Feb.24 -- In today’s “Bloomberg Equality” segment, Maaike Steinebach, general manager for Hong Kong and Macau at Visa, discusses the number of women on boards in the U.K. and the challenges they still face. She speaks on “Bloomberg Markets: Asia.”
Feb.24 -- In today’s “Bloomberg Equality” segment, Maaike Steinebach, general manager for Hong Kong and Macau at Visa, discusses the number of women on boards in the U.K. and the challenges they still face. She speaks on “Bloomberg Markets: Asia.”
(Bloomberg) -- More than a third of Australian homeowners are planning to sell in the next five years, according to a report by Westpac Banking Corp., as they look to cash in on a booming market driven by low mortgage rates and an improving economy.The report showed 35% of households surveyed were considering selling, more than double the amount seen prior to the pandemic. More than one in ten were already in the process of putting their property on the market, or planning to do so in the next twelve months.“It is absolutely a seller’s market at the moment,” Matt Hassan, a senior economist at Westpac, said in a media release. “The research suggests the situation will rebalance in coming months as more sellers come onto the market, however demand is still expected to remain strong, driving a sustained lift in prices this year and next.”Australia’s housing market in February posted its biggest monthly price gain in 17 years, dispelling fears of a Covid-induced downturn. Economists think the gains can continue: Goldman Sachs Group Inc. said Friday that prices will rise 10% this year, fueled by low interest rates and improved sentiment, although the bank also noted there are risks ahead including a potentially more hawkish Reserve Bank.The Westpac report also pointed to lingering caution, with 51% of respondents saying they’re actively holding off from listing their property straight away, while 66% said high moving costs were a big barrier to selling.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Airline executives and directors sold $49.9 million of stock in February, the most in three years, as industry shares posted a record rally fueled by a widening vaccination effort.The top individual sellers were at Allegiant Travel Co. and Southwest Airlines Co., two leisure-focused carriers that are among analyst picks to benefit from a rebound in vacation travel as the coronavirus pandemic eases. Executives from Delta Air Lines Inc. and Mesa Air Group Inc. also sold significant holdings, according to data from InsiderInsights.com, which analyzes such transactions.The insider sales increased as investors bet that vaccine campaigns would gain steam and improve the prospects for a travel rebound. Airlines got hammered last year by an unprecedented drop in demand for flights. Continued stock gains are far from guaranteed this year, as the industry’s recovery remains shrouded in uncertainty and the slump in lucrative corporate and international trips is expected to drag on.The February surge in stock sales came after no airline insiders sold shares the previous month. An index of nine U.S. airlines jumped 30% in February, the most on record, led by a 45% advance for SkyWest Inc. Through Thursday, the stock gauge had rallied about 140% since hitting a seven-year low in May 2020.As if to underscore the uncertainty, however, the index plunged as much as 8.3% during the Friday trading session before paring losses to close with a fall of only 0.8%.Pay LimitsMajor carriers slashed jobs and cut executive pay because of the crisis, while Congress imposed compensation limits in exchange for tens of billions of dollars in aid.Bloomberg News surveyed insider transactions for the 11 largest publicly traded U.S. carriers. The data exclude April 2020, when Warren Buffett’s Berkshire Hathaway Inc. dumped its large stakes in the four biggest U.S. airlines.Last month, Allegiant Chief Executive Officer Maury Gallagher Jr. was the industry’s top seller, shedding 101,000 shares worth $21.5 million in 13 transactions. Last year, he sold shares worth $67.9 million. Gallagher still owns more than 13% of outstanding shares in Las Vegas-based Allegiant, which he co-founded in 1997.The company’s chief operating officer and chief financial officer also sold holdings of more than $1 million apiece. Allegiant declined to comment on executives’ personal decisions to sell shares, said spokeswoman Hilarie Grey. The transactions continued this month as Allegiant President John Redmond sold shares worth $6.1 million.Southwest’s insider sales made up 19% of the February total for airlines. President Tom Nealon collected at $2.98 million, while Chief Operating Officer Mike Van de Ven got $1.82 million and Chief Financial Officer Tammy Romo had $1.74 million. Restricted stock units paid to executives that vest in February carry “significant” taxes that aren’t fully covered by shares withheld for that purpose, Southwest said in regard to last month’s sales.Delta President Glen Hauenstein sold $2.63 million, while Mesa Air President Michael Lotz shed $1.79 million. Delta declined to comment.”Our window is open infrequently and we’ve been accumulating stock for a long time and took the opportunity to diversify holdings,” said Mesa CEO Jonathan Ornstein, who also sold nearly $915,000 in shares last month.Executives and directors at American Airlines Group Inc. and United Airlines Holdings Inc. sold no shares, according to available data.(Updates Allegiant president’s sale this month in ninth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Tesla Inc.’s plunge has cost its shareholders about $300 billion in 2021 but the toll it is taking on speculative sentiment throughout the market has been much greater.Elon Musk’s electric carmaker is down more than 30% since its January high, brutalizing anything associated with it -- most notably Cathie Wood’s flagship exchange-traded fund, the Ark Innovation ETF (ticker ARKK). At one point on Friday, every one of the 54 U.S.-based ETFs that have assets under management exceeding $1 billion and more than 1% invested in Tesla had fallen.While Tesla is the most prominent example of the turnaround in high-flying stocks, large funds holding comparable amounts of quarantine favorites such as Zoom Video Communications Inc. have also been hit. All but one of the 12 funds with sizable stakes in the video conferencing company fell in early trading Friday.The shock rippling through markets from a single stock’s plunge is a testament to how quickly things can go haywire when risk takers crowd into the same once soaring names.“Any fund that holds a large weight in a single stock, if there is selling of that fund, it will pressure the stock, and vice versa -- especially on down days when bids tend to disappear,” said Mohit Bajaj, director of ETFs for WallachBeth Capital. “We are seeing heavy pressure in some of these names that had such a huge run last year.”The Invesco Wilderhill Clean Energy ETF, First Trust NASDAQ Clean Edge Green Energy Index Fund, Ark Next Generation Internet ETF and the Ark Innovation ETF were all down more than 6% as of noon in New York, though they pared losses by the market close. “High-flying stocks are great to own when there’s still wind beneath them,” said James Pillow, managing director at Moors & Cabot Inc. “But when that breadth thrust is withdrawn because of liquidity, they often fall much faster than they rose. Holding such high fliers is a significant risk to concentrated portfolios, and frankly it’s a risk for the confidence in the entire stock market.”Arthur Hogan, chief market strategist at National Securities Corp., said that “Tesla is the poster child for betting on a dream.”“When you start looking at things and saying, ‘This is going to be the greatest fill-in-the-blank ever,’ and then running up its valuation,” he added, “you have to understand, there are no one-way trades. Trees don’t grow to the sky. So when something goes parabolic, it tends to come back down to Earth at some juncture.”(Updates with closing prices)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Treasury yields are rising because of a much stronger economic outlook, Federal Reserve officials said Friday, playing down the need for a monetary policy response.“As a central banker I am always concerned if there is disorderly trading or something that looks panicky,” Federal Reserve Bank of St. Louis President James Bullard said in an interview with Wharton Business Radio. “That would catch my attention. But I think we are not at that point.”His remarks, on the final day before the central bank enters a blackout period on public comment before its March 16-17 meeting, follow Chair Jerome Powell’s Thursday caution that rising yields had caught his eye and he would be “concerned by disorderly conditions in markets or persistent tightening in financial conditions.”Treasuries yields stabilized Friday after spiking higher on a stronger-than-expected payroll report for February, but remain sharply higher than a month ago, nudging up borrowing costs on everything from mortgages to auto loans.That’s prompted speculation the Fed might lean against the move by purchasing more longer-dated securities, including by reprising a strategy from its past policy playbook called Operation Twist in which it switches out of short-dated holdings into longer ones.