Latest / Bloomberg Intelligence / Family Offices Amass $3.8 Billion SpaceX Bet in Boost for Musk

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Family Offices Amass $3.8 Billion SpaceX Bet in Boost for Musk · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
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  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
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  Speaker 1: or watch us live on YouTube.
• 0:24
  Speaker 2: It is thirteen f season, and that's always kind of
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  Speaker 2: a fun time in the marketplace because you get to
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  Speaker 2: see what some of your favorite investors, what they're buying,
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  Speaker 2: what they're selling here, and that's certainly the case this time.
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  Speaker 2: Each and Shen joins us here. She's a ecuty supporter
• 0:36
  Speaker 2: for Bloomberg News. She joins us live here in our
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  Speaker 2: Bloomberg Interactive Brokers studio.
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  Speaker 3: Each and talk to us about.
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  Speaker 2: Some of these ultra wealthy individuals, these family offices.
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  Speaker 3: What are they buying?
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  Speaker 4: Sure, yeah, so I would say for this certain ap qulder,
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  Speaker 4: lots of attention has going to SpaceX Fabius. We know
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  Speaker 4: space ass has this raka setting IPO right in and
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  Speaker 4: it's for the first time like the public got to
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  Speaker 4: see who are the sort of the earlier investor private
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  Speaker 4: investor on its back and eternal from certain filings. More
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  Speaker 4: than a dozen family offices at least hold was in
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  Speaker 4: three point eight billion investments through the first of the year.
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  Speaker 4: So that includes a family office from Higher Hotels Prisoner
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  Speaker 4: who hold one point eight billion investment, and Michael Platt's
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  Speaker 4: Blue Crash Capital and also just like super influential finance
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  Speaker 4: dynasty back by Brazil's Mariira Salas. Each of them hold
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  Speaker 4: over one hundred million of Steak. And also remember some
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  Speaker 4: of these investors are also investors in Tesla and other
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  Speaker 4: ELAMSK listed business empire.
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  Speaker 5: So there are a lot of really exciting fast moving
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  Speaker 5: stocks right now, a lot of excitement around AI and
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  Speaker 5: things like that. What is about SpaceX that has this
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  Speaker 5: group of investors so excited?
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  Speaker 3: I think?
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  Speaker 4: So it's interesting that we don't know when exactly they invested.
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  Speaker 4: It could be before well before the public IPO or
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  Speaker 4: before the merge it had with XAI. It actually takes
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  Speaker 4: to another interesting highlighters that there are lots of college
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  Speaker 4: endowment funds also invested in space As, including Harvard Management,
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  Speaker 4: which is that endowment for the college it have two
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  Speaker 4: point two build it and they're also the California University
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  Speaker 4: of California Investment arm. So how it works as that
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  Speaker 4: usually these college enowment funds. They invest through vc arms
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  Speaker 4: ventral capital firms, and through the vcs they were like,
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  Speaker 4: could be you know, early masters in SpaceX or to
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  Speaker 4: wait before it became this AI was like the rocket
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  Speaker 4: science start up right for many many years ago, So
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  Speaker 4: that sort of it's just come a long way through
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  Speaker 4: until what we see in the public filings.
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  Speaker 2: And our good friends up at Cambridge Harvard they had
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  Speaker 2: a stake in SpaceX, right, yeah, right, as.
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  Speaker 4: We just mentioned, they have two point two bill in.
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  Speaker 3: Nice good for them. What are we seeing?
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  Speaker 2: Do we know when these people invested? You don't really know, right, right,
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  Speaker 2: just that it was in the private round before they
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  Speaker 2: went public.
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  Speaker 3: That's all we really know.
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  Speaker 4: Yeah, especially for SpaceX, right, we only got to know
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  Speaker 4: this because now it became a public company. But yeah,
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  Speaker 4: we wouldn't know. And there's also a forty five days
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  Speaker 4: of lag between. Because the CTE half is a snapshot
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  Speaker 4: of their CUTU portfolio, it could be possible that they
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  Speaker 4: try some of their position or change their porfolio, you know,
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  Speaker 4: throughout July, because it was a pretty turbulous month for
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  Speaker 4: tech and AI stocks. But yeah, that part is a
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  Speaker 4: question mark.
