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An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter. Seriously, do you think funds playing with the kind of money to buy 15% of twitter often

by rosndo 5y ago

An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter. Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases? >Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%. Such an arrangement would make Elon the beneficial owner of your shares.

kolbe 5y ago
Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself. https://www.bloomberg.com/opinion/articles/2022-03-28/barclays-sold-too-many-notes https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...
- rosndo 5y ago
  Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill. $15bn is tiny, presumably we’re talking about big ETFs like SPY here. And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening. In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.
  - kolbe 5y ago
    What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets. I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.
    - hedora 5y ago
      I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right? There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.
      - heartbreak 5y ago
        ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.
    - rosndo 5y ago
      > but we are far from agreeing that large financial institutions are inherently competent because they're large. I don’t see anyone making that argument. Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.
      - kolbe 5y ago
        > Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases? - You
        rosndo 5y ago
        kolbe 5y ago
        Good luck with that perspective in life. I'll stick with writing clearly. You stick with writing poorly and flipping out whenever people misunderstand your intentions.
        5y ago
hedora 5y ago
> Such an arrangement would make Elon the beneficial owner of your shares. Thanks for explaining why that won't work. Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed. I wonder what other schemes would work. B corp, maybe?
- doldols 5y ago
  > Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed. But that’s just playing along with the spirit of the rules, not a loophole.
roughly 5y ago
> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter. No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.
- rosndo 5y ago
  Do you think big ETFs just buy shares willy nilly without any due diligence on company charters and bylaws?
  - roughly 5y ago
    I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?
    - lalaland1125 5y ago
      Buy futures or other assets that will mimic the price. The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".
      - roughly 5y ago
        How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.
        rosndo 5y ago
        No, you aren’t going to have higher volatility like this than you would buy triggering a poison pill like discussed in the article.
    - rosndo 5y ago
      They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares. Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures. From the article: > Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval

by rosndo 5y ago

kolbe 5y ago

Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself. https://www.bloomberg.com/opinion/articles/2022-03-28/barclays-sold-too-many-notes https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...

rosndo 5y ago
Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill. $15bn is tiny, presumably we’re talking about big ETFs like SPY here. And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening. In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.
- kolbe 5y ago
  What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets. I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.
  - hedora 5y ago
    I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right? There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.
    - heartbreak 5y ago
      ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.
  - rosndo 5y ago
    > but we are far from agreeing that large financial institutions are inherently competent because they're large. I don’t see anyone making that argument. Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.
    - kolbe 5y ago
      > Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases? - You
      - rosndo 5y ago
        kolbe 5y ago
        Good luck with that perspective in life. I'll stick with writing clearly. You stick with writing poorly and flipping out whenever people misunderstand your intentions.
        5y ago

hedora 5y ago

> Such an arrangement would make Elon the beneficial owner of your shares. Thanks for explaining why that won't work. Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed. I wonder what other schemes would work. B corp, maybe?

doldols 5y ago
> Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed. But that’s just playing along with the spirit of the rules, not a loophole.

roughly 5y ago

> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter. No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.

rosndo 5y ago
Do you think big ETFs just buy shares willy nilly without any due diligence on company charters and bylaws?
- roughly 5y ago
  I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?
  - lalaland1125 5y ago
    Buy futures or other assets that will mimic the price. The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".
    - roughly 5y ago
      How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.
      - rosndo 5y ago
        No, you aren’t going to have higher volatility like this than you would buy triggering a poison pill like discussed in the article.
  - rosndo 5y ago
    They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares. Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures. From the article: > Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval