Bag of Snakes

Summary

Money Stuff: The Podcast — "Bag of Snakes" (May 1, 2026)

Episode Overview

In this week's episode, host Matt Levine and Bloomberg reporter Katie Greifeld dive into recent Wall Street oddities, with a particular focus on Bill Ackman’s new closed-end fund (the titular "bag of snakes"), challenges in the multi-strategy hedge fund world (featuring Bobby Jain's struggles), a playful analysis of activist Boaz Weinstein’s latest moves, and wild short squeezes around Avis. The tone is witty and conversational, moving seamlessly between technical nuance and gleeful market gossip.

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Key Discussion Points & Insights

1. Bill Ackman’s Pershing Square USA (PSUS) IPO: The "Bag of Snakes" [03:15–14:05]

• Ackman’s Ambitious Launch: Ackman finally takes Pershing Square USA, a closed-end fund, public after several years and multiple pivots in strategy (from a projected $25B fund to reality—a $5B fund).
• Premium vs. Discount: Despite initial hopes it would trade at a premium, PSUS launched and traded at a discount to net asset value—consistent with most closed-end funds.
  • “It really had to trade at a premium to, like, get $25 billion IPO done. You really have to think that the thing will trade up. No one did. So that IPO didn't happen.” – Matt Levine [03:21]
• Dual IPO Mechanics: Investors received shares in both the closed-end fund and the Pershing Square management company, but the blended value ended up slightly down from the IPO price.
• Favored Investors: "Anchor" investors who committed pre-IPO received more favorable allocations of the management company shares than public IPO participants, splitting the upside.
  • “It's a little awkward. Yeah, that's the dividing line... The favored investors did well and the disfavored investors did poorly.” – Matt Levine [09:23]
• Structural Musings: Levine ponders why closed-end funds nearly always trade at discounts in the real world, and why Ackman didn’t choose the ETF route—highlighting his quest for “permanent capital” and allusions to Buffett.
  • "He wants it to be a company... He wants it to be Berkshire Hathaway." – Matt Levine [07:20]
• Publicly Listed Hedge Fund Management: Few hedge fund managers go public. Levine explains that opaque, volatile revenue streams and multi-layered fee structures often make these listings unappealing to public markets.
  • “Because a lot of hedge funds have bad income, like they're very volatile income. And so it is hard to sell that to the public. Pershing Square thinks it has built a better mousetrap…” – Matt Levine [12:06]
• Ackman Buys In: Ackman tweets he’s buying PSUS and PS in the open market, a classic PR move to reinforce his bullishness.
  • "Bill Ackman, man, not bird." – Katie Greifeld [13:50]

2. Multi-Strat Hedge Fund Woes: The Bobby Jain Story [15:17–20:17]

• Jain Global Retreats: Bobby Jain, former Millennium star, returns outside capital and essentially unwinds his fund, admitting the startup multi-strategy hedge fund game is just too brutal—even at $6B AUM.
  • “It's hard out there for a...multi strategy hedge fund startup.” – Matt Levine [15:46]
  • “If it's not Bobby Jain, who can crack into this into multi strats?” – Katie Greifeld [15:51]
• Industry Challenges: Scale is essential in multi-strats due to enormous fixed costs (mostly portfolio manager payouts). Without it, economics don’t work.
  • “You're paying a portfolio manager $50 million a year to do the trades and you're only making $40 million a year from the trades because you're not putting enough money into them.” – Matt Levine [17:38]
• Hedge Funds vs. Startups: Unlike tech startups, hedge funds can't offer the "work for equity, profit later" deal to attract talent—portfolio managers expect (and get) immediate high pay.
  • "Those people are not like, oh yeah, in 10 years I'll 10x my money. Great. Those people are like, I want a very steady 15% a year with no correlation to the market and no drawdowns." – Matt Levine [19:09]

3. Boaz Weinstein and Private Credit BDC Tenders [20:22–24:49]

• Weinstein’s Bid for Blue Owl BDC: Recently on the podcast, Weinstein outlined his plan to buy a chunk of Blue Owl’s private credit BDC shares at a deep discount (65 cents on the dollar).
  • “He got, he accomplished the trolling whether or not he bought any shares.” – Matt Levine [20:48]
• The Market’s Response: Few sellers bit at the lowball offer, implying either confidence in the BDC’s value, inertia, or perhaps just the administrative hassle of these deals.
  • “If he had gotten filled, it would have been...scary for everyone, including him.” – Matt Levine [20:56]
  • “What they won't do is sell to Boaz for 65 cents on the dollar. Because the whole point of this product is it doesn't go down.” – Matt Levine [22:22]
• Psychology of BDC Investors: Levine admits he’s personally in the target demographic, but argues most investors in these products prize illiquidity and price stability over market pricing or fire-sale exits.
  • “It's not like outright panic.” – Katie Greifeld [23:27]
  • “You make a good point. Think of the content, Matt. Think of the content.” – Katie Greifeld [24:50] (on whether Levine should sell BDC shares to Weinstein for the podcast storyline)