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  Speaker 5: What are some of the other stocks that are I
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  Speaker 5: guess generating excitement right now. I think I'm reading that
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  Speaker 5: Berkshire has taken another huge chunk of Alphabet.
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  Speaker 4: Yeah, that's right, So Brischard has away. They added roughly
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  Speaker 4: another eight billa in Alphabet. Yeah, and that's on top
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  Speaker 4: of the ten billion private private placement they committed and
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  Speaker 4: it's closed before And remember Alphabet was a position initially
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  Speaker 4: started by Warren Buffett twenty twenty five a year ago.
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  Speaker 4: Now it is runnder Grag at Bell. But apparently the
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  Speaker 4: company is still pretty committed to this tag.
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  Speaker 6: Pat.
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  Speaker 2: You know what I've noticed over the list I don't know,
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  Speaker 2: several years, I guess, is that we're not even looking
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  Speaker 2: at these thirteen f's. It's just more and more family
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  Speaker 2: offices are showing up here. I mean family offices. They're
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  Speaker 2: becoming serious players out there in the investment world.
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  Speaker 3: What what do you guys see from your reporting?
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  Speaker 4: Yeah, that's that's a good observation. I would agree with
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  Speaker 4: that trend. And I would say yeah overall, because certain
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  Speaker 4: F has the requirements. Is any investment funds I believes
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  Speaker 4: one hundred mile or two hundred melo au ams, that's
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  Speaker 4: the stresshold you need to report. So that's why we're
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  Speaker 4: seeing on them into cultural at filings. But otherwise, yeah,
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  Speaker 4: they've being very active. It just you don't they're also
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  Speaker 4: being super under the radar for the most part with
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  Speaker 4: their investments.
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  Speaker 2: I think that's changing though, because they're getting so big
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  Speaker 2: these family offices that they are showing up.
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  Speaker 3: In some of these public filings.
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  Speaker 6: Oh, is this just like.
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  Speaker 5: A more private wealth coming or why is there such
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  Speaker 5: a boom of private.
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  Speaker 3: Office Stay with us. More from Bloomberg Intelligence coming up
• 5:34
  Speaker 3: after this.
• 5:38
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
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  Speaker 3: Well, we know many things about AI.
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  Speaker 2: One of the things we know is it's really expensive
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  Speaker 2: and you need lots of capital to build this stuff out.
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  Speaker 2: And it used to be when the tech companies needed capital,
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  Speaker 2: they just used their cash on the bounty or their
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  Speaker 2: free cash flow.
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  Speaker 3: Uh huh.
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  Speaker 2: AI is so expensive requires so much capital that these
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  Speaker 2: companies are going to the equity markets and the fixed
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  Speaker 2: income markets. And today Alphabet is looking to raise five
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  Speaker 2: billion in a debt offering, a debut bond offering. Where Australia,
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  Speaker 2: why not Lodow joints us here Bloomberg Tech host, he's
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  Speaker 2: out there in San Francisco. Why do you think that
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  Speaker 2: I love Australia, I've been there several times, short place,
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  Speaker 2: But why do you think Alphabet's gone to Australia to
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  Speaker 2: raise five I mean Australian dollars.
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  Speaker 7: You gave a perfect summary of what's been happening since
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  Speaker 7: the middle of twenty twenty five. I mean, for one thing,
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  Speaker 7: Australia's bomb market's quite big, right, and so the capital
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  Speaker 7: is available from there. But Alphabet leads this AI borrowing
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  Speaker 7: boom that we've seen, you know, since the middle of
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  Speaker 7: twenty twenty five. They'd already done about one hundred and
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  Speaker 7: fourteen billion dollars worth, but it was also split largely
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  Speaker 7: US nominated, but you know, EuroSwiss, franc et cetera. So
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  Speaker 7: this three point six billion dollar Kangaroo bond action is
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  Speaker 7: kind of diversifying that funding. But you're exactly right, like
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  Speaker 7: even a giant like Alphabet cannot fund capex from its
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  Speaker 7: own cash flows, and so it needs to go to
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  Speaker 7: the capital markets to do that across equity and debt,
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  Speaker 7: but the debt investor seems very willing, you know, to
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  Speaker 7: support that that offering.
