Funny Business Is My Business: PRIV, HHH, WARS
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Scratchy voices. Yeah. I sound pretty good. You do sound pretty good. Yeah. I probably sound mostly like myself, but I have been sick. Yeah. You also got a haircut. Not that that matters. No. It's an audio podcast. But no, we took last week off because I was taking my children to a water park, but also I got extremely sick. And so I couldn't have recorded anyway. I lost my voice. I was like standing at the water park very quietly saying, don't go in there.

there. So really it was in the listener's best interests. Was it ever? Yeah, so that they didn't have to hear that voice. But we're back now and boy, we have some stuff to talk about. Unconvincing. Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

I'm Matt Levine, and I write the Money Stuff column for Bloomberg Opinion. And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television. What is all this stuff we have to talk about today, Katie? Okay, we're coming in hot because the first ever private credit ETF has finally launched. We're going to talk about Bill Ackman's dreams of being a baby Berkshire, and then we're going to talk about InfoWars and an interesting bid to try and buy it.

Private credit ETF. The SPDR, SSGA, Apollo, IG, private credit ETF. It launched on Thursday. Priv is the ticker. Yes. And I have to say, I'm kind of shocked that this launched. You didn't think it would? We've talked about this like more than 15 times on this show, right? Yeah, and...

And a lot of people in the industry, too, are shocked that it launched. Okay, interesting. I feel like, is this partly like when they filed for it, it was like there were rules and now there are no rules, or is it not related to that at all? So I was thinking about that. You know, we are in a brave new world. We have a new SEC. This was filed in September 2024. It's launching February 27th, 2025.

I mean, they didn't make arguments. I don't think that Apollo and State Street didn't put any meaningful thought into this. I have no problem. Like, I'm not surprised that it launched. Tell me why. Because, like, you could do anything, man. It's an ETF. Like, why not? If this launched in 2024, would you have been surprised?

No. I asked about, like, now that we have no rules, is that what made it? But, like, I would have thought it was fine in 2024, which is probably why they filed it. So there's a lot of question marks about, and we've talked about this too, like how you put securities as a liquid, as private credit, into a very public wrapper, what withdrawals look like, and whether you could run into some problems there. There's rules that more than 15% of an open-ended fund can't be in a liquid securities fund.

Private credit obviously is considered in a liquid security, but this ETF is going to invest 10 to 35 percent of its holdings in private credit. And the argument that State Street and Apollo made was basically that, you know, Apollo is going to provide that liquidity. They have this trading desk. They're going to both supply liquidity.

the private credit assets for this fund, and they're also going to buy them back. They're contractually obligated to buy them back. So it seems like the SEC agreed with that argument because this thing is trading. I think that argument is basically correct.

Right. There's a range of stuff that is, quote, private credit, right? And, like, one thing that is private credit is business development companies, which are, you know, often, like, middle market direct lending companies that are private credit companies in a public wrapper, right? Like, they provide...

non-bank privately negotiated loans to companies, but they're provided out of a public pool of capital. So my understanding is there's some ability to put BDC shares into this thing, which is liquid private credit, no problem. Some large percentage of what they're going to do is Apollo private credit loans that Apollo will make a market in, and they will be able to trade with Apollo at that market. And yeah, it solves the problem, right? Because the problem is you have...

The possibility of the fund expanding and contracting each day, because like if more public buyers want to buy, then it'll have to expand. And if you have a very illiquid, hard to source, hard to sell asset, like we've talked about like private companies where it's like, you know, you can only get so many SpaceX shares. If you have that, it's hard to expand and contract. But like if you have...

Apollo, which has a massive supply of private credit and its own balance sheet and its ability to buy some back, then Apollo can be the accordion for the expanding and contracting of the ETF. And I don't know, it seems fine. What's wrong with that? Well, let me read you something from Morningstar analyst Brian Moriarity. And I will note that Morningstar tends not to like

things that are a little too crazy. Like, they hate what's going on. I love things that are a little too crazy. That's the problem right here. I'm like, oh, yeah, that sounds fun. They are very spiritually opposed to, you know, funny business. But this is what Moriarty... Funny business is my whole business. Moriarty had to say, Apollo's liquidity facility is subject to a daily limit, and this daily limit remains undefined. It's possible the fund...