4. Avis Short Squeeze: A Modern Market Circus [26:07–33:14]

• Extreme Volatility: Avis stock recently surged from ~$100 to over $700—then promptly crashed—due to a massive short squeeze.
• The Players: Two hedge funds (SRS and Pentwater) end up effectively long more than 100% of Avis, overwhelming the market’s short interest.
  • "These two hedge funds, SRS and Pentwater, were long more than 100% of the stock." – Matt Levine [26:42]
• Legal Loopholes: Pentwater skirted Section 16 “short swing profit” clawbacks by reporting most share sales as coming from accounts not recently buying, thus not subject to the law. Only a small portion triggered profits owed to Avis.
  • “So they're like, we're almost all. But we're giving the company a tip, you know.” – Matt Levine [28:32]
  • "It's wild on a number of levels. One, it's like, oh, you can just get around short swing profit rules that way." – Matt Levine [28:44]
• Company’s Response: Avis hinted on their earnings call they would investigate whether they could recover more of the short squeeze profits.
  • “Avis, they said on their earnings call, you know, we got a call from Pentwater saying, like, here's your, you know, check for a little bit of money. And they're like, we're going to look into anything we can do to recover for the shareholders, because obviously they'd rather have a billion dollars than, you know, a few million dollars.” – Matt Levine [29:44]
• Short Squeeze Mechanics: The episode serves as a mini-case: how extreme ownership dynamics and regulatory quirks create occasional market chaos, and how well-resourced funds can profit handsomely.
  • “It's like, it's baffling that I don't understand how they could have bought so much stock in one place and sold so much stock in another place. Like it's something as weird, but great trade.” – Matt Levine [32:42]

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Notable Quotes & Memorable Moments

• “I'm going to try to sell this bag of snakes...the same way it was sold to me.” – Katie Greifeld [02:36]
• “Careful analysis, not careful.” – Matt Levine, on Ackman’s IPO optimism [05:19]
• “If it's not Bobby Jain, who can crack into this into multi strats?” – Katie Greifeld [15:51]
• “65 is less than 100.” – Katie Greifeld, on why BDC holders aren’t rushing to sell [22:28]
• "Selling at $700 and then dealing with lawyers afterwards is much, much, much, much better than selling at 100." – Matt Levine [32:13]
• “You make a good point. Think of the content, Matt. Think of the content.” – Katie Greifeld [24:50]

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Timestamps for Key Segments

• Closed-End Fund / Ackman Discussion: [03:15–14:05]
• Multi-strategy Hedge Fund Struggles (Bobby Jain): [15:17–20:17]
• Boaz Weinstein Private Credit Tenders: [20:22–24:49]
• Avis Short Squeeze Analysis: [26:07–33:14]

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Tone & Style

Levine and Greifeld maintain their trademark blend of deadpan humor, technical insight, and meta self-awareness throughout the episode. Even as they dive into niche market topics—closed-end fund structures, fee pass-throughs, tender offers—there’s a sense of gleeful bewilderment at the oddities and incentives that drive modern investing.

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For Listeners Who Missed the Episode

This is an episode for anyone who delights in the absurd mechanics of modern finance: whether it’s hedge fund managers scheming for permanent capital, hedge fund startups failing in the cold light of institutional muscle, activist investors chasing discounted illiquids, or a good old-fashioned short squeeze that leaves lawyers, accountants, and executives scrambling to catch up. The "Bag of Snakes" theme runs throughout—a reminder that, as Levine puts it, “the normal thing happened.” In finance, that’s often the weirdest thing of all.

Transcript

[A]

Hi, I'm Kelly Cavagnaro, Managing director, head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter future together.

[B]

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[C]

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[B]

Bloomberg Audio Studios Podcasts, radio news.

[D]

I'm trying to buy a house.

[C]

Yeah, it's the nesting instinct.

[D]

Things in Hoboken, New Jersey, they just get wet because the city is below sea level. I'm exaggerating, but only slightly. And you know, mold is a problem and remediation of mold is a problem. And it's like, what are we gonna do? I don't know.

[C]

Can remediate that mold.

[D]

I know, and that's gonna cost money. And this, this whole thing, it's gonna

[C]

cost money and time.

[D]

Why does anyone own a house?

[C]

I ask myself that question every day. Yeah, but I want to own an apartment, but I don't. I own a house. I remediate mold. I check for radon.

[D]

Yeah, we checked for radon too. There's no radon.