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  Speaker 5: What is this money for? Exactly? Is this data centers?
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  Speaker 3: Is this other things?
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  Speaker 5: Why do they need to cheat amount of money?
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  Speaker 7: So it is for data centers, and it is in
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  Speaker 7: financial terms for capital expenditures.
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  Speaker 2: Right.
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  Speaker 7: So if you look at Alphabet's capex for twenty six,
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  Speaker 7: it's approaching two hundred billion dollars and the expectation is
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  Speaker 7: that it will be much bigger in twenty twenty seven
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  Speaker 7: and bigger still in twenty twenty eight. Something that's really
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  Speaker 7: interesting is that capex doesn't just go up because you've
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  Speaker 7: got to build more stuff, right. It doesn't just go
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  Speaker 7: up because you're saying, Okay, well I did ten data centers,
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  Speaker 7: now I need to do twenty. It's also the cost environment,
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  Speaker 7: so like labor, construction, materials, power, that is also seeing
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  Speaker 7: some inflationary effects, and so the capex numbers also need
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  Speaker 7: to rise to meet that environment.
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  Speaker 2: And what are the companies saying about longer term capex
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  Speaker 2: has related to AI? I guess I'm concerned that this
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  Speaker 2: extraordinary high level of capex coming from many of these
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  Speaker 2: tech companies, this is the new normal.
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  Speaker 3: You don't just build.
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  Speaker 2: Your AI and then it's there forever and you can
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  Speaker 2: your CAPEX can go back down. It seems like this
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  Speaker 2: may be the new level of borrowing. Do the companies
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  Speaker 2: admit that or do they say no, this is kind
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  Speaker 2: of a one time five or year or whatever.
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  Speaker 7: There is a distinction probably then between what their capital
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  Speaker 7: expenditure intensions are and what they're borrowing intentions are, right,
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  Speaker 7: and what Alphabet had said after the last tranch of
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  Speaker 7: dollar denominated bonds is, look, we plan to borrow from
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  Speaker 7: the US debt market twice a year. And the signal
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  Speaker 7: that the market took from that very explicit explanation was
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  Speaker 7: we've done twice this year. Are you now done?
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  Speaker 6: You know?
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  Speaker 7: And so the bi thesis is really clear. There's a
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  Speaker 7: lot of demand out there, hundreds of billions of dollars
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  Speaker 7: of demand to support that borrowing. But there is also
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  Speaker 7: the psychological aspective like when do they hit pause and stop?
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  Speaker 7: And the three point six billion Ossie offering is very
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  Speaker 7: small on a dollar basis compared to the twenty twenty
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  Speaker 7: five billion they did in the two dollar denominated ones.
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  Speaker 7: So it seems like they're kind of tapering off a bit.
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  Speaker 5: So the bond market has been the subject of a
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  Speaker 5: lot of news this summer. Yields have been up a lot.
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  Speaker 5: Does this potentially affect government bond yields when there are
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  Speaker 5: all these bonds being issued by huge companies?
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  Speaker 7: You know, I might be convincing because of my British
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  Speaker 7: schoolboy accent and Welsh charm, but the bomb market's not
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  Speaker 7: my forte technology is. So, I mean, the one thing
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  Speaker 7: I would say is that you can look at some
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  Speaker 7: of the post issuance pricing action of those technology bonds
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  Speaker 7: and corporate bonds and say, in some cases SpaceX, the
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  Speaker 7: most notable that those underperformed and trailed away, And the
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  Speaker 7: big pitch is the premium over treasuries. Right in the
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  Speaker 7: first place. That was partly what some of the appetite
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  Speaker 7: was driven by. But yeah, I ain't a fixed income guy.
• 10:24
  Speaker 7: I'll hunt it back to you.
• 10:26
  Speaker 2: So ed real quick anthropic saw some Bloomberg reporting here
• 10:30
  Speaker 2: eleven point four five billion dollars in revenue in the
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  Speaker 2: second quarter, fourteen fold increase.
