WEBVTT - Reddit Traders Beat The Masters of the Universe: Jim Bianco 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.439 and on Bloomberg dot com. A big new player with 0:00:20.560 --> 0:00:23.200 lots of money and sophistication has entered the game, and 0:00:23.200 --> 0:00:26.560 it's probably not going away. That's what Jim Bianco, our 0:00:26.640 --> 0:00:29.440 next guest, says, Wall Street never saw the Redators coming. 0:00:29.680 --> 0:00:33.320 To Bianco as president of Bianco Research and Bloomberg Opinion columnist, 0:00:34.400 --> 0:00:36.920 Jim just first of all, on today's action. Are the 0:00:37.040 --> 0:00:39.440 rehdators sort of retreating just a little bit into their 0:00:39.440 --> 0:00:43.120 corners in preparation for something else big? Or they just 0:00:44.280 --> 0:00:47.560 now sort of having executed their plan for game stop? 0:00:47.600 --> 0:00:50.920 Are they sort of just retreating in general? I think 0:00:50.920 --> 0:00:54.440 that the retreating from the trade um they won. The 0:00:54.440 --> 0:00:58.280 announcement was yesterday when we found out that the gigantic 0:00:58.400 --> 0:01:01.680 short in the in game stock and some of these 0:01:01.680 --> 0:01:05.199 other stocks was covered by the hedge funds. The hedge 0:01:05.200 --> 0:01:08.720 funds took a big loss. They walked away, and now 0:01:08.880 --> 0:01:11.880 the short squeeze is ending, and so that they're all 0:01:11.880 --> 0:01:15.320 exiting the trade right now, and they're exiting presumably in a 0:01:15.280 --> 0:01:18.480 a big loss. Dave Portnoy texting, are sending out a 0:01:18.520 --> 0:01:21.039 tweeting he lost seven hundred thousand dollars on the mean 0:01:21.160 --> 0:01:25.360 stocks here. This is I mean, the retail investors are 0:01:25.360 --> 0:01:28.640 getting crushed here, aren't they. No, they're not getting crushed. 0:01:28.640 --> 0:01:31.120 There are some that are losing. Portnoy loss some money, 0:01:31.120 --> 0:01:33.760 but that's not a big loss for him. He'll be back, 0:01:33.880 --> 0:01:36.520 you know, probably with a bigger gainer loss by the 0:01:36.600 --> 0:01:38.680 end of the week if you follow him like like 0:01:38.840 --> 0:01:42.560 I do closely. Um, a lot of the a lot 0:01:42.600 --> 0:01:44.839 of the buying on all the way up to the top, 0:01:44.880 --> 0:01:47.360 which we found out now was a shortcover. It wasn't 0:01:47.400 --> 0:01:51.320 necessarily retailed. Look, if the answer is there's seven point 0:01:51.360 --> 0:01:53.520 five million people in Reddit that some of those people 0:01:53.600 --> 0:01:55.920 lose with the market with this stock going down. Yes, 0:01:56.600 --> 0:02:00.360 So if you're asking us the perfection in the trade, um, no, 0:02:00.520 --> 0:02:03.240 there isn't. But if you said, here's a group of 0:02:03.240 --> 0:02:06.640 hedge funds, here's a group of retail traders who did 0:02:06.720 --> 0:02:10.400 better the retail traders by far did better in this episode. 0:02:10.800 --> 0:02:14.000 The masters of the Universe got hurt a lot worse 0:02:14.240 --> 0:02:18.200 in this trade than the retail traders. Yeah, Jim, how 0:02:18.240 --> 0:02:20.160 do they not see this coming? I mean some of 0:02:20.160 --> 0:02:23.400 them are definitely in there on those reddits, uh you 0:02:23.400 --> 0:02:26.880 know sub breddits. I was communicating with one, you know, 0:02:27.720 --> 0:02:32.200 very large hedge fund manager last week and he actually said, 0:02:32.240 --> 0:02:35.440 it's really shocking a swarm of small investors overpowering any 0:02:35.520 --> 0:02:38.560 sense of value. These were his words. How do they 0:02:38.600 --> 0:02:42.400 not see this coming? I think the problem is the 0:02:42.440 --> 0:02:45.880 word collusion. Look when the stock got over to a 0:02:46.560 --> 0:02:48.920 of the float, I think it's illegal. It's a short, 0:02:49.120 --> 0:02:53.320 it's a naked short. But even if it isn't illegal, Uh, 0:02:53.360 --> 0:02:57.120 it is very poor risk management by a lot of 0:02:57.120 --> 0:03:00.240 these hedge funds to