[C]

We have some radon.

[D]

Oh, neat.

[C]

Yeah, yeah, that's cool. It's the whole thing.

[D]

This is a place that we live in for like five to seven years.

[C]

Okay.

[D]

And five to seven years I'm going to try to sell this bag of snakes. Yeah, same way it was sold to me. But at least you know, I'm with my good friend Matt Levine and there's microphones in front of us.

[C]

Yeah, I have no bags of snakes to sell you. Hello. And welcome to the Money Stuff podcast, your weekly podcast where we talk about stuff related to bunny, to money, to bunnies, to Bunny.

[D]

Bunny stuff.

[C]

Bunny stuff. I'm Money Stuff and I write the Matt Levine column from.

[D]

This is Very silly. I'm just Katie Greifeld. I'm a reporter for Bloomberg News and an anchor for Bloomberg Television.

[C]

Back to the snakes. Yeah. Bill Ackman, founder of Pershing Square, the hedge fund management firm, closed end fund management firm also has been talking for like two years about taking a big new closed end fund public. It's called Pershing Square USA or PSUS. And I feel like this time two years ago it was going to be a $25 billion closed end fund and it was going to trade at a premium unlike most other closed end funds, including notably Bill Ackman's other close end fund for sure. And it really had to trade at a premium to like get $25 billion IPO done. You really have to think that the thing will trade up. No one did. So that IPO didn't happen. And he came back last month with like, what we're going to do is we're going to give you free shares of the management company, Pershington Square, the hedge fund management firm. And with those free shares, that'll be enough incentive for you to buy the close end fund shares and then the whole thing will work. And it worked.

[D]

Yeah.

[C]

They went public, dual ipo, both PS Hedge Fund Management Company and psus, the Clothesline fund. They went public this week. They started trading Wednesday. They raised $5 billion for the closed end fund which you can now put to work investing in large cap public companies and uber credit hedges.

[D]

I have a few questions. I guess I just keep coming back to the point. I mean you think about, can we,

[C]

before we get to too many questions, can we just talk about. So they, they did go public, PSUs. So it's 2 o' clock on Thursday. Yeah, PSUs was trading at like 43.50 last I checked.

[D]

So sounds right.

[C]

Not a premium to net asset value. No meaningful discount to net asset value.

[D]

It did close at a bigger discount on Wednesday.

[C]

Yeah, it's up a bit today. Yeah, it closed, it closed down like sort of 20ish percent.

[D]

Yeah.

[C]

From that asset it closed 42ish and now it's at 43 and change. So you know. Yeah, well below net asset value.

[D]

I mean it just seems extremely hard to defy the physics of closed end funds.

[C]

Sure, I agree. I should stress that Bill Eichmann spent years being like you know, in 2024, he wrote in a letter, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognize that this closed end company will trade at a premium after the ipo when very few in history have done so. Yeah, careful analysis, not careful. So, yeah, so that traded down. Meanwhile, the management company is trading at like 29 bucks a share, 30 bucks a share, which if you bought in the IPO, you got one share of PSUs and 1/5 of a share of Pershing Square.

[D]

Right.

[C]

So if you do the math, you got about like 43 bucks worth of the closed end fund and about 6 bucks worth of the management company. So you lost a little bit of money as of now on the IPO. It's down from the IPO price, but it's not catastrophically done. Yeah, no, normally IPOs go up.

[D]

Normally. I mean, ideally, ideally. Yeah. Right. To the closed end fund. He did say yesterday that there are hundreds of closed end funds, but they are very different animals from what we are doing over time. We're going to compound this book value if we do anything like we've done in the past at a high rate over time and we're going to run it like a real company. I guess I just struggle to understand how this animal looks different than the other animals that are out there when it comes to closed end funds.

[C]

His hair, his eyes.

[D]

Yeah, true, true.

[C]

His Twitter. Yeah, right. Everyone who runs a closed end fund would like to compound it.

[D]

Yeah.

[C]

At a high rate.

[D]

I'm sure that's what he would have wanted to do in Europe as well, where his close end fund is trading

[C]

at a discount and compounds at a high rate, by the way.

[D]

Yeah.

[C]

Like the actual investing track record is good, you know.

[D]

Yeah. It just feels, it's feels. Yeah. It feels disconnected from the trading dynamics of the actual structure. The structure is interesting in that I really want him to launch an etf. I know he's not going to launch an etf. The discount problem would be solved. But it feels like that's a detail for him since he wants the permanent capital.

[C]

It's not just that, like.

[D]

Yeah.

[C]

Like he wants it to be a company. Like he wants it to be Berkshire Hathaway. Well, like if you can just be redeemed at any moment and like you're dealing with Jane street arbitraging. Like it's not the same thing.