could have to meet way more redemptions in a day than the limit. That could force State Street to sell more liquid public securities first, potentially leaving the ETF with more illiquid private credit instruments as a percentage of assets and increasing the risks

of a liquidity crunch. Wait, I like this line. When this happens, the portfolio often begins to manage the advisor rather than the other way around. Okay. That's a cool line. I agree with that. I think it's like when they start with like $0 of assets, like it's not a relevant consideration, right? Like this is clearly like, they're going to see where it goes. Apollo's trading desk has some risk limit and like that risk limit is more than adequate to deal with redemption's

on the first day when it will clearly be net creating, right? Like they're not going to have net redemptions for two weeks, right? I suppose. If they had net redemptions in the next two weeks, they would be very small because it would be small fund. But right. If this becomes a $20 billion ETF, then,

There will be material risks of Apollo not being able to absorb all of the private credit if it goes from $20 billion to zero overnight. Yeah.

My assumption is that everyone's like, well, that'll be a nice problem to have when we come to it, right? Yeah. But no, I think at modest size, it's like, yeah, this is a fun proof of concept for Apollo, and they would trade the paper. They also get to make the price in a not competitive environment, right? Yeah. In a world where Apollo thinks we're doing great private credit loans and all of our loans are fantastic, and retail shareholders of the ETF are pulling out, then...

For Apollo to be like, the mark is 60 cents on the dollar, we'll buy as much as you want. Seems fine for them. I don't know. Yeah. Well...

There's skepticism that I've seen. The fact that, OK, Apollo is supplying the private credit and it's also contractually obligated to buy it back. I did see some people comparing this to like the fox guarding the hen house. One thing that I think. Yeah, I think they're creating private credit to sell to the public and they're trying to make money on it. It's like, of course. Also, what do you think? In the filing, it also says to sort of.

I don't know, ease that worry. The ability to sell the instruments to Apollo is not exclusive. So if State Street theoretically- Found another bid. Yeah. If they found a better bid somewhere else, they wouldn't have to necessarily sell to Apollo. Sure. Great. Yeah. No, I mean, look, I mean, like one, we've talked about not only in the context of the ETF, right? Like Apollo is trying to build up a market for private credit, right? And I think they'd be thrilled-

to live in a world where when State Street wants to sell its private credit, it can get bids from 20 anonymous firms on an electronic platform, right? Like that's a good world for a private credit originator to live in. But yeah, like they think they're smart evaluators of private credit and this is a like retail place into which to put it. Yeah. Yeah, they're hoping to make money. The other thing I'll say is like on this liquidity worry, the thing I always write about private credit is that it's a really good funding model for loans, right? Like you...

are Apollo. You raise money from like classically insurance companies or like, you know, in Apollo's case, they own an insurance, they are an insurance company, right? You raise money from insurance companies and you have this very like long-term locked up capital and you use it to make long-term somewhat risky loans that don't trade, right? And, and,

that's a good match of liabilities and assets, right? Like you are raising long-term money to make long-term loans. It's a better match of liabilities and assets than like classic bank lending where the banks raise overnight money to make 30-year loans. The private credit model has always struck me as being unusually not runnable, right? Like you can't usually, I mean, you sort of can, but you don't really like redeem your life insurance policy, right? So like, like Athene has like really long-term money. And if like,

credit gets worse. Like, no one is clamoring to get their money back, so Athene can kind of ride that out. Athene is Apollo's, like, captive. Right. But once you do it in a, like...

instant liquidity retail vehicle, like that changes a little bit, right? And it's like for the retail vehicle, the liquidity is like, whatever, it's provided by Apollo. But for Apollo, it's like you've shifted your funding model so that it went from being like arguably 100% of your funding is from insurance company clients where like it's like permanent funding to a small but you hope growing percentage of your funding comes from

retail investors who can take their money out at any time and it gets like a little bit more fragile. Yeah. A little bit more fragile. It's like, you know, I wouldn't worry so much about the fund being able to get its money back out of Apollo. I'd worry a little bit like Apollo like making its funding model a little bit worse. Mm-hmm. But you can understand why they think it's worth the risk because one, again, they're starting from nothing so it's like

Day one, that risk is very small. And then two, if it gets really big, then it's a nice problem to have. I cannot wait to see how this is received. I mean, day one is Thursday. I mean, I can't wait to see what it'll look like on Monday, what it'll look like in two weeks, two months, et cetera, what the reception will be like. It's not that private credit-y.

