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Let's get back to John Tucker in our New York studio. John, Supreme Court. We got some rulings today, the notable on the crossing the tape. Supreme Court backs White House on social media post removal. What do we know about that?
Yeah, the Court issuing several major decisions this week. They could also extend into next week. In fact, twelve opinions left in in this term. Paul on Alex Paper opinions released to the courthouse in Washington just a few minutes before they're posted online. June Grosso, the host of Bloomberg Law, joining me now to go over some of these decisions with respect to the Biden administration. They're social media contexts. What was the decision?
So the decision, the complaint by a few Republican states and people was that the Biden administration, and this was during COVID was contacting the social media platforms and getting them to change information. That was the charge. So here in a six to three case, and both the cases today are six to three, which is indicative of how this term might end.
Six to three.
So the court went off on a standing issue, which is procedural, and I know I've discussed this before, but it's a way for the court not to reach the main issue, but to say the people who are suing here don't have standing to sue because they weren't injured
in any way. But also in doing that, just as Amy Cony Barrett, who wrote the majority, said that the Fifth Circuit here was wrong in some of the analysis that it made and that they couldn't really show that it was the government that injured the plaintiffs at all these points. So you know, the question is and also it's sixty three in the.
Three, So it sets up how this is going to play out before the election in terms of misinformation on social media.
Right.
Also, there are two other cases that are sort of joined that are more important as far as social media is concerned, and those are the cases concerning the Texas and Florida laws where they're trying to curtail the platforms into doing you know, into into and it's another thing like a conservative saying that you know they're being unfair to us, and it's a question of free speech. So the dissent here was the three most conservative justices, Alito, Gorsicic, and Thomas.
How many more cases are going to be? Is that it for today?
There's one other case on public corruption, something that we haven't been following, but it continues the Supreme Court's skepticism of these public corruption laws.
All right, June Grasso, the host of Bloomberg Law, with me to break down some of these cases. The Supreme Court again backing the Biden administration on the social post media removal in terms of cases that go against the arguments.
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Let's get back to FedEx.
Thomas black is the Bloomberg opinion columnists covering logistics, manufacturing, and aerospace, joining us.
Now, So what did you make of that news? In particular?
A strategic spinoff maybe, or strategic options, I should say for its freight unit.
That pretty much surprised a lot of analysts. What did you make of that?
It was surprising. It potentially could unlock a lot of value, and I think that's why the stock price is up around fifteen percent today. Investors see that as kind of a little gold nugget that's been hidden in FedEx. It's the largest less than truckload carrier, and those trucking companies tend to have pretty high valuations right now, so they could definitely unlock some value.
So is the expectation that they will spin that out or ipo it. What mechanism were they discussing?
Do you think they didn't want to talk about it? They were asked several questions about that on the conference call, and they batted them all away. They're going to review it. Spin out would be would be easier to do, probably more tax friendly as well. They could sell it, sure there would be some interested buyers in there. It's a pretty high margin business for the trucking company, for trucking industry IPO. I presume they could do that as well.
A spin would probably be the better way to get it, you know, trading.
Yep, you know, just looking at this just the most recent results. You know, they're talking about their forecast revenue will grow in the load a mid single digit percentage in the upcoming period. But boy, they're talking about a big gain in EPs net profitability. What are they doing on the cost side that's kind of bringing a lot more dollars down?
Yeah, the FedEx story is all about cost cutting. The parcel market is a little soft right now. It's been that way for a few quarters. As people the revenge traveling and all the revenge experiences that people are buying, they're not buying as much stuff, so e commerce in the package delivery market's a little flat. So FedEx is cutting costs hard. That the new CEO, Rod Supermanium, came in a couple of years ago and announced this big
transformation of FedEx, and he's doing it. There was some skepticism about how this would work, but he's winning over investors now because they've had several quarters in which they have increased margins even though their revenue has been on the decline because of the market pressure. So so far, so good for mister SUPERMANI.
So you had a great opinion piece out about FedEx and you sort of broke down this logistics business and then what would be left afterwards, and how FedEx would be then a pure play small packaged delivery company, and then you'd have this behemoth logistics company. And is how much market share they really own? Can you talk us through some of those numbers, because I think of what's left of FedEx will be quite interesting in how to value it.