[D]

Yeah.

[C]

He wants to have a permanent company with permanent capital where he can make permanent investments, not an etf.

[D]

Well, it's the Warren Buffett comparison that I also have a lot of questions about. Because how does the Howard Hughes of it all fold into this?

[C]

I have never understood that. Yes, Howard Hughes is a real company that he owns a big stake in, has offered to acquire more of it, would like to control it and use it as a platform to make investments. And then separately, there's a closing phone.

[D]

So, yeah, how do those two coexist? Are you going to compete with yourself? I mean, probably not, but it seems like you're trying to do the same thing through two different.

[C]

Yeah, I'm sure he has a plan, but I don't know that it's that. Super well explained.

[D]

Yeah, like, why would I buy shares of Howard Hughes and support your vision there if you're also doing it in the closed end fund?

[C]

It's probably a different vision. Slightly different vision.

[D]

I want to know what it is.

[C]

Yeah, sure. I don't care. I was going to say I do too, but the grandiosity with which this started and the sort of fizzle with which sort of went public is a little disappointing. This is going to be a $25 billion close end fund that trades at a premium. Now it's a $5 billion closed end fund that trades at a discount. Okay, there you go. The normal thing happened. Someone got really mad about this. This IPO sort of took place in two phases. He rounded up a bunch of anchor investors, institutions and family offices and high net worth individual invested who like committed their capital before the ipo. They're sort of like an anchor to like do the IPO. They're like, we've already got like $2.8 billion of capital. Spoken for. So the thing will, you know, have enough money. Those people got a little bit extra in the IPO. Instead of getting 1/5 of a share of Pershing Square for every share of pieces they got, they got 310 of a share. So they got an extra like 50% of the management company. And someone emailed me like a week ago being like, it's so unfair that like the favored fat cats get more than like the regular investors who buy in the ipo. I was like, look, that's always true that, yeah, venture capitalists who invest in the last round before an IPO get, you know, a better deal than people who invest in the ipo. That's not that weird. But it is kind of the, you're paying these people to anchor the deal and make sure it happens. But it is the case that like, as of like the prices right now, the people who invested before the IPO have made a little bit of a profit on the deal. People invested in the IPO have lost a little bit of money in the deal. It's a little awkward. Yeah, that like that's the dividing line. Like you split that perfectly. Where the favorite investors did well and the disfavored investors did poorly.

[D]

Yeah. I do wonder, and we've talked about this before, I also wonder when it comes to the management company, like what is the motivation to go public? There's so few publicly listed hedge funds. Man group is the one that springs to mind for me. I just wonder why.

[C]

Well, I feel like the number one reason is to get this closed on fund on.

[D]

Yeah, right.

[C]

Like as I've written a lot like you just can't get the clothes on fund. Like this is not feasible.

[D]

But if you think back to 2024, like they weren't connected. They were going to be too. I know, but I feel like they

[C]

were talking about doing an ipo. Yeah, no, I mean I think it's the same reason anyone takes any, you know, financial services company public, which is if you think that the public market would pay a high value for your ownership in your company, like, yeah, why not take some cash out? Like, you know, it's like he's sort of not the main chief investment officer of the company anymore. Like there's, you know, there's like a next generation coming up. It makes sense for him to have a publicly listed stock. But also, I don't know, for all I know they're going to do M and A. You know, for all I know the publicly listed stock will be a currency beyond just the getting the close end fund launched. It's also like they have sort of an interesting structure where like everyone's calls him a hedge fund manager. It's like sort of a hedge fund firm, but it's like it's like a closed end fund management firm. I think they would argue they have more stable recurring revenue than a lot of hedge fund firms. They're not making most of their money on totally at risk performance fees. Like they're. The way it works is like they, they get like a senior share in the performance fees goes to the shareholders and then like the junior share goes to the employees. And so they are a little bit more of a like recurring revenue play. And so I think they think that's something that shareholders value and they can monetize.

[D]

Yeah, I guess maybe another way to ask that question is why aren't there more publicly listed hedge funds?

[C]

So there's a couple of Answers One is like, because a lot of hedge funds have bad income, like they're very volatile income. And so it is hard to sell that to the public. Pershing Square thinks it has built a better mousetrap where it has less volatile income. And so, you know, because it runs like locked up, you know, investor capital with like very stable fees and you know, invests in large cap equity, it's like a, you know, it's a, it's a fairly stable revenue stream. That's one part of the answer. Like if you run a medium sized hedge fund and you have like very volatile earnings, then it's harder to take that public. My theory is that the giant hedge fund firms don't go public because their hedge funds operate like investment banks. They offer their investors a return on equity rather than offering them like all of the upside and you know, upside minus 20% performance fees. Like they take whatever they want from the investors to pay their fees. And so there's not really like another layer of equity that you can put on that. I think that's not a very clear answer, but I think that's part of the answer. Like I think of the big multi strategy hedge funds as like, this is a business and the business has equity capital and the equity capital comes from the LPs and the hedge fund. And when you think of it like that, like you don't need another layer of equity capital for the management company because the management company is just a way to pay the fees to the employees.