I was like, very good. Very good is like this hot asset class in some sense, but it's also, it's like, yeah, you get like, you know, slightly better than Bond or, you know, like, it's not like SpaceX, right? It's not like a lottery ticket, right? It's like, yeah, it's like a slightly higher fixed income investment.

That's true, but still, I mean, it feels like there's been so much anticipation for this, certainly. I mean, you think about the big splash that this filing made at the time. Maybe that was just in my... We talked about it on this podcast. We talked about it on this podcast. I was going to say, that was mostly in your world. As discussed on the Money Stuff podcast. I was not like...

Hearing on the subway, people being like, oh my gosh, did you see there's a private credit ETF coming? Well, this will be a good reality check to see whether this sort of lives up to the hype, at least in the ETF world. It's a big moment both for the ETF world, but also for just the world of private assets. Oh, yeah. I mean, I do think, and we've talked about this too, like the idea that private credit

won't trade on an electronic platform. Like, it's just like a weird, like, blip in time. Like, there's no reason for that. Like, in five years, will there be, like, big electronic trading platforms for private credit loans? Like, sure, why not? It's

It's fine. Yeah. Also, if we stretch our imaginations, and this is something that I haven't really had time to do yet, but the fact that this is a partnership between an ETF firm, established ETF firm, State Street, with Apollo, which is acting as liquidity provider, you could dream up how that model evolves. Some people, including Morningstar, have pointed to, we'll probably see more of these liquidity partnerships in the future. Oh, yeah.

Yeah. Although like that is also possibly transitional, right? And like in a world where like there is easy liquid trading of private credit, if you're an ETF provider and you're looking to start a private credit ETF,

You'll partner with like Jane Street or something, which is like a liquidity provider, not an originator, right? But like for now, the originators are the liquidity providers. And right, every other originator is probably going to get into having an ETF. Yeah. Also the fee, 70 basis points. Is that high or low? I mean, it's not...

low. But considering the, I don't know what the cost for a retail investor, like an average individual investor to get access to private credit now without an ETF would cost. I will say there's some like leveraged single stock ETFs that cost more than 1%. So this is pretty, I mean- 70 basis points for a credit investment, that seems fun. For a brand new product, a brand new category, actively managed, obviously 70 basis points is fairly cheap, all things considered.

Yeah. This is not their business, you know? Yeah. They got a lot going on. This is a fascinating proof of concept for like, you know, Apollo's push to like be your one-stop retirement provider, right? Yeah. And, you know, you don't need to make a lot of money on this one product in the first week. But maybe they will. Yeah.

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Okay. Okay.

Bill Ackman, friend of the show, Bill Ackman, making some interesting moves, trying to reinvent himself, sort of. Sort of. Only sort of. It's so hard to understand what a hedge fund is. When I was growing up in finance, the hedge fund managers were guys like Bill Ackman who ran kind of concentrated, equity-ish, activist-ish, got on the news, went on TV. And now a hedge fund is...

More back to the classical hedged notion where it's like these much more, you know, multi-strategy, multi-manager, factor neutral kind of quanti funds. But like back when like the kings of the hedge fund world were like the Blackmans, it was like,

A lot of them kind of position themselves as successors to Warren Buffett, who was a hedge fund manager for a little while. Right? And it's like you build an investment partnership where you make concentrated long-term bets on stocks you really like and you're smart and have a public persona and go on TV and that's your business. And like you are self-consciously a like gram and dot value investor and like you're sort of your investing framework is kind of similar to Warren Buffett's. I think that one thing that Bill Ackman in particular has learned

is that in addition to being good at Graham and Dodd and being folksy, Warren Buffett has a structural advantage. He runs a company, and that's more useful to him than running a hedge fund. And in particular, it has seemed to me that Bill Ackman really wants to have a thing that is his investment vehicle that trades at a premium, and that people are willing to pay up to have money managed by Bill Ackman.