Right, So what they would spin out would be there less than truckbload UH trucking company. And these are these are companies that have a network of warehouses and they bring in customers goods and they consolidate them so that they can fill a full trailer instead of just taking a partial trailer. So they're essentially a trucking It's a trucking company. So FedEx is going to keep all of its UH if it did spin that, it would keep
all of its package delivery business. It also has some logistics business in which it helps customers move freight around the world. They do custom stuff and freight forwarding and so forth, so they would keep that as well with the main company. So this would be a trucking company. They've tried in the past to help to merge these companies a little bit more, in other words, having the trucking company do some of the package delivery and so forth,
especially some of the large packages. I'm not sure it worked out that well, So maybe that's why they're pivoting and saying, well, maybe we could unlock more value instead of trying to integrate it more into our system, let's just go ahead and carve it out.
You know, when we talk cost custs in this business, a lot of times it means headcount. What have they done on the headcount front, because it just seems like a labor intensive business.
They've definitely have lowered some headcount. I don't have the numbers off the top of my head, but that's that's one of the things. The other is they're trying to consolidate their networks. And if they're in the past, if there was an express facility and a ground facility in the same vicinity, they would just continue to operate those and the trucks sometimes would arrive at your house. One would be an express truck, one would be a ground truck.
They're trying to eliminate a lot of that duplication so in some cases they're consolidating facilities, they're handing off packages so that only one driver comes to your door or your business. So that's another way in which they're cutting costs. It's not all just head counted operational.
Yeah, and clearly also, you know, spinning on the logistic business will help them cash flow there real quick before you let you go. If the spinoff of logistic business went the way of M and A, who might be potential buyers?
Oh, good question.
That's a little bit of shaky ground. But there are some large LTL players out there. I'd have to say XBO would come to mind, maybe because they have their chairman, Brad Jacobs has made a living by acquiring companies, so I wouldn't put them. I would put them on the list. In fact, when Yellow, which is another LTL carrier, went bankrupt, XBO bought the most of the assets. The assets were all divided up and sold and XBO came out with
the lion's share of those. So it's it's it's willing to expand through acquisition, So I would put them on the list.
All right, Very good, Thomas Black, Thank you very much for joining us. Really appreciate Thomas Black, Bloomberg opinion columnists, just giving us the latest on FedEx better and expect the results. Taking guidance up stock moving up here about about thirteen fourteen percent fifty two week high. About that for our friends at FedEx.
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We're live here at the very loud Bloomberg invest Conference in Lower Manhattan. It's called the World Financial Center for those of us that were actually here back in the day down in Lower Manhattan, which by the way, is a great place. I'm gonna plug it yet again. Come down here in warm weather with the kids and stuff. There's you know, you're right on the river. Lots of cool restaurants, a lot of fun places for the kids
are run around, big yachts there to look at. So it's a great part of the city that I think a lot of people kind of miss here. So in video, is that our drawdown the last few you know, that was it? That was it? Okay, now we're back up at it all right in videos up taking up the nastac so so so there you go. Let's talk about these markets here and where we go. Clark Chang, CEO
and Chief investment Officer Merrimack Corporation. Clark is a Fuqua graduate at Duke University, so he's he's much younger than I am, but we will both went to the business exactly. Hey Clark, what do you feel about these markets here? What's kind of how are you approaching them right here? Because we've got a FED that presumably is going to be cutting raged at some time, I guess later rather than that, the sooner we've got decent earnings, how are you guys approaching it?
I think the FED is thinking they're going to start cutting rage, So that's what people think in September and stuff. I think every time we talk about this it keeps getting delayed more and more, and I don't I think this market is very dependent on what the FED does, and they're timing of it. So growth is slowing down, unemployment is slowly starting to increase, things are heading in the right direction, Inflation is coming down, and it just
depends on how the FED reacts. If they react too quickly. I think we could go the wrong direction. May they react to slow they go the other direction. So I think it's very conditional on how the FED, on how the FED basically performs.
What I was struck with over the last day listening to a lot of the Bloomberg in Best Panels is how little the FED was really talked about, Like it was a little bit here and there, but it was mostly about AI, how to invest, what the potentials are, and private credit and sort of what do you do in that sector as part of the family off of how do you guys look at the best investment thesis for AI.
