ETF Inflows Top $1 Trillion for First | Stock Market News Today


A historic surge of cash has swept into exchange-traded funds, spurring asset managers to launch new trading strategies that could be undone by a market downturn. 

This year’s inflows into ETFs world-wide crossed the $1 trillion mark for the first time at the end of November, surpassing last year’s total of $735.7 billion, according to Morningstar Inc. data. That wave of money, along with rising markets, pushed global ETF assets to nearly $9.5 trillion, more than double where the industry stood at the end of 2018.

Most of that money has gone into low-cost U.S. funds that track indexes run by Vanguard Group,

BlackRock Inc.


BLK 0.66%

and

State Street Corp.


STT -0.50%

, which together control more than three-quarters of all U.S. ETF assets. Analysts said rising stock markets, including a 25% lift for the S&P 500 this year, and a lack of high-yielding alternatives have boosted interest in such funds.  

“You have this historical precedent where you have tumultuous equity markets, and more and more investors have made their way to index products,” said

Rich Powers,

head of ETF and index product management at Vanguard.

Asset managers are looking to actively managed funds, some with narrow themes, in search of an unfilled niche not already dominated by the industry’s juggernauts, analysts and executives said. VanEck, for example, earlier this month rolled out an active ETF targeting the food industry. In March, Tuttle Capital Management launched its

FOMO ETF,

which is bullish on stocks popular with individual investors. 

Firms including Dimensional Fund Advisors have converted mutual funds into active ETFs. Meanwhile, bigger firms have rolled out ETFs that mimic popular mutual funds, including Fidelity Investments’ Magellan and Blue Chip Growth funds.

“We should have a broad offering of ETFs that stand alongside a broad offering of mutual funds,” said

Gerard O’Reilly,

Dimensional’s co-chief executive, of his company. “Choose your own adventure.” 

As ETFs, baskets of securities that trade as easily as stocks, have boomed this year, investors poured a record $84 billion into ones that pick combinations of securities in search of outperformance rather than tracking swaths of the stock market. That represents about 10% of all inflows into U.S. ETFs, up from nearly 8% last year, according to Morningstar. 

Asset managers long known for running mutual funds are rushing to take advantage of investors’ interest in active ETFs. More than half of the record 380 ETFs launched in the U.S. this year are actively managed, according to FactSet. Fidelity, Putnam and

T. Rowe Price

are among the firms that have rolled out actively managed ETFs in 2021. Firms new to ETFs have also entered the fray. 

The top 20 fastest-growing ETFs, largely run by Vanguard and BlackRock, this year pulled in nearly 40% of all flows, charged an average fee of less than 0.10 percentage point and tracked benchmarks of some sort. 

Many active ETFs remain comparatively small and charge fees higher than passive funds, putting a swath of new products at risk of closing over the next several years. ETFs usually need between $50 million and $100 million in assets within five years of launching to become profitable, analysts and executives say; funds below those levels have tended to close. 

Of the nearly 600 active ETFs in the U.S., three-fifths have less than $100 million in assets, according to FactSet data. More than half are below $50 million. 

“You’re going to see a lot of those firms take a hard look at their future,” said

Elisabeth Kashner,

FactSet’s director of ETF research.

The stock market’s bull run has helped buoy many ETF providers, Ms. Kashner said, adding that firms have in 2021 closed the fewest number of funds in eight years. But a market pullback, which most stock-market strategists anticipate, could flush out weaker players, she said. 

Vanguard has been a beneficiary of high inflows to funds that track indexes. A statue of founder John C. Bogle.



Photo:

Ryan Collerd for The Wall Street Journal

ETF closures generally climbed over the past decade, and firms closed a record 277 ETFs last year as the coronavirus pulled markets down. Many held few assets. About a third of all active ETFs are marked as having a medium or high risk of closure, according to FactSet data that take into account assets, flows and fund closure history. 

Factors that have helped stoke active launches, analysts and executives said, include rules streamlined by regulators in late 2019 that made ETFs easier to launch. The approval of the first semitransparent active ETFs, which shield some holdings from the public’s eye, followed.

Analysts also said the success of ARK Investment Management Chief Executive

Cathie Wood

in 2020 showed how active ETFs can score big returns and pull in substantial sums of money. Several of ARK’s funds doubled last year, and its assets approached $60 billion earlier this year, though many of its bets have slumped in 2021. 