“I don’t see that as an option right now,” Bullard said, noting the “very strong” U.S. economic outlook and already-easy monetary policy: “So it’s not just matching up right now that we have to do anything to be even more dovish than we are.”While Treasury yields have moved sharply higher, they remain historically low and the shift should not be a cause for concern, he said.‘Natural’ Causes“It is natural for them to be going higher as growth prospects are improving -- not just improving, really, but going very, very strong growth expected in 2021 and beyond and inflation risks moving up.”The Fed is expected to hold interest rates near zero at its upcoming meeting and reiterate it will keep buying bonds at a $120 billion monthly pace until it sees substantial further progress on employment and its 2% inflation goal.Like Bullard, other Fed officials characterized the increase in bond yields as a predictable result of a welcomed improvement in the economic outlook.“The bond market is reflecting I think the strength that we’ve seen in some of the recent data. They’re looking ahead and they’re positive,” Cleveland Fed President Loretta Mester said in an interview on CNN International later on Friday. “Both real rates are higher and inflation expectations in those bond yields are higher,” she said.Minneapolis’s Neel Kashkari said he would take note if the movement in the bond market reduced the amount of support monetary policy was providing the economy by pushing real yields higher.“But we’re not seeing much movement in real yields. Most of the movement is in that inflation expectations, or inflation compensation,” he said separately during a live-streamed interview with the Washington Post.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The legislation is advancing quickly. Here's how much you're likely to get, and when.
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It’s time to check in with the macro picture, to get an idea of just where markets are headed in the coming months. That’s what a JPMorgan global research team, headed up by Joyce Chang, has been doing. The JPM team starts by noting the sell-off in US Treasury bonds last week, pushing up yields as investors acted in response to inflationary fears. However, the rise in bond yields steadied on Friday, and Chang’s team does not believe that inflation is the great bugaboo it’s made out to be; her team sees a combination of economic growth and fiscal stimulus creating a virtuous circle of consumer spending fueling more growth. They write, “Our global economics team is now forecasting US nominal GDP to average roughly 7% growth over this year and next as targeted measures have been successful in addressing COVID-19 and economic activity is not being jeopardized. Global growth will exceed 5%...” What this means, in JPM’s view, is that the coming year should be good for stocks. Interest rates are likely to remain low, in the firm’s estimation, while inflation should moderate as the economy returns to normal. JPM’s stock analysts have been following the strategy team, and seeking out the stocks they see as winners over the next 12 months. Three of their recent picks make for an interesting lot, with Strong Buy ratings from the analyst community and over 50% upside potential. We’ve used the TipRanks database to pull the details on them. Let’s take a look. On24 (ONTF) The first JPM pick were looking at here is On24, the online streaming service that offers third parties access for scaled and personalized networked events. In other words, On24 makes its streaming service available for other companies to use in setting up interactive features, including webinars, virtual events, and multi-media experiences. The San Francisco-based company boasts a base of more than 1900 corporate users. On24’s customers engage online with more than 4 million professionals every month, for more than 42 million hours every year. As can be imagined, On24 saw a surge of customer interest and business in the past year, as virtual offices and telecommuting situations expanded – and the company has now used that as a base for going public. On24 held its IPO last month, and entered the NYSE on February 3. The opening was a success; 8.56 million shares were put on the market at $77 each, well above the $50 initial pricing. However, shares have taken a beating since, and have dropped by 36%. Nevertheless, JPM’s Sterling Auty thinks the company is well-placed to capitalize on current trends. “The COVID-19 pandemic, we believe, has changed the face of B2B