The Daily Ten – Hedge-Fund Titans Lose Billions to Reddit Traders Running Amok, A-Rod & Lizzo invest in Proptech, Facebook privacy…
The Daily Ten
1. Hedge-Fund Titans Lose Billions to Reddit Traders Running Amok | Bloomberg
For once, Main Street is beating Wall Street.
In a matter of weeks, two hedge-fund legends — Steve Cohen and Dan Sundheim — have suffered bruising losses as amateur traders banded together to take on some of the world’s most sophisticated investors. In Cohen’s case, he and Ken Griffin ended up rushing to the aid of a third, Gabe Plotkin, whose firm was getting beaten down.
Driven by the frenzied trading in GameStop Corp. and other stocks that hedge funds have bet against, the losses suffered over the past few days would rank among the worst in some of these money managers’ storied careers. Cohen’s Point72 Asset Management has declined 10% to 15% so far this month, while Sundheim’s D1 Capital Partners, one of last year’s top-performing funds, is down about 20%. Melvin Capital, Plotkin’s firm, had lost 30% through Friday.
It’s a humbling turnaround for the hedge fund titans, who in 2020 staged a comeback by pouncing on the wild markets caused by the Covid-19 pandemic. But that crisis helped push thousands if not millions of retail traders into the U.S. stock market, creating a new force that for now the professionals seem powerless to combat.
2. Daryl Morey, former Sixers star join Lizzo and A-Rod in Apartment List’s $60M funding round | Philadelphia Busines Journal
The new president of the Philadelphia 76ers is joining former star swingman Andre Iguodala and celebrities like Lizzo and Alex Rodriguez as new investors in Apartment List’s $60 million Series D funding round.
Daryl Morey — a data whiz with an MBA from the Massachusetts Institute of Technology — was named president of the Sixers in early November, less than a month after he stepped down as general manager of the Houston Rockets.
Apartment List, an online service that helps users find rental units, initially announced a $50 million Series D in December that was led by Janus Henderson Investors. The San Francisco-based company said Wednesday it’s upped that round by $10 million, which includes new investments from big names like actor Priyanka Chopra Jonas, Grammy award-winning musician Lizzo, former Yankees star Rodriguez’s A-Rod Corp. and Chopra Jonas’ manager Anjula Acharia.
3. Facebook’s Zuckerberg Sees Battles Escalating With Apple on Privacy, Messaging | WSJ
Chief executive says changes planned by iPhone maker could hurt ad business, which lifted social-media giant to record fourth-quarter revenue and profits
Facebook Inc. posted record revenue and profit in the fourth quarter while warning of challenges including growing friction with Apple Inc., which Chief Executive Mark Zuckerberg said is increasingly one of his company’s biggest competitors.
Apple and Facebook have tussled in recent years on issues ranging from data collection to app-store fees, though the latest flashpoint is centered on the iPhone maker’s plan to enable users to opt out of third-party apps from collecting certain data—a move Facebook has said could hamper its ad-targeting capabilities.
As Facebook has grown to become the world’s largest social network, with roughly 1.85 billion daily users in the latest quarter, it has become an online advertising behemoth through its ability to harness the reams of information users share and help businesses to reach narrow bands of users based on their internet behavior.
On an earnings call Wednesday with analysts, Mr. Zuckerberg uncharacteristically lambasted Apple during his opening remarks, saying the iPhone maker has made misleading claims about user privacy and that the new rules around advertiser tracking will hurt small businesses. Apple has defended itself, saying it doesn’t plan to prohibit such tracking but that it will simply require app makers to obtain users’ permission to do so. The initiative has rankled the broader advertising community.
4. ‘Dumb Money’ Is on GameStop, and It’s Beating Wall Street at Its Own Game | The New York Times
GameStop shares have soared 1,700 percent as millions of small investors, egged on by social media, employ a classic Wall Street tactic to put the squeeze — on Wall Street.
A real estate salesman in Valparaiso, Ind. A former line cook from the Bronx. An evangelical pastor and his wife in Huntington Beach, Calif. A high school student in the Milwaukee suburbs.
They are among the millions of amateur traders collectively taking on some of Wall Street’s most sophisticated investors — and, for the moment at least, winning. Propelled by a mix of greed and boredom, gleefully determined to teach Wall Street a lesson, and turbocharged by an endless flow of get-rich-quick hype and ideas delivered via social media, these investors have piled into trades around several companies, pushing their stock prices to stratospheric levels.
Some of the names are from an earlier business era. BlackBerry’s shares are up nearly 280 percent this year. Stock in AMC, the movie theater chain, has surged nearly 840 percent. But the trade that captures the David-versus-Goliath nature of the moment involves GameStop, the troubled video game retailer that was once a fixture in suburban malls.
5. Hamptons Home Sales Soar to a Record, and So Do Bidding Wars | Bloomberg
New Yorkers swarming to the Hamptons pushed home sales to their highest level in almost 16 years. Buyers also set records for their willingness to overpay.
The Long Island resort towns saw 803 completed deals in the fourth quarter, the most for any three-month period in data going back to early 2005, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Buyers eager for a pandemic retreat favored larger, more expensive homes, sending the median price of all purchases to $1.4 million, also a record. Bidding wars jumped, with 19% of properties trading above the seller’s asking price, up from 4.6% a year earlier and the biggest share in data going back to 2016, the firms said.
Covid-19 sparked an exodus from New York City, as workers freed from office commutes sought larger homes in quieter locales such as the Hamptons. Families who began as renters in the summer vacation towns have committed to living there full time, enrolling their kids in local schools while continuing to do their jobs remotely — even possibly after the public health crisis ends.
6. Nigeria’s Cowrywise raises $3M pre-Series A to scale its wealth management platform | TechCrunch
Cowrywise, a Nigerian fintech startup that offers digital wealth management and financial planning solutions, has raised $3 million in pre-Series A funding. Quona Capital led the round as Tsadik Foundation, Gumroad CEO Sahil Lavingia, and a syndicate of Nigerian angel investors locally and in the diaspora participated. The company previously raised more than $500,000 through a combination of equity financing and grants.
The idea for Cowrywise came when CEO Razaq Ahmed was an investment analyst with Meristem covering equities and making recommendations to retail and wealth management clients. He noticed that existing investment management firms in the country focused on the top 1 percent. They couldn’t scale investment products to millions of Nigerians primarily due to their restricting size.
7. Washington state lawmakers target Bill Gates, Jeff Bezos, and other billionaires with wealth tax | GeekWire
House Bill 1406 would produce an estimated $2.25 billion in 2023 and $2.5 billion in 2024, according to Rep. Noel Frame (D-Seattle), chair of the state’s House Finance Committee who introduced the bill Wednesday with House Majority Leader Pat Sullivan (D-Covington).
In an interview with GeekWire, Frame said the intent of the wealth tax is part of a larger effort to help to restructure the tax code in Washington state, which she described as the most regressive in the nation. Washington is also among nine states that do not have income taxes.
“We have a tax code that asks low-income people to pay six times more than the wealthiest, in terms of how much tax they’re paying as a share of their income,” she said. “As a state that considers ourselves a social and economic leader, I just don’t think it’s acceptable. It’s completely out of line with our values.”
8. Hotel chain turning kitchens into ‘digital food halls’ with culinary group partnership | Fox Business Network
Graduate Food Halls will be run by culinary group C3
A Chicago-based hotel chain is turning its kitchens into “digital food halls.”
On Wednesday, Graduate Hotels and culinary group C3 (Creating Culinary Communities) announced that they are working together to transform the hotels’ kitchens into Graduate Food Halls, a “new delivery-focused, hybrid digital kitchen concept.”
The hotel kitchens will be remodeled to support operations for up to six C3 brands at once. C3 — which is owned by SBE Entertainment Group — has several restaurant brands including Umami Burger, Krispy Rice and Sam’s Crispy Chicken.
“Instead of being restricted to one menu or cuisine type, diners simply choose their preferred items from any of C3’s food hall concepts in one single order,” the announcement said.
9. VC investment in proptech can yield profits and change lives | TechCrunch
In 2020, nearly $24 billion in venture capitalpoured into companies creating new technology products or innovative business models for the real estate market.
While things like smart home apps and digital mortgage financing services make life easier for upmarket renters and homeowners, none of these technologies help improve the day-to-day struggles of the vast majority of low-income families.
Many of these emergent technologies could be adapted to become “housing tech” solutions — focused on financial resilience, fresh food access, healthcare access and workforce development — which have the potential to transform the lives of our most at-risk populations.
10. SpaceX, Amazon spat pits world’s richest men against each other over space real estate | CNN Business
Austin, Texas (CNN Business)SpaceX and Amazon (AMZN) — companies run by the two richest men in the world — are sparring over their competing satellite-based internet businesses, with SpaceX accusing Amazon of “stifling competition” and Amazon accusing SpaceX of looking to “smother competition in the cradle.”
Elon Musk, the CEO of SpaceX, has an estimated net worth of $209 billion. Jeff Bezos, the CEO of Amazon, has an estimated net worth of $192 billion. (By comparison, even the lower figure was higher than the annual gross domestic product of more than half the countries in the world in 2020, according to the International Monetary Fund.)
At the center of the back-and-forth is a recent attempt by SpaceX to modify its license for Starlink, a massive constellation of internet satellites, of which SpaceX has already launched more than 900. SpaceX already has permission from the US federal government to launch thousands of satellites to bulk up the Starlink constellation, and in recent filings with the Federal Communications Commission, SpaceX said it wants to put a few thousand of those satellites in a lower altitude than previously planned or authorized.