Raiding has been going on for a long time. Firms have just increased in size and political/economic influence and have benefited from an utter lack of accountability and an uneven playing field. The 80s films Wall Street addressed raiding where a still viable airline company Blue Star is to be chopped up and sold for parts:

I’m willing to keep my I-Bonds at least another six months at that rate. They are exempt from state income taxes, which adds a little more to their value, and perhaps inflation will not drop as expected. However, I’m not buying any new I-Bonds as long as CDs and money markets are yielding 4-5%

I had a 4% "brokered" CD mature yesterday, and I chose to reinvest the principal into a new 5% "brokered" CD. As long as I can get a guaranteed 5% interest on CDs, they will continue to be a very viable investment option for this retired investor. I have chosen to set up a laddering system, focusing on short term CDs of 6 monts to 1 year, so I am having CDs mature frequently, giving me the options of how to invest my cash.

/4
And:
A defendant in the case, who spoke on condition of anonymity, denies paying bribes—his firm paid Helsinge “consultancy fees”—but says that exchanging information on rival bids and tenders was “the way of doing business” in South America at the time.
Ah, yes, great, great.
But the other part of the Businessweek story is that this story of corruption and bribery — and Morillo’s instant messages allegedly proving it — fell into the hands of David Boies, the famous American lawyer, who saw that Morillo and his clients had stolen billions of dollars from Venezuela and decided to try to get that money for himself:
Excited by the evidence in their possession, various combinations of Boies, [Morillo’s rival Wilmer] Ruperti, Blondie (the private investigator) and [investor Bill] Duker (the moneyman) met over the summer of 2017 in various offices and on Duker’s 230‑foot sailboat, Sybaris, named for an ancient Greek city famous for its excess. …
First they needed to persuade the Maduro administration to let them bring a claim on PDVSA’s behalf. … Ruperti introduced Boies and Duker to Nelson Martinez, Venezuela’s newly installed oil minister, and Reinaldo Muñoz Pedroza, the country’s attorney general. On July 12, 2017, the parties came to an agreement: Blondie, Duker and the lawyers would get 66% of the proceeds, leaving 34% for PDVSA.
So they set up an entity — PDVSA US Litigation Trust — to sue Morillo and his clients in Florida federal court, and to pay any winnings two-thirds to the lawyers and one-third to PDVSA. They sued, and the defendants’ first line of defense was, basically, “look, you say that we stole billions of dollars from PDVSA, but why do you get to sue? You aren’t PDVSA; you’re some weird new trust. If we stole from PDVSA, let PDVSA sue us.”
Back in court in Miami, before the proceedings could turn to the matter of whether Helsinge and its customers had committed any crimes, Boies needed to demonstrate that the trust had standing—the legal right to bring a case. In most lawsuits, an injured party files a complaint and the two sides argue over its merits. Here you had an opaque New York vehicle claiming to represent Venezuela’s state oil company, which itself was controlled by a corrupt dictator subject to sanctions. Beyond that, it was unclear from the preliminary filings who controlled the trust and who stood to benefit. In July 2018 the defendants filed a motion to have the case dismissed on the grounds that the trust was illegitimate.
This defense was helped by the fact that nobody from PDVSA could really come to court to explain that the trust was legitimate, because (1) Venezuela was subject to increasingly strict US sanctions that made it hard for Boies to work with PDVSA and (2) the Venezuelan government didn’t make it particularly easy either:
What followed was a kind of courtroom farce, as Boies Schiller Flexner’s increasingly desperate efforts to demonstrate the trust’s bona fides fell apart under scrutiny. Defense lawyers sought to depose Venezuelan signatories to the litigation agreement among the various parties, but none could be pinned down. One had simply vanished. Another, Martinez, the oil minister, had recently been arrested in Venezuela and charged with corruption. “Jailed? Did I hear jailed?” the judge asked, trying to keep up. When PDVSA’s general counsel did finally commit to going to the US to be deposed, two dozen attorneys booked flights and hotels, only for the witness to pull out at the last minute, apparently under orders from Maduro himself.
The plaintiffs’ position was further undermined by how poorly news of the litigation was going down in South America. As part of the discovery process, Boies Schiller Flexner was ordered to hand over the agreement letter laying out the 66%-34% split. It was pilloried on Venezuelan state television. On April 24, 2018, the National Assembly, home to what remains of the country’s opposition, published a decree describing the trust as “a mechanism to divert the funds and resources” of Venezuela.
