Latest / Bloomberg Intelligence / Reddit Traders Beat The Masters of the Universe: Jim Bianco

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Reddit Traders Beat The Masters of the Universe: Jim Bianco · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. A big new player with
• 0:20
  Speaker 1: lots of money and sophistication has entered the game, and
• 0:23
  Speaker 1: it's probably not going away. That's what Jim Bianco, our
• 0:26
  Speaker 1: next guest, says, Wall Street never saw the Redators coming.
• 0:29
  Speaker 1: To Bianco as president of Bianco Research and Bloomberg Opinion columnist,
• 0:34
  Speaker 1: Jim just first of all, on today's action. Are the
• 0:37
  Speaker 1: rehdators sort of retreating just a little bit into their
• 0:39
  Speaker 1: corners in preparation for something else big? Or they just
• 0:44
  Speaker 1: now sort of having executed their plan for game stop?
• 0:47
  Speaker 1: Are they sort of just retreating in general? I think
• 0:50
  Speaker 1: that the retreating from the trade um they won. The
• 0:54
  Speaker 1: announcement was yesterday when we found out that the gigantic
• 0:58
  Speaker 1: short in the in game stock and some of these
• 1:01
  Speaker 1: other stocks was covered by the hedge funds. The hedge
• 1:05
  Speaker 1: funds took a big loss. They walked away, and now
• 1:08
  Speaker 1: the short squeeze is ending, and so that they're all
• 1:11
  Speaker 1: exiting the trade right now, and they're exiting presumably in a
• 1:15
  Speaker 1: a big loss. Dave Portnoy texting, are sending out a
• 1:18
  Speaker 1: tweeting he lost seven hundred thousand dollars on the mean
• 1:21
  Speaker 1: stocks here. This is I mean, the retail investors are
• 1:25
  Speaker 1: getting crushed here, aren't they. No, they're not getting crushed.
• 1:28
  Speaker 1: There are some that are losing. Portnoy loss some money,
• 1:31
  Speaker 1: but that's not a big loss for him. He'll be back,
• 1:33
  Speaker 1: you know, probably with a bigger gainer loss by the
• 1:36
  Speaker 1: end of the week if you follow him like like
• 1:38
  Speaker 1: I do closely. Um, a lot of the a lot
• 1:42
  Speaker 1: of the buying on all the way up to the top,
• 1:44
  Speaker 1: which we found out now was a shortcover. It wasn't
• 1:47
  Speaker 1: necessarily retailed. Look, if the answer is there's seven point
• 1:51
  Speaker 1: five million people in Reddit that some of those people
• 1:53
  Speaker 1: lose with the market with this stock going down. Yes,
• 1:56
  Speaker 1: So if you're asking us the perfection in the trade, um, no,
• 2:00
  Speaker 1: there isn't. But if you said, here's a group of
• 2:03
  Speaker 1: hedge funds, here's a group of retail traders who did
• 2:06
  Speaker 1: better the retail traders by far did better in this episode.
• 2:10
  Speaker 1: The masters of the Universe got hurt a lot worse
• 2:14
  Speaker 1: in this trade than the retail traders. Yeah, Jim, how
• 2:18
  Speaker 1: do they not see this coming? I mean some of
• 2:20
  Speaker 1: them are definitely in there on those reddits, uh you
• 2:23
  Speaker 1: know sub breddits. I was communicating with one, you know,
• 2:27
  Speaker 1: very large hedge fund manager last week and he actually said,
• 2:32
  Speaker 1: it's really shocking a swarm of small investors overpowering any
• 2:35
  Speaker 1: sense of value. These were his words. How do they
• 2:38
  Speaker 1: not see this coming? I think the problem is the
• 2:42
  Speaker 1: word collusion. Look when the stock got over to a
• 2:46
  Speaker 1: of the float, I think it's illegal. It's a short,
• 2:49
  Speaker 1: it's a naked short. But even if it isn't illegal, Uh,
• 2:53
  Speaker 1: it is very poor risk management by a lot of
• 2:57
  Speaker 1: these hedge funds to have that bigger short. Why they
• 3:00
  Speaker 1: have that bigger short because they all looked at each
• 3:02
  Speaker 1: other and let me let me not men sports. Is
• 3:04
  Speaker 1: Goldman Sachs gonna stick it to us? Is another hedge
• 3:07
  Speaker 1: fund gonna stick it to us? Is JP Morgan gonna
• 3:10
  Speaker 1: stick it to us? No, none of them are going
• 3:12
  Speaker 1: to stick it to us. So it's not imprudent to
• 3:15
  Speaker 1: run that kind of risk, and then they said, who
• 3:17
  Speaker 1: out there is going to figure this out and stick
• 3:21
  Speaker 1: it to us? And we found out who because if
• 3:24
  Speaker 1: you go on the Reddit boards, they talked exactly about
• 3:27
  Speaker 1: the Starting in October, they identified Melvin Capital as being
• 3:31
  Speaker 1: the big short and when the uh when when the
• 3:37
  Speaker 1: short does? Report came out by Citron Research two weeks ago.
