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Did you know I interviewed Adam Back on Tuesday?
On Tuesday?
Yeah, do you know when the New York Times article came out Wednesday?
Yeah, So that's fascinating. John Carrier at the New York Times identified Adam Back as Satosha knocking out over, the founder of bitcoin. And there's a lot of skepticism of this arification. A lot of the evidence for it is like sort of circumstantial stuff and a lot of like linguistic analysis, and like Adam Back is like a.
Cryptographers also British, British.
And there's all these things that like are basically shared by any of the you know, one hundred people who might have invented bitcoin. So there's a lot of skepticism of the identification. But what I really like in the story, Yeah, and this is why I wish you would interviewed him a day later. What I really liked in the story is that John Carrier doesn't hang his hat on these analyzes. I met with the guy and asked if he was Satoshi and he said no, but he looked shifty when
he was doing it. Yeah, and I love I read out this all the time, like this notion that like investors get information from like the tone and body language of executives. I love the idea that everyone sort of goes around thinking that they can spot a liar, where like they can just look into someone's eyes and know if they're telling the truth. But the supposed to John Carrier,
that's true, right, Like he's an accomplished investigative reporter. But I wish that you had looked at him back in the eyes and said so.
And then my follow up question could have been like, why are you so nervous?
You know you look turning red? Why is this adam so anyway? I love that as a category of evidence. I don't know that I'm convinced, but I like it.
Yeah, I like it too. I will say I wish I wish that New York Times article had come out a day earlier. You were talking about quantum computing and I was filling in on our crypto show. I wasn't supposed to do it. It was just, you know, an anchor called out and I hopped in and it wasn't my best work.
No, I tell you, if you had sat Nakamoto on your show and you didn't.
Add yeah, I said, I was just talking to the CEO of Blockstream, you know, about quantum computing, also potentially the founder of bitcoin itself. I really think it is the most interesting modern mystery, you know. Yes, what else you got like truly modern, like still happening mystery.
I don't know. My first instinct is that we are sort of training my children to be skeptical of the moonlanding.
Just for fun, just for fun.
You know.
I've been telling my nephew that I'm a witch for consistently for the past couple of years.
So yeah, I feel like that's a good aunt joke.
He doesn't know if I'm joking at scared apparently I love the story. He was riding in the back of my brother and my sister in law's car and they hadn't been talking about me, but he very seriously asked, does Aunt Katie write a broom like it's on his mind? Yeah, he's just thinking, Yeah.
It'spare moments. Yeah, that's what it means that you're a witch. 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 write The Money Stuff column for Bloomberg Opinion.
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
I feelin like we have some money stuff the podcast Greatest That's Today. Bill Ackman keeps doing stuff.
Got so much stuff. He has a lot going on, a lot going on.
It's impressive. But yeah, the news this week is that he's doing something with the Universal Music Group, or proposing to do something with Universal Music Group.
He wants to buy it, No he doesn't, but he wants to do all this stuff that isn't necessarily just buying it.
Yeah, I love it because like you love it. The headline is that he is proposed to acquire all of Universal Music Group for fifty five billion euros. But that's not true. Like what's happening is so universal? Is it? It's like listen in your ainext ins and Acman and a lot of people would like it to be listed in New York and it's proposed to listen to New York and like delay it and so partly as a matter of speeding that along, Akman has proposed basically a
series of activist things. He wants the company to like borrow some money to buy back stock, you know, classic activist move. He stock buyback funted by borrowing. They own a stake in Spotify. He wants them to sell that off and use the cash to buy back more stock. He wants to buy some stock, and like they use those proceeds to buy back other people's stock and all of that activist stuff, he says, and his letter to the board will cause the stock to go up from
you know, something like seventeen years now up thirty years. Right, So we created a lot of value for shareholders, and that's good theoretically. Yeah, yeah, strictly, this is great, right, It's like the law of nature. It's just like that's that's his analysis of what would happen if they changed their capital return strategy and you know, listed in New York and did some other stuff for sure, and the way that he would buy stock and the way that they would do this borrowing to buy more stock is
a transaction that's technically a merger. It's a merger with like one of his vehicles. Kid, he's like falling directly asleep here.