[D]

The good news is that we're going to be talking about the fee structure of multistrats.

[C]

Oh yeah, we are.

[D]

Later in this podcast, I just want to point out one more thing. Bill Ackman, he said on Bloomberg TV that he's been very constrained when it comes to tweeting. Something that he did tweet on Thursday morning was that he bought in the open market, both PSUs and PS.

[C]

Terrific.

[D]

Yeah, thought that was a cool little detail established.

[C]

He thinks it should trade at a premium.

[D]

Yeah, you have to invest in yourself, Matt. Bill Ackman, man, not bird.

[A]

Hi, I'm Kelly Cavagnaro, Managing director, head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights. Your mission and our vision. Working in harmony to seek the right investment opportunities. Janice Henderson, Investors investing in a brighter future together. Get the news you need in just 15 minutes.

[C]

Start your day with Bloomberg Daybreak, the podcast with a global View on the stories that matter. Hi, I'm Nathan Hager.

[A]

And I'm Karen Moscow. Join us each morning for curated stories

[C]

on current events, politics, business and foreign relations, plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise,

[A]

thoughtful take on the stories that matter.

[C]

Listen to Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen. Should we talk about Bobby Jane and the fees? Yeah, I think that if we were

[D]

trying to be thematic.

[C]

Yeah, sure. So elser in hedge funds, hedge fund managers, hedge fund managers who've maybe, you know, had somewhat disappointing weeks.

[D]

Yeah.

[C]

Bobby Jain, the founder of Jane Global,

[D]

which I don't think is going to

[C]

go public anytime soon, a multi strategy hedge fund startup from the last couple of years is returning outside capital and going back to managing money exclusively for Millennium, which is the firm that he came from.

[D]

He's going home.

[C]

Going home. It's hard out there for a. It really is strategy hedge fund startup.

[D]

I think a lot of people read this news and at least my first thought was if it's not Bobby Jane, who can crack into this into multi strats.

[C]

That's what everyone said. Right. He was like high up in investing at Millennium and also was like sort of known as the guy who built a lot of millenniums, like architecture and process. Like he seemed like a guy who could run a firm rather than just be an investor at a firm.

[D]

Yeah.

[C]

And it didn't work, apparently. And I think the answer is like, it's just really hard. These are platforms that really require scale and have a lot of fixed costs. And it's just hard to get started and cover all those fixed costs as you're like ramping up your strategies and as you're ramping up your investor base.

[D]

Yeah.

[C]

And therefore it's hard to get new investors because early on you're not earning the return that they want. And so they're like, yeah, I'll wait until you get huge and I'll stick with Millennium until then.

[D]

Yeah. I mean it has about $6 billion.

[C]

Not enough.

[D]

It's not enough. I wonder what is enough. Jane struck out on his own in 2024.

[C]

Yeah. So he's been independent for about two years and it's hard to get to scale.

[D]

Yeah. Let's talk a little bit about how pass through fees factor into this because multi strats are very expensive.

[C]

Yeah. I think that like the intuition that people have about hedge funds just doesn't apply to multi strats like Bill Ackman runs like an investment firm, right?

[D]

Yeah.

[C]

He like takes your money and he invests it in some stuff and he gives you the return minus his fees. It's not what Millennium or Jane Global do. What they do is they run some businesses, they have some desks that do some businesses. They do index arbitrage, they do basis trades, they do like some stuff that generates high expected returns with like relatively low volatility. And they combine those things into a thing that has even lower volatility. And they sell that to investors. They say, we're going to give you alpha, we're going to give you like very stable medium sized returns. And when you do those businesses, there's a certain amount of capacity in those strategies. And if you have too much money for the capacity, then you can't do it. Right. And so like these firms will sometimes return money because they don't have enough capacity to run the money that the investors will give them them. But if you have too little capacity, then you can still do the trades. But you're paying a portfolio manager $50 million a year to do the trades and you're only making $40 million a year from the trades because you're not putting enough money into them. Right. So that's a lot of what's happening here is like the going rate for someone to sit in these seats and do these trades is $50 million or something. And if you're not giving him enough capital, then he's only earning $40 million and you're not earning a return for your investors. I think that's a lot of what happened here. Like they were earning returns, running their strategies, but the amount they were paying their portfolio managers, it wasn't enough for the investors.

[D]

Yeah, it's a sad story, right?