And it has been funny over the last year or two watching him fail to achieve that with his closed-end fund IPO. Also heavily discussed on this podcast. Heavily discussed on this podcast. And now what he wants to do, he's like, start over. We're going to do Warren Buffett. We're going to do Berkshire Hathaway. What we're going to do is we're going to buy a small, weird, random company and turn it into a gigantic investment vehicle for like,

Bill Ackman making some public stock investments, making some 100% acquisitions of companies, just being Warren Buffett, just being an acquirer and an investor and a public figure. And I say like buy some random company, but it's not a random company. It's like Howard Hughes, which is a company that he has a long history of. It's like spun out of DTR, which is one of his most successful investments. He was the chairman of the company for a while. And Pershing Square currently owns like 30,

something percent of it. And what he wants to do now is one, buy a little more, partly to get his stake up and probably to just inject money into the company. And then two, like become the head of the company and let the people who are currently running its real estate business be like one little segment of the company. And then let him and his investing team make investments for the company, make acquisitions for the company so that it can become a Berkshire. So that in 20 years, uh,

think of Howard Hughes as a, you know, insurance and tech and whatever company and it's real estate will be a

Interesting historical side note. Although it's also funny that it's called Howard Hughes, which is a guy's name and it's not Bill Hackman. Yeah, I was Googling about it and I kept getting the guy himself. It's not what I wanted. Yeah, it's a $3.9 billion market cap company. It's heavily involved in real estate, including the seaport for our Manhattan natives here. You know what's funny is that they reported earnings today, which is Thursday when we're recording this,

And I was reading through the earnings call and they did make a note that the special committee of our border directors is responsible for evaluating Pershing Square's most recent scheduled 13D filing and the associated proposed transactions. Thus, they will not answer any questions about it. They really cage it. I love it. Well, they got a question about it, obviously. It did take a few questions to get there. But John Kim from BMO Capital Markets was the brave candidate.

brave analyst who spoke up and said, I was wondering if you could provide any sense at all as far as timing of when there will be an update. And I just wanted to confirm the transaction needs board approval and not shareholder approval to move forward? CEO David Riley said that the Pershing Square 13-D filing is between the special committee and Pershing Square, and I'm going to leave any comments on timing or otherwise for them to opine on. So yeah, scant detail. Actually, in my prior life,

Knowing whether that transaction, buying like 10-ish percent of the company when you're already a 30-ish percent holder, knowing whether that transaction required shareholder approval was like a surprisingly large part of my prior life, but I've now forgotten. So I'll let someone else figure that out. God, that would have been so good to bring to this podcast. No, it's a shockingly boring subject. That's what we aim for here at the Money Stuff Podcast. Shockingly boring. I have some questions. One is,

So it's a $3.9 billion company. It's a good company. He has a long history with it. Why not just take Pershing Square public? No, no, because you have to have a regular company.

Like it's a real estate company. So it's like not really a real estate company. You can't just take your hedge fund public and be happy with it? No, you can't. This is what he tried. I mean, not the hedge fund. He tried to take a closed-end fund public. But it turns out that if you just have a closed-end fund, it won't trade at a premium. And then like all of the magic goes away. I thought that the closed-end fund was launching as a step in taking Pershing Square itself public. Yeah, but Pershing Square itself public is not quite the same thing because when you take a hedge fund company public, you're –

capitalizing a fee stream yeah and he doesn't want to sell a fee stream he wants to sell the pot of investments at a premium right it's now breaking my brain a little bit to think about taking a hedge fund company public and then in that hedge fund company buying assets but it just seems it seems like a weird sort of cannibalism or something yeah okay matt doesn't like it i don't like it i don't know why but to me the question is like okay you like howard hughes but like there's

3,000 companies out there. Just buy any one of them. It doesn't matter. We've talked about Brad Jacobs and QXO buying just the most random software company to build his logistics empire out of. It doesn't matter. Just get rid of the software company and then you have your clean shell to do a logistics empire. I wrote once about GameStop.com

In addition to being GameStop, it's like controlled by Ryan Cohen, who's the CEO. And like at some point they put in an announcement being like, he's going to be able to make equity investments with the company treasury. It's like, you can build Berkshire Hathaway out of GameStop and you should because it will trade at a premium and people will love it. Right. But it's like that Ryan Cohen already has that one. But like,

Bill Ackman could buy, you know, all sorts of weird companies and turn them into Berkshire Hathaway. Yeah, I mean, you did write in your column that someone suggested he buy Errolife. That would have been pretty good. I would love to... I mean, I know that I can't, that this is the matter of the special committee of the board of directors, but I would love to know how Howard Hughes feels about this. Right, it's weird because you're like, here you are trying to run your business. Yeah, trying to do your earnings call. And it's like, no, we want to build...

