Bloomberg Audio Studios, Podcasts, radio News. Hello and welcome to the Money Stuff Podcast. You're a weekly podcast where we talk about stuff related to money. I'm Matt Levine and I are at the Money Stuff column for Bloomberg Opinion.
I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
Hello Katie, Hey, Matt, you're very far away.
I know this is the first time that we've done this podcast where we're in different locations.
Yes, you're at Bloomberg. I am not at Bloomberg. I'm in a secret that I've been in my house.
You're in your house, and I'm in my house because I don't actually leave this building.
What are you talking about today, Katie.
We're going to talk about Texas at Potential Stock Exchange coming to Dallas. We're going to talk about Bill Lackman, of course, and then we're going to talk, of course about Roaring Kitty, also known as Keith Gill.
Let's give into it Equities in Dallas.
Equities in Dallas, the Texas Stock Exchange. That was a big splashy report from the Wall Street Journal this week that this company would like to start a new stock exchange headquartered in Texas.
It's very exciting.
I guess it is. So there's so many ways that we can attack this. Let's get on it head on. In that there's been a lot of attempts to sort of launch exchanges. As you go through in many columns, the long term stock exchange, we have the members exchange, we have the investors exchange. I feel like it's kind of easy to launch an exchange and get to one to two percent share. What's interesting about this is that this is political. This is a politicized stock exchange, even
if they're trying not to be. The introduction of Texas I feel like makes it political.
Yeah, I mean there is like this sort of movement in American business politics to move stuff to Texas, right, I mean you see it with Elon Musk trying to move his companies to Texas from Delaware. There's the sense that like a lot of corporate rules are set from you know, New York and Delaware, and that people who don't like those rules might find a more sympathetic audience in Texas. I don't know that that's exactly relevant to this company, but yeah, they're sort of making noises about
the listing standards. You know, most companies are listed on either the New York Stock Exchange or NASDAC, and there are rules about corporate governance that apply to listed companies and those stock exchanges. And I think the people starting this exchange, or at least hinting that some of those rules are either too onerous and expensive or they're too like woke and left wing, and so they will offer a different set of rules in Texas.
The SEC still has to approve their listing rules, so they can't be like too crazy and out there.
Yeah, I think like some of what's happening here is like there's this notion that Nicia and NASDAK accept the listing rules. I'm like, that's not exactly true. They sort of do it with pressure and input and approval from the SEC. So Nice and nas listing rules don't differ from each other all that much because it's not like Nicia and NASDAG are out there making crazy decisions. It's like kind of done in concert with the SEC. So there's only so far that the Texas Stock Exchange can differ.
So I have a free idea for the Texas Stock Exchange. I was waiting for your reaction.
But I'm sure they'd pay you a lot of money for that idea, Katie.
But well you haven't heard, so let me let me lay it on you. So, like I said, you can get to one to two percent share. But as we've seen with some of these other upstart exchanges, it's really hard to attract listings. That is a nut that has yet to be cracked. What the Texas Stock Exchange should focus its efforts on is getting Musk to switch Tesla from Nasdaq to the Test Stock Exchange and be like the anchor big name listing.
That's a really good idea. I think they should pay you for that idea. I mean, it is a really good idea. Right. It's so hard to get listings because most companies don't think that much about their listings anymore. Right, Like, if you're listed on the top tier of NASDAC or you're listed on the top tier of Nice, it's fine. Like you're not getting that many perks from switching from one to the other, and it's like an administrative hassle
and it's confusing, So why would you switch? Right? Most companies think about listings only really when they're going public. I mean, you're going public. It is such a high pressure situation. It is so important to get it right. And if you list on some untested exchange and you're the first company listing on that exchange, there's that small potential for catastrophe, and you really really really don't want
that when you're going public. So if you are going to compete for listings, you do have to start, probably with already public companies, and you want companies that are interesting it in doing weird stuff and not afraid of the like weird stigma of being the only company listed on a weird new exchange with lower listing standards. And that all does sound like Tesla.
Yeah, and I feel like the risk of catastrophe isn't necessarily going to deter Elon musk Away.