have that bigger short. Why they 0:03:00.280 --> 0:03:02.839 have that bigger short because they all looked at each 0:03:02.840 --> 0:03:04.800 other and let me let me not men sports. Is 0:03:04.880 --> 0:03:07.600 Goldman Sachs gonna stick it to us? Is another hedge 0:03:07.600 --> 0:03:10.560 fund gonna stick it to us? Is JP Morgan gonna 0:03:10.560 --> 0:03:12.520 stick it to us? No, none of them are going 0:03:12.600 --> 0:03:15.720 to stick it to us. So it's not imprudent to 0:03:15.800 --> 0:03:17.839 run that kind of risk, and then they said, who 0:03:17.960 --> 0:03:21.520 out there is going to figure this out and stick 0:03:21.520 --> 0:03:24.720 it to us? And we found out who because if 0:03:24.760 --> 0:03:27.760 you go on the Reddit boards, they talked exactly about 0:03:27.840 --> 0:03:31.680 the Starting in October, they identified Melvin Capital as being 0:03:31.720 --> 0:03:36.640 the big short and when the uh when when the 0:03:37.400 --> 0:03:40.960 short does? Report came out by Citron Research two weeks ago. 0:03:41.360 --> 0:03:44.680 They literally said, this is the this is the event. 0:03:45.160 --> 0:03:47.840 Right now, let's go. We've got them because they're at 0:03:47.880 --> 0:03:51.440 maximum squeeze potential. I think when Michael Lewis whites the book, 0:03:51.480 --> 0:03:54.120 he's gonna call this. Now, we've got the greatest trade 0:03:54.160 --> 0:03:58.560 that's ever been done. So jim um. Some of these 0:03:58.600 --> 0:04:03.400 meme stocks, if you will, all to MidCap, relatively thin floats, um, 0:04:03.560 --> 0:04:07.800 big short positions, easy to squeeze. Re surprised to see 0:04:08.240 --> 0:04:13.760 the Reddit traders going to something like a commodity like silver, Yeah, 0:04:13.880 --> 0:04:17.599 I was surprised by that. Um. That doesn't seem to 0:04:17.680 --> 0:04:20.520 be kind of their modus operandi. And there is some 0:04:21.640 --> 0:04:24.560 debate on Reddit whether or not they're actually doing that 0:04:25.240 --> 0:04:28.880 as well too. But even if it is silver, it 0:04:28.960 --> 0:04:31.440 isn't silver. You know one of my favorite movies, it's 0:04:31.440 --> 0:04:33.880 a hunt for Red October when the torpedo missed the 0:04:33.960 --> 0:04:37.159 boat moving around in the ocean. That's the Reddit traders 0:04:37.160 --> 0:04:39.960 looking for another target. So there'll be another chapter to 0:04:40.080 --> 0:04:41.640 this story. I don't know if it will be next 0:04:41.640 --> 0:04:44.320 week or in three months, but this crowd is still 0:04:44.360 --> 0:04:46.920 out there unless the I would say before the last 0:04:46.960 --> 0:04:51.520 two weeks, we've been seeing this coming. When Buffets sold 0:04:51.520 --> 0:04:54.479 his airlines, it was no less than Dave Portnoy who 0:04:54.760 --> 0:04:58.120 led the charge that said Buffett is old and he's 0:04:58.200 --> 0:05:01.400 past his prime. Let's all up the airlines. They doubled 0:05:01.440 --> 0:05:04.000 in a month. Portantly made a ton of money off 0:05:04.000 --> 0:05:07.119 that trade back then, and the airlines are even higher. 0:05:07.120 --> 0:05:08.840 They bought the work from home stocks that weren't in 0:05:08.839 --> 0:05:12.839 the indexes. They bought Tesla one up and then got 0:05:12.839 --> 0:05:17.640 into the SMP. They've even been playing the cryptocurrencies, so 0:05:17.680 --> 0:05:20.640 they've been largely winning at this Now. I'm not saying 0:05:20.680 --> 0:05:24.039 they're gonna win forever, but what they've been doing is 0:05:24.080 --> 0:05:27.560 they've been looking at Wall streets practices, which has a 0:05:27.560 --> 0:05:29.159 little bit of collusion. This is the kind of the 0:05:29.160 --> 0:05:32.240 way we all do this, and they've been gaming their 0:05:32.279 --> 0:05:35.320 system over and over again and taking advantage of it. 0:05:35.600 --> 0:05:37.440 Wall Street is going to have to change the way 0:05:37.480 --> 0:05:39.600 they do money. We're never going to see another big 0:05:39.600 --> 0:05:42.359 short interest in a stock like this again as we 