marketing and sales forever. It has forced companies to move most of their sales lead generation into the digital world where On24 is typically viewed as the best webinar/webcast provider.” the 5-star analyst wrote. “Even post-pandemic we expect the marketing motion to be hybrid with digital and in-person being equally important. That should drive further adoption of On24-like solutions, and we expect On24 to capture a material share of that opportunity.” In line with these upbeat comments, Auty initiated coverage of the stock with an Overweight (i.e., Buy) rating, and his $85 price target suggests it has room for 73% upside over the next 12 months. (To watch Auty’s track record, click here.) Sometimes, a company is just so solid and successful that Wall Street’s analysts line up right behind it – and that is the case here. The Strong Buy analyst consensus rating is unanimous, based on 8 Buy-side reviews published since the stock went public just over a month ago. The shares are currently trading for $49.25 and their $74 average price target implies an upside of 50% from that level. (See On24’s stock analysis at TipRanks.) Plug Power, Inc. (PLUG) And moving over to the reusable energy sector, we’ll take a look at a JPM ‘green power’ pick. Plug Power designs and manufactures hydrogen power cells, a technology with a great deal of potential as a possible replacement for traditional batteries. Hydrogen power cells have potential applications in the automotive sector, as power packs for alt-fuel cars, but also in just about any application that involves the storage of energy – home heating, portable electronics, and backup power systems, to name just a few. Over the past year, PLUG shares have seen a tremendous surge, rising over 800%. The stock got an additional boost after Joe Biden’s presidential election win – and his platform promises to encourage ‘Green Energy.” But the stock has pulled back sharply recently, as many over-extended growth names have. Poor 4Q20 results also help explain the recent selloff. Plug reported a deep loss of $1.12 per share, far worse than the 8-cent loss expected, or the 7-cent loss reported in the year-ago quarter. In fact, PLUG has never actually reported positive earnings. This company is supported by the quality of its technology and that tech’s potential for adoption as industry moves toward renewable energy sources – but we aren’t there yet, despite strides in that direction. The share price retreat makes PLUG an attractive proposition, according to JPM analyst Paul Coster. “In the context of the firm's many long-term growth opportunities, we believe the stock is attractively priced at present, ahead of potential positive catalysts, which include additional ‘pedestal’ customer wins, partnerships and JVs that enable the company to enter new geographies and end-market applications quickly and with modest capital commitment,” the analyst said. “At present, PLUG is a story stock, appealing to thematic investors as well as generalists seeking exposure to Renewable Energy growth, and Hydrogen in particular.” Coster’s optimistic comments come with an upgrade to PLUG’s rating - from a Neutral (i.e., Hold) to Overweight (Buy) - and a $65 price target that indicates a possible 55% upside. (To watch Coster’s track record, click here.) Plug Power has plenty of support amongst Coster’s colleagues, too. 13 recent analyst reviews break down to 11 Buys and 1 Hold and Sell, each, all aggregating to a Strong Buy consensus rating. PLUG shares sell for $39.3 and have an average price target of $62.85, which suggests a 60% one-year upside potential. (See Plug’s stock analysis at TipRanks.) Orchard Therapeutics, PLC (ORTX) The last JPM stock pick we’ll look at is Orchard Therapeutics, a biopharma research company focused on the development of gene therapies for the treatment of rare diseases. The company’s goal is to create curative treatments from the genetic modification of blood stem cells – treatments which can reverse the causative factors of the target disease with a single dosing. The company’s pipeline features two drug candidates that have received approval in the EU. The first, OTL-200, is a treatment for Metachromatic leukodystrophy (MLD), a serious metabolic disease leading to losses of sensory, motor, and cognitive functioning. Strimvelis, the second approved drug, is a gammaretroviral vector-based gene therapy, and the first such ex vivo autologous gene therapy to receive approve by the European Medicines Agency. It is a treatment for adenosine deaminase deficiency (ADA-SCID), when the patient has no available related stem cell donor. In addition