everyone even
Speaker 2: if they object. And it's sort of natural for the
Speaker 2: bankruptcy court to say, well, in order to get the
Speaker 2: fair deal that like works the best. We need to
Speaker 2: not only end claims against Purdue, but we have to
Speaker 2: end these claims against the sacklers. And because that's part
Speaker 2: of like achieving our goal of fairness, it's like sort
Speaker 2: of part of our powers. But the Supreme Court said
Speaker 2: it's not really part of your powers, right, Like you
Speaker 2: only have jurisdiction over the bankruptcy, not over the you know,
Speaker 2: everyone else who comes into contact with it, and so
Speaker 2: it's not part of your powers. And I think there's
Speaker 2: like a good argument for that. It's just like a
Speaker 2: matter of law. But yeah, it was a five to
Speaker 2: four decision in the Supreme Court, and Justice Kavanaugh wrote
Speaker 2: this the sense saying, you know, this is a shiny
Speaker 2: example of the bankruptcy process. Right. The point of the
Speaker 2: bankruptcy is to get as much money as you can
Speaker 2: for the victims. And they did that, and they did
Speaker 2: it here by a sort of compromise that made everyone unhappy,
Speaker 2: but kind of like achieved the rough justice of getting
Speaker 2: as much money as possible for the victims. And then
Speaker 2: the Supreme Court says, no, you can't do that, and
Speaker 2: so now it's sort of in this limbo where probably
Speaker 2: the victims will get less money.
Speaker 1: Yeah, in that descent you wrote, because some victims or
Speaker 1: creditors may hold out for any potential future settlement for
Speaker 1: any one of those reasons and instead still sue, the
Speaker 1: Sacklers are less likely to settle with anyone in the
Speaker 1: first place. Maybe the clouds will part, but in a
Speaker 1: world where non consensual, non debtor releases are categorically impermissible,
Speaker 1: any hope for a new deal seems questionable. So we'll see.
Speaker 2: Yeah, And I wrote on Thursday that they're trying for
Speaker 2: a new deal, right, Yeah. The biggest claims against the
Speaker 2: Sacklers don't belong to like individual victims. They belong to Purdue.
Speaker 1: Right.
Speaker 2: The biggest claim against the Sackler is they took all
Speaker 2: this money out of Purdue, and Purdue has, like in
Speaker 2: bankruptcy claims that they should give the money back, and
Speaker 2: so they will bring those cases against the Sacklers, and
Speaker 2: they will hope that the Sacklers will settle those claims
Speaker 2: and we'll say, you know, we're not going to get
Speaker 2: released from all the other creditors, but we'll get released
Speaker 2: from Purdue, and that's like the biggest thing. So we're
Speaker 2: going to settle that. But will they settle that for
Speaker 2: six billion dollars. There's some chance that it is, in fact,
Speaker 2: if you're a fantasy that will get any money out
Speaker 2: of them.
Speaker 1: So watch this space. Let's talk about empty voting and
Speaker 1: politan versus Massimo, which you've described as a long, weird
Speaker 1: proxy fight.
Speaker 2: Okay, here's how weird it is. I suppose this company,
Speaker 2: it's like a health tech company. They like sued Apple
Speaker 2: over Apple Watch, like they're you know, they through something. Yeah,
Speaker 2: health pulls something.
Speaker 1: It was a big deal, like a year ago.