• 10:37
  Speaker 3: What is going on there?
• 10:39
  Speaker 7: Yeah, I mean that's real revenue, right, They're prelim numbers,
• 10:41
  Speaker 7: but that's data presented to prospective investors in a document
• 10:45
  Speaker 7: the Bloomberger has seen, which would indicate that having these
• 10:48
  Speaker 7: meetings with prospective investors ahead of an IPO or as
• 10:50
  Speaker 7: part of the process. The other data point is that
• 10:53
  Speaker 7: they had adjusted positive operating income. And like, if you
• 10:57
  Speaker 7: look at some of the AI link stocks that are
• 10:58
  Speaker 7: moving today, it's probably not just the idea that anthropics
• 11:01
  Speaker 7: trapping towards an IPO that it will happen, but also
• 11:04
  Speaker 7: like they're finding a way to do it without endless losses, right,
• 11:08
  Speaker 7: and lots of those names, Amazon, Alphabet have direct investment
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  Speaker 7: exposure to Anthropic, but it kind of is validation of
• 11:15
  Speaker 7: the AI trade right now.
• 11:17
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 11:24
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 11:28
  Speaker 1: weekdays at ten am Eastern on Apple, Coarclay and Android
• 11:31
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 11:34
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 11:39
  Speaker 2: I'd said it before, I'll say it again. I just
• 11:41
  Speaker 2: could not invest in biotech stocks. It is just too volatile.
• 11:46
  Speaker 2: I mean, it is a hit or miss. The test
• 11:48
  Speaker 2: Works stock doubles a dozen, it goes to zero.
• 11:51
  Speaker 5: When they hit though, it can be so huge, unbelievable.
• 11:55
  Speaker 2: So here's one where not working.
• 11:58
  Speaker 3: Out so well.
• 11:58
  Speaker 2: Astrozeneca is st being a clinical trial of the experimental drug.
• 12:02
  Speaker 3: I'm not going to pronounce it after it didn't look
• 12:05
  Speaker 3: set to help fight.
• 12:06
  Speaker 2: Lung cancer better than existing therapy. So I'm going to
• 12:08
  Speaker 2: go to Sam Fazzelli. He does all this healthcare stuff
• 12:10
  Speaker 2: for Bloomberg Intelligence. He's based in London. Have no idea
• 12:13
  Speaker 2: where he is right now. But Sam talks about Astrozenek
• 12:18
  Speaker 2: and just about this drug in particular, but just how
• 12:22
  Speaker 2: these big pharma companies kind.
• 12:23
  Speaker 3: Of try to pursue a portfolio approach of drug development.
• 12:28
  Speaker 6: Yeah, so Paul, first of all, I have to say,
• 12:30
  Speaker 6: don't worry about by it and just give all your
• 12:32
  Speaker 6: money to uncle Sam. You already committed to that in
• 12:34
  Speaker 6: the previous segment.
• 12:35
  Speaker 3: Right, that's right.
• 12:38
  Speaker 6: Let's talk about this. This is clinical trials are like that.
• 12:41
  Speaker 6: If you want to get a drug for a disease,
• 12:42
  Speaker 6: you've got to go through this. You got to prove
• 12:45
  Speaker 6: unlike some people would like to just make it up
• 12:47
  Speaker 6: whether something is bad or causes autism or not. You
• 12:50
  Speaker 6: got to prove that it works, and you've got to
• 12:52
  Speaker 6: prove that it's worth the side effects. Here, they ran
• 12:56
  Speaker 6: the test in a very difficult group of patients once
• 12:58
  Speaker 6: who don't normally respond to even the best drug we
• 13:01
  Speaker 6: have today, which is merks Ki truder, and it didn't
• 13:05
  Speaker 6: work out. But they had two other results that came
• 13:07
  Speaker 6: out today. In fact, one of them was probably more relevant,
• 13:09
  Speaker 6: which is why astrostock is not down right. So I
• 13:14
  Speaker 6: think it's the way you reported, Paul. At the end
• 13:17
  Speaker 6: of the day, three chrials came out today, Two of
• 13:20
  Speaker 6: them hit, one of them didn't. That to me is
• 13:22
  Speaker 6: a wind.