to these two EU-approved drugs, Orchard has ten other drug candidates in various stages of the pipeline process, from pre-clinical research to early-phase trials. Anupam Rama, another of JPM’s 5-star analysts, took a deep dive into Orchard and was impressed with what he saw. In his coverage of the stock, he notes several key points: “Maturing data across various indications in rare genetic diseases continues to de-risk the broader ex vivo autologous gene therapy platform from both an efficacy / safety perspective… Key opportunities in MLD (including OTL-200 and other drug candidates) have sales potential each in the ~$200-400M range… Importantly, the overall benefit/risk profile of Orchard’s approach is viewed favorably in the eyes of physicians. At current levels, we believe ORTX shares under-reflect the risk-adjusted potential of the pipeline...” The high sales potential here leads Rama to rate the stock as Outperform (Buy) and to set a $15 price target, implying a robust 122% upside potential in the next 12 months. (To watch Rama’s track record, click here.) Wall Street generally is in clear agreement with JPM on this one, too. ORTX shares have 6 Buy reviews, for a unanimous Strong Buy analyst consensus rating, and the $15.17 average price target suggests a 124% upside from the current $6.76 trading price. (See Orchard’s stock analysis at TipRanks.) Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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Ark Funds CEO and Founder Cathie Wood joined Benzinga’s “Raz Report” this week and discussed the history of Ark Funds. Wood also shared some of the reasons why Ark Funds owns several positions, including in DraftKings Inc (NASDAQ: DKNG). Wood on DraftKings: Wood told Benzinga that DraftKings is becoming accepted as a platform for sports betting as the public grows more comfortable with the activity. “We do think sports betting is losing its taint,” Wood said. The fund manager sees more states turning toward legalizing sports betting, especially as many face huge deficits, Wood said. Wood used New Jersey as an example of the success states can have. The state is a mature market and DraftKings’ revenue was up 100% in the state. “New Jersey was very telling to us," she said. Ark Funds: DraftKings was added to two different Ark Funds beginning in February. Ark Next Generation Internet ETF (NYSE: ARKW) owns around 1.4 milion shares of DraftKings worth $88.1 million. Ark Fintech Innovation ETF (NYSE: ARKF) owns around 546,000 shares of DraftKings worth $33.8 million. DraftKings represents around 1.2% and 0.8% of ARKW and ARKF, respectively. Price Action: Shares of DraftKings finished the week down 6.24% at $59.52. Related Link: DraftKings And Dish Network Partner On Sports Betting, TV Integration See more from BenzingaClick here for options trades from BenzingaFuboTV Shares Pop On Caesars Partnership, Access To Additional States For Sports BettingHorizon Acquisition Corp SPAC Jumps 20% On Potential Sportradar Merger© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
This week, investors will be eyeing new inflation data, which will offer a look at whether prices have already begun to creep up as some have feared ahead of a major economic reopening. A highly anticipated direct listing for the vide0 game company Roblox is also on deck.
Shares of Carnival Cruise Lines (NYSE:CCL) have climbed approximately 20% in the last month. That puts CCL stock within hailing distance of its pre-pandemic price. I understand that the market is forward thinking, but this seems to be an example of irrational exuberance. Source: Kokoulina / Shutterstock.com As of now, over 82 million Americans have received a Covid-19 vaccine. This is evidence, not just hope, but empirical evidence that the pandemic is much better. But still, CCL seems to be a stock that’s moved too high, too fast. In this article, I’ll explain why.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Ships Are Still In Port My colleague Josh Enomoto pointed out that airline passenger volume was up to about 38% of pre-pandemic levels from Feb. 1 through Feb. 19. Undoubtedly, those numbers will look even better as they are compared to pandemic numbers in the coming months. 