You Can Buy a Vote on Disney's Board & The Regional Bank Saved by $1B Investment

0:00This episode is brought to you by State Farm. Checking off the boxes on your to do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.

0:27Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, one year after SVB, another regional bank is teetering on the edge. Then the company who is trying to bring back Willie Mammoth just made a major breakthrough. But has anyone stopped to think if we should bring back Willie Mammoth? It's Thursday, March 7th. Let's ride.

0:52All right, we knew the Iditarod was hardcore, but we did not know it was this hardcore. So one day after the sled dog race began in Alaska on Sunday, veteran musher Dallas Seavey had to kill and gut a moose after it became entangled with his dogs. Iditarod rules stipulate that if a big game animal like a moose, caribou, or buffalo is killed in defensive life or property, the musher must gut the animal and report it to race officials at the next checkpoint. If all that wasn't grisly enough, officials handed Seavey a two-hour penalty because he did not sufficiently gut the moose, and people complained about NBA refs.

1:32I cannot believe that we were nose deep in the Iditarod rule pick this morning, but it is a real rule. It is specifically the big game animals, edible big game animals, that require you to gut it if you kill another animal like a wolf or something like that. You don't have to do that, so there is a little bit of a distinction there. Can you imagine, though, you just started the Iditarod, big moose comes, falls in your sled, starts injuring one of your sled dogs, and then you get in trouble for not properly gutting that muse enough. Well, they take it seriously because they want to salvage as much meat as possible, but I can't imagine it because I would not go anywhere near the Iditarod.

2:06Well, maybe as a viewer, I would love to see it, but I don't think I'm going to be a musher anytime soon. I would like to see the documentary covering the Iditarod. I'll do it from the comfort of my own home, though. All right, before we jump into the show, let's hear from our friends over at Factor. I feel like we haven't gotten into the actual meals themselves enough. Neil, you cook a lot. You're also not easily impressed. What factor meals have left an impression on you? My favorites are actually the pastas. I had a fusilli and ground pork tomato ragu last night. It tasted like it just came out of the kitchen.

2:38What about you? That is a very solid choice. Okay, this might be a hot take, but I like the sides the most. Every meal comes with the main, but for instance, the ragu comes with green beans as well. Gives it that extra little healthy kick that I appreciate. All right, but give us a main. All right. I like the roasted garlic chicken. Can't go wrong with that and some mashed potatoes. Whether you're a main dish or a side dish person, head to factormeals.com slash morningbrew50, then use code morningbrew50 to get 50 % off. That's right. You can get 50 % off when you head to factormeals.com slash morningbrew50, then use code morningbrew50.

3:13Race the rudders. Raise the sails. Raise the sails. Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sails solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. Disney is locked in a heavyweight brawl with activist hedge funds over the future of the company. and you, a regular old Disney shareholder, could make a big difference.

3:53Ahead of the company's board meeting in April, a bidder is offering to buy proxy votes on the platform's shareholder vote exchange for 20 cents a pop. That means this anonymous person or group will allow regular investors to give up their right to vote on the direction of the company in exchange for some cash. It's an unusual twist in an already unusually intense battle. Disney is trying to fend off two activist investors. Nelson Peltz's try and fund management in Blackwell's capital that are upset with how things are going at the House of Mouse and want to place their allies on the board. They believe that poor management by CEO Bob Iger is the key reason why Disney's stock price has been cut in half since 2021.

4:33Now, Disney has pushed back and all three parties are spending gobs of money to try and win over shareholders ahead of this vote on April 3rd. With spending expected to reach$70 million, it'll likely be the most expensive shareholder fight ever. Yeah, the thing that stands out to me is the ethical nature of selling votes. It is technically legal. Like this startup is operating in a legal space. But should you be able to kind of forego you have a stake in the company? Should you then be able to monetize that stake and forego your right to vote? It's a smaller portion of kind of corporate fights that you don't really hear about.