• 13:24
  Speaker 5: What are some of the exciting things on the horizon
• 13:26
  Speaker 5: right now? Obviously GLP ones have been such a huge
• 13:30
  Speaker 5: market mover, such an economic force, but I feel like
• 13:33
  Speaker 5: over the summer it's just been all tech news in
• 13:35
  Speaker 5: the markets. Is there anything on the horizon that you
• 13:38
  Speaker 5: really have your eye on right now?
• 13:40
  Speaker 6: Yeah? I mean in terms of drugs, there's always something
• 13:44
  Speaker 6: exciting coming on. And if we look at cancer specifically
• 13:48
  Speaker 6: now because the current conversation is cancer, we have a
• 13:51
  Speaker 6: revolutionary drug coming from revolution Medicines for pancreatic cancer, something
• 13:56
  Speaker 6: that is going to at least open the fire the
• 14:01
  Speaker 6: starting guns and actually treating these patients giving them a
• 14:05
  Speaker 6: chance of doubling their survival. And of course the all
• 14:08
  Speaker 6: these numbers that are ones who are much better treated
• 14:11
  Speaker 6: in terms of the you know, you go with the
• 14:12
  Speaker 6: mean and median, but there are people in there get
• 14:15
  Speaker 6: much better efficacy. And it is the starting guns because
• 14:17
  Speaker 6: we need to deal with side effect profile there. So
• 14:20
  Speaker 6: there's that that's coming and that's going to really accelerate
• 14:24
  Speaker 6: efforts there. There's a whole load of other stuff going on.
• 14:27
  Speaker 6: There's other versions of these GLP ones coming up. There
• 14:30
  Speaker 6: are drugs for neuropsychiatric diseases that are making big waves.
• 14:34
  Speaker 6: There are drugs for reducing a cholesterol oral drug that
• 14:38
  Speaker 6: recently approved. There's a lot happening. Unfortunately, AI is this
• 14:43
  Speaker 6: subject dourjure and it will keep taking sucking the oxygen
• 14:47
  Speaker 6: out of the room.
• 14:48
  Speaker 2: How does AI apply to your business, Sam, in the
• 14:51
  Speaker 2: biotechn of farmer space, I would think it would make
• 14:53
  Speaker 2: the average scientist and lab smarter better.
• 14:58
  Speaker 6: How much time do you have? Oh? Shoot, The answer
• 15:03
  Speaker 6: to that is actually exactly what you just said. The
• 15:07
  Speaker 6: point isn't to replace scientists. Remember we've got a brain.
• 15:11
  Speaker 6: If you are for example, utilizing your brain to understand, say,
• 15:16
  Speaker 6: neuroscience and how neurons work. Even there you might be
• 15:20
  Speaker 6: a expert in visual field or eyes or whatever, you
• 15:25
  Speaker 6: don't know how much about the nose and olfactory system.
• 15:27
  Speaker 6: AI is able to synthesize that the enormous amount of
• 15:31
  Speaker 6: data and help you make sure that you're not missing
• 15:34
  Speaker 6: something that someone else has seen in a completely unrelated field.
• 15:38
  Speaker 6: As an example. Right, so you keep using these things,
• 15:41
  Speaker 6: you bring the biology into bear. With the massive amount
• 15:44
  Speaker 6: of data analysis, we're going to see twenty thirty percent
• 15:48
  Speaker 6: of time shaved of drugs get into market, and we're
• 15:51
  Speaker 6: going to see better biology married to people. You need
• 15:55
  Speaker 6: the people in there can't just do it.
• 15:57
  Speaker 2: And it's on at the minute, Sam, I was looking
• 15:58
  Speaker 2: at my weather app. I clicked on London eighty degrees
• 16:02
  Speaker 2: as far as I can see now in New York,
• 16:04
  Speaker 2: no problem.
• 16:05
  Speaker 3: We just crank up the AC. What are you people,
• 16:08
  Speaker 3: What are you doing over there with this heat? You
• 16:09
  Speaker 3: guys don't have air conditioning.
