The audio companion to Bloomberg Opinion’s beloved Money Stuff column hosted by its author Matt Levine, “whose deadpan style mixes technical elucidation and wit” (NY Times). Once a week, Matt and his friend, Bloomberg News reporter and TV host Katie Greifeld, talk about Wall Street, finance and…other stuff. New episodes every Friday.
An NBA investigation, conducted by Wachtell Lifton, has reportedly confirmed that the Los Angeles Clippers engaged in illicit payments to star player Kawhi Leonard. The investigation found that the Clippers funneled millions of dollars through shell companies for "environmental services" and "consulting fees," which ultimately ended up with Leonard through endorsement deals, bypassing NBA salary cap rules. This practice was initially reported by Pablo Torre.
The company Aspiration Partners, involved in a scandal with the Los Angeles Clippers, has a history of questionable financial dealings. Founder Joe Sandberg is now in prison, and the company itself faced scrutiny for its revenue-boosting tactics, including round-trip deals with Colombian celebrities for tree planting. Aspiration would book revenue from these deals, which were often resold at high markups, even though no actual money changed hands.
The podcast discusses 'Digital Asset Treasury' (DAT) companies, a trend from 2025 where public companies held large amounts of Bitcoin, allowing their stock to trade at a premium. Empory Digital, an electric motorcycle company, pivoted to being a DAT. This strategy worked until the premium disappeared, leading to DATs trading at a discount to their Bitcoin holdings, creating an arbitrage opportunity.
Robinhood has begun offering tokenized versions of public company stocks, including AMC Entertainment, to international investors. This move has angered AMC CEO Adam Aron, who views these tokens as 'fake stock' and a challenge to his control over the company's shareholder base. Matt Levine argues that Vlad Tenev's perspective, that Robinhood is essentially creating its own version of AMC stock, is reasonable, despite Aron's concerns about unregistered securities and control.
The podcast delves into the complex ownership structure of public companies, revealing that Seed & Co., acting as a nominee for the Depository Trust Company (DTC), is the largest shareholder of most companies. This system, developed for efficiency, means that individual investors technically own shares through an entry on Robinhood's ledger, which leads to Robinhood owning an entry on DTC's ledger, and ultimately Seed & Co. owning the stock on AMC's ledger. This structure bypasses direct company-shareholder relationships and is being challenged by tokenization.
A research paper suggests that private equity firms with more aggressive reputations, such as Apollo, charge portfolio companies higher borrowing costs. The study used AI models (ChatGPT, Claude), analysis of liability management exercises (LMEs), and a subjective categorization of 'aggressiveness' to rank firms. Apollo, in particular, is cited as an example of an aggressive sponsor, leading to an estimated 100 basis point premium on its loans.
A Morgan Stanley research report suggests that AI tools will significantly streamline mortgage refinancing. This increased efficiency is predicted to lead to more frequent refinancing when interest rates fall, a process currently hindered by borrower inattention and cumbersome procedures. Consequently, mortgages may become more expensive for consumers by 10-20 basis points.
The increasing adoption of AI in professional services is pressuring law firms to reduce hourly billing rates. This shift poses a challenge to the traditional law firm model, where partners profit from billing associate hours at a markup. AI's ability to handle grunt work may necessitate a move away from hourly billing towards models that value expertise directly.
The Federal Trade Commission, along with 22 state attorneys general, has filed a complaint against Amazon, alleging deception in its sponsored product ad auctions. The FTC claims Amazon misrepresented its auction system as a second-price auction, when in reality, it often uses a 'soft reserve' price that leads to winning bidders paying their own bid, not the second-highest bid.
The practice of 'chandelier bidding' in art auctions, where auctioneers may place bids on behalf of the seller to meet a reserve price, is being compared to Amazon's alleged use of a 'soft reserve' in its advertising auctions. While art auction houses may disclose this practice, the FTC argues Amazon's disclosure was insufficient, leading to advertiser deception.
Foreign investors and hedge funds are reportedly engaging in a strategy to avoid U.S. dividend withholding taxes by utilizing the differing dividend payout schedules of two nearly identical S&P 500 ETFs: iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO). The trade involves selling the ETF that pays dividends earlier and buying the one that pays later, effectively capturing the dividend value without incurring the tax.
Boaz Weinstein of SABA Capital Management explains his tender offer to buy shares of Blue Owl BDCs at a significant discount to net asset value. He clarifies that the strategy is not trolling but a comprehensive approach involving tender offers, potentially hedging, and leveraging his expertise in closed-end fund activism.