[C]

I mean, look. Yeah, the essential problem here is that hedge fund portfolio managers get paid a lot, which is, you know, a nice problem for them.

[D]

Yeah.

[C]

But it makes it hard to become an employer of hedge fund portfolio managers.

[D]

I like how you compared it to tech startups in the newsletter that you wrote on this topic that you think about tech startups. Employees come in and they, you know, are paid pennies, but they get a lot of stock and invest. Investors are content to wait out for their big payday. Right.

[C]

Everyone has like investors in a startup company have a long term horizon where they're like, I know I'm not going to get any return on my capital in the first year, but in 10 years I'll get a lot. I'll get a huge return on My capital. Right. You know, if things go well and employees are kind of taking the same bargain at a multi strategy hedge fund, if you're like competing for the audience that is giving money to like Millennium and 0.72 and whatever. Those people are not like, oh yeah, in 10 years I'll 10x my money. Great. Those people are like, I want a very steady 15% a year with no correlation to the market and no drawdowns. Right. Like, those people are not the ideal investors in a startup that is not currently earning its cost of capital. And similarly like the employees. I don't know, man. I'm sure there are some portfolio managers at hedge funds who are like, I'll work for nothing in exchange for huge equity. Right. I mean there are famous stories, right. Like Jeff Bezos left De Shaw to gamble on himself. But you know, a lot of them are like getting $50 million a year over here. I'd rather keep getting $50 million a year.

[D]

Yeah, I'm just, I'm just doing the math, man. It doesn't, it doesn't work out.

[C]

Right. Should we move on to another?

[D]

Yeah, we have a lot to cover.

[C]

Friend of the show hedge fund manager had a disappointing week.

[D]

An actual friend of the show, Boaz Weinstein.

[C]

Boaz Weinstein came on the pod a few weeks ago to talk about how he was bidding to buy, I don't know, 5 or 10% of OBDC 2, the Blue Owl private credit fund.

[D]

Audacious.

[C]

He got less than 1%. I don't think think he's that disappointed. I mean, as I said on the podcast, it was not zero percent trolling. Yeah, he got, he accomplished the trolling whether or not he bought any shares.

[D]

Yeah.

[C]

And also as you said on the podcast, like if he had gotten filled, it would have been sort of scary for everyone, including him. It would have been like, oh wow, people are really panicking about these private credit funds. But the fact that he didn't get that many shares suggests that like, yeah, everyone's fine, it's fine.

[D]

Yeah, it was an interesting experiment. He pulled it off and we got an interesting read on how folks are actually feeling.

[C]

Yeah, it's very hard for me to know the psychology of investors in private credit non traded BDCs. And I want to emphasize that I say that as an investor in a non traded bdc, as we'll talk about next week, I own a small amount of, of a blue L non traded pdc. Not this one. But who are these people like me? Some of them are people who are like, these credits are bad. I want my money back. And if the best I can do is boaz giving me 65 cents on the dollar, I'll take it. Right. A few of those people. Right. You got some take up. A lot of them I think are like, I would like to not be involved in this conversation. I would like my money back at 100 cents on the dollar, which all these funds offer, you know, but with caps on how many withdrawals you can, how much they'll pay out each quarter. And they're like putting in their requests to get back their money at 100 cents on the dollar. And if it's capped and they only get a portion of their money back at 100 cents on the dollar, then they'll wait for next time.

[D]

Yeah.

[C]

What they won't do is sell to Boaz for 65 cents on the dollar. Because the whole point of this product is it doesn't go down.

[D]

65 is less than 100.

[C]

Yeah. There are a lot of people who sell stocks below where they bought them because, like, stocks go up and down. Right. This is not supposed to go up and down.

[D]

Yeah.

[C]

You know, whatever. The NIV goes up and down, but mostly up. And if the market price of this thing is in some sense down 35% from its net asset value, people are not going to sell at that market price. So that's a lot of what's happening here, is that these people, including me, are in these products for, like, stability. And if the market is dislocated, they're like, no, thank you, I don't want to play. And then some people are like, not checking their mailbox.

[D]

Right. Yeah. It feels like quite an exercise in trying to herd cats without knowing.

[C]

I get and throw away all sorts of tender offer statements from Blue Owl.

[D]

Yeah. And some of them might be interesting. Maybe you would have liked to look at that.

[C]

Every time I open one, I'm like, yeah, this is relevant to my job.

[D]

Goodbye. Okay, so we don't know too much about the psychology. You can draw the conclusion here, though, that people.

[C]

It's not like outright panic.

[D]

Yeah. They weren't so desperate to get out of this.

[C]

If he had bought like 10% of the fund at 65 cents on the dollar, that would have been a strong suggestion that it was worth considerably less than 65 cents on the dollar and he would be taking a bath.