• 16:10
  Speaker 5: You have air conditioning?
• 16:12
  Speaker 6: Are air conditioning? That's okay. We have little mobile fans
• 16:16
  Speaker 6: that you carry on. That's enough for us. And marry that.
• 16:19
  Speaker 6: And also just look a bit further up, Pull It's
• 16:22
  Speaker 6: all coming back. Rain is coming out. Our umbrellas will
• 16:24
  Speaker 6: be out, so don't worry.
• 16:26
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 16:33
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android
• 16:40
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• 16:44
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 16:48
  Speaker 3: Here's the story.
• 16:48
  Speaker 2: I did not have my Bingo card at all for
• 16:51
  Speaker 2: twenty twenty six. The sale of the Los Angeles Lakers
• 16:54
  Speaker 2: last week. Nowhere ex me and I followed the business
• 16:58
  Speaker 2: of sports pretty closely. The sea of Guggenheim Partners and
• 17:01
  Speaker 2: the owner of the LA Dodgers flipped the Lakers within
• 17:04
  Speaker 2: a year and has explored other steps to pay down
• 17:07
  Speaker 2: loans from his insurers. So this is not just selling
• 17:09
  Speaker 2: a team. This is a dude. Mark Walter is a Guggenheim, big,
• 17:13
  Speaker 2: big private equity shop. He's got some financial issues out
• 17:17
  Speaker 2: there and he's got to kind of move some pieces around. Fortunately,
• 17:20
  Speaker 2: ourn ex guest is following all these pieces. Shri Nana Rogen,
• 17:23
  Speaker 2: chief Wall Street correspondent for Bloomberg News Street, who is
• 17:28
  Speaker 2: Mark Walter and what's going on there?
• 17:32
  Speaker 4: Ye?
• 17:33
  Speaker 8: Mark Walter is one of America's wealthiest financiers. And the
• 17:37
  Speaker 8: real story is Mark Walter was in the backwaters of
• 17:40
  Speaker 8: finance in the late nineteen nineties.
• 17:42
  Speaker 3: No one knew him.
• 17:43
  Speaker 8: He was running a asset back securitization firm died with
• 17:48
  Speaker 8: the commercial paper marketplace. But the real trick, the real
• 17:51
  Speaker 8: game changer for him, was a meeting with one of
• 17:53
  Speaker 8: the descendants of the original Guggenheim dynasty, Meyer Guggenheim, the
• 17:58
  Speaker 8: mining battern from the Gilded Age. He meets his great
• 18:01
  Speaker 8: grandson who's not happy with how advisors have been dealing
• 18:04
  Speaker 8: with that family money. They come up with this plan
• 18:07
  Speaker 8: where he folds his firm into their family office and
• 18:10
  Speaker 8: today somehow become no connection to that family, but somehow
• 18:13
  Speaker 8: he's become torch bearer for that great family name, for
• 18:17
  Speaker 8: that Gugenheim name, because once he folded that firm, he
• 18:21
  Speaker 8: grew that into Gougenheam Investments. Google TAM Security is run
• 18:24
  Speaker 8: by former bearst and CEO Alan Schwartz. With all that
• 18:27
  Speaker 8: money expand into other investments, most prominently a stable of
• 18:33
  Speaker 8: expansive and some glittering sports teams Los Angeles Dodgers, the
• 18:37
  Speaker 8: Chelsea Football Club, Cadillac F one team until recently the
• 18:42
  Speaker 8: Los Angeles Lakers. And the only reason we're all talking
• 18:45
  Speaker 8: about this is the shock news that came out here
• 18:47
  Speaker 8: is a professional sports team owner selling a team, flipping
• 18:51
  Speaker 8: a team less than a year after hebort it. The
• 18:54
  Speaker 8: Lakers are getting the treatment like it's some sort of
• 18:57
  Speaker 8: fixer upper on the New Jersey Shore.
• 18:59
  Speaker 5: I know, I've never heard the term flipping in conjunction
• 19:02
  Speaker 5: with like a professional sports team. Only you ranch style homes.