The problem is, I've read this so many times and my eyes glaze over every single time.
But so I believe it has this thing called a spark. Yes, like a speck, only doesn't have money. It's going to raise money later, Yeah, don't worry about So he's going to go ahead and raise a billion dollars in the spark or he won't because like it's backstop by his hedge fund that has the money, and he's going to
use the spark to merge with Universal. And like the combined company will list on the New York'stock Exchange, So like most of the stock in the combined company will be owned by existing Universal shareholders, you know, Pershing squirrel on, you know, ten eleven percent of it. That's the transaction.
But because it involves a merger, he can say things like I'm proposing to buy all of Universal, and because it involves a merger, he can say I'm proposing to buy it for a value of thirty yuros per share, even though that's not he's not buying it for thirty years per share. Yeah, buying a little bit of that
twenty two years a share. But because the activist thing, like the math on, it pencils out to being worth thirty years a share, says him, he can say I'm going to buy the whole company at a seventy eight percent premium and get people to write that Andy, Yeah, Yeah, it's proprilling to buy the company. It's seventy eight percent premium.
Yeah, And a lot of places did write yeah, or a.
Version of it, that's the headline. It's a good way to get attention for your activism because you send a letter being like, I want to buy a little bit of stock and I want you to make some changes in your capital return strategy. So yeah, everyone says that all the time, right, yeah, and then you go, oh, it'll be worth a lot of more money and sure whatever. But if you say I'm gonna buy it, and then it sounds real.
So I mean the stock surged on this, eighty rs popped. There are some very high hurdles to this happening, sure, I mean he has to convince two thirds of investors to agree. And also there's a certain.
Thought suggests people like it. You can wave away everything else and be like, well, listing in New York it is going.
To be good for the that's the interesting part. I mean that makes sense to me. We've seen a lot of European companies come to New York or IPO on US exchanges. But I didn't realize that Universal Music Group UMG had planned to do this but then scrapped it just last month. Their plans a list setting market uncertainty, which is fair. But I mean.
Maybe it's yeah, maybe it's nothing.
But I don't really understand is what he wants to sell the stake in Spotify, Like why that would be good long term because Spotify has crushed it over the last five years or so compared to UMG. Yeah, like that seems pretty valuable.
Sure, but if it seems pretty valuable, you can sell it for money now, I know.
But it might be something you want to hang on to.
Yeah, but if the market value is that as highly or more or more highly than you do, then you should sell it now. Also, it's just it's like very standard activist playbook to be like, the market never values some weird random minority stake at its full value because the market is focused on, you know, investing in the company's business. If you make the business a simpler story, then the market will, you know, describe more value to
that story. If you can sell a minority stake in Spotify for more dollars than like the market describes to its value when it's part of a bigger company. So I don't know, that's like pretty standard logic. It might not be true, but like, if you're sure that Spotify is going to continue going up much more than the rest of the company, then sure, hang out to it.
Yeah, anyway, I did want to bring up the French billionaire that he has to convince. Sure, I'm so bad at French names, so I'm scared to say it. Vincent Pulair Does that sound good?
Sounds good?
French person's going to write in anyway, he owns more than an eighteen percent stake through his family holding company. But apparently Ackman said that he spoke to bull Air and his investment group and said that they were quote intrigued with the.
Right part of the point of the proposals. So maybe intrigued crush him out, you know, if he wants cash instead of his stake. But I'm not privy to those negotiations.
No, that was billionaire to a billionaire, not for us to know the ft.
Today Thursday, I think reported another he's so busy he's got going on.
I know I was wondering if we were going to get there.
Yeah, briefly because I don't really understand it. He's got a big let's say hedge fund, it's not really the right word for it, but he is a big pot of money that he invests in some stocks basically and he does the occasional like asymmetric derivatives trade as he
would say. That makes a lot of money on for instance, COVID, and it's in this like series of funds that are most prominently is like close end fund in Europe, and he's like launching a closed end fund in the US, pushing to where USI We've talked about this a lot. It keeps being in the process of launching.
Yes, as a launched, it's going to happen.
