To: Hidden Recipient Date: Thu, 13 Nov 2025 19:04:59 +0000 Content-Type: multipart/alternative; boundary="_----EeGxX0mJsU1vDVk3iyxRbg===_14/48-46434-BDB26196" MIME-Version: 1.0 Subject: Money Stuff: Blackstone Is for Everyone From: "Matt Levine" X-Hiring: We are hiring, reach out at header-hacker@emailshot.io X-EmailShot-Signature: PhHgAjoGozJg-V8_zQWomnU-bKNVmn4ii8oVZmPq1ZOhPBBgU5GDz7oMC363MLuP7Act2Fa9LHRvkXtwYIkHfQ== --_----EeGxX0mJsU1vDVk3iyxRbg===_14/48-46434-BDB26196 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset="UTF-8" Money Stuff =0A ISS, votes, wealth, cash, bubble wrap. =0A=0AView in browse= r =0A =0A=0A =0A=0A =0A=0A=0A=0A=0ABlackstone=0A=0AIf yo= u work in financial markets and are very smart and diligent, you might =0Ao= ccasionally notice something weird. Some stock is trading at too high a pri= ce, =0Aor too low. Some company is being run inefficiently, and if you take= it over =0Ayou can make it worth more. Some company has violatedthe terms = of its bonds =0A, and if you buy up the bonds =0A= you can put the company into bankruptcy and extr= act =0Aa lot of value. Some asset is trading at a tiny discount to some eco= nomically =0Aequivalent asset, and if you buy one and sell the other and le= ver up the trade =0Ayou can make some money. The Ruritanian stock market go= es up on Tuesdays when =0Ait rains, so you should buy Ruritanian stocks on = Monday afternoon when the =0Aforecast is for rain. All sorts of anomalies a= nd dislocations and =0Ainefficiencies and opportunities.=0A=0AThese opportu= nities have different scales. By some measures, one of the =0Agreatest of a= ll trades is thereverse split arbitrage =0A: When= a tiny company does a reverse stock split, it will often round up, so if = =0Ayou buy one share of a company as soon as it announces a 1-for-10 revers= e =0Asplit, you can end up with a quick and reasonably certain 900% return = on your =0Ainvestment. But this only works withone share; you cannot in any= sensible way =0Ascale it up. [1] <> You can make, like, $4.50 on a $0.50 = investment: It is a =0Atrue market anomaly that you can exploit, but not ve= ry much. Other trades have =0Amuch bigger scales. Jane Street Group was abl= e to extract perhaps a billion =0Adollars from, uh, let=E2=80=99s saynotici= ng some anomalies =0Ain the Indian options marke= t. Renaissance Technologies has spent decades taking =0Abillions of dollars= out of financial markets by noticing anomalies on an =0Aindustrial scale.= =0A=0ABut there are tens of trillions of dollars in the financial markets. = Jane =0AStreet and Renaissance are big in the sense that they have made bil= lions of =0Adollars for their executives, but in the scale of financial mar= kets the =0Aanomalies they exploit are tiny.Somebody can make some money = =E2=80=94 billions of =0Adollars =E2=80=94 by finding weird inefficiencies = in financial markets. Buteverybody =0Acan=E2=80=99t makeall the money that = way. In the aggregate, financial markets are not a =0Agrand bet on market a= nomalies; that would make no sense. Everyone can=E2=80=99t be =0Anoticing i= nefficiencies that no one else notices; everyone can=E2=80=99t be taking = =0Amoney from everyone else by being cleverer than everyone else. In the = =0Aaggregate, financial markets are a grand bet on global economic growth.= =0A=0APeople sometimes divide investing into =E2=80=9Calpha=E2=80=9D and = =E2=80=9Cbeta.=E2=80=9D Alpha is, =0Aapproximately, finding opportunities t= hat no one else has noticed and making =0Acontrarian bets on them. Beta is,= approximately, using your savings to buy a =0Ashare of global economic gro= wth. BlackRock Inc., the giant asset manager, has =0Amore than $13 trillion= ofassets under management , =0Amore than half of= which is in index funds and exchange-traded funds. You do not =0Aput your = money into a BlackRock S&P 500 index ETF because you hope BlackRock =0Awill= spot clever anomalies. You=E2=80=99re just there for your cut of global ec= onomic =0Agrowth.=0A=0AMany of the people who got rich and famous in financ= ial markets did so by =0Aspotting anomalies. (That tends to work faster tha= n global economic growth.) =0AThe most ambitious of them naturally want to = scale up: run more money for more =0Apeople to generate more returns and co= llect more fees for themselves. This is =0Apossible, at some scale. The big= gest multimanager multistrategy =E2=80=9Cpod shop=E2=80=9D =0Ahedge funds a= re essentially industrial anomaly factories: They compete fiercely =0Ato hi= re talented spotters of market inefficiencies, they deploy as much capital = =0Aas they can against those opportunities, and they scale up by hiring mor= e =0Apeople to spot more uncorrelated anomalies. Wetalked about this =0A the other day: One hedge fund investor told Busines= s =0AInsider that =E2=80=9Chistorically, capital= was the =0Abottleneck,=E2=80=9D but =E2=80=9Cnow it=E2=80=99s 100% talent.= =E2=80=9D Another way to phrase that statement =0Ais: =E2=80=9CThe biggest = hedge funds now manage as much capital as they can possibly =0Aput to work = in market anomalies, but they just can=E2=80=99t find enough anomalies to = =0Aget any bigger.=E2=80=9D [2] <> Those biggest hedge funds have net asse= ts on the order =0Aof tens of billions of dollars. Tiny!=0A=0APerhaps the g= reatest financial anomaly-spotting story of the last 50 years is =0Athe lev= eraged buyout. As Ihave told the story , in =0Ath= e 1970s there were a lot of sleepy companies that were lazily run and =0Aun= derlevered, and a small group of pioneers realized that they could borrow = =0Amoney, buy those companies, align incentives, impose financial and opera= tional =0Adiscipline, flip the companies back to public markets a few years= later, make =0Ahuge profits and keep 20% of those profits for themselves. = This opportunity =E2=80=94 =0A=E2=80=9Cthe market undervalues and underleve= rs companies, so we can borrow money to =0Abuy them ourselves and extract e= xtra profits=E2=80=9D =E2=80=94 turned out to beabsolutely =0Aenormous. It = turned out that you could do leveraged buyouts of companies worth =0Atens o= f billions of dollars, and this business could support multiple big firms = =0Aeach with hundreds of billions of dollars under management. And those fi= rms =0Acould, at least arguably, earn market-beating returns: They gave the= ir =0Ainvestors not just the returns of allocating capital to economic grow= th, but =0Aalso the bonus returns of spotting market inefficiencies and cor= recting them.=0A=0ASo they scaled up. They went from =E2=80=9CLBO funds=E2= =80=9D to =E2=80=9Cprivate equity firms=E2=80=9D to, =0Anow, =E2=80=9Calter= native asset managers.=E2=80=9D They invest in real estate and =0Ainfrastru= cture and private credit. The biggest of them, Blackstone Group Inc., =0Ano= w managesmore than $1 trillion of assets : an ord= er =0Aof magnitude more than the big hedge funds, though an order of magnit= ude less =0Athan BlackRock.=0A=0AAnd they want to scale up more. Historical= ly LBO funds invested on behalf of =0Asophisticated risk-seeking institutio= nal investors. Now they run tons of =0Ainsurance and annuity money. The nex= t prize is retail money, investing=0Aindividuals=E2=80=99 retirement accoun= ts , which could add =0Atrillions of dollars in a= ssets at the big alternatives managers.