this thread is for posting matt levine quotes in

JPMorgan made money that it did not, you would have to say, "deserve" to make

Probably what *this* should be called.
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Oct 26, 2021 5:46 pm

I assume that the world will eventually reach an equilibrium in which (1) every single company, government, person, etc., can certify that they have net zero carbon emissions, but (2) the world keeps emitting carbon. (For instance, every tree on earth will be sold multiple times to carbon emitters to offset their carbon, etc.) “Must be aliens,” people will say.

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Re: this thread is for posting matt levine quotes in

Post by groff_enthusiast » Tue Nov 02, 2021 1:53 pm

Rylinks wrote: Tue Oct 26, 2021 5:46 pm I assume that the world will eventually reach an equilibrium in which (1) every single company, government, person, etc., can certify that they have net zero carbon emissions, but (2) the world keeps emitting carbon. (For instance, every tree on earth will be sold multiple times to carbon emitters to offset their carbon, etc.) “Must be aliens,” people will say.
:omg:

Love it. We've made it to the point on the history circle where you can buy indulgences again and I am HERE FOR IT.
Ashenai wrote: Sat Jul 16, 2022 5:08 pmoh no

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Nov 02, 2021 6:19 pm

I suppose the lesson here is that when Zillow is overbuying you should sell them your house, and when they’re doing a fire sale you should try to buy it back. I do hope that there are predatory high-frequency house traders getting low-latency data on Zillow’s order book and trying to front-run its trades.

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Thu Nov 04, 2021 7:11 pm

If you are the CEO of a public company, I want you to consider very seriously going to an investment conference with no pants on. Your stock will go up, your shareholders will be happy and your cost of financing will go down. “Why would my stock go up because I don’t wear pants,” you ask me, and I say, shh, shh, it just will, don’t ask why. “I have my dignity, I am not going to go to an important business conference with no pants on just to amuse some apes on Reddit,” you say, and I say: You are not as committed to maximizing shareholder value as I thought you were.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Mon Nov 08, 2021 5:57 pm

The purest possible mechanism of “financial literacy” is (1) a banker comes to your school, (2) the banker tells you that to have a good life you need to start depositing money in the bank, (3) your teacher nods approvingly, (4) you believe them and deposit money in the bank and (5) the bank steals it.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Mon Nov 15, 2021 7:44 pm

In general it is my theory that when Musk is loud, annoying and funny on Twitter, that is good for Tesla’s stock price; that attracts the attention of loyal fans who will bid up the stock. But it is not working here, I suppose for the obvious reason that the particular loud, annoying, funny thing that Musk is doing on Twitter is dumping billions of dollars of Tesla stock.

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Thu Dec 02, 2021 9:00 pm

Yes! Yes! Yes! “I will buy a painting, and then I will turn it into an NFT by lighting it on fire, and then I will sell you the NFT, except that when I said ‘lighting it on fire’ I actually meant ‘hanging it on my living room wall.’” Not that lighting it on fire made any more sense! Still!

I love this so, so much; I cannot stress enough how much I love it. Some rich guy will buy a multimillion-dollar painting and then you can just buy shares of The Fact That A Rich Guy Has A Painting. Do you have the painting? No, he does. But you have the NFT. Come on.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Mon Dec 06, 2021 6:46 pm

The all-time champion of this is Frank Perkins Hixon Jr., who tipped his girlfriend and his father, Frank Perkins Hixon, about some inside information that the girlfriend and Frank Sr. then traded on. Confronted with a list of names, including both the girlfriend and Frank Sr., Frank Perkins Hixon Jr. said “nope, don’t recognize any of them.” This did not go well.

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Re: this thread is for posting matt levine quotes in

Post by Luna » Mon Dec 06, 2021 8:58 pm

what a guy

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Wed Dec 08, 2021 6:58 pm

This person put $400,000 into this trade and lost all of it.

