Goldman Sachs shrinking its SPAC business amid regulatory crackdown
cnbc.com
cnbc.com
I think they all operate on the principle of being first for everything is more profitable, including exiting poor investments.
By the time you are talking about, it largely will be.
Google is profitable and trading at a below-market multiple. It's a poor rates play.
Rates directly influence broad-market multiples, which Google will track, but "market goes down and Google goes up...priced in" isn't an intelligent thing to say.
Right.. which is why people should ignore "priced in" comments and instead read them as "I don't know what I'm talking about whatsoever".
There's no such thing as "priced in" - it's a contradiction and only used by people who are religiously inclined to talk about events that are random and don't have an explanation. If someone says "oh that was priced in" that's an extremely clear signal that they do not know what they are talking about.
> Google is profitable and trading at a below-market multiple. It's a poor rates play.
Did you intentionally miss the point or were you genuinely confused about what the discussion was about? It's very clear that I was not providing any sort of analysis about Google and interest rates rising (or lowering) and was talking about how people just say any action is "priced in" once it occurs.
There may be a level of underwriting going on also, as is the case with a rights issue or IPO, but it's probably more the marketing and access to the bank's client base that the spac benefits from.
SPACs are chock full of fees to Wall Street.
When the SPAC goes public, it pays an IPO fee. The bank, having to comply with fewer regulations than in a traditional IPO, makes a healthy profit. When the SPAC negotiates a merger it pays M&A fees. When shareholders are presented with the merger and asked to vote that comes with a fee. If there is a PIPE, there are, of course, more fees.
Later, when the sponsors sell their stock, there will be brokerage fees for the block trade. And I assume, in the final stage of a SPAC’s lifecycle, there will be de-listing, liquidation and/or distressed debt fees.
https://www.forbes.com/sites/jacobwolinsky/2021/12/16/odeys-...
The Federal Reserve bought the shitty mortgage backed securities because they werent that shitty, the banks just had too many of them relative to the size of their own assets.
Even of subprime mortgages and adjustible apr mortgages only ~7% went into default by 2008-2009
A portfolio of mortgages where 93% are going to pay vastly more interest to you than the home is worth and you still have the home if they really default? Thats a good portfolio
The banks issue at the time was that they were leveraged up 50x, and they didnt even realize they were levered up that much
so a single month of 7% defaulting could bankrupt them
While the fed has an infinite sized portfolio without leverage, and bought all the claims and let them just play out which they have continued to do. Theyre profitable, correctly performing investments.
More transparent accounting fixes the problem with re-collateralized re-securitized assets
lol, are these target companies saddled with debt though? I don't think so
Which reminds me OP omitted dilution/share issuance as a mechanism for banker fees.
True, but the margins are wider. Most of the documents are boiler plate. The same investors were buying them in comparable chunks from deal to deal. All this before the boatload of the other fees I mentioned.
2. Build a Twitter following and preach on topics on which you have zero knowledge or experience
3. People will believe you because you are rich (like they want to be) and so you must obviously be a genius
4. Use that influence to push your political views and/or other hustles like your favorite cryptocurrency, NFTs, SPACs)
The standard VC playbook these days
“All of us have our weak moments on public television around sensitive topics like genocide, while speaking as a billionaire”
And the discussion on HN: https://news.ycombinator.com/item?id=26037059
Even if the purchased firm were solvent after some elapsed time, that wouldn't necessarily mean the SPAC investors had made any money.
Only retail investors ( aka suckers ) will be holding the bag/beer, as always.
I'm curious to know if Goldman Sachs already has an alternative scheme/scam running or it's a case of "chilling out for awhile".
When companies have to present their financials coldly instead of painting the nice warm dream, it's gonna deflate the market. Between that and the other factors hitting the market now (interest rates and inflation), there just isn't going to be a huge amount of work in the space in the future.
You really don't need to assume a conspiracy of some sort is involved when all the completely public factors justify this.
You really don't have to cape up for Goldman. They don't care what we think. They always have enough alumni in the government that they don't have to care. [0] The Biden administration is theoretically less infested with them than previous ones, but e.g. SEC Chair Gary Gensler and Examiner Adam Storch are both former Goldman people. There are probably more but I figured one minute on DDG was enough...