=0A=0AAre there trillions of dollars= of anomalies=3F Can you put trillions of dollars =0Aof retirement savings = to work by spotting market inefficiencies=3F Bloomberg=E2=80=99s =0ADawn Li= m has a fascinatingprofile of Jon Gray , the =0Ap= resident of Blackstone, the thesis of which is that =E2=80=9CBlackstone, on= ce a =0Afortress for the world=E2=80=99s richest institutions, is remaking = itself under Gray =0Ainto a financial superstore for the dentist, lawyer an= d teacher next door.=E2=80=9D The =0Asubtext is that, as Blackstone gets hu= ge and universal, some stuff doesn=E2=80=99t =0Ascale:=0A=0AGray also confr= onted differences of mind when he urged GSO Capital Partners, =0Athe credit= arm once famed for audacious bets, to come around to his views. He =0Aargu= ed that distressed investing was too hard to scale and created too many =0A= headaches for a firm that needed to stay in banks=E2=80=99 and rivals=E2=80= =99 good graces.=0A=0AGray=E2=80=99s influence was unmistakable. GSO was re= cast as Blackstone Credit =E2=80=94 =0Alosing the initials of its legendary= dealmaking founders. The goal turned to =0Acapturing the broadest customer= base and becoming more focused on performing =0Acompanies and steady cash = flows.=0A=0AYes at a very high level if you had to describe the debt market= in a sentence, =0Ayou might say =E2=80=9Cwe lend money to companies to get= steady cash flows.=E2=80=9D And then =0Ahistorically a tiny pimple on the = debt market was GSO, whichdid the opposite. =0AIt woulddo incredible things= like lend money to =0Acompanies to get them to = default on their debts to trigger credit default swap =0Acontracts that GSO= had also bought. That doesn=E2=80=99t generalize: The whole debt =0Amarket= doesn=E2=80=99t work like that; everybody couldn=E2=80=99t do that; everyo= ne=E2=80=99s =0Aretirement savings can=E2=80=99t be invested in manufacture= d defaults on CDS contracts. =0A[3] <> You cannot go around making money o= n manufactured debt defaults and at =0Athe same time will that it should be= come a universal law =0A. That=E2=80=99s a weird = trick, an anomaly. You can do that =0Aand get rich and have fun, but when y= ou manage trillions of dollars you have to =0Aput away childish things and = start getting steady cash flows from performing =0Acompanies.=0A=0AOr:=0A= =0AAs Gray rallied investment teams around =E2=80=9Cmegatrends=E2=80=9D tha= t were blessed by the =0Atop of the house, dealmakers deemed it career suic= ide to question big =0Asanctioned themes like AI or India, according to som= e of the employees. Some =0Aveterans lamented that the swagger was gone and= that investing felt akin to =0Abeing in a factory or flipping burgers in a= line.=0A=0AYes: If you run trillions of dollars, you are going to invest i= n big themes =0Alike AI or India. =E2=80=9CWhere can we get access to globa= l economic growth,=E2=80=9D you will =0Aask yourself, and you will answer w= ith words like =E2=80=9CAI=E2=80=9D or =E2=80=9CIndia.=E2=80=9D If your =0A= answer is =E2=80=9Cthis company has particularly low-priced bonds so if we = triggered =0Aits CDS with a manufactured default we could make a huge recov= ery,=E2=80=9D that is the =0Awrong sort of answer; you are thinking too sma= ll. If your answer is =E2=80=9Cwe could =0Aput some more leverage on this $= 20 billion public company,=E2=80=9Deven that is now too =0Asmall. The right= sort of answer is =E2=80=9CAI=E2=80=9D or =E2=80=9CIndia.=E2=80=9D Your th= emes have to be big.=0A=0ABut that is not the business you once signed up f= or. =E2=80=9CPrivate Equity Is =0AGetting Boring = ,=E2=80=9D I wrote in September:=0A=0AIn the beginning, when private equity= was a novel risky arbitrage to correct =0Asystematic mispricing of compani= es, it was funded by sophisticated investors =0Awho could understand and ap= preciate that bet. If private equity is just =E2=80=9Cowning =0Acompanies,= =E2=80=9D it will be funded by everyone=E2=80=99s retirement savings.=0A=0A= If you got into this business to spot inefficiencies and ruthlessly exploit= =0Athem, and your job now is to invest people=E2=80=99s retirement savings= in megatrends, =0Athat might feel boring.=0A=0A =0A=0A= =0A =0A=0A=0AFTC vs. ISS=0A=0AHere is one way to think a= bout how public companies work:=0A=0A * There are about 4,000 US public companies. =0A * Each company is managed by a chief= executive officer. The CEO makes the =0Aday-to-day decisions about how to = run the company. =0A * The CEO reports to the board of directors. The board= oversees the CEO=E2=80=99s =0Adecisions, and if it is unhappy it can fire = the CEO. =0A * The board of directors reports to the shareholders. The shar= eholders =0Aoversee the board=E2=80=99s decisions, and if they are unhappy = they can fire the board. =0A * A majority of the shareholders of most publi= c companies are not =0Aindividuals, but rather institutional investment man= agers who manage money on =0Abehalf of their clients. =0A * A few of those = institutional shareholders =E2=80=94 like BlackRock =E2=80=94 own large =0A= chunks of every public company and so have enormous influence. (=E2=80=9CI = didn=E2=80=99t know =0ALarry Fink had been made God,=E2=80=9D as Sam Zellon= ce said =0Aof BlackRock=E2=80=99s CEO.) =0A * Bu= t a lot of those institutional shareholders are smaller, though =0Acollecti= vely they also own big chunks of every public company. They don=E2=80=99t = =0Anecessarily have the time or resources to oversee the decisions of all o= f the =0Aboards of all of the companies they oversee, so they outsource tho= se decisions =0Ato proxy advisory firms that specialize in corporate govern= ance and shareholder =0Avoting. (And historically even the biggest managers= tended to follow the =0Arecommendations of proxy advisory firms,though =E2=80=9Cbig =0Amoney managers have increasingly em= phasized that they make their own =0Adecisions.=E2=80=9D) =0A * There are t= wo of them, Institutional Shareholder Services and Glass Lewis. =0AThere ar= e others,but =E2=80=9CISS and Glass Lewis =0Acol= lectively control between 90% and 97% of the U.S. proxy advice market.=E2= =80=9D =0A * So, at every company, the CEO reports to the board who reports= to the =0Ashareholders who report to ISS and Glass Lewis. There are two co= mpanies that =0Amake the ultimate decisions for every US public company. Or= maybe the number is =0Amore than two =E2=80=94 maybe it=E2=80=99s like ISS= and Glass Lewis and BlackRock and Vanguard =0Aand a few other giant invest= ors =E2=80=94 but it=E2=80=99s smaller than, say, 10. There are a =0Ahandfu= l of people who are the ultimate arbiters of the decisions made by every = =0AUS public company. =0A * Isn=E2=80=99t that an antitrust problem=3F =0AI= mean! This is not the only way, or the most sensible way, to think about = =0Aanything. Only a tiny fraction of all corporate decisions are put to a = =0Ashareholder vote, and ISS and Glass Lewis mostly tend to tell investors = how to =0Avote on nonbinding proposals about executive pay orproducing envi= ronmental =0Aimpact reports , not on competitive = strategy. No =0Aactual corporate CEO thinks that she =E2=80=9Cworks for ISS= ,=E2=80=9D or considers how her =0Astrategic decisions will be received wit= hin ISS. [4] <> It is not true in any =0Apractical sense that the decision= -making at every public company ultimately =0Arolls up to the two proxy adv= isory firms. But it is true in a loose =0Agalaxy-brained theoretical sense.= The corporate buck stops with the =0Ashareholders, and if the shareholders= all do what Glass Lewis and ISS tell them =0Ato then that=E2=80=99s weird.= =0A=0AThe Wall Street Journal reports :=0A=0AThe = Federal Trade Commission is investigating whether proxy advisory firms =0AI= nstitutional Shareholder Services and Glass Lewis violated antitrust laws = =0Athrough their business of guiding shareholder votes on contentious topic= s, =0Apeople familiar with the matter said.=0A=0AThe investigation is the l= atest move putting pressure on the two influential =0Aadvisers, which inves= tment managers rely on for research, analysis and =0Arecommendations on how= to cast shareholder votes on issues ranging from =0Aexecutive compensation= to board elections.=0A=0AThe probe, which is in its early stages, is focus= ed on the firms=E2=80=99 competitive =0Apractices and how they steer client= s on hot-button issues such as climate- and =0Asocial-related shareholder p= roposals, people familiar with the matter said. The =0AFTC told Glass Lewis= it was investigating whether it and others may have =0Aengaged in =E2=80= =9Cunfair methods of competition,=E2=80=9D according to a letter sent in la= te =0ASeptember that was reviewed by The Wall Street Journal.=0A=0AI am som= ewhat conflating two points here, though I have a feeling that the FTC =0Ai= s as well. One point is that ISS and Glass Lewis arguably have a lot of mar= ket =0Apower in the market for proxy advice, and some people worry about th= at and want=0Amore competition in that market. T= he other point is =0Athat ISS and Glass Lewis serve a powerful coordinating= function for lots of =0Ainvestors in lots of public companies, and that it= is troubling for 4,000 =0Acompanies to all answer to the same few ultimate= bosses.=0A=0AI guess a third point is that the Trump administration substa= ntively does not =0Alike the answers that ISS and Glass Lewis come up with = on social and governance =0Aquestions. Wetalked yesterday about a potential =0Aexecutive order to limit the power of proxy = advisers and/or to restrict voting =0Aby index fund managers: Shareholder v= oting is now a culture-war matter, and =0Athere is a sense that the proxy a= dvisers and index fund managers tend to have =0Aleft-wing social preference= s. So perhaps the FTC thinks that breaking up the =0Aproxy advisory duopoly= will make public companies less woke.=0A=0A=0AMultiverse finance=0A=0ASpea= king of shareholder votes. It is rapidly becoming conventional wisdom that = =0Aprediction markets are a good way to estimate probabilities and make dec= isions =0Aabout the future. Here is Jeff Yass explaining that prediction ma= rketscould =0Ahave prevented the Iraq War . My ow= n view =0A that =E2=80=9Cprediction markets=E2=80= =9D is a polite way to say =0A=E2=80=9Csports gambling=E2=80=9D seems to be= in the minority.=0A=0AAn extension this idea that we have discussed a coup= le =0A of times is =E2= =80=9Cmultiverse =0Afinance,=E2=80=9D athought experiment from Dave White at =0AParadigm, in which you could buy financial = assets conditional on some =0Aprediction-market-ish event. So like =E2=80= =9CI want to buy Treasury bonds contingent =0Aon the Democrats winning the = Senate in 2026=E2=80=9D or whatever, a trade where (1) I =0Aget the asset i= f the event occurs, (2) the trade is unwound if the event does =0Anot occur= but (3) in the interim, the conditional asset itself trades and has a =0Ap= rice. One benefit of this is, you know, more ways to manage risk, more ways= to =0Aspeculate, etc. But another benefit is that the prices of the condit= ional =0Aassets could give you information about possible futures: not abou= thow likely =0Athe event is, but rather what theeffects of the event might = be. The price of =0A=E2=80=9Cone barrel of oil contingent on invading Iraq= =E2=80=9D could tell you something about =0A(market expectations about) wha= t invading Iraq would do to oil prices.=0A=0AAfter I wrote about shareholde= r voting yesterday, reader Charles Wang emailed =0Ato suggest:=0A=0AThe obv= ious correct resolution for delegating shareholder votes is to have one =0A= publicly traded contract that is a forward contract for the stock condition= al =0Aon the vote passing and another forward contract for the stock condit= ional on =0Athe vote failing. Then the stock is voted according to whicheve= r side has the =0Abetter forward price. ...=0A=0AReally it's a bit bizarre = that the markets are supposed to be about efficient =0Aallocation of capita= l but the one thing that's directly about allocation of =0Acapital is not s= ettled by the markets.=0A=0AI suppose that might be manipulable, and for al= most all actual shareholder =0Avotes the result doesn=E2=80=99t matter to t= he stock price, but I like the general idea.=0A=0A=0AGet Rich 101=0A=0AIt w= ould be cool if a business school hired a serial failed entrepreneur to =0A= teach a class like =E2=80=9CHow I Started Several Businesses But They Didn= =E2=80=99t Work.=E2=80=9D For =0Aone thing, there are probably good lessons= there: =E2=80=9CI started a company and did =0Aeverything right, bask in m= y glory=E2=80=9D might be less informative than =E2=80=9Chere are =0Athe mi= stakes I made, figure out how to avoid them.=E2=80=9D But also one wonders = about =0Aselection biases. If you hire the winners of coin-flipping contest= s to teach =0Athe business-school class in How To Succeed At Coin Flipping,= their advice =0Amight be completely spurious. [5] <> If you hire a cross-= section of winners =0Aand losers to teach coin flipping, your students migh= t get a better education.=0A=0AThough they might not sign up. The Wall Stre= et Journal reports =0A that Chicago State Univers= ity has a class on =E2=80=9CHow to =0AGet Very, Very Rich=E2=80=9D:=0A=0ATh= e person helping them get there is Pete Kadens, a wealthy white entrepreneu= r =0Ateaching the mostly Black CSU classroom strategies on getting very ric= h. =0AKadens=E2=80=99s pitch to the 33 students taking his weekly =E2=80=9C= Mastering Wealth=E2=80=9D class: =0AAffluence isn=E2=80=99t just for privil= eged people, but for anyone willing to take big =0Arisks and work like a de= mon.=0A=0AHaving the =E2=80=9Cballs and the guts to say =E2=80=98I=E2=80=99= m going to make $50 million by the =0Atime I=E2=80=99m 35 years old=E2=80= =99=E2=80=A6that is not typically reserved for Black and brown =0Astudents = in this country,=E2=80=9D says Kadens, who is worth roughly $250 million af= ter =0Afounding companies in the solar and cannabis industries. =E2=80=9CTh= at=E2=80=99s typically =0Areserved for rich white kids that come from Green= wich.=E2=80=9D =E2=80=A6=0A=0ADuring another class, Kadens handed out $100 = bills to students who volunteered =0Ato stand and describe how they planned= to multiply their current incomes by 10. =0AHe also passed around a risk-t= olerance quiz and chided students who proved =0Arisk-averse. =E2=80=9CIf yo= u want to be Jay-Z rich=E2=80=A6that=E2=80=99s not going to work,=E2=80=9D = he said.=0A=0AI feel like an important implication of a class like =E2=80= =9Cget very rich by taking =0Ahuge risks=E2=80=9D is that some of the peopl= e in the class will get the opposite of =0Avery rich=3F Like that=E2=80=99s= what risk means=3F=0A=0A=0ARobinhood will deliver you cash in a paper bag= =0A=0AThis is just cool, hats off to them :=0A=0A= Robinhood Markets is betting its Gen Z and millennial clientele are as eage= r =0Ato send out for delivery of a wad of cash as they are to order pizza o= r a pint =0Aof ice cream.=0A=0AThe brokerage is joining with food-and-drink= delivery app Gopuff to allow =0Acustomers to withdraw cash from their Robi= nhood bank accounts and have it =0Abrought right to their door. For a $6.99= delivery fee=E2=80=94or $2.99 if they have =0Amore than $100,000 in assets= across their Robinhood accounts=E2=80=94users can skip the =0AATM and have= money delivered in a sealed paper bag while they are at home.=0A=0AThis st= rikes me as a silly thing to do, but that=E2=80=99s why Robinhood=E2=80=99s= founders =0Aare billionaires and I=E2=80=99m not. Also I appreciate that R= obinhood is making =0Arigorous efforts to address every aspect of its custo= mers=E2=80=99 financial lives. If =0Ayou want to day-trade stocks or option= s or crypto, that is traditionally what =0ARobinhood is for. If you have re= tirement savings that you want to invest in =0Aindex funds and get some tax= advice, that is increasingly what Robinhood is =0Afor. If you want to keep= cash in the bank, sure, that=E2=80=99s what Robinhood is for, =0Abut where= are the Robinhood ATMs=3F The Robinhood ATMs are they=E2=80=99ll bring the= cash =0Ato your house. It=E2=80=99s a good pitch!=0A=0A=0ASealed Air=0A=0A= In yesterday=E2=80=99s column , I needed an examp= le of a =0Acompany that is (1) is in the S&P 500 index but (2) not especial= ly memorable. I =0Apicked one that I found a little bit funny: Sealed Air C= orp., which makes =0Abubble wrap. There was no particular reason for that, = and I=E2=80=99d have preferred a =0Aball bearings company if one was availa= ble, but sealing air is a nice =0Aindustrial business that you probably don= =E2=80=99t think about very much. So I wrote =0Aabout diversified retail sh= areholders=E2=80=99 rational indifference to goings-on at =0ASealed Air, as= an example of their rational indifference to goings-on at =0Avirtually eve= ry company.=0A=0AAfter the close yesterday, the Wall Street Journal reporte= d =0A:=0A=0ABuyout firm Clayton Dubilier & Rice i= s in talks to take packaging-provider =0Aprivate, according to people famil= iar with the matter.=0A=0AA deal for the Bubble Wrap maker could come toget= her soon, though it remains =0Apossible talks could fall apart or another b= uyer could emerge, the people said.=0A=0ASealed Air had a market value of a= round $5.4 billion as of Wednesday=E2=80=99s close =0Aand a deal including = a typical premium would value the company above that, the =0Apeople added.= =0A=0AIts shares jumped over 20% in after-hours trading after The Wall Stre= et =0AJournal reported on the talks.=0A=0AThe stock opened at $44.27, up 21= .7% from yesterday=E2=80=99s close, though it traded =0Adown a bit from th= ere. I just want to be clear that I had absolutely no idea =0Athat this wou= ld happen and it was a pure coincidence. Unless someone at CD&R =0Aread my = column and was like =E2=80=9Coh Sealed Air, I haven=E2=80=99t thought about= them in a =0Awhile, maybe we should buy them,=E2=80=9D and moved quickly. = Seems unlikely.=0A=0AAnyway if you made money by (1) reading Money Stuff ye= sterday afternoon, (2) =0Athinking =E2=80=9Chuh Sealed Air that sounds fun= =E2=80=9D and (3) buying short-dated =0Aout-of-the-money call options, plea= se let me know. This is extremely the =0Aopposite of investing advice, thou= gh, and don=E2=80=99t try it on the next random =0Acompany I mention.=0A=0A= =0AThings happen=0A=0ABanks Take Big Risks in $110 Billion Australian Bloc= k-Trade Boom =0A. U.S. Insurers Are Binging on Pr= ivate Credit =0A, Moody=E2=80=99s Says. Coinbase = to Leave Delaware, =0AReincorporate in Texas . Cr= ypto Asset Manager =0AGrayscale Shows Revenue D= rop in IPO Filing. Brazil =0ATries to Sell Skeptics on =E2=80=98Low-Carbon = Beef =E2=80=99 at =0ACOP30. Younger brother beats= older sibling inBertelsmann succession battle =0A. First Brands Founder =0ARegains Access to Per= sonal Bank Accounts. Cliff Asness Says AQR Is Exploring a =0APush Into Spor= ts Betting . =E2=80=9CPolymarket will become =0At= he Official and ExclusivePrediction Market Partner of UFC =0A.=E2=80=9D With the Push of a Button, the U.S. Mints Its =0AFi= nal Pennies . =E2=80=98Naked=E2=80=99 Cheetos and= Doritos Ditch =0AIconic Colors in Health Push . = GLP-1 anhedonia =0A. =E2=80=9CIt was actually lik= e I was just feeding myself =0Ainto theAI meat grinder .=E2=80=9D=0A=0AIf you'd like to get Money Stuff in handy email form,= right in your inbox, =0Apleasesubscribe at this link . Or you can subscribe =0Ato Money Stuff and other great Bloomberg new= slettershere =0A. Thanks!=0A=0A[1] Obviously ther= e are online forums that will teach you how to scale it up, =0Abut even at = its best it is a cool personal-account trade: You can make hundreds =0Aor p= erhaps thousands of dollars, not millions.=0A=0A[2] Though there are skepti= cs even there. That Business Insider article =0A = quotes Ken Griffin saying that =E2=80=9CThe biggest sea =0Achange has been = the migration of the [hedge fund] industry away from a more =0Ahard-nosed, = driven focus on the performance fee to a much stronger focus on an =0Aasset= -gathering business model.=E2=80=9D=0A=0A[3] Arguably nobody can do that: T= he great GSO Hovnanian manufactured default =0Atrade never actually happened, because regulators =0Atold them to knock it= off . But they previously did =0Ait successfully= with Codere SA .=0A=0A[4] Well, she might consid= er how her merger decisions will be received within =0AISS.=0A=0A[5] Here I= am using =E2=80=9Ccoin-flipping contests=E2=80=9D in the classic abstract = =0AJensen-Buffett sense , i.e., assuming that win= ning a =0Acoin-flipping contest is purely random but that people retroactiv= ely impose =0Ameaning on it. Obviously in the literal sense there are peopl= e who are good at =0Aflipping coins, they all work at Susquehanna, and we h= ave discussed =0A them several =0A times = around here. =0A=0A=0A =0A=0AFollow Us =0A Get the newsletter =0A=0A=0ALike getting th= is newsletter=3F Subscribe to Bloomberg.com =0A=0A for unlimited acce= ss to trusted, data-driven journalism and subscriber-only =0Ainsights.=0A= =0ABefore it=E2=80=99s here, it=E2=80=99s on the Bloomberg Terminal. Find o= ut more about how the =0ATerminal delivers information and analysis that fi= nancial professionals can=E2=80=99t =0Afind anywhere else.Learn more =0A=0A.=0A=0AWant to sponsor this newsletter= =3F Get in touch here =0A=0A.=0A=0A Y= ou received this message because you are subscribed to Bloomberg's Money = =0AStuff newsletter. =0AUnsubscribe =0A=0A |Bloomberg.com <= https://bloom.bg/41BzmUH> | Contact Us =0A =0A=0A= | =0ABloomberg L.P= . 731 Lexington, New York, NY, 10022 =0A --_----EeGxX0mJsU1vDVk3iyxRbg===_14/48-46434-BDB26196 Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="UTF-8" Money Stuff =0D=0A
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ISS, votes, wealth, cash, bubble wrap.
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Blackstone
If you work in financial markets and are very sm= art and diligent, you might occasionally notice something weird. Some stock= is trading at too high a price, or too low. Some company is being run inef= ficiently, and if you take it over you can make it worth more. Some company= has violated the terms of its bonds, and if y= ou buy up the bonds you can put the company = into bankruptcy and extract a lot of value. Some asset is trading at a tiny= discount to some economically equivalent asset, and if you buy one and sel= l the other and lever up the trade you can make some money. The Ruritanian = stock market goes up on Tuesdays when it rains, so you should buy Ruritania= n stocks on Monday afternoon when the forecast is for rain. All sorts of an= omalies and dislocations and inefficiencies and opportunities.