• 3:41
  Speaker 1: They literally said, this is the this is the event.
• 3:45
  Speaker 1: Right now, let's go. We've got them because they're at
• 3:47
  Speaker 1: maximum squeeze potential. I think when Michael Lewis whites the book,
• 3:51
  Speaker 1: he's gonna call this. Now, we've got the greatest trade
• 3:54
  Speaker 1: that's ever been done. So jim um. Some of these
• 3:58
  Speaker 1: meme stocks, if you will, all to MidCap, relatively thin floats, um,
• 4:03
  Speaker 1: big short positions, easy to squeeze. Re surprised to see
• 4:08
  Speaker 1: the Reddit traders going to something like a commodity like silver, Yeah,
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  Speaker 1: I was surprised by that. Um. That doesn't seem to
• 4:17
  Speaker 1: be kind of their modus operandi. And there is some
• 4:21
  Speaker 1: debate on Reddit whether or not they're actually doing that
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  Speaker 1: as well too. But even if it is silver, it
• 4:28
  Speaker 1: isn't silver. You know one of my favorite movies, it's
• 4:31
  Speaker 1: a hunt for Red October when the torpedo missed the
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  Speaker 1: boat moving around in the ocean. That's the Reddit traders
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  Speaker 1: looking for another target. So there'll be another chapter to
• 4:40
  Speaker 1: this story. I don't know if it will be next
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  Speaker 1: week or in three months, but this crowd is still
• 4:44
  Speaker 1: out there unless the I would say before the last
• 4:46
  Speaker 1: two weeks, we've been seeing this coming. When Buffets sold
• 4:51
  Speaker 1: his airlines, it was no less than Dave Portnoy who
• 4:54
  Speaker 1: led the charge that said Buffett is old and he's
• 4:58
  Speaker 1: past his prime. Let's all up the airlines. They doubled
• 5:01
  Speaker 1: in a month. Portantly made a ton of money off
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  Speaker 1: that trade back then, and the airlines are even higher.
• 5:07
  Speaker 1: They bought the work from home stocks that weren't in
• 5:08
  Speaker 1: the indexes. They bought Tesla one up and then got
• 5:12
  Speaker 1: into the SMP. They've even been playing the cryptocurrencies, so
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  Speaker 1: they've been largely winning at this Now. I'm not saying
• 5:20
  Speaker 1: they're gonna win forever, but what they've been doing is
• 5:24
  Speaker 1: they've been looking at Wall streets practices, which has a
• 5:27
  Speaker 1: little bit of collusion. This is the kind of the
• 5:29
  Speaker 1: way we all do this, and they've been gaming their
• 5:32
  Speaker 1: system over and over again and taking advantage of it.
• 5:35
  Speaker 1: Wall Street is going to have to change the way
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  Speaker 1: they do money. We're never going to see another big
• 5:39
  Speaker 1: short interest in a stock like this again as we
• 5:42
  Speaker 1: move forward, because the fear is there now that somebody
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  Speaker 1: will stick it to us if we ever do it. Jim,
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  Speaker 1: are you concerned on the effect that this will have
• 5:51
  Speaker 1: on short setters and short sellers making their research available
• 5:54
  Speaker 1: for everybody to view. I mean, in a sense, the
• 5:56
  Speaker 1: short sellers were the little guy for a long time,
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  Speaker 1: and they were the people that were sticized by some
• 6:01
  Speaker 1: in the market, and they were the people that were,
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  Speaker 1: you know, putting themselves out there, not saying that they
• 6:05
  Speaker 1: were all, you know, heroes or Robin hoods themselves. Let's
• 6:09
  Speaker 1: you know, let's make that very very clear. But some
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  Speaker 1: of them did have excellent research and they were willing
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  Speaker 1: to share it with the world, and it can't have
• 6:17
  Speaker 1: been all bad, no. I agree. Short selling is a
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  Speaker 1: critical function in the market, and the guys like Jim
• 6:23
  Speaker 1: Chainos Marcotis, they are been very very good at identifying
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  Speaker 1: literally fraudulent companies and explaining why they've been fraudulent through
• 6:33
  Speaker 1: research reports, and profiting off of that. That is a
• 6:37
  Speaker 1: very valuable service. But then there were these smash and
• 6:40
  Speaker 1: grab type of short sellers that kind of got in
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  Speaker 1: the way, and like I said, the other institutions didn't
• 6:45
  Speaker 1: put a stop to it until retail did. And now
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  Speaker 1: all short sellers have been tarnished. And I think that
• 6:50
  Speaker 1: at the end of the day, that's not a good thing.