AI is moving so fast that I don't think anyone has any idea what's going to happen with it. But it's going at an exponential pace. So you know, we went from like PCs to the internet, to mobile to the cloud, and I think AI is going to be much faster. But I think the things that are gonna change AI for this next generation, I don't think people can even comprehend, like even terms of making like entertainment and stuff like that, the like we don't need actors
and actresses. Sora from Open AI can generate a video live, and I think this magic and secret is just in terms of how you prompt it.
I think my artist soul is slowly dying, yes, but.
It really is changing the world that I don't think people even understand. I think the danger of it is always going to be the deep fakes, the cybersecurity, all that stuff, because I think the hackers are much more innovative than the people defending against it, and they only have to win once. So I think that's the danger of it. I think people are starting to understand this. So I think we're starting to see dedicated AI models for specific countries. So I think Japan just invested in
one for their country. I think India is looking at it too, because no one wants to be using the US LM model. Basically, it's using US data and as a result, it reflects more of the US population, the Western society and stuff like that. To do that and to run that in China is useless because the Chinese population they have so many restrictions on jaywalking or chewing gum or whatever that it just may not work over there.
So I think AA is gonna be It's gonna be fascinating in terms of how impacts the world.
The energy usage is.
Going to be a huge issue. And I mean I was I was out in Las Vegas last week and William Jensen was actually speaking at an energy conference and he's you know, he's a tech guy and he's at an energy conference.
But he was speaking with Edison International, which is the CEO that I've spoken to about power usage.
They're based in California.
So to that point, do you invest though in this thesis, like you're absolutely right, like everything you said makes complete sense.
Do you make money off of that?
No, we could definitely make money off I think it's changing so quickly. I think the problem is knowing who the winner is going to be, no matter what Navidia is doing for now, because everything they produce is sold out and everyone's trying to get ahead. And if you're not buying the chips, you're not going to be on the forefront of this technology. So I mean, if they
can keep the market share that it's fantastic. I think they have a mode around them with the software and the chip, but I think it's just a home run right now.
And what seems a little bit different AI versus say the Internet, for example, is the Internet was a whole bunch of new companies, disruptors, whether it's Google or Facebook, disrupting the existing business models. Here doesn't seem to be that way. It seems to be in Nvidia is the chip play. Maybe Microsoft's a software play, you know, and it's these existing incumbents that are investing in and building up AI capabilities. I guess that's the way to play it.
It's all it's all in the data. The data is oil. The data is what trains these models. The investments that you need in the infrastructure in terms of these data centers can only come from the largest companies, like say Microsoft. I think Microsoft and open ai have a project that we working to build the biggest you know, data center of the world to basically run AI. So I think it is gonna be with those big winners that are out there. But if you're a small company, we see
this a lot on the venture side. You develop something new, like say mid Junior, some of these you know videotype of creation models, you're you're basically out innovated within six months when open I released Sora. So like it's happening at such a fast pace set if you're a startup and you don't have the capital and the resources and the talent to innovate faster than the big guys. Your basic business model, business models is basically gone in six months.
So you were on a panel that was titled meeting the Needs of the Rising Generation.
What does that mean?
Is that like, we don't have enough kids and everyone is gonna get old and there's a big fiscal deficit. Does that mean that it's gonna be super isolationist? What does that mean?
I mean we do have a demographic problem. I think in the in the modern world where I think the population is declining, I think the people are getting older. Well, we were talking about earlier is more. There's an eighty four trillion dollars of a wealth that's going to be transferred from the baby boomers towards the next two generations. It's going to happen over the next twenty years. And the question is how does it happen? What is this next generation?
Like, what are they?
What are the what are their intentions? I think I think the the generation that generated the wealth after World War two, through through housing and through the stock market. I mean, their their intention was clear. They were trying to generate wealth and have a good cost of living and stuff like that. I think the next generation, I think is more idealistic, and they do want to help solve income inequality, they want to help solve climate impact ESG. Stuff.
I think the danger with that is the fact that if you're not focused on one goal and you have conditional goals where this is the best investment relative to climate, it's it gets hard to measure how you're actually performing. And as a psychologist, we really wanted to make keep things simple. We want to have one goal. You can have another goal for a different part of your business, like say at the foundation, but to combine the two into one, I think you really never know how you're doing.
