Weekly Brief #60
Market manipulation or free speech?... Plus, Nippon’s U.S. Steel merger, blocked, Apple settles $95 million Siri privacy suit, OpenAI’s for-profit restructure plans, Norway becomes fully EV, and more.
Good morning investors 👋,
Welcome back to the 60th Weekly Brief.
Happy New Year, everyone. Guess what? It’s giveaway time! Every ten weeks of Weekly Brief, I host a giveaway of Amazon gift cards. With each tenth-week milestone that passes, the gift card amount increases by $10. This week marks the 60th consecutive issue of Weekly Brief, meaning today is the day of a $60 Amazon gift card giveaway.
The rules are simple:
Subscribe to The J. Nicholas.
Share this publication.
Reply to this email (or comment on the web) with at least one thing you’ve learned from this newsletter and at least one suggestion for improvement. (Paid subscribers, consider mentioning your pros and cons about the membership.)
(Optional) Purchase a book using the affiliate link below (100% of proceeds to charity) so my affiliate account isn’t terminated.
And that’s it! I’ll email the winner right before Weekly Brief #61 next Friday. Now, time to talk about Bill Ackman. Today’s a short one.
Let’s get into it. (10 min read)
In this issue:
📈 Market manipulation or free speech?
🙅♂️ Nippon’s $15 billion U.S. Steel merger, blocked
🇰🇷 South Korean president to be arrested
FEATURED STORY
📈 Market manipulation or free speech?
I recently watched a video by Joseph Carlson where he discussed adding ASML to his portfolio right before the New Year. It was an insightful video (and I’ll link it here if you’re interested), but what stood out to me most was the recent story he covered near the end about Bill Ackman.
Artificially boosting hedge fund returns
Bill Ackman has been an inspiration for my portfolio ever since I started—or, I guess, switched to my individual stock strategy. Him and Warren Buffett. I guess you could say I look up to him in a way. Ackman gained his name and billions of wealth with his hedge fund, Pershing Square, where he (at least now) fully invests in high-quality companies with great growth aspects, buying them at a fair price. Extremely similar to my strategy.
He has sizeable influence in the investing space and currently has around 1.5 million followers on Twitter, plus millions who know his name around the world. Overall, I think it’s safe to say that, from his good name in the industry and his knowledge of the markets, his words are very powerful—in terms of, again, influence. (Remember that fact; it is important to know for the rest of this section.)
Ackman was in the face of controversy lately this week—not widely, but it was a very interesting play—when he made a post on Twitter on New Year’s Eve about a position of his, explaining his bull case. Okay, not too controversial. He went on to mention that this position, which he has been holding for around a decade, has not moved in that time frame, but that it will now.
The same day, that stock—Fannie Mae—went up ~30%.
As you may know, hedge funds earn their revenue from fees: management fees and sometimes performance-based fees on their total clients’ capital. Hedge funds base these fees on total performance in a given year. Now, coincidentally, Ackman decided that New Year’s Eve—the last day of the year—was an amazing time to mention his bull case on his worst-performing stock, only to see it fly 30% before the year ended. Adding that much better performance onto his fund’s 2024 sheet for the year.
Did he tell everyone to buy this stock? No. Did he sell the stock once it raced up, or buy before it raced up without telling anyone beforehand? I assume not. So with these answers, what he did was completely legal. It’s very sneaky, but technically legal. This does raise the question though: When large, influential investors talk about stocks, when does that become illegal?
Market manipulation vs. free speech
Joseph mentions this point in the video: how he wholeheartedly supports free speech and the right to say what you want about the stock market, regardless of following. He mentioned Roaring Kitty and Ackman as examples. That is, in fact, our right as citizens of a free nation. So, of course, I agree with this point wholeheartedly as well.
There’s a clear distinction between using your free speech and manipulating the market when you have a large following, and it can be answered with two simple points:
Did the person release information to the public using their influence to pump a stock?
Did the person trade on this pumped stock?
If Bill Ackman wants to share his opinion on a stock he owns, he should be able to share it without consequence, regardless of his influence. That would be limiting his right to free speech otherwise. The same applies to Roaring Kitty if he wants to create videos about GameStop. This would be free speech—simply talking and sharing your opinion on a stock.
Unless Bill Ackman or Roaring Kitty act financially to benefit themselves here, their use of free speech isn’t a crime and shouldn’t be treated as such. If Ackman bought more Fannie Mae before making that post, then that’s clear market manipulation. The same if Roaring Kitty loaded up on GameStop call options before his massive rant of memes on Twitter.
I didn’t have many eye-popping stories in the news to write about for this week’s featured story, so I apologize if today’s issue was redundant or bland. But once I heard this very sneakily intriguing story about one of my investment inspirations, I thought it was worth sharing my thoughts. Do enjoy the rest of today’s issue.
FINANCE
a. 🙅♂️ Nippon’s $15 billion U.S. Steel merger, blocked
President Joe Biden, as a final goodbye before his presidency ends on January 20, has officially blocked Nippon Steel’s $14.9 billion acquisition of U.S. Steel. Biden has faced massive pressure from politicians and, more prominently, the United Steelworkers union (USW) ever since the merger was announced in December 2023 (mostly due to production limits; therefore job loss).
