WEBVTT - Tellers in Dallas: TSLA, FD, PE 0:00:02.720 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.200 --> 0:00:10.080 I'm really jealous that you're taking two weeks off. 0:00:10.280 --> 0:00:12.080 Yeah, I'm pretty you're already. 0:00:13.520 --> 0:00:15.520 I was going to say that, but I was going 0:00:15.600 --> 0:00:18.520 to say you're already pretty tan. Yeah, I feel like 0:00:18.560 --> 0:00:20.680 so I'm excited to see you after two weeks. 0:00:21.120 --> 0:00:23.880 I'm gonna work very rigorously. 0:00:23.400 --> 0:00:29.200 On my good I mean, were SPF please do it responsible. 0:00:28.760 --> 0:00:31.880 You come back and be like the colorless table for. 0:00:31.880 --> 0:00:36.879 Those table listening at home. It's a handsome mahogany o. 0:00:39.120 --> 0:00:39.559 Plastic. 0:00:40.320 --> 0:00:41.200 It's not real wood. 0:00:41.360 --> 0:00:44.960 It's maybe it is, I don't know what. But yeah, 0:00:45.000 --> 0:00:47.760 So I'm out for the next two weeks. 0:00:48.960 --> 0:00:49.600 I'll be here. 0:00:50.040 --> 0:00:52.960 Yeah, keep me up to date on the gossip. 0:00:53.200 --> 0:00:55.840 Yeah, plenty of tea. I'll keep the tea flowing. 0:00:56.960 --> 0:01:00.240 So this episode is coming on this Friday. You will 0:01:00.280 --> 0:01:01.400 have a mail bag. 0:01:01.880 --> 0:01:02.880 Mail bag. 0:01:03.440 --> 0:01:04.959 I'm gonna say we're gonna have a mail bag the 0:01:04.959 --> 0:01:05.720 following week. 0:01:05.959 --> 0:01:08.920 We're recording it directly after this episode, so it's actually 0:01:08.959 --> 0:01:11.520 still up in the air. Good to see if we. 0:01:11.760 --> 0:01:14.600 Right, we'll cut the enjoy it potentially, but like probably 0:01:14.600 --> 0:01:16.760 we're gonna have this episode out on August eighth and 0:01:16.800 --> 0:01:18.679 the mail bag out on August fifteenth, and then on 0:01:18.720 --> 0:01:21.600 August twenty second, you'll be alone with your thoughts. 0:01:21.840 --> 0:01:25.039 Money Stuff will go dark, but it'll be okay. I 0:01:25.040 --> 0:01:25.840 think we all need that. 0:01:25.880 --> 0:01:27.160 Recent twenty second. 0:01:27.520 --> 0:01:30.640 Yeah, you know. Actually I won't even be on air 0:01:30.720 --> 0:01:34.520 that day because it'll be our chick, our jackson Hole special. 0:01:34.680 --> 0:01:37.920 So let's all just enjoy jackson Hole together. You know, 0:01:38.000 --> 0:01:40.480 take a look at some central bankers in front of mountaintops. 0:01:40.680 --> 0:01:44.600 And we don't need to listen to a podcast that day. 0:01:44.880 --> 0:01:47.440 But you do need to listen to a podcast. 0:01:47.040 --> 0:01:49.920 Today, and we're going to really try hard to make 0:01:49.960 --> 0:01:50.640 this one good. 0:01:52.560 --> 0:01:56.440 You might Hello, and welcome to the Money Stuff Podcast, 0:01:56.760 --> 0:02:00.520 your weekly podcast where we talk about stuff related to money. 0:02:01.720 --> 0:02:03.720 I'm Matt Levian, and I write the Moneys Doff column 0:02:03.720 --> 0:02:04.680 for Bloomberg Opinion. 0:02:04.960 --> 0:02:07.960 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:02:08.000 --> 0:02:09.640 an anchor for Bloomberg Television. 0:02:10.919 --> 0:02:16.359 Kitty. I feel like I follow Elon must pay more 0:02:16.400 --> 0:02:20.320 than he does more than I don't think that's true. 0:02:20.840 --> 0:02:23.600 Way I believe you must pay. It is rumor that 0:02:23.600 --> 0:02:28.560 he follows my vacation schedule schedules his most insane activities 0:02:28.680 --> 0:02:30.239 for when I'm supposed to be on vacations that I 0:02:30.280 --> 0:02:32.360 have to write about them. I don't think this is true. 0:02:32.400 --> 0:02:35.000 I don't think he consciously going to find out, but 0:02:35.000 --> 0:02:37.679 we're gonna find out here. I am talking on a 0:02:37.720 --> 0:02:40.639 podcast about taking two weeks off. So if Elon does 0:02:40.639 --> 0:02:44.960 something really egregious in the next two weeks, you'll know why. 0:02:45.080 --> 0:02:49.880 Well, he should be happy or right now he got out? 0:02:50.000 --> 0:02:52.080 Or do you think thirty billion dollars makes him happy? 