This podcast is all about quantitative finance and financial history. Subscribe to hear about financial markets, derivatives, and how investors use quantitative tools from statistics and corporate finance theory. Included are interviews with some of the most interesting thinkers in finance. Occasional longer form financial documentaries, open up fascinating elements of financial markets history. Patrick Boyle is a quantitative hedge fund manager, a university professor, and a former investment banker. To contact Patrick visit http://onfinance.org Find Patrick on YouTube at: https://www.youtube.com/c/PatrickBoyleOnFinance DISCLAIMER:This podcast is not affiliated with any financial institution. The information provided is for entertainment purposes only and does not constitute financial advice. Those seeking investment advice should seek out a registered professional in their home jurisdiction and confirm their credentials on your national regulator's website. Patrick Boyle is not responsible for any investment actions taken by viewers and his content should not be used as a basis for investment or other financial decisions.
Gamestop Selling New Shares $GME
Two months after Reddit day traders took GameStonk ( $GME ) shares to surprising heights in a massive short squeeze, the video game retailer is finally trying to cash in. On Monday, it announced plans to issue up to 3.5 million new shares worth $650m via an “at-the-market” offering, or ATM. The structure allows the issuer to raise cash bit by bit over the course of months or years. This is reasonable opportunism. Despite a pullback, GameStop shares are still up 900 per cent this year. If successful, the share sale will equate to 5 per cent of outstanding stock. For the army of diamond handed faithfuls, the dilution is a small price to pay in exchange for turnaround plans. Ryan Cohen, co-founder and former chief executive of online pet supply retailer Chewy (The new Pets.com), is leading the push to transform the brick-and-mortar retailer into an online-first operation. Patrick's Books: Statistics For The Trading Floor: https://amzn.to/3eerLA0 Derivatives For The Trading Floor: https://amzn.to/3cjsyPF Corporate Finance: https://amzn.to/3fn3rvC Patreon Page: https://www.patreon.com/PatrickBoyleOnFinance Visit our website: www.onfinance.org Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle YouTube Channel: https://www.youtube.com/c/PatrickBoyleOnFinance/videos
The Archegos Capital Blow-up
Archegos Capital: The little-known family office of Bill Hwang convinced almost every big bank to lend enormous sums to it. One of the so-called Tiger Cub veterans of Julian Robertson’s Tiger Management fund, Hwang was, after all, a man who had run into trouble before, having been banned from trading in Hong Kong and fined millions in the US to settle illegal trading charges in 2012. Hwang, used to run a hedge fund called Tiger Asia, but he returned outside money after his trading misadventures. Now he is the man behind Archegos Capital, the family office that has become a stark example of what happens when banks give out too much leverage and call it back all at once. Bill Hwang had been flying under the radar until his bet on ViacomCBS ran into trouble last week. The plunge triggered margin calls, a bank’s way of saying, “put up more cash or we’re selling your positions”. What followed was a wave of selling by banks that wiped $33bn off the companies involved on Friday alone. By some accounts, share sales by Hwang’s various counterparties have already topped $30bn, with more damage expected to follow. That spelt trouble not only for Hwang but also the top banks including Goldman Sachs, Morgan Stanley, Credit Suisse and Nomura which extended billions of dollars in credit to allow Archegos to make highly levered bets on US and Chinese stocks. We learned on Monday that the banks had attempted to co-ordinate efforts to limit the mayhem. Those talks failed and chaos ensued. Patrick's Books: Statistics For The Trading Floor: https://amzn.to/3eerLA0 Derivatives For The Trading Floor: https://amzn.to/3cjsyPF Corporate Finance: https://amzn.to/3fn3rvC
The Collapse of Greensill Capital
SoftBank-backed Greensill (a fintech company) lent billions of dollars to companies that included the highly indebted metals conglomerate GFG Alliance, silicon valley Construction Technology company Katerra and West Virginia mining company Bluestone Resources. These loans were packaged into bonds which were sold as a fund by Credit Suisse. Todays episode explains what Greensill did and what went wrong.
The Next Hedge Fund Scandal
What is the latest free money for Wall Street Hedge Funds? SPAC Arbitrage, which is an investment strategy that seeks to acquire shares or units of a special purpose acquisition company (“SPAC”) at or below its net asset value (“NAV”) in order to generate a return through either: An exit at a premium to NAV once the SPAC announces a business combination An exit at NAV, being the IPO price plus accrued interest, while keeping the SPAC Warrant Izzy Englander’s Millennium Management increased its investments in blank-cheque companies almost six-fold last year as hedge funds poured tens of billions of dollars into Wall Street’s hottest investment product. The New York-based group, which has $47bn under management, had $4.4bn invested in special purpose acquisition companies as of December, up from $750m at the end of 2019, making it the top hedge fund buyer of such vehicles, according to data compiled by Spac Research. Hedge funds have embraced Spacs because they see the investments as having limited risk — and huge potential upside. Early backers can park cash in the vehicles for up to two years, accumulating interest, while receiving warrants that can be converted into relatively low-priced shares once a blank-cheque company merges with another business. Chamath Palihapitiya has launched six SPACs on his quest to bring SPACs with tickers IPOA to IPOZ to market. Three of the SPACs have completed deals, one has a pending merger and two are still searching for targets. He has registered with the SEC to launch seven more in 2021. Palihapitiya has also been involved with six SPACs as a member of the private investment in public equity, commonly referred to as the PIPE. The investor tweeted last Friday to “trust the process” after a short report from Hindenburg Research attacked his recently completed SPAC deal Clover Health Investments (NASDAQ: CLOV).
The Infinite Money Machine
The story I am about to tell you will contradict almost everything I have taught people about risk and return, about how easy it is to make money and about arbitrage in markets. Today I’m going to tell you how an experimental physicist Konstantin Anikeev discovered an infinite money machine and used it to make $310 thousand dollars. In addition he made this money in such a way that the IRS could not even tax him on the income. because Konstantin doesn’t have to pay taxes on his gains, he is left with enough money to buy a Lamborghini Huracan and get it wrapped in gold. It is reasonable to believe that he has achieved “The FX Trader Lifestyle”
Top Five Corporate Scandals of The Century
In today's Podcast we look at some of the biggest corporate scandals since the turn of the century. They are listed in no particular order - let’s see if there is anything we can learn from them.