[D]

Yeah.

[C]

But currently it's like. Yeah, it's interesting experiment.

[D]

Boss did say in an interview with Bloomberg News, to Blue Owl's credit, they went around to calm nerves. We would have had more success if we offered for their larger bdc, but we had the offer ready before they offered to pay back investors and we still wanted to go through with it. Obviously we hope to buy more shares from them than we did. He's not out of this game, right?

[C]

Yeah. OBC2 is a weird one because like they are trying to wind it up at 100 cents on the dollar. So like one reason for him to tender for it is it's a pretty short timeline to probably get all of all of your money back, right? The other Blue Owl and also other firms have a lot of private non traded BDCs where people have asked for more than 5% of their money back. They've been capped at 5%. There's a line to get out and how long that problem will persist nobody quite knows. And so he's going to tender for some other ones where maybe the timeline is a little bit more uncertain. Maybe people will be more interested. I think he's going to tender for the one I own and then that'd be so fun.

[D]

You have to sell to him. I think it would be really good for the podcast.

[C]

You make a good point.

[D]

Yeah. Think of the content, Matt. Think of the content.

[A]

Hi, I'm Kelly Cavagnaro, Managing Director, head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter Future together.

[B]

On June 10, Bloomberg Invest is back in Hong Kong. We look at the role Hong Kong plays between China and the world as major powers compete and markets realign. As global investors rethink risk, we'll explore the forces driving Asian demand and the future of private capital. Catch exclusive interviews with top newsmakers, plus a live recording of Bloomberg's Odd lots podcast. Visit BloombergLive.com investhongkong to learn more. Supporting sponsor Deutsche bank.

[D]

If you want to talk about Avis

[C]

if you want to talk about Avis,

[D]

suggest we do it now. That's why we saved it for last.

[C]

Had a short squeeze.

[D]

Yeah, they did.

[C]

And that's been going for like a month. And like it peaked last week. The stock had gone from like a hundred dollars like a few weeks ago to 7. Closed over $700 one day last week and then it deflated and it's back down to the 1002s. And this week the company had an earnings call which earnings Are always somewhat irrelevant in these situations. The stock was down a little. The earnings are a little disappointing, but it doesn't mean who cares?

[D]

Yeah, but at least the executives have to talk about what's going on.

[C]

And what was going on was crazy, which is that the night before the earnings announcement, so their short squeeze was like they had two hedge funds that owned between actual stock positions and derivatives. They owned more than 100% of the stock. So a lot of people were short. And these two hedge funds, SRS and Pentwater, were long more than 100% of the stock. Put those things together, it just seems like there's going to be a short squeeze. And there seems to have been a short squeeze of those two hedge funds. SRS is kind of like the company. They have a board seat, like they've been long term holders. They're associated with the company. They have a lockup agreement. They have an agreement where they're bound by the company's blackout periods. Pennwater is just like a hedge fund. They just bought some stock as an investment and they got to like 50% of the stock, including derivatives. And they sold a big chunk of stock at the peak of the short squeeze last week for something like $1.75 billion of total proceeds and profits of possibly a billion dollar. Huge profits. And when the short squeeze was happening, I remember people emailing me to be like, what is Penwater going to do about this? Because they are subject to short swing profit rules. They own more than 10% of the stock. And therefore, if they sell their stock within six months of buying it, which, like, they double their stake in like February and March, if they sell their stock within six months of buying it, they pay back all of the profits to the company. Just a weird rule of Section 16 of the US securities laws. And so, like, they can't really profit from the short squeeze. That's what I thought and what everyone thought.

[D]

That was naive.

[C]

That was a little naive. So they announced that they've sold millions of shares and those shares fall into two buckets. One bucket, they're like, yes, we are subject to short swing profit rules. We bought these shares and then we sold them within six months. So we have to give up all of our profits to the company. So we called the company and we're like, here's your check. Here you go. The other bucket, they're like, no, no, the funds like Penwater is, you know, it manages different funds, like funds, SMAs, like all sorts of like, accounts, right? And it buys stock for all the different Accounts. And the accounts are separate. And they're saying, well, you know, most of the shares that we sold in the last, you know, last week were not sold by funds or accounts that bought within the last six months. So there's no section 16 short swing profits for that. The first bucket, the one where they're giving up the profits is like 94,000 shares, and the second bucket is like millions of shares. So they're like, we're almost all. But we're giving the company a tip, you know. You know, 50 million bucks or whatever, maybe less. And so that's wild on a number of levels. One, it's like, oh, you can just get around short swing profit rules that way, too. Like, how did that happen? Like, how did some funds that they managed by the shares and other funds sold the shares? It seems a little bit mysterious. Presumably the funds that sold the shares were funds that had owned them for a long time. Maybe not. Maybe they were short selling. I don't know.