0:05:42.440 --> 0:05:45.520 move forward, because the fear is there now that somebody 0:05:45.520 --> 0:05:47.920 will stick it to us if we ever do it. Jim, 0:05:47.920 --> 0:05:51.000 are you concerned on the effect that this will have 0:05:51.120 --> 0:05:54.360 on short setters and short sellers making their research available 0:05:54.400 --> 0:05:56.480 for everybody to view. I mean, in a sense, the 0:05:56.520 --> 0:05:58.719 short sellers were the little guy for a long time, 0:05:58.760 --> 0:06:01.159 and they were the people that were sticized by some 0:06:01.279 --> 0:06:02.719 in the market, and they were the people that were, 0:06:02.960 --> 0:06:05.320 you know, putting themselves out there, not saying that they 0:06:05.320 --> 0:06:09.559 were all, you know, heroes or Robin hoods themselves. Let's 0:06:09.760 --> 0:06:11.960 you know, let's make that very very clear. But some 0:06:12.120 --> 0:06:14.000 of them did have excellent research and they were willing 0:06:14.000 --> 0:06:17.000 to share it with the world, and it can't have 0:06:17.120 --> 0:06:20.760 been all bad, no. I agree. Short selling is a 0:06:20.800 --> 0:06:23.760 critical function in the market, and the guys like Jim 0:06:23.880 --> 0:06:28.760 Chainos Marcotis, they are been very very good at identifying 0:06:28.839 --> 0:06:33.440 literally fraudulent companies and explaining why they've been fraudulent through 0:06:33.480 --> 0:06:36.839 research reports, and profiting off of that. That is a 0:06:37.040 --> 0:06:40.240 very valuable service. But then there were these smash and 0:06:40.279 --> 0:06:42.320 grab type of short sellers that kind of got in 0:06:42.360 --> 0:06:45.200 the way, and like I said, the other institutions didn't 0:06:45.200 --> 0:06:47.840 put a stop to it until retail did. And now 0:06:47.920 --> 0:06:50.599 all short sellers have been tarnished. And I think that 0:06:50.680 --> 0:06:52.760 at the end of the day, that's not a good thing. 0:06:52.839 --> 0:06:56.880 It is still a valuable function that was a little overdone, 0:06:56.960 --> 0:07:00.560 that's finally getting pulled back from the frost. But if 0:07:00.600 --> 0:07:03.679 if the Jim chanos Is marcutis Is of the world 0:07:03.880 --> 0:07:06.920 have to go into hiding now or witness protection programs 0:07:06.960 --> 0:07:09.120 because of this, I don't think in the long run 0:07:09.440 --> 0:07:12.640 this has benefits all of us. Jim, do you expect 0:07:12.680 --> 0:07:16.200 any regulatory oversight to grow out of this from Washington 0:07:16.320 --> 0:07:20.960 or the SEC um. We've heard some rumblings. I hope 0:07:20.960 --> 0:07:23.440 there is, but I think they're looking in the wrong place. 0:07:23.560 --> 0:07:26.440 I think they need to start with their short selling rules. 0:07:26.480 --> 0:07:29.000 One of the reasons the SEC was invented in ninety 0:07:29.080 --> 0:07:32.200 three was abuse of short selling in the nine crash, 0:07:32.600 --> 0:07:34.960 and they still after ninety years, can't seem to get 0:07:35.000 --> 0:07:38.280 it right. I hope that they start looking there at 0:07:38.320 --> 0:07:40.480 that and I think maybe they should start looking at 0:07:40.480 --> 0:07:43.720 the institutional community too, Is there a little bit of 0:07:43.920 --> 0:07:48.440 coordination or collusion going on there as well? That's in 0:07:48.480 --> 0:07:52.040 some cases like the famous you know idea spanners at 0:07:52.080 --> 0:07:54.720 the hedge funds old that's not really legal for them 0:07:54.760 --> 0:07:58.280 to do that. But we've done whole showtime shows called 0:07:58.320 --> 0:08:01.920 billions about this because such an accepted practice right now 0:08:01.960 --> 0:08:04.840 on Wall Street. I hope they looked there as opposed 0:08:04.840 --> 0:08:07.880 to how do we how do we restrict and restrain 0:08:08.320 --> 0:08:13.040 these message boards? They weren't the problem. They identified the problem, right. Hey, Jim, 0:08:13.120 --> 0:08:15.119 thanks so much for joining us. We always appreciate getting 0:08:15.360 --> 0:08:18.880 