Ultimately this defense worked, and the judge dismissed Boies’s lawsuit. I love that a famous US lawyer learned of Swiss companies defrauding a Venezuelan company out of billions of dollars, and his natural first reaction was to go to a US federal court to get it to order those companies to give him the money instead. “If a US lawyer notices anyone stealing any money anywhere in the world, that money belongs to him, and a US court will enforce his rights to it” is not 100% wrong as a description of US law, which explains a lot about the extraterritorial application of US law, the hegemony of the dollar system, and the entrepreneurial American legal culture. But it is not 100% right either, and it did not work out for Boies.
Anyway, elsewhere in euphemisms for bribes, here is the Economist with a helpful collection:
One approach is to talk about something other than money. Some officials, for example, like to keep citizens well abreast of their food and drink preferences. “I really want to drink a Nescafe,” declares an airport security guard six times as he frisks your correspondent in Burkina Faso. In Uganda traffic police find ways to mention their favourite soda. In South Africa such requests are so common that bribes for driving offences are known as “cold drink money”.
I guess if you’re a cop at a traffic stop you can’t really ask for a consultancy fee.
Succession
I have occasionally tried to understand the capital structure, valuation, corporate governance and shareholder base of Waystar Royco, the Roy family’s publicly traded conglomerate on the TV show Succession, but I quickly find myself frustrated by some contradiction that doesn’t make much sense, and then I remind myself that it’s a TV show and nobody cares about the absolute verisimilitude of its corporate bits. (Who is on the Waystar Royco board? Why are there no independent directors? Who cares!) Anyway at FT Alphaville last week Louis Ashworth gave it a go; he got farther than I ever have but he gave up too, and my advice is that it isn’t worth it.
Things happen
SVB’s new owner fights to rebuild brand and stem outflows. Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance. New Wall Street ‘fear gauge’ to track short-term market swings. The Crypto Detectives Are Cleaning Up. The Impending Fight for Private Equity Buyout Lending. CME plays down rival to LME nickel market. UK Aims to Avoid Repeat of Liz Truss’s Market Mayhem With LDI Reforms. Partner pay at top US law firms hit by dealmaking drought. J&J Consumer-Health IPO Process to Kick Off Key Test for Moribund New-Issue Market. A Schwab Divorce From Bank Could Unlock Value, JPMorgan Says. Gemini’s Plan for Derivatives Exchange Adds to Crypto’s Flight From the US. “The market considers the one-month bill a safe haven. … The three-month is more in the crosshairs.” How Vanuatu allegedly lost its mackerel rights — and fought back. “Afterward we had dinner at Bennigan's; on the menu chalkboard, under Quiche of the Day, Jello [Biafra] scrawled ‘YOU.’”
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[1] This number comes from the company’s first-day declaration (PDF), Document 10 in the bankruptcy docket.
[2] A footnote to this sentence in the declaration cites Money Stuff.
[3] There are also about $1 billion of unsecured bonds outstanding, and talk about nostalgia: They were issued in 2014 to fund a stock buyback, and include about $600 million of *30-year bonds*, due in 2044, with a 5.165% interest rate. They were rated A-/Baa1 when issued. Different times!
[4] Its closest competition is when Hertz Global Holdings Inc. sold stock to meme-stock investors *in bankruptcy*, which was incredible, but (1) the US Securities and Exchange Commission shut that deal down almost as soon as it launched, so it never raised much money and (2) Hertz was trying to reorganize in bankruptcy, not liquidate; it succeeded and the equity actually recovered, so buying (and, thus, selling) the stock was not *that* crazy. To be clear, that is still a possibility here — “Bed Bath & Beyond has pulled off long shot transactions several times in the last six months, so nobody should think Bed Bath & Beyond will not be able to do so again” — and I will feel dumb and amazed if the people who bought Bed Bath stock on Friday at $0.29 end up making a fortune on the trade.
[5] This is a little loose, and there are scenarios where some equity owner might put in more money in a bankruptcy-type situation in order to *keep control of the company*. “An equity owner throws in more money and comes out with zero stake in the company" is … less common.
[6] No, no, it’s still trading; it was at about $0.19 or so at noon today. Really this should say “… and (2) now is even more clearly going to be worthless,” but all hope is not technically lost.
[7] Bloomberg reports: “‘The idea that you can continually support your company even in the face of constant dilution of your investors just isn’t a long-term, viable corporate-finance strategy,’ said James Gellert, CEO of ratings firm Rapid Ratings. ‘Bed Bath & Beyond had a seeming disregard for common equity holders.’”
/4 of 4