Yeah. A totally unrelated hedge fund. If you're running the textile mill that is Berkshire Hathaway and Warren Buffett comes in and says, I'm going to build a business empire and get rid of the textiles. I don't know. It's like a mixed bag. Yeah. It's probably good for shareholders, but it's kind of weird. Yeah. I wonder if this goes through, whether or not Bill Ackman would tweet less, but- No. You think so? No. Maybe he'd tweet more. I don't know. Oh, yeah. More. Because you get like-

Well, it's got to get people interested in it, I suppose. The thing you're aiming to do is, like, make investments and, like, be accretive to the value of both of your investments and of, like, your vehicle, Howard Hughes, by, like...

People would be like, ooh. Warren Buffett had the ability for a long time to go to a company and be like, I will put a billion dollars into your company at a 30% discount to your stock price. And the stock would double. And so it was worth it to the company. And Warren Buffett would make a lot of money off of it. He had the self-fulfilling prophecy ability where he could invest money in a company and just that investment would make the company go up.

And so he could like monetize that. And like Bill Ackman wants that too. And the way Bill Ackman gets it is like one by like making good investments so that people like his track record, but then two by tweeting a lot. Right. Well, let me, let me rephrase that. I wonder if he will tweet about different things. I don't know. I don't know either. I think that he thinks that this is working. Maybe it is. I will say it's interesting to me.

Reading this column and then preparing for this podcast, you know, I grew up just with Warren Buffett as Warren Buffett. And I haven't really thought deeply about his model before, how he did just buy a random company and start doing this. Yeah, it's similar. Like he was running a hedge fund and like they made an investment in this textile company and he got mad at them. I forget why he got mad at them.

Yeah. They didn't pay. There's some, like he had some fight with them and he's like, I'm just going to buy some stock. And he bought enough stock that he controlled the company. Yeah. And then he's like, well, all right.

I'm going to take the treasury of this company and start making investments with it. And then he became Berkshire Hathaway. Well, I don't know if I find it surprising or not that there haven't been more high profile, successful Berkshire Hathaway types. I mean, we just talked about Brad Jacobs, for example, who's pretty well known. And I don't know, maybe Bill Ackman will be the next Berkshire Hathaway. I will say that Warren Buffett was kind of early to running a hedge fund. And he

in the 90s and certainly the 2000s and 2010s and 2020s, if you were like good at making investment decisions, the idea that you would like take over a public company and invest its treasury and pay yourself, you know, $100,000 a year as Buffett sort of nominally gets paid at Berkshire and like get all of your returns from the increase in the fundamental value of the company. Like,

People found a better model. Yeah. You can run a hedge fund. You can charge $220,000. And, like, you can, you know, make more exotic investments and, you know, have maybe better tax treatment and, like, get paid hundreds of millions of dollars a year. So the idea of people, like, wanting to follow exactly the Buffett path, like, that kind of attenuated. And, like, why does Ackman want to do it? Like, some of it is just, like…

Like he's made enough money and it's like sort of like a legacy slash, you know, experimentation kind of thing. Yeah. I don't know the man, obviously. Not well. It just feels like he wants to be in control of some publicly traded entity. I don't know. I think that's right. I think that like he's had a good run as being a guy who is mainly a manager of private hedge funds and made a lot of money doing it. And now it's like.

This is somehow more of a satisfying public-facing thing. Yeah. I mean, it's hard to understand not being incentivized necessarily by money, but I suppose when you have... You get to a point, man. Yeah. Also, like, I'm sure the money in this... He'll be fine. Yeah.

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Thank you.