Is this bad? I don’t know. It seems bad. How do you prevent it? At some level you might want each retail investor to have some trusted fiduciary financial adviser and have to run all of their trades through that adviser. You call up the adviser and say “hey I’d like to put all my money into Alibaba call options” and the adviser says “are you sure” and you say “yes” and she says “this is unbelievably dumb” and you say “nonetheless” and she says “I’ll let you put 10% of your money into Alibaba call options, max,” and you say “no I want all of it” and she says “nope” and her ruling is final. Obviously the market cannot actually work like this. You have to be able to do the dumb things that you want to do. Sometimes you shouldn’t, though.

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Re: this thread is for posting matt levine quotes in

Post by groff_enthusiast » Mon Jan 03, 2022 8:00 pm

Ashenai wrote: Sat Jul 16, 2022 5:08 pmoh no

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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Tue Jan 04, 2022 12:31 am

can you explain what that means because it sounds to me like big money people jerked off and jizzed hundred dollar bills all over the place and then rich people in suits said mmmhmm mhmmm and rubbed the money all over them and then went and murdered some poor people by dropping giants crates of hundred dollars bills on them
u gotta skate

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Jan 04, 2022 12:44 am

The simplest weirdest thing about the spike in repo rates two weeks ago is that there was a day when big banks could borrow money at around 2%, unsecured, overnight, and lend it out overnight, secured by Treasuries, for at least 5%, maybe as high as 10%. On Sept. 17, overnight Libor, a measure of banks’ unsecured borrowing costs, was about 2.15%, up from about 2.11% the day before[1]; the federal funds effective rate, another measure of unsecured bank borrowing, was 2.30%, up from 2.25% the day before. Meanwhile the Secured Overnight Financing Rate, a broad measure of the cost of repo, that is, overnight borrowing secured by Treasuries, was at 5.25%, up from 2.43% the day before. The 99th percentile SOFR borrower paid 9%, and rates as high as 10% were reported. The cost of unsecured borrowing for banks went up a little; the cost of secured borrowing against Treasuries shot up a lot.

The world should not work that way: If big rational financial actors have the capacity to borrow at 2% and lend risk-free at 5% or 10%, they should do that all day long, but really they should only be able to do it for a few minutes until the rates converge. Like there’s a lot of money over here, not enough money over there, you connect a pipe between them and collect a fee until the amounts level out, I don’t know, this is kind of how finance works.

But that’s not how it worked on Sept. 17, and repo rates only got back to normal (SOFR on Friday was 1.82%, versus 1.83% for fed funds and 1.83% for Libor[2]) after the Federal Reserve intervened by setting up its own pipe and lending in the repo market. A lot of people have talked about a lot of causes for this, and I will list some here as long as you promise not to email me to say “you are missing the most important cause which is that Freedonia’s central bank was liquidating its Bitcoin portfolio” or whatever. Post-crisis liquidity regulation, and real economic needs for liquidity, have made it more important for banks to hang on to their money, so they might not want to lend out money even at very attractive rates. Leverage regulation has made it more important for big banks not to borrow, so they might not want to borrow to get more money to lend out at very attractive rates. The repo market is much bigger than the fed funds market, so if you actually tried to suck money from fed funds to repo you would quickly use it all up. “Banks” in common usage are actually bank holding companies, and the actual banks that do the borrowing have limits on their ability to move money over to their affiliated broker-dealers that do the lending. Lots of other stuff too; the essential nature of the problem involves the absence of a pipe where a pipe should be, which means that its explanation will be sort of specific and finicky and plumbing-related.

But here I want to abstract away from that stuff and just focus on the big simple weird thing—that during the repo spike banks could still borrow at 2% even as they were lending at 5 or 10%—and what it tells you. One very very simple thing that it tells you, one that I am almost embarrassed to mention here because it is so obvious, is that the repo spike was not an indication of a crisis for banks. The fact that the big banks could, at the height of the repo spike, borrow unsecured—without collateral, based only on their own financial strength—at around 2% means that investors just were not particularly worried that banks were running into trouble. The repo spike was bad for (some) hedge funds and non-bank broker-dealers, people who fund themselves in the repo market and don’t have access to bank-type borrowing. But the banks were fine.