Oh yeah, I think the rest of the catastrophe is much lower for an already public company, right, Like the rest of catastrophe is mainly for an IPO. Right If you're already public, it can only go so wrong on your first day of trading, Like the worst thing that happens is like takes a little extra time to open you for trading. But yes, also I agree that even if there were a risk of catastrophe. Elon Musk would say, great, sign me up. So I think it's a good idea, Yeah,
not to step on your territory. But like, I don't think that the other listings that they would want to compete for are for ETFs, right, because I assume that, you know, if you're an ETF is sure you have a lot of ETFs. It's a little bit less higher stakes each time to like pick a listing exchange and I assume they're angling for that product. I don't know.
Yeah, if you take a look, I mean at their various press releases that's in there that they do plan to compete on exchange traded product listings through lower fees ETF listings. This is, you know, something that I'm actually reporting out right now. But I am curious how much of a business and how bigger of a business that might become for exchanges because you think about the current IPO market and there's very little going on relative to you know, the halcyon days of like twenty twenty one
or whenever the last big rush was. But I mean there are hundreds of ETFs that launch and list every single year, and I mean those ETFs. They pay an initial listing fee and then they pay annual listing fees, so I mean that continues to hum along. It was just so fascinating to see that press release that that specifically is an area that they want to target, because right now it's NASI, it's NASDAC, it's also Cibo, and Cibo for example, has.
Been taking bath Exchange is not a major listening venue for public companies, but it is for ets right. Yeah, it's the easiest space to compete in.
It's the second biggest venue, so we'll see. But aside from just listing fees, which I mean, who knows. But when it comes to transaction volume, you think about black Rocks Bitcoin ETF, which is now, since it launched in January, the biggest bitcoin ETF in the world. It does a lot in trading volume, it's listed on Nasdaq. I mean, it's done much better than some of the recent IPOs from this year. So you have to imagine the ETF business,
the ETP business for these exchanges. It's a nice cushion from what's going on in IPO land.
Yeah, and if you're starting from scratch, it does seem like an easier thing to pursue. Now do you think that you know, as you said, it's like a lot of exchanges have started and gotten to like one to two percent of market share and then kind of plateau there. My impression is that's not the worst business, because the
economics of exchanges are very weird. And one thing that sort of happens is that if you are a big broker or a big electronic market maker, you're sort of obligated to connect to every exchange because you have obligations to get your clients the best execution, and so you have to know whatever exchange is doing. So even if you sort of say, I don't think the Texas Stock Exchange is ever going to have almost ever going to have the best price on any stock, you can't be
sure of that. So you have to like connect and check their prices before you trade somewhere else. And so you're paying them for like connections and for data fees, and so anyone who's like a certified official national stock exchange can get some revenue from just like charging for data. So it's this interestingly regulatorily protected business model that when you start an exchange and you go out and pitch investors, you have to like tell a story about how you
know we're going to be the anti woke exchange. But like some exime, once you have the exchange, that doesn't matter what you do. You can just collect the data fees.
Sounds pretty good, so.
As you actually intend to like displays nice and Nasdaq as like one of the major listening venues, which I think is much much much harder to do.
Yeah, I mean, I feel like I've done a good job of not exposing my bias thus far.
So I wouldn't say one other thing about the Texas Stock Exchange. Two other things. When is the phrase equities in Dallas, which of course comes from liars poker, where it is used as an insult because the worst trainees in the solive and training program were sent to trade equities, And.
Yeah, I missed that reference is.
Oh did you?
Oh? Yeah, let me tell you.
I had a reader email me literally. I wrote the newsletter about the stock Exchange and the section header was equities in Dallas and someone replied saying, I can't believe the section header for the Texas Stock Exchange wasn't equities in Dallas. I was like, wait, it was just read it. People were so keen to come up with that joke on their own, that they were like emailing me that joke after I already read it. I didn't come up
with my own either, but someone else told me. But anyway, Equities in Dallas like a Great Wall Street insult, which is now like the actual business model of the Texas Stock Exchange.
Maybe it will soon be a compliment. Perhaps.