/3
In 2017, Snap Inc. went public by selling non-voting stock; only founders and insiders would get any votes at all. Investors complained, and also bought the stock, because they didn’t want to miss out on a hot initial public offering. (It’s down more than 40% since its IPO, oops.) But then some index providers — FTSE Russell and S&P Dow Jones — changed their rules to exclude or limit dual-class stocks from many of their indexes. The investors had solved their collective action problem; they had found a way to impose economic penalties on companies with dual-class stock.
It didn’t work. Companies kept going public with dual-class stock. They didn’t care that much about missing out on the indexes; their founders were willing to pay the economic price to keep control. (In particular, companies don’t generally get added to the S&P 500 the day they go public; a lot of index demand is not for shares in the IPO but later on, meaning that it doesn’t directly affect the IPO price.) This means that the investors’ solution ended up being bad for them: They credibly committed to not buying dual-class stock of hot companies, hot companies kept going public with dual-class stock, index funds couldn’t buy those stocks, and they were sad.
The solution was to give up. Last week S&P Dow Jones announced that dual-class stocks are fine again: “Effective April 17, 2023, all companies with multiple share class structures will be considered eligible candidates for addition to the S&P Composite 1500 and its component indices,” including the S&P 500. Here’s a Davis Polk & Wardwell LLP client memo from last week:
In response to Snap Inc.’s IPO in which only non-voting shares were offered to the public, the Council of Institutional Investors and others had lobbied the major index providers to bar non-voting shares from their indices, arguing that absent this change, passive investors such as index funds would be forced to invest in non-voting shares that erode public company governance. As a result, since July 31, 2017, S&P Dow Jones has excluded companies with multiple share classes from the indices comprising the S&P Composite 1500.
The decision to revisit index eligibility criteria comes after a consultation process that S&P Dow Jones ran with market participants from October to December 2022.
In 2017, investors noisily complained that they were being forced to buy dual-class stocks, so S&P kicked the dual-class stocks out of the indexes. In 2022, investors noisily complained that they were being forced not to buy dual-class stocks, so S&P let them back in.
Oil rigging
I loved Liam Vaughan’s and Lucia Kassai’s Bloomberg Businessweek story last week about corruption in Venezuelan oil auctions, in part because it is two almost entirely separate stories of corruption. For starters, there are the Venezuelan oil auctions. Venezuela’s state oil company, Petróleos de Venezuela SA, would sell various oil products in auctions, and big oil trading firms would hire a consulting firm named Helsinge, run by a guy named Francisco Morillo, to help them win the auctions. The way he allegedly helped them win was (1) he bribed PDVSA insiders to tell him about the other bids, (2) he shared those bids with his clients, (3) the clients topped those bids by a penny and (4) they paid him enough to cover the bribes with some profit for himself:
In one series of chats from March 14, 2006, Morillo, using the screen name George White, guided three prominent commodity traders—Maarraoui at Vitol, Gustavo Gabaldon at Glencore and Maximiliano Poveda at Trafigura—through auctions for fuel oil and a product called vacuum gas oil, which is used to make gasoline. At 9:51 a.m., nine minutes before the offers were due, Morillo shared details of the bids PDVSA had received for the vacuum gas oil—information PDVSA says is supposed to be confidential. Five minutes later he informed the three traders, via separate chats, of a late bid for the fuel oil.
The traders didn’t enter every auction, but when they did bid, the information Morillo had provided let them know at what price to do so. On March 20, 2006, after learning about offers from BP Plc and two other companies, Maarraoui placed a bid to buy gas oil at 0.8¢ per gallon more than the next-highest bidder. Two days later, Poveda won a liquefied petroleum gas auction after being told about two rival offers and besting them by a cent.
These conversations, a handful among thousands, demonstrate how valuable Helsinge’s service was to its customers—and how potentially devastating it was to the Venezuelan people. If Morillo’s clients had been forced to enter the market blind, they likely would have placed some bids at $5 or $10 per metric ton higher than they needed to, as the chats show their competitors did. Instead the traders were able to win auctions they entered by a dollar or less, saving as much as $1.5 million on a typical 150,000-ton cargo. According to the Boies complaint, they’d pay Helsinge about $300,000 on a shipment of that size. PDVSA declined to provide data to Businessweek on the outcome of its auctions, or to comment for this story, but given that the company conducted dozens of auctions each month as buyer and seller, and that Helsinge was in business for 15 years, it’s conceivable Venezuela lost out on several billion this way.
Also, if you keep doing this, eventually you’re going to drive everyone else out of the auctions, further depressing prices:
Traders from two oil companies told Businessweek that they’d stopped participating in PDVSA’s auctions because they were sick of losing to the same players. “Putting together an offer takes time. You need to figure out the economics, freight, insurance, the hedge, then submit to your compliance, get signatures from God knows who before you’re able to submit a number,” says one of the individuals, who asked not to be identified. “After a while we just gave up. It became clear to us that something funny was happening.”
This part of the story includes some classics of the “don’t put it in writing” and “don’t refer to bribes by cutesy nicknames” genres:
As well as routinely passing along information, [PDVSA commercial and supply unit manager Rene] Hecker talked to Morillo about the need to encrypt their conversations and about an offshore company he’d set up in Panama. In one message, Hecker sent Morillo banking information for his father-in-law, known as Gigante, writing in the subject line, “chamo elimina estos archivos despues please” (“dude delete these files later please”). Before Christmas 2004, Gigante received two payments totaling $400,000, Morillo’s bank statements show.
/3

/2
I said above that the few hundred million dollars that Bed Bath raised by selling 622 million shares of stock since it started preparing for bankruptcy “was not enough” to solve its problems, but it’s actually a bit worse than that. Bed Bath’s bankruptcy filing tells a story in which the company got into a bad place due to a combination of pandemic/supply-chain issues and its own management mistakes; in particular, its former chief executive officer pushed private-label brands instead of the well-known brands that its customers wanted. Bed Bath realized its mistakes and began correcting them — that CEO “was excused on June 29, 2022” — but that takes money; “the Company needed real runway to turn around its inventory and liquidity position.”
But the story is not that it then went out and raised several hundred million dollars to build up its inventory and make its business more attractive. No, the story is that it went out and raised several hundred million dollars to hand directly to its creditors:
Unfortunately, under the terms of the Second Amended Credit Agreement, the Debtors were required to use the net proceeds from the initial closing of the [Hudson Bay] Offering, along with the FILO Upsize, to repay outstanding revolving loans under the Debtors’ Prepetition ABL Facility, including repayment of the nearly $200 million overadvance. At this point the Company’s sales had dropped 60% on a comparable store basis, resulting in substantial ongoing losses from operation; therefore, the remaining Offering proceeds went to cover operational losses rather than to restoring inventory levels. …
The net proceeds from the B. Riley ATM Program were used to prepay outstanding revolving loans under the Debtors’ Prepetition ABL Facility and cash collateralize outstanding letters of credit, resulting in new credit under the Debtors’ Prepetition ABL Facility. ...
The Debtors’ cash burn continued while sales further declined due to lack of incoming merchandise, thus, preventing the Debtors from implementing their anticipated long-term operational restructuring while satisfying their restrictive debt obligations.
That is, Bed Bath had an asset-based lending facility (its most senior debt) and a first-in-last-out term loan (effectively its second-most-senior debt); as of November 2022, it had borrowed $550 million on the ABL (plus $186.2 million of letters of credit) and $375 million on the FILO. As of Sunday there was $80.3 million outstanding on the ABL (plus $102.6 million of letters of credit) and $547.1 million outstanding on the FILO.[3] Since this all began, Bed Bath has raised a bit more than $400 million from shareholders and handed about $300 million of it directly to its lenders, while the business collapsed and it had no money to fix things. Now it will hand the rest of its money over to the lenders.
I don’t know what to say? All of this was quite well disclosed. Back when Bed Bath did the Hudson Bay deal in January, it said in the prospectus that it intended to use all the money it raised to repay debt, and that if it didn’t raise a billion dollars in that deal (it did not) then it “would not have the financial resources to satisfy its payment obligations,” it “will likely file for bankruptcy protection,” “its assets will likely be liquidated” and “our equity holders would likely not receive any recovery at all in a bankruptcy scenario.” All of the legal documents were pretty clear that Bed Bath was raising money by selling stock to retail investors, that it was handing that money directly to its creditors, that the money probably wouldn’t be enough, that Bed Bath was probably going bankrupt, and that when it did the stock that it had just sold to those retail investors would be worthless. And things have worked out exactly as promised. No one can be surprised!
And yet it is one of the most astonishing corporate finance transactions I’ve ever seen?[4] The basic rules of bankruptcy are:
When a company is bankrupt, the shareholders get zero dollars back, and the creditors get whatever’s left.
The shareholders don’t get less than zero. They don’t put more money in.[5]
Here, I mean, Bed Bath was kind of like “hey everyone, we went bust, sorry, but our lenders are such nice people and they could really use a break, we’re gonna pass the hat and it would be great if you could throw in a few hundred million dollars to make them feel better.” And the retail shareholders did! With more or less complete disclosure, they bought 622 million shares of a stock that (1) was pretty clearly going to be worthless and (2) now is worthless,[6] so that Bed Bath could have more money to give to its lenders when it inevitably liquidated.