“Fine” isn’t quite the word. The second thing to notice is that the repo spike was an indication of a big opportunity for banks. Like, sure, the fact that banks could borrow at 2% and lend at 10% was not arbitraged away, which means that not enough banks were doing it, but the fact that those rates printed means that somebody was doing it. Bloomberg’s Yalman Onaran and Shahien Nasiripour report that one of those somebodies was JPMorgan:
Behind the scenes, lenders such as JPMorgan Chase & Co. have begun offering more money, lured by much higher returns than they get parking it at the central bank, according to executives in the market.

The result: Banks have offered enough to burnish their earnings. Yet it’s too little to let the market function as quietly and smoothly as it has for the much of the past decade. The dysfunction has kept the Federal Reserve pumping in money to ease the pain of hedge funds and broker-dealers that need to finance their Treasury holdings. ...

When rates recently peaked at 10%, the gap with fed funds was 8 percentage points. A bank providing $40 billion could make $8.8 million in a day. That would exceed $60 million in a week. That’s still dwarfed by the profits they generate quarterly in other businesses.

Big banks won’t start reporting quarterly results until mid-October, and in the meantime, there’s no way to estimate specific profits. But market participants point to figures that they reckon illustrate the opportunity banks enjoyed.

The first involves the bid-ask spread -- the difference between the price a buyer is willing to pay versus the lowest price a seller would accept. In short-term lending markets, the gap is typically slim. One hedge fund trader said he usually negotiates hard for banks to reduce their prices by just a few basis points. But as markets gyrated, he said, it became obvious banks were scoring fatter spreads, with some shaving initial offers by 100 basis points.

Other participants pointed to the tri-party repo market, where banks borrow from money market funds and lend to other clients. One repo trader who works in that market described the spreads he saw as the craziest he’s witnessed in three decades.
Never mind unsecured borrowing: Banks could lend money to hedge funds or dealers at 5 or 10%, secured by Treasuries, and then turn around and borrow against those Treasuries from money market funds at 3 or 4%, the purest sort of pipe-connecting transaction. The money market funds mostly can’t lend directly to the hedge funds or dealers,[3] but the banks can connect them and take a (generally) tiny or (occasionally) gigantic cut.

The third thing to notice here is that, despite this being a big opportunity for banks, they mostly didn’t take advantage of it. Some did, somewhat, but the arbitrage got nowhere close to closing, meaning that banks left a whole lot of money on the table. Partly that is for regulatory reasons: Liquidity and leverage rules limited the banks’ ability to lend out the money they had or borrow more. Partly it is for genuine liquidity-risk-management reasons: Banks need to keep money around to settle customer transactions and so are hesitant to lend all of it.[4] Partly it is for sort of operational muscle-memory reasons: They forgot that this is the sort of opportunity they are supposed to seize, and how to seize it. “There are no more fed funds desks at the big banks, and the Fed staff who used to keep the wheels of the market greased are no longer there,” Glenn Havlicek tells Onaran and Nasiripour. “So when there was a funding spike, nobody remembered what to do.”

This mostly seems like a straightforwardly bad result: Markets should clear, money should move from low-value to high-value uses, banks are in the business of making that happen, and if they can’t do it then they are not doing their job and something is broken. And in particular, overnight lending secured by Treasuries is about the safest business a bank can be in, so bank-safety regulation that (1) prevents banks from doing that and (2) breaks that market is probably unhelpful.

But I tend to think about the post-financial-crisis rules mainly from a cultural perspective of “have they succeeded in making banks boring?” If they have, that is not at all an unalloyed good: If banks are too boring then they will not be doing their jobs effectively, and markets might get more exciting (and scary) to make up the difference, and also of course I will have less fun stuff to write about. But banking boredom does seem to me to be the central intended consequence of post-2008 regulation. And if you want boring banks then the repo spike is almost something to celebrate: The market went haywire and created opportunities for banks to make a profit, and they mostly passed on it because (1) the rules told them not to take risks, (2) their own internal requirements told them not to take risks, and (3) they forgot how to take risks.

[1] We make fun of Libor a lot around here as “the interest rate at which banks don’t lend to each other,” but post-scandal Libor is actually very transaction-based.