I think Dallas has sort of self consciously reclaimed its statue as a financial center and been like, no, no, it's not Equities in Dallas anymore. Now it's good. But the other thing I want to say about this exchange is that I wrote that, you know, it's all electronic, right, No one really stands on the floor of stock exchange except like TV reporters now. But you know, I wrote that their computer for trading stocks would be in Texas, and they actually told me no, they will have a
data center and somewhere in Dallas. But they also have a data center.
In Secaucus, as they should.
As they should because all US stock exchanges sort of have to be in northern New Jersey because it is all this interlinked web of trading venues where like everyone trades on every venue and you sometimes have to do arbitrage trades where like a stock is trading at one price on BATS and another price on NASDAIK, and so you want to do the trade between them. To do that, you have to move data. And it takes longer to move data over long distances than it does over short distances.
And this business is so like competitive and so focused on speed that people locate their computers in the data center with the extan computers. And the idea of sending your data all the way to Dallas would be weird. It would be so far away, it would takes so long for your data to get there. So of course the Texas Stock Exchange will actually have computers in secaucas next to all the other stock exchanges computers.
I love that that the beating heart that's a financial world is in northern New Jersey.
Incas right, It's like suburban Northern New Jersey is like where everything is.
I just my brain like is cooked. I can I can feel it like sizzling and frying.
That's okay, because now we're going to talk about Bill Lackman.
Bill Lackman, Bill Ackman, There's a lot to talk about with Bill Lackman.
There usually is, but now we're talking about his closed end fund. We're among other things.
That's the only thing I was referring to. I am so excited to talk about his closed down fund plans, specifically in the US. And then there's also the IPO.
Yeah right, they go together, right, Yeah, he's got a lot of stuff gone up.
Where do you want to start? Perhaps the IPO, I don't know.
Yeah, So they're link so basically starting last week of the Welsher Journal reported and then there's been some good Plomberg flo up. There's this package of Bill Lackman news. So Bill Lackman runs Pershing Square Capital Management, which is a hedge fund firm, has been a hedgehund firm. Now most of its money is in the form of a closed end fund in Europe called Pushing Square Holdings runs like eighteen billion dollars, not all of which, most of
which is in Persian car holdings. US investors they kind of can buy Pershing Square Holdings, but not really. It's like bad for taxes and they can't market it. So it's mostly European investors. But Bill Lackman is in New York and the fund mostly invests in the US. Companies, and so he wants to open a closed end fund in the US that would do the same thing. It would buy US companies, but it would be much more convenient for US investors and he could market it to
US investors. But then last week the journal reported that he's also planning an IPO of the management company of Pushing Square, so the management company itself would go public, probably like at the end of next year or something. And in the lead up to that, he sold the stake.
He sold like ten percent of the management company to some private investors for a billion dollars, so valuing the management company at ten billion dollars, which is really quite rich for a hedgehome firm that manages eighteen billion dollars. To value the management company at ten billion is pretty rich. But then also Bloomberg reported that he's planning to raise twenty five billion dollars for the US closed und fund, which helps explain the valuation of the management company. He's like, oh,
he's going to run like a lot more money. But on the other hand, that's a sort of ambitious target to raise. So that's kind of where the news is.
Yeah, I mean, starting with the ten and a half billion dollar valuation. That's something close to sixty percent of its assets. And according to the Wall Street Journal, they reported that Acman told investors to compare Pershing Square to Brookfield Asset Management, Blue Oul, et cetera. But then you take a look at how they're valued. And this is something that Aaron Brown pointed out in Bloomberg Opinion that typically they have market capitalizations that are like fifteen to
eighteen percent of their assets. So I mean, comparing them to that peer group, it's still quite rich. But I guess if you are planning to quadruple assets or something, it makes a little bit more sense.
I mean, like my doneb math is like you can charge some fees on your assets, right, and like what kind of fees can you charge your Blue Ol or Pushing Square or somebody like that. You can charge you do one or two percent of assets, right, you know, maybe a little more if you're making big performance fees. And so if you're charging one or two percent of assets, you capitalize that at like ten times, then the value of the managing company is ten to twenty percent of
assets under management. So sixty percent is really big, right, Like if you're charging six percent of assets per year, then you can get that kind of valuation. But then you know, if you're judging six percent of who would pay you six percent of ethsets to run their money?