9 Cheap Stocks That Look Like a Bargain However, airlines were operating, albeit in dribs and drabs, throughout the pandemic. Carnival is not going to be sailing for quite some time. In January, the company stated that the Carnival Magic, Carnival Paradise and Carnival Valor will not resume operations until November 2021. Overall, the cruise line will not be resuming operation until June of this year. And that isn’t all. Here are just three headlines on Cardinal’s investor relations website: Their Princess Cruises line extended its pause of cruises on Roundtrip Southampton sailings through Sept. 25. Princess Cruises also extended its pause of cruises to select Alaska, Canada & New England and Pacific Coastal sailings. The company Seabourn line announces cancellation of every 2021 Alaska/British Columbia voyages. This simply means it’s going to be quite some time before the cruise line sees smooth sailing from a revenue perspective. Waiting On Revenue In 2020, Carnival brought in about 5.6 billion in revenue. That was a year-over-year decline of more than 70%. However, that included a first quarter in which the company was operating under pre-pandemic conditions. When you look at the following four quarters, including the first quarter of 2021 that the company reported in January, the revenue picture is even worse. Not surprisingly Carnival announced it was raising $1 billion from a public offering. Investors took a brief pause, but then CCL stock began trading at nearly a 12-month high. And it’s also important to note that CCL stock was flat to slightly negative throughout much of 2019. And keep in mind that in 2019, the company had slightly more revenue than it delivered in 2018. It would be one thing if Carnival was a pre-revenue company. But they’re not. Yet investors are buying CCL stock as if it was. That’s not a formula for success, when it’s likely that the company won’t start delivering meaningful revenue before 2022. Wait For a Better Price For CCL Stock I’m not intending to bash Carnival. The Covid-19 pandemic hit cruise lines particularly hard. As I noted above, airlines at least had a trickle of revenue. The same was true of hotels. But cruise lines were literally banned from sailing. I believe the company is being transparent with investors. It’s not their fault, and to their benefit, that investors are getting excited about CCL stock. But that doesn’t make it a good investment at this time. The stock price is approximating where the company was, revenue-wise, prior to the pandemic. However, the cruise line won’t be sailing for months. On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Carnival Is Climbing Too High Too Fast appeared first on InvestorPlace.
The last week has been a tough one for investors in many growth stocks. SPACs is one segment that was hit particularly hard. Lessons Learned From Palihapitiya: SPAC King Chamath Palihapitiya shared on Twitter Inc (NYSE: TWTR) how much he lost in the week and his thoughts on the SPAC market. “It’s been a super tough week for me and I’m sure a super tough week for some of you as well. Here is how I’m doing after Friday and what I’ve learned...” Palihapitiya tweeted. The investor broke down his lessons learned during the week as follows: “The first thing I tried to do yesterday was take a step back and try to see the bigger picture,” he said. Palihapitiya went on to say that March 2020 could be a guide as markets were down 20% then. Is this current market environment the same or different? Palihapitiya asks. He said he looked at his relative performance vs the S&P500, which breaks down as 3.6% compared to 2.3%, or 56% above the benchmark. He said he's not a "huge fan" of these numbers. “I re-questioned my goals and concluded my strategic view is still right: that inequality and climate change investments are a once in a lifetime opportunity to make hundreds of billions of dollars AND do the right thing," he said. “I freed up some capital by selling some shares in $SPCE so I can keep investing at scale without impacting my pace and strategic view.” Palihapitiya added that he hated selling the shares but had to do it after his balance sheet shrank by nearly $2 billion during the week. Palihapitiya also said he has not sold any shares of any other SPAC he’s launched. He went on to say that investing is hard, he is not perfect, and he is trying to learn just like his audience and followers on Twitter. “Be resilient and keep fighting,” he said. Markets are volatile and unforgiving, Palihapitiya added. Companies that do valuable things tend to see their value reflected in gains. “Find a way to make sure you are comfortable with what you own and if not, don’t be afraid to make changes. Prices are temporary but your peace of mind should not be,” he said. Palihapitiya ended his tweet with the Persian adage: “This too shall pass.” Related Link: 5 Things You Might Not Know About Chamath Palihapitiya Sale of Virgin Galactic Stock: The tweet from Palihapitiya came after he was in the news Friday for selling his personal