[2] There was a rate cut in between.

[3] Why not? Partly to do with clearinghouse memberships, partly to do with credit-rating and concentration limits on money market funds, partly also, though, to do with just, like, who has whose phone number and who has set up repo agreements with whom. Banks are in the business of intermediating transactions; their job is to know which hedge funds need money and which money market funds have it, etc. The money market funds’ job is not to know which hedge funds to call, so they don’t.

[4] Onaran and Nasiripour point out that “banks have worried about the stigma of using the Fed’s overdraft facilities, where they can borrow -- or temporarily carry a negative balance -- as long as they pay it back at the end of the day. That hasn’t been used since the crisis. ‘No bank will ever go negative at the Fed any more,’ JPMorgan Chief Executive Officer Jamie Dimon told reporters last week. ‘In the old days, you would go negative during the course of the day by huge sums. So these things just change the nature of the money markets.’” If you can’t go negative during the day, then you have to manage your money so as to never get below zero, which means that you can’t take advantage of as many intraday opportunities.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Jan 04, 2022 7:02 pm

WAGMI

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Re: this thread is for posting matt levine quotes in

Post by Blissful » Wed Jan 05, 2022 10:12 am

WAGYU
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Re: this thread is for posting matt levine quotes in

Post by groff_enthusiast » Wed Jan 05, 2022 4:10 pm

WAGARA
Ashenai wrote: Sat Jul 16, 2022 5:08 pmoh no

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 07, 2022 5:23 pm

Nothing in this column is ever legal advice, but my occasional footnotes about the smart way to do crime are especially not legal advice! Do not do this!

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Re: this thread is for posting matt levine quotes in

Post by Blissful » Sat Jan 08, 2022 3:22 pm

Rylinks wrote: Fri Jan 07, 2022 5:23 pm Nothing in this column is ever legal advice, but my occasional footnotes about the smart way to do crime are especially not legal advice! Do not do this!
lol
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Wed Jan 12, 2022 6:56 pm

You could imagine the CEO barricading himself in his office and saying “who put you in charge? ‘Shareholders’? Sounds fake.”

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Re: this thread is for posting matt levine quotes in

Post by Skeletor » Thu Jan 20, 2022 6:52 pm

Confounding legal posturing notwithstanding, this would seem a strange time for the 76ers to end their contract with Color Star, the Cayman Islands-registered, Dubai-based ready-mix concrete outfit pivoting to Web3 technology and hyping the forthcoming launch of a celeb-populated metaverse.
wow, [you]. that all sounds terrible. i hope it gets better for you

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Mon Jan 31, 2022 6:58 pm

What happened is that prosecutors would investigate a bank’s Libor dealings and find electronic chats like this:

Derivatives trader: Hey what Libor are you submitting today?

Submitter: I think the right number is 0.525%.

Derivatives trader: It would help me out a lot, in terms of profiting on my derivatives, if you would lie and submit a higher number.

Submitter: What if I lied and submitted 0.545%, which is not what I think is the right number?

Derivatives trader: Perfect, I appreciate it, in exchange for your dishonest criminal conduct I will happily pay you a bribe of one case of Champagne.

Submitter: Your bribe is acceptable to me, pleasure doing crime with you.

Derivatives trader: Hope we don’t go to jail!

Submitter: Lol. We should, though, what with the crimes we’re doing!

And then they would charge the trader with wire fraud, and the jury would look at the chats and be like “well yes this sounds like wire fraud” and convict them. Seriously the chats are bad!