So from an investment perspective, do you have that in your back in your mind?
ESG.
And let's not even use those letters because they become toxic. I guess it's just just is that part of your investment outlook, or you're just there focus on generating the best returns for your client.
We're here to generate returns. And then we have another side, the foundation side that does all the charitable stuff. So we have two distinct goals and two separate parts of our businesses, but we try not to combine the two into one.
Then I guess the question then becomes, how do you think of, say the deglobalization part, because you get the transfer of wealth. Yes, and we're also going to be in an entirely different few decades now as we were since like the Industrial revolution, kind of how do you think about that?
I think the world is going in a very bad direction. I think if you read Destined for War, you're talking about the changes of economic powers. Every time one and two changes powered, there is some kind of war, whether it be a kinetic war or not. I don't think it's going to be the I think we are in a cyber war. We are in a tech war. I think between China and Russia, North Korea and Iran, they're gonna have their own tech stack and the US is gonna have our own tech stack with our own allies.
So there's gonna be two distinct tech stacks are gonna be generated from each of these groups of nations. But I don't think we're going to share stuff. If you're reading the book of How the World Ends, they talk about all the cyber stuff, but it is scary the stuff that they can do. So I think ultimately that's where we're going. And as a result, I think the
globalization is going to happen. That is going to be inflationary. However, that's going to go against AI, which is going to be very disinflationary too.
Because we grew up in a general I'm gonna say the last at least a generation was all about globalization bringing barriers down out sign and then I know that turned maybe four or five, six, seven years ago. Is globalization dead?
Do you think?
I don't know if it's dead. It just made me more compartmentalized within each country's allies and stuff like that. It's just but I don't think it's going to be as global as it was before because China wasn't a threat, nor were the power economic power we were trying to I can convince him to come towards the US type of you know, type big Colombian market, but they're not
going to head in that direction. So I think the world is changing right now and it's gonna be really interesting for this next generation.
All right, Clark, we really appreciate Clark Chang's CEO and CIO of Marymac Corporation joining us here at Bloomberg invest I have to say, I don't envy having to think about these themes in the next few decades when literally nobody knows what it's going to be, whether it's AI and how that cyclical nature of that industry works, whether it's deglobilization and what that winds up looking like.
It is very confusing.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa Play Bloomberg eleven thirty.
Alex you alongside Paul Sweeny.
We are live from the Bloomberg and Best Conference in Manhattan, Lawer Manhattan, a beautiful.
Two two five a Liberty Street.
We're bringing together leaders from asset management, banking and private markets. Well here on set, I have a special guest for you. Rebecca Lynn is co founder and general partner of Canvas Ventures now. Canvas Ventures was founded in twenty thirteen and focuses on leading Series A and Series B investments around AI, say, fintech, digital health, A lot of stuff going on in that space, and Rebecca joins us.
Now, Rebecca, thank you so much for joining us.
Thank you for having me.
So what do you like right now? Like, what's interesting to you? What's the market like? Give us some perspective of how you're thinking about things.
Yeah, there's a lot that's happening right now in the market overall. I think AI is creating a real catalyst. We're hearing a lot about, you know, jen Ai with the launch of chat JPT just a year and a half ago. And the interesting thing is is this has been evolving for some time. I mean, we've been tracking the LLLM and the AI space for many years. We've had a number of exits in this space, you know, way dating back to Siri, you know, in my prior
and most recently case text. And so what we're seeing is that Jenai can really supercharge many of the theses we've had for a very long time in both fintech and in digital health. One example is the ability to actually take all the call volume, for example, off of
a physician practice is an incredible opportunity. Wealth Management is another company that we recently recently let an investment in where the company can actually perform all of the back office functionality that a wealth manager would typically do and quite frankly doesn't really want to do, right, all of the back office compliance, the emails, the reporting, the generation of reports, things that would take them ten to fifteen
hours on average a week. JENAI can now lift off their shoulders and let them do what they do best, which is really interface with the clients.
Right. So one of the things as I talked to just investors, they're saying, where's that AHA moment for AI? From an IPO perspective? So for example, for search we had, for social we had Facebook. Should we be anticipating an Aha ipel to come out of Sandhill Road and just blow the market away?