stake in Virgin Galactic Holdings (NYSE: SPCE). Palihapitiya sold 6.2 million shares for around $211 million, according to Business Insider. It follows a similar sale in December. Palihapitiya still owns 15.8 million shares in Virgin Galactic through Social Capital Hedosophia, the company that Palihapitiya and partner Ian Osborne used to take the space tourism company public via SPAC. “I sold 6 million shares for $200 million, which I am planning to redirect into a large investment I am making towards fighting climate change,” Palihapitiya told Business Insider in an emailed statement. The investment will be made public in the next few months. It’s been a super tough week for me and I’m sure a super tough week for some of you as well. Here is how I’m doing after Friday and what I’ve learned... pic.twitter.com/fX5YHdqBv6 — Chamath Palihapitiya (@chamath) March 6, 2021 Disclosure: Author is long shares of SPCE. See more from BenzingaClick here for options trades from Benzinga3 Former SPACs Report Earnings: What Fisker, Velodyne Lidar, Virgin Galactic Investors Should Know© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Elon Musk set records last year for one of the fastest streaks of wealth accumulation in history. The reversal is underway, and it’s steep.The Tesla Inc. chief executive officer lost $27 billion since Monday as shares of the automaker tumbled in the selloff of tech stocks. His $156.9 billion net worth still places him No. 2 on the Bloomberg Billionaires Index, but he’s now almost $20 billion behind Jeff Bezos, who he topped just last week as world’s richest person.Musk’s tumble only underscores the hard-to-fathom velocity of his ascent. Tesla shares soared 743% in 2020, boosting the value of his stake and unlocking billions of dollars in options through his historic “moonshot” compensation package.His gains accelerated into the new year. In January, he unseated Bezos as the world’s richest person. Musk’s fortune peaked later that month at $210 billion, according to the index, a ranking of the world’s 500 wealthiest people.Consistent quarterly profits, the election of President Joe Biden with his embrace of clean technologies and enthusiasm from retail investors fueled the company’s rise, but for some, its swelling valuation was emblematic of an unsustainable frothiness in tech. The Nasdaq 100 Index fell for the third straight week on Friday, its longest streak of declines since September.Bitcoin InvestmentMusk’s fortune hasn’t been solely subject to the forces buffeting the tech industry. His net worth has risen and slumped recently in tandem with the price of Bitcoin. Tesla disclosed last month it had added $1.5 billion of the cryptocurrency to its balance sheet. Musk’s fortune took a $15 billion hit two weeks later after he mused on twitter that the prices of Bitcoin and other cryptocurrencies “do seem high.”Extreme volatility has roiled many of the world’s biggest fortunes this year. Asia’s once-richest person, Chinese bottled-water tycoon Zhong Shanshan, relinquished the title to Indian billionaire Mukesh Ambani last month after losing more than $22 billion in a matter of days.Read more: Ambani Again Richest Asian as China’s Zhong Down $22 BillionQuicken Loans Inc. Chairman Dan Gilbert’s net worth surged by $25 billion on Monday after his mortgage lender Rocket Cos. was said to be the next target of Reddit day traders. His fortune has since fallen by almost $24 billion. Alphabet Inc. co-founders Sergey Brin and Larry Page are among the biggest gainers on the index this year. They’ve each added more than $13 billion to their fortunes since Jan. 1.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares -- equal to a third of all hedge-fund assets -- actually out on loan, according to the International Securities Lending Association.It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock -- the so-called short interest -- the higher the fee a lender can charge.In the case of GameStop, short interest was unusually high and shares on loan were generating an annualized return of 25% to 30%, Ken Griffin testified at the Feb. 18 hearing. Griffin operates a market maker, Citadel Securities, as well as Citadel, one of the world’s largest hedge funds.