But yeah, I mean I think that the idea is that you're comparing them to these other asset managers, but you're baking in a lot of growth in the very near future, which is ambitious, right, Blue Owl and Brookfield also want to grow assets under management, but like Pushing
Square is gonna double assets under management in like six months. Okay, maybe I do think I think that's like a little bit fascinating about Pushing Square's business model, and like why they think they can get a premium valuation is it's so simple, right, Like they have one investing team, they buy like twelve stocks, they hold them for the long term. They're all like liquid public US stocks, so that there's
plenty of capacity. And so like Blue Owl, you're paying a lot for a lot of people that go out on the road and like find companies and try to make direct loans to them, manage the credit risk, and like the loans are constantly like maturing. You have to find new loans. Your money is in funds that have a limited life, and so you have to like go raise new funds and all this stuff. And Bill Ackman is like, I just have like this one permanent fund or two permanent funds now, and I buy twelve stocks
and like that's it. That's the whole business.
So it's really I love that. I'm fascinated with this investing style just because it is so simple.
Say I'm exaggerating a little bit. He has made a lot of money doing like asymmetric derivative trades, where like he'll pay like a little bit of money for CDX indexes like just before COVID hits, and like make one hundred times his money on these derivative trades. So he's like putting some of that into the product too. So it's a little hedge funny, but from day to day it kind of looks like buying twelve stocks.
Yeah, I mean, I tend to think of those as just hedges and thus don't think of them very much, but maybe I should be thinking about them more.
Well, they are hedges, but like you know, if you buy the S and P five hundred, you're not getting those hedges, right, This is true. What you're getting here is exposure to large cab us stocks plus some hedging for bad situations, which is like you know, which is a hedgehun product.
I do really just find the simplicity, though, really appealing, and it's something that's coming a little bit back in vogue. If you think about what's really hot in the ETF world where I live, you have all these income products, these very options overlay products, and then you have just super concentrated equity ETFs that are launching with greater and greater frequency because I don't know, it feels like a while we swung into at least in the ETF world,
like these basically closet indexing type active funds. Now people are just going super active because they found out that's actually a really hard way to beat the benchmark. But I mean it kind of always mixes my brain up a little bit that, like, you have a hedge fund that is going public, and I know there's a few examples of that, but if you're an equity investor in pershing, I feel like you're just buying a stock with a ton of key Man risk and that doesn't make a ton of sense to me.
You definitely are. I mean, it's interesting because like you're making two baths, right, What is the business model of Pershing compared to other hedgehunt firms? Is very appealing because all their money is really locked up, you know. It's the Pershing Squareholdings closed on fund in Europe and then this anticipated fund in the US, which are permanent capital vehicles, like the money can't go away and their revenue comes
mostly from management fees. Right, So, like investors are very nervous about paying for incentive fees for hedge funds because like the fund has a bad year, it doesn't earn any incentive fees, right. Like, if you're buying a management company that makes a lot of money on incentive fees, you value those at kind of a low multiple because you can't be sure they're going to be consistent from your dear Krishan Square is like you're gonna make all
its money on like two percent management fees. So it's very consistent revenue on very locked up money. So on the one hand, it's like a very safe bet, right. But the other thing you're buying is like Bill Ackman as a person, right, and you're buying like his ability to go raise twenty five million dollars, which again, is
like really ambitious. Right again, Like every other investment firm would love to double their assets next year, but like Bill Ackman is selling his ability to double his assets to investors, right, And I agree, it's a lot of
keymand risk. It's like there's like kind of a memestock vibe to it, where like you're buying this guy who is like a financial celebrity, who's on Twitter, who's on television, his personal life is in the news, you know, like a guy who has a lot of retail appeal and who's like very explicitly marketing that as part of the business proposition. So yeah, like that's what people are investing in, is like his ability to like monetize that celebrity to raise a lot of money. But yeah, like what if
he gets bored? His number two is not the same celebrity. If you're not getting like a super institutional asset manager, you're getting like kind of one guy, yeah, which again is cheap compared to like you know, you're picking twelve stocks. That sort of cost structure is fairly lean, but like you are relying a lot on him continuing to do it and his celebrity continuing to work.
