Exxon Mobil Defeated by Activist Investor Engine No. 1

The energy giant’s stunning loss was the work of a tiny hedge fund that believes investing for social good is also good for the bottom line.

#blackrock-inc, #boards-of-directors, #engine-no-1-gp-llc, #exxon-mobil-corp, #global-warming, #greenhouse-gas-emissions, #hedge-funds, #oil-petroleum-and-gasoline, #shareholder-rights-and-activism, #state-street-corporation, #vanguard-group-inc

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Exxon Mobil Faces Off Against Activist Investors on Climate Change

The oil company will hold a contested election for four board seats at its annual shareholders meeting on Wednesday.

#alternative-and-renewable-energy, #engine-no-1-gp-llc, #exxon-mobil-corp, #global-warming, #greenhouse-gas-emissions, #hedge-funds, #oil-petroleum-and-gasoline, #stocks-and-bonds, #woods-darren-w-1965

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Is buying and selling short-positions in private companies next? This fintech startup is banking on it

Even the most casual industry observer has to be stunned at times by the pace of dealmaking right now. Not quite halfway through 2021, startups are routinely closing new rounds just months apart and sometimes seeing their valuations triple and even quadruple with every new round.

Maybe they will all become trillion-dollar companies. It’s more likely, however, that they will not, which is where year-old Caplight comes in. Led by Javier Avalos, a former investment banker who recently spent more than three years with the secondaries platform Forge, Caplight is right now building a model that it says will enable institutional investors to take long and short private company positions via synthetic, cash-settled derivatives, so whether or not they own any actual shares in certain startups, they can bet on their rise or fall.

Caplight isn’t the first company drawn to the idea. Another young startup in New York, Apeira Capital, is also looking to “short” overvalued startups.  More, Avalos and his cofounder, Justin Moore, a former engineering manager at Forge, could also face competition, from their old firm, for example, as well as Carta, the venture-backed company that makes software to manage equity stakes in other startups.

Still, Avalos thinks he’s on to something. Caplight already has $400 worth of interest from more than 30 institutions, he says. It also just closed on $1.7 million in pre-seed funding led by Fin VC, with participation from Susquehanna Private Equity Investments, Clocktower Ventures, and Dash Fund. We talked with him late last week to learn more; below are excerpts from that chat, edited lightly for length.

TC: You were at Forge, which helps people buy and sell pre-IPO shares. What opportunity did you see while working there?

JA:  I think what platforms like Forge have done really well is build tech solutions for startup employees, for startup founders, and for the companies themselves, and that’s great. What we’re really focused on are larger institutions who need true liquidity, meaning higher frequency of trading, whether that’s buying and selling option contracts, or entering swap-type agreements. [They need a way] to quickly move in and out of positions, as well as hedge themselves.

Caplight [aims to become the] infrastructure that enables any other fund that is looking to take directional positions in private companies. It’s meant to be the plumbing that connects that fund to a market, but not just the marketplace –all of the infrastructure that comes with that. So holding assets in prime brokerage; being able to quickly settle transactions through clearinghouses; being able to provide [the] data to inform a mark to market to value those contracts.

TC: Even more specifically, what are you offering?

JA: So we [want to] allow institutional investors to hedge their private company stock — to generate income on their private company stock by selling out-of-the-money option contracts, for instance. We also allow institutional investors to take short or long positions [and] we’re doing all of our transactions synthetically, so the underlying shares don’t don’t actually have to move.

TC: Is that private company stock used as collateral or encumbered in any way? Do you need the permission of the startup?

JA: The pre-IPO stock can be used as collateral. It doesn’t always need to be though. The great thing about building a synthetic platform is you can inject liquidity into the market by working with sellers who don’t actually own the stock. If I’m a hedge fund, and I don’t own shares of a pre-IPO company, but I still want to express a short interest — a negative view on that company — I could use Caplight to do that. I’d just need to hold other tradable securities as collateral. That’s part of the beauty of what makes this a marketplace that can have very rapid settlement and execution.

TC: So if a hedge fund wants to go short, it just needs to needs to find another party on your service who’s willing to take that trade? 

JA: What you need is two parties — one who one who’s interested in going short on the name, and another who’s interested in going long on the name. Beyond that, you need a model that helps these parties arrive at not just an agreed-upon valuation of the company today, but also where they’re comfortable striking a contract at some point in the future, and then a methodology for valuation at any point in time in between those two points.What we’re talking about here is a methodology to create a mark to market on what the value of that contract is at any given time between the time you enter the contract and the time you ultimately go to settle the contract. Those are really the three main ingredients that are needed here.