Speaker 2: Yeah. So anyway, but there's a company, public company, and
Speaker 2: Polotan is a hedgehund that ran a proxy fight complaining
Speaker 2: about how they run their business and one and got
Speaker 2: two seats on the board of directors, which has like
Speaker 2: five members. And so they're on the board and they're
Speaker 2: running another proxy fight to get more directors because they're
Speaker 2: like this company is still stonewalling us, like they're having
Speaker 2: three two board votes where like the Polotan guys lose
Speaker 2: out on the vote and they claim they're not getting
Speaker 2: enough information and they're sort of they're keeping the board
Speaker 2: in the dark. So it's this very like awkward boardroom
Speaker 2: tension where like the activist and the company's chairman are
Speaker 2: both in the boardroom at the same time and apparently
Speaker 2: still vehemently dislike each other. But anyay, they're running a
Speaker 2: proxy fight. So they're company is holding a shareholder meeting
Speaker 2: at the end of July to vote on whether the
Speaker 2: company's nominees or the Polyotan nominees will get elected. And
Speaker 2: Polotan just filed this letter saying that the company is
Speaker 2: doing some empty voting. So empty voting is like in theory,
Speaker 2: it's like you own one percent of the stock or whatever,
Speaker 2: and you get the votes for like ten percent of
Speaker 2: the stock. So like classically you like buy eleven percent
Speaker 2: of the stock, you short ten percent of the stock, right,
Speaker 2: so you're like long eleven percent, short ten percent. You're
Speaker 2: net long one percent, So you only own one percent
Speaker 2: of the stock, but you have eleven percent of the
Speaker 2: votes and then you vote way out of proportion to
Speaker 2: your economic interest. This is the thing that people like
Speaker 2: talk about as a concept a lot and you rarely
Speaker 2: see like actual cases of it, and here I'm not
Speaker 2: sure you see actual cases of it. But like Polytan says,
Speaker 2: you know, we got like the voting records and it
Speaker 2: seems like this one brokerage firm voted a lot of shares,
Speaker 2: like a lot more than it owned a week before
Speaker 2: the record date and a lot more than it owned
Speaker 2: a week after the record date. So what they think
Speaker 2: happened is essentially it borrowed that stock from other shareholders
Speaker 2: just around the record date for the vote, so that
Speaker 2: it would own ze point nine percent of the stock
Speaker 2: just at the vote, and then it got rid of
Speaker 2: that stock afterwards, so it never had the economic exposure.
Speaker 2: They say it's a brokerage firm affiliated with an investor
Speaker 2: who's a friend of the chairman of the company, and
Speaker 2: so it's like they called it a favor and like
Speaker 2: just got a lot of votes.
Speaker 1: How do you prove friendship? I mean, do they have
Speaker 1: a podcast together?
Speaker 2: What is this? It doesn't matter. Like if someone actually
Speaker 2: borrows ten percent of the stock to vote it and
Speaker 2: then that gets rid of it the next day, then
Speaker 2: that's weird. Yeah, that's weird. And then you know, like polytimes,
Speaker 2: I always should investigate it, right, and like if it
Speaker 2: turns out that the chairman of the company was like
Speaker 2: emailing the guy being like, hey, borrow ten percent of
Speaker 2: the stock so you can vote then that's bad, whether
Speaker 2: or not they have a podcast together.
Speaker 1: I was going to ask you that is it bad.
Speaker 1: They're alleging that this happened, et cetera, But is this
Speaker 1: not allowed?
Speaker 2: I don't know. I don't know. No one knows, right,
Speaker 2: I mean, like, this is the thing that people talk
Speaker 2: about and people like write papers about because I think
Speaker 2: it's interesting. It seems like it should be bad, right.
Speaker 2: It seems like the point of shareholder voting is that
Speaker 2: you own a portion of the company and you care
Speaker 2: about the company being good because it's like your stock, right,
Speaker 2: So you want the stock to go up, you want
Speaker 2: the company to be profitable, all those things, and so
Speaker 2: your votes are in proportion to your economic interest in
Speaker 2: the company. And if you find a way to get
Speaker 2: votes that are not in proportion to your economic interest,
Speaker 2: that seems like it's wrong and not how voting is
Speaker 2: supposed to work. But there's no actual rule that says
Speaker 2: your voting has to be in proportion to your economic interest. Then,
Speaker 2: you know, we've talked a lot about like the Paramount deal,
Speaker 2: where like the whole point of the Paramount deal is
Speaker 2: that Cherry Redstone owned like ten percent of the stock
Speaker 2: and had you know, seventy five percent of the votes, right,
Speaker 2: So it's not like a love of nature or as
Speaker 2: far as I can tell, a rule of the SEC
Speaker 2: that you need to have votes in proportion to your
Speaker 2: economic interest. Like I just don't think there's a rule
Speaker 2: that says, like if you own ten percent of the
Speaker 2: stock and then do a swap with a bank where
Speaker 2: you're short ten percent of the stock and so you
Speaker 2: have no net exposure and rule says you can't vote.