5:10But it's this burgeoning new market that this startup is capitalizing on. I mean, on the surface, I think I'm for it because so many regular shareholders have votes that they don't use. I mean, when you look at Disney—and there's a reason you don't use this, because they don't really matter. Disney has 1.8 billion shares outstanding. You probably don't—whatever you have is a rounding error, and whatever your vote is in the shareholder meetings is probably not going to make any difference compared to the Black Rocks or the Vanguards of the world. But what makes Disney actually interesting in this case is that Disney is a stock that people pass down to their kids.

5:50I know my mom passed down some Disney stock to me. And so there is an outsized retail shareholder base compared to other companies. Over a third of all Disney stock is owned by individual investors, which makes this actually more compelling and potentially has a bigger impact on the vote. Yeah, absolutely. Disney is interesting in that regard. Another weird thing about this proxy fight is that no one really controls that many shares. Usually when you have a proxy share fight like this, someone is fighting for a majority or to win over voting shares. But if Trian or Trian is the biggest shareholder of the three with 32 million shares worth 3.7 billion.

6:27But then you go, you mentioned Blackwell's the other kind of hedge fund involved in this fight. They only own 157 ,000 shares worth 17.9 million. Even Bob Iger, the CEO of the company, only has 205 ,000 shares. And you mentioned that 1.8 billion shares outstanding. So they're all drops in the bucket here. So most of them are just waging this battle of public perception and persuasion right now. Some of these hedge funds have bought websites that redirect to kind of their turnaround plans for the company. So it really is the war of public opinion right now because none of them are going to accrue enough shares to actually win voting rights over the company.

7:04How much does Mickey have? He must have a lot. Speaking of passing down through generations, I would assume Mickey and Minnie have a fair amount. All right, let's move on. There's this famous quote from Ferris Bueller's Day Off. Life moves pretty fast. If you don't stop and look around once in a while, you could miss it. Turns out that also applies to the banking industry these days because the fortunes of New York Community Bank were changing faster than you can sing, twist, and shout yesterday. Just before noon, the Wall Street Journal reported a surprise announcement that NYCB was looking to sell some shares to raise additional capital.

7:39The fundraising effort spooked investors, and the stock plunged 40 % to under$2 a share in a matter of minutes, triggering multiple trading halts. When it resumed trading again, things stabilized upon the announcement that Steve Mnuchin, the former Treasury Secretary of all people, led a$1 billion cash injection into the company at a price of around$2 per share. In all, it was a wild day where fears that NYCB could go under were alive and well, which was especially poetic given it's almost been one year to the day since Silicon Valley Bank imploded. Neil, New York Community Bank has been on very shaky ground since the beginning of the year when it revealed its commercial real estate loan portfolio was looking a little grim, but it seems like it's survived for now.

8:25Yes, this is sort of the survival lifeline. But you said Mnuchin of all people, but he's done this before. Back in 2008, when banks were collapsing left and right, he rescued Indy Mac Bank and then actually doubled his profits on it. So he is, in addition to being a Treasury Secretary and a Goldman Sachs former executive, is experienced in rescuing banks. He was criticized a little bit for what they eventually did with IndyMac Bank. But he did provide a lifeline for New York Community Bank. And it lives to see another day. It lives to see another day. And on paper, he's almost already doubled the investment, him and the investor group.

9:06because after that deal was announced, it did get up to over$3, almost to$4 a share. So right now it's looking like a good investment. I do just want to go back and relive SVB for a second because, again, it is just crazy that almost to the day we are having a similar conversation around this. Remember, it announced a public capital raise the same day it revealed it also had this kind of hole in their books,$2 billion hole from the sale of assets. Very similar to what NYCB just did, where you kind of spring this fundraising announcement on people. People at SVB started to get a little nervous, though.

9:40And then the outflows of bank deposits accelerated. And within days, it was taken over by the FDIC. The key difference here between what happened at SVB is that the outflows are still stable. The deposits are still stable at New York Community Bank. That was what happened. a bank run essentially spread like wildfire and everyone started pulling their money out, which just gets really ugly for the bank. It does seem like deposits are still stable at New York Community Bank, which is hopefully how we'll dodge kind of a similar situation. Right. And New York Community Bank, I mean, just like SVB, it seems that it occupied a particular niche, which allowed the ripple effects of this particular banking crisis to stay somewhat contained.