TC: How do you develop this methodology? How automated is it?

JA: We’re in the process of building that out now. There’s quite a bit of work, as you can imagine, that goes into that. And part of the mandate that we have having raised this pre seed funding is to go out and find the best talent to come in and help us with this.

TC: Assuming some of these inputs would include fund-raising announcements, any announced revenues, and where things are trading on the secondary market, what are other inputs might surprise people?

JA: Maybe a less obvious one is that when public mutual funds own private tech companies’ stock, they have to report out on at least a quarterly basis where they’re marking those positions, and that’s all public information. So that’s another alternative data set that we would love to pull into our platform in product form.

TC: Why does your company make sense now versus earlier? Does it tie to smart contracts?

JA: Smart contracts are are definitely an enabler. But I think it’s more of a function of where we are in the markets. Forge alone is [ approaching a billion dollars a quarter of volume] and that’s just one platform. When you sum up all the activity, we think there is $20 billion of transaction volume, meaning pre IPO shares that are trading hands each year. For that size marketplace to exist without the ability to have directional bets on top of that, or hedging that is made very easy, it just didn’t make sense to us that hedging and derivative-type transactions don’t exist.

TC: This is a work in progress. In the meantime, what’s to stop Forge or Carta from doing what you’re doing?

JA: It’s something I spend a lot of time thinking about. It goes back to a point that I mentioned earlier, which is that I think Carta and Forge have done a really good job of building tech solutions that serve the companies, and I think a lot of future growth from Carta and Forge and some of the other players is pegged on their ability to develop company relationships. And when you have a lot of [your] growth pegged on building out these relationships — a lot of the valuation that’s being ascribed to Forge and Carta and other secondary platforms is tied their ability to maintain those relationships — to turn around and stand up a marketplace that allows institutions to go short on the same companies that you’re fighting to build relationships with is a direct conflict.

Above, from left to right, Caplight founders Javier Avalos and Justin Moore. For more from this chat, including some of the legal hurdles Caplight has to overcome to operate its business, and how it attracts buyers and sellers to the platform, you can hear our longer conversation here.

#carta, #finance, #fintech, #forge, #hedge-funds, #justin-moore, #secondaries, #tc, #venture-capital

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With a Big Tax Break, Hong Kong Tries to Soothe the Rich

Beijing, which can’t afford to let its attack on civil liberties scare away global banks and financiers, is offering them a big tax break and other perks.

#bank-of-america-corporation, #banking-and-financial-institutions, #cambridge-associates-llc, #china, #communist-party-of-china, #credit-suisse-group-ag, #goldman-sachs-group-inc, #hedge-funds, #high-net-worth-individuals, #hong-kong, #hsbc-holdings-plc, #morgan-stanley, #regulation-and-deregulation-of-industry, #taxation

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He Built a $10 Billion Investment Firm. It Fell Apart in Days.

Banks were eager to do business with Bill Hwang and his Archegos Capital Management — until he ran out of money.

#archegos-capital-management-llc, #banking-and-financial-institutions, #credit-suisse-group-ag, #derivatives-financial-instruments, #goldman-sachs-group-inc, #gsx-techedu-inc, #hedge-funds, #hwang-bill, #jpmorgan-chasecompany, #morgan-stanley, #regulation-and-deregulation-of-industry, #rlx-technologies, #stocks-and-bonds, #viacomcbs-inc

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Investment Firm’s Collapse Put Unseen Risks on Full Display

Archegos Capital Management’s use of swaps helped conceal its exposure to huge blocks of shares but showed once again how lightly regulated derivatives can shake the financial system.

#archegos-capital-management-llc, #banking-and-financial-institutions, #credit-suisse-group-ag, #derivatives-financial-instruments, #hedge-funds, #hwang-bill, #nomura-holdings-inc, #regulation-and-deregulation-of-industry, #stocks-and-bonds, #viacomcbs-inc

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New Suitor May Enter Fray for Tribune Publishing

A Maryland hotel magnate who had a deal to buy The Baltimore Sun is now weighing a bid for all of Tribune’s newspapers that could thwart a hedge fund’s plan.

#alden-global-capital, #baltimore-sun, #gannett-company-inc, #hedge-funds, #los-angeles-times, #mergers-acquisitions-and-divestitures, #newspapers, #soon-shiong-patrick, #tribune-publishing-company

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A Shadowy but Powerful Wall St. Firm Has Its Moment in Washington

Citadel and its sister business, Citadel Securities, were all over the GameStop debacle. Its founder will face sharp questions on Thursday.