0:02:52.240 --> 0:02:55.239 I'm fine, it's. 0:02:56.440 --> 0:02:59.680 You know, I have to imagine. Maybe he's not completely happy, 0:02:59.720 --> 0:03:02.679 but he he's a degree happier than he was perhaps. 0:03:03.440 --> 0:03:06.560 So the news is that Tesla's board announced that it's 0:03:06.600 --> 0:03:10.360 going to give Elon Musk an interim award of twenty 0:03:10.400 --> 0:03:12.360 eight billion dollars worth of I was going to say 0:03:12.400 --> 0:03:15.640 stock options slightly Morgan's like restricted stock units with a 0:03:15.720 --> 0:03:18.440 strike price, but it's stock options whatever. They also giving 0:03:18.520 --> 0:03:21.440 him that as basically a good faith payment, because, as 0:03:21.440 --> 0:03:23.680 we've talked about on this pot a lot, he was 0:03:23.720 --> 0:03:28.040 awarded a bunch of options in twenty eighteen. They were 0:03:28.080 --> 0:03:30.280 all contingent on him making Tesla the giant company. He 0:03:30.320 --> 0:03:33.000 made Tesla the giant company he got the options. They're 0:03:33.040 --> 0:03:36.640 worth something like eighty seven billion dollars today, and then 0:03:36.840 --> 0:03:39.880 last year at Della Recurt said, no, those weren't valid. 0:03:40.520 --> 0:03:44.400 They go away. And so now Tesla's in this weird bind. 0:03:44.440 --> 0:03:46.200 They're like appealing the decision and stuff. They're trying to 0:03:46.240 --> 0:03:51.040 get him back that money, but there are various governance 0:03:51.080 --> 0:03:53.800 and tax and accounting and legal complications around getting him 0:03:53.800 --> 0:03:56.520 back that money, and they're still kind of figuring out 0:03:56.520 --> 0:03:58.839 how to do it. But as a good faith down 0:03:58.880 --> 0:04:02.119 payment on there desire to give him back those options, 0:04:02.360 --> 0:04:05.160 they gave him back twenty eight billion dollars of them 0:04:05.240 --> 0:04:08.800 this week. So you're asked if that made him happy. 0:04:08.880 --> 0:04:11.960 One thing I wonder is was it a surprise, because 0:04:11.960 --> 0:04:13.640 like the previous set of options, like he sort of 0:04:13.680 --> 0:04:17.040 negotiated with the board, you know, in twenty eighteen, and 0:04:17.120 --> 0:04:18.720 like there was obviously like you know, this is an 0:04:18.760 --> 0:04:22.200 incentive package that you know, we're giving you these targets 0:04:22.200 --> 0:04:24.080 that are super ambitious, but you know you think you 0:04:24.080 --> 0:04:26.920 can meet them. So that was like an employment deal 0:04:27.000 --> 0:04:29.480 that he struck with the board. Right, this is like 0:04:29.880 --> 0:04:32.440 this could have just been like surprise some of your 0:04:32.440 --> 0:04:35.000 money back. It's possible the board did it without him, 0:04:35.200 --> 0:04:36.880 which would be kind of funny. If he just woke 0:04:36.960 --> 0:04:38.880 up one day and, like, you know, at a twenty 0:04:38.920 --> 0:04:41.159 eight billion dollar transfer in his bank account, that'd be 0:04:41.160 --> 0:04:41.680 pretty cool. 0:04:41.960 --> 0:04:44.720 Why twenty eight billion? Why not just make it eighty 0:04:44.760 --> 0:04:45.400 seven billion. 0:04:45.839 --> 0:04:48.960 Part of it is like they're still figuring out what's happening, right, 0:04:48.960 --> 0:04:50.960 So this is like a down payment on figuring out 0:04:51.200 --> 0:04:53.760 the whole answer to this question. Right. If they win 0:04:53.800 --> 0:04:56.880 the appeal, this award goes away, and it's really easier 0:04:56.920 --> 0:05:00.800 to have given him less while they're on appeal. I 0:05:00.839 --> 0:05:04.400 think it's possible that part of the answer is that 0:05:06.680 --> 0:05:10.160 funny that this is to say that Tesla's board of 0:05:10.200 --> 0:05:13.720 directors and the special committee that gave him this award 0:05:14.200 --> 0:05:17.480 are independent and are thinking about their friduciary duty to 0:05:17.680 --> 0:05:22.480 Tesla's minority sholders or outside shoolders, and are thinking not 0:05:22.560 --> 0:05:26.159 only what would be nice for Elon, but also how 0:05:26.200 --> 0:05:29.159 do we motivate him to maximize the value of the company. 