What we’re reading (9/8)
“Elliott Management Has A More Than $1 Billion Stake In Citrix Systems” (Wall Street Journal). “Activist hedge fund Elliott Management Corp. has a more than $1 billion stake in Citrix Systems Inc. and wants the software company to take action to boost its lagging stock price, according to people familiar with the matter…[w]hile Elliott’s exact demands couldn’t be learned, it previously called for Citrix to focus on its core offerings and better allocate capital when the investor built a stake of more than 7% in June 2015. Jesse Cohn, Elliott’s managing partner who oversees its U.S. activist investing, joined Citrix’s board the following month as part of a settlement agreement.”
“Wall Street's Hottest Investor Is Betting Big On A Handful Of Stocks. Critics Say She's Playing With Fire” (CNN Business). “Some tech stock veterans also wonder if Wood is just an investing flavor of the month, comparing her to once-popular portfolio managers like Kevin Landis of Firsthand Funds, Alberto Vilar of Amerindo and Garrett Van Wagoner, who ran a popular emerging-growth fund in the late 1990s. Many of those tech funds imploded following the 2000 bubble…is Wood destined for similar ignominy?”
“Gensler’s Brewing Battle With Robinhood Could Prove Bloody” (New York Post). “[I]t’s never a smart thing to pick a fight with your chief regulator…[b]ut Robinhood isn’t picking the fight…the people there know what Gensler has proposed recently — a possible banning of something known as Payment for Order Flow, or PFOF — has existential ramifications for the brokerage firm. The firm makes most of its money through the practice. Its stock tanked last week on Gensler’s comments to the financial publication Barron’s about a possible ban.”
“The Debate We Should Be Having About The Federal Reserve” (The Hill). “[One] area of concern relates to financial distortions associated with the injection of excess liquidity via prolonged periods of quantitative easing by the Fed and other major central banks. Measures originally intended for financial emergencies are now being deployed by monetary authorities to achieve traditional macroeconomic goals. This in turn has caused financial markets to become addicted to a never-ending stream of easy money to sustain ever higher asset prices. Unsurprisingly, it has also encouraged speculative excesses. Unconventional Fed policies might unintentionally be contributing to a rise in inequality.”
“Investors Are Ignoring The Parallels Between Stocks Today And ‘Heady’ Years Of 1929, 1999 And 2007. Do This Next, Says Strategist.” (MarketWatch). “The S&P 500 is trading at a lofty 22.5 times forward earnings and its price-to-sales ratio of 3.1 times is far costlier than in 2000. The Nasdaq-100 tracking QQQ exchange-traded fund is trading at a 70% premium to its 200-week moving average, the biggest since 1999/2000…[t]he last time SPACs were as big as they are today? That’s right 1928/1929…[s]imilar to 1920 and 2000, margin debt has shot to new highs…Individual investors make up 20% of average daily volume for stocks, twice the level of two years ago. Many big market tops of the past — 1929, 1999/2000 — were marked by big jumps in investor activity.”