Just days ago, Nippon had offered the U.S. government veto power over any production changes at U.S. Steel plants and had vowed to keep production intact, but that wasn’t enough. U.S. Steel, once the largest company in the world by market cap, holds some of the most prized value in American history.
Related articles:
b. 💰 Apple settles $95 million Siri privacy suit
Your devices are listening. Apple this week agreed to pay $95 million to settle a proposed class action alleging Siri violated user privacy, with claims it recorded private conversations after accidental activation and shared them with third parties—mostly advertisers. Apple denied wrongdoing, with no admission of guilt.
The settlement covers Sept. 17, 2014, to Dec. 31, 2024 for certain users, and could provide those affected up to US$20 per Siri-enabled device. But the laywers will be taking $28.5 million in fees + $1.1 million in expenses from this payout so that might be slighly less (talk about inequality (they must have iPhones). A similar case in ongoing with Google, who will also probably just write a gargantuan cheque, I’m sure.
BUSINESS
c. 🤖 OpenAI’s for-profit restructure plans
As we’ve known for a little while now, OpenAI has been preparing for a restructuring of its for-profit model into a Public Benefit Corporation (PBC) (a fancy way of saying a for-profit charity). This week, the company announced these plans in more detail. Currently, OpenAI operates as a non-profit controlling a for-profit, with the for-profit’s success funding the non-profit.
The OpenAI Board is now considering transitioning the for-profit into a PBC, which would allow it to raise conventional capital while giving it leeway for shareholder and mission interests. The non-profit will then hold shares in the PBC. According to OpenAI, each arm will focus on specific roles: the PBC will run operations and business, while the non-profit will push towards “charitable initiatives in health, education, and science.”
Related articles:
d. 🇳🇴 Norway becomes fully EV
In 2024, nearly all new cars sold in Norway were fully electric (89%, up from 82% in 2023). Norway has long-standing incentives for EVs and is notorious for its high taxes on petrol and diesel vehicles. Not to mention, the country has absolutely no automotive lobby organization, which made it much easier to implement such pro-EV policies… policies that actually worked!
EVs in Norway are exempt from import and VAT taxes, and as a result, fuel stations are increasingly replacing petrol pumps with fast chargers to support the growing EV market. This alone is pushing an increase in EV sales, which now account for 28% of all Norwegian vehicles. At this pace, Norway will be the first country in the world to achieve 100% EV sales by 2025.
Related articles:
POLITICS
e. 🇰🇷 South Korean president to be arrested
A court in Seoul issued an arrest warrant for the now-impeached president of South Korea, Yoon Suk Yeol, on Tuesday, following his alleged attempt to incite an insurrection by declaring martial law. Investigators from the country’s anti-corruption agency are looking into charges of rebellion against Yoon because of this stunt a month ago.
However, enforcing the arrest warrant is complicated. As Yoon continues to remain in his official residence, a law protects him frmo being searched. Where under South Korean law, locations potentially linked to military secrets without the consent of the person in charge is prohibited. Yoon is the person in charge. Nonetheless, the warrant is valid for one week.
Related articles:
📚 Book of the Week
For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $31.11.)
My full bookshelf: Here.
Think Again - Adam Grant
Book Description:
Intelligence is usually seen as the ability to think and learn, but in a rapidly changing world, there’s another set of cognitive skills that might matter more: the ability to rethink and unlearn. In our daily lives, too many of us favour the comfort of conviction over the discomfort of doubt. We listen to opinions that make us feel good, instead of ideas that make us think hard. We see disagreement as a threat to our egos, rather than an opportunity to learn. We surround ourselves with people who agree with our conclusions, when we should be gravitating toward those who challenge our thought process.
The result is that our beliefs get brittle long before our bones. We think too much like preachers defending our sacred beliefs, prosecutors proving the other side wrong, and politicians campaigning for approval—and too little like scientists searching for truth. Intelligence is no cure, and it can even be a curse: being good at thinking can make us worse at rethinking. The brighter we are, the blinder to our own limitations we can become.
Organizational psychologist Adam Grant is an expert on opening other people’s minds—and our own. As Wharton’s top-rated professor and the bestselling author of Originals and Give and Take, he makes it one of his guiding principles to argue like he's right but listen like he’s wrong.
With bold ideas and rigorous evidence, he investigates how we can embrace the joy of being wrong, bring nuance to charged conversations, and build schools, workplaces, and communities of lifelong learners. You’ll learn how an international debate champion wins arguments, a Black musician persuades white supremacists to abandon hate, a vaccine whisperer convinces concerned parents to immunize their children, and Adam has coaxed Yankees fans to root for the Red Sox. Think Again reveals that we don’t have to believe everything we think or internalize everything we feel. It’s an invitation to let go of views that are no longer serving us well and prize mental flexibility over foolish consistency. If knowledge is power, knowing what we don’t know is wisdom.
Thanks for reading. Feel free to reply to this email or comment on the web if you need anything—I always reply. If you enjoyed today’s issue, feel free to share it with friends and family.
All the best,
Jacob
I enjoyed this. The market manipulation vs free speech discussion raises good points.
BTW - Every one of your write-ups are great; never say otherwise.