Speaker 1: I do wonder, like what the incentive for this brokerage
Speaker 1: firm associated with an investor who is a friend of
Speaker 1: the Massimo chairman. What is their incentive to do this
Speaker 1: beyond their friendship? You know, I have a lot of friends,
Speaker 1: and there's not a lot I would do for them.
Speaker 2: I feel like if I had a lot of money
Speaker 2: and someone was like, would you empty vote for me
Speaker 2: in a proxy fight, I would say yes, just because
Speaker 2: it's like a cool legal precedent. Yeah, Like I don't know,
Speaker 2: like you get it, yeah exactly, but no, I mean,
Speaker 2: like what's in it for them? But it's unclear how
Speaker 2: much it costs them, right, because like you do have
Speaker 2: to do it right, it's.
Speaker 1: Like the pain, Yeah, I mean the effort alone.
Speaker 2: There's some transaction costs. Loosely speaking, what you're doing is
Speaker 2: borrowing the stock for a couple of days, which is
Speaker 2: like you pay a stock borrow a fee, which is
Speaker 2: like for like most liquid stocks, it's like, yeah, on
Speaker 2: the order of twenty five basis points per anum, so
Speaker 2: it's like not that much, but it's yeah, little cost.
Speaker 2: But probably you're not literally just paying a stock biffy.
Speaker 2: Probably you're like doing something sort of thing where you're
Speaker 2: like buying the stock and simultaneously shorting it, or like
Speaker 2: buying the stock and doing a derivative. So you're playing
Speaker 2: some transaction costs. So it costs you money. It doesn't
Speaker 2: cost you like as much money as buying ten percent
Speaker 2: of the company, but it costs you some money. What's
Speaker 2: in it for them? I mean like literally one possibility
Speaker 2: is like there's no allegation they weren't a shareholder, right,
Speaker 2: And so if you're like a one percent sharehold of
Speaker 2: the company, and you think one side here is clearly
Speaker 2: right and one side is wrong and it's better for
Speaker 2: the company for Massimo to win this proxy fight, then
Speaker 2: doing this empty voting costs you a little bit of money,
Speaker 2: but it gets you the right result in the proxy fight,
Speaker 2: and then you're one percent stake is worth more. Right,
Speaker 2: So that's a possible explanation.
Speaker 1: Right, I mean that, but that comes back to the
Speaker 1: point you made that like in activist hedge fund, like
Speaker 1: they would want to have the economic exposure as well.
Speaker 2: Yeah, it's hard to know, right, Like loosely speaking, if
Speaker 2: you're an activist, you can own more than ten percent
Speaker 2: of a company's stock without like running into complicated issues
Speaker 2: around trading. Some people do, but it's like often activists
Speaker 2: will sort of cap themselves at nine point nine. A
Speaker 2: lot of activists will run proxy fights owning less than
Speaker 2: nine point nine percent because they're not that huge a
Speaker 2: fund and the company is big, right, Like you have
Speaker 2: you know, like the Engine number one proxy fight at
Speaker 2: Excellent where they own like essentially zero, but you know
Speaker 2: they own a tiny fraction of one percent of the
Speaker 2: company because they were a little hedge fund and xcelln
Speaker 2: A is a giant company, right, and so maybe they
Speaker 2: would have liked to own ten percent, but they didn't
Speaker 2: have that kind of money, and so they owned a
Speaker 2: lot less. It's a lot cheaper to buy votes than
Speaker 2: it is to buy stock. Right. I don't know how
Speaker 2: much cheaper, because it depends on the stock proa costing
Speaker 2: exactly how you structure the transaction, but like, yeah, it's cheaper.
Speaker 2: And so if you are an activist and like you
Speaker 2: are sort of capped out economically at like one or
Speaker 2: two percent of a company, you might want to get
Speaker 2: to ten percent of the company just to win the vote, right,
Speaker 2: just in empty voting. Now that's an interesting case because
Speaker 2: that's like, clearly your motivations there are good, you're just
Speaker 2: buying votes, right, but like you want the stock to
Speaker 2: go up, and you do have economic exposure to the stock.