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Matt, we decided on this topic like- Ten minutes ago. Yeah, pretty much. So I'm a little bit unprepared. That's fine. But I'm so excited to hear you tell me about it. InfoWars. We talked once about InfoWars before. We did. When The Onion was going to buy them, or rather- They wanted to. Global Tetrahedron was going to buy them. So Global Tetrahedron, which is like the trade name of The Onion, was going to buy InfoWars out of bankruptcy. It's like-

Alex Jones, the InfoWars guy, is in bankruptcy because he spread conspiracy theories and hoaxes about the Sandy Hook Elementary School Massacre. And the families of the victims sued him and got like a billion dollars of judgments. And so now he's in bankruptcy because he doesn't have a billion dollars. And his main asset is InfoWars, his YouTube platform. And the bankruptcy court has been trying to sell that to raise money to give to these essentially Sandy Hook victim families.

And we talked about it because The Onion had bid to buy it. And the idea was that The Onion would pay a little bit of cash for it, but mostly they would run it on behalf of the Sandiak families, essentially, both economically and also to not promote

right-wing conspiracy theories, but to instead promote gun control. So that fell through for what I thought were kind of technical administrative reasons, but like it seems to have really fallen through. When we talked about it, I was like, yeah, Onion can just come back and bid again, but it didn't seem to work out that way. So now like the only bidders are Alex Jones himself in a fake mustache. Fouak? Yeah, there's a thing called Fouak that's basically like some backer of Alex Jones will give him money to buy his company back.

And this thing called wow.ai. That's like a Puerto Rican artificial intelligence, like some sort of thing, you know. But...

Its bid is some cash and a meme coin. It has launched a meme coin called Wars that it wants to use to pay for InfoWars. And the idea is that it has like this meme coin. All meme coins, it's like they issue like 10% of the meme coin and they're like, we've reserved 50% for some weird purpose. So this one, they reserved 51% for the bankruptcy estate. They're going to give it to the bankruptcy estate. It's going to be part of their bid. Yeah. So like the creditors, basically the Sandy Hook families will end up owning this meme coin. Yeah.

And they would buy the site. And then the holders of the Mintcoin could vote on what they would do with the site. I guess the choice would be like, let Alex Jones run it or let The Onion run it. Yeah. And that's their bid. That's... That's the plan. So...

You seem to write that this is pretty clever. You've got to read the whole sentence, which says, you know how much I hate to say this. Because I hate meme questions. Yeah. And the thing that is happening here at its core is like someone thought, hey, it would be good to like pre-sell stock in InfoWars. It would be good to try to buy InfoWars and like raise the money to do it from the public. And like that would give us the money to do it. And then the public could have a say in how we run InfoWars.

But you can't do that because there are securities laws. But now there are no securities laws as long as you call it a token. And so what they have done here is they've pre-sold stock in their new Infowars company and call it a meme coin. And it has some very clever properties, right? You can create a dynamic where people are going to bid up the price because some people want it to be run one way. Some people want it to be run another way. And so there's some auction dynamic where people will pay more to get the outcome they want.

And you've sold like a relatively small number of the tokens and you've reserved a large number of the tokens. So you can say, oh, the fully diluted value of this thing is very large because like the small number of tokens trade, trade at like a relatively high price. And so it's got, you know, it's not like Trump coin, but, you know, I looked this morning and like the fully diluted value is like $23 million, which is like implies $11 million for the Sandy Hook victims, which is more than they'd get from Fuak. Yeah.

It's not necessarily a real value, right? Because it's a thinly traded meme coin. The main thing about meme coins is their value disappears overnight. But still. So it creates a lot of paper value and value.

It creates it in a somewhat clever way. And it just gets around the securities laws because everyone's decided securities laws don't apply to crypto anymore. Yeah. So it's clever, but not in a way that I like. Yeah. Yeah. Like, got to give it to them. But do you have to? You do, kind of. But yeah. Kind of have to give it to them. A question, then I have a statement. So explain this to me one more time. So the bid is for $3.5 million in cash plus 51% of the total maximum supply of the war's meme coins. So...

InfoWars would control the meme coin and then the remaining holders? The meme coin is like, I think like 10% of the meme coin has been like just sold. Yeah. It's like issued to the public and you can trade it, right? Right. So that creates a price, right? Right. Like there's trading. Anyone who wants to can own it. It creates a price. They can, you know, in theory vote on whatever they, if they end up buying InfoWars, then the holders of the token can vote. So like 10% or so is public. Right.