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Most other active managers aren’t doing much better. Two-thirds of large-cap managers of mutual funds have fallen short of benchmarks this year, while roughly 10% of the 371 U.S. active ETFs with full-year performance data are beating the S&P 500. More than a third are flat or negative for 2021. 

“Active management is a zero-sum game,” said FactSet’s Ms. Kashner. “Beating the benchmark quarter after quarter, year after year, is a very difficult task at which active managers have traditionally struggled. The ETF wrapper doesn’t change that calculus.” 

Write to Michael Wursthorn at [email protected]

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Latest News Today – International Monetary Fund (IMF) Downgrades India’s


The International Monetary Fund (IMF) lowered India’s growth projection from 12.5 per cent to 9.5 per cent for fiscal 2021-22 – down by three percentage points, following the severe second wave of COVID-19 pandemic in the country. For the current fiscal year, India witnessed the largest drop in growth projections made by IMF, even as the global economic growth rate remains the same at six per cent.

However, for the next fiscal 2022-23, IMF revised the economic growth for India up from 6.9 per cent to 8.5 per cent it had projected in April 2021 – higher by 1.6 percentage points.

“Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback,” IMF said in its latest World Economic Outlook (WEO).

In its second bi-monthly monetary policy committee meeting for fiscal 2021-22 held on June 4, the Reserve Bank of India (RBI) also lowered the country’s gross domestic product (GDP) projection to 9.5 per cent, from 10.5 per cent.

Among the developing nations, IMF has downgraded the economic growth projections for India at three per cent, for China at 0.3 per cent, and for Saudi Arabia at 0.5 per cent. While the change in economic growth projections made by IMF for the rest of the developing countries including Mexico, Brazil, South Africa, among others, is in positive terms.

Recording its worst-ever performance in more than four decades, India registered a de-growth of 7.3 per cent for fiscal year 2020-21, while the preceding January-March quarter of the fiscal showed a slight rise of 1.6 per cent.



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Latest News Today – Rs 23,123 Crore Covid Fund Announced After First Meet Of


PM Modi’s government has faced sharp criticism for its handling of the coronavirus pandemic.

New Delhi:

A new emergency response package worth Rs 23,123 crore to tackle the coronavirus pandemic was announced by the central government on Thursday, following the first meeting of Prime Minister Narendra Modi’s revamped cabinet on Thursday.

The announcement outlined the priority for PM Modi who appointed new ministers for health, IT and oil as part of a reshuffle a day ago in a bid to reinvigorate his government amid fierce criticism of its handling of the coronavirus pandemic, the economy and other quarters.

The package will help set up paediatrics departments in 736 districts, 20,000 new ICU beds and acquire buffer stocks of medicines, new health minister Mansukh Mandaviya said.

Out of the 23,000 crore, around Rs 15,000 crore will be spent by the centre and Rs 8,000 crore will be allocated to states, he said, adding the plans will be implemented in the next nine months.

Mr Mandaviya was appointed on Wednesday just hours after Harsh Vardhan, who was the face of the government’s efforts to fight COVID-19, was asked to step down along with his deputy.

Official sources said Mr Vardhan had to pay the political price for the government’s struggles to cope with a devastating second wave of coronavirus infections.

PM Modi’s government has faced sharp criticism for the chaotic rollout of a nationwide immunisation campaign that experts say had worsened the impact of the second wave, killing hundreds of thousands.

The official count of deaths after a surge in COVID-19 infections in April and May passed 4 lakh last week. Experts believe the actual number may be much higher and there are fears of a third wave soon. Millions remain unvaccinated.

Several members of the ruling BJP and a few from allies were sworn in at the Rashtrapati Bhavan to replace 12 ministers that were fired in the first cabinet reshuffle since PM Modi was re-elected in 2019 on a promise to transform India into a political and economic power.

Opposition leader P Chidambaram said the removal of the health minister and his deputy was an acknowledgement that the Modi government had failed in managing the pandemic but the buck should stop with PM Modi.

“There is a lesson for ministers in these resignations. If things go right the credit will go to the PM, if things go wrong the minister will be the fall guy,” he said.

PM Modi retained his core team at the foreign, finance, home and defence departments even though the economy is in a deep recession and there are widespread concerns that a surge in COVID-19 infections will stall economic recovery.

The reshuffle also came after the defeat of the BJP in April elections in key West Bengal and ahead of another major test of PM Modi’s popularity in state elections in Uttar Pradesh, Goa, Manipur, Punjab and Uttarakhand in February and March next year, which may prove to be a bellwether for his party in 2024 national elections.