• 6:52
  Speaker 1: It is still a valuable function that was a little overdone,
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  Speaker 1: that's finally getting pulled back from the frost. But if
• 7:00
  Speaker 1: if the Jim chanos Is marcutis Is of the world
• 7:03
  Speaker 1: have to go into hiding now or witness protection programs
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  Speaker 1: because of this, I don't think in the long run
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  Speaker 1: this has benefits all of us. Jim, do you expect
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  Speaker 1: any regulatory oversight to grow out of this from Washington
• 7:16
  Speaker 1: or the SEC um. We've heard some rumblings. I hope
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  Speaker 1: there is, but I think they're looking in the wrong place.
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  Speaker 1: I think they need to start with their short selling rules.
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  Speaker 1: One of the reasons the SEC was invented in ninety
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  Speaker 1: three was abuse of short selling in the nine crash,
• 7:32
  Speaker 1: and they still after ninety years, can't seem to get
• 7:35
  Speaker 1: it right. I hope that they start looking there at
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  Speaker 1: that and I think maybe they should start looking at
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  Speaker 1: the institutional community too, Is there a little bit of
• 7:43
  Speaker 1: coordination or collusion going on there as well? That's in
• 7:48
  Speaker 1: some cases like the famous you know idea spanners at
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  Speaker 1: the hedge funds old that's not really legal for them
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  Speaker 1: to do that. But we've done whole showtime shows called
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  Speaker 1: billions about this because such an accepted practice right now
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  Speaker 1: on Wall Street. I hope they looked there as opposed
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  Speaker 1: to how do we how do we restrict and restrain
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  Speaker 1: these message boards? They weren't the problem. They identified the problem, right. Hey, Jim,
• 8:13
  Speaker 1: thanks so much for joining us. We always appreciate getting
• 8:15
  Speaker 1: your perspective on markets. Jim Bianco, President of Bianco Research
• 8:18
  Speaker 1: and Bloomberg Opinion Calumnis. You can read all of Jim's
• 8:21
  Speaker 1: work and all of the Bloomberg opinion columnists at Bloomberg
• 8:23
  Speaker 1: dot com, Slash Opinion or O P I N. Go
• 8:27
  Speaker 1: on the terminal. Lizza Chapman joins us now. She is
• 8:33
  Speaker 1: a venture capital reporter here at Bloomberg. And the reason
• 8:37
  Speaker 1: we want to talk to Lizette is because we have
• 8:39
  Speaker 1: been waiting for robin Hood to go public, potentially in
• 8:42
  Speaker 1: May of this year or so. Lizette have the events
• 8:47
  Speaker 1: of the last few weeks changed robin hoodsplans at Alls
• 8:51
  Speaker 1: absolutely had thrown a real wench in um kind of
• 8:55
  Speaker 1: how they approach the public markets. If anything, it's made
• 8:58
  Speaker 1: it much more pressing because they realize that they do
• 9:01
  Speaker 1: need these extra capital requirements. So, you know, while before
• 9:05
  Speaker 1: they were looking at an I p O or I
• 9:08
  Speaker 1: p O or some type of way to go public,
• 9:10
  Speaker 1: you know, early to late spring, now they're they're not
• 9:14
  Speaker 1: even really talking about the timing as much as they
• 9:16
  Speaker 1: are that yes, we need to go public, not a
• 9:18
  Speaker 1: matter necessarily of when, but as why, and so as
• 9:22
  Speaker 1: they resolved this recent hubub um, you know they'll be
• 9:26
  Speaker 1: they'll be looking at um exactly how to go public. Yeah, Liz,
• 9:29
  Speaker 1: is their talk or what is the level of talk
• 9:32
  Speaker 1: about a spack? A spack to me might be a
• 9:35
  Speaker 1: way to consider it, could be could get them into
• 9:38
  Speaker 1: the public market sooner, perhaps with less scrutiny. Um, what
• 9:41
  Speaker 1: are they thinking about us back? That's a great point,
• 9:44
  Speaker 1: and a lot of companies have definitely availed themselves as
• 9:47
  Speaker 1: that like last year was all time record high. It
• 9:50
  Speaker 1: was more last year than it was I think in
• 9:52
  Speaker 1: the past twenty years combined. So it's definitely top of talks.
