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Billionaire investor Bill Ackman handed in his Red Notice to Netflix Wednesday. Ackman’s hedge fund Pershing Square Capital liquidated 3.1 million shares at a $400 million loss, three months after placing a $1.1 billion bet on the streaming service. Netflix, which reported a shocking loss of subscribers earlier this week, has since watched its stock plunge faster than the comet in Don’t Look Up.
Ackman said the rout could erase four percentage points from Pershing Square’s annual performance, meaning they might have to revert to sharing passwords for their Bloomberg Terminals. | | | • | | Goldman Sachs’ DJing CEO is doing everything he can to get paid. | | • | | Beta Technologies is bringing new aircraft to the skies. | | • | | Interest rates are crunching companies with junk loans. | | | | |  | Executive Pay | Goldman Execs are Paying Themselves a Cut of the Bank’s Private Funds | | Apparently, for Goldman Sachs CEO David Solomon, a flourishing side hustle hasn't been enough to pad the old nest egg.
The bank’s head honcho, whose adventures as an electronic music DJ will see him spinning tunes this summer at Chicago’s Lollapalooza festival, has restructured his compensation plan to profit from the bank's lucrative private investment vehicles — à la his private equity peers.
Investors, already grappling with a recommendation from a prominent advisory firm to vote against Goldman's "excessive" payouts, might not like the sound of this tune. | Paycheck Remix | | Solomon made $35 million in 2021, fairly typical for the CEO of a large US bank. But relative to the 9 or even 10 figure fortunes being minted by certain executives in cryptocurrency and private equity (the co-CEOs at investment firm KKR each made some $500 million in 2021) Solomon's pay might feel, to him, somewhat pedestrian.
In a determined act of catch-up, Goldman’s executives are tapping the bank’s sizeable private investments to line their personal coffers: | • | | Previously, Goldman's share of profits — commonly referred to as carried interest — for its corporate buyout, real estate, and growth equity operations, were split 50/50 between the bank and the managers who run the respective funds. | | • | | Now, the fund managers will get just 35%, sources tell The Wall Street Journal. Goldman’s 400 partners will split the other 10%, while the remaining five percent will be awarded to Solomon and fewer than a dozen top executives, who stand to reap hundreds of millions of dollars from the changes over the next few years. | | | | King of Pop: Solomon’s musical taste leans towards cutting-edge electro and house, yet his efforts to boost his take-home pay harken back to the Michael Jackson classic Don’t Stop ’til You Get Enough. According to Bloomberg, last year Solomon sought a cut of profits from any SPACs Goldman launched — although his protracted negotiations on such an arrangement caused Goldman to miss out on the SPAC window.
Meanwhile, the corporate governance advisors at Glass Lewis have urged Goldman shareholders to vote against a proposed stock bonus worth $30 million for Solomon and $20 million for his deputy, John Waldron, at the bank’s AGM next week. | | | | | | Aviation | Electric Aviation Startup Beta Technologies Raises $375 Million | | Electric vehicles are all the rage, but vehicles is a broad term. While there are more and more Teslas and electrified Ford F150s on the road, investor interest is also gravitating to electric vehicles that literally go above and beyond.
Case in point: Beta Technologies, which announced a $375 million B round fundraise on Wednesday. The company specializes in electric vertical-takeoff-and-landing aircraft, or eVTOL. Hopefully, a better acronym comes along sooner than later. | It’s a Bird, It’s a Plane, It’s… an eVOTL? | So what in the wild blue yonder is an eVTOL? Anderson Cooper asked the same question this weekend on 60 Minutes. Essentially, eVTOLs are small battery-powered aircraft that can take off and land vertically on helipads and other flat landing points. The ALIA-250 does feature two plane-like wings, although not all eVTOLs are alike. Cooper compared his eVTOL joyride to riding inside a giant drone. Optimists believe eVTOLs could transform short-distance air travel. Beta’s flagship model can seat five passengers plus a pilot, carries up to 1,400 pounds of cargo, and can traverse a distance of 250 miles at 170 m.p.h after less than an hour of charging. That means getting from D.C. to New York in about 80 minutes. The startup has raised nearly $800 million in funding to date, including a Series A backed by Amazon last year, and aims to earn FAA certification by 2024. It’s already landed a handful of high-profile commercial contracts, mostly in the cargo sector: | • | | UPS has ordered 10 ALIA-250 machines, with an option for 140 more, and reserves the right to buy Beta charging stations; the shipping firm views eVTOL as a means to improve small-market service while reducing emissions. | | • | | Blade, the Uber-but-with-helicopters service, purchased five units last year, with an option for 20 more. | | | | Meanwhile, biotech firm United Therapeutics, founded by Beta director Martine Rothblatt, plans to use the aircraft to transport between-donor-and-recipient human organs.
