Money Stuff: The Podcast – Episode Summary Title: Funny Business Is My Business: PRIV, HHH, WARS
Release Date: February 28, 2025
Host/Authors: Matt Levine & Katie Greifeld

1. Introduction to the Episode

After a brief hiatus, Matt Levine and Katie Greifeld reconvene to delve into three main topics: the launch of the first private credit ETF, Bill Ackman's strategic maneuvers to emulate Warren Buffett's Berkshire Hathaway, and the latest developments surrounding Infowars' acquisition attempts.

2. Launch of the First Private Credit ETF (PRIV)

Overview: The episode kicks off with the introduction of the SPDR SSGA Apollo IG Private Credit ETF, trading under the ticker PRIV. This marks a significant milestone as the first ETF dedicated to private credit.

Key Discussions:

• Surprise Launch:

  • Katie Greifeld (02:32) expresses shock over the ETF's launch, noting that both the hosts and industry insiders had anticipated delays.
  • Matt Levine (03:03) counters by stating, "you could do anything, man. It's an ETF. Like why not?"

• Regulatory Considerations:

  • The ETF was filed in September 2024 and launched in February 2025. Katie speculates whether the SEC's evolving stance influenced the timing.
  • Matt Levine (03:38) explains the mechanics, emphasizing how Apollo's liquidity facility is crucial for managing redemptions:

    "Apollo can be the accordion for the expanding and contracting of the ETF."

• Morningstar's Skepticism:

  • Katie cites Morningstar analyst Brian Moriarty's concerns about the ETF's liquidity safeguards:

    "Apollo's liquidity facility is subject to a daily limit. And this daily limit remains undefined... increasing the risks of a liquidity crunch."
    (06:29)

• Potential Risks and Benefits:

  • Matt reassures that Apollo's established trading desk can handle initial redemptions, viewing the ETF as a "proof of concept."
  • Matt Levine (07:38) highlights that at a modest size, the ETF poses minimal risk, but acknowledges potential challenges if it grows significantly.

• Fee Structure:

  • The ETF carries a 70 basis points fee, which Katie deems reasonable for a new, actively managed product.
    (14:01)

Notable Quotes:

• Matt Levine (03:46): "What's wrong with that?"
• Katie Greifeld (12:12): "Private credit is like this hot asset class in some sense."

Conclusion: The launch of PRIV is seen as an innovative yet risky venture, blending private credit's traditionally illiquid nature with the liquidity demands of an ETF. While Morningstar raises valid concerns, Matt and Katie view it as a pioneering step with potential for future evolution in private asset trading.

3. Bill Ackman's Reinvention: Aspiring to a Berkshire Hathaway Model

Overview: Matt and Katie shift focus to hedge fund magnate Bill Ackman, who appears to be restructuring his investment approach to mirror Warren Buffett's long-term, conglomerate-style holdings.

Key Discussions:

• Ackman's Strategic Shift:

  • Matt Levine (18:02) describes Ackman's attempts to transition from managing concentrated equity positions to building a public company with diversified investments.

    "He really wants to have a thing that is his investment vehicle that trades at a premium... be the head of the company and let the people who are currently running its real estate business be one little segment of the company."

• Acquisition of Howard Hughes:

  • Ackman targets Howard Hughes, a $3.9 billion market cap real estate company, aiming to inject capital and steer it toward broader investment activities.
  • Katie notes the company's recent earnings call and lack of transparency regarding Ackman's proposed transactions:

    "They will not answer any questions."
    (21:15)

• Challenges and Criticisms:

  • The hosts debate the viability and rationale behind Ackman's strategy, contemplating whether this mirrors the timeless appeal of Buffett’s model or if it’s a misstep in the modern hedge fund landscape.
  • Matt Levine (23:09): Criticizes the unconventional nature of turning a specialized real estate firm into a Berkshire-like entity.

    "I don't like it. I don't know why, but to me the question is like, okay, you like Howard Hughes, but there's 3,000 companies out there."