• 19:06
  Speaker 8: And you get the sense that in some ways it
• 19:10
  Speaker 8: was very lucky for him. We don't have any information
• 19:13
  Speaker 8: that suggests that he was quietly going around shopping the Lakers,
• 19:16
  Speaker 8: because again, only in.
• 19:18
  Speaker 3: October, don't make the money.
• 19:19
  Speaker 8: Only in October twenty twenty five did he even get
• 19:21
  Speaker 8: the approval for this. But somehow someone clearly told Bob
• 19:24
  Speaker 8: Biger and Josh Kushner, at least that's our understanding, that hey,
• 19:27
  Speaker 8: you guys should knock on the door of Mark Walter.
• 19:29
  Speaker 8: You're showing interest in the NBA universe. He might need
• 19:31
  Speaker 8: the money. They go in there, they make an offer
• 19:33
  Speaker 8: he can't refuse and suddenly he slipped the team for
• 19:36
  Speaker 8: more than two point five billion what he paid for
• 19:38
  Speaker 8: less than a year ago, which is incredible in itself.
• 19:41
  Speaker 8: As one finance executive put it to us, it feels
• 19:44
  Speaker 8: like a lucrative fire sale.
• 19:46
  Speaker 3: Yes, cut a lot of money.
• 19:47
  Speaker 8: It accelerates his bid to solve for the other problems
• 19:52
  Speaker 8: in his financial empire. And that is why this is
• 19:54
  Speaker 8: in the news. That is why we all want to
• 19:55
  Speaker 8: talk about. Mark Walter is in addition to the sports team,
• 19:59
  Speaker 8: as he said, he also owns insurers. His whole model,
• 20:01
  Speaker 8: almost a pioneer on Wall Street in some sense, was
• 20:05
  Speaker 8: to take that sleepy, boring insurance money, deploy them in
• 20:09
  Speaker 8: not just bonds and equities and treasuries out there, but
• 20:12
  Speaker 8: go and find other more complex investments, whether that was
• 20:15
  Speaker 8: to back his Dodgers purchase or some of the other
• 20:18
  Speaker 8: pieces of his sprawling business universe.
• 20:21
  Speaker 2: So do we know what the problems are at the
• 20:24
  Speaker 2: insurance companies that kind of started this whole.
• 20:26
  Speaker 8: Thing, right, And there was a filing from the insurance
• 20:29
  Speaker 8: company that said, oops, we got a subpoena in February
• 20:31
  Speaker 8: from the government and we did some numbers again and
• 20:36
  Speaker 8: looks like our affiliated investments, which is money that let's
• 20:40
  Speaker 8: just shorthanded as from Walter's insurers going to other parts
• 20:45
  Speaker 8: of Walter's businesses much higher than previously thought. How much
• 20:49
  Speaker 8: higher we went from some about at least in one
• 20:51
  Speaker 8: of the insurance firms of Delaware Life, we went from
• 20:53
  Speaker 8: three percent being affiliated assets to forty percent being affiliated assets.
• 20:57
  Speaker 8: You can see why that would make regular It is nervous.
• 21:01
  Speaker 8: That is a big change. The sense here is and
• 21:04
  Speaker 8: that is what prosecutors and regulators that are looking at,
• 21:06
  Speaker 8: were third party intermediaries used just to borrow the money
• 21:10
  Speaker 8: and then channel them off to other parts of Walter's
• 21:14
  Speaker 8: business without the insurance company or even the ratings firm
• 21:18
  Speaker 8: having a true picture of where that money was going.
• 21:21
  Speaker 8: And that's been the focus. That's why Walter, through his
• 21:25
  Speaker 8: holding company TWG, is racing, racing to cut back this
• 21:30
  Speaker 8: high forty percent rate of affiliated investments, presumably to make
• 21:34
  Speaker 8: sure that regulators can get comfortable again with this remediation plan.
• 21:37
  Speaker 8: If they're able to do that, and that's why the
• 21:41
  Speaker 8: sudden influx from the Lakers sale when it happens, will
• 21:45
  Speaker 8: be good. There are other options that are exploring to
• 21:48
  Speaker 8: try and raise money to be able to pay on
• 21:49
  Speaker 8: some of these structures.