I have over the past few years been impressed by AMC Entertainment Holdings Inc.’s commitment to the meme-stock bit. In particular, AMC’s management was early and aggressive in realizing that being a meme stock could be a tool of corporate finance, that when people on Reddit are bidding up your stock for no clear reason, the correct reaction is not to chuckle in disbelief but to sell them stock. But AMC at least has a story; AMC is using its meme investors’ money to pay down debt, sure, but also to keep its theaters open and buy a gold mine.
No, this is the peak of meme stocks. Bed Bath & Beyond sold 50 million shares a week for three months with, as far as I can tell, no story, no plan, nothing but “a troubled financial situation and nostalgia value.”[7] Bed Bath saw that its retail shareholders wanted to throw their money away, and that its sophisticated lenders wanted to get their money back, and realized that there was a trade to be done that would make everyone, temporarily, happy. So it did the trade. It’s amazing. The lawsuits are gonna be great.
Dual-class stock
Most investors would prefer not to have dual-class stock. If a company has two classes of common stock, one of which has a lot of votes and is held by the founders and the other one of which has fewer votes and is sold to the public, then that’s bad, for you, as a big public shareholder. If you’re buying 5% of a company you’d like to get 5% of the votes, so that if you get dissatisfied with management you can push for change and they’ll have to listen to you.
But it can be a little hard to insist on this preference. Most of the time, if things work out well or even adequately, your voting rights just won’t matter very much. If some hot tech company is looking to go public with dual-class stock so that its visionary founder can keep control forever, and you like the visionary founder, you will want to own the stock even with no voting rights, and if you insist on voting rights, the visionary founder can say “well I don’t need your money anyway, lots of other people want to invest.” There is a collective action problem: Most investors would like voting rights, but it’s not at the top of their list, so anyone who refuses to buy dual-class stock will end up missing out on a lot of hot deals.
This means that, if you are a visionary founder looking to go public, there’s not much downside to having dual-class stock. “Investors won’t like it,” your bankers will tell you, and you will ask “well how much less will they pay for the stock if it’s dual-class,” and the bankers will be forced to reply “well they’ll pay the same price but they’ll grumble about it to the press.” Who cares? If there is no visible economic penalty for having dual-class stock, lots of founders will want it.
There is, however, at least one way for investors to act collectively to address this problem. Sort of. Companies, and founders, want to be in stock indexes, because there is a lot of money there: Trillions of dollars are managed in indexed strategies, and trillions more are in funds that are benchmarked to indexes and tend to invest in companies in indexes. So there is an economic penalty for companies that are not eligible for the indexes. And index eligibility rules are set by index providers like S&P Dow Jones Indices and FTSE Russell. Those companies can change their rules if they want. Those companies’ clients are investment managers who use their indexes. And the index eligibility rules are, to some extent, a matter of customer service and marketing: Index rules are not just about the abstract pursuit of truth (“What does it mean to be a large-cap company in Europe, the Middle East and Africa? How do we make sure all of those companies are in our index?”), but also about providing a useful product for your customers (“What list of large-cap EMEA companies do large-cap EMEA index fund managers feel like they should invest in?”).
And so if all the investment managers hate dual-class stock, they can quietly call up the index providers and say “hey it would be helpful for us if you ban dual-class stocks from the index, because then none of us could buy them and our collective action problem would be solved.”
/2