[0] https://www.nytimes.com/2017/03/16/business/dealbook/goldman...
If you look at the new rules the SEC announced, they're so poorly written that no bank would see them as more than an accounting checkbox. Those rules are certainly not the reason for winding down a line of business.
If you want to attack connections between finance and the government, why not focus on real ones? Like, why are the new SEC policies so toothless? Who wrote them, and why?
It could easily be someone from GS, even! But people are a lot more likely to listen to you if you save your criticism for things that are based on facts and clear reasoning. A massive web of innuendo is worth a lot less than one direct problem.
Doesn't have to be nefarious though, if it doesn't make money for them they leave. Someone somewhere else in the business will find some other thing.
However the SEC recently increased its "Crypto Assets and Cyber Unit" staff from 30 to 50. Hopefully they'll bring the hammer down on token offerings with enough force to scare the big VCs away, at least.
That was my take from the 2008 financial crisis: the government had to fix everything. Again. And no Hollywood movie about the European, American and Asian finance ministers who had to make sure the ATMs kept working.
https://www.npr.org/2022/04/08/1091801453/1mdb-fund-goldman-...
He was charged, but nobody else from GS, AFAIK.
https://www.usatoday.com/story/money/business/2013/08/01/gol...
(I remember because he besmirched my good name :-)
Remember, your corporate email is not yours. Especially at a financial services firm.
https://www.sec.gov/news/press-release/2022-56
It's very disappointing how fact-free this discussion is.
https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
Would be much more interesting if he had personally experienced or orchestrated what he discusses. Otherwise you may as well just listen to anyone.
EDIT: As some people are responding and confused about how journalism works: E.g. he wrote about Elon Musk today yet is just getting his information from other articles or Twitter as I doubt he is speaking with Elon Musk or involved in the deal. At that point it's just hearsay.
You just literally described a journalist's job. Congrats?
Like if he had worked at Goldman-Sachs and had direct experience with how large financial institutions function or something?
Now maybe you can qualm about where he gets his information and how reputable it is, but I think your standard for journalism differs from most.
He has been offering analysis and commentary on the process since the beginning, floating theories for various parties’ positions and debunking silly ideas that were being taken seriously at the time.
Writing about your first hand accounts is not journalism. If for no other reason than it would be inherently biased. We have a term for stories from a person's life written by the person: autobiographies.
To be clear, the criticism of Levine from the GP is total bunk, but this definition is weird.
Peter Sullivan: Yes.
John Tuld: I'm here for one reason and one reason alone. I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence.
Great movie though
Margin call is by far the best movie about the financial crisis of 2008 that I've ever seen. I was working in the biz at that time and it all just rang so true. 7 AM pre-market meetings, lots of folks crunching data, Wall Street people actually living in Brooklyn and so much more.
Sadly, the movie is so esoteric that it never had a mainstream success. Such a shame because it had great actors and a fantastic script.
You bet they do. But like all things the more money you have the better you get treated.
Small retail investor, your margin call is likely automatic with assets sold without your input to take the money.
large hedge fund. Tables of lawyers deciding how much you have to put up, at what time, and what can you move out of that bank before you pay.
Never read the book (http://www.knightmareonwallstreet.com/) but watched it happen in real time from the trade desk at a different firm.
You could also say it happens to small banks. If you fail some sort of FDIC testing, you're classified as at-risk and they force you to sell to a larger bank so as not to risk depositor funds.
I strongly recommend that movie.
That whole movie is so shallow when you think about it for more than 2 seconds.
That's you assuming stuff, not me. And I don't think there's any evidence for it in the movie - it's portrayed as a surprise to everyone involved.
Edit: actually wasn’t Sorkin but whatever
The movie also makes clear multiple times that the only people who were surprised by what was going on were the little guys – risk analysts and middle management. People at the top got the news and were simply like "ok guess it's finally happening".
If you ask around people who do this stuff for a living, all of them will tell you that out of the dozens of movies about the financial crisis, Margin Call was conceptually the closest one to how things actually work in the industry (obviously disregarding the Hollywood-esque dialog and characters).