Levine on Wall Street: Drug Trials and Extreme Cameras
Don't insider trade on drug trials.
Here are two doctors who conducted trials of a prostate cancer drug called Capesaris, developed by a company called GTx Inc. After the Food and Drug Administration halted the trials due to patient safety concerns, but before that was publicly announced, they dumped their GTx stock and saved $45,000. Now they are paying back more than twice that to the Securities and Exchange Commission. Discussion questions here include:
- Is what these guys did, which got them civil SEC charges, worse than what Mathew Martoma did, which will get him two to six years in prison?
- Should drug-trial doctors maybe not be allowed to own stock in the companies developing the drugs? The insider-trading temptation, for one thing, but also doesn't that skew your incentives?
- Should the FDA maybe publicly announce when it's halting drug trials for patient safety reasons, instead of just telling the company and letting it announce the halt whenever?
Ugh I'll see myself out, sorry. Here is the S-1 for fancy-camera company GoPro Inc.'s initial public offering, with a picture of what GoPro is used for:
GoPro did $23 million of net income ($134 million of adjusted EBITDA, $102 million of operating cash flow) on $986 million of revenue in 2013. It's got $111 million in cash and owes about as much on its credit facility, so there is perhaps slightly more of a use of proceeds here than the usual "we will put all of the money in a big pile and look at it lovingly."
Hedge funds are efficient until they aren't.
Here is an intuition-confirming Federal reserve discussion paper:
We examine the relation between changes in hedge fund stock holdings and measures of informational efficiency of equity prices derived from transactions data, and find that, on average, increased hedge fund ownership leads to significant improvements in the informational efficiency of equity prices. The contribution of hedge funds to price efficiency is greater than the contributions of other types of institutional investors, such as mutual funds or banks. However, stocks held by hedge funds experienced extreme declines in price efficiency during liquidity crises, most notably in the last quarter of 2008, and the declines were most severe in stocks held by hedge funds connected to Lehman Brothers and hedge funds using leverage.
Here is a story about how JPMorgan has a lot of jobs in Bournemouth, which is cheaper than London but still accessible. Making it sort of the Salt Lake City of England? I particularly appreciated the accompanying picture, and its caption "Sheep graze in a field at Mudchute farm on the Isle of Dogs, near the headquarters of HSBC Holdings Plc ..."
Jordan Belfort is still saying stuff.
Unrepentant con man Jordan Belfort "told a conference in Dubai" that he's planning to make $100 million this year traveling around the world giving motivational speeches, presumably about how awesome it is to defraud investors and take loads of drugs. The money will go a long way toward fulfilling Belfort's court-imposed obligation to pay back investors for some of the $200 million he stole from them. There are two possibilities here. One is that Belfort, uncharacteristically, is not being completely honest about financial matters. The other, which is almost too horrible to contemplate, is that he's actually found thousands of suckers willing to pay $250 a head to listen to his sales pitch, which is a vastly more ambitious con than he ever attempted at Stratton Oakmont.
Perhaps fish roe will save Greece. People like yield. Apparently interest rate derivatives were manipulated? "Thus there is a global rejection of society as it presently exists together with acceptance of the mechanisms that produce that society." Harvard's Kennedy School will not require a seminar on white privilege. There's more Ken Langone Hitler stuff. "Bass told police he was a 'high-elf engaged in the battle with the evil Morgoth,' not a pirate." Barclays bankers, stop "leaving the contents of your nose on the wall."
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