Speaker 2: The really interesting case is like what if your motivations
Speaker 2: are to tank the stock?
Speaker 1: Right?
Speaker 2: I mean, like I wrote about this and people email me,
Speaker 2: like what if you're actually short, Like you're a short
Speaker 2: seller you want the stock to go down, right, you're
Speaker 2: short one percent of the stock. Why not get long
Speaker 2: eight percent of the stock and short nine percent of
Speaker 2: the stock and you're still net short and you still
Speaker 2: want the stock to go down, But now you have
Speaker 2: eight percent of the votes, you can like mess up
Speaker 2: the voting. Yeah, I don't think there's a ton of
Speaker 2: cases where you can actually do any damage to be
Speaker 2: accompanied by voting. But there are a few, right, The
Speaker 2: one that I thought of immediately is and this is
Speaker 2: hard to do just because of the size, But we
Speaker 2: talked about Elon Musk's compensation vote. We certainly had he
Speaker 2: lost that vote, I think the stock would have gone down, right,
Speaker 2: he might have quit in a huff, Right, this dog
Speaker 2: probably would have gone down. And then if you were short,
Speaker 2: you would have made a lot of money. And so
Speaker 2: if you were short, you know, two percent of Tesla
Speaker 2: and like you got to be short nine percent and
Speaker 2: long seven percent and like messed up his vote, then
Speaker 2: like you might have made some money on it. Now,
Speaker 2: you can't really do that because Tessla's enormous, but there's
Speaker 2: maybe some circumstances where you could be a short seller
Speaker 2: who gets some empty votes to like mess up some
Speaker 2: sort of shareholder vote.
Speaker 1: You know, I'm happy we're talking about this. I feel
Speaker 1: like we're getting closer and closer to talking about close
Speaker 1: end fun proxy fights.
Speaker 2: Oh yeah, I'm sure.
Speaker 1: Gosh, it's just I don't know, the inevitable tug of
Speaker 1: the universe pulling us towards talking we're going to talk
Speaker 1: about close unfund proxy fights, Yeah, anything else you'd like
Speaker 1: to ask.
Speaker 2: The only other thing I'd sad about ant the dding
Speaker 2: is like people say about this all the time in credit.
Speaker 2: In credit, there's a lot more you can do, And
Speaker 2: so you can buy up like fifty percent of some
Speaker 2: series of a company's bonds and be like much more
Speaker 2: short with credit default swaps than you are long bonds,
Speaker 2: and then you can like mess things up and so
Speaker 2: like the classic case, and no one knows if this
Speaker 2: is true for some reason, but like a company called
Speaker 2: Windstream basically like was forced into default by a hedge fund,
Speaker 2: Aurelius that owned a bunch of its bonds and said
Speaker 2: you've defaulted on these bonds, and it was widely rumored,
Speaker 2: never like really fully reported. Was widely rumored that Arelius
Speaker 2: bought a lot of CDs protection and it was net
Speaker 2: short the company's credit, which makes sense because it like
Speaker 2: bottled these bonds, said you're in default, and the value
Speaker 2: of the bonds dropped precipitously. So that's not a good
Speaker 2: trade unless you're also doing something else. But there's a
Speaker 2: lot of like people call it empty creditors, empty voting,
Speaker 2: and credit where you can be more short somewhere else
Speaker 2: and cause a lot of problems with their long position. Also,
Speaker 2: creditors can kind of do more to like cause problems.
Speaker 2: There's only so much to share. Older vote can do.
Speaker 1: Cool empty voting, empty voting voting. All right, Oh, now.
Speaker 2: We're cooking with frozen heads.
Speaker 1: I'm so excited to talk about this. There was just
Speaker 1: a fantastic article in bloom Earth is so talking about
Speaker 1: and interviewing a state attorneys for people who freeze themselves
Speaker 1: and want to be brought back to life. There's so
Speaker 1: many questions that I feel like they can't be answered,
Speaker 1: but they're so fun to talk about.
Speaker 2: Aaron Schilling right of it and says it's like a
Speaker 2: philosophy las hypothetical, and it really is. It's like Derek Parfect.