#citadel-investment-group, #gamestop-corporation, #griffin-kenneth-c, #hedge-funds, #house-financial-services-committee, #short-selling

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Who is Stewart Bainum? The New Owner of The Baltimore Sun

Stewart Bainum, a hotel magnate and former politician, has swooped in with a plan to run it and other papers in Maryland as part of a nonprofit.

#alden-global-capital, #bainum-stewart-jr, #baltimore-md, #baltimore-sun, #choice-hotels-international-inc, #content-type-personal-profile, #hedge-funds, #maryland, #news-and-news-media, #nonprofit-organizations, #philanthropy, #tribune-publishing-company

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Hedge Fund Reaches a Deal to Buy Tribune Publishing

The acquisition by Alden Global Capital continues the trend of the financial industry’s taking control of major newspaper chains. The Baltimore Sun, a Tribune paper, will be sold to a Maryland entrepreneur in a separate deal.

#alden-global-capital, #baltimore-sun, #chicago-tribune, #hedge-funds, #medianews-group-inc, #news-and-news-media, #newspapers, #tribune-publishing-company

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Reddit’s ‘Roaring Kitty’ Will Speak at GameStop Hearing

The trader who pumped up the stock on the internet will appear next week with the leaders of the Robinhood app and hedge funds that lost big during the frenzy.

#citadel-investment-group, #gamestop-corporation, #gill-keith-1986, #hedge-funds, #house-committee-on-financial-services, #huffman-steve-1983, #melvin-capital-management-lp, #reddit-inc, #robinhood-financial-llc, #short-selling, #tenev-vladimir

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Bitcoin and Dogecoin Are Boosted by Elon Musk

Bitcoin and even Dogecoin, which began as a playful experiment, are soaring in value as billionaires, companies and celebrities promote the digital currencies.

#bitcoin-currency, #celebrities, #computers-and-the-internet, #dogecoin-project, #electric-and-hybrid-vehicles, #hedge-funds, #mobile-applications, #mobile-commerce-and-payments, #musk-elon, #snoop-dogg, #social-media, #tesla-motors-inc, #virtual-currency

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Wall Street’s Most Reviled Investors Worry About Their Fate

Short sellers — self-described financial detectives who make money when companies fail — were already worried about their success and safety. Then GameStop happened.

#enron-corp, #gamestop-corporation, #hedge-funds, #point72-asset-management-lp, #reddit-inc, #regulation-and-deregulation-of-industry, #securities-and-commodities-violations, #securities-and-exchange-commission, #short-selling, #social-media, #stocks-and-bonds

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The Hopes That Rose and Fell With GameStop

Fueled by amateur traders and online enthusiasm, the struggling retailer’s shares took investors on a ride like no other. For them, it ended in different ways, including apathy, defiance and regret.

#amc-entertainment-holding-inc, #computers-and-the-internet, #gamestop-corporation, #hedge-funds, #reddit-inc, #stocks-and-bonds

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Pumps and Dumps and Chumps

Please, stop falling for fake populism.

#computer-and-video-games, #gamestop-corporation, #hedge-funds, #reddit-inc, #short-selling, #social-media, #stocks-and-bonds

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Are GameStop’s ‘Degenerates’ Just Getting Started?

They may have lost their bet. But they haven’t lost their political power.

#banking-and-financial-institutions, #gamestop-corporation, #gill-keith-1986, #hedge-funds, #reddit-inc, #stocks-and-bonds

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Plunging GameStop Shares Test the Will of Investors to Stick With the Ride

After a crazy run-up, the price dropped 72 percent over two days, putting it just 18 percent higher than it was at the start of last week.

#cuban-mark, #gamestop-corporation, #hedge-funds, #stocks-and-bonds

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Robinhood, Under the Gun, Raises $2.4 Billion

The high volume of trading by its customers, many of them egged on by social media, has put a strain on the company’s balance sheet.

#banking-and-financial-institutions, #depository-trust-and-clearing-corporation, #fidelity-investments, #gamestop-corporation, #hedge-funds, #sequoia-capital, #stocks-and-bonds, #tenev-vladimir, #venture-capital

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Why Tackling Gamestop’s Wild Stock Rise Will be a Challenge for Gensler

There is broad agreement that the capital markets have been distorted but less consensus on what, if anything, the S.E.C. should do about it.