hope that anyone interested saw this earlier and similar stomach-turning MLevine writeup, "Money Stuff: Bed Bath Moves Into the Beyond" ...
somehow like an inverse of naked shorting
or something
\\\ Beyond bloodbath
On Jan. 20, Bed Bath & Beyond Inc. had about 117.3 million shares of common stock outstanding; the stock closed that day at $3.35 per share. On March 27, it had about 428.1 million shares outstanding, at $0.7881 each. On April 10, it had 558.7 million shares outstanding, at $0.2961 each. Yesterday, April 23, when it filed for bankruptcy, it had 739,056,836 shares outstanding.[1] The stock closed at $0.2935 on Friday.
So in the last two weeks, Bed Bath & Beyond has sold about 180 million shares to retail investors, more shares than it had outstanding in January. The stock averaged about $0.31 per share over those two weeks, meaning that the company raised maybe $55 million, in those two weeks, as it has been sliding into bankruptcy. Since January, Bed Bath & Beyond has sold about 622 million shares, or almost 50 million shares a week, raising a few hundred million dollars.
Here is Bed Bath’s first-day declaration in the bankruptcy case, which describes what the company has been up to over the last few months. The points that I would highlight are:
In December 2022, “Bed Bath & Beyond triggered multiple events of defaults under its financing facilities” and began its slow move into bankruptcy.
Also in December 2022, its financial advisers at Lazard “commenced a process to solicit interest in a going-concern sale transaction that could be effectuated in chapter 11,” that is, to find someone who was interested in buying the company out of bankruptcy and continuing to operate its business.
They failed: By mid-January, “Lazard had engaged with approximately 60 potential investors to solicit interest in serving as a plan sponsor, acquiring some or all of the Debtors’ assets or businesses, or providing postpetition financing,” but “to date, the Company has been yet to identify an executable transaction.”
So, as of mid-January, it seems that the company’s plan was to file for bankruptcy, close all its stores, liquidate its inventory and hand whatever cash was left to its creditors.
But Bed Bath did have one thing going for it. It was “part of the ‘meme-stock’ movement started and fueled on Reddit boards and social media websites,” because it “checked the two boxes needed to become a meme-stock: (i) a troubled financial situation and (ii) nostalgia value.”[2]
So someone had the bright idea of delaying things for a bit by selling tons and tons of stock to Bed Bath’s retail shareholders at whatever prices they’d pay. “Certain third-party investors expressed interest in providing the Debtors with substantial equity financing in light of the Company’s depressed share price and continued trading volatility. More specifically, the Debtors were approached by Hudson Bay Capital Management, LP” about a weird stock deal that we discussed in January; this ended up raising about $360 million. After the Hudson Bay deal ran its course — basically, after Hudson Bay and Bed Bath drove the stock price from above $3 to below $1 by pounding out about 311 million shares to retail investors — Bed Bath and its brokers at B. Riley Securities Inc. sold another 311 million shares to retail investors, but at ever-declining prices, so they raised a lot less money. Still something, though.
It was not enough, though, and ultimately this weekend Bed Bath & Beyond filed for exactly the sort of bankruptcy it was contemplating in January: Close all the stores, liquidate the inventory, hand whatever cash is left to the creditors. “The Debtors are committed to achieving the highest or otherwise best bid for some or all of the Debtors’ assets by marketing their assets pursuant to the Bidding Procedures, and, if necessary, conducting an auction for any of their assets,” the company says, but it has had like four months to find someone interested in buying the business, and if no one has shown up yet no one is going to. And: “The Debtors estimate that the aggregate net sales proceeds from all Sales will be approximately $718 million,” against about $1.8 billion of debt to pay off. Nonetheless:
While the commencement of a full chain wind-down is necessitated by economic realities, Bed Bath & Beyond has and will continue to market their businesses as a going-concern, including the buybuy Baby business. Bed Bath & Beyond has pulled off long shot transactions several times in the last six months, so nobody should think Bed Bath & Beyond will not be able to do so again. To the contrary, Bed Bath & Beyond and its professionals will make every effort to salvage all or a portion of operations for the benefit of all stakeholders.
/1