Earlier in the evening, PM Modi held a virtual meeting of the new cabinet that now includes 30 ministers while the council includes 77 in all.



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Clean Energy ETFs Take a Hit, but Money Keeps Flowing In | Sidnaz Blog


Investors have lost a bundle this year betting on solar-panel and wind-turbine makers. Their response: to double down.

A year ago, green stocks and the funds that track them rallied tremendously in the aftermath of the market’s recovery from a pandemic-induced swoon. Solar-panel and wind-turbine companies were among firms benefiting from a surge of investor- and consumer-driven demand for renewables, despite many being small unprofitable ventures.

This year, returns are trailing the broader stock market. That is thanks, in part, to stocks having run so far and uncertainty around the Federal Reserve’s interest-rate course and how its actions may ultimately affect growth stocks.

Exchange-traded funds that track renewable-energy indexes have posted double-digit declines so far this year.

BlackRock’s

iShares Global Clean Energy ETF

has fallen 18% since December;

Invesco Ltd.

’s popular

Solar ETF

has posted a 17% decline.

Even so, money continues to pour in. Professional money managers and individual traders alike have invested $6.2 billion into green-energy ETFs so far this year, according to data from Refinitiv Lipper. The inflows are on course to eclipse last year’s record $7.2 billion.

Index makers and asset-management firms say that, for now, large pullbacks in share prices don’t reflect investors’ desire to bet on green companies.

“It’s an area where we see continuous demand,” said

Ari Rajendra,

a senior director of strategy and volatility indexes at S&P Dow Jones Indices.

At BlackRock, the world’s largest asset manager, clean energy funds reported $2.7 billion in inflows so far this year and $1 billion into a European clean-energy fund, according to FactSet. Interest was so high that S&P had to broaden its clean-energy benchmark used by BlackRock funds to fix the problem of having too much money in mostly small, hard-to-trade companies.

Such changes don’t happen often, said S&P’s Mr. Rajendra, but intense demand from investors warranted the index’s revamp to 82 stocks from just 30. The firm also lowered the criteria for the inclusion of stocks, among other things.

Ross Gerber,

chief executive of Gerber Kawasaki Wealth and Investment Management, thinks renewable-energy stocks, from solar-panel makers to manufacturers of alternative batteries, will eventually transform transportation and other facets of everyday life.

A solar farm in Maine. With clean energy stocks pricey, they and funds that track them may be more vulnerable to market or political changes.



Photo:

Robert F. Bukaty/Associated Press

Mr. Gerber has put more client cash into Invesco’s clean-energy fund, contributing to the $446 million of total inflows into ETF so far this year. He shuns oil stocks, which are among the stock market’s best performers this year.

“The more speculative the stock, the higher the valuation. But in this market, people care more about fantasy than reality,” said Mr. Gerber. “So with solar, you have a little bit of the fantasy in there, too.”

Invesco’s solar ETF jumped 233% in 2020, while BlackRock’s global clean-energy fund soared 140%—easily the best years ever for both as valuations of green stocks climbed to dizzying heights.

Although both funds have declined in the year to date, valuations are elevated. Invesco’s solar ETF trades at a forward price/earnings ratio of 36, versus 21 for the S&P 500, according to FactSet.

In an interview with WSJ’s Timothy Puko, U.S. special climate envoy John Kerry explains the roles he’d like to see the private sector and countries play in fighting climate change. Photo: Rob Alcaraz/The Wall Street Journal

Meanwhile, clean-energy companies trade at a 70% premium to traditional energy companies based on a ratio of enterprise value to earnings before interest, taxes, depreciation and amortization, a standard valuation yardstick, strategists at

Bank of America

said. They noted this valuation was down from highs earlier this year but still well above the five-year average.

With stocks pricey, they and funds that track them may be more vulnerable to market or political changes. Their allure may dim, for example, if the Fed begins to raise interest rates earlier than expected, taking some of the shine off growth stocks.

Or volatility could increase if there are hiccups for a $1 trillion infrastructure plan agreed to by President

Biden

and some U.S. senators. Green stocks rallied last year after Mr. Biden won November’s presidential election, as investors bet the new administration would hasten the U.S.’s transition toward wind and solar energy and away from fossil fuels.