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Mon Feb 07, 2022 8:34 pm

Credit Suisse wants to be in the business of financing oligarchs’ yachts, because (1) this encourages the oligarchs to do more business with Credit Suisse and (2) there is a certain sort of branding halo, for a Swiss bank, to be able to say “oh of course we do a lot of oligarch yacht financing.” But if there’s ever a wave of defaults on oligarch yacht loans and Credit Suisse runs into trouble with its capital levels, it will have to call its regulators and say “hey we are low on capital” and the regulators will say “what happened” and Credit Suisse will have to say “the oligarch yachts sank” and the regulators will be really mad.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Feb 08, 2022 7:18 pm

A good tip in big business is that if you ever find yourself sending an unsolicited nine-figure bid for something, you should end your bid letter by saying “And yes, this is totally legit.” If you do not end that way, the person receiving your unsolicited nine-figure bid letter might wonder if it is in fact legit; they might conclude that it is not, and throw the letter away instead of calling you to negotiate.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Thu Mar 10, 2022 6:55 pm

One thing that happens in my line of work is that people who are doing a fun weird trade will sometimes call me up and tell me about it, not so much because they think that coverage might be helpful in making the trade pay off, but just because they correctly think that I will appreciate it aesthetically. They want to brag about having found a good trade, and maybe share a laugh about it with someone who also enjoys a good trade. Obviously I am happy to get these calls.

A couple of times over the past few weeks, people have called me to talk about a Parker Drilling trade. Parker Drilling Co. is a small ($268 million market cap as of yesterday) oil services company listed on the New York Stock Exchange. It would prefer to be a private company, presumably for the usual reasons that public companies sometimes regret being public. (Parker’s board of directors “has determined that the costs of being a public reporting company outweigh the benefits thereof,” it says.) The ordinary way for a public company to become a private company is for someone—typically a private equity firm, perhaps assisted by the company’s chief executive officer—to make an offer to buy up all of the stock from the public shareholders. But this has some disadvantages. For one thing, it requires a lot of cash, since you have to buy 100% of the stock, normally at a premium to the market price. For another thing, this approach normally gets rid of all of your public shareholders, or at least all but a few who are involved in the buyout group, and maybe you want some of those shareholders to stick around.

If your plan for going private is just “we want to be a private company, but we want to keep the same shareholders and not really spend any money,” that is mostly just not how it works. We talked about this back when Elon Musk got the idea that he would prefer for Tesla Inc. to be private, but with the same shareholders and without spending much money. It doesn’t work that way, I, and his advisers, and eventually the Securities and Exchange Commission, all told Musk. A common misunderstanding.

But there are ways to do it, more or less, at least in small size. (Parker Drilling, not Tesla.) The legal division between “public” and “private” companies is basically 300 shareholders: If you have 300 or fewer holders, you can de-list your stock and stop making public filings; if you have more than 300 then you have to stay public.[3] At Parker Drilling, as at many companies, a lot of the shareholders by number only own a few shares; if you could just get rid of all the shareholders owning fewer than, say, 100 shares, then there would be fewer than 300 shareholders left, and you could delist your stock and stop making public filings. You’d still have a bunch of shareholders—up to 299—and at least initially they’d still be public-type holders, and they could still trade stock with each other, but you wouldn’t have to make SEC filings or generally deal with being public.

And so companies sometimes do this, “go dark”[4] by getting rid of their small shareholders. You still have to pay the small shareholders, but it’s not a huge use of cash because they don’t have very many shares. If 299 shareholders own 99% of your stock, you can go dark by buying back only the remaining 1%.[5] That’s, uh, 99% cheaper than trying to buy every share at a premium.

One way to do this is an “odd-lot tender offer,” in which the company offers to buy back stock at a premium from anyone with 99 or fewer shares. If enough of those shareholders tender, then the company will get below 300 shareholders and be able to go dark. They don’t have to tender, though, so it’s a bit uncertain. Parker Drilling chose a different approach, which sounds much sillier when you read it but which is actually quite sensible. Here is its announcement from September:
In order to deregister its shares of common stock, the Company must reduce its number of stockholders of record to below 300. To accomplish this, the Board is proposing to amend the Company’s amended and restated certificate of incorporation to effect a 1-for-100 reverse stock split, in which holders of less than 100 shares of the Company’s common stock would be cashed out at a price of $30.00 per pre-split share in lieu of fractional shares. Such price represents a premium above the common stock’s closing price on September 10, 2019. Stockholders owning 100 or more shares of the Company’s common stock prior to the reverse stock split would remain stockholders in Parker. The number of shares such continuing stockholders would own following the proposed stock splits would be unchanged, as immediately after the reverse stock split a forward split of 100-for-1 would be applied to the continuing stockholders, negating any effects to them. Parker estimates that approximately 37,446 shares (or less than approximately 0.2% of the shares of its common stock currently outstanding) would be cashed out in the proposed transaction and the aggregate cost to the Company of the proposed transaction would be approximately $1,100,000, plus transaction expenses, which are estimated to be approximately $800,000, all of which Parker intends to fund using cash-on-hand.
Everyone who owns fewer than 100 shares would automatically get cashed out at $30 per share through the reverse stock split; everyone who owns 100 shares or more would notice a momentary hiccup as their 100 shares became 1 share, but then they’d split right back again and everything would be the same as before. (Except the company would not be listed on the NYSE and wouldn’t file public reports.) They’d still own the same number of shares in the same company, but all the small shareholders would be gone.[6] There were few enough of them that it would only cost $1.1 million.