Speaker 2: It's like it's like if you were cloned, is like
Speaker 2: your new consciousness you or is it somebody else that matters?
Speaker 2: Is like a matter of like legal inheritance.
Speaker 1: Yeah. Absolutely. If you set money aside for two hundred
Speaker 1: years in the future and you're brought back to life,
Speaker 1: is that your money depends on what your trust says exactly?
Speaker 2: But are you you?
Speaker 1: Are you you?
Speaker 2: Because like one argument apparently some kinds of trust, you
Speaker 2: can't get the right tax benefits. You can't be the
Speaker 2: beneficiary of your own trust. And so for some people
Speaker 2: the answer that you want is no, you are not you.
Speaker 2: If you're brought back to life, you're a separate person,
Speaker 2: and therefore you can inherit from yourself. Well all the
Speaker 2: other contracts are you'd want answer to be the other way, like, no,
Speaker 2: I'm the same person, so I get to keep mine.
Speaker 1: I mean, if you freeze your brain, does your soul
Speaker 1: get frozen too when you're reanimated.
Speaker 2: I don't know that your soul like a separate third thing,
Speaker 2: which is like your legal person.
Speaker 1: Right, Well, someone makes care about your soul. Someone makes
Speaker 1: the point in this article one of the state attorneys
Speaker 1: that reversing a death certificate is super complicated. So for
Speaker 1: legal purposes, maybe you should be a different person when
Speaker 1: you wake up.
Speaker 2: Yeah. One thing you learn in law school is the
Speaker 2: rule against perpetuities. Are you familiar with the rule against perpetuities?
Speaker 1: Yes, we're all aware. I mean, I hope of the
Speaker 1: spy kids.
Speaker 2: The spy kids. Right, So the really against perpetuity says
Speaker 2: that certain kinds of trusts, traditionally all trusts can't go
Speaker 2: on forever. There are some places where it can't go
Speaker 2: on forever means they can't last more than one hundred
Speaker 2: years or whatever, which is like a natural thing. But
Speaker 2: the traditional rule is they can't last longer than lives
Speaker 2: in being plus twenty one years, So lives and being,
Speaker 2: I mean, you write some list of specific people who
Speaker 2: are alive today, and when the last of those people
Speaker 2: dies plus twenty one years, that's when your trust has
Speaker 2: to end. And so famously spy, the s you have
Speaker 2: is a.
Speaker 1: Trust, a unit investment trust.
Speaker 2: It's a unit investment trust, and it terminates when the
Speaker 2: last of like it's like what like thirty it's something.
Speaker 1: It's like something like like a dozen dish yeah people
Speaker 1: below twenty Yeah, when.
Speaker 2: The last of them dies twenty one years later, Spy ends, right,
Speaker 2: And like the people they're called the spy kids are
Speaker 2: all they are like the children of like people who
Speaker 2: worked at the at the company, the lawyers lawyers kids.
Speaker 2: Because that's what you do. You try to pick the
Speaker 2: longest life. And so you pick like twelve people, so
Speaker 2: like if one of them dies by a freak accident,
Speaker 2: you still got like eleven more. Yeah, and you pick
Speaker 2: young people because because then like they're likely to live
Speaker 2: longer than if you picked old people. And so that's
Speaker 2: the traditional really insperiputunities. But that doesn't help you if
Speaker 2: you're planning to be reanimated in two hundred years, because
Speaker 2: then everyone will be dead plus twenty one years, everyone
Speaker 2: alive of the time except you, maybe right, because like
Speaker 2: one question is like, if you're reanimated, do you spring
Speaker 2: back to life, and therefore the true springs back to life?
Speaker 1: I don't know.
Speaker 2: I don't know.
Speaker 1: Well, also, I mean looking for into the future, what
Speaker 1: if you set money aside and then you aren't reanimated,
Speaker 1: this never comes to fruition. What happens to the money eventually?
Speaker 1: And at what point do you just someone say, Okay,
Speaker 1: this clearly isn't going to work, let's crack open the
Speaker 1: piggy bank.