You know, as an investor in early stage or early growth, right, we actually think the Aha moment is M and A OK. And so what's going to happen is all of these companies that are focused on solving real world problems with AI are going to be acquired by these very large tech companies that have consumer bases they can sell into.
And that's what happened with case Text, right. Case Text had ten thousand of its own users, but their AI product was fundamentally disrupting all of Thompson Router's Oh and so Thompson Reuters had said publicly that they were going to invest a billion dollars in AI technology because they saw it disruptive to their entire business, right, and instead they bought case text, which they could plug right into their existing customer base.
Do you feel like the regulatory environment is going to allow for stuff like that? Because I feel like, if, if anything, big tech making making big deals based on things that they need and don't want to compete against, it's not going to.
Go so well.
I mean, if they if they truly have a monopoly, right, But I think regulatory right now has bigger fish to fry personally.
Okay, how about just fundraising in general? If I have an idea, I go to Sandhill Road and I try to get some capital. What's it like these days in raising capital? If I do I have to have an AI angle, can I get something done? Otherwise? What's it like raising money these days?
You know what it's like raising money? I think it's very like the general the ecosystem. I first came into venture in in that O eight O nine time period where you know, the markets were a little bit frozen. In terms of early stage, we're seeing a decrease in like the seed and the A funding. Definitely seeing a lot more down rounds in the later stage. However, that was the biggest fund I've been involved in. That was a monster fund, right because what's happening right now is
the same thing that happened back then. Where you know, venture capital firms have record amounts of cash, but because their valuations of their current companies got so over their skis, they're having to put their money and their current companies and not invest as much in new companies. And so if you kept sort of, if you kept sort of in a steady pace like we did, you're able to still invest in all of those new y early stage companies.
But for the early stage company, it's nice because you don't have fifty other competitors being also backed, so you have some runway to move.
In terms of exit strategies. I know you said M and A, is you think how it's going to go? What do you think the IPO market does, like when does that open up?
When?
So my crystal ball is not here with me today, However, you know, I think it's incredible what we've seen in the pipeline for IPOs. Right when we took Doximity public, the rule of thumb back then was, you know, one hundred million plus in revenue, you know, thirty percent to fifty percent growth year over year, you know, profitability. And they were profitable and they went out, which I think is very important.
In the hopper we have.
We have companies that have a billion dollars of revenue and are profitable, and so I think, what as soon as they're still private and they're still private, and we can talk about maybe why they're still private, but they're still private. And so when those go out and they go public and they have already proven their ability quarter over quarter to hit their plan and to hit their benchmarks and to be able to predict it. It's the number one recipe for success is to be able to
being able to forecast and predict accurately. It's what we found. I think that's going to bolster the market overall and really open the gates for other companies when that happens real.
Quick thirty seconds. What's it like for you to raise venture capital money? Are people still looking to put money and venture.
You know they are looking to put money. Investor but in venture. But it's tough because they are really people are for some reason are focused on these multi billion dollar funds which probably aren't going to return more than the public markets. Okay, and so yeah, for an early stage fund, I think we have a lot of opportunity.
Great stuff, Rebecca, thank you so much for joining us. Rebecca Lynn, she's a co founder and general partner of Canvas Ventures based in San Francisco, but she found her way here to Lower man and to be at the Bloomberg invest conference here in Lower Manhattan. I always wonder what it's like if it's gonna be M and A because it just doesn't seem like the IPO market is as as I thought it would be up fifteen percent this year up, you know, thirty forty percent off that October twenty three.
Low.
I mean, back in the day, I could get these companies out the door. Right, I don't know what's going on.
I mean, but back in the day, would the M and A market have been as robust as maybe it could be now?
Yeah, I don't know. I'm just thinking this younger generation just not as Oh, Paul, exactly right.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
Alex Steel Paul Sweeney were live here in a Bloomberg Interactor Roker Studio actually downtown at the Bloomberg invest Conference. We've moved it downtown to the World Financial ud Bloomberg Invest Conference. A lot of good stuff going on down here.
You know, there's one of the great stories in global financial services and wealth management is this supposed transfer of wealth, like a jillion dollars of wealth from baby boomers, which I qualify by like a year to like the Gen X and gen Z. Well, I'll tell you what I've told my kids, four of them. The last check I write is going to bounce, So don't wait on me, get the work and start saving. But I understand it's a thing. Emily Green Joints is ahead of wealth management
at Elvest. Emily, can you frame out what this opportunity is in wealth management? Because people are telling me there's gonna be a pretty big wealth transfer over the next generation or.