Unlike a tender offer, this would be mandatory for all small shareholders, and so it requires a shareholder vote, and Parker Drilling filed a preliminary proxy statement asking shareholders to vote for it. It mentioned that its biggest shareholders intend to vote in favor, presumably because they agree with the board that the costs of being public for Parker Drilling outweigh the benefits, including the benefits to them of having a liquid public stock. So it looked reasonably likely to happen. And, as the announcement said, that $30 price was a nice premium: Parker Drilling’s stock closed at $19.59 per share the day the split transactions were announced, and it has mostly been below $20 since. If you had 100 shares, they were worth about $19.59 each; if you had 99 shares, you could cash them out at $30 each.

This is the point at which people started to call me to tell me to brag about the trade. You know what the trade is, right? It is embarrassingly simple, really, hardly worth mentioning. It’s just: Buy 99 shares of Parker Drilling stock for under $20 each, wait for the stock-split stuff to happen, and cash them in for $30. It’s free money. The downside of the trade is that it’s only about $1,000 of free money: It only works for 99 shares or fewer, so it is not an institutional-size trade. No hedge fund is running this arbitrage for its clients, though I would not be surprised if one or two hedge fund analysts are doing it in their personal accounts, just on principle. The upside, though, is that because of the size limit, the arbitrage doesn’t close: You can’t run this arbitrage by going out and buying Parker Drilling shares until the price converges on $30, because if you buy more than 99 shares you can no longer get the $30. So the stock never really traded up much. Nobody can get all that much free money, but because of that everyone can get their share of the free money.

Oh hahaha the other downside to the trade is that it’s not an arbitrage at all, there is and was absolutely no guarantee that Parker Drilling would actually go through with this, and the more people who noticed the trade the less likely it was that it would happen.

And so in fact, this Monday, Parker Drilling announced that the party was over. Now it is proposing to do the reverse split at a ratio of “not less than 1-for-5 and not greater than 1-for-100,” with the exact ratio set “at the discretion of the Board … without further approval or authorization of our stockholders.” If you have 99 shares, you might get cashed out at $30 per share, or you might just get rolled over into 99 shares of a no-longer-publicly-listed Parker Drilling.[7] (If you have four shares you’ll definitely get cashed out, but then you’ll make like forty bucks.)

The company also explained the reason for the change, which is of course that people were having too much fun:
After announcing on September 10, 2019 the stock splits at a proposed reverse stock split ratio of 1-for-100 to be followed by a forward stock split ratio of 100-for-1 and the proposed transaction to deregister and delist its common stock, the Board and its advisors observed a substantial increase in trading of the Company’s common stock. While this increased trading activity had only a nominal effect on the number of holders of record, it led to a significant increase in the number of shares that would be cashed out in lieu of receiving fractional shares at the previously proposed reverse stock split ratio, which would make the stock splits and the proposed transaction significantly more expensive for the Company.
Oh well! I don’t know what the lesson is here. Perhaps just the classic lesson that, if you find a $20 bill on the ground, it is probably not worth picking up.