It's gonna happen. But so he's raising like five to ten billion dollars for that. He's like Peoing the management company is part of that, blah blah blah. But the f he reported that he's also in talks three is a separate fund. Now only do the like asymmetric toatives.
So instead of owning like you know, a concentrated portfolio of large cap stops and sometimes buying index CDs, oat of a pandemic, he would own treasury bills and occasionally buy index CDs instead of a pandemic, which okay, yeah sure, yeah, like a like sort of like a tele risk hedge fund. Yeah, a permanent capitol vehicle.
Yeah. The ft called it like you know, he's making doomsday trades here.
Yeah. The headline is something like he wants the profit from market complacency. Right, He's going to bet against complacency, Yeah, as opposed to the rest of the portfolios. Is like owning latche caap equities.
This is something that apparently he has highlighted two investors as a way to turbo charge the firm's fee earnings. So it does play into the potential IPO here.
Yeah. Right. The way the IPO works is that he's mostly selling shares of this closed infund's mostly selling shares of a pot of you know, investments, but he's partially
selling shares in the management company. And so the more assets the management company runs, the more that is worth, and therefore the more appealing it is to investors in the I p O. Right, So, like, if you're paying people to buy your clothes end fund and the currency of your management company, then like the more funds you run, the better that.
Is doesn't seem very more in buffet of him. I keep getting confused over who Bill Lackman is.
You know, is he Warren Buffett?
Or is he a bird?
Yeah?
I don't know, Bill Ackman, who are you?
He's a bird? Don't answer that or do He's also like tweeting a lot, But that's a that's a whole other story of all.
The thing he wrote today is that it is not quite fair to say that Billlackman runs a portfolio of a dozen ish large cap stocks that don't change very much.
But it's a little bit true, and that's very cool if you can do that and make money and be edge trying to manage it. Right, You're just like, I'm gonna own twelve stocks with the right twelve stocks, and I'm not gonna change it that much. I'm just gonna kind of hang out here and tweet a lot.
That's what I would do.
That's what I would do it. Like that is my dream as a money manager, right, Like the people who are like, I'm going to like work all day and change my portfolio every day so they can capture like every incremental piece of alpha. That sounds like a hard job, whereas like I'll just pick the red stocks and then.
Tweet I'll just pick good snack.
Incredible move. But what I like about this idea of the like whatever complacency.
Doom to day fun.
So one way to run a doomsday fund and the way people run their dooms day funds is basically you wake up every day and you buy some pots on the S and P. Yeah, and it costs you money, and at the end of every year you send your investors a statement being like I've lost ten percent of your money, and then once every like ten years you're like I've made twenty thousand percent of your money and they're like, okay, fun. It's like a bad profile, right.
But like the alternative way to run a doomsday fun which is like a little bit what is implied by the ft article though I don't have no idea, is you take the investors' money put in treasure. But I don't do anything. You're in four percent a year, and every once in a while you're like, you know what
next week is doomsday. I'm gonna buy puts on the S and P today, And if you're right all the time, every time you buy doomsday insurance, it pays off, which is like what happened to Acmin in COVID, Like you bought like some index CDs twenty seven million dollars. I'm like, the next week it paid off like billions of dollars. Right, So if you're just perfect at predicting doomsday like next week, then like your return profile is like most years you
just earned treasury bills. In some years you return like ten thousand percent. That's a great fund. And the reason that no one does that is one, no one's perfect predicting, right and too because like you know, you have a job and you're like, oh, I'm like charging fees and like taking investors' money to protect them from doomsday, And so you end up buying a lot of doomsday insurance because it's just like what it says on the tin.
And if you're Bill Ackman and you have the zen like repose to just buy twelve stocks and hold them and tweet all the time, they're like, maybe you can do the doomsday fund the right way, where you just don't do anything until it's almost doomsday and then you buy insurance and make a lot of money. This is like I'm mostly joking suggestion, but I kind of like it.
No, I fantasize all the time, Like what if I wasn't in journalism, what if I had a completely unrelated job, what if I was a novelist. Then I dream about what my portfolio would be and doing something like that sounds really fun, right, Like the best.