• 21:51
  Speaker 4: Is here?
• 21:51
  Speaker 3: Do we know how much the total hole is?
• 21:53
  Speaker 8: I don't know if hole is necessarily the right term,
• 21:56
  Speaker 8: because we don't understand that. It's not like he has
• 21:58
  Speaker 8: to get rid of all of it. But we're talking
• 21:59
  Speaker 8: about suddenly roughly twenty billion dollars across his two insurers
• 22:02
  Speaker 8: being in affiliated assets, and the goal is to try
• 22:05
  Speaker 8: and bring it down substantially.
• 22:06
  Speaker 3: Okay, is do we know?
• 22:08
  Speaker 5: I mean, did so? He didn't necessarily want to sell
• 22:11
  Speaker 5: the Lakers, even though he made a lot of money
• 22:13
  Speaker 5: on the sale.
• 22:15
  Speaker 3: He didn't.
• 22:15
  Speaker 8: Definitely, it stands to reason that someone who's collected sports team,
• 22:19
  Speaker 8: someone who's so invested in the sports team, invested emotionally,
• 22:23
  Speaker 8: not just through his wealth. Right some thinks yeah, yeah,
• 22:26
  Speaker 8: And like, look look at what the Dodgers are doing.
• 22:27
  Speaker 8: Two times defending World Series champion. They were out there
• 22:30
  Speaker 8: the Rose Garden just last month being fettered by President
• 22:33
  Speaker 8: Donald Trump. So you wouldn't think that he wanted to
• 22:35
  Speaker 8: buy this as if it was some private equity deal
• 22:38
  Speaker 8: where he could ring out some efficiencies and then sell
• 22:40
  Speaker 8: it for a higher price the very next year. That
• 22:42
  Speaker 8: wasn't the goal, But from all the moon music we're hearing.
• 22:45
  Speaker 8: It certainly helps.
• 22:46
  Speaker 2: So there was some reporting I think last week where
• 22:48
  Speaker 2: he had mister Walter discussed putting up Guggenheim's securities, you know,
• 22:55
  Speaker 2: maybe either putting up for collatter or selling it or
• 22:58
  Speaker 2: monetizing it somehow.
• 23:00
  Speaker 3: Where are we with that?
• 23:01
  Speaker 2: I mean, should we expect more asset sales from his collection?
• 23:05
  Speaker 8: Look, things are very fluid. That our understanding was even
• 23:08
  Speaker 8: before the first set of new stories in the probe
• 23:09
  Speaker 8: came out, even before anyone knew anything about the Lakers
• 23:12
  Speaker 8: being up for sale, and just judging by the timeline,
• 23:15
  Speaker 8: way before the Kushner and Niger even went up to
• 23:18
  Speaker 8: him and said they would like to buy the Lakers.
• 23:20
  Speaker 8: They have had early deliberations with different folks in the
• 23:22
  Speaker 8: market trying to find various ways they could raise money,
• 23:25
  Speaker 8: and one of the options was could we do some
• 23:28
  Speaker 8: nine month to twelve month loans where you could give
• 23:30
  Speaker 8: us five hundred million or a billion, and we'd back
• 23:32
  Speaker 8: the guarantee that with collateral in the form of various assets,
• 23:36
  Speaker 8: including the equity stake in Google I'm partners, which again
• 23:40
  Speaker 8: tells you the stated path to recovery. Some of the
• 23:42
  Speaker 8: lenders were saying, the potential lenders were saying would have
• 23:45
  Speaker 8: been if they failed to pay back the money that
• 23:46
  Speaker 8: they could enforce on that collateral, which tells you you
• 23:50
  Speaker 8: wouldn't normally want to put up your Crown financial jeuele
• 23:52
  Speaker 8: out there and say, okay, I could use that as collateral.
• 23:55
  Speaker 8: So it tells you what they were thinking about in
• 23:59
  Speaker 8: the realm of the art of the possible. It is
• 24:01
  Speaker 8: unclear whether that is still a live deal, but what
• 24:04
  Speaker 8: is clear is they're exploring all options possible to make
• 24:07
  Speaker 8: sure they get out of this insurance mess.
• 24:11
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