[3] The rule refers to shares “held of record by 300 or more persons,” and *record* ownership of stock is very different from what we ordinarily think of as stock ownership: Most of the time, if you own stock in a brokerage account, you are not a record owner, and your ownership is aggregated up with all of the broker’s other customers. I would prefer not to discuss this further, as it is a weird complication that doesn’t actually matter for the story in the text. “We intend to treat persons who hold shares of our common stock in ‘street name,’ through a bank, broker or other nominee, in the same manner as persons who hold shares of our common stock in their own names,” says Parker Drilling, meaning that you can get cashed out like a record holder even if you aren’t one. But see footnote 7.

[4] The preferred term for a public company that delists its stock and stops making public filings is “going dark,” not “going private,” which is normally used to refer specifically to becoming a private company when someone buys all the stock. This distinction is not always observed; see, e.g., Elon Musk.

[5] Those numbers are made up but not unrealistic. Bloomberg tells me that about 94% of Parker Drilling’s stock is owned by 71 big disclosed holders; presumably if you added the 200 biggest undisclosed (i.e. retail) holders you’d get above 99%. These numbers are based on historical disclosures, mostly as of June 30, and, for reasons we’ll get to, they may not be accurate any more.

[6] If you owned, like, 499 shares before this little dance, you’d own 499 shares afterwards too; the fractional shares would just be mysteriously rolled over as long as they totaled more than one.

[7] The obvious questions here are: (1) Wait, did more than 300 people buy 99 shares each? and (2) If they did, then won’t Parker not be able to go dark without cashing them out? I dunno man. See footnote 3; technically those people may not be record holders, so you can go dark without cashing them all out. (“Only a nominal effect on the number of holders of record” suggests that’s the idea.) Another possibility: A lot of the people who got into this trade for the free money might get out after this announcement, so there will end up being fewer than 300 holders of odd lots.

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Thu Mar 10, 2022 6:56 pm

[Editor's note: this quote is from 2019 so you can no longer make like fourty bucks]

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Tue Mar 29, 2022 6:21 pm

I used to think that this didn’t matter, because options trading is either (1) for professionals, who can afford $5,500 a throw, or (2) for retail weirdos, who can’t be the driving force of corporate finance. But I do think that an important lesson of last year’s GameStop Corp. meme-stock situation is that retail options weirdos are in fact the driving force of corporate finance

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Wed Mar 30, 2022 5:35 pm

When I was an investment banker, I would occasionally interview undergraduates looking to get banking jobs. I am trying to imagine what I would have said if one of them had walked into the room, pulled out a computer, and said “I’m sorry, do you mind? I spent 12 hours preparing a hyperlinked document with answers to a range of possible interview questions, and I’d like to refer to it during our interview. For instance, if you were to ask me ‘what are your strengths and weaknesses,’ I’d click into the ‘Behavioral’ section, then the ‘Strengths & Weaknesses’ subsection, and I would read off my bullet-pointed list of responses. I think this will make this process more efficient and informative for both of us.”

I think I would … obviously have hired that person on the spot? That person has what it takes to be an investment banker! Ooh, so she has to look at her notes to do an accretion/dilution model, who cares, you can look at your notes on the job. That’s a person who obsessively prepped for a meeting! “Obsessively preps for meetings” is the whole job of a junior investment banker! What else could the banks possibly be hiring for if not that?

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Thu Mar 31, 2022 5:35 pm

Sure, you can hedge your TAS exposure by buying futures in the regular market, but you can’t manipulate the settlement price by “banging the close.” Those things are very hard to distinguish from each other, unless you send your colleagues dumb electronic chat messages saying like “bro i m banging the close, hope i dont go to prizon.”

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Re: this thread is for posting matt levine quotes in

Post by Khaos » Thu Mar 31, 2022 6:06 pm

you can hedge your tas exposure by making sure the on-screen button inputs don't show left and right d-pad inputs at the same time

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Re: this thread is for posting matt levine quotes in

Post by Skeletor » Thu Mar 31, 2022 6:37 pm

just a typo man, i was fucking my zipper. you know, banging the clothes
wow, [you]. that all sounds terrible. i hope it gets better for you

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