So, Yeah, definitely, and it's already started. Okay, So the numbers vary depending on what people say, but it's looking at anywhere from eighty four trillion to one hundred and twenty nine trillion have been named to actually move to the next generations. There's been a lot of talk millennials, but to your point, actually Gen X and Gen Z have been talked about a lot more more recently as well.
And what people have really forgotten is actually the first transfer is going to go from the husbands to the wives within there. And so we talk a lot about those millennials, but the wives are actually getting the money already, and so this is something that's already ocurring. And so you look at thirty trillion dollars by twenty thirty should have transferred to women.
Oh wow, which is really where labs comes in your CEO of Sally crowcheck yep. And this is all about sort of helping investing in wealth management company that's built by women and for women. How does this differ from another wealth manager?
For example, Yeah, I worked at a traditional wealth manager, one of the biggest wealth manager for a long time, and people often ask us this, and you know number one, just the numbers of financial advisors. I think what people also forget in this great wealth transfer is that over fifty percent of advisors are over the age of fifty five. There's going to be an enormous transfer of advisors as well.
We're starting to see it a lot of people coming to us and saying, advisors, my advisor retired, what do I do?
And so?
And you sit in a lot of rooms. In seventy percent of advisors, there's a lot of time or over the age of seventy and not below the age of thirty. So what's going to happen within here? And so what all of us eighty three percent of our team is women. Overall, all of our advisors are women. It's very rare within here. And so just that we are her within there and so that we hear her. And so when people when women are going through divorce, widowhood, inheritance, all these things
that are occurring that our team actually reflects. That has been an enormous way for us to actually gather clients within here. And then the other thing that we really see is these women, this next generation has been looking for more impact ESG investing, impact, whatever we want to call it. We can throw a lot of labels at this, but how do we actually align their values to their money?
So on the first point there, where do you get these young women to be advisors? Where do you get them? Because I know even the traditional investment banks have a hard time.
Yeah, No, we just went we just went to an event in Nashville. Yeah, and we're just you know.
It's not easy. And I'll tell you that I spent a lot of time looking at it, a lot of resumes of people who apply and such. It's not all young women, you know. I have some advisors. I one of the top advisors on my team a woman in her mid fifties. She was a large advisor at Wells Fargo for a long time. She went through something that was really soul searching for her. She had breast cancer and it made her really realize she needed to do
something more meaningful in her life. And so finding advisors like that where she was making a ton of money, she was good, she had a huge book of business. She didn't need to leave Wells Fargo. You know, these advisors, they don't need to make that transition. But she decided she'd need to do something more meaningful, and that a lot of advisors I find that are in their you know, mid thirties and trying to figure out, like how do
I make something for myself? And really those advisors who may be at that point where they're going to have children, they're thinking about what their career is going to look like at these big banks, at these large broker dealers, and they start to reflect and say, I'd rather be somewhere like Elevest. And so we've recruited a lot from these large broker dealers.
Well, I was gonna say, what is your recruitment process? Like how easy is it to pitch? Like what's the what's the track record?
It's pretty good. We get a lot of applications. I always joke to people, people be like, did you see my friend's application? Because I do get the emails. I don't read everyone's application every single day. We get a lot of them. That's so great, it's wonderful in a lot of So what do you look for them? It's it really varies within here. So I always tell people
I need a couple of different things. And actually, my biggest problem of hiring advisors, especially from the big broker dealers, and I come from I worked at JPMorgan where they tell you what to say every day. You know you're very trained, and is really finding people who can have that ability to think for themselves and to learn and to realize that our business six months ago was different than it is six months from now, and it will
be different twelve months from now. And so how are you actually building with us within there and then really thinking about that person who was passionate to our mission. I can feel from an advisor if they're just trying to come work for Sally Crotcheck or if they really want to we want to do and it is always amazing. Like I work with Sally very closely. I forget that she's Sally, and people you know, they want to meet her, they want to go through it, they want to do that.
And so we do get a good amount of that within the process.
Start with people have oh wow, Sally.
