Episode summary
Bag of Snakes | Money Stuff: The Podcast
Money Stuff The Podcast
· · 31 min · Hosts: Matt Levine, Katie Greifeld
Summary
The hosts start with the headaches of homeownership, including mold, radon checks, and the feeling that a house is “a bag of snakes.” That leads into a broader discussion of how hard it is for financial products and structures to behave the way their promoters want them to behave.
Bill Ackman’s Pershing Square USA is the first big example. The hosts say the new $5 billion closed-end fund and the publicly listed management company both came to market this week, but PSUS quickly traded at a meaningful discount to net asset value rather than the premium Ackman had hoped for. They argue that the physics of closed-end funds are hard to defy, even when the sponsor says it will “compound” value over time and run like a real company.
They then move to hedge fund structures more generally: why publicly listed hedge fund firms are rare, why multi-strategy firms like Jain Global struggle with scale and fixed costs, and why the economics of paying portfolio managers so much make these businesses hard to start. The episode closes with two trading oddities: Boaz Weinstein’s limited success tendering for Blue Owl’s non-traded BDC shares, and the wild Avis short squeeze, where Section 16 short-swing rules may not have captured all of Pentwater’s profits.
Key takeaways
- The hosts say Pershing Square USA raised $5 billion, but it quickly traded well below net asset value, reinforcing how hard closed-end fund premiums are to sustain.
- They argue the public-listing of Pershing Square management is partly a way to get the closed-end fund done, and partly a monetization of stable recurring fees.
- The hosts say multi-strategy hedge fund startups like Jain Global are hampered by high fixed costs, expensive portfolio managers, and the need for scale before investors will commit.
- They describe Boaz Weinstein’s Blue Owl tender as evidence that many non-traded BDC holders are not panicked enough to sell at 65 cents on the dollar.
- They say the Avis short squeeze produced a bizarre Section 16 question: Pentwater appears to owe profits on one bucket of shares while arguing another bucket is outside the short-swing rule.
Notable quotes
“Why does anyone own a house? I ask myself that question every day”
“I mean, it just seems extremely hard to defy the physics of closed-end funds”
“the whole point of this product is it doesn't go down”
“They went from 9% to 50%. People are like, "Oh, wow, between them SRS and Pentwater own more than 100% of the stock”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. I'm trying to buy a house. Yeah, it's the nesting instinct.
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 going to do?
I don't know. You can have to remediate that. Mhm.
I know, and that's going to cost money, and this this whole thing It's going to cost money and time. Why does anyone own a house? I ask myself that question every day.
Yeah. But I want to own an apartment. Mhm.
But I don't. I own a house. I remediate mold.
Ugh. I check for radon. Yeah, we checked for radon, too.
There's no radon. There's no radon. Oh, neat.
Yeah, yeah. That's cool. — Whole thing. This is a place that we live in for like 5 to 7 years. Okay. And 5 to 7 years I'm going to try to sell this bag of snakes. Yeah. — Same way it was sold to me. Ugh, but at least, you know, I'm with my good friend Matt Levine, and there's microphones in front of us.
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 money. To money. To money. To money. Money stuff. — Money Money stuff. I'm money I'm money stuff, and I'm I'm Matt Levine calling from Bloomberg. This This is very silly. I'm I'm just Katie Greifeld. I'm a reporter for Bloomberg News and an anchor for Bloomberg Television.
The snakes. Um Bill Ackman founder of Pershing Square, the hedge fund management firm, closed-end fund management firm, also Mhm.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- home ownership downsides
- closed-end funds
- hedge fund firms
- non-traded bdc psychology
- avis short squeeze
Companies and tickers mentioned
- PSUS
- CAR
- Pershing Square USA
- Avis Budget Group
Watch the episode
Watch “Bag of Snakes | Money Stuff: The Podcast” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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