#banking-and-financial-institutions, #commodity-futures-trading-commission, #futures-and-options-trading, #gamestop-corporation, #gensler-gary-s, #hedge-funds, #regulation-and-deregulation-of-industry, #robinhood-financial-llc, #securities-and-exchange-commission, #stocks-and-bonds

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The GameStop Rebellion

What began as a story about Reddit versus Wall Street has since revealed itself to be something larger. We have an explanation of what happened and what it means.

#computer-and-video-games, #computers-and-the-internet, #gamestop-corporation, #hedge-funds, #reddit-inc, #shopping-and-retail, #social-media, #stocks-and-bonds

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Gensler Faces Big Challenge in Tackling GameStop’s Wild Ride

There is broad agreement that the capital markets have been distorted but less consensus on what, if anything, the S.E.C. should do about it.

#banking-and-financial-institutions, #commodity-futures-trading-commission, #content-type-service, #futures-and-options-trading, #gamestop-corporation, #gensler-gary-s, #hedge-funds, #regulation-and-deregulation-of-industry, #robinhood-financial-llc, #securities-and-exchange-commission, #stocks-and-bonds

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Melvin Capital, Squeezed by Its Bets Against GameStop, Lost 53 Percent in January

A principal reason for the hit to Melvin Capital’s monthly performance were the massive losses the firm suffered when small investors bid up the stock of GameStop.

#citadel-investment-group, #cohen-steven-a, #gamestop-corporation, #hedge-funds, #point72-asset-management-lp, #stocks-and-bonds

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GameStop and Investing for the Long Run

Signs of irrational exuberance abound. Stay sober and invest for the long run, our columnist says.

#banking-and-financial-institutions, #blockbuster-inc, #charles-schwab-corporation, #facebook-inc, #financial-brokers, #gamestop-corporation, #hedge-funds, #long-term-capital-management-lp, #stocks-and-bonds

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The ‘Roaring Kitty’ Rally: How a Reddit User and His Friends Roiled the Markets

A Massachusetts man who goes by “Roaring Kitty” on social media helped fuel the frenzy around GameStop. His $53,000 investment in the company briefly reached $48 million in value.

#computer-and-video-games, #computers-and-the-internet, #gamestop-corporation, #hedge-funds, #reddit-inc, #robinhood-financial-llc, #short-selling, #social-media, #stocks-and-bonds, #video-recordings-downloads-and-streaming

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Robinhood, in Need of Cash, Raises $1 Billion From Its Investors

The no-fee trading app, which is popular with young investors, has been strained by the high volume of trading this week in stocks such as GameStop.

#computers-and-the-internet, #hedge-funds, #initial-public-offerings, #mobile-applications, #robinhood-financial-llc, #start-ups, #stocks-and-bonds, #venture-capital

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GameStop Stock Soars as Reddit Investors Take On Wall St.

GameStop shares have soared 1,700 percent as millions of small investors, egged on by social media, employ a classic Wall Street tactic to put the squeeze — on Wall Street.

#financial-brokers, #gamestop-corporation, #hedge-funds, #reddit-inc, #securities-and-commodities-violations, #short-selling, #social-media, #stocks-and-bonds

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Alden Global Bids for Control of Tribune

Alden Global Capital, which is already Tribune’s biggest shareholder, valued the company at about $520.6 million.

#alden-global-capital, #chicago-tribune, #hedge-funds, #medianews-group-inc, #mergers-acquisitions-and-divestitures, #newspapers, #tribune-publishing-company

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As Steve Cohen Closes In on Mets, Discrimination Claims Cast a Shadow

As M.L.B. owners consider whether to approve Cohen as the new owner of the club, several complaints filed by women at his company loom as potential sticking points.

#baseball, #bonner-lauren, #cohen-steven-a, #discrimination, #hedge-funds, #major-league-baseball, #mergers-acquisitions-and-divestitures, #new-york-mets, #point72-asset-management-lp, #suits-and-litigation-civil, #women-and-girls

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‘The Big Short 2.0’: How Hedge Funds Profited Off the Pain of Malls

As the pandemic accelerated the demise of some brick-and-mortar retailers, a group of investors profited handsomely from their travails.

#coronavirus-2019-ncov, #hedge-funds, #icahn-carl-c, #shopping-and-retail, #shopping-centers-and-malls

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Worried Lenders Pounce on Landlords Unable to Pay Their Loans

Some hedge funds and private equity firms that lent money to property owners are now suing them for falling behind on interest payments.