And so you have to work through the people who are going to be able to sit in a room, hold their own and show that they actually care about the last mission and that they're going to be able to relate to women.
What's a typical Elvest client look like? So and what do they need?
We have clients Elevest overall, we have clients from zero to tens of millions. Within there, I run our wealth management business and so that has kind of two parts within it. We have a mass affluent business and a traditional more high ultra high network business. Our average client
sets between two and ten million of investable assets. We do have family offices who come in and we do a lot of more private investing within there, and so they're typically people who need a financial plan, need that guidance, need some decision making in order to think about what does retirement look like. I would tell you none of our clients. I have one client where retirement means golf every day. Most of them it means I want to leave my huge mag seven job and go do something different.
I need to do something meaningful, I want to start a business. Whatever that means in us helping guide them through that. And then we invest across all ASCID classes. So we do stocks, bonds, and alternative investing, and that's where we've gathered or a lot of clients. Actually is the differentiated alternative investing that we really do, which is not the big guys, It's not the names that we all know. It's not the places that all the large
broker dealers put on their platform. These are like bespoke managers that could be fifty to a couple hundred million in AUM managers, and people really leave some of these big broker dealers to have some of these very opportunistic ideas.
So interesting, really cool.
I'm the women who come to you, are they also tend to be married or is it more just like you really focus on the women's side.
Great question. People ask me this all the time. Yes, forty percent of our clients are actually meant in wealth management because sometimes women marry men. It happens, and so most of them are married. Actually, And what you find is a lot of times the woman has to have
some authority over the money. So she made it, she inherited it, she's the one who controls it in some way, and she comes and we have clients who maybe for a little while they manage their money separately, and then a year later he comes overtly, Yeah, comes across the corner, you know, comes to that zoom meeting and it's like I don't like me.
Yeah, really amazing, This is such great stuff. I learned a lot on the Green Thank you so very much. Head of Wealth Management at.
Elves CEO, of course, is Sally Crocheck.
There.
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We need this at Bloomberg Intelligence Radio and we are broadcasting to you live from the Bloomberg invest Write Conference right here in Lawer Manhattan, bringing together the leaders from asset management, banking in private markets. It's wrapping up in just a few hours, but it's been a really fun day and a half. We also keep you updated on all the fun, juicy Wall Street stories, and for that we're going to go back to seven thirty one legs
to shrin Anarajan in the Bloomberg Interactive Broker Studio. A. Shri, you have an amazing big take story that you co authored and it's called the last seventy two hours of our kegos. I can't imagine what reporting this story out must have been like, can you walk us through can you give us the cliff notes to the seventy two hours.
Look, this is a story that's fascinated Wall Street for much of the last three years. Right Billhong out of nowhere, had built up such enormous wealth, had a family office, and yet hid wealth had gone from a billion to four billion, from four billion to thirty six billion in a span of six months. That all collapsed very publicly in March twenty twenty one, when in a matter of
days he lost his entire fortune. Everyone on Wall Street has been trying to figure out what happened, how it happened, and a lot of the details have been dribbling out for the last few years. But over the last few weeks any court room in downtown Manhattan, Bill Huong is on trial. Prosecutors accused him of manipulating markets, of defrauding lenders. But after having spent a lot of time in the courtroom, another key takeaway from it all has been that Wall
Street doesn't look all that great. Here was someone whose personal wealth might have been thirty six billion dollars, but he had another one hundred and twenty five billion dollars in borrowed money. He had a gross portfolio size of one hundred and sixty billion dollars, making concentrated bets on much of the same names, and all the banks were largely caught unawares. Yes, they got vague answers, evasive answers, but they also relied on pinky promises effectively to give
him so much fire for his bets. And in the end the banks were burnt badly, lost over ten billion dollars, and one of those banks, the most badly hit credit Squeeze, doesn't even exist anymore, and you could argue Bill Hung's firm played a key role in that.
So Shree, what I found fascionating about this article, and it's a great minute by minute walk through a seventy two hour period when it all kind of came to an end for everyone involved, was that the banks did not know that Bilhuang and his firm was layering on such concentrated bets across various firms. One bank didn't know what the other bank was doing. Therefore they didn't know the magnitude of the exposure. How did that happen?