0:05:29.480 --> 0:05:31.400 And it's possible that giving him all of the options 0:05:31.440 --> 0:05:33.120 right now is not the answer to that question. It's 0:05:33.120 --> 0:05:36.599 possible that, like the ultimate structure they'll come to is 0:05:36.640 --> 0:05:39.160 something like, you get thirty billion dollars of this stuff 0:05:40.160 --> 0:05:43.240 and a new award with new targets that requires you 0:05:43.320 --> 0:05:46.320 to do new stuff. But for now, they give him 0:05:46.320 --> 0:05:51.800 this award and it has essentially two contingencies. One is 0:05:51.800 --> 0:05:54.599 that he has to say there for two years, which 0:05:55.400 --> 0:05:58.320 who knows, and the other one is that it goes away. 0:05:58.400 --> 0:06:01.080 If they win the appeal, he gets all the previous 0:06:01.080 --> 0:06:01.600 options back. 0:06:01.600 --> 0:06:03.560 He doesn't get these options twenty eighteen options. 0:06:03.640 --> 0:06:05.480 Yeah, so if he gets that, like nineteen thirty seven 0:06:05.480 --> 0:06:08.320 billion dollars, this is not additive to that. 0:06:08.400 --> 0:06:11.360 Like, so no double dipping, no double dipping. Isa, you 0:06:11.440 --> 0:06:15.160 talk about this a little bit in your column that Okay, 0:06:15.520 --> 0:06:18.160 it has these strings attached. It's contingent on him staying 0:06:18.160 --> 0:06:19.039 there for two years. 0:06:19.200 --> 0:06:21.960 Very few strings. Well, like, sure he has to say 0:06:22.000 --> 0:06:24.239 there for two years, but it's like a fourteen billion 0:06:24.279 --> 0:06:25.239 dollars a year payback. 0:06:25.400 --> 0:06:28.159 But isn't I don't know. Isn't a little weird that, Okay, 0:06:28.160 --> 0:06:30.359 you have to stay here another two years, but also 0:06:30.480 --> 0:06:33.080 this is making good on our promise for things you 0:06:33.120 --> 0:06:34.000 already Yeah, I. 0:06:34.000 --> 0:06:36.440 Agree with you. It's a little weird if their mentality 0:06:36.480 --> 0:06:39.400 is truly like we owe you this and we're giving 0:06:39.400 --> 0:06:42.520 it to you no matter what. Then you're right, he 0:06:42.560 --> 0:06:45.159 shouldn't have this there for two years. But I don't 0:06:45.160 --> 0:06:46.960 think they can really do that. I think they really 0:06:47.000 --> 0:06:50.120 have to be like in a posture of like, we 0:06:50.160 --> 0:06:53.480 are maximizing value for the shareholders, and we have to 0:06:53.520 --> 0:06:55.839 get something going forward from it. And if we're just 0:06:55.880 --> 0:06:59.120 giving Elon Musk twenty eight billion dollars on his way 0:06:59.120 --> 0:07:02.640 out the door, then that is not a good use 0:07:02.680 --> 0:07:05.719 of shareholder resources, even if it's in some sense fair true. 0:07:05.960 --> 0:07:09.279 Also like it doesn't seem like that big an ask 0:07:10.200 --> 0:07:14.480 like years, it's like, you know, his main source of 0:07:14.560 --> 0:07:17.240 wealth more or less. And also like it's not that 0:07:17.280 --> 0:07:21.160 big an asking in the sense that, like you and I, 0:07:21.160 --> 0:07:24.160 if we got like a great job opportunity, we would 0:07:24.200 --> 0:07:26.800 have to sadly quit this job to pursue that great job. 0:07:27.520 --> 0:07:29.480 That is not a problem for Elon Musk. He can 0:07:29.520 --> 0:07:31.800 have as many jobs as he wants. Like, they're not 0:07:31.840 --> 0:07:34.840 requiring him to only work at Tesla for two it's 0:07:34.840 --> 0:07:35.880 just like to have it. 0:07:35.880 --> 0:07:38.480 You know, have his name on the door for continuously 0:07:38.680 --> 0:07:40.920 right intermittently. 