Way to invest is to just buy a stock right before it goes up a lot, or buy crash insurance right before the market goes down a lot. Yeah, it's hard to pull off, both intellectually and as a matter of getting antsy. But like Bill, likeman might not get antsy, that's true.
Also very busy man. He's got a lot going on.
A lot going on.
He has one, like really big thing going on right now, can you guess?
No, I actually wonder like if you went to him and said, what's a big thing you've got going on right now? Would he be like fighting the woke mind virus?
No. I think he'd say something like trying to make more people use rock. Really, it'd be one of the things.
I think it would be something much weirder. God, it would be like solving the population crisis.
That's my second big question. Of the podcast Elon Musk, what's your big thing anyway?
I believe the big thing you were referring to, Yeah, is the space, the impending SpaceX slash X.
I mean, it's factually very big. It's very big. It keeps getting bigger, probably.
Soon, although yeah, they filed confidentially. Everyone says they're looking to go in June, although it's not clear that they will go in Jane. But yeah, very big, two trillion dollars supposedly, and yes, as part of his quest to get everyone to use Croc and thus fight the woke mind virus.
Yeah, for sure.
Your Times reported that is making bankers who want to lead the IPO by subscriptions to Kroc for their banks, which is like a little frowned upon. But I don't know why. It's like impolite. It feels somehow dodgy. Yeah, but I kind of respect it. You know, he's the CEO of or whatever he is.
He's not actually I don't think he's sick or whatever.
He's the owner. Yeah, and he's like making a sale. Yeah, you know, like shows up this meaning like, hey, guys, you know what's great is groc? You should by Groc. Yeah, they're like, okay, well look into him, be like no, no, no, by Grock right now.
And this matters personally that Elon Musk. It also matters to SpaceX, and SpaceX now owns XII.
Okay, so first of all, this company is going to go public at one hundred times earnings or a hundred times revenue or something. I don't actually know the revenue numbers, but like the two trillion dollar evaluation is not closely
connected to any amount of revenue or income. But you know, every little bit helps, and in particular, you know, to the extent you are going public not only as a rocket company, but as ooh AI everything's AI, you know, showing like AI adoption is valuable, even if the AI is still a sort of smallest part of the business commerci Yeah, and so saying you know, all of these big banks there's names are on the cover of the perspective, So all these big banks have purchased subscriptions to GROC.
Some of the banks seems positive.
I mean not if you have articles being like, oh, they only did it because they were forced through, but you know, maybe they'll like it.
Or I was also wondering like after they get the IPO over the line. Can they just cancel their subscriptions?
So One, I'm sure they'll pay for some portion of it upfront. Two, maybe they'll like it.
Maybe it's the best.
No, because Elon Musk is like a continual source of ajata for banks, right, and then fees, you know, and so you're always looking to win continued business and you know, a million dollars a year for crock or whatever.
It's fair. Feel maybe it's good.
Be they like it, Maybe they like it.
Maybe they will.
You'd hope that Sam Altonman and Tima Day are reading this and being like, I we should do that too. So now every bank has to buy the subscriptions every that's true.
Of course, open Ai and Anthropic also potentially going public this year.
Right.
I love some of the details in this piece from the New York Times. Some of the banks have agreed to spend tens of millions of dollars on the chatbot. But also this is fun. Elon Musk also reportedly asked the banks to advertise on X, his social media site also owned by SpaceX, but was less adamant about that request.
Right, which I think makes sense.
Yeah, he's one, it's not a natural fit.
It's not a natural fit, right, use my AI because it'll help you run your banking business. Advertise on Twitter to run your banking like that makes sense. But also because you know, like you're selling an IPO and being like, oh, our flagship AI product is being adopted by big you know, fortune five hundred companies. Is a good pitching. I always tell some ads on our cess pool social media. So let's have a good pitch catering to IPO investors.
Yeah, I will say. I mean when it comes to all these chatbots, actually getting enterprise customers is like a big, big part of it because people individuals use chatbots, but it's less common.
No, enterprise is a big deal. And my impression is that Groc has some trouble there. Marketing is like, oh, we're making mecha Hitler or whatever.