10:21And for New York Community Bank, its niche is rent stabilized buildings in New York City, which not a lot of banks are exposed to, but it is. And there was a 2019 law that regulated landlords' ability to raise rents, which crashed the value of all these properties that it made loans to, by 50 percent. So that's what this company is dealing with. It's not the problem of every bank. So I'm sure Janet Yellen and other officials are watching this very closely to see if bank contagion spreads, because that is the biggest fear you have when banks start teetering on the edge. but hopefully this lifeline sort of stabilizes NYCB and the broader banking sector.

10:57Wondering just how much your Chipotle burrito bowl contributes to climate change or your Old Navy workout clothes? You might be able to find out soon after the SEC approved a new rule requiring companies to disclose key details about their greenhouse gas emissions and the threat that climate change poses to their operations. It's one of the biggest climate initiatives of the Biden administration and one of the most highly anticipated measures in the SEC's history. Chairman Gary Gensler said the rules are intended to provide investors with the important information they need to make decisions. You know, if a company has outside exposure to flooding and wildfires, for example, it'd be helpful to know before you make a big stock purchase.

11:36But business groups have fought impassionately against the rules, saying they're overly burdensome and that climate concerns are outside of the scope of the SEC, which is supposed to regulate markets. And during this debate period, the proposal generated 24 ,000 comments from companies, trade groups, and more, far more than is typical. Yeah, believe it or not, this rule is actually a lot more mild than the one the SEC originally had planned. So I'm going to introduce some terms to people right now. I have my notebook out. About how the SEC kind of quantifies emissions. So Scope 1 covers direct emissions from anything controlled by the company.

12:11So imagine a fleet of cars or a power plant, something that is directly under the control. Scope two covers emissions from the generation of electricity that power stuff like their offices or manufacturing. And then scope three is everything else linked to the company. So the emissions produced by the entire value chain, including suppliers, including consumers. So scope three is a lot, lot bigger. And they actually dwarf scope two and scope one emissions. So the SEC's rules stopped short of including Scope 3, which really would have gotten companies up in arms. And even still, the companies are up in arms about these new regulations.

12:49Right. I mean, typically, companies do have been reporting their emissions data because it's, you know, they've had pressure to. They haven't been required to. But that has led to a process where some critics argue that they do greenwashing and they make they inflate the numbers and they make them seem a little better than they are. And this rule would require them to actually put pen and paper to their specific greenhouse gas emissions, which gives investors information they need to make decisions. And that's the SEC's argument that if we create a standardized process here, then it'll just lead to more transparency overall and will sort of persuade or dissuade companies from boasting about their numbers that aren't actually good.

13:30Yeah, and a lot of the critics pointed at that this is maybe targeting the oil and gas industry because, of course, their emissions numbers aren't going to be pretty. But to me, this doesn't actually hurt the oil and gas companies as much because no one is investing in oil and gas thinking that their emissions are under control. They're doing it for reasons that benefit the environment. I do think it might hurt the companies that you kind of mentioned at the top, things like the Chipotles of the world, the Old Navies, a lot of fast fashion brands that you don't really think about the emissions effects that they have.

14:01So I do think it won't be the companies that immediately come to mind when you think about emissions. It will be some of the more under the radar ones. So these rules are supposed to go into effect in 2026. But I would say do not expect them to to go into effect that year because Republican United States are already lining up lawsuits. And this thing is going to be in the courts for a long time with legal challenges. So stay tuned. Twenty four thousand comments. That should tell you enough right there. All right. We're going to hear a quick word from our sponsors, but stick around because we got the beautiful, entertaining, always fun.

14:33Neil's numbers coming up right after this.

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15:37Welcome back to Neil's Numbers, the segment where I share three stats from the week's news that will make you smarter than J. Robert Oppenheimer. My first number illustrates just how rich you have to be to buy an apartment in Manhattan these days. And the answer is really rich. According to the real estate brokerage Corcoran, nearly 70 percent of Manhattan homes bought in the final quarter of 2023 were paid for in cash, up from 55 percent of transactions in the same period in 2022. And if that's the shot, here's the chaser. The median sales price for a Manhattan home is$1.15 million. This reflects a couple of truths.