0:07:41.080 --> 0:07:44.760 Yeah, an alternate two days so I think it's fine. 0:07:44.800 --> 0:07:46.280 I think he's like not a big ass, right, Like 0:07:46.320 --> 0:07:48.520 he can spend one hundred percent of his time elsewhere 0:07:48.560 --> 0:07:51.000 for two years and still be the CEO of Tesla. 0:07:51.160 --> 0:07:57.320 So yeah, which is so would argue that's what's been happening. 0:07:57.960 --> 0:07:58.960 Many would argue. 0:08:00.280 --> 0:08:00.440 Quo. 0:08:00.600 --> 0:08:01.920 And I think, you know, again, like the board, like 0:08:01.920 --> 0:08:03.760 they're doing two things right. They're trying to be fair 0:08:03.800 --> 0:08:05.960 to Elon, which I think is like a legitimate concern. 0:08:06.040 --> 0:08:09.160 Like I think the board things and Elon things. I 0:08:09.160 --> 0:08:11.720 think they have a real point that he earned this 0:08:11.800 --> 0:08:13.840 eighty seven billion dollars of options, and so you should 0:08:13.840 --> 0:08:16.800 get them and just retroactively, he should get them for 0:08:17.160 --> 0:08:19.520 his prior work. Right, So they're trying to be fair, 0:08:19.680 --> 0:08:21.560 But they're also trying to you know, do good things 0:08:21.600 --> 0:08:24.960 for the company and situate the company well going forward. 0:08:25.040 --> 0:08:27.480 And so you know, their announcement is not just like 0:08:27.560 --> 0:08:29.440 literally like yes, I have a name there for two 0:08:29.440 --> 0:08:32.280 more years. It's like we need him to focus on 0:08:32.400 --> 0:08:36.720 building AI and like attracting talent to this company because 0:08:36.840 --> 0:08:39.480 we're in an arms race for AI and Tesla is 0:08:39.480 --> 0:08:43.240 an AI company. You know, Kittie's rolling rys. It's reasonable 0:08:43.240 --> 0:08:46.679 because like Elmos does have an AI company that's not Tesla. 0:08:46.880 --> 0:08:50.000 Yeah, but like Tesla is, you know, it's valued like 0:08:50.040 --> 0:08:50.400 an AI. 0:08:50.880 --> 0:08:52.680 It's not valued like a car company that sells as 0:08:52.720 --> 0:08:56.120 many cars as itself. Right, It's valued like the future 0:08:56.160 --> 0:09:00.920 of life, robotics, AI something, some thing something, And so 0:09:01.720 --> 0:09:03.959 to you know, live up to that valuation, they need 0:09:04.000 --> 0:09:07.480 to keep him around to be their futurist in residence. 0:09:07.760 --> 0:09:11.920 Yeah. I anchor a television show with Matt Miller. Yeah, 0:09:12.080 --> 0:09:15.959 and he's a car guy, So talking about Tesla makes, 0:09:16.040 --> 0:09:17.560 you know, smoke come out of his ears. When we 0:09:17.559 --> 0:09:20.160 talk about the fact that it's a trillion dollar company, 0:09:20.200 --> 0:09:23.680 you add up the market caps of the big three Stilantis, Ford, 0:09:23.760 --> 0:09:25.840 and GM and it comes out to less than one 0:09:25.880 --> 0:09:28.480 hundred and fifty billion dollars, which shocked me. Actually, I 0:09:28.480 --> 0:09:32.959 didn't realize it was that low. So a trillion dollars, Yeah, 0:09:33.200 --> 0:09:34.960 I wanted to talk a little bit more about the 0:09:35.000 --> 0:09:40.280 fact that, Okay, if we're talking about this options package, 0:09:40.320 --> 0:09:42.600 the thirty billion dollar one, so Tesl would take an 0:09:42.720 --> 0:09:45.840 enormous tax hit if this happens. 0:09:45.520 --> 0:09:47.559 Well, Elon Muss would take a tax hit. 0:09:47.840 --> 0:09:49.960 Elon Muss would take a tax hit, Tesla would take 0:09:49.960 --> 0:09:51.440 a hit to their earnings. 0:09:51.480 --> 0:09:51.800 Correct. 