Happy hump day, readers. Phil Rosen here. I’m still mulling over a conversation I had yesterday with Shark Tank’s “Mr. Wonderful,” Kevin O’Leary.
Top of mind, inevitably, was last week’s implosion of FTX, as O’Leary was a spokesperson and investor with the exchange.
It was our third conversation together, and O’Leary shared candid thoughts on his FTX investments going to zero, as well as details from a phone call he had with Sam Bankman-Fried just before FTX declared bankruptcy.
Let’s dive in.
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1. Kevin O’Leary has spent a lot of time on the phone over the last week. This weekend, he was calling investors and consultants in an attempt to sort through the mess that FTX found itself in, and to try and determine how much of his own money he could get back.
“I’m writing that all down to zero,” O’Leary told me on a video call Tuesday. “It’s not clear what can be recovered, there’s a lot of allegations flying around. But frankly, I’ve seen this movie before. It’s a difficult situation, there’s no question about it. There’ll be a mountain of litigation.”
O’Leary, a paid spokesperson for FTX, said he had initially gained trust in the company and its 30-year-old CEO, Sam Bankman-Fried, a little over two years ago.
What was meant to be a 30-minute meeting turned into a three-hour lunch.
And a major selling point was its precocious leader.
“I’ve never met a more brilliant mind when it comes to crypto and blockchain, that remains the same,” he said. “I mean, he’s a savant. He’s probably one of the most accomplished traders of crypto in the world, and so I was very impressed.”
On Tuesday, the Wall Street Journal reported that Bankman-Fried is now trying to raise money to pay back clients, while an updated FTX bankruptcy filing showed the company could have more than 1 million creditors.
That turmoil convinced O’Leary to stop keeping money in any crypto exchange that wasn’t regulated.
Now, he’s turned to a Canadian firm, WonderFi, which is regulated by the Ontario Securities Exchange, for his portfolio, as the US market lacks oversight, he explained.
In his words: “I can’t find another place on Earth right now safer than Canada.”
In the middle of it all, of course, is Bankman-Fried. The ex-CEO’s sharp mind, O’Leary said, makes it hard to believe he didn’t realize the risks he was taking.
The Shark Tank star told me that he was on the phone with Sam Bankman-Fried the day before FTX declared bankruptcy to discuss a price for potential buyers to rescue FTX.
Interested parties, O’Leary said, were unsure if the liquidity required for an FTX takeover was $6 billion or $8 billion, so he messaged Bankman-Fried and got an immediate call back.
“He confirmed that it was $8 billion, and that’s the number I took forward,” O’Leary explained. “We had a brief conversation. He was very rational. We discussed a few things about, you know, the timing on that $6 to $8 billion. But it was enough information for me to go back to the interested sources and confirm the number was eight.”
But those interested parties disappeared soon after that call, as reports surfaced that the SEC and other regulators were homing in on FTX.
You can get the full story on my conversation with Kevin O’Leary here.
Thoughts or feedback? Let me know on Twitter (@philrosenn) or email me (email@example.com).
In other news:
2. US stock futures rise early Wednesday, after US President Joe Biden said a missile strike inside Poland was caused by Ukrainian forces — calming fears of an escalation from Russia. Meanwhile, investors are awaiting key US retail sales data due this morning. Here are the latest market moves.
3. Earnings on deck: NVIDIA Corp., Oracle Corp., and Cisco Inc., all reporting.
4. Buy this batch of stocks now for reliable income as high inflation persists through 2023, according to the manager of a top-8% fund. Mike Morey, who guides a dividend-focused fund, expects high prices to stick around well into next year. These seven stocks are his choices for strong market returns.
5. BlockFi is preparing for layoffs and may file for bankruptcy, the Wall Street Journal reported. FTX’s implosion is seeping into the rest of the crypto sector, as fears of contagion continue to swirl. Get the full details here.
6. The US dollar has dropped to a three-month low. October’s CPI report showed easing inflation, which dampened expectations for more big rate hikes. Analysts say that could signal softness for the greenback in the near-term.
7. Wharton professor Jeremy Siegel said the stock market has bottomed out and bond yields have peaked. All that suggests that the Fed could stop its tightening path soon, he explained. “I’ve often described this market like it’s coiled up, just waiting for the Fed to say ‘alright, I do actually see that inflation has been solved.”
8. This Amazon seller brings in over $42,000 per month in revenue. Shan Shan Fu, founder of Millennials In Motion, said 20% of her products do 80% of total sales. She explained how to pick a good product to sell online.
9. A fund manager who oversees $14 billion in equities shared why emerging markets offer attractive growth opportunities. And those opportunities will remain even in the event of a global economic slowdown, he explained. Here are his seven top foreign stocks to buy for high returns.
10. Taiwan Semiconductor soared 14% after Warren Buffett’s Berkshire Hathaway initiated a $4 billion stake. The purchase, revealed in the investing firm’s third-quarter 13-F filing, comes amid heightened concerns that China might invade Taiwan.
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Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email firstname.lastname@example.org
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