Let's talk a little bit more about close end funds, the close end funds specifically, you mentioned the European one. The European one is really interesting because it's actually done super well. It's returned fifty percent over the past year. But the discount, it's trading a twenty five percent discount, and I have to say, I don't super understand why.
I mean, if you look at some of these UNI ceas and other ones, I sort of get it with performance like this, I don't quite understand why it's trading it's such a big discount.
I don't fully understand the European tax situation. I've been told there is some tax overhang and that's part of the discount. I'm not sure if that's true. I think that the traditional explanation for closed them fund discounts is often fees. Right, Like you know again, it has like a fairly small portfolio of fairly long term holdings and fairly liquid stocks. If you look at that portfolio, you
could replicate it. You just buy the twelve stocks. You would get the discount buying those twelve stocks, but you also wouldn't pay Pershing Square any fees for owning the twelve stocks, right, you just own the twelve stocks directly, So the fees eat into the value of the fund and explain part of the discount. The other thing that I think sort of explains the discount is just investors inventation. Like, as I said, it is hard to buy Pershing Square
holdings if you're a US retail investor. It's got some weird tax attributes and they can't market it, and it's just like you know, you can like find on your own, but it's not a thing that a lot of US investors buy, and it's otherwise like very US centric, Right, It's like a guy who's a celebrity in the US, who tweets in the US and who invests in US companies, So like who's going to buy Pershing Square holdings in Europe? It's like open to European investors, but it's otherwise targeted
very much to the US. So I think that's part of it, is like it's just not the most attractive product. And clearly pushing squares hope is that when they do, you know, kind of the same product. Pushing square US is not that different from pushing scare holdings, but when they do that product in the US, and like market it very heavily to US investors. They will get a lot of US investors, and it will not trade at a discount.
If you ask them, I think they will hope that it will trade it a premium because people will be so excited to Bill Ackman manage their money that they'll pay more than the net ass and value for the fund.
But we'll see, it'd be great to ask Bill Ackman that. But to that point, I do wonder once the US fund launches, who would buy the European fund other than Europeans of course. I mean, if you think about the difference in the fees. Right now, the European one charges a one point five percent management fee and a sixteen percent performance fee. You think about what the US one is going to charge, and it's just a two percent
management fee. So it's free for the first year. Yeah, so it's clear what the better product is.
Yeah. I mean, like, part of the reason I think that they originally did this fund in Europe is that you can't really charge performance fees on a publicly listed goes on fund in the US, and so that's why this will not charge performance fees. But also like you think about it with the IPO, like, performance fees are bad for public investors in the management company, right, Like they don't describe a lout of value to those performance
fees because they fluctuate. So if you're thinking about taking your management company public, you're less excited about the performance fees and you're more willing to just sort of do it for a flat two percent because that's what investors will pay for.
So if you think about the actual Pershing Square IPO, I mean that's not happening for a while, but the US closed fund could become a reality pretty soon, like in the next couple months or so.
Let me ask you, as a kind of seroquas and funds, do you think they will raise twenty five billion dollars?
I don't know. Actually, there was an interesting lot of money. It's a lot of money. But I mean Bloombery Intelligence had to report out this week and didn't downplay that number at all. I mean, you think about the size of some of the most retail friendly ETFs, and I think twenty five billion could be possible. Yeah, I mean think about Kathy Wood for example. She doesn't manage that much money now, but I mean she got in the
forty billion dollar range. Also, for all the shade that we just threw on the European Clothes End Fund, it has fifteen point three billion dollars in Europe, so I guess twenty five billion dollars in the US. Putting it through that lens looks very realistic.
Yeah, I mean I think that's right. I mean, manage a lot of money, and he has a good track record, and so yeah, why I shouldn't be able to raise twenty five billion dollars? So I want to do a weird transition here, Yeah, do it. At some point in the last few months, people started sending me Instagram ads for Bill Ackman's investing masterclass or his investing newsletter or something where you'd sign up and it's like, I'm Bill Ackman. I picked all these great stocks, and I can teach
you how to pick all these great stacks. People kept sending me these being like, look at what Bill Ackman is saying. These are obviously fake, Like these are completely obviously fake, Like.
His eyes were yees.