That's the thing. Like from what I can I don't really use chatbots in general, but I spent a lot of time on X, which means I spend a lot of time reading Elon Musk's posts on X and everything he posts from Groc is like, I don't know, it's just like anime girls.
I could see not like a button down corporate it stuff, but they have other marketing channels to corporate clients, like forcing them to buy it for the IPEA.
There you go, twist my arm.
I love that because you know, I used to be an equity capital markets.
I've heard and how delighted would you be if they were like, guys, we have to use CROC.
I wrote about this. There's so much stupid stuff in these pitches, right, there's so much like you know, like programs drove an Uber for a year to pitch Uber. But also like the one I always come back to is when Lululemon went public, every bank sent their teams in like yoga pants got to pitch the IPO god, and like did that boost Lulemon's revenue like a little bit?
They had to go out and buy the yoga pants, but not materially, not enough to like move the numbers in the IPO perspectives, But like how humiliating the banks?
Humiliation ritual, just a humiliation.
Whereas when you show up and Elon Musk is like, look, you can pitch me, but you gotta spend twenty million dollars on rock and I was like, okay, that's like it's not humiliating. It's just like transactional. It's very straightforward. I like it. Gosh, it makes sense.
Other possible humiliation.
There's so much like this. Used to be a real big thing. Banks were really into thinking about how they could prove to a company is that they loved those companies' products. You know, with AI you have some of that, right, Like, I'm sure that everyone who shown up the pitch open a or anthropic or even I say I on the right pa. I was like, well, we made this pitch book with chat GPT or Claude or you know, whatever it may be. And some days they probably get it wrong.
We made this with chat GPT and it's like, nope, you're pitching anthropic. But I'm sure they'll do that, but more direct connection.
We made Mecha Hitler.
You have to show up and be like we made this pitch book with Crock and he opens and I don't know, it's kind of woke. You're like, no, no, here's all the slurs.
Where's the anime?
I take it back?
It would be pretty That was fun, you know, it's also fun everyone.
It's been a while since we talked about the reads of the ETF markets. I'm going to leave, and.
Katie is gonna If you are not interested, you can leave now for the dozen, the dozen listeners who are still with us, Matt, you threw me a bone.
Can you talking about competition for QQQ?
And Katy's like, yes, obviously, that's the fastest I've ever answered an email.
I know.
So this is interesting, So I promise. So the ques QQQ, it's investos, NAZAQ one hundred ETF, it's been around since nineteen ninety nine, is everywhere.
Yes, we've talked about why they advertised every which is they have too much money.
But yeah, my eyes just lit up. They might not advertise everywhere going forward because their proxy vote passed at the end of twenty twenty five, so now they don't have to spend as much on marketing.
I feel like I still see them on the trend, but.
Well, they probably made commitments for twenty twenty six. You know.
Anyway I'm getting anyway, we're.
Still talking about the cues anyway. So NASAC and the Cues have had this long standing relationship. NASAK has been historically very selective about who they license out the NASAQ one hundred two and at least in the US as of right now, there's only two ETFs that purely track the NASAQ one hundred. You can there's other ETFs that like add derivative income options overlay stuff to it, But in terms of the pure NASAQ one hundred, there's just two Invesco ETFs in the US. Outside in a Mia
there are NASTAQ one hundred ETFs. But anyway, Matt is slowly inching towards the DOR. What's interesting is that Black Rocks six am on Monday filed for a Nasdaq one hundred ETF. Mat what is going on, h you know, it's crazier. Tuesday in the morning, State Street filed for NASAQ one hundred ETF. I know, it's nuts. So apparently Nasdaq is feeling a little bit, you know, more open, and Invesco shares, I mean, at least on Monday they
went straight down. I think they closed five percent lower or something, because they might have some serious competition here. I mean, then cues have been a cash cow and Invesco just figured out how to open the piggybank and actually get some of that windfall since they have to spend less on marketing now. But to have black rocks show up months later. Traders reacted appropriately here.
So I really love that index licensing is such a thing. Yeah, because if I in my personal account wanted to track the NASAK one hundred index without buying any ETF that licenses that index, it could probably do okay, Like it's kind of a public knowledge.