Boarding Soon: It's not just electric quasi-helicopters that are taking to the skies. Traditional planes (with tails and wings and a need for runways) are embracing the battery-powered future. On Tuesday, Arlington, Virginia-based Eviation Aircraft inked a deal to sell 75 of its electric commuter airplanes — which seat nine passengers and produce no carbon emissions — to regional airline Cape Air. If your next quickie flight is battery powered, don’t be shocked. | | | | | | SPONSORED BY caliber | What To Do With Your Capital Gains of $50K or More... | Did you know, there are now extremely attractive ways of reinvesting your capital gains and putting them to work, effectively keeping the tax man at bay for years. Indeed…it’s a rare gift from the folks at the IRS. So, how familiar are you with Qualified Opportunity Zones? If your answer is “very,” then you know just how powerful they can be when it comes to after-tax returns. If not, well, you’re in luck — because this guide from Caliber has everything you need. Get access to “ The Accredited Investor’s Guide to Qualified Opportunity Zone Investing” right here. Caliber’s guide will show you how to cash in on substantial perks (like tax deferral until 2027 on certain capital gains, and avoiding taxation completely on growth above your original investment) — and help you navigate the pros, cons, myths, and misconceptions of opportunity zones. Grab the guide today at no cost and learn how to capitalize before key deadlines expire. | | | | | | Corporate Finance | Rising Interest Rates are a Growing Pain for Companies With Junk Loans |  | | Think rising interest rates are a pain because of what they did to your mortgage? Talk to a CEO whose company mortgaged their future on junk loans tied to the US Federal Reserve’s every move.
The high costs of floating-rate loans, which rise with interest rates and are a popular tool for companies with a less-than-stellar credit rating, are starting to weigh on firms carrying around ungainly amounts of debt. They could have a wider impact on the buyout market — by sticking a wrench in it. | In a Junk Funk | | When a company takes on a leveraged loan, it typically commits to paying a floating interest rate, which rises whenever the Fed tightens the screws on monetary policy. With the Fed expected to unleash multiple rate hike rates in an effort to combat inflation, Citigroup forecasts the benchmark rates that leveraged loans are anchored to will climb to 3% in the next year, up from 0.50% right now. That would mean a $45 billion increase in loan-servicing costs just on the loans issued last year, according to Dealogic data reviewed by The Wall Street Journal.
In 2021, American companies took out a record $1.8 trillion in junk-rated loans. This year, both Citigroup and Bank of America have warned that the cumulative portfolio is a growing risk. Given that it carries a larger chance of default than investment-grade debt, a junk-rated loan can foist particularly onerous conditions on debt holders. Some firms could start to feel the pain very soon: | • | | Fashion giant Revlon has an annual interest expenditure of $260 million, contrasted with just $206 million in liquidity as of December, according to ratings agency S&P. | | • | | Per Moody’s, technical equipment manufacturer Encore Global, which issued $2.2 billion in loans at the end of 2020, is carrying an unsustainable debt load. | | | | “It is one of the biggest concerns that we have and we have been tracking it in our portfolios since the end of last year,” says Somnath Mukherjee, head of investments at Lakemore Partners, a firm that invests in vehicles that own junk loans, told the Journal.
Buyout Boom to Bust: If loan costs keep getting higher, some analysts say the record $1 trillion buyout boom of last year could turn to bust. | | | | | | Extra Upside | | | • | | A new smart mirror can guess your clothing size, saving you a trip to the changing room. | | • | | In Vino Veritas. The enduring Latin phrase means, “In wine, there is truth.” While the saying usually describes cocktail party guests who over-imbibe, fine wine has itself proven trustworthy 一 as an investment 一 returning more than 10% annually over the last 30 years. Even with soaring inflation and stumbling stock prices, Vinovest’s curated wine portfolios allow investors to enjoy high performance and bond-like stability. Start investing in minutes and see why more than 7,000 Vinovestors put their trust in fine wine. * *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