#banking-and-financial-institutions, #coronavirus-2019-ncov, #credit-and-debt, #foreclosures, #hedge-funds, #kushner-cos, #mark-hotel-manhattan-ny-hotel, #mortgages, #private-equity, #real-estate-commercial, #suits-and-litigation-civil

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A Hedge Fund Bailout Highlights How Regulators Ignored Big Risks

The Dodd-Frank financial law succeeded at making banks safer, but empowered shadowy corners of finance that nearly wrecked the system in March.

#banking-and-financial-institutions, #coronavirus-2019-ncov, #dodd-frank-wall-street-reform-and-consumer-protection-act-2010, #federal-reserve-system, #financial-stability-oversight-council, #government-bonds, #hedge-funds, #mnuchin-steven-t, #prices-fares-fees-and-rates, #regulation-and-deregulation-of-industry, #securities-and-exchange-commission, #stocks-and-bonds, #treasury-department, #united-states-economy, #united-states-politics-and-government

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Hedge Fund Set to Own McClatchy Oversaw Cuts at Canadian Newspapers

Since Chatham Asset Management took over Postmedia, Canada’s largest newspaper chain, 1,600 employees have been laid off and more than 30 papers shut down.

#canada, #chatham-asset-management, #hedge-funds, #layoffs-and-job-reductions, #mcclatchy-company, #media, #melchiorre-anthony-hedge-fund-manager, #mergers-acquisitions-and-divestitures, #national-post, #news-and-news-media, #newspapers, #postmedia-news, #shutdowns-institutional

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Chatham Hedge Fund Has the Winning Bid for McClatchy Newspapers

The family-owned publisher of The Sacramento Bee and The Miami Herald announced the winner of its bankruptcy sale: Chatham Asset Management, the owner of The National Enquirer.

#alden-global-capital, #american-media-inc, #apollo-global-management, #bankruptcies, #chatham-asset-management, #forman-craig-1961, #fortress-investment-group-l-l-c, #hedge-funds, #knight-ridder, #mcclatchy-company, #mcclatchy-kevin-s, #melchiorre-anthony-hedge-fund-manager, #mergers-acquisitions-and-divestitures, #newspapers, #pensions-and-retirement-plans

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Hedge Funds Duel in Bankruptcy Court Over McClatchy Newspapers

Alden Global Capital’s emergency motion challenges the attempt by a likely suitor, Chatham Asset Management, to buy the publisher of The Sacramento Bee and more than two dozen other papers.

#alden-global-capital, #auctions, #bankruptcies, #chatham-asset-management, #hedge-funds, #mcclatchy-company, #medianews-group-inc, #newspapers

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‘He’s Buying Up Brixton’: Beloved Grocer’s Eviction Sparks Gentrification Fight

In south London, people rebelled when a developer, backed by an American hedge fund, tried to evict Nour Cash & Carry.

#brixton-london-england, #gentrification, #hedge-funds, #nour-cashcarry-london-england-retailer, #ottolenghi-yotam, #real-estate-commercial, #shopping-and-retail

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A Trump-Backed Senate Candidate’s Hedge Fund Disaster

Tommy Tuberville, the football coach and leading Republican vying to take on Senator Doug Jones in Alabama, had a tumultuous foray into finance.

#alabama, #auburn-university, #elections-senate, #endorsements, #football-college, #frauds-and-swindling, #hedge-funds, #republican-party, #sessions-jefferson-b-iii, #stroud-john-david, #suits-and-litigation-civil, #trump-donald-j, #tuberville-tommy, #united-states-politics-and-government

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Fed Warns of Financial Risks as Coronavirus Downturn Wears On

The central bank said the financial system “amplified” the shock in March, and warned that vulnerabilities remain heightened.

#banking-and-financial-institutions, #brainard-lael, #coronavirus-2019-ncov, #federal-reserve-system, #hedge-funds, #stocks-and-bonds, #united-states-economy

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Spiraling Virus Fears Are Causing Financial Carnage

A global disease outbreak isn’t the kind of risk that many investors were trained to react to.

#banking-and-financial-institutions, #coronavirus-2019-ncov, #dow-jones-stock-average, #federal-reserve-system, #hedge-funds, #standardpoors-500-stock-index, #stocks-and-bonds, #subprime-mortgage-crisis, #united-states-economy

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In Prison Interview, Madoff Says Banks ‘Had to Know’

In his first interview for publication since his arrest, Bernard L. Madoff insisted that his family knew nothing about his crimes, but some banks and hedge funds “had to know.”

#banking-and-financial-institutions, #hedge-funds, #madoff-bernard-l, #picard-irving-h, #ponzi-schemes

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