your perspective on markets. Jim Bianco, President of Bianco Research 0:08:18.920 --> 0:08:21.320 and Bloomberg Opinion Calumnis. You can read all of Jim's 0:08:21.320 --> 0:08:23.600 work and all of the Bloomberg opinion columnists at Bloomberg 0:08:23.680 --> 0:08:26.880 dot com, Slash Opinion or O P I N. Go 0:08:27.280 --> 0:08:33.880 on the terminal. Lizza Chapman joins us now. She is 0:08:33.920 --> 0:08:37.120 a venture capital reporter here at Bloomberg. And the reason 0:08:37.120 --> 0:08:39.640 we want to talk to Lizette is because we have 0:08:39.720 --> 0:08:42.360 been waiting for robin Hood to go public, potentially in 0:08:42.480 --> 0:08:47.320 May of this year or so. Lizette have the events 0:08:47.320 --> 0:08:49.920 of the last few weeks changed robin hoodsplans at Alls 0:08:51.840 --> 0:08:55.760 absolutely had thrown a real wench in um kind of 0:08:55.760 --> 0:08:58.640 how they approach the public markets. If anything, it's made 0:08:58.640 --> 0:09:01.280 it much more pressing because they realize that they do 0:09:01.360 --> 0:09:05.839 need these extra capital requirements. So, you know, while before 0:09:05.880 --> 0:09:08.560 they were looking at an I p O or I 0:09:08.640 --> 0:09:10.640 p O or some type of way to go public, 0:09:10.960 --> 0:09:14.319 you know, early to late spring, now they're they're not 0:09:14.440 --> 0:09:16.680 even really talking about the timing as much as they 0:09:16.720 --> 0:09:18.920 are that yes, we need to go public, not a 0:09:18.960 --> 0:09:22.440 matter necessarily of when, but as why, and so as 0:09:22.480 --> 0:09:26.000 they resolved this recent hubub um, you know they'll be 0:09:26.000 --> 0:09:29.840 they'll be looking at um exactly how to go public. Yeah, Liz, 0:09:29.920 --> 0:09:32.160 is their talk or what is the level of talk 0:09:32.200 --> 0:09:35.199 about a spack? A spack to me might be a 0:09:35.880 --> 0:09:38.079 way to consider it, could be could get them into 0:09:38.080 --> 0:09:41.720 the public market sooner, perhaps with less scrutiny. Um, what 0:09:41.800 --> 0:09:44.920 are they thinking about us back? That's a great point, 0:09:44.960 --> 0:09:47.440 and a lot of companies have definitely availed themselves as 0:09:47.480 --> 0:09:50.600 that like last year was all time record high. It 0:09:50.640 --> 0:09:52.320 was more last year than it was I think in 0:09:52.360 --> 0:09:55.440 the past twenty years combined. So it's definitely top of talks. 0:09:55.440 --> 0:09:57.800 But right now, to be honest, this is a you know, 0:09:57.840 --> 0:10:01.240 this is a you know, small but fast growing company. 0:10:01.679 --> 0:10:05.360 Um it is. They say that they are profitable. Um 0:10:05.400 --> 0:10:07.720 you know, that's what we've been told. According to sources 0:10:07.760 --> 0:10:11.440 familiar um back is one of the options. Um so 0:10:11.559 --> 0:10:14.360 is a direct listing, which is what palat here and Spotify. 0:10:14.440 --> 0:10:17.280 You may remember they've done that previously. So those are 0:10:17.320 --> 0:10:19.880 two other options that they're also talking and thinking about. 0:10:20.200 --> 0:10:23.040 But but to be honest, you know, there so they've 0:10:23.040 --> 0:10:25.360 been so focused on just dealing with this crisis right now. 0:10:25.400 --> 0:10:27.240 I mean they raised you know, they were able to 0:10:27.320 --> 0:10:29.040 raise they had to raise one billion dollars in a 0:10:29.080 --> 0:10:32.000 span of twelve hours, and that that number increased to 0:10:32.080 --> 0:10:35.280 three point four billion over the course of seventy two hours, 0:10:35.280 --> 0:10:37.719 just to you know, create that comfort and make sure 0:10:37.760 --> 0:10:40.240 that they could continue trading regularly against But that has 0:10:40.280 --> 0:10:43.720 been their primary focus up until now. Now. Who knows. Yeah, 0:10:43.760 --> 0:10:46.480 for sure, they definitely want to, you know, keep working 0:10:46.520 --> 0:10:49.400 beautifully so that people don't lose trust or face. In 0:10:49.520 --> 0:10:52.280 Robin Hood, Lizzat we were just speaking with somebody who 0:10:52.320 --> 0:10:55.680 mentioned the game stuff. Probably should have tried to buy 0:10:55.720 --> 0:10:57.920 Twitch at some point, and we know, of course that 0:10:58.000 --> 0:11:00.280 Amazon boa Twitch for less than a billion dollar or is. 0:11:00.320 --> 0:11:03.520 But we did get Uber making another acquisition today for 0:11:03.640 --> 0:11:07.160 one point one billion dollars. Not the alcohol startup Drizzly. 