• 9:55
  Speaker 1: But right now, to be honest, this is a you know,
• 9:57
  Speaker 1: this is a you know, small but fast growing company.
• 10:01
  Speaker 1: Um it is. They say that they are profitable. Um
• 10:05
  Speaker 1: you know, that's what we've been told. According to sources
• 10:07
  Speaker 1: familiar um back is one of the options. Um so
• 10:11
  Speaker 1: is a direct listing, which is what palat here and Spotify.
• 10:14
  Speaker 1: You may remember they've done that previously. So those are
• 10:17
  Speaker 1: two other options that they're also talking and thinking about.
• 10:20
  Speaker 1: But but to be honest, you know, there so they've
• 10:23
  Speaker 1: been so focused on just dealing with this crisis right now.
• 10:25
  Speaker 1: I mean they raised you know, they were able to
• 10:27
  Speaker 1: raise they had to raise one billion dollars in a
• 10:29
  Speaker 1: span of twelve hours, and that that number increased to
• 10:32
  Speaker 1: three point four billion over the course of seventy two hours,
• 10:35
  Speaker 1: just to you know, create that comfort and make sure
• 10:37
  Speaker 1: that they could continue trading regularly against But that has
• 10:40
  Speaker 1: been their primary focus up until now. Now. Who knows. Yeah,
• 10:43
  Speaker 1: for sure, they definitely want to, you know, keep working
• 10:46
  Speaker 1: beautifully so that people don't lose trust or face. In
• 10:49
  Speaker 1: Robin Hood, Lizzat we were just speaking with somebody who
• 10:52
  Speaker 1: mentioned the game stuff. Probably should have tried to buy
• 10:55
  Speaker 1: Twitch at some point, and we know, of course that
• 10:58
  Speaker 1: Amazon boa Twitch for less than a billion dollar or is.
• 11:00
  Speaker 1: But we did get Uber making another acquisition today for
• 11:03
  Speaker 1: one point one billion dollars. Not the alcohol startup Drizzly.
• 11:07
  Speaker 1: Talk to us about this pricing. I mean, essentially, this
• 11:10
  Speaker 1: is literally an alcohol delivery service. Is it worth one
• 11:15
  Speaker 1: point one billion dollars? Well, I'm sure that the investors
• 11:20
  Speaker 1: who last um backed in twent seventeen and valued at
• 11:23
  Speaker 1: at seventies three millions according to pitch Book, I'm sure
• 11:27
  Speaker 1: they are popping champaign today and ordering a plenty of
• 11:32
  Speaker 1: things by Drizzly or other means, because that is one
• 11:34
  Speaker 1: heck of a return. So sent three million, not even
• 11:37
  Speaker 1: three years, barely three years ago. Yeah, exactly, So, I mean,
• 11:41
  Speaker 1: you know, and that's kind of the way the venture
• 11:43
  Speaker 1: capital game is played, right, You only need one really
• 11:47
  Speaker 1: great company to knock it out of the park to
• 11:49
  Speaker 1: make up for all the other losses. Um. You know
• 11:52
  Speaker 1: what Uber guests with this is um. You know, they
• 11:56
  Speaker 1: get to expand their alcohol delivering They were doing it
• 11:59
  Speaker 1: for four through Postmates, which you remember they acquired uh
• 12:03
  Speaker 1: last year for two point six billions and they were
• 12:05
  Speaker 1: able to do it through a corner shop, which was
• 12:07
  Speaker 1: their acquisition in Mexico. But this is a really big
• 12:11
  Speaker 1: push doubling down, maybe even tripling down and delivery boost
• 12:14
  Speaker 1: sales or through the roof. During the pandemic, um, you know,
• 12:17
  Speaker 1: Drizzly itself said that their sales were up four above
• 12:21
  Speaker 1: historical levels, um back in May, and UM, you know,
• 12:26
  Speaker 1: I think many people can say that that, you know,
• 12:29
  Speaker 1: alcohol consumption is up historically, so you know this this
• 12:33
  Speaker 1: this is a chance for Uber to really dig down
• 12:35
  Speaker 1: into delivery because, as we've talked about before, it's ride
• 12:38
  Speaker 1: hailing service. It's just been decimated by the pandemic. So
• 12:41
  Speaker 1: people are shut in, people are ordering food, you know,
• 12:44
  Speaker 1: and and now booze and um. They can also do
• 12:48
  Speaker 1: uh pharmaceuticals or pharmacy, uh, you know, items and also packages.
• 12:54
  Speaker 1: So this is part of Uber's overall shift to just say, look, guys,
• 12:58
  Speaker 1: we're not gonna do flying cars. Are not going to
• 13:00
  Speaker 1: do um, you know, flying flying tax these are electric scooters.