• Legacy and Motivation:

  • Speculation arises regarding Ackman's motivations, suggesting a blend of legacy-building and experimentation rather than pure financial incentives.
    (28:31)

Notable Quotes:

• Matt Levine (19:51): "It's like running a public company and make investments... similar to Warren Buffett's approach."
• Katie Greifeld (27:11): Highlights the historical context of Ackman's relationship with Howard Hughes.

Conclusion: Ackman's endeavor to emulate Buffett by transforming Howard Hughes into a diversified investment conglomerate is met with skepticism. The hosts debate the sustainability and strategic merit of such a move in today's financial ecosystem, questioning whether Ackman can successfully blend his hedge fund expertise with the operational demands of managing a public company.

4. Infowars Acquisition Bids: The Meme Coin Controversy

Overview: The final segment explores the contentious efforts to acquire Infowars amidst bankruptcy proceedings, highlighting unconventional bid proposals involving meme coins.

Key Discussions:

• Failed Acquisition by The Onion:

  • Initially, The Onion (operating under Global Tetrahedron) attempted to purchase Infowars to repurpose it for promoting gun control, but the deal fell through.
    (32:22)

• Alex Jones' Response:

  • Post-failure, Alex Jones aims to reclaim Infowars through entities like Fuak and WOW.AI. The latest bid includes a unique mix of cash and a meme coin named WARS.
  • Matt describes combating traditional securities laws by labeling investments as meme coins, thereby circumventing regulations.

    "They have pre-sold stock in their new Infowars company and called it a meme coin."
    (34:56)

• Mechanics of the Meme Coin Bid:

  • The proposal entails offering $3.5 million in cash plus 51% of the total maximum supply of WARS, with tokens granting voting rights over Infowars' future.
    (36:38)
  • Matt criticizes the lack of real value and fundamental backing for the meme coin, labeling it as "paper value" reliant on speculative trading.

    "The Meme Coin does not entitle you to cash flows from Infowars. It's just like a meme coin connected to the thing."
    (38:40)

• Regulatory and Ethical Implications:

  • The unconventional bid raises questions about the integrity of bankruptcy auctions and the potential manipulation using cryptocurrency.
    (39:10)

• Hosts' Perspectives:

  • Matt remains skeptical, expressing discomfort with the approach despite acknowledging its ingenuity in bypassing traditional mechanisms.

    "I don't like it. I don't know why, but to me the question is like..."
    (25:05)

  • Katie conveys intrigue mixed with skepticism, recognizing the novel yet questionable strategy employed by Alex Jones and his backers.

Notable Quotes:

• Matt Levine (34:56): "It's a good financing mechanism for this situation... fit for purpose."
• Katie Greifeld (38:32): "It's like a weird kind of stock that doesn't convey ownership."

Conclusion: The attempt to use a meme coin as part of the Infowars acquisition bid underscores the evolving and often contentious intersection of cryptocurrency and traditional financial mechanisms. While innovative, the approach raises significant concerns regarding legitimacy, investor protection, and the potential for future regulatory challenges.

5. Final Thoughts and Closing Remarks

Matt and Katie wrap up the episode by reflecting on the week's discussions, highlighting the blend of traditional financial strategies with modern, sometimes controversial, financial instruments. They emphasize the importance of understanding the underlying mechanics and implications of such innovations in the financial landscape.

Notable Quotes:

• Matt Levine (41:22): "Shrimped to death." (Referring humorously to potential future meme coins)
• Katie Greifeld (42:03): Acknowledges their preparedness and enthusiasm to present insightful financial discussions.

Conclusion: The episode serves as a deep dive into the latest financial innovations and strategic maneuvers within the hedge fund and investment sectors. Matt Levine and Katie Greifeld provide a thorough analysis, blending technical elucidation with wit, making complex financial topics accessible and engaging for their audience.

Listeners can subscribe to the Money Stuff Podcast on their preferred platforms and engage with Matt and Katie through their respective channels for further insights and discussions.