Investors already are experiencing some of that volatility. Clean energy stocks have rallied alongside growth stocks in recent weeks. Invesco’s solar fund is up nearly 11% over the past month, while BlackRock’s ETF has added 2.2%.

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The willingness of investors to continue pouring money into this part of the market shows they are positioning for a potential longer-term readjustment of the energy sector and economy.

Rene Reyna,

head of thematic and specialty product strategy at Invesco, said expectations are premised on a belief that technology will eventually bring the cost of batteries, solar panels and other green efforts down enough to garner wider adoption—and big profits. In that sense, clean energy is the “hope trade,” he said.

Construction at a wind farm in New Mexico last year. Clean energy companies trade at a 70% premium to traditional energy companies.



Photo:

Cate Dingley/Bloomberg News

Write to Michael Wursthorn at [email protected]

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J.P. Morgan Asset Management Acquires Timberland Investment Firm | Sidnaz Blog


One of the biggest names on Wall Street is getting into the timber business, and a big part of its plan to make money involves less logging.

J.P. Morgan Asset Management said Monday that it has acquired Campbell Global LLC, a Portland, Ore., firm that manages $5.3 billion worth of timberland on behalf of institutional investors, such as pensions and insurance companies.

The deal gives the $2.5 trillion asset manager a position in the booming market for forest-carbon offsets, tradable assets that are created by paying landowners to not cut down trees and leave them standing to sponge carbon from the atmosphere. Offsets are used by companies to scrub emissions from their internal carbon ledgers, which track progress toward pollution-reduction goals.

Terms of the deal with Campbell’s seller,

BrightSphere Investment Group Inc.,

weren’t disclosed.

Many of the world’s largest companies, including

Apple Inc.,

Microsoft Corp.

and

Royal Dutch Shell

PLC, have promised investors they will reduce their carbon footprints. Many emissions are unavoidable for global businesses, which has made standing timber a hot commodity.

J.P. Morgan


JPM 1.51%

is betting that carbon markets will add value to timberlands beyond the income they generate as a source for building products, said

Anton Pil,

the firm’s head of alternatives.

“We wanted to play an active role in carbon-offset markets as they’re developed,” Mr. Pil said. “We want to be viewed as a global leader in the carbon-sequestration market.”

Other big names are angling for similar status.

BP

PLC last year bought a controlling stake in Finite Carbon, the country’s largest forest-offset producer.

Salesforce.com Inc.

Chief Executive

Marc Benioff,

Microsoft and others recently invested in NCX, a firm that matches offset buyers with timberland owners willing to defer harvests for a fee.

Campbell Global oversees about 1.7 million acres of forestland in the U.S., New Zealand, Australia and Chile. About two-thirds of its 150 employees are involved in managing the forests, while the others are investment professionals, said

John Gilleland,

the firm’s chief executive.

Campbell Global for more than three decades has managed timberland to produce logs for lumber and pulp mills, but has moved into carbon markets in recent years.



Photo:

Campbell Global

Campbell for more than three decades has managed timberland to produce logs for lumber and pulp mills. In recent years, it has moved into carbon markets, selling offsets in California’s regulated cap-and-trade market as well as in the unregulated voluntary markets that have boomed with the rise of green investing.

“We do believe this is the future for this asset,” Mr. Gilleland said.

Timberland investing became popular in the 1980s after the tax code was made more favorable to owners of income-producing real estate, Congress allowed pensions to diversify beyond stocks and bonds and Wall Street analysts convinced forest-products companies to sell off their timberlands.

Investors reasoned that trees would grow, and thus gain value, no matter what the stock market did. Timberland was viewed as a good hedge against inflation.

Demand for lumber has skyrocketed during the pandemic, sending prices to all-time highs. This video explains what’s driving the lumber boom, who’s profiting, and why those growing the trees aren’t reaping the benefits. Illustration: Liz Ornitz/WSJ

But it hasn’t always been a good investment: At the same time timberland investing was gaining momentum, the federal government was paying landowners in the South to plant pine trees on worn-out farmland to boost crop prices. Decades later, the resulting surfeit of pine has pushed log prices to their lowest levels in decades even as the resurgent housing market has lifted prices for lumber and other wood products to records.

Investors such as the California Public Employees’ Retirement System have suffered big losses on southern timberland in recent years. Though log prices in the West still move in unison with those of lumber, timberland there is threatened by fires and wood-boring beetles. In the North, mills have closed and rