Millennials just can’t wait to entrust their financial futures to companies that don’t actually manage money—yet. Read more »

Invest accordingly. Read more »

Twenty years after Jordan Belfort and his Stratton Oakmont Inc. defrauded investors out of more than $200 million from its offices on Long Island — a story retold in the movie “The Wolf of Wall Street” — New York’s financial district has become a hub for veterans of defunct boiler rooms who use decades-old scripts to pressure investors into speculative trades, more than 40 current and former brokers said in interviews…Today, computerized records make it easier for regulators to unravel fraud. The federal do-not-call list, established in 2003, has both limited phone solicitation and made it less socially acceptable. Most people know they can trade stocks online for about $10 and want to look up a brokerage on Google before sending money, the brokers said…That doesn’t stop brokers from trying. Armed with only the names of business owners on index cards, trainees call, tout their Wall Street addresses and say their boss will call back with one good stock tip. Hundreds of people hang up for each one willing to listen to the pitch, brokers said. “There could be days when you’re dialing nonstop, and nothing,” said Jorge Ferreira, 40, a broker at Blackwall. [Bloomberg]

  • 17 Jun 2013 at 4:13 PM

Let’s Hack Google’s Share Split

How much would you pay for a share of Google Class C stock? Those are the zero-vote shares that will soon be distributed, on a one-for-one basis, to holders of Google’s low-vote Class A shares, assuming that the settlement Google announced today goes through. We previously discussed the split when it was announced last year: Google’s founders don’t want to ever lose voting control of the company, so they’re proposing that any new shares issued for acquisitions, etc., be non-voting C shares; shareholder lawsuits have held this up until now but with the settlement it should go forward.

The traditional answer is that a share without voting rights is worth less than a share with voting rights because, y’know, sometimes you want to vote, and so various studies find something like a 2 to 10% discount for non-voting shares. But with Google that’s a little silly since no one really votes anyway: the high-vote Class B shares, which are mostly owned by co-founders Larry Page and Sergey Brin, give them about 56% of the vote, so whatever you do with your piddly Class A shares doesn’t matter. So the As and the Cs are basically the same except the As come with the hassle of having to mail back your pointless proxy card.1

So if you could get a C cheaper than an A, that seems like an arbitrage and you should buy it because the prices should eventually converge. But markets can remain irrational etc. etc. etc., so absent any obvious catalyst for convergence why would you do that? So Google, and some clever plaintiffs’ lawyers, provided a catalyst: Read more »

There is no denying that Jeffrey Gundlach is a hugely talented man whose IQ would rank among the highest in the world if he ever had it tested. “What’s it like having lunch with a genius,” he once asked a colleague, who presumably answered, “To be honest, it’s giving me an inferiority complex just breathing the same air as you, knowing that your brain is the standard for how intelligence will be measured from now until the end of eternity.” Until recently, however, the application of Gundlach’s brilliance was largely confined to bond management. According to a new profile by Bloomberg Markets, though, Gundlach’s intellectual prowess is just as if not more impressive when it comes to crime solving. Read more »

There’s something interesting going on in these Wall Street Journal articles (Money & Investing and Deal Journal) today about how corporate bonds now sometimes trade inside of Treasuries. Or somethings interesting; one thing that’s going on is, like, why the day after the election? One possibility is that the message here – which the Journal is helpfully conveying from bond investors to the government – is “see? get your fiscal cliff shit together or soon you’ll be pricing your bonds outside of Google, and you don’t want that do you?”

There may be a side helping of, like, annoy modern-monetary-theory bloggers; from a certain viewpoint this graphic is a hot mess of category mistakes1:

BUT THE GOVERNMENT HAS A PRINTING PRESS oh never mind. Maybe Exxon does too, I don’t know.

But this is my favorite part: Read more »

Citi today fired Mark Mahaney, its internet analyst, and was fined by Massachusetts securities regulators, for sending dumb emails to reporters. The Massachusetts consent order is here. Mahaney’s main misconduct1 is that on April 30 of this year a French reporter asked him about Google’s YouTube business:

  • Do you think that YouTube has been above your Total Net Revenue estimate 2011 ($876M)
  • Do you think that YouTube will be above your Total Net Revenue estimate 2012 ($1119m)
  • Do you think that they are largely profitable?

And Mahaney replied “Yes Yes Yes.” This was problematic because:

The information that [Mahaney] gave to the French Reporter had not been previously published. [He] had published a research report on Google, Inc. on March 21, 2012 and did not publish another research report until his interview with “All Things Digital” on June 21, 2012.

Two thought experiments. First, Mark Mahaney’s job was to drum up institutional business by producing actionable estimates and opinions about the stocks he covered. One way to do this is to publish research reports. Google, it is fair to say, is an important stock that he covered. He did not publish any research reports on Google for three months this year. What do you think he was doing during that time? Your choices are: Read more »

Considering he’s now a Yahoo! board member, Dan Loeb presumably approves of the hire but one should always assume a cross-check on his or her credentials will be run anyway, just in case. [WSJ, related]