Kind of astonishing this kind of stuff is still going on: https://nytimes.com/2023/04/28/opinion/private-equity.html#commentsContainer
An excerpt:

Companies bought by private equity firms are far more likely to go bankrupt than companies that aren’t. Over the last decade, private equity firms were responsible for nearly 600,000 job losses in the retail sector alone. In nursing homes, where the firms have been particularly active, private equity ownership is responsible for an estimated — and astounding — 20,000 premature deaths over a 12-year period, according to a recent working paper from the National Bureau of Economic Research. Similar tales of woe abound in mobile homes, prison health care, emergency medicine, ambulances, apartment buildings and elsewhere. Yet private equity and its leaders continue to prosper, and executives of the top firms are billionaires many times over.
Why do private equity firms succeed when the companies they buy so often fail? In part, it’s because firms are generally insulated from the consequences of their actions, and benefit from hard-fought tax benefits that allow many of their executives to often pay lower rates than you and I do. Together, this means that firms enjoy disproportionate benefits when their plans succeed, and suffer fewer consequences when they fail.
Consider the case of the Carlyle Group and the nursing home chain HCR ManorCare. In 2007, Carlyle — a private equity firm now with $373 billion in assets under management — bought HCR ManorCare for a little over $6 billion, most of which was borrowed money that ManorCare, not Carlyle, would have to pay back. As the new owner, Carlyle sold nearly all of ManorCare’s real estate and quickly recovered its initial investment. This meant, however, that ManorCare was forced to pay nearly half a billion dollars a year in rent to occupy buildings it once owned. Carlyle also extracted over $80 million in transaction and advisory fees from the company it had just bought, draining ManorCare of money.
ManorCare soon instituted various cost-cutting programs and laid off hundreds of workers. Health code violations spiked. People suffered. The daughter of one resident told The Washington Post that “my mom would call us every day crying when she was in there” and that “it was dirty — like a run-down motel. Roaches and ants all over the place.”
In 2018, ManorCare filed for bankruptcy, with over $7 billion in debt. But that was, in a sense, immaterial to Carlyle, which had already recovered the money it invested and made millions more in fees. (In statements to The Washington Post, ManorCare denied that the quality of its care had declined, while Carlyle claimed that changes in how Medicare paid nursing homes, not its own actions, caused the chain’s bankruptcy.)
Carlyle managed to avoid any legal liability for its actions. How it did so explains why this industry often has such poor outcomes for the businesses it buys.
The family of one ManorCare resident, Annie Salley, sued Carlyle after she died in a facility that the family said was understaffed. According to the lawsuit, despite needing assistance walking to the bathroom, Ms. Salley was forced to do so alone, and hit her head on a bathroom fixture. Afterward, nursing home staff reportedly failed to order a head scan or refer her to a doctor, even though she exhibited confusion, vomited and thrashed around. Ms. Salley eventually died from bleeding around her brain.
Yet when Ms. Salley’s family sued for wrongful death, Carlyle managed to get the case against it dismissed. As a private equity firm, Carlyle claimed, it did not technically own ManorCare. Rather, Carlyle merely advised a series of investment funds with obscure names that did. In essence, Carlyle performed a legal disappearing act.
In this case, as in nearly every private equity acquisition, private equity firms benefit from a legal double standard: They have effective control over the companies their funds buy, but are rarely held responsible for those companies’ actions. This mismatch helps to explain why private equity firms often make such risky or shortsighted moves that imperil their own businesses. When firms, through their takeovers, load companies up with debt, extract onerous fees or cut jobs or quality of care, they face big payouts when things go well, but generally suffer no legal consequences when they go poorly. It’s a “heads I win, tails you lose” sort of arrangement — one that’s been enormously profitable.
But it isn’t just that firms benefit from the law: They take great pains to shape it, too. Since 1990, private equity and investment firms have given over $900 million to federal candidates and have hired an untold number of senior government officials to work on their behalf. These have included cabinet members, speakers of the House, generals, a C.I.A. director, a vice president and a smattering of senators. Congressional staff members have found their way to private equity, too: Lobbying disclosure forms for the largest firms are filled with the names of former chiefs of staff, counsels and legislative directors. Carlyle, for instance, at various times employed two former F.C.C. chairmen, a former S.E.C. chair, a former NATO supreme allied commander, a former secretary of state and a former British prime minister, among others.
Such investments have paid off, as firms have lobbied to protect favored tax treatments, which in turn have given them disproportionate benefits when their investments succeed. The most prominent of these benefits is the carried interest loophole, which allows private equity executives to pay such low tax rates. The issue has been on the national agenda since at least 2006, and three presidents have tried to close the loophole. All three have failed.

Banks, including JPMorgan Chase & Co (JPM.NaE) and PNC Financial Services Group Inc (PNC.NaE), are vying to buy First Republic Bank (FRC.NaE) in a deal following a government seizure of the lender, Wall Street Journal reported on Friday.

Certainly didn’t help FRC’s stock price much late in the day. Closed down 43% to $3.51 in Friday’s regular trading. Than fell 34% more during after market trading to end the week at $2.32. It’s interesting to note the huge impact CNBC and other reporting had on the stock Friday. If someone wanted to play naughty and manipulate the price for personal gain with unsubstantiated reports, there was plenty of opportunitiy.
FRC 3.51
USD▼ -2.68 (-43.30%) today
2.32▼ 1.19 (33.90%)After Hours · April 28, 7:59 PM EDT · Market Closed
(Above excerpted from Google)

I also posted this link over on the BUY-SELL-WHY thread.
First Republic likely headed for receivership, and regulators are readying themselves for it. Yahoo Finance is the source.
https://finance.yahoo.com/news/u-regulator-set-over-first-203340365.html

Stable-Value (SV) Rates, 5/1/23
TIAA Traditional Annuity (Accumulation) Rates
+25 bps for RC, RA, RCP, SRA; huge +175 bps for Newer IRAs.
Restricted RC 6.50%, RA 6.25%
Flexible RCP 5.75%, SRA 5.50%, Newer IRAs 5.20% (!)
TSP G Fund hasn't updated yet (previous monthly rate was 3.625%).
Options outside of workplace retirement plans include m-mkt funds, bank m-mkt accounts (FDIC insured), T-Bills, short-term brokered CDs.
#401k #403b #StableValue #TIAA #TSP
https://ybbpersonalfinance.proboards.com/post/1024/thread

Thanks for the info. At 4.30% composite rate, will I bond be competitive to that of say, 5 year TIPs at auction?
I anticipate the inflation (CPI) will stay 4-5% until end of 2024. The labor market is still tight.