0:11:07.320 --> 0:11:10.280 Talk to us about this pricing. I mean, essentially, this 0:11:10.360 --> 0:11:15.040 is literally an alcohol delivery service. Is it worth one 0:11:15.040 --> 0:11:20.000 point one billion dollars? Well, I'm sure that the investors 0:11:20.040 --> 0:11:23.640 who last um backed in twent seventeen and valued at 0:11:23.679 --> 0:11:27.400 at seventies three millions according to pitch Book, I'm sure 0:11:27.440 --> 0:11:31.960 they are popping champaign today and ordering a plenty of 0:11:32.000 --> 0:11:34.440 things by Drizzly or other means, because that is one 0:11:34.600 --> 0:11:37.760 heck of a return. So sent three million, not even 0:11:37.840 --> 0:11:41.520 three years, barely three years ago. Yeah, exactly, So, I mean, 0:11:41.559 --> 0:11:43.240 you know, and that's kind of the way the venture 0:11:43.280 --> 0:11:47.440 capital game is played, right, You only need one really 0:11:47.480 --> 0:11:49.880 great company to knock it out of the park to 0:11:49.920 --> 0:11:52.680 make up for all the other losses. Um. You know 0:11:52.760 --> 0:11:56.640 what Uber guests with this is um. You know, they 0:11:56.679 --> 0:11:59.800 get to expand their alcohol delivering They were doing it 0:11:59.800 --> 0:12:03.320 for four through Postmates, which you remember they acquired uh 0:12:03.440 --> 0:12:05.760 last year for two point six billions and they were 0:12:05.800 --> 0:12:07.480 able to do it through a corner shop, which was 0:12:07.520 --> 0:12:11.000 their acquisition in Mexico. But this is a really big 0:12:11.040 --> 0:12:14.200 push doubling down, maybe even tripling down and delivery boost 0:12:14.240 --> 0:12:17.600 sales or through the roof. During the pandemic, um, you know, 0:12:17.720 --> 0:12:21.760 Drizzly itself said that their sales were up four above 0:12:21.800 --> 0:12:26.560 historical levels, um back in May, and UM, you know, 0:12:26.679 --> 0:12:29.440 I think many people can say that that, you know, 0:12:29.480 --> 0:12:32.920 alcohol consumption is up historically, so you know this this 0:12:33.320 --> 0:12:35.800 this is a chance for Uber to really dig down 0:12:35.800 --> 0:12:38.880 into delivery because, as we've talked about before, it's ride 0:12:38.880 --> 0:12:41.360 hailing service. It's just been decimated by the pandemic. So 0:12:41.480 --> 0:12:44.520 people are shut in, people are ordering food, you know, 0:12:44.720 --> 0:12:48.480 and and now booze and um. They can also do 0:12:48.600 --> 0:12:54.840 uh pharmaceuticals or pharmacy, uh, you know, items and also packages. 0:12:54.920 --> 0:12:58.120 So this is part of Uber's overall shift to just say, look, guys, 0:12:58.280 --> 0:13:00.480 we're not gonna do flying cars. Are not going to 0:13:00.559 --> 0:13:04.080 do um, you know, flying flying tax these are electric scooters. 0:13:04.120 --> 0:13:06.520 Were just going to do delivery and rides and darn it, 0:13:06.559 --> 0:13:08.280 we're going to turn a profit this year. So that's 0:13:08.360 --> 0:13:11.080 their focus. Hey, was that how what's the mood out 0:13:11.120 --> 0:13:13.320 there in Silicon Valley as it relates to doing deals 0:13:13.400 --> 0:13:17.680 raising capital. How much does the pandemic slow things down? Oh? Man, 0:13:17.760 --> 0:13:20.320 I don't know. I've been you know, kind of cloistered away. 0:13:20.360 --> 0:13:22.720 Silicon Valley is more of a of an idea, I 0:13:22.800 --> 0:13:25.520 think to send an actual location. So I've been working 0:13:25.559 --> 0:13:27.720 from home since since March. But I can tell you 0:13:27.760 --> 0:13:31.120 