Boaz Weinstein argues that BDCs and interval funds have over-promised liquidity to investors, especially during times of market stress. He explains that while funds might offer 5% quarterly redemptions, a significant sell-off can lead to investors waiting years to access their money, a reality he believes retail investors may not fully grasp.
The discussion touches upon the potential failure of communication regarding the liquidity of private credit products, with a focus on the role of brokers. It's suggested that sales commissions might have incentivized brokers to push these products, potentially without fully informing clients about the liquidity mismatch and risks.
Boaz Weinstein draws parallels between activism in closed-end funds and Business Development Companies (BDCs), noting that the fundamental principles are similar due to both being 40 Act products. He explains that activism can involve replacing management or seeking fee reductions, a strategy he has employed successfully in the past.
Boaz Weinstein discusses the complexities of evaluating discounts and net asset values (NAVs) in private credit, particularly for BDCs. He notes that while a discount to NAV might seem attractive, factors like leverage, fees, and the accuracy of marks (gross asset value vs. net asset value) need careful consideration. He highlights that falling NAVs can exacerbate outflows, creating a reflexive downward spiral.
Boaz Weinstein critiques the concept of 'volatility laundering' in private credit, where funds provide seemingly stable returns with low reported volatility by not marking down assets aggressively. He argues this masks underlying risks and that the recent market events, including distribution cuts and defaults, are pulling back the curtain on these issues.
Boaz Weinstein expresses concern over BDC managers continuing to originate new loans at attractive rates while their own shares trade at significant discounts to NAV. He suggests this behavior is driven by greed, as managers earn fees on NAV and would see their assets under management shrink if they repurchased shares at a discount.
Boaz Weinstein expresses caution regarding Digital Asset Treasury Companies (DATs), citing concerns about potential dilutive share issuances below NAV and the possibility of excessive executive compensation. He contrasts this with closed-end funds, which have regulatory protections against dilutive offerings.
Leopold Ashanbrenner's hedge fund, Situational Awareness, which had substantial gains betting on AI companies, faced significant margin calls from prime brokers. Citadel reportedly acquired many of its public stock positions after the fund couldn't meet its obligations due to a recent drawdown in AI-related bets.
Financial firms are offering structured notes linked to SpaceX's performance, which has seen its stock price fall post-IPO. While marketed to retail investors as downside-protected investments, the notes may function as a mechanism for banks to acquire out-of-the-money put options on SpaceX from these investors.
Exoma, a biotech royalty company, has been involved in a confusing situation regarding the record date for its contingent value rights (CVRs) related to its acquisition by Ligand. This has led to a discrepancy in what shareholders receive depending on when they bought the stock, causing trading confusion and requiring clarification.
The discussion draws a parallel between Situational Awareness's funding issues and Sam Bankman-Fried's early, significant investment in Anthropic. Bankman-Fried's stake in Anthropic, acquired with funds from his crypto exchange, is presented as an example of how risky funding can jeopardize long-term bets, even if the underlying thesis was correct.
The Treasury Department is reportedly considering action against a growing trend of "3:51 exchange" ETFs, which wealthy families are using to defer capital gains taxes on appreciated assets. Bloomberg News identified over 100 such ETFs, including those linked to the family behind Hot Pockets and the GameStop saga.
Truth Social is launching an API service that will charge hedge funds and quantitative trading firms $100,000 per month for early access to posts, particularly those from Donald Trump. This move is seen as a significant revenue driver for the company, potentially exceeding its current income from social media operations.
The SEC's past crackdown on financial firms using personal phones for work communications, which resulted in billions in fines, is being re-examined following Coinbase's settlement with the agency. Coinbase received $150,000 from the SEC related to its own cell phone misuse, a stark contrast to the large penalties imposed on banks.
The market for sports-related financial products is expanding with the introduction of new ETF structures. One concept involves 'sports indexes' tied to the performance of individual teams, offering investors a way to gain exposure to wins and losses similar to betting, but within an ETF wrapper.
This episode marks the final broadcast for hosts Matt Levine and Katie Greifeld of the 'Money Stuff' podcast, as they move on to new roles. The discussion covered the proliferation of tax-deferring ETFs, a controversial API from Truth Social, SEC regulatory actions, and novel sports-themed investment products.
During a 75-dollar session, an animal communicator relayed messages from pets to their owner about her pregnancy. The cat reportedly thought the owner was sick and felt relieved to learn she was pregnant, while the horse, Gus, was described as excited and proud, viewing the baby as his own.
