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Money Stuff: Boards Have to Pay Attention

by
Matt Levine
Money Stuff
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Everything is shareholder derivative claims.

  • Some shareholders brought a derivative action against Boeing's directors and officers for failure to establish a reporting system for airplane safety and other problems.
    • Boeing's board had no committee charged with direct responsibility to monitor airplane safety.
    • They also didn't address the Lion Air Crash on the Board's first call on November 23.
  • While similar to a securities fraud case, it makes a lot more sense.
    • Suing the directors is a better deterrent than suing the corporation.
    • The issues are a legitimate concern, and the only way to address these issues is for the board members to do their job better.

Private markets are the new public markets.

  • Forge Global, an online marketplace for buying and selling shares of private firms, is going public via SPAC.
    • The deal is valued at $2 billion.
  • What's interesting about this deal is that it provides some public information about private-company trading:
    • Private companies don't trade that much (on average, a private company trades around 0.2% of its value per year v. public companies trading around 126% of its market cap).
    • Private market deals are expensive, with Force making around 2-3% commission.

Supply Chain Finance

  • Greensill Capital offers supply chain finance and AI technology that could assess the risk of loans for small businesses.
  • Facebook announced a $100 million commitment to a program that supports small businesses owned by women and minorities by paying their invoices.
  • It is going to be difficult for Greensill to compete with a big tech company:
    • Typically, businesses would go to a bank for financing, but they are slower and more risk-averse than tech companies.
    • Tech companies have a lot more data that could benefit their AI.

Value vs. Growth

  • The Russell 2000 value index gains this year have been powered by some meme stocks (e.g., AMC), which allowed it to outperform the Russell 2000 growth benchmark by the widest margin since 2002.

Non-fungible tokens etc.

  • Recap: You can slice an NFT into billions of pieces and sell them for more than you paid for the original token.
  • This didn't just happen in the digital world:
    • Last year, MSCHF bought a print of Damien Hirst's spot painting, cut out the dots, and sold each of them separately.
    • Someone did the same thing with a Picasso print in 1986.
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