These opportunities have different scales. By some mea= sures, one of the greatest of all=C2=A0trades is the reverse split arbitrage: When a tiny=C2=A0company does a reverse sto= ck split, it will often round up, so if you buy one share of a company as s= oon as it announces a 1-for-10 reverse split, you can end up with a=C2=A0 q= uick and reasonably certain 900% return on your investment. But this only w= orks with one share; you cannot in any sensible way scale it up. [1] =C2=A0You can make, like, $4.50 on a = $0.50 investment:=C2=A0It is a true market anomaly that you can exploit, bu= t not very much. Other trades have much bigger scales. Jane Street Group wa= s able to extract perhaps a billion dollars from, uh, let=E2=80=99s say noticing some anomalies in the Indian options mar= ket. Renaissance Technologies has spent decades taking billions of dollars = out of financial markets by noticing anomalies on an industrial scale.

=

But there are tens of trillions of dollars in = the financial markets. Jane Street and Renaissance are big in the sense tha= t they have made billions of dollars for their executives, but in the scale= of financial markets the anomalies they exploit are tiny.=C2=A0Somebod= y=C2=A0can make=C2=A0some=C2=A0money =E2=80=94=C2=A0billions = of dollars =E2=80=94=C2=A0by finding weird inefficiencies in financial mark= ets. But=C2=A0everybody=C2=A0can=E2=80=99t make=C2=A0all=C2=A0= the money that way.=C2=A0In the aggregate, financial markets are not a= grand bet on market anomalies; that would make no sense. Everyone can=E2= =80=99t be noticing inefficiencies that no one else notices; everyone can= =E2=80=99t be taking money from everyone else by being cleverer than everyo= ne else.=C2=A0In the aggregate, financial markets are a grand bet on global= economic growth.=C2=A0

People sometimes d= ivide investing into =E2=80=9Calpha=E2=80=9D and =E2=80=9Cbeta.=E2=80=9D Al= pha is, approximately, finding opportunities that no one else has noticed a= nd making contrarian bets on them. Beta is, approximately, using your savin= gs to buy a share of global economic growth. BlackRock Inc., the giant asse= t manager, has more than $13 trillion of assets u= nder management, more than half of which is in index funds and exchange= -traded funds. You do not put your money into a BlackRock S&P 500 index= ETF because you hope BlackRock will spot clever anomalies. You=E2=80=99re = just there for your cut of global economic growth.

Many of the people who got rich and famous in financial markets di= d so by spotting anomalies. (That tends to work faster than global economic= growth.) The most ambitious of them naturally want to scale up: run more m= oney for more people to generate more returns and collect more fees for the= mselves. This is possible, at some scale. The biggest multimanager multistr= ategy =E2=80=9Cpod shop=E2=80=9D hedge funds are essentially industrial ano= maly factories: They compete fiercely to hire talented spotters of market i= nefficiencies, they deploy as much capital as they can against those opport= unities, and they scale up by hiring more people to spot more uncorrelated = anomalies. We talked about this the other day= : One hedge fund investor told Business Insider that =E2=80=9Chistorically, capital was the bottleneck,=E2=80=9D but =E2= =80=9Cnow it=E2=80=99s 100% talent.=E2=80=9D Another way to phrase that sta= tement is: =E2=80=9CThe biggest hedge funds now manage as much capital as t= hey can possibly put to work in market anomalies, but they=C2=A0just can=E2= =80=99t find enough anomalies to get any bigger.=E2=80=9D= [2] =C2=A0Those biggest hedge funds have net assets on th= e order of tens of billions of dollars. Tiny!