• 13:04
  Speaker 1: Were just going to do delivery and rides and darn it,
• 13:06
  Speaker 1: we're going to turn a profit this year. So that's
• 13:08
  Speaker 1: their focus. Hey, was that how what's the mood out
• 13:11
  Speaker 1: there in Silicon Valley as it relates to doing deals
• 13:13
  Speaker 1: raising capital. How much does the pandemic slow things down? Oh? Man,
• 13:17
  Speaker 1: I don't know. I've been you know, kind of cloistered away.
• 13:20
  Speaker 1: Silicon Valley is more of a of an idea, I
• 13:22
  Speaker 1: think to send an actual location. So I've been working
• 13:25
  Speaker 1: from home since since March. But I can tell you
• 13:27
  Speaker 1: from talking to early stage investors, UM, some of them
• 13:31
  Speaker 1: say that that their deal flow is higher than it's
• 13:34
  Speaker 1: ever been, and the numbers back that up. You know,
• 13:36
  Speaker 1: even though they're not doing all these deals in in
• 13:40
  Speaker 1: you know, over coffees and over drinks and networking, all
• 13:43
  Speaker 1: that stuff has gone. Yet last year was the highest
• 13:47
  Speaker 1: amount of venture capital on on record. And we also saw, um,
• 13:52
  Speaker 1: you know, the most of the megafunding deals, the massive
• 13:55
  Speaker 1: million plus deals that pumps that total um, you know,
• 13:59
  Speaker 1: to an all time I So to your answer, you know,
• 14:01
  Speaker 1: to your question, what's the mood, Um, it's busy. I
• 14:05
  Speaker 1: think people are just grinding it through, still getting deals done.
• 14:08
  Speaker 1: They're doing it on zoom, they're doing it and called um.
• 14:11
  Speaker 1: But um, you know, we're still very much affective on
• 14:13
  Speaker 1: the pandemic here as we are in other parts of
• 14:15
  Speaker 1: the nation. Hey, Lozette, thank you so much for joining us.
• 14:18
  Speaker 1: We really appreciated getting your thoughts there on some interesting
• 14:21
  Speaker 1: news coming out of the valley there with Uber and
• 14:25
  Speaker 1: UH with Robin Hood as well. Listen Lazette Chapman, venture
• 14:28
  Speaker 1: capital reporter for a Bloomberg News in are based out
• 14:32
  Speaker 1: in San Francisco. Well, one of the industries that was
• 14:36
  Speaker 1: certainly disrupted by the pandemic was retail. The acceleration of
• 14:42
  Speaker 1: the migration from bricks and mortar to e commerce just
• 14:46
  Speaker 1: really proceeded during this pandemic and continues to do so.
• 14:49
  Speaker 1: Let's get the latest on kind of where we are
• 14:51
  Speaker 1: in the retail environment here. We do that with Tay Lopez.
• 14:54
  Speaker 1: He's executive chairman and CEO of Retail e Commerce Ventures
• 14:58
  Speaker 1: based in Miami, Florida. Ty, thank so much for joining us.
• 15:01
  Speaker 1: Give us a sense of kind of where we are
• 15:03
  Speaker 1: in the retail landscape now, you know, bricks and mortar
• 15:07
  Speaker 1: versus e commerce. How are the retailers adapting? Yeah, I
• 15:12
  Speaker 1: mean it's still a slow burn, slow transition. Hard to
• 15:16
  Speaker 1: teach old dogs new tricks, as they say, so I
• 15:21
  Speaker 1: don't see them changing fast enough to allay the you know,
• 15:26
  Speaker 1: coming tidal wave that they're starting to feel. So yeah,
• 15:31
  Speaker 1: that's the short answer in my opinion. So, Ty, what
• 15:34
  Speaker 1: brands are you using a potential targets? Well, you know,
• 15:40
  Speaker 1: usually the bankruptcy and so on the first quarter they
• 15:45
  Speaker 1: slowly ramp up. People tried to make it through and
• 15:48
  Speaker 1: watch how the holidays, you know, November, December, Black Friday did.
• 15:52
  Speaker 1: So I expect it to ramp up a little bit
• 15:55
  Speaker 1: in the second quarter. It's usually snow slow. Now, Um,
• 15:59
  Speaker 1: French Escas was one that was for sale. We did
• 16:02
  Speaker 1: not go after that one. It's starting to heat up
• 16:06
  Speaker 1: a little bit. People are realizing, hey, we can buy
• 16:08
  Speaker 1: these distressed brands. Um, the last thing we bought with
• 16:12
  Speaker 1: Stein Martin radio shack in November and in November, so
• 16:16
  Speaker 1: we'll see what's coming up. Everybody's kind of, like I said,
• 16:20
  Speaker 1: they're saying, can we make the switch? Can we do
• 16:23
  Speaker 1: it fast enough? And I think when the audited financials
• 16:27
  Speaker 1: come out from the fourth quarter of last years when
• 16:29
  Speaker 1: you'll start seeing bigger decisions being made about the bankruptcy
• 16:33
  Speaker 1: or selling. So t is your strategy to kind of
• 16:37
  Speaker 1: identify high quality brands, brands that really have good value
• 16:41
  Speaker 1: in the marketplace, but for whatever reason, did not manage
• 16:44
  Speaker 1: that transition from physical to e commerce and then get
• 16:49
  Speaker 1: that brand by that brand, acquire that brand and try
• 16:52
  Speaker 1: to do it yourself. Yes, exactly what we're looking for
• 16:56
  Speaker 1: is brands that are not distressed breaking the order that
• 17:00
  Speaker 1: was distressed. So if we think the brand itself is distressed,
• 17:04
  Speaker 1: we're less interested. We've passed on various brands in the
• 17:08
  Speaker 1: last six months. Sometimes you know, I'm just down being
• 17:11
  Speaker 1: too busy, but sometimes we felt like, you know, that
• 17:14
  Speaker 1: brand doesn't have much power. But when you look at
• 17:17
  Speaker 1: something like stein Mart, for example, radio Shack, people still
• 17:21
  Speaker 1: stop shopping their dress bomb here one. It's just the
• 17:24
  Speaker 1: economics of the scores is what was distressed. And since
• 17:28
  Speaker 1: we don't really take stores on that, that segmentation of
• 17:33
  Speaker 1: distress doesn't bother us at all. What about Game Stop?
• 17:37
  Speaker 1: What kind of reputation does that brand have these days? Wow,
• 17:43
  Speaker 1: that's a great clash hit. I would say, you know,
• 17:46
  Speaker 1: if you look at the origin the Game Stop, it's
• 17:49
  Speaker 1: this chewy co founder coming on the board and kind
• 17:52
  Speaker 1: of bringing life that he can revive the brand. I read,
• 17:56
  Speaker 1: I forget the name. I read yesterday an act of
• 18:00
  Speaker 1: a shareholder or a consultant who told them two years ago,
• 18:05
  Speaker 1: you should have bought Twitch. You know, that would have
• 18:07
  Speaker 1: been to play because that transitions you. Not only it's
• 18:10
  Speaker 1: not e commerce, but it puts you in that world
• 18:13
  Speaker 1: that you should be. And so I think games stopped.
• 18:16
  Speaker 1: They have to do more. They have to have to
• 18:19
  Speaker 1: be some fundamental changes. Um. I can't speak to it
• 18:23
  Speaker 1: because I haven't researched much, but I thought I was
• 18:25
  Speaker 1: an interesting quote. If they had, you know, made that
• 18:28
  Speaker 1: Twitch acquisition several years ago, maybe they wouldn't be so
• 18:32
  Speaker 1: distressed right now. So I think it's it's one on
• 18:35
  Speaker 1: the brink. It can be turned around maybe, but it's teetering,
• 18:38
  Speaker 1: you know, so we'll see. Ty. What's the status of
• 18:41
  Speaker 1: Brooks Brothers. That was a big brand at the beginning
• 18:43
  Speaker 1: of this pandemic. I believe filed for bankers if it
• 18:47
  Speaker 1: certainly challenged. Yes, a company called a b G Authentic
• 18:53
  Speaker 1: Brands Group out of New York. I thought, I'm not
• 18:56
  Speaker 1: mistaken made that made that acquisition. They do a little
• 19:00
  Speaker 1: bit different than us. Um, really well run business makes
• 19:04
  Speaker 1: a lot of money backed by black Stones or black
• 19:08
  Speaker 1: Rocks already, and they buy things that they focused on
• 19:12
  Speaker 1: licensing revenue. So they felt for us Brookstone as our
• 19:17
  Speaker 1: Brooks brothers. Um, you know, we didn't. We didn't understand
• 19:21
  Speaker 1: how we can add as much value. But they buy
• 19:24
  Speaker 1: it for the global licensing rights. And so I think
• 19:28
  Speaker 1: that happened about four or five months ago that they
• 19:32
  Speaker 1: made the acquisition. I think it was if I'm not
• 19:34
  Speaker 1: mistaken publicly, it was in the three hundreds. Wow. What's
• 19:38
  Speaker 1: interesting talk to us about fundraising? Is it an easy
• 19:42
  Speaker 1: time for fundraising? It feels like there's so much cash
• 19:45
  Speaker 1: out there. I mean, so many stacks and so much
• 19:49
  Speaker 1: you know, so many signals of frost really across this market.
• 19:53
  Speaker 1: Are you seeing that tie or people coming to you
• 19:55
  Speaker 1: to to to hunt your money? Uh? You know, but
• 20:02
  Speaker 1: I want to say coming to us the instantly hand
• 20:04
  Speaker 1: us money. But um, there is an element I'm reading
• 20:07
  Speaker 1: rereading Robert Schiller's book A Rational Exuberant. That's a good
• 20:11
  Speaker 1: one for everybody to reread. The Noble Applies winner wrote
• 20:14
  Speaker 1: it a while ago. But um, we raise money uniquely.
• 20:19
  Speaker 1: We're not a fund or a holding company. We mostly
• 20:21
  Speaker 1: raised from a network. We've kind of built this kind
• 20:23
  Speaker 1: of group club of high network that credited investors. So
• 20:28
  Speaker 1: most of what we do is with this group of
• 20:30
  Speaker 1: hundreds of credit investors who directly have relationships with us.
• 20:35
  Speaker 1: But we are yes. I mean, the spack world is
• 20:38
  Speaker 1: going to be fascinating because all these facts for and
• 20:41
  Speaker 1: they have to eventually, you know, find a target or
• 20:44
  Speaker 1: give the money back. So I think it is an
• 20:47
  Speaker 1: interesting time. It's relatively easy to raise. But you know,
• 20:51
  Speaker 1: one thing that you start to push up against the
• 20:54
  Speaker 1: paradox of choice investors go, there's so much we at
• 20:58
  Speaker 1: tact and there's so much to do they do, and
• 21:00
  Speaker 1: there's so much to talk about. Time we'll have to
• 21:02
  Speaker 1: do it again soon to talk more about all of this.
• 21:05
  Speaker 1: Tayl Opez of Retail e Commerce Adventures, thank you. Let's
• 21:10
  Speaker 1: switch gears now to Global Oil ex on mobile. It
• 21:14
  Speaker 1: pledged to safeguard it's mammoth dividend after posting its first
• 21:17
  Speaker 1: annual loss in at least forty years, a show of
• 21:20
  Speaker 1: defiance by an oil driller besieged by activist investors, lawmakers
• 21:24
  Speaker 1: and climate change campaigners. Let's get the latest on that.
• 21:26
  Speaker 1: We could do that with Fernando Vallier, oil and gas
• 21:29
  Speaker 1: analyst for Bloomberg Intelligence Fernando talked to us about Exon Mobile.
• 21:33
  Speaker 1: Here a brutal, brutal year for them, but they're keeping
• 21:36
  Speaker 1: the dividend. That's right, Paul. They're they're maintaining their fifteen
• 21:40
  Speaker 1: billion dollar dividend, but at the sacrifice of restoring their
• 21:45
  Speaker 1: their peer leading returns. Excellent has been the leader UH
• 21:48
  Speaker 1: in returns on capital for the sector for several years,
• 21:52
  Speaker 1: but since eighteen it lost its ground, first to Totel
• 21:56
  Speaker 1: and now to Chevron, and it is maintaining its evidence
• 22:00
  Speaker 1: but flashing growth in the projects that were supposed to
• 22:04
  Speaker 1: bring it back towards the head of the line. UM.
• 22:06
  Speaker 1: You see the target for the Permian, for example, one
• 22:09
  Speaker 1: of its ground jewels going from one point two million
• 22:12
  Speaker 1: barrels by seven hundred thousand barrels a day UM. So
• 22:17
  Speaker 1: the growth is really slowing down, and some of its
• 22:20
  Speaker 1: other key pillars from as as soon as March of
• 22:23
  Speaker 1: last year. But poor New Guinea and Mozambique also falling.
• 22:27
  Speaker 1: By the wayside as it prefers to to funnel money
• 22:31
  Speaker 1: towards the dividend as opposed to showing up. It's UH.
• 22:34
  Speaker 1: It's falling production and returns on capital. What made them
• 22:38
  Speaker 1: make that decision. It was that there was too much
• 22:40
  Speaker 1: risk in hanging on for some of these plays to
• 22:43
  Speaker 1: to pay off. UM. I think it's primarily a concern
• 22:48
  Speaker 1: that cutting its dividend will drive away some of its
• 22:51
  Speaker 1: shareholder base. It is a retail focused shareholder base that's
• 22:56
  Speaker 1: really for uh important that for whom the dividend is
• 23:00
  Speaker 1: very important. So there's a concern that if they do
• 23:03
  Speaker 1: eventually cut the dividend, there would be a movement away
• 23:07
  Speaker 1: from the stock, and then that would consequently impact it's
• 23:10
  Speaker 1: cost the capital. My view is that by continuing to
• 23:14
  Speaker 1: pay such a large dividend and not addressing its following
• 23:18
  Speaker 1: return on capital, the sustainability of that dividend in the
• 23:21
  Speaker 1: long term is coming into under question. Forna talk to
• 23:26
  Speaker 1: us about Exxon's results for first annual loss in forty years.
• 23:32
  Speaker 1: What's the story. Well, the story is again uh, just
• 23:38
  Speaker 1: fallen margins that were coming along before this as they
• 23:41
  Speaker 1: continue to over invest. But obviously the pandemic taking its
• 23:44
  Speaker 1: toll on the on returns both in the upstream and
• 23:49
  Speaker 1: on the refining and chemicals segment. Chemicals has been the strongest,
• 23:52
  Speaker 1: but even that we're closer to the ten year lows
• 23:55
  Speaker 1: on margins than we are to to to the highs
• 23:59
  Speaker 1: that we saw in Need seventeen and and again that's
• 24:03
  Speaker 1: driven a massive gap in their balance sheet and a
• 24:08
  Speaker 1: significant cash outflow. Excellent also took a nineteen and a
• 24:11
  Speaker 1: half billion dollar impairment on assets in the US on
• 24:16
  Speaker 1: the natural gas side, and also Western Canada and Argentina
• 24:19
  Speaker 1: place that they had under development that are now outside
• 24:22
  Speaker 1: of their scope. Just generally for an under the price
• 24:25
  Speaker 1: of oil today is pretty high, up on the three
• 24:28
  Speaker 1: percent and above fifty a barrel for w C I
• 24:31
  Speaker 1: is that just a factor of the weather, natural gas
• 24:34
  Speaker 1: prices going up, and so wonder is there more at
• 24:35
  Speaker 1: play here? Well, there's been cuts in production, widespread cuts
• 24:40
  Speaker 1: in production. The question is at this price, how much
• 24:43
  Speaker 1: of it is restored? And we see, for example, as
• 24:46
  Speaker 1: I mentioned in Canada, Canada is now backed up above
• 24:49
  Speaker 1: pre pandemic levels, as Alberta removed quotas UH is. The
• 24:53
  Speaker 1: US shale producers also increasing the amount of completion crews
• 24:57
  Speaker 1: on the field, so we'll see higher production in there.
• 25:00
  Speaker 1: And then there's a question on how long Saudi Arabia
• 25:03
  Speaker 1: and other members of OKAY plus we'll stick to their
• 25:06
  Speaker 1: quota as and production quotes cut. If prices remain at
• 25:11
  Speaker 1: this level. Uh, there is always a prisoner's dilemma that
• 25:14
  Speaker 1: you don't want to be the guy that cuts too
• 25:16
  Speaker 1: much and drives prices higher. So eventually we expect some
• 25:21
  Speaker 1: of that production to come back online. We've also had
• 25:23
  Speaker 1: Libya reopening their ports, so we're going to see some
• 25:27
  Speaker 1: production there picked back up in the next couple of weeks.
• 25:32
  Speaker 1: All right, Fernando, thank you for that much. Appreciate the
• 25:35
  Speaker 1: input there. Fernando Valet joining us there and Paul. It
• 25:40
  Speaker 1: is quite stunting to see oil black about fifty five
• 25:42
  Speaker 1: dollars a barrel. It's been in the forties for as
• 25:44
  Speaker 1: long as I remember now. Yeah, And you know, we
• 25:46
  Speaker 1: always talk about and we talk about a commodity top
• 25:48
  Speaker 1: hat supplying demand, and it just feels like this commodity
• 25:51
  Speaker 1: is driven by the demand side of the equation a
• 25:53
  Speaker 1: little bit more in this market. People expecting, uh, you know,
• 25:56
  Speaker 1: good news on the COVID virus and reopening the economy,
• 26:00
  Speaker 1: and this is you know, certainly at the top of
• 26:02
  Speaker 1: a reopening trade for many investors. Yeah, for sure. Once
• 26:05
  Speaker 1: again thanks to Fernando Valet. Oil and Gas analyst for
• 26:09
  Speaker 1: Bloomberg Intelligence. Thanks for listening to Bloomberg Markets podcast. You
• 26:14
  Speaker 1: can subscribe and listen to interviews at Apple Podcasts or
• 26:17
  Speaker 1: whatever a podcast platform you prefer. I'm Bonnie Quinn, I'm
• 26:21
  Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm
• 26:23
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 26:26
  Speaker 1: always catch us worldwide at Bloomberg Radio