0:09:51.920 --> 0:09:53.520 Yeah. Basically, the way it works is that when they 0:09:53.520 --> 0:09:57.520 granted the options in twenty eighteen, they were, for accounting purposes, 0:09:57.840 --> 0:10:00.760 kind of worthless because they were at the money, so 0:10:00.840 --> 0:10:03.240 they were not like a gift of stock that day. 0:10:03.600 --> 0:10:06.400 And because they had these really aggressive conditions where you know, 0:10:06.440 --> 0:10:08.480 it's like a sixty billion dollar company, you would have 0:10:08.520 --> 0:10:10.200 to grow it into a six hundred and fifty billion 0:10:10.240 --> 0:10:12.640 dollar company to get all the options, and so you 0:10:12.640 --> 0:10:14.800 can go to your accounts and say, that's not very 0:10:14.840 --> 0:10:17.560 likely to happen. So the value of this grant day 0:10:17.559 --> 0:10:20.680 one is not very much. When they do it retroactively, now, 0:10:21.000 --> 0:10:23.200 the value of the grant day one is kind of 0:10:23.240 --> 0:10:29.439 twenty eight billion dollars. But they apparently this is a 0:10:29.600 --> 0:10:32.240 disclosure and it's at a little unclear while though I 0:10:32.280 --> 0:10:35.439 have my assumptions. They apparently went to the accounts and 0:10:35.480 --> 0:10:37.440 said it's very unlikely that he'll get these options, and 0:10:37.440 --> 0:10:39.920 so they're worth nothing, and the accounts a great and 0:10:40.000 --> 0:10:41.720 so they say right now that they plan to not 0:10:42.080 --> 0:10:44.719 incur any expense for the options because it's unlikely that 0:10:44.760 --> 0:10:47.600 the performance conditions of the options will be met, but 0:10:47.640 --> 0:10:50.560 there are no performance conditions. So we talked about the 0:10:50.559 --> 0:10:52.640 two conditions, which are one he has to say that 0:10:52.679 --> 0:10:55.480 for two years, and two these go away if he 0:10:55.520 --> 0:10:57.800 gets back the previous charge, like basically, if they win on. 0:10:57.760 --> 0:11:01.760 Appeal court case, it's a Delaware decision is overturned returned. 0:11:01.840 --> 0:11:05.320 Yeah, And so what I think they're saying is that 0:11:05.400 --> 0:11:07.559 there is a less than like twenty five percent chance 0:11:08.800 --> 0:11:12.160 of both of those conditions being met. That is, either 0:11:12.520 --> 0:11:16.480 they're very confident that the Delaware decision will be overturned, 0:11:17.160 --> 0:11:20.040 or they're very confident that he lends going to quit 0:11:20.080 --> 0:11:23.679 in the next two years, or they believe like the 0:11:23.760 --> 0:11:26.360 joint probability of neither of those things happening is very low, right, 0:11:26.400 --> 0:11:29.440 Like they think if the decision is not overturned, hell 0:11:29.520 --> 0:11:32.800 quit something like that. So this is a funny little 0:11:32.880 --> 0:11:36.400 like I don't know what those conversations with their accountants 0:11:36.440 --> 0:11:39.839 were like, but I found it amusing that, Yeah, they 0:11:39.840 --> 0:11:42.320 would not have a high degree of confidence of him 0:11:42.360 --> 0:11:44.360 meeting these very limited performance. 0:11:43.880 --> 0:11:47.360 Conditions, but it seems like, I don't know, listening to that, 0:11:47.360 --> 0:11:50.000 that they seem somewhat confident that the Delaware decision. 0:11:50.160 --> 0:11:51.800 Beeve weird to go to your accountant and be like, 0:11:51.800 --> 0:11:55.679 this one hundred page opinion by the Delaware chancellor is 0:11:55.720 --> 0:11:58.680 obviously wrong in the accounts, Like, yeah, it's obviously wrong. 0:11:58.960 --> 0:12:00.840 That's going to be overturned. Like, you know, I don't 0:12:00.840 --> 0:12:02.720 think they got a legal opinion saying this is definitely 0:12:02.760 --> 0:12:04.679 going to be overturned. Maybe they did. I don't think 0:12:04.679 --> 0:12:06.440 it's crazy, by the way, Like it's kind of a 0:12:06.440 --> 0:12:09.520 weird opinion. It's kind of a weird outcome. Like there's 0:12:09.559 --> 0:12:13.240 this weird political environment where Delaware is losing companies. You 0:12:13.240 --> 0:12:16.599 could imagine it being there's the reasons it would be overturned, 0:12:16.960 --> 0:12:19.320 but it's not like, oh, it's definitely going to be overturned. 