No, no, they were real pictures of Bill Ackman taken from the Internet and used to market a fake Bill Ackman newsletter product. I didn't click on them, so I don't know what the product is. I don't know like what the scam is exactly. But someone is like, I'm going to like pretend that Bill Ackman is starting an investing newsletter. I'm gonna get people to send me their credit card to like sign up for this newsletter. And they bought Instagram ads, saying I always thought these were
like super obvious fakes. I think I actually saw it like they were served to me on Instagram. But then people send them to me, but they're just they're fake. This week I have gotten several people sending me Instagram ads for Keith Gill oh right kiddy starting an investing masterclass or newsletter or what have you. I'm also fairly
confident those are a fake. And the reason I'm confident those are fake is that anyone, almost anyone, not literally anyone, but almost anyone who's selling you an investing class or like a stock picking newsletter, you should ask the question, if they're so good at picking stocks, why aren't they just making a lot of money picking stocks? Why do they need my forty nine ninety five for this investing newsletter? And like Bill Ackman, Yeah, it's like a billionaire running
a hedge funt. He doesn't need your forty nine ninety five. That's why you know that Bill Ackman investing ads are fake. But Keith gil he has like three hundred million dollars trading game stop stock. He does not need your money. He is not starting an investing newsletter. He is, however, going on YouTube to do a live stream to talk about Gamstop at noon on Friday, June seventh, which is unfortunately after we record this podcast, before we release this podcast.
So for the time you hear this, Keith gill will have said something newsworthy that we haven't talked about.
So here's an instance where time just really becomes a concept.
You know, I know, right this podcast is meant to feel timeless and unchanging, but in fact we're recording it before Keith gill s has some stuff on YouTube and releasing it afterwards.
Sorry, all we can definitively say about the.
That was a transition. Now we're talking about Keith kill.
That was actually I throwd at that needle quite while I was a little nervous.
I think it's interesting, like there's the two that I've seen, like fake investing newsletters have been Blackman and Keith kill. Maybe there was one for Warren Buffett years ago and I just missed it. But those are the guys.
Yeah, those are the guys to do it. I'm really interested to see the Keith Gill live stream at twelve pm. All we can totally say about it right now is that it will put to bed whether or not the posts that we've been getting from Roaring Kitty have actually been Keith Gill, whether it truly has been him posting, can.
You think a step back? So I don't know, Keith Gill should be interested. Yeah, we've said one it before, but he's the guy who started the GameStop frenzy in like January twenty twenty one. He was like a guy who got long game stop and said I like the stock, and he would do these like four hour YouTube videos about why he thought GameStop was an undervalued business. And then when GameStop had a huge rally in January twenty twenty one, he was like the sort of patron saint
of that and got a lot of media attention. And then last month he tweeted some weird stuff he treated like a cartoon, and then he treated some video clips and GameStop stock came just roaring back a huge rally. Then he like posted on Redda his trade account back in twenty twenty one. He would like periodically post his game stop positions and how much money he had made and how he was holding them. And he posted that last week, and it was hundreds of millions of dollars
of game stop stocking options. And at one point Bloomberg calculated that he had a portfolio worth like three hundred million dollars of game Stop And so he's back, as you say, he's gonna do a video thing where we'll see him, and unless AI has advanced tremendously, we will know if Keith Gill has actually been on this account, which I think we already do. Like I think there were a lot of rumors when he came back, because
he was just tweeting inscrutable stuff. They were rumors that like someone had like bought or hacked his account and someone else was doing this and it wasn't really him, and this was all like some sort of weird fake out. And I think that now we know that's not true. Because there was a Wall Street Journal story about e Trade getting increasingly nervous about his trading because they worry that it's market manipulation. And if he trade is worried
A had his trading, they do KYC. They know who is trading it, right, And so if they know what his portfolio looks like and he's posting that portfolio, then like that means this is all real, this is actually his Twitter actually has read it, and now we'll see him tomorrow on YouTube.
Can I tell you how tired I was when I saw those headlines that you Trade might kick him off. I know it's just conspiracy theory fodder. It's reasonable that people would make conspiracy theories out of that, Like didn't anyone at e Trade watch dumb money?