Perhaps the greatest financial anomaly-spotting story of the last 50 ye= ars is the leveraged buyout. As I have told the s= tory, in the 1970s there were a lot of sleepy companies that were lazil= y run and underlevered, and a small group of pioneers realized that they co= uld borrow money, buy those companies, align incentives, impose financial a= nd operational discipline, flip the companies back to public markets a few = years later, make huge profits and keep 20% of those profits for themselves= . This opportunity =E2=80=94=C2=A0=E2=80=9Cthe market undervalues and unde= rlevers companies, so we can borrow money to buy them ourselves and extract= extra profits=E2=80=9D=C2=A0=E2=80=94=C2=A0turned out to be=C2=A0absol= utely enormous. It turned out that you could do leveraged buyouts of c= ompanies worth tens of billions of dollars, and this business could support= multiple big firms each with hundreds of billions of dollars under managem= ent. And those firms could, at least arguably, earn market-beating returns:= They gave their investors not just the returns of allocating capital to ec= onomic growth, but also the bonus returns of spotting market inefficiencies= and correcting them.

So they scaled up. T= hey went from =E2=80=9CLBO funds=E2=80=9D to =E2=80=9Cprivate equity firms= =E2=80=9D to, now, =E2=80=9Calternative asset managers.=E2=80=9D They inves= t in real estate and infrastructure and private credit. The biggest of them= , Blackstone Group Inc., now manages more than $1 trillion of assets: an order of magnitude more t= han the big hedge funds, though an order of magnitude less than BlackRock.<= /p>

And they want to scale up more. Historical= ly LBO funds invested on behalf of sophisticated risk-seeking institutional= investors. Now they run tons of insurance and annuity money. The next priz= e is retail money, investing individuals=E2=80=99= retirement accounts, which could add trillions of dollars in assets at= the big alternatives managers.

Are there = trillions of dollars of anomalies=3F Can you put trillions of dollars of re= tirement savings to work by spotting market inefficiencies=3F Bloomberg=E2= =80=99s Dawn Lim has a fascinating profile of Jon= Gray, the president of Blackstone, the thesis of which is that =E2=80= =9CBlackstone, once a fortress for the world=E2=80=99s richest institutions= , is remaking itself under Gray into a financial superstore for the dentist= , lawyer and teacher next door.=E2=80=9D The subtext is that, as Blackstone= gets huge and universal, some stuff doesn=E2=80=99t scale:

Gray also confronted differences of mind whe= n he urged GSO Capital Partners, the credit arm once famed for audacious be= ts, to come around to his views. He argued that distressed investing was to= o hard to scale and created too many headaches for a firm that needed to st= ay in banks=E2=80=99 and rivals=E2=80=99 good graces.

Gray=E2=80=99s influence was unmistakable. GSO was recast as Bl= ackstone Credit =E2=80=94 losing the initials of its legendary dealmaking f= ounders. The goal turned to capturing the broadest customer base and becomi= ng more focused on performing companies and steady cash flows.

Yes at a very high level if you had to d= escribe the debt market=C2=A0in a sentence, you might say =E2=80= =9Cwe lend money to companies to get steady cash flows.=E2=80=9D And then h= istorically a=C2=A0tiny pimple on the debt market was GSO, which did th= e opposite. It would=C2=A0do incredible thin= gs like lend money to companies to get them to default on their debts t= o trigger credit default swap contracts that GSO had also bought. That does= n=E2=80=99t generalize: The whole debt market doesn=E2=80=99t work like tha= t; everybody couldn=E2=80=99t do that; everyone=E2=80=99s retirement saving= s can=E2=80=99t be invested in manufactured defaults on CDS contracts. [3] You cannot go around making money on ma= nufactured debt defaults and at the same time wil= l that it should become a universal law. That=E2=80=99s a weird trick, = an anomaly. You can do that and get rich and have fun, but when you manage = trillions of dollars you have to put away childish things and start getting= steady cash flows from performing companies.

Or:

As Gray rallied invest= ment teams around =E2=80=9Cmegatrends=E2=80=9D that were blessed by the top= of the house, dealmakers deemed it career suicide to question big sanction= ed themes like AI or India, according to some of the employees. Some vetera= ns lamented that the swagger was gone and that investing felt akin to being= in a factory or flipping burgers in a line.

Yes: If you run trillions of dollars, you are going to inve= st in big themes like AI or India. =E2=80=9CWhere can we get access to glob= al economic growth,=E2=80=9D you will ask yourself, and you will answer wit= h words like =E2=80=9CAI=E2=80=9D or =E2=80=9CIndia.=E2=80=9D If your answe= r is =E2=80=9Cthis company has particularly low-priced bonds so if we trigg= ered its CDS with a manufactured default we could make a huge recovery,=E2= =80=9D that is the wrong sort of answer; you are thinking too small. If you= r answer is =E2=80=9Cwe could put some more leverage on this $20 billion pu= blic company,=E2=80=9D even=C2=A0that is now too small. The right = sort of answer is =E2=80=9CAI=E2=80=9D or =E2=80=9CIndia.=E2=80=9D Your the= mes have to be big.

But that is not the bu= siness you once signed up for. =E2=80=9CPrivate E= quity Is Getting Boring,=E2=80=9D I wrote in September:

In the beginning, when private equity was a n= ovel risky arbitrage to correct systematic mispricing of companies, it was = funded by sophisticated investors who could understand and appreciate that = bet. If private equity is just =E2=80=9Cowning companies,=E2=80=9D it will = be funded by everyone=E2=80=99s retirement savings.

If you got into this business to spot inefficiencies= and ruthlessly exploit them, and your job now is to invest people=E2=80=99= s retirement savings in megatrends, that might feel boring.

class=3D"lihide"
=

FTC vs.= ISS

Here is one way= to think about how public companies work:

  1. There are about 4,000 US public compa= nies.
  2. Each company is managed by a c= hief executive officer. The CEO makes the day-to-day decisions about how to= run the company.
  3. The CEO reports to= the board of directors. The board oversees the CEO=E2=80=99s decisions, an= d if it is unhappy it can fire the CEO.
  4. The board of directors reports to the shareholders. The shareholders ov= ersee the board=E2=80=99s decisions, and if they are unhappy they can fire = the board.
  5. A majority of the shareho= lders of most public companies are not individuals, but rather institutiona= l investment managers who manage money on behalf of their clients.
    6. A few of those institutional shareholders = =E2=80=94 like BlackRock=C2=A0=E2=80=94=C2=A0own large chunks of every publ= ic company and so have enormous influence. (=E2=80=9CI didn=E2=80=99t know = Larry Fink had been made God,=E2=80=9D as Sam Zell once said of BlackRock=E2=80=99s CEO.)
  6. But a lot of those institutional shareholders are smaller, though= collectively they also own big chunks of every public company. They don=E2= =80=99t necessarily have the time or resources to oversee the decisions of = all of the boards of all of the companies they oversee, so they outsource t= hose decisions to proxy advisory firms that specialize in corporate governa= nce and shareholder voting. (And historically even the biggest managers ten= ded to follow the recommendations of proxy advisory firms, though =E2=80=9Cbig money managers have increasingly emphasiz= ed that they make their own decisions.=E2=80=9D)
  7. There are two of them, Institutional Shareholder Services and = Glass=C2=A0Lewis. There are others, but =E2= =80=9CISS and Glass Lewis collectively control between 90% and 97%=C2=A0of = the U.S. proxy advice market.=E2=80=9D
  8. So, at every company, the CEO reports to the board who reports to the sh= areholders who report to ISS and Glass Lewis. There are two companies that = make the ultimate decisions for every US public company. Or maybe the numbe= r is more than two =E2=80=94=C2=A0maybe it=E2=80=99s like ISS and Glass Lew= is and BlackRock and Vanguard and a few other giant investors =E2=80=94=C2= =A0but it=E2=80=99s smaller than, say, 10. There are a handful of people wh= o are the ultimate arbiters of the decisions made by every US public compan= y.
  9. Isn=E2=80=99t that an antitrust p= roblem=3F