0:12:20.520 --> 0:12:24.000 History in real time and we are chronicling it. 0:12:24.440 --> 0:12:26.319 Not for the next two weeks or not that's true. 0:12:26.800 --> 0:12:30.120 Who knows. I didn't say anything about his political activities, 0:12:30.240 --> 0:12:34.120 Like you think about the the serious overhand over the stock. 0:12:34.240 --> 0:12:37.040 No, you're the Tesla board and you're like, OKAYLN, in 0:12:37.160 --> 0:12:39.840 order to get your twenty eight billion dollars of options, 0:12:40.000 --> 0:12:43.520 you have to not do a list of bad things, right, 0:12:43.520 --> 0:12:45.360 we're the list of bad things, Like Okay, sure it 0:12:45.400 --> 0:12:48.160 starts with like enraging customers by doing political activities and 0:12:48.160 --> 0:12:50.520 then go out to like Ketamane and like, you know, 0:12:51.360 --> 0:12:54.080 running seven other companies. Like no, he would much rather 0:12:54.160 --> 0:12:56.120 have his complete freedom to do whatever he wants. And 0:12:56.160 --> 0:13:01.400 then twenty eight billion dollars. I mean, I'm speculating that. 0:13:02.320 --> 0:13:03.520 I talked to him this morning. 0:13:03.559 --> 0:13:06.440 I don't know, Like it's easy for me. 0:13:08.320 --> 0:13:10.400 We're just talking about plenty of money at this point. 0:13:10.400 --> 0:13:13.640 Right, He's like, right, we are talking about funny money. Yeah, 0:13:13.760 --> 0:13:16.440 Like he lives in a state in which if he 0:13:16.520 --> 0:13:19.720 wanted any number of dollars to do anything, he could 0:13:19.720 --> 0:13:22.240 snap his fingers and it would like magically appear. So 0:13:22.480 --> 0:13:26.760 like there is a sense of fairness. There is a 0:13:26.800 --> 0:13:28.960 sense of like, you know, wanting to have a certain 0:13:29.000 --> 0:13:31.800 ownership of Tesla. There's all this stuff that goes into 0:13:31.880 --> 0:13:34.079 him wanting to have tens of billions of dollars of 0:13:34.120 --> 0:13:37.080 Tesla actions. But if he needs money to do something, 0:13:37.080 --> 0:13:38.240 he'll find money to do something. 0:13:38.720 --> 0:13:41.400 He's going to be all right, Gus, he wants to 0:13:41.440 --> 0:13:59.440 be okay, how about corporate actions? 0:13:59.440 --> 0:14:00.600 About corporate access? 0:14:01.200 --> 0:14:06.040 Bradley Sacks over a business insider Bloomberg along great peace 0:14:06.080 --> 0:14:07.319 out about. 0:14:07.080 --> 0:14:09.000 Like the big hedge funds and corporate access. I love 0:14:09.000 --> 0:14:12.280 corporate access because it's like it makes no sense, No, 0:14:12.559 --> 0:14:15.079 it makes total sense, but like it makes people insane. 0:14:15.440 --> 0:14:22.280 Corporate access is like investors largely big you know, institutional investors, hedgehunds, 0:14:22.320 --> 0:14:26.440 and like mutual fund matters. Investors like to meet with 0:14:26.520 --> 0:14:28.800 the companies who shares they own and the companies who 0:14:28.880 --> 0:14:31.280 shares their considering buying. And they will sit down with 0:14:31.320 --> 0:14:35.000 the CEO and be like, so, how's business, And they 0:14:35.080 --> 0:14:39.320 learn things in these meetings. Theoretically, No, theoretically they don't, 0:14:39.400 --> 0:14:41.920 right because, like you know, the US has rules saying 0:14:41.960 --> 0:14:45.840 that regulation FD says that companies can't disclosed material and 0:14:45.880 --> 0:14:49.160 public information to some investors without disclosing it publicly to everyone. 