16:16One, Manhattan is increasingly becoming a playground for the ultra-wealthy if the vast majority of million-plus-dollar homes are bought with cash. And two, no one who can afford it is going to take on a mortgage right now with rates at an eye-watering 7.2%. You gave us a shot. You gave us a chaser. But I think the other chaser is that it's forcing a lot of people into renting right now. There's been a 4 % increase in new leases in Manhattan and Brooklyn in January of this year. That's also rents have rose to an all time high of$3 ,950. So shot chaser chaser right there. You just got to have a lot of money to live in New York.

16:51My lease is coming up in August. I know. That's immediately what I thought of. And overall, if we just zoom out to the housing market, we're in a state of freeze right now because of high mortgage rates. No one wants to leave what they have right now. And the U.S. last year had fewer than 4 million property transactions, which is down from a peak of 6 million and much lower than the average of 5.1 million in the 2010. So just nothing really happening over there in the housing market. My second number is 217, which is how many COVID vaccinations a 62-year-old German man got over the span of 29 months.

17:30That's nearly a shot every two weeks. Recently, he was used as a willing guinea pig in research about what being vaxxed to the max can do to a person. Scientists learned about his epic syringe count when he was being investigated for fraud, asked him whether they could study his body for science. He said, sure, I'm happy to. And this week they published the results in a medical journal and the researchers concluded that this guy is perfectly fine. The report shows that, quote, SARS-CoV-2 hypervaccination did not lead to adverse effects and even increased COVID antibodies without having a strong positive or negative effect on his overall immune system.

18:07Still, they did warn that getting a zillion vaccines was not advisable. It literally is a zillion. 217 vaccinations for someone who doesn't like needles. That was the first thing I thought about. That's a lot of jabs right there. He was mixing and matching, too. It wasn't like the same vaccine over and over again. He included a total of eight different vaccine formulations, including boosters. I don't know what possesses someone to do this, but once he had maybe like the first five or ten, he's like, might as well keep going. Well, he did say why, and it was, quote, private reasons. So we'll never know.

18:39But actually, this is pretty interesting because scientists assume that if you get this many vaccinations, it's going to hurt your overall immune response. That was their hypothesis going in. That was sort of standard operating procedure in this line of medicine is that if you get too many vaccines, it's going to hurt your ability to fight off pathogens, whatever they are. But it didn't. His overall immune system is strong. And even the 217th shot increased antibodies against COVID. So even the last one still helped him protect against COVID. Yeah, they found that his antibodies ability to neutralize COVID appeared to be fivefold and 11 fold higher.

19:19And that was mostly due to there just being a lot more antibodies in his bloodstream. Not necessarily that they were more effective at finding the disease. I mean, I would hope there's more because again, if you get 217, I hope it's doing something. Oh my God, that dude has so many T cells. So many antibodies. All right. On an entirely different note, my third number is the highest paid actor of 2023. He putts with a hockey stick. He's got his life riding on Kevin Garnett and he's repeating middle school forever. His name is Adam Sandler. Yes. Everyone's favorite goofball earned seventy three million dollars last year, thanks to a combo of movies and stand up shows, making him the highest paid actor of 2023 by a wide margin.

20:00According to Forbes, Sandler's financial success stems from his partnership with Netflix. He signed his first$250 million four-picture deal with the streamer back in 2014, and now he's made eight movies for Netflix and produced several more over the years. Plus, most of his back catalog is on the service, earning him a steady stream of checks whenever you queue up Happy Gilmore on a lazy Sunday. Through the first six months of last year, people on Netflix spent more than 500 million hours watching Sandler movies, and that's what I call high-quality HDO. That is a very good line right there. I wanted to look at the top three of the highest paid because after Sandler, you have Margot Robbie and Tom Cruise.