A Subversive All Seasons Sports ETF has been filed with the SEC, aiming to hire professional gamblers to make sports bets packaged into an ETF. While presented as a novel financial product, discussions on the podcast questioned its fun factor for investors and its long-term viability compared to other ETF structures.
South Korean regulators have temporarily halted new listings of single stock leverage ETFs due to extreme volatility and potential risks to the market. In addition to the halt, they are increasing training requirements for investors and adjusting minimum trading lot sizes.
MicroStrategy CEO Michael Saylor, in an interview, addressed the company's Bitcoin treasury strategy and its underlying software business. He indicated that while the Bitcoin strategy is paramount, the software business supports 1,500 employees. Saylor also touched on debt risks associated with Bitcoin's price fluctuations.
SpaceX's stock has recently traded below its IPO price of $135, a notable event given its prior strong performance. This decline is occurring as lock-up periods are set to expire soon, potentially leading to a significant increase in available shares and further impacting the stock price.
A new set of exchange-traded funds (ETFs) are being launched that aim to track the Nasdaq 100 and S&P 500 indexes but specifically exclude companies run by Elon Musk. These ETFs, named the Nasdaq 100 Ex-Elon ETF and the S&P 500 Ex-Elon ETF, are designed to cater to retail investors who are reportedly unhappy with Musk's inclusion in major market indexes. The move reflects a growing sentiment among some investors to avoid Musk's companies due to personal or valuation concerns.
Multi-strategy hedge funds, acting as index rebalancing traders, reportedly made $3.7 billion in June by capitalizing on predictable demand from index funds. This strategy involves anticipating and fulfilling the large buy orders that index funds must execute when companies are added or removed from major indexes, such as SpaceX's recent inclusion in the Nasdaq 100. While this practice can be profitable, it also carries significant risk, as highlighted by a previous loss of $900 million for the same team in February.
The Justice Department and several state attorneys general have sued major egg producers for allegedly manipulating egg prices through a practice referred to as 'egg Libor'. Producers are accused of artificially inflating prices by submitting fake bids to an egg pricing service, which then influenced wholesale contract prices. The companies have settled, agreeing to pay the equivalent of 50 million eggs, which will be distributed to food banks. This settlement occurred despite the backdrop of bird flu, which already drove up egg prices.
Around the time of the alleged egg price manipulation, controlling families of major egg producers like Cal-Maine Foods and the Adams family sold significant amounts of stock. The Cal-Maine Foods controlling family sold $300 million worth of stock in an underwritten offering. This offering prospectus disclosed the Justice Department's investigation into high egg prices as a risk factor, raising concerns about whether investors were fully informed about the ongoing probe.
SpaceX's inclusion in the Nasdaq 100 index has generated significant backlash from retail investors, who are reportedly 'really mad' about the change. This controversy highlights the unusual public engagement with index construction rules, with many investors expressing strong negative sentiments towards Elon Musk's involvement. While index providers like Nasdaq and potentially the S&P Dow Jones Indices have adjusted their rules, the fervor indicates a strong investor desire to align portfolios with personal or ethical preferences, even if it leads to less conventional investment strategies.
Susquehanna Investment Group has filed a lawsuit against 100 anonymous individuals, referred to as "John Does," alleging they engaged in insider trading against the firm through options on Chinese brokerages. The firm claims this scheme allowed traders to profit from a crackdown on cross-border trading by Chinese regulators, which caused the brokerages' share prices to plummet.
The Securities and Exchange Commission (SEC) has issued a request for comments regarding the ETF application process, signaling a need to refine how it oversees new and unconventional ETF products. This comes as a surge in filings for areas like prediction markets and sports gambling ETFs has led to concerns about a 'dog-piling' effect among issuers and the potential for a confidential filing process.
MicroStrategy is experiencing financial difficulties due to a significant drop in the value of its Bitcoin holdings and increasing interest expenses on its debt. The company's 'Stretch' preferred stock, designed to maintain a $100 par value, has seen its dividend rate skyrocket to 15%, creating substantial carrying costs.
The launch of sports gambling Exchange Traded Funds (ETFs) in the US, a prediction made by Matt Levine, continues to be hampered by regulatory hurdles, primarily the SEC's cautious approach to novel investment products. While some believe sports gambling ETFs could offer bond-like returns, the SEC's recent pause on prediction market applications and its request for comments on ETF processes suggest a prolonged wait.