0:14:50.200 --> 0:14:54.040 And yet these meetings happen, and you know that they 0:14:54.160 --> 0:14:57.760 learn something because one they keep doing the meetings, right. Sure, 0:14:58.000 --> 0:15:00.000 you know, people don't waste their time for no reason, right, 0:15:00.040 --> 0:15:02.280 Like they think they're learning something. And then it's like 0:15:02.320 --> 0:15:03.880 a little hard to study. But there are some empirical 0:15:03.880 --> 0:15:06.680 studies where academics like look at these meetings and they 0:15:06.680 --> 0:15:09.960 find that investors who have meetings with management then make 0:15:10.040 --> 0:15:12.840 more informed trading decisions than they do if they don't 0:15:12.840 --> 0:15:15.080 have the meetings. So it's clear that these meetings have 0:15:15.120 --> 0:15:19.720 some value. And you know, it's like this gray intermediate 0:15:19.720 --> 0:15:22.880 area between. They can't get material on public information, right, 0:15:22.920 --> 0:15:24.640 Like the company can't be like, oh, our earnings are 0:15:24.640 --> 0:15:26.160 going to be really good next quarter if they haven't 0:15:26.160 --> 0:15:28.360 already given guidance on the earnings. They can't be like, oh, 0:15:28.400 --> 0:15:29.600 we're getting acquired next week. 0:15:29.640 --> 0:15:29.760 Right. 0:15:29.800 --> 0:15:32.880 They can't give like big material information, but they can 0:15:32.880 --> 0:15:34.840 talk about how they think about the business. They can like, 0:15:35.000 --> 0:15:36.520 you know, talk through the model. They can do a 0:15:36.520 --> 0:15:40.120 lot of helpful stuff for the investors where the investors 0:15:40.160 --> 0:15:45.640 come away learning something without being spoon fed next quarter's earnings. 0:15:45.800 --> 0:15:46.000 Yeah. 0:15:46.720 --> 0:15:49.240 The thing that people always say about this to make 0:15:49.280 --> 0:15:54.200 themselves feel better is that the investors can get a 0:15:54.280 --> 0:16:01.680 read on the executive's tone and body language. On its face, absurd, yes, 0:16:02.520 --> 0:16:05.000 but people keep saying it. They're like, oh, yeah, they 0:16:05.000 --> 0:16:07.120 don't say anything that they haven't already said, but the 0:16:07.240 --> 0:16:08.560 body language tells you something. 0:16:08.600 --> 0:16:11.240 So I can tell you it probably lost its edge 0:16:11.320 --> 0:16:13.400 during the pandemic when you were all on zoom. And 0:16:13.440 --> 0:16:14.440 it's a lot harder to see. 0:16:14.960 --> 0:16:17.080 Oh, that's an interesting question. I feel like there are 0:16:17.120 --> 0:16:20.720 studies and I don't know them, because like that would 0:16:20.760 --> 0:16:22.760 tell you something, right, Yeah, if it in fact lost 0:16:22.760 --> 0:16:25.160 its edge on the pandemic, then that would tell you 0:16:25.600 --> 0:16:28.560 that tone and body language mattered a lot. Yeah, and 0:16:28.600 --> 0:16:31.840 when people are only getting zoom calls, they got less information, 0:16:32.240 --> 0:16:34.840 whereas my thesis is that in fact they're being told 0:16:34.880 --> 0:16:37.800 information and tone in body language is just a euphemism. 0:16:38.160 --> 0:16:40.520 And so in the pandemic, as you get on a 0:16:40.600 --> 0:16:42.600 zoom call and you're like, so, walk me through how 0:16:42.600 --> 0:16:45.000 you're thinking about strategy, and the executive tells you they're like, 0:16:45.040 --> 0:16:45.840 still informative. 0:16:46.120 --> 0:16:50.280 Yeah, someone should do that. I guess I come at 0:16:50.360 --> 0:16:53.760 it from a skeptical lens as a journalist who talks 0:16:53.800 --> 0:16:57.640 to a lot of CEOs. Not to besmirch any CEOs, 0:16:57.680 --> 0:17:00.240 but a lot of them just follow the script. And 0:17:00.480 --> 0:17:02.840 I mean you listen to them speak at conferences, and 0:17:03.640 --> 0:17:05.679 you know, it's hard to get new news out of 0:17:06.280 --> 0:17:06.960 someone in the C. 0:17:07.000 --> 0:17:10.720 Suite maybe three answers that one you don't five percent 0:17:10.760 --> 0:17:13.600 of their stock. It's possible that a conversation with an 0:17:13.600 --> 0:17:17.639 investor is a different framework from a conversation at a 0:17:17.680 --> 0:17:20.800 conference with a journalist, right, Like, they're media trained, but 0:17:20.840 --> 0:17:25.480 they're trained differently to talk to investors. Right. Two, you 0:17:25.560 --> 0:17:28.760 do not have CIA interrogators to understand their body language. 