Speaker 2: Well, I think that the legal rule is still the
Speaker 2: rules perpetuities. Like I think the answer is, like, you
Speaker 2: know they do this in states where instead of like
Speaker 2: lives and being plus twenty one years, the rule is
Speaker 2: like trust can last for five hundred years, and so
Speaker 2: you set aside money and a trust, and it's like
Speaker 2: if I get reanimated, the money goes to me, and
Speaker 2: if not after five hundred years, that do against the
Speaker 2: charity or whatever, right, but like we'll all be dead.
Speaker 1: I mean, we'll speak for yourself, right exact Apparently.
Speaker 2: Like if you're not reanimated in five hundred years, like,
Speaker 2: no one cares about that.
Speaker 1: If I found out that I had an ancestor who
Speaker 1: left me some money five hundred years ago, right, right, well,
Speaker 1: I'd be psyched about it.
Speaker 2: Contingently, right, like, yeah, your ancestor left some money for
Speaker 2: himself to reanimate his frozen head, and then five hundred
Speaker 2: years later, his frozen he had still not reanimated, and
Speaker 2: it's like, okay, it goes to Katie.
Speaker 1: It's probably kind of gross too, because I, yeah, I
Speaker 1: don't know about this, sure, see, but apparently, by one estimate,
Speaker 1: about five five hundred people are planning for cryogenic preservation.
Speaker 1: That's actually I don't I was going to say that's
Speaker 1: so many people, but actually, in the grand scheme of things,
Speaker 1: that's not that many. I kind of want to be
Speaker 1: one of them, though. If it works, sure, if it works, yeah,
Speaker 1: but eventually we will die, Matt, so you might as well,
Speaker 1: you know, take a gamble on it. I will say though,
Speaker 1: like if my parents were some of these people who
Speaker 1: were like estate planning for their frozen heads, I would
Speaker 1: be so mad.
Speaker 2: It is a little I don't want to say selfish,
Speaker 2: but right, instead of the money going to your air
Speaker 2: as it goes to Maindaniel frozen.
Speaker 1: Head, yeah, I'd be like, I need this now, feel.
Speaker 2: Like the pretty small chance of maybe not small chance
Speaker 2: for some chance of reanimation.
Speaker 1: Yeah, I don't. Actually I have no idea either. I
Speaker 1: did love this quote though in the article This is
Speaker 1: from Mark House. He's an estate lawyer who works in Scottsdale, Arizona,
Speaker 1: and he says the idea of cryo preservation has gone
Speaker 1: from crack pot to merely eccentric, and now now that
Speaker 1: it's eccentric, it's kind of in vogue to be interested
Speaker 1: in it. Eccentric is such an interesting word because that
Speaker 1: is the word that wealthy people use to just say weird.
Speaker 1: You can be eccentric if you have money. If you
Speaker 1: don't have a lot of money, you're just a weirdo.
Speaker 2: Right, and you definitely need a lot of money to
Speaker 2: be excited.
Speaker 1: That money aside for exactly yeah, right. There's also I
Speaker 1: mean there's also the big question of like what currency
Speaker 1: are we going to use in five hundred years?
Speaker 2: Oh yeah, like you wake up and you need money, right,
Speaker 2: and like what if your dollars are worthless? Yeah, put
Speaker 2: in a bitcoin if your bitcoins are worthless, right or like?
Speaker 2: But also like along the way, like presumably there's some
Speaker 2: warehouse that is billing somebody to keep your head frozen.
Speaker 1: Just a warehouse of heads. It's this is just the
Speaker 1: perfect topic. I love this.
Speaker 2: I must say, Yeah, can we talk.
Speaker 1: About my novel? So I am such an egomaniac, like
Speaker 1: I actually believe that I have gold here. I have
Speaker 1: an idea for a sci fi novel. I'll talk about
Speaker 1: it in general terms. Is I really am worried someone's
Speaker 1: going to steal it and write it before I have
Speaker 1: a chance. But it involves blood farming, it involves time travel,
Speaker 1: and I mean there's a lot of ethical questions there. Yeah,
Speaker 1: like to save the human race if you needed to
Speaker 1: like farm people's blood. Is that okay?