from talking to early stage investors, UM, some of them 0:13:31.160 --> 0:13:34.559 say that that their deal flow is higher than it's 0:13:34.600 --> 0:13:36.840 ever been, and the numbers back that up. You know, 0:13:36.880 --> 0:13:40.080 even though they're not doing all these deals in in 0:13:40.800 --> 0:13:43.160 you know, over coffees and over drinks and networking, all 0:13:43.160 --> 0:13:46.960 that stuff has gone. Yet last year was the highest 0:13:47.000 --> 0:13:51.959 amount of venture capital on on record. And we also saw, um, 0:13:52.000 --> 0:13:54.960 you know, the most of the megafunding deals, the massive 0:13:55.520 --> 0:13:59.040 million plus deals that pumps that total um, you know, 0:13:59.080 --> 0:14:01.640 to an all time I So to your answer, you know, 0:14:01.720 --> 0:14:05.360 to your question, what's the mood, Um, it's busy. I 0:14:05.400 --> 0:14:08.160 think people are just grinding it through, still getting deals done. 0:14:08.160 --> 0:14:11.360 They're doing it on zoom, they're doing it and called um. 0:14:11.480 --> 0:14:13.839 But um, you know, we're still very much affective on 0:14:13.920 --> 0:14:15.439 the pandemic here as we are in other parts of 0:14:15.480 --> 0:14:18.120 the nation. Hey, Lozette, thank you so much for joining us. 0:14:18.120 --> 0:14:21.760 We really appreciated getting your thoughts there on some interesting 0:14:21.800 --> 0:14:24.840 news coming out of the valley there with Uber and 0:14:25.080 --> 0:14:28.440 UH with Robin Hood as well. Listen Lazette Chapman, venture 0:14:28.480 --> 0:14:32.080 capital reporter for a Bloomberg News in are based out 0:14:32.120 --> 0:14:36.800 in San Francisco. Well, one of the industries that was 0:14:36.880 --> 0:14:42.600 certainly disrupted by the pandemic was retail. The acceleration of 0:14:42.640 --> 0:14:46.600 the migration from bricks and mortar to e commerce just 0:14:46.840 --> 0:14:49.840 really proceeded during this pandemic and continues to do so. 0:14:49.880 --> 0:14:51.600 Let's get the latest on kind of where we are 0:14:51.680 --> 0:14:54.880 in the retail environment here. We do that with Tay Lopez. 0:14:54.880 --> 0:14:58.440 He's executive chairman and CEO of Retail e Commerce Ventures 0:14:58.440 --> 0:15:01.160 based in Miami, Florida. Ty, thank so much for joining us. 0:15:01.560 --> 0:15:03.680 Give us a sense of kind of where we are 0:15:03.760 --> 0:15:07.480 in the retail landscape now, you know, bricks and mortar 0:15:07.720 --> 0:15:12.640 versus e commerce. How are the retailers adapting? Yeah, I 0:15:12.640 --> 0:15:16.440 mean it's still a slow burn, slow transition. Hard to 0:15:16.480 --> 0:15:20.840 teach old dogs new tricks, as they say, so I 0:15:21.000 --> 0:15:26.360 don't see them changing fast enough to allay the you know, 0:15:26.480 --> 0:15:31.240 coming tidal wave that they're starting to feel. So yeah, 0:15:31.320 --> 0:15:34.480 that's the short answer in my opinion. So, Ty, what 0:15:34.520 --> 0:15:40.080 brands are you using a potential targets? Well, you know, 0:15:40.440 --> 0:15:45.600 usually the bankruptcy and so on the first quarter they 0:15:45.680 --> 0:15:48.800 slowly ramp up. People tried to make it through and 0:15:48.840 --> 0:15:52.800 watch how the holidays, you know, November, December, Black Friday did. 0:15:52.920 --> 0:15:55.800 So I expect it to ramp up a little bit 0:15:55.800 --> 0:15:59.400 in the second quarter. It's usually snow slow. Now, Um, 0:15:59.600 --> 0:16:02.800 French Escas was one that was for sale. We did 0:16:02.840 --> 0:16:06.360 not go after that one. It's starting to heat up 0:16:06.400 --> 0:16:08.840 a little bit. People are realizing, hey, we can buy 0:16:08.880 --> 0:16:12.080 these distressed brands. Um, the last thing we bought with 0:16:12.120 --> 0:16:16.040 Stein Martin radio shack in November and in November, so 0:16:16.840 --> 0:16:20.320 we'll see what's coming up. Everybody's kind of, like I said, 0:16:20.360 --> 0:16:23.120 they're saying, can we make the switch? Can we do 0:16:23.200 --> 0:16:27.080 it fast enough? And