“Securities lending is a way for long holders to generate additional alpha,” said Nancy Allen of DataLend, which compiles data on securities financing. “Originally, it was a way to cover costs, but over the last 10 to 15 years it’s become an investment function.”Not everyone is comfortable with the inherent conflict. In December 2019, Japan’s $1.6 trillion Government Pension Investment Fund stopped lending its international stock holdings to short sellers, calling the practice inconsistent with its responsibilities as a fiduciary. At the time, the decision cost GPIF about $100 million a year in lost revenue.The U.S. Securities and Exchange Commission has regulated short-selling since the 1930s and polices the market for abuses such as naked shorting, which involves taking a short position without borrowing shares. Proponents of legal shorting argue that its use enhances liquidity, improves pricing and serves a critical role as a bulwark against fraud and hype.Chief executives, whose pay packages often depend on share performance, routinely decry short sellers as vultures. More recently, shorting has come under fire in the emotionally charged banter on Reddit’s WallStreetBets forum. Some speculators ran up the prices of GameStop, AMC Entertainment Holdings Inc. and other meme stocks in January to punish the hedge funds that bet against them, and they delighted when the rampant buying led to bruising losses at Melvin, Maplelane Capital and Citron Research.Many of the key actors in the GameStop frenzy testified at the Feb. 18 hearing. Plotkin was grilled by committee members over Melvin’s short position. Citadel’s Griffin and others faced broader questions about short-selling. Yet no one asked about the supply of borrowed shares and there were no witnesses called from the securities-lending industry.There’s a symbiotic relationship between hedge funds and the prime-brokerage units of Wall Street firms, much of it built on securities lending. Prime brokers act as intermediaries, sourcing stocks and bonds for borrowers who want to short them and facilitate the trades. According to DataLend, securities lending generated $2.9 billion of broker-to-broker revenue in 2020, almost the same as in 2019.Demand for short positions was already expected to drop as stock prices surged to all-time highs. Now, with the threat of retribution from the Reddit crowd, it may weaken even further. Griffin said he has “no doubt” there’ll be less short-selling as a consequence of the GameStop squeeze.“I think the whole industry will have to adapt,” Plotkin said at the hearing. “I don’t think investors like myself want to be susceptible to these types of dynamics.”This could not only threaten the dealers who broker stock lending but also the holders who supply the securities and share in the revenue. They reaped $7.7 billion globally in 2020, down from a record of almost $10 billion in 2018, according to DataLend. Lending fees increased by 4.2% on a year-over-year basis in February after the GameStop onslaught, DataLend says.While securities lending accounted for $652 million, or just 4%, of BlackRock’s revenue in the fourth quarter of 2020, there’s little cost involved and the risks are low because borrowers have to put up collateral that equals or exceeds the value of the loan. At both BlackRock and State Street Corp., the second-largest custody bank, the value of securities on loan as of Dec. 31 jumped at least 20% from a year earlier, to $352 billion and $441 billion, respectively.“Every little bit counts with indexes,” said John Rekenthaler, vice president of research at Morningstar. “You’re scraping nickels off the street, but there’s a whole lot of nickels.”Others could take a hit, too. Just as Robinhood Markets is able to offer zero-commission trades by selling its order flow to Citadel and other market makers, asset managers typically pass on some of their securities-lending revenue as a type of client rebate.“It’s very important to remember that institutional investors earn substantial returns from participating in the securities-lending market,” Citadel’s Griffin said at the GameStop hearing. “That accrues to the benefit of pension plans, of ETFs, of other pools of institutional lending that participate in the securities lending market.”(Adds data on lending fees after the short-interest chart.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Personal finance guru Suze Orman said the receipt of a tax refund indicates "something's radically wrong," since the money returned to filers could otherwise have accrued value over the period it stood in the government's possession.
Stock-market timers, who as recently as two weeks ago were irrationally exuberant, have reacted to the market’s recent correction by beating a hasty retreat. Consider how quickly the Nasdaq-focused stock-market timers that my firm monitors have jumped on the bearish bandwagon. As recently as Feb. 12, their average recommended exposure level stood at 88.9%, which was higher than 97.9% of all daily readings since 2000.