Speaker 2: I don't know, Well maybe the financial podcast. I don't know.
Speaker 1: I'm worried I'm gonna get canceled, Like I don't know.
Speaker 2: A farm people's blood.
Speaker 1: I don't want to. But like if you traveled in
Speaker 1: the future and like through the method of travel the
Speaker 1: population was weakened and everyone had bad blood and you
Speaker 1: needed more blood, you know, what would you do? I
Speaker 1: don't know, blood farm.
Speaker 2: Yeah. Science fiction is always like these sort of like
Speaker 2: technological or like societal hypotheticals. But it's like what about
Speaker 2: the lawyers, right, It's like, what are the legal regimes
Speaker 2: applicable to these like science type of I mean, that's.
Speaker 1: The type of world building that you have to do
Speaker 1: in a sign line.
Speaker 2: You need to think about the trust in the states rules.
Speaker 1: I'm reading a book about fairies right now, which is
Speaker 1: just like straight fantasy, and I feel like you don't
Speaker 1: run into these kind of questions as much in fantasy
Speaker 1: that involves fairies and magic because you have magic, where
Speaker 1: a sci fi you know, you have to create a
Speaker 1: world where these rules make sense.
Speaker 2: I often think that you should have more of it
Speaker 2: in fantasy, right, because like the financial implications of like
Speaker 2: having magic, right, what kind of society would you have?
Speaker 1: I guess Harry Potter to try to tackle a lot
Speaker 1: of those questions.
Speaker 2: Some of them I remember had a bank, they had
Speaker 2: a bank. There's like some brief mention in Harry Potter
Speaker 2: that's like there's like some laws of somebody's laws of
Speaker 2: transfiguration where you can't like create food out of nothing
Speaker 2: or something. I forget exactly what it is. There are
Speaker 2: characters in Harry Potter who like don't have a lot
Speaker 2: of money. Yeah, like wizards, and it's like, well, they're wizards.
Speaker 2: They can do whatever, you know, they can like create
Speaker 2: stuff out of nothing. They could create magic, right, so
Speaker 2: like why do they not have a lot of money?
Speaker 2: And there's sort of like a nod in that direction,
Speaker 2: but it's like sort of perplexing.
Speaker 1: So like they can't create food out of nothing, but
Speaker 1: they do have spells that could kill.
Speaker 2: People, right, Yeah, so you could like.
Speaker 1: Yeah, exactly, you could get into gring gods, but then there's.
Speaker 2: Green gods, but like just a regular bank.
Speaker 1: Yeah, or you know, you walk into a shop.
Speaker 2: Right, yeah, take what you want, disappear.
Speaker 1: Yeah, there you go.
Speaker 2: Anyway, right, world building in science section.
Speaker 1: Yeah, anyway, I just feel like I've accomplished everything I
Speaker 1: want to in journalism, So it's time to.
Speaker 2: You've been a TV anchor in the right kound of
Speaker 2: TV anchor for four days.
Speaker 1: Yes, it's over anything else. Who want to say my dog.
Speaker 2: Is really cute? And that was the Money Stuff Podcast.
Speaker 1: I'm Matt Vivian and I'm Katie Greifeld.
Speaker 2: You can find my work by subscribing to The Money
Speaker 2: Stuff newsletter a Bloomberg dot com, and.
Speaker 1: You can find me on Bloomberg TV every day between
Speaker 1: ten to eleven am Eastern.
Speaker 2: We'd love to hear from you. You can send an
Speaker 2: email to you money dot at Bloomberg dot net, ask
Speaker 2: us a question and we might answer it on air.
Speaker 1: You can also subscribe to our show wherever you're listening
Speaker 1: right now and leave us a review. It helps more
Speaker 1: people find the show.
Speaker 2: The Money Stuff Podcast is produced by Anna Maserakus and
Speaker 2: Moses onam.
Speaker 1: Our theme music was composed by Blake Maples.
Speaker 2: Brandon Francis Nunhim is our executive producer.
Speaker 1: And Stage Bauman is Bloomberg's head of Podcasts.
Speaker 2: Thanks for listening to The Money Stuff Podcast. We'll be
Speaker 2: back next week with more stuff