0:17:28.880 --> 0:17:33.119 Apparently some edge ones that do. And then did I 0:17:33.160 --> 0:17:33.520 have a third? 0:17:33.760 --> 0:17:36.120 You said you had three, so you got to think 0:17:36.160 --> 0:17:39.760 of something. Okay, I'm reading your body language right now, 0:17:39.800 --> 0:17:43.600 and it seems like you're really trying to think. Okay. 0:17:45.480 --> 0:17:48.600 The third point is like you could imagine the investors 0:17:48.600 --> 0:17:51.280 asking different questions because they're not trying to make news. 0:17:51.320 --> 0:17:54.280 That's like like they're trying to make very incremental news, right, 0:17:54.280 --> 0:17:57.080 They're trying to find out like like update their model. 0:17:57.440 --> 0:18:00.040 Well, that was part of the piece. Bradley wrote a 0:18:00.080 --> 0:18:04.200 out how one of the complaints is that the questions 0:18:04.200 --> 0:18:07.000 that are being asked or like becoming so niche to 0:18:07.040 --> 0:18:08.680 the point that they're not useful anymore. 0:18:08.720 --> 0:18:10.439 Oh, I know what my third point was. Okay, My 0:18:10.520 --> 0:18:13.359 third point was that actually in this piece, several investors 0:18:13.359 --> 0:18:16.119 complain that in fact, they have the same point you do, 0:18:16.160 --> 0:18:18.159 which is that the CEOs are now so scripted that 0:18:18.200 --> 0:18:20.600 these meetings have become less useful than it used to be. Yeah, 0:18:20.840 --> 0:18:22.800 not just because the questions are very granular, which is 0:18:22.840 --> 0:18:26.800 like their questions are granular because hedge funds are competing 0:18:26.920 --> 0:18:31.560 to like add extremely granular information to like the information set, 0:18:31.720 --> 0:18:34.679 and so they have very detailed questions, which sometimes annoy 0:18:34.800 --> 0:18:36.840 CEOs who want to talk about like the big pictures. 0:18:36.880 --> 0:18:39.120 Make sure, come on, here's my strategy. Isn't it great? 0:18:39.920 --> 0:18:42.320 Right? I mean the THESS Like the point of this 0:18:42.359 --> 0:18:44.359 piece and what I read about it is that like 0:18:44.680 --> 0:18:46.840 in my role, do you think of like the prestige 0:18:46.840 --> 0:18:50.040 and importance of investment firms and like right now, the 0:18:50.080 --> 0:18:54.560 big four multi strategy hedge funds like the Citadel Millennium 0:18:54.680 --> 0:18:57.639 point seventy two vali Asnis of the world are really 0:18:57.680 --> 0:19:00.680 like on the ascendant, Like they're really prestigious, really sort 0:19:00.680 --> 0:19:05.000 of top employers and the asset management business. But when 0:19:05.040 --> 0:19:08.000 you think about what a CEO wants, they don't want 0:19:08.040 --> 0:19:09.520 to meet with those guys. They want to meet with 0:19:09.560 --> 0:19:11.600 Fidelity and Wellington. They want to meet with long arming 0:19:11.640 --> 0:19:15.000 managers for a number of reasons, one of which is 0:19:15.040 --> 0:19:19.240 that the long only managers have longer tenure, both like 0:19:20.160 --> 0:19:23.320 they hold the stock for decades and also like the 0:19:23.359 --> 0:19:26.200 portfolio managers for decades, whereas like you know, the big 0:19:26.240 --> 0:19:29.520 hedge funds, they're constantly churning through portfolio managers, and they're 0:19:29.520 --> 0:19:31.880 constantly turning through stocks, and so like if you talk 0:19:31.920 --> 0:19:34.359 to Citadel because they own your stock this week, they 0:19:34.400 --> 0:19:36.320 made it own it next week or maybe a different person. 0:19:37.119 --> 0:19:38.720 But there are other reasons, one of which is that 0:19:38.960 --> 0:19:41.240 the hedge funds have these really granular questions, like they're 0:19:41.240 --> 0:19:43.480 really interested in, like what's going to drive the stock 0:19:43.520 --> 0:19:45.639