Vicky Huang (3:22)

What we found is it's a three part answer. One of the reasons why these investors want to buy MicroStrategy bonds is simply because the performance of these bonds have been really, really strong, so that some bond investors almost have to buy it. Especially if you're a convertible bond fund manager and this is in your trading investing universe, it almost makes it so that you have to buy it just to have good performance. The other part of this is that because these are MicroStrategy bonds and MicroStrategy itself has become a leveraged play on Bitcoin, it just means so that these bonds are essentially Bitcoin bonds. A lot of these are unsecured bonds, meaning that MicroStrategy doesn't post collateral to borrow money from investors. However, in a way, these bonds are almost backed by Bitcoin because they're backed by MicroStrategy. And a lot of these bond investors, usually investors that play as safe, are starting to believe in the potential of Bitcoin to go up over the short, medium to long term. And then the last reason is that because the bonds that MicroStrategy issued are convertible bonds. A lot of hedge funds and mutual fund asset managers, they can buy the bonds of microstrategy and short the stock, which basically means betting against the stock. And this trading strategy works only when the stock you're betting against is super, super volatile. And MicroStrategy stock, like Bitcoin is really volatile. So a lot of hedge funds that engage in this convertible arbitrage strategy have been able to make a lot of profits because of the hyper volatility of microstrategy.

Alex Osila (5:17)

Are there other companies doing something similar?

Vicky Huang (5:20)

Yes, there are more and more companies that have started to copy MicroStrategy's playbook. For example, some of the bitcoin miners, such as Bitcoin mining company Mara, want to join in on this ride of momentum and profits.

Alex Osila (5:37)

That was Wall Street Journal reporter Vicky Huang. Thanks, Vicky.

Vicky Huang (5:40)

Thank you for having me.

Alex Osila (5:43)

Coming up, under pressure to reduce its diversity initiatives. Why Costco is holding out. That's after the break. Diversity, equity and inclusion efforts are under fire both in government and the private sector. This week, the Trump administration closed DEI programs within federal agencies and placed all staff working on those programs on paid leave. And as we reported yesterday, activists are pushing banks like Goldman Sachs and JPMorgan Chase to abandon their initiatives as well. But at least one company is sticking with its DEI effort. Costco shareholders are expected to vote today on a conservative activist group's proposal to assess the risks that diversity initiatives pose to the company's stock price. The retailer has urged them to reject it. My colleague Pierre Bienname spoke with Sarah Nassauer, who covers big retailers for the Wall Street Journal. He asked her why Costco is sticking to its DEI efforts.

Sarah Nassauer (6:45)

They said that their DEI efforts are part of what has made them so successful. It helps them attract talent, spur innovation, select merchandise that appeals to shoppers, offer things at a good value. Basically said, you know, we're committed to this and it's good for our business. The way that they have talked about it and you can see this in some of their response to their own customers that have reached out to them about this stuff with concern is, hey, we're an employer that wants to give everyone equal opportunities. We really focus on having a higher wage and benefit structure than our competitors. Those are things that have always been important to us over decades. And we're not changing that. It is just a little bit of a different tone than, than other companies that are on some level, kind of just changing, like switching from one language set of language options to a different set of language options. Right. They're just communicating differently. Customers at Costco, they pay an annual membership fee to shop there and they're pretty loyal. 92% of US members renew that membership each year. How significant is that for Costco's ability to stick to its guns? It seems fairly significant. There are several things at play here. One is that Costco, it's a massive company, but it doesn't really jump on corporate bandwagons. They just tend to do things from a corporate perspective a little bit differently. They don't have a public relations department or even person. They're a retailer that hasn't really tried to quickly grow E commerce sales. They really do want you to come into clubs even though they have a dot com site. And as you said, they have a very, very loyal customer base. And that does allow them to perhaps do things a little differently and be maybe not quite as reactive as other companies. What are Costco's DEI initiatives? They're not as extensive, frankly, as some other companies have developed, say since 2020 in the wake of George Floyd's murder. There were a lot of companies that sort of came out with announcements like Walmart would be one target, would be another about funding new racial equity centers or doing things differently when it came to training workers, things like that. Costco's policies are about things like executive bonuses are partially tied to some social objectives, including diversity, equity, inclusion goals. They do report metrics on gender and race and ethnicity demographics on their workforce, things like that.

Alex Osila (9:22)

That was WSJ reporter Sarah Nassauer speaking to my colleague Pierre Bienname. In other business news, the Sackler family, which owns Purdue Pharma, has struck a new agreement to settle mass litigation around the sale and marketing of opioids. New York Attorney General Letitia James said the family members will pay $6.5 billion over 15 years while the company will fork over an additional $900 million in a one time payment that makes a total of $7.4 billion. Family members won't receive a blanket shield from liability from civil lawsuits. And CNN is laying off about 200 employees, or roughly 6% of its workforce. It's part of a broader effort to boost digital growth and prepare the company to launch a streaming service. And that's what's news for this Thursday afternoon. Today's show was produced by Pierre Bienname and Anthony Banci with supervising producer Michael Kosmides. I'm Alex Osoloff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.