And look in all the conversations we have, they will tell you we're not allowed to ask. If you're in the prime brokerage business, if you're in the business of extending leverage to your client, the client doesn't necessarily have to tell you or show you their exact portfolio. They will claim secrecy, they will claim proprietary information. But at the end of the day, banks can also say, if you don't give me as many disclosures as possible, I will not give you that money.
That never happened.
These guys would come in and say, yes, we have a diversified portfolio, and yes, don't worry, we have all the controls in place, and it's across a mix of names, and the banks would believe that, Yes, they expect honesty and truthful answers. And if they didn't get that, and you can see why the DOJ wants to go after Billhong and Archie goes. But just think about it for
a moment. You walk into a bank today as a retail customer and want a ten thousand dollars loan or a mortgage, or you are trying to get into a co op. The hoops that one has to jump through, the signatures you have to get I mean to get into a co op. You will need three witnesses, three friends, your high school teacher, your college professor, and so many other.
People when you're first born man, and if you're getting into a co op.
Pretty much and in this case, he as someone who said I would like five billion dollars in capacity, Actually, can we increase it ten billion now? Because my portfolio sizes increase and all the banks are doing you're sure you're you're good for that right and we can trust you that you're investing well and you're doing this responsibility.
Yep, yep.
Great not They didn't even require written declarations about what the portfolio looks like. These were phone conversations and that was convincing enough for them to extend this kind of money. And that's why for us it's yes, the legal process will follow its own path, and the jury of twelve New York because will decide whether Bill Hoong his CFO if they are guilty or not on the charges that have been brought against them. But it's not a great look for Wall three.
So in terms of Wall Street, could this happen again or do you think now things will be rethought? Those pinky pinky swears will be by the wayside.
By the way, I was told by one of the editors that pinky swears are the highest grade of promises out there. So if you can't rely on that, what do you rely on. I will make the point though, that the lack of copycats before our kid goes or even after our k goes, isn't necessarily reflection of a new regime of banking, of strengthen controls of great oversight. As much as in the case of our gecos there was one man who was willing to take a pliant system to the extremes. There was a lot of noise
about bringing in rules. Family officers don't face the same kind of oversight as hatch funds, and they will talk about what can be changed, how the rules need to be modified. Some have been put in place, but for the most part it's been a lot of talk, and these things take time. The worry still remains. And look, this happened recently, so the banks are perhaps shry of doing this with someone else, but it's not entirely clear to me how they avoid a repeat of this situation.
If someone else comes along and follows this, you know, you may want to call it what might have looked like genius investing to start with, but really at the end of it reckless investing. If they follow the same pattern, can we be guaranteed that they won't be a repeat? I don't know, and Credit Swiss will tell you it doesn't even matter, because they don't. They don't exist anymore to be able to tell you if there will be
a repeat or not. That was the kind of consequence we saw from the collapse of this one film.
Any says how this trial is gonna gorocery, Well, it's it's fascinating.
It's happening in the court room of a nineteen year old judge, right, and you have you have a jury most of them, well all of them had never heard of Bill Hoong or archade Goes before, and and that kind of means that they have been getting a finance one o one finance one on one sounds challenging in itself, But then if the prosecutors and the defense lawyers have to spend much of their time trying to explain security based swaps, margin leverage, even discuss what memes talks and
what they're not, and have to define for some of these people what Goldman Sachs is It'll be very interesting to see how it pans out. Because when you're listening to some of the arguments in court, when you when you when you hear prosecutors talk about a lot of heavy investing towards close of market, they were lifting the firm limit to dry and drive the price up. And yet on counter you kind of understand that that is how business is done on Wall Street. I mean, some
of this jargon sounds sinister, but isn't necessarily sinister. But how we see and perceive it doesn't matter. It's what's getting through to the jury. The prosecution rests its case today, the defense gets another couple of days, and after a break next week, we will come back with closing remarks, and then we will get the final verdict on this one.
All right, that's gonna be fascinating. This is a fascinating article. Big Take article on the Bloomberg trumbling check out on a Bloomberg dot com slash Big Take as well. Shrinanna Roger and Bloomberg News senior financial reporter on the Big Take story. The last seventy two hours of our chae goes and you I've been reading it this whole time. Here It's just minute by minute, and it is a really amazing look at this explosion.
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