I think when the audited financials 0:16:27.120 --> 0:16:29.840 come out from the fourth quarter of last years when 0:16:29.840 --> 0:16:33.440 you'll start seeing bigger decisions being made about the bankruptcy 0:16:33.560 --> 0:16:37.400 or selling. So t is your strategy to kind of 0:16:37.880 --> 0:16:41.800 identify high quality brands, brands that really have good value 0:16:41.800 --> 0:16:44.880 in the marketplace, but for whatever reason, did not manage 0:16:44.920 --> 0:16:49.880 that transition from physical to e commerce and then get 0:16:49.920 --> 0:16:52.720 that brand by that brand, acquire that brand and try 0:16:52.720 --> 0:16:56.800 to do it yourself. Yes, exactly what we're looking for 0:16:56.960 --> 0:17:00.600 is brands that are not distressed breaking the order that 0:17:00.680 --> 0:17:04.760 was distressed. So if we think the brand itself is distressed, 0:17:04.800 --> 0:17:08.439 we're less interested. We've passed on various brands in the 0:17:08.520 --> 0:17:11.760 last six months. Sometimes you know, I'm just down being 0:17:11.800 --> 0:17:14.520 too busy, but sometimes we felt like, you know, that 0:17:14.640 --> 0:17:17.520 brand doesn't have much power. But when you look at 0:17:17.560 --> 0:17:21.040 something like stein Mart, for example, radio Shack, people still 0:17:21.080 --> 0:17:24.600 stop shopping their dress bomb here one. It's just the 0:17:24.600 --> 0:17:28.160 economics of the scores is what was distressed. And since 0:17:28.240 --> 0:17:33.080 we don't really take stores on that, that segmentation of 0:17:33.200 --> 0:17:36.439 distress doesn't bother us at all. What about Game Stop? 0:17:37.080 --> 0:17:43.080 What kind of reputation does that brand have these days? Wow, 0:17:43.119 --> 0:17:46.800 that's a great clash hit. I would say, you know, 0:17:46.880 --> 0:17:49.040 if you look at the origin the Game Stop, it's 0:17:49.119 --> 0:17:52.680 this chewy co founder coming on the board and kind 0:17:52.720 --> 0:17:56.520 of bringing life that he can revive the brand. I read, 0:17:56.640 --> 0:18:00.040 I forget the name. I read yesterday an act of 0:18:00.040 --> 0:18:04.480 a shareholder or a consultant who told them two years ago, 0:18:05.200 --> 0:18:07.840 you should have bought Twitch. You know, that would have 0:18:07.840 --> 0:18:10.920 been to play because that transitions you. Not only it's 0:18:10.920 --> 0:18:13.399 not e commerce, but it puts you in that world 0:18:13.440 --> 0:18:16.560 that you should be. And so I think games stopped. 0:18:16.960 --> 0:18:19.679 They have to do more. They have to have to 0:18:19.720 --> 0:18:23.359 be some fundamental changes. Um. I can't speak to it 0:18:23.359 --> 0:18:25.199 because I haven't researched much, but I thought I was 0:18:25.240 --> 0:18:28.840 an interesting quote. If they had, you know, made that 0:18:28.880 --> 0:18:32.240 Twitch acquisition several years ago, maybe they wouldn't be so 0:18:32.400 --> 0:18:35.000 distressed right now. So I think it's it's one on 0:18:35.040 --> 0:18:38.440 the brink. It can be turned around maybe, but it's teetering, 0:18:38.600 --> 0:18:41.520 you know, so we'll see. Ty. What's the status of 0:18:41.560 --> 0:18:43.800 Brooks Brothers. That was a big brand at the beginning 0:18:43.800 --> 0:18:47.639 of this pandemic. I believe filed for bankers if it 0:18:47.720 --> 0:18:53.080 certainly challenged. Yes, a company called a b G Authentic 0:18:53.160 --> 0:18:56.280 Brands Group out of New York. I thought, I'm not 0:18:56.520 --> 0:19:00.400 mistaken made that made that acquisition. They do a little 0:19:00.400 --> 0:19:04.640 bit different than us. Um, really well run business makes 0:19:04.640 --> 0:19:08.600 a lot of money backed by black Stones or black 0:19:08.680 --> 0:19:12.480 Rocks already, and they buy things that they focused on 0:19:12.600 --> 0:19:17.080 licensing revenue. So they felt for us Brookstone as our 0:19:17.119 --> 0:19:21.520 Brooks brothers. Um, you know, we didn't. We didn't understand 0:19:21.520 --> 0:19:24.680 how we can add as much value. But