Been raising a little cash the past couple days. Dry powder for the next market nose-dive. Dow’s not too far from its record close of 36,800 on January 5, 2022. Not bearish, just a little cautious. Still slightly overweight equities and a bit below normal on the fixed income side. How we allocate, of course, depends greatly on age and other individual factors. No single approach fits all.
Metals continue to look interesting in the overall scheme of things, but have pulled back a bit. The S&P and NASDAQ have greatly outdistanced the Dow YTD. The Fed may not like the heady stock market when they meet next month. First Republic at last glance had fallen over 40% today down to $3 - $4. One wonders how the eventual outcome there may impact markets next week …. And whether it’s enough to lessen the Fed’s strident approach …

@Old_Joe - He was an investor, not a saint. But I agree with you that religion’s a funny thing. Templeton wore his religion well. Was it genuine? I believe so, but who knows? And the comments above about Bhopal haven’t escaped me. I suspect that today (50 years later) he might be scoffed at for being so overtly religious. Different periods and cultures.
Among the giants that appeared often on Rukeyser’s show in the ‘70s & ‘80s were Templeton, Peter Lynch and Henry Kaufman. What Templeton lent was a belief / message that over long periods individual investors would be rewarded for saving and investing for the future. In the long run the country and mankind worldwide would prosper and investments in equities were a road to participation in that wealth - a way to raise the living standards of the masses. Of course, it hasn’t turned out that way for various sundry reasons. But that was the message, and I think he really believed it.
Geez - Have another book about Templeton loaded into my Audible library. Generally fall asleep nights absorbing either finance or astro-physics, both of which I find intriguing. Have listened to Howard Marks a lot and to a nice biography on Buffett. I try to glean what wisdom I can from any source, even though I might loath some aspects of their lives.
PS - Thanks for commenting.

New I-Bond Rate 4.30%, 5/1/23
Fixed/base rate 0.90%
Semiannual inflation 1.69%
Composite rate = [0.0090 + (2 x 0.0169) + (0.0090 x 0.0169)] = 0.042951 or 4.30%
www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

Often, though not always, one can do a little better on the secondary market. Currently, the 3 month T-bill expected auction rate shows as 5.012%, while I'm seeing (at Fidelity) a T-bill maturing 7/27/23 with an ask yield of 5.124% (quantity 1).
You have to go digging through the book (multiple offerings of a given security) to find offerings that don't require you to buy $100K or so. If you make do the effort, you may be able to eek out another 10 basis points or so (annualized). Might not be worth your time just to make an extra 25¢ on a $1,000 T-bill over three months. Depends on how much you're investing and how long until maturity.

@yogibearbull ; Thanks for the info, "
Anyway, the 3m T-Bill still looks attractive for Monday 5/1/23 Auction. Orders can be entered at brokerages until early-AM Monday, 5/1/23. The settlement is on Thursday, 5/4/23; money would be reserved/blocked by the brokerage on Monday, but could also be covered by another security settling on 5/4/23. Fido would generate margin alert(s) but those can be ignored if there are matching settlements on 5/4/23; Schwab and Vanguard would just indicate pending activity on their balance screens but won't/shouldn't send any margin alerts."

The fed fund (overnight) rate is 4.75-5.00% (likely to change on 5/3/23). So, these rates should be viewed in that context.
The 1m T-Bill yield fell to 3.36% on 4/21/23, but yesterday (EOD, 4/27/23) it was 4.27%, low compared to the fed funds but not alarmingly so. Yesterday, the 3m T-Bill yield was 5.18%, so the 1m-3m T-Bill spread was 91 bps (vs 178 bps on 4/21/23).
Unclear how anything has changed for debt-ceiling - there is a House proposal that would be just DOA in the Senate.
Anyway, the 3m T-Bill still looks attractive for Monday 5/1/23 Auction. Orders can be entered at brokerages until early-AM Monday, 5/1/23. The settlement is on Thursday, 5/4/23; money would be reserved/blocked by the brokerage on Monday, but could also be covered by another security settling on 5/4/23. Fido would generate margin alert(s) but those can be ignored if there are matching settlements on 5/4/23; Schwab and Vanguard would just indicate pending activity on their balance screens but won't/shouldn't send any margin alerts.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202304

https://www.globenewswire.com/news-release/2023/04/28/2657083/0/en/Norsk-Hydro-Robust-results-executing-on-strategy.html
Lots of buying and selling of assets!!!!
This just sounds like musical chairs to me. WTF?
"Glencore will acquire an additional 40 percent stake in MRN which is currently owned by Vale. This 40 percent interest will be acquired by Hydro from Vale and immediately sold to Glencore on a back-to-back basis. After the transactions Hydro will no longer have an ownership position in MRN. The transactions will have a total enterprise value of USD 1.15 billion which shall be adjusted for debt like items and working capital. Closing is expected in the second half of 2023."