20:40Three very different approaches to high paid movie stars. I mean, you have Adam Sandler has that great passive income stream, but also has had to crank out movies for Netflix over the years. Then you have Margot Robbie, who had a blockbuster with Barbie, made the Art Sear Wes Anderson film, but then also had a niche kind of smash hit Salt Burn that she produced. and then you got Tom Cruise who just does basically one big action movie a year still made 45 million dollars so who wins in kind of their approach I think it's the Margot Robbie blended more because you're satisfying your artistic side as well but also bringing in the big bucks Forbes did say that if you're an actor that wants to make the most amount of money maximize your earnings then the key to that is a hit movie at the box office because you're going to be able to generate money from that in perpetuity so someone like Margot Robbie is probably going to be collecting barbie checks for the rest of her life and ryan gosling was number four so that kind of ticket to financial success is getting a blockbuster at the at the box office it turns out that that's all you need or ben affleck made the list at number nine and they said part of it was due to his high profile advertising deal with duncan so you can either have a massive smash hit or just be the face of duncan donuts let's move on the company that is trying to resurrect a woolly mammoth made a breakthrough yesterday which is a big win for lovers of the movie Ice Age and a big loss for lovers of the movie Jurassic Park.

22:02The company behind the research is called Colossal Bioccience and has been at this mammoth project for a while now. The most recent breakthrough that has it all fired up is that it produced a line of Asian elephant stem cells that can fuse with the mammoth cells that they have on hand. Quote, it's probably the most significant thing so far in the project, said George Church, the Harvard geneticist who co-founded the company. you know colossus loves trying to resurrect things they raised a round of funding at the beginning of last year to try to de-extinct the dodo bird and it has plans to bring back the tasmanian tiger alongside the mammoth as well this company pops into the news cycle every so often but this time it feels like they did make a significant step well they call themselves the world's first and only de-extinction company and their goal is to restore the past preserve the present and help bring down climate change, and they think resurrecting the woolly mammoth will do that.

23:01I think what they're doing right now is kind of a shoot for the moon, and even if you miss, you'll land among the stars kind of thing, because these stem cells that they produced should be able to help our greater understanding of living elephants. So it's a way long way from actually resurrecting a mammoth or anything that resembles a mammoth, but this research is important, and independent experts have said, wow, this is pretty crazy that they were able to do this. This definitely will help us with our research and helping endangered elephants currently. Yeah, it does feel like it's more marketing stunt than anything else.

23:32Like they want to stay in front of the news cycle. So we've heard about this company for a while now. There's definitely ethical questions, though, when it comes to the kind of niche of de-extinction. Who decides who comes back? What species deserve to be reborn? Where will those species go if they are kind of reborn? So it does feel very Jurassic Park-y in a way of like scientists, you were so preoccupied with if you could and you never thought about if you should. So there's definitely been ethical pushback. But again, technically, if the good outweighs, this is very utilitarian, but if the good of the many outweigh maybe the ethical questions of bringing back an extinct species, then maybe Colossal is on to something.

24:12Yeah, I think the benefits are if you reintroduce mammoths to, say, the Arctic tundra in Siberia, they'll be able to help climate change by changing the ecosystem there. Because after mammoths left, now it releases way more carbon than it used to. So if you have a herd of mammoths back up there adapted to the cold and genetically engineered to maybe not have as many diseases as the previous mammoths did, then they'll help overall tamp down climate change. There are there's a lot of questions, though, because they're not going to actually make a mammoth. It's just going to be kind of a hairy elephant with a lot of mammoth DNA.

24:47It's not going to be a one to one match. And the critics of this company also say that just because you can make a the genetic makeup of a mammoth does not mean that it will be a mammoth. Because to be a mammoth, you have to have mammoth parents and learn how to be a mammoth. You know, you have to behave one. There's a particular culture involved. So, I don't know. There's just so many questions. I think, I don't know. I've gone back and forth about this just thinking about it a lot. Shout out to the Pachyderm lovers, though, because they are all fired up right now. Our final story of the day, the crypto exchange Binance made a perfume in an effort to cater towards women in crypto.