What we’re reading (11/2)
“Sam Bankman-Fried Found Guilty On All Seven Counts” (TechCrunch). “The decision was handed down on Thursday, following a five-week trial that dug deep into how one of the biggest crypto exchanges and its sister trading company collapsed about a year ago. The U.S. Department of Justice charged 31-year-old Bankman-Fried about 11 months ago. The jury took about four hours to come to a verdict on six counts relating to fraud and one count relating to money laundering.”
“How Does The World’s Largest Hedge Fund Really Make Its Money?” (New York Times). “With the hope of turning around the firm’s investment performance, members of the Circle of Trust put together a study of Mr. Dalio’s trades. They trawled deep into the Bridgewater archives for a history of Mr. Dalio’s individual investment ideas. The team ran the numbers once, then again, and again. The data had to be perfect. Then they sat down with Mr. Dalio, according to current and former employees who were present. (Lawyers for Mr. Dalio and Bridgewater said that no study was commissioned of Mr. Dalio’s trades and that no meeting took place to discuss them.) One young employee, hands shaking, handed over the results: The study showed that Mr. Dalio had been wrong as much as he had been right. Trading on his ideas lately was often akin to a coin flip. The group sat quietly, nervously waiting for the Bridgewater founder’s response. Mr. Dalio picked up the piece of paper, crumpled it into a ball and tossed it.”
“Private Equity: Higher Rates Start To Pummel Dealmakers” (Financial Times). “‘Many of the reasons these guys outperformed had nothing to do with skill,’ says Patrick Dwyer, a managing director at NewEdge Wealth, an advisory firm whose clients invest in private equity funds. ‘Borrowing costs were cheap and the liquidity was there. Now, it’s not there,’ he adds. ‘Private equity is going to have a really hard time for a while . . . The wind is blowing in your face today, not at your back.’”
“Artificial (Stock Market) Life Support” (Smead Capital Management). “The whole thing [AI] looks very disingenuous to us at Smead Capital Management. First, AI is not new, and they have all been working on it and using it in the last ten years. Second, interest rates have risen substantially and make futuristic earnings on exciting technology less valuable by discounting those earnings back to today. Third, this group of companies has been famous for having a lack of forthrightness (just ask the Justice Department). Lastly, the Magnificent 7 has been the only thing keeping the rally in the S&P 500 Index alive this year. The success of this narrow group of stocks has defended the massive amount of capital stuck in the passive index and prevented it from fleeing.”
“Apple Stock Dips After Weak Outlook For December Quarter Revenue” (CNBC). “Apple reported fiscal fourth-quarter earnings on Thursday that beat analyst expectations for sales and earnings per share, but revealed that overall sales fell for the fourth quarter in a row. Every hardware business outside of the iPhone declined year over year, with big drops in the iPad and Mac segments.”