Well, I mean to be clear, Like that's the debate they're having. They're like, on the one hand, we worried that he's committing market untilation. On the other hand, we're going to get so much flak if we kick him off for a platform. So I mean like, ordinarily, if you're like some guy, some retail trader might be committing market reutilation, but we're not sure that the charges would stick, You're like, yeah, who cares kick him off? What does
it hurt you? But you don't want to skate too close to the regulatory line if you're a big broker dealer. But with Keith Gill, if you kick him off, it's going to be a real firestarman. So I think you know so far they haven't. By the way, the controversy about him being a market manipulator, I find it's a little strange.
Yeah. Well, I was just going to say, I'm so drilled and grateful to be doing this podcast with you, because on Twitter after he posted some of those screenshots, I saw a few different tweets to the effect of I won't be saying how I feel about this until Matt Levin tells me how to feel. So tell us how you feel about market manipulation and whether Keith Gill is manipulating markets.
I mean, I love him, like how many I said.
I love it?
So I wonder I want to quote a few things. There's another journal article about like the gist of it is like everyone is running around like chickens with their heads cut off because they don't know if this is market maniplation and they don't know like what the rules are. So they quote Matt Staller, who's a sort of left wing journalist and market analyst, saying this is obviously market manipulation.
I can't believe we're even having this conversation. If market manipulation law doesn't handle this, then what's it for?
Which is like, what is it for?
I mean, like to me, like market inguilation is like if you move a stock by doing something deceptive. And the thing about Keith kill is that he's definitely moving stock. He's definitely like when he tweets, the price of game slop stock goes up, and it's definitely like not for any fundamental reason, you know, it's definitely like his fans and his followers are buying the stock because he's tweeting about it. But none of them were deceived, right, none
of them are being lied to. There's no deception guy on. So I don't think it's manipulation. I think it's just this mysterious new thing. It's like coordination, right, Like people are having fun with their friends. There's like the social elements to like all buying game Stop together, and when Keith Gill tweets, that's the thing that makes everyone like
go buy the game Stop together. It is strange. It is a way of moving stock prices that has nothing to do with the fundamental value of the cash flows. But marketmunification laws about using deceptive devices, and there's no deception going on here. It's weird if you're like a fundamental investor who wants to buy game Stop at a reasonable price or wants to be able to short game Stop if he gets too high and or worried about being blown up, you know, it's like bad for market efficiency.
But the stock market rules are not about market efficiency. They're about honesty, and like usually those things kind of work together, and so if you're not lying about a stock, the stock will probably come to the correct price. But Keith Gill has discovered this mysterious new thing where like you cannot lie about a stock but still make the price not be correct. So I don't know. I don't think it's market mutilation, but I understand why people get mad about it.
Yeah.
I also from that same article, I want to quote another complaint. So Jake Clayton, who's through the chairman of the sec the Journal, says that he suggested in an interview that Gil should publicly answer questions about his trading. Such questions include is he working with anyone else? How did Gil an individual investor finance his purchases of game Stop shares? Has he hedged any of his bets on
game Stop? And what are his ultimate intentions? And it's like, yeah, I understand why you want to hear all that, but he actually doesn't have any obligation to do that. There are actual disclosure rules about who has to disclose what about a stock, and he hasn't triggered any of those disclosure rules. He's not an institutional investor, he's not above five percent of the stock. He's like getting there, you know,
He's just like a guy buying stock. There's no rule that says he has to answer your questions about his intentions. It's like driving people crazy because it is not covered by the rules, and everyone has this intuition that there's something wrong about it. But it's technically fun boy. Is that not legal advice?
But I mean, in his own words, he just likes the stock.
Well, he hasn't said maybe he'll say that on this YouTube lave Ship. Yeah he said that like two years ago, but we don't know if he likes the stock now, if.
His intentions have changed. I'm curious to see how many more headlines like this week get because after he posted on Reddit that screenshot that showed his stake, Bloomberg News reported that Andrew Left, the founder of sitch On Research, pleased a new short bet against Game Stop, immediately just went back and shorted it. I have to imagine he's having a pretty lousy end to his week.