But if you went out and launched a product.
If I launched a product, right and I called it the like one hundred and three tech stock index, that would get less traction than the Nasdaq one hundred, We'll call it.
The matt Levine At least.
It is kind of weird to me that, like the licensing of the actual official indexes is so valuable because like you can recreate much of that performance, and there are some pan cardial role that's on indexes sometimes. Yeah, but least the nas like one hundred has enough like cachet that you really do need to license it.
It's funny to talk about this because as I was writing this article, I was talking to my husband about it very excitedly, because this is huge. He's a he's a very nice man, but he raised the same question. He was like, why Googles you like a sleep mask, but he was like, why can't I just go and buy all the stocks he can? I was like, you just you can't, Joe, Okay, you can't. And probably the answer is that NASAC would sue you no, if you launched a product, fine, right, right, I'd sue you.
Right. You'd have to be very careful to not use words like Nasdaq or one hundred of the product.
It is interesting and fun to think about why now you know, why is NASDAK Now.
The answer SpaceX? I don't know.
I mean, that's one of the big theories out there is that if SpaceX does go with Nasdaq as the change that they list on, and if they fast track SpaceX into the NASAQ one hundred, NASAK is going to have a huge competitive advantage here over other.
Big period where you know, the NAZA one hundred is a big deal, but like S ANDB five hundred is the main like indix that people index.
Two, but they're not mutually exclusive.
Well they are in product terms, like I.
Know, but I'm saying, like.
Right, you can be in both indexes, but like crucially, yeah, for some period of months, it seems like SpaceX will be in the NAZAK one hundred and not in the SMP.
Right.
Yes, it seems like NASDAC has changed its rules to fast track listing SpaceX, So that's shortly, you know, weeks after it goes public, it'll be in the NAZAK one hundred, and the SMP moves more slowly, So there will be some period of months where, yes, if you want space X and your index fund because you're buying index funds that like deep down you're an active stock picker or at least like that name, then you have to buy the NAZAQ one hundred one.
Yeah, that could be a theory.
I think it's break it theory. And then it's you know, it's like also open AI and all of the big tech companies. You know, the NAZAC rules will allow them to fast track into the Nasdaq index and SMP might move more slowly, and so you have this period where like the big tech IPOs that everyone is most interested in will come first to the NAZAK one hundred if all breaks now the next way, I.
Was also wondering if it connects to the proxy vote somehow. I mean, under the new fee revenue breakdown of the queues, NASAC is still getting paid and I think that they're getting paid the same amount, So maybe that doesn't quite connect. But obviously Invesco is going to theoretically be marketing the cues less. Yeah, so maybe that could be it as well. But maybe it's some delightful combination. You know. See, who
wasn't this fun? Yeah? What I'm waiting for. What I can't wait to see is that we haven't had fees listed on any of these filings yet. They're very preliminary filings from both What do people pay.
For neke licensing like a basis punt?
It left depends on the index you know, the cues right now, they were charging twenty basis points. Then post privacy charging yes, yes, now that fee is eighteen basis points. They have qqq M, which is fifteen basis points. And we're talking about an index, like an index tracking ETF. That's pretty it's pretty expensive. So very curious to see if Blackrock comes out with a three basis point productor I.
Assume how much of that fifteen or twenty basis prints is is that's not kidding.
I believe when it was twenty basis points, it was something close to like seven or eight basis points.
That's a lot.
It is a lot, I know. So we'll say they could do something. This is something that black Rock does occasionally, is you know, the way of fees for the first year or something, just accumulate a bunch of scale and.
Then they go, do you think they're paying now seven basics points?
That's what I'm so curious to find out. I want to know what if their fee is like ten basis points, then you have to assume that, okay, And as I still yeah, I'm also interested to see, like if a Vanguard files for Nazaq one hundred ETF that would be fun for me and.
Or for like a big tech ninety eighty ts.
Yeah, yeah, man, Thank you to everyone who's still listening. This is really great for me.
I feel we need to have like a reward.
Tell us right.
And that was the Money Stuff Podcast.
I'm Matt Levine and I'm Katie Greifeld.
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