[D]

Will anyone go and try to figure that out?

[C]

The company will.

[D]

Avis will.

[C]

Yeah. Because Avis, they said on their earnings call, you know, we got a call from Penwater saying, like, here's your, you know, check for a little bit of money. And they're like, we're going to look into anything we can do to recover for the shelters, because obviously they'd rather have a billion dollars than, you know, a few million dollars.

[D]

That number is bigger than the other one.

[C]

This was just like a weird exogenous event that happened to Avis, and they're like, probably a little bit unsettled by it. And if they could have a billion dollars, they'd. That would make it better.

[D]

They have a little bit of money, though.

[C]

Yeah, they have some money.

[D]

Yeah.

[C]

Right. I wrote it's like a nice windfall for them. If you'd asked me last week, and I feel like maybe you did. I feel like we talked about this. Like, it's very hard for anyone to do anything about the short squeeze. Right. Like, Penwater, I had thought, can't sell because of Section 16 rules. And the company can't sell because, one, they were in an earnings blackout, right. They released earnings this week. So they can't, like, go around selling stock the week before they release earnings. And two, if you announce a sale, you might pop the bubble and then you won't actually sell at the high prices. But, like, somehow Pentwater found a way around it where both Penwater got a lot of money and also the company got a little bit of money without Actually selling any stock.

[D]

So they found a way around it. But tbd, well, they certainly sold stock.

[C]

Who gets that money between Pentwater and Avis is an interesting question. Panwater will be bummed if they lose all of the money, but my impression is they have a pretty good argument that they're fine and they get to keep the money they think they can keep. I also think there's some possibility of just like Ponwater and Avis being like, you know, we'll give you a little bit more than the 94,000 shares and we'll call it a day.

[D]

90s would be.

[C]

No, no, because 94,000 shares, like, the profits on these shares sales are at least. Yeah, at least $100 and as much as like $600 a share. So, you know, like, it's. It's millions, tens of millions of dollars, but it's not billion dollars.

[D]

So if they had increased their stake by slightly less, could they have just like, if they had stayed at the 9% that they were on December 31, 2025, would they relevant number?

[C]

Well, to 50%, it's not like a little bit less. They got to 50%, which is what caused the short squeeze. They went from 9% to 50%. People are like, oh, wow. Between them, SRS and Pentawarad are own more than 100% of the stock. That's going to cause a short squeeze. It causes a short squeeze. The stock goes to 700 and they sell. Right. Going from nine to nine and a half percent wouldn't have done that.

[D]

Yeah. But I'm just wondering, would they have then been under the threshold where they could short sell without penalty or sell without penalty?

[C]

Sure. But who cares?

[D]

I care a little bit. You're saying the short squeeze would have never happened.

[C]

Selling at $700 and then dealing with lawyers afterwards is much, much, much, much better than selling at 100.

[D]

Yeah, I guess that's assuming that that is what caused the short squeeze because there are competing theories, but like, you

[C]

know, the short squeeze was definitely like two hedge funds on 180% of the company.

[D]

Yeah.

[C]

These are things that happen due to, like, attention and investor psychology and things like that. And, you know, like, it happens because, like, they bought so much of the company.

[D]

Yeah.

[C]

Anyway, it's a great trade.

[D]

It is.

[C]

It's like, it's baffling that I don't understand how they could have bought so much stock in one place and sold so much stock in another place. Like it's something as weird, but great trade.

[D]

I wish I had tuned into that earnings call because we talk about body language all the time. I would have loved to.

[C]

Yes, I know. I've read the transcript of that earnings call, which is you definitely like can imagine them like tugging on their collar,

[D]

dabbing at their brow. Oh good stuff.

[C]

And that was the Money Stuff podcast. I'm Matt Levine.

[D]

And I'm Katie Greifeld.

[C]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com

[D]

and you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[C]

We'd love to hear from you. You can send an email to moneypodlumberg.net Ask us a question and we might answer it on the air.

[D]

You can also send subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[C]

The Money Stuff podcast is produced by Anna Mazarakis, Moses Andam and Alexis Haut.

[D]

Our theme music was composed by Blake Maples.

[C]

Amy Keen is our executive producer. Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

[B]

On June 10th. Bloomberg Invest is back in Hong Kong. We look at the role Hong Kong plays between China and the world as major powers compete and markets realign. As global investors rethink risk, we'll explore the forces driving Asian demand and the future of private capital. Catch exclusive interviews with top newsmakers, plus a live recording of Bloomberg's Odd Lots podcast. Visit visit bloomberglive.com investhongkong to learn more. Supporting sponsor Deutsche Bank.