I mean! This is not the o= nly way, or the most sensible way, to think about anything. Only a tiny fra= ction of all corporate decisions are=C2=A0put to a shareholder vote, and IS= S and Glass Lewis mostly tend to tell investors how to vote on nonbinding p= roposals about executive pay or producing environ= mental impact reports, not on competitive strategy. No actual corporate= CEO thinks that she =E2=80=9Cworks for ISS,=E2=80=9D or considers how her = strategic decisions will be received within ISS. [4= ] It is not true in any practical sense that the decision-makin= g at every public company ultimately rolls up to the two proxy advisory fir= ms. But it is true in a loose galaxy-brained theoretical sense. The corpora= te buck stops with the shareholders, and if the shareholders all do what Gl= ass Lewis and ISS tell them to then that=E2=80=99s weird.

The Wall Street Journal reports:

The Federal Trade Commiss= ion is investigating whether proxy advisory firms Institutional Shareholder= Services and Glass Lewis violated antitrust laws through their business of= guiding shareholder votes on contentious topics, people familiar with the = matter said.=C2=A0

The investigation is th= e latest move putting pressure on the two influential advisers, which inves= tment managers rely on for research, analysis and recommendations on how to= cast shareholder votes on issues ranging from executive compensation to bo= ard elections.

The probe, which is in its = early stages, is focused on the firms=E2=80=99 competitive practices and ho= w they steer clients on hot-button issues such as climate- and social-relat= ed shareholder proposals, people familiar with the matter said. The FTC tol= d Glass Lewis it was investigating whether it and others may have engaged i= n =E2=80=9Cunfair methods of competition,=E2=80=9D according to a letter se= nt in late September that was reviewed by The Wall Street Journal.

I am somewhat conflating two points = here, though I have a feeling that the FTC is as well. One point is that IS= S and Glass Lewis arguably have a lot of market power in the market for pro= xy advice, and some people worry about that and want more competition=C2=A0in that market. The other point is that ISS a= nd Glass Lewis serve a powerful coordinating function for lots of investors= in lots of public companies, and that it is troubling for 4,000 companies = to all answer to the same few ultimate bosses.

I guess a third point is that the Trump administration substantively d= oes not like the answers that ISS and Glass Lewis come up with on social an= d governance questions. We talked yesterday a= bout a potential executive order to limit the power of proxy advisers and/o= r to restrict voting by index fund managers: Shareholder voting is now a cu= lture-war matter, and there is a sense that the proxy advisers and index fu= nd managers tend to have left-wing social preferences. So perhaps the FTC t= hinks that breaking up the proxy advisory duopoly will make public companie= s less woke.

<= /table>

Speaking of shareholder votes. It is r= apidly becoming conventional wisdom that prediction markets are a good way = to estimate probabilities and make decisions about the future. Here is Jeff= Yass explaining that prediction markets could ha= ve prevented the Iraq War. My own view th= at =E2=80=9Cprediction markets=E2=80=9D is a polite way to say =E2=80=9Cspo= rts gambling=E2=80=9D seems to be in the minority.

An extension this idea that we have discussed a couple of times is =E2=80=9Cmulti= verse finance,=E2=80=9D a thought experiment = from Dave White at Paradigm, in which you could buy financial assets condit= ional on some prediction-market-ish event. So like =E2=80=9CI want to buy T= reasury bonds contingent on the Democrats winning the Senate in 2026=E2=80= =9D or whatever, a trade where (1) I get the asset if the event occurs,=C2= =A0(2) the trade is unwound if the event does not occur but (3) in the inte= rim, the conditional asset itself trades and has a price. One benefit of th= is is, you know, more ways to manage risk, more ways to speculate, etc. But= another benefit is that the prices of the conditional assets could give yo= u information about possible futures: not about how likely=C2=A0th= e event is, but rather what the effects=C2=A0of the event might be= . The price of =E2=80=9Cone barrel of oil contingent on invading Iraq=E2= =80=9D could tell you something about (market expectations about) what inva= ding Iraq would do to oil prices.=C2=A0

Af= ter I wrote about shareholder voting yesterday, reader Charles Wang emailed= to suggest:

The obvious corr= ect resolution=C2=A0for delegating shareholder votes is to have=C2=A0one pu= blicly traded contract that is a forward contract for the stock conditional= on the vote passing and another forward contract for the stock conditional= on the=C2=A0vote failing. Then the stock is voted according=C2=A0to whiche= ver side has the better forward price. ...

Really it's a bit bizarre=C2=A0that the markets are supposed to be about e= fficient allocation of capital but the one thing that's directly about allo= cation of capital is not settled by the markets.

I suppose that might be manipulable, and for almost al= l actual shareholder votes the result doesn=E2=80=99t matter to the stock p= rice, but I like the general idea.

Multiverse finance

Get Rich 101

It would be cool if a = business school hired a serial=C2=A0failed entrepreneur to teach a= class=C2=A0like=C2=A0=E2=80=9CHow I Started Several Businesses But They Di= dn=E2=80=99t Work.=E2=80=9D For one thing, there are probably good lessons = there: =E2=80=9CI started a company and did everything right, bask in my gl= ory=E2=80=9D might be less informative than =E2=80=9Chere are=C2=A0the mist= akes I made, figure out how to avoid them.=E2=80=9D But also one wonders ab= out selection biases. If you hire the winners of coin-flipping contests to = teach the business-school class in How To Succeed At Coin Flipping, their a= dvice might be completely spurious. [5] = =C2=A0If you hire a cross-section of winners and losers to teach coin flipp= ing, your students might get a better education.

Though they might not sign up.=C2=A0The W= all Street Journal reports that Chicago State University has a class on= =E2=80=9CHow to Get Very, Very Rich=E2=80=9D:

The person helping them get there is Pete Kadens, a wealt= hy white entrepreneur teaching the mostly Black CSU classroom strategies on= getting very rich. Kadens=E2=80=99s pitch to the 33 students taking his we= ekly =E2=80=9CMastering Wealth=E2=80=9D class: Affluence isn=E2=80=99t just= for privileged people, but for anyone willing to take big risks and work l= ike a demon.