Yeah, I mean, I'll tell you, if you're shorting game Stop, now, that's not like a fundamental bet, that's not like, oh, like I've looked at the you know, business model, and I think that this is overpriced, right, if you're shooting game Stop fundamentally, what you're betting on, I think is that Keith Gill will get diminishing marginal returns for his tweet, right, Like what you're betting is like oh yeah, like when he first treated that, everyone's like, oh excited he's back.
When he treated his profits, everyone's like, oh he's excited. He's back. And if this YouTube video does even better than the treats, then like, yeah, Drew Left is gonna get blown up. Although I think he's said that he's scaling back his short bets on Campstop, he's going to count. But yeah, like you know, if Keith Gill continues to have this wild power to move the stock every time he does some stuff. He'll keep doing more stuff, and the stock will keep going up and the short sellers
will lose a lot of money. But I think there has to be some sort of bet on fatigue here where it's like, well, you know, like eventually people will stop doing this.
I don't know if that's right, but I mean so at two points there, the first one on diminishing returns, that makes a lot of sense to me. And yet I still keep getting surprised, and it still keeps popping double digits out of nowhere. And I probably would have said that in like twenty twenty one as well. And here we are in the Year of our Lord twenty twenty four. To your point, yeah, go on, no, you go no, I won't know.
He's doning a great job. I don't want to use the word manipulate because I just it's not recopilation. But he's did a great job of slow rolling this out to like maximize impact. He like did that weird treat and the stock jumped, and then like he waited a while doing other weird tweets where you're like, is it is it? What is he saying, what does it mean?
And then he revealed his position, which is enormous and people were very excited about that and that moveless talk, and now he's going to go on YouTube and like he was originally like more than anything else, like a YouTube guy, like he would do these long, in depth discussions of game stop and so he'd come back in
other formats, and now he's finally rolling out that. You're like, if he were you know, designing this to maximize his impact, he's done a nice job of tripping it out and also like it's maximized as impact, but also like kind of maximizing pain for short sellers because I like Keith gilld tweets and the stock gaps up and you're a short seller and you're like, ah, this can't last, and you short it and then like the next day he does like another thing. He's done a nice job of
making life hard for short sellers. I don't know, you want to take a step back to appreciate like he made almost three hundred million dollars basically trading one stock.
You know, it's not in video, like the company hasn't done anything in the last three years, but in the last like three years, he went from kind of like zero, from like regular kind of middle class person amount of money in the stock market to three hundred million dollars on one stock through some combination of being really media savvy and being really like stock market savvy and kind of being legally savvy. And it's just amazing, No wonder,
he has a fan base. Our friend Mary Child said to me that he's the first self made person in the history of the world. Like that's kind of true. Like he's really kind of gone from nothing to like immense wealth through a very odd in particular set of skills, and like, you know, no wonder people are interested in seeing what it's trading.
Does you know? Again, we're recording all of this before the live stream, So I hope that he doesn't reveal himself to just be a villain and in the pocket of someone tomorrow on the live stream after you said all those nice things.
Look, there's all sorts of ways this could end a dability, right, Like how could you go to this kind of the case that his three hundred million dollar wealth has been extracted from you know, his fans the stock market, like someone's on the other side of those trades and like where does this ultimately end up? Right? I mean, like the last Game Stop rally, a lot of people lost a lot of money, a lot of people made a
lot of money, including Keith Kill. If you piled into Game Stop stock at the top and then lost a lot of money, Like, maybe it's not completely irrational for you to blame Keith Kill for that. Maybe, like in some people's eyes he is a villain, but like, I don't know, man, he's made a lot of money Amazon and Cleverness, I think. And that was The Money Stuff Podcast.
I'm Matt Levian and I'm Katie Greifeld.
You can find my work by subscribing to the Money Stuff newsletter on Bloomberg dot com, and.
You can find me on Bloomberg TV every day between ten to eleven am Eastern.
We'd love to hear from you. You can send an email to money Pod at Bloomberg dot net ask us a question. We might answer it on the air.
You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.
The Money Stuff Podcast is produced by Ana Maserakus and Moses Adam.
Our theme music was composed by Blake Maples.
Brandon. Francis Nenham is our executive producer.
And Sage Bauman is Bloomberg's head of podcasts.
Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff