What’s Black And Reddit All Over?

Plus: The SEC may be making activist investors richer ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

June 13, 2023

Read in Browser

TOGETHER WITH

Good morning.

America may be turning the like-everything-else-more-expensive page on inflation. According to survey data released by the Federal Reserve Bank of New York on Monday, consumers’ near-term inflation expectations fell to the lowest level in two years this May. That’s good news, given that The Fed watches the metric closely and, historically speaking, macroeconomic pressures tend to turn consumer sentiment into self-fulfilling prophecies.

Now let’s just hope this isn’t a case of inflated expectations.

Morning Brief

•

It’s the biggest deal in Nasdaq history.

•

Activist investors for the win.

•

Redditors want to end Reddit.

Mergers and Acquisitions

Nasdaq to Buy Adenza for $10.5 Billion

(Photo Credit: Luis Villa del Camp/Flickr)

Nasdaq is tapping the Andrew Carnegie playbook on vertical integration.

On Monday, the financial market that operates stock exchanges in New York, Boston, and Philadelphia, agreed to purchase software company Adenza for $10.5 billion. It marks not only Nasdaq’s most expensive deal in its 52-year history, but also the latest move by stock exchanges to diversify beyond transaction services to offer data and risk management as well.

Finding Fintech

Adenza — a merger of Calypso Technology and AxiomSL — makes treasury management systems. We won’t bore you explaining terms like “end-to-end trading” and “regulatory compliance solutions.” In layman’s terms: It keeps track of money and makes sure companies are reporting it properly and not falling victim to an Office Space-esque scheme.

Nasdaq’s purchase of Adenza from private equity group Thoma Bravo wasn’t the first of its kind, and it likely won’t be the last. In 2020 Intercontinental Exchange, which owns the New York Stock Exchange, purchased mortgage software specialist Elli Mae — another former Thoma Bravo company — for $11 billion. A year after that, the London Stock Exchange acquired Refinitiv, one of the world’s largest providers of financial markets data, for a whopping $27 billion. It’s easy to see why stock exchanges are going on a fintech shopping spree:

•

By their very nature, exchange trading volumes are inherently volatile. Whether it’s a regional bank bubble, a worldwide pandemic, or a sleepy August with traders decamped to the Hamptons — trading volume is rarely stable. Exchanges view financial management services as more stable ways of generating revenue.

•

Nasdaq CEO Adena Friedman said she wants to bolster the company’s software endeavors, which now accounts for more than a third of its annualized recurring revenues, Bloomberg reported.

“We’re trying to make sure we’re buying the best-in-breed companies to solve and serve clients so that we can really be the best partner we can be to banks and brokers around the world,” Friedman told Bloomberg.

Will it Pay Off? But even these seemingly safer ventures can be a crapshoot. When markets closed last Friday, Nasdaq’s own share price was down roughly 6% year-to-date. Following the announcement of the Adenza deal, its share price fell another 11% on the day by market close. Consider it a shareholder’s version of buyers remorse.

– Griffin Kelly

Corporate

Activist Investors Are Getting More Powerful

Have you noticed that activist investors are more active, and maybe successful lately?

Data shared with Axios suggests that activist investors are tasting victory on a more regular basis, thanks in part to a new SEC policy that makes board voting less black-and-white, allowing shareholders to select from a buffet of nominees put forward by both the company and agitators, rather than order the set menu.

Icahn’t Believe It

Investor activism started this year with a bang. In the first three months of 2023 activist investors around the world had their most active quarter ever. Now the US proxy season is drawing to a close, the data suggests that activist investors’ success rates are creeping up.

This is partly to do with a rule brought in last September by the SEC called the Universal Proxy Card (UPC). Prior to the UPC, if an activist investor wanted to replace directors on a company’s board, two proxy cards would be sent to shareholders. One card would have the slate of directors being nominated by the activists, and the other would be the board as suggested by the company’s management. Shareholders could only send in one card, meaning you either voted for all the people backed by the company, or all the folks being put forward by the activists. The UPC changed that, meaning shareholders can now mix and match nominees from both camps.

Axios reports that while activist investors have definitely enjoyed higher rates of success, there have been some upsides for companies as well:

•

Data given to Axios by investor voting data company Insightia showed that although this year’s proxy season has seen fewer activist-backed nominees elected to company boards, the proportion of successful nominations is higher than last year. In 2022 47% of nominations resulted in a win, compared to 66% this year.

•

For companies, the silver lining is that having a smattering of dissident directors on your board is better than shareholders overhauling the entire thing.

The Boardroom Where It Happens: Activist investors don’t always need to rely on democracy for a win. The data given to Axios also indicated a higher rate of settlements between companies and activist investors, and Sunday saw a major move as Francis deSouza, CEO of biotech company Illimunia, stepped down following a long crusade from high-profile activist investor Carl Icahn.

– Isobel Asher Hamilton

SPONSORED BY WELLCORE

Boost Your Testosterone and Win Dad of the Year

If you’re not feeling your best, you can’t be a great dad.

Enter Wellcore. They created the Best At-Home Hormone Optimization Program on the planet. This scientifically-backed program can improve strength, fat loss, bone density, libido, blood sugar, mood, and more.

Real science. Real results.

The path towards being a real life superhero has never been more clear. Right now, Wellcore is treating all dads like VIPs.

Use code DAILYVIP to get the At-Home Assessment Kit for just $49 ($150 off retail).

Social Media

Reddit Faces Massive Wave of User Protests

The great Reddit rebellion is underway.

Virtually all of the social network’s most popular subreddits — the online communities where users post about their favorite topics like gaming, sports, politics, or GIFSFromspace — have voluntarily “gone dark” this week, effectively shutting down massive swaths of the entire site in protest of announced changes to the platform’s application programming interface (API) pricing policies. Mad? Consider downvoting ChatGPT.

Now Is the Hour of Our No Content

With Facebook-sized ad revenue forever elusive and its IPO perpetually on ice, Reddit’s parent company Advance Publications (which also owns Condé Nast) recently hatched a new revenue-juicing scheme by significantly increasing the cost of API access — a.k.a. tools used by third-party developers to access Reddit data and make Reddit-compatible and Reddit-integrated apps. It’s a move that Elon Musk has also recently employed at Twitter.

But Reddit’s power users are a persnickety bunch. The platform is especially reliant on a literal army of unpaid moderators who foster fun, friendly, and informative subreddit cultures. And said army is especially reliant on the third-party apps now likely to be squashed by Reddit’s hefty new API fees. It’s why moderators across the site have opted to effectively block public access to their subreddits for 48 hours starting early Monday morning (the blackout was so widespread, it briefly crashed the entire site).

The site’s problems can be distilled to one charge of slow-footedness and another of being a victim of their own success:

•

Reddit didn’t launch a mobile app until 2016, nearly a decade after the first iPhone’s launch, meaning many Redditors turned to third-party alternatives which remain popular. Many moderators say one alternative, Apollo, offers an experience far superior to Reddit’s app, though Apollo’s creator now says Reddit’s new API fees would cost him $20 million annually and he’ll be forced to shutter the app at the end of June.

•

AI companies have seized on Reddit’s vast library of human discussion to train their large language models via API tools. Reddit essentially wants to get compensated for fueling Silicon Valley’s Next Biggest Thing, even if it kills popular tools like Apollo in the process.

AITA? “[T]he LLM explosion put all Reddit data use at the forefront, and our continuing efforts to reign in [sic] costs to make Reddit self-sustaining put a spotlight on the tens of millions of dollars it costs us annually to support the [third-party] apps,” Reddit co-founder and CEO Steve Huffman said in an “Ask Me Anything” community forum last Friday. The comment has since been, as Redditors may say, downvoted into oblivion.

– Brian Boyle

Extra Upside

•

Chase settlement: JPMorgan to pay Epstein victims $290 million to end class-action suit.

•

How the older half lives: Boomers make bank while younger gens scrimp and save.

•

Buckle up: Toyota, Kia, Land Rover, and Mercedes each issue massive recalls.

Just For Fun

What goes up…

Stuck the landing.

ADVERTISE // CAREERS

No longer want to receive these emails? Unsubscribe here.

//campaignmonitornewsletter.everestengagement.com/ea/BntD2QJCyg/?e=postie@btcnews.com.au’ width=’1′ height=’1′ style=”margin-top:0 !important;margin-bottom:0 !important;margin-right:0 !important;margin-left:0 !important;padding-top:0 !important;padding-bottom:0 !important;padding-right:0 !important;padding-left:0 !important;border-width:0 !important;height:1px !important;width:1px !important;-ms-interpolation-mode:bicubic;” />