Having the =E2=80=9Cballs and= the guts to say =E2=80=98I=E2=80=99m going to make $50 million by the time= I=E2=80=99m 35 years old=E2=80=99=E2=80=A6that is not typically reserved f= or Black and brown students in this country,=E2=80=9D says Kadens, who is w= orth roughly $250 million after founding companies in the solar and cannabi= s industries. =E2=80=9CThat=E2=80=99s typically reserved for rich white kid= s that come from Greenwich.=E2=80=9D =E2=80=A6

During another class, Kadens handed out $100 bills to students who vol= unteered to stand and describe how they planned to multiply their current i= ncomes by 10. He also passed around a risk-tolerance quiz and chided studen= ts who proved risk-averse. =E2=80=9CIf you want to be Jay-Z rich=E2=80=A6th= at=E2=80=99s not going to work,=E2=80=9D he said.

I feel like an important implication of a class like = =E2=80=9Cget very rich by taking huge risks=E2=80=9D is that some of the pe= ople in the class will get the opposite of very rich=3F Like that=E2=80=99s= what risk means=3F

Robinhood will deliver you cas= h in a paper bag

Thi= s is just cool, hats off to them:

Robinhood Markets=C2=A0is betting its Ge= n Z and millennial clientele are as eager to send out for delivery of a wad= of cash as they are to order pizza or a pint of ice cream.

The brokerage is joining with food-and-drink delivery app= Gopuff to allow customers to withdraw cash from their Robinhood bank accou= nts and have it brought right to their door. For a $6.99 delivery fee=E2=80= =94or $2.99 if they have more than $100,000 in assets across their Robinhoo= d accounts=E2=80=94users can skip the ATM and have money delivered in a sea= led paper bag while they are at home.

This strikes me as a silly thing to do, but that=E2=80=99s why Ro= binhood=E2=80=99s founders are billionaires and I=E2=80=99m not. Also I app= reciate that Robinhood is making rigorous efforts to address every aspect o= f its customers=E2=80=99 financial lives. If you want to day-trade stocks o= r options or crypto, that is traditionally what Robinhood is for. If you ha= ve retirement savings that you want to invest in index funds and get some t= ax advice, that is increasingly what Robinhood is for. If you want to keep = cash in the bank, sure, that=E2=80=99s what Robinhood is for, but where are= the Robinhood ATMs=3F The Robinhood ATMs are they=E2=80=99ll bring the cas= h to your house. It=E2=80=99s a good pitch!

Sealed= Air

In yesterday=E2=80=99s column, I needed an example of a comp= any that is (1) is in the S&P 500 index but (2) not especially memorabl= e. I picked one that I found a little bit funny: Sealed Air Corp., which ma= kes bubble wrap. There was no particular reason for that, and I=E2=80=99d h= ave preferred a ball bearings company if one was available, but sealing air= is a nice industrial business that you probably don=E2=80=99t think about = very much. So I wrote about diversified retail shareholders=E2=80=99 ration= al indifference to goings-on at Sealed Air, as an example of their rational= indifference to goings-on at virtually every company.

After the close yesterday,=C2=A0the = Wall Street Journal reported:

Buyout firm Clayton Dubilier & Rice is in talks to take packaging-= provider private, according to people familiar with the matter.=C2=A0

<= p style=3D"margin: 16px 0;">A deal for the Bubble Wrap maker could come tog= ether soon, though it remains possible talks could fall apart or another bu= yer could emerge, the people said.=C2=A0

S= ealed Air had a market value of around $5.4 billion as of Wednesday=E2=80= =99s close and a deal including a typical premium would value the company a= bove that, the people added.=C2=A0

Its sha= res jumped over 20% in after-hours trading after The Wall Street Journal re= ported on the talks.

The sto= ck opened at $44.27, up 21.7% from yesterday=E2=80=99s close, though it tra= ded down a bit from there. I just want to be clear that I had absolutely no= idea that this would happen and it was a pure coincidence. Unless someone = at CD&R read my column and was like =E2=80=9Coh Sealed Air, I haven=E2= =80=99t=C2=A0thought about them in a while, maybe we should buy them,=E2=80= =9D and moved quickly. Seems unlikely.=C2=A0

Anyway if you made money by (1) reading Money Stuff yesterday afternoon,= (2) thinking =E2=80=9Chuh Sealed Air that sounds fun=E2=80=9D and (3) buyi= ng short-dated out-of-the-money call options, please let me know. This is e= xtremely the opposite of investing advice, though, and don=E2=80=99t try it= on the next random company I mention.

Things happ= en

Banks Take Big Ri= sks in $110 Billion Australian Block-Trade Boom<= /a>. U.S. Insurers Are Binging on Private Credi= t, Moody=E2=80=99s Says. Coinbase to Leave Delaware, Reincorporate in Texas. Crypto Asset Manager Grayscale Shows Revenue Drop in IPO Filing.=C2=A0Brazil Tries = to Sell Skeptics on =E2=80=98Low-Carbon Beef= =E2=80=99 at COP30.=C2=A0Younger brother beats older sibling in Bertelsmann succession battle.=C2=A0First Brands Founder Regains Access to Personal Bank Accounts. Cl= iff Asness Says AQR Is Exploring a Push Into Spo= rts Betting. =E2=80=9CPolymarket will become the Official and Exclusive= Prediction Market Partner of UFC.=E2=80=9D W= ith the Push of a Button, the U.S. Mints Its Fina= l Pennies.=C2=A0=E2=80=98Naked=E2=80=99 Cheetos and Doritos Ditch Iconi= c Colors in Health Push. GLP-1 anhedonia. =E2=80=9CIt was actually like I was just feedin= g myself into the AI meat grinder.=E2=80=9D

If you'd like to get=C2=A0Money= =C2=A0Stuff=C2=A0in handy email form, right in your inbox, please=C2=A0subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletter= s here. Thanks!

[1] Obviously there are= online forums that will teach you how to scale it up, but even at its best= it is a cool personal-account trade: You can make hundreds or perhaps thou= sands of dollars, not millions.

[2] Though there are ske= ptics even there. That Business Insider article= quotes Ken Griffin saying that =E2=80=9CThe biggest sea change has bee= n the migration of the [hedge fund] industry away from a more hard-nosed, d= riven focus on the performance fee to a much stronger focus on an asset-gat= hering business model.=E2=80=9D

[3] Arguably nobody can = do that: The great GSO Hovnanian manufactured = default trade never actually happened, because regulators told them to knock it off. But they previously did it su= ccessfully with Codere SA.

[5] Here I am using =E2=80=9Ccoin-fli= pping contests=E2=80=9D in the classic abstract = Jensen-Buffett sense, i.e., assuming that winning a coin-flipping conte= st is purely random but that people retroactively impose meaning on it. Obv= iously in the literal sense there are people who are good at flipping coins= , they all work at Susquehanna, and we have disc= ussed them se= veral times around here.

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