And then like some percentage of it has been reserved for like the guy doing this, right? Wow.ai, the company, right? And then 51% has been reserved for the bid. The bid would be in exchange for Infowars, we'll give the bankruptcy estate $3.5 million in cash and 51% of this token. And then the bankruptcy estate, meaning the creditors, meaning the Sandiak parents, would get those tokens. And there's like some lockup on when they could sell them. But the idea is like...

the bankruptcy state, the creditors would, let's say, share in the economics of future InfoWars by owning this meme coin. Now, when I say share in the economics, I'm like rolling my eyes because... Matt actually said that with a completely straight face. I did. Not even a smile. I was rolling my eyes on the inside. Yeah. You can't see me rolling my eyes and neither can Katie. But...

The whole thing about meme coins is that a meme coin is like, eh, it's linked to the value of this meme, but not through any mechanism. It's just like, yeah, maybe it is. It's just like if people feel like it's linked to the value of the meme, then it's linked to the value of the meme. But it has no ownership of the meme. And so here, the meme coin does not entitle you to cash flows from Infowars. It's just like a meme coin connected to the thing. Yeah.

It's like a weird kind of stock that doesn't convey ownership. I was going to say, this coin or token or whatever we're calling it has clearer fundamentals than most...

Yes, but still no fundamentals. Yeah. I agree with you. Clearer fundamentals than most meme coins, but still none. Yeah. You would have an easier time building a case for why this has fundamentals, though, than... Yeah, because it gives you voting rights over a thing that you care about. Yeah. Right? Like, I mean, you don't have to care about it, but, like, the people trading it probably care about it. Right. It gives you voting rights about what will happen with this, like, culturally...

salient and controversial property. So it does have fundamentals, but it doesn't have cash flows. And so they can say with a somewhat straight face, it's not stock, it's not a security, it's not an investment.

By the way, if their bid fails, it just goes away. Yeah, that's what I was going to ask. Nothing happens. I was going to ask, so if you care about this, you would buy this coin now in hopes of having voting rights in the future. Sure. If this doesn't work, then. If it doesn't work, then. All right. Well, you tried. Yeah. Yeah. That's interesting. It's not like, you know, you would imagine doing this like 10 years ago, going to an investment bank and trying to build a structure that allowed you to like pre-fund your bid and

And where it's like, yo, you put the money in escrow and then you give it back if the bid fails. There's none of that here. It's just like a meme coin. If it fails, it goes to zero. It doesn't matter. How do you think the bankruptcy judge is reading this? I assume he's rolling his eyes on the inside too. I don't really know. I don't understand the process there because he's sort of given up on doing an auction. But the meme coin guy said to, I think, the Wall Street Journal, he said, I put in a $3.5 million cash component to the bid, which is...

was what fuak offered at one point is i put in that cash component so that people wouldn't like would take me seriously yeah because like i think if you just showed up bidding a meme coin people would not take you seriously at all and i don't think that would you still have written about it i don't know that i would have taken it seriously wow yeah yeah there you have it but right i don't know how the tank judges are gonna take it whatever it on thursday like this is gonna be a

thing, right? Like, I feel so stupid saying this, but like, this is a good financing mechanism for this situation, right? For like, the situation where you're like bidding in bankruptcy and you don't know if you're going to win and you're bidding for a relatively small, controversial online, like right-wing meme-y property using a meme coin to fund that like, it's like fit for purpose. Yeah. And so you're probably not going to see like a ton of situations where that applies, but this won't be the last one.

It's a brave new world. You know, like the Red Lobster bankruptcy. Someone could have come in with a meme coin. Like, you know, like it's a thing. God, if only they had been able to hold out for another year. Shrimp coin. Shrimped to death.

And that was the Money Stuff Podcast. I'm Matt Levine. And I'm Katie Greifeld. You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com. And you can find me on Bloomberg TV every day on open interest between 9 to 11 a.m. Eastern. We'd love to hear from you. You can send an email to moneypod at Bloomberg.net. Ask us a question and we might answer it on air.

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show. The Money Stuff Podcast is produced by Anna Masarakis and Moses Andam. Our theme music was composed by Blake Maples. Brendan Francis Noonan is our executive producer. And Sage Bauman is Bloomberg's head of podcasts. Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.

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