There’s a reason they don’t call it Spring Sanity.
It took all of 48 hours for all four major March Madness bracket-competition platforms — that’s ESPN, CBS, Yahoo, and the NCAA’s own website — to announce that not a single perfect bracket was still in play for the men’s tournament. Hope still remains, technically, on the women’s side, with just over 1,000 perfect brackets (or well less than 1% of entrants) in play across major platforms as of Sunday morning, per the NCAA. Of course, there’s no recorded case of a perfect bracket in tournament history. In fact, the odds of a perfect bracket are often calculated as 1 in 9.2 quintillion — or 9,200,000,000,000,000,000, if you wanted it all typed out. Then again, that’s the beauty of March Madness: There’s always next year.
Tech leaders are getting out while the getting’s good.
As the artificial intelligence hype cycle rockets massive tech companies to all-time high share prices, Silicon Valley’s founder and executive classes are beginning to cash out at the highest rate in years, per a Financial Times analysis published over the weekend. But is it a signal that the market is nearing its peak?
View From the Top
Meta, Amazon, Microsoft, and Alphabet are trading at or near all-time highs. And that momentum has even revivified the listless IPO market. On Friday, social media company Reddit finally made its long-anticipated debut, with its stock ending its first day of trading up nearly 50% — a rise fueled in part by various deals the company has made to cement its place in the generative AI ecosystem. Chipmaker Astera Labs, another obvious beneficiary of AI optimism, also flourished in its market debut last week, with its shares nearly doubling in their first few days on the market.
But the bull market has also coincided with a spate of serious insider selling. And while insider selling is typical in the early months of the year, the ratio of insider selling to insider buying has hit its highest point since the first quarter of 2021, according to data from insider trading disclosure-tracking firm Verity LLC seen by the FT. Some of the industry’s biggest names are leading the charge:
Peter Thiel has sold $175 million worth of shares of Palantir, the data analytics firm he co-founded, per regulatory disclosures — good for his biggest sale in three years. Meanwhile, his old protégé Mark Zuckerberg sold $135 million worth of Meta shares in February, marking his biggest sale since November 2021 — or the most recent market crest.
Over at Amazon, Jeff Bezos has cashed out a whopping $8.5 billion worth of shares so far this year, though the timing is likely at least in part due to Bezos finally completing his move to the tax-friendly state of Florida. His CEO successor, Andy Jassy, has sold about $21 million worth of shares so far this year, or about the equivalent of the past two years combined.
Pop Till You Drop: The widespread selloff raises an obvious question: Do tech execs believe they’re nearing a summit — and subsequent dropoff? “Insider sales by high-level execs of large amounts of stock are never a good sign, it’s quite simple,” Charles Elson, chair of corporate governance at the University of Delaware, told the FT. And while some see a bull market, others are beginning to see, well, you know… “The current AI bubble is bigger than the 1990s tech bubble,” Torsten Slok, chief economist at Apollo, wrote in a note to clients at the end of February. There it is — the dreaded B word.
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To some investors, climate action does not equal good business.
Investment firm BlackRock is still getting grief from conservative investing funds, which have so far withdrawn nearly $13.5 billion from its environmental, social, and governance funds, the Financial Timesreported. The good news is that it only amounts to about one-tenth of one percent of its $10 trillion in assets under management.
What’s on the Agenda?
To many Republican state investment funds and lawmakers, ESG investing is the equivalent of a “politically motivated money pit.” The anti-ESG movement kicked off in 2020 when two conservative groups — Consumers’ Research and the State Financial Officers Foundation — ramped up their efforts to get red-state treasuries to withdraw government pensions from firms that focus on sustainable initiatives, per The New York Times. That made BlackRock, the world’s largest asset manager, the biggest target in their sights.
States including Florida, Missouri, West Virginia, and others have divested billions from BlackRock for its alleged boycott of the fossil fuels industry, an accusation BlackRock CEO Larry Fink has denied. And, in a combination of business strategy and appeasement, BlackRock has walked back some of its commitments to Climate Action 100+, an initiative that encourages highly polluting companies like airlines and energy businesses to reduce their carbon footprints.
However, that hasn’t curbed conservatives’ efforts to take their pension money elsewhere:
Just last week, the Texas Permanent School Fund announced it would pull $8.5 billion from BlackRock, the largest divestment yet by a Republican-led pension fund. BlackRock called the move “reckless” and “irresponsible” and said it was based on “short-term politics.”
The divestment morality can get a little hazy, though. North Carolina Treasurer Dale Folwell has bashed BlackRock and even called for Fink’s firing, but the state still has roughly $18.5 billion in assets under BlackRock management. Folwell has said he’s sticking with BlackRock because he can’t find a cheaper manager.
Is ESG a Bad Investment Strategy? There is some recent evidence to suggest that anti-ESG sentiment isn’t as widespread as it looks. While investors pulled $13 billion from US sustainable funds, much of that came from BlackRock’s iShares ESG Aware ETF. And plenty of investors still believe in ESG. In its recent “Sustainable Signals” report, Morgan Stanley said 77% of individual investors worldwide say they are interested in investing in funds related to climate and also believe they’ll perform well. About 55% said they anticipate boosting their allocations to sustainable funds.
As the country logs its first full week of spring, the winter we just finished can take its rightful “honor” as the warmest ever recorded in the lower 48 states, according to the NOAA’s National Center for Environmental Information. While that meant a mild extra week or two to get in even more pickleball in some locales, the regions that rely on a traditionally cold and snowy winter were back in the increasingly common predicament of no snow, no customers.
Dry Season
A practically snowless winter hits large and small businesses alike. For every Teton Pass Ski Area in Montana that closed in early February after operating for just four days amid record-low snowfall, or canceled UP200 sled-dog race near Marquette, Michigan, there’s a Michigan Upper Peninsula snowmobile trail that saw its sales fall 70% from last year’s “normal” winter:
Travel Marquette CEO Susan Estler told CNN that hotel bookings in her town were down 16% from a year ago, adding she estimates that 30% of tourism dollars go to hotels, meaning the other 70% supports the local economy via money spent at gas stations, grocery stores, and restaurants.
On a combined scale, these businesses are significant contributors to state economies. The Bureau of Economic Analysis estimated that Wisconsin snow activities added $83.6 million in 2022, while Michigan’s businesses added roughly $130 million.
When One Door Closes: On the other side of the spectrum, it’s not just your local pickleball court that gets an early start to the spring season. Highland National Golf Course in St. Paul, Minnesota, planned to open its season this month about four weeks ahead of schedule. While that’ll undoubtedly be good for business, it’s worth wondering whether the course will regret missing out on the natural early-irrigation system that a typical season’s snowfall brings.
1 Research run by Guideline using Suzy research insights based on data collected December 2023, from a survey of 1038 US-based respondents ages 18-75. Guideline was not identified as the survey sponsor. The experiences of the respondents in this survey may not be representative of all people.
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Pop Till You Drop: The widespread selloff raises an obvious question: Do tech execs believe they’re nearing a summit — and subsequent dropoff? “Insider sales by high-level execs of large amounts of stock are never a good sign, it’s quite simple,” Charles Elson, chair of corporate governance at the University of Delaware, told the FT. And while some see a bull market, others are beginning to see, well, you know… “The current AI bubble is bigger than the 1990s tech bubble,” Torsten Slok, chief economist at Apollo, wrote in a note to clients at the end of February. There it is — the dreaded B word.