they buy 0:19:24.720 --> 0:19:28.000 it for the global licensing rights. And so I think 0:19:28.040 --> 0:19:32.120 that happened about four or five months ago that they 0:19:32.119 --> 0:19:34.040 made the acquisition. I think it was if I'm not 0:19:34.160 --> 0:19:38.240 mistaken publicly, it was in the three hundreds. Wow. What's 0:19:38.280 --> 0:19:42.240 interesting talk to us about fundraising? Is it an easy 0:19:42.359 --> 0:19:45.399 time for fundraising? It feels like there's so much cash 0:19:45.440 --> 0:19:48.800 out there. I mean, so many stacks and so much 0:19:49.440 --> 0:19:53.399 you know, so many signals of frost really across this market. 0:19:53.480 --> 0:19:55.439 Are you seeing that tie or people coming to you 0:19:55.520 --> 0:20:01.800 to to to hunt your money? Uh? You know, but 0:20:02.080 --> 0:20:04.400 I want to say coming to us the instantly hand 0:20:04.480 --> 0:20:07.760 us money. But um, there is an element I'm reading 0:20:07.840 --> 0:20:11.280 rereading Robert Schiller's book A Rational Exuberant. That's a good 0:20:11.320 --> 0:20:14.040 one for everybody to reread. The Noble Applies winner wrote 0:20:14.080 --> 0:20:18.920 it a while ago. But um, we raise money uniquely. 0:20:19.000 --> 0:20:21.280 We're not a fund or a holding company. We mostly 0:20:21.359 --> 0:20:23.800 raised from a network. We've kind of built this kind 0:20:23.840 --> 0:20:27.840 of group club of high network that credited investors. So 0:20:28.000 --> 0:20:30.159 most of what we do is with this group of 0:20:30.520 --> 0:20:34.639 hundreds of credit investors who directly have relationships with us. 0:20:35.119 --> 0:20:38.240 But we are yes. I mean, the spack world is 0:20:38.280 --> 0:20:41.080 going to be fascinating because all these facts for and 0:20:41.160 --> 0:20:44.200 they have to eventually, you know, find a target or 0:20:44.240 --> 0:20:47.919 give the money back. So I think it is an 0:20:47.960 --> 0:20:51.280 interesting time. It's relatively easy to raise. But you know, 0:20:51.800 --> 0:20:54.199 one thing that you start to push up against the 0:20:54.200 --> 0:20:58.000 paradox of choice investors go, there's so much we at 0:20:58.080 --> 0:21:00.520 tact and there's so much to do they do, and 0:21:00.560 --> 0:21:02.760 there's so much to talk about. Time we'll have to 0:21:02.600 --> 0:21:05.280 do it again soon to talk more about all of this. 0:21:05.440 --> 0:21:10.360 Tayl Opez of Retail e Commerce Adventures, thank you. Let's 0:21:10.400 --> 0:21:14.200 switch gears now to Global Oil ex on mobile. It 0:21:14.320 --> 0:21:17.480 pledged to safeguard it's mammoth dividend after posting its first 0:21:17.520 --> 0:21:20.520 annual loss in at least forty years, a show of 0:21:20.560 --> 0:21:23.960 defiance by an oil driller besieged by activist investors, lawmakers 0:21:24.160 --> 0:21:26.480 and climate change campaigners. Let's get the latest on that. 0:21:26.520 --> 0:21:29.679 We could do that with Fernando Vallier, oil and gas 0:21:29.680 --> 0:21:33.159 analyst for Bloomberg Intelligence Fernando talked to us about Exon Mobile. 0:21:33.240 --> 0:21:36.880 Here a brutal, brutal year for them, but they're keeping 0:21:36.880 --> 0:21:40.879 the dividend. That's right, Paul. They're they're maintaining their fifteen 0:21:40.880 --> 0:21:45.400 billion dollar dividend, but at the sacrifice of restoring their 0:21:45.480 --> 0:21:48.760 their peer leading returns. Excellent has been the leader UH 0:21:48.760 --> 0:21:52.760 in returns on capital for the sector for several years, 0:21:52.800 --> 0:21:56.560 but since eighteen it lost its ground, first to Totel 0:21:56.800 --> 0:22:00.359 and now to Chevron, and it is maintaining its evidence 0:22:00.680 --> 0:22:04.040 but flashing growth in the projects that were supposed to 0:22:04.040 --> 0:22:06.720 bring it back towards the head of the line. UM. 0:22:06.800 --> 0:22:09.720 You see the target for the Permian, for example, one 0:22:09.760 --> 0:22:12.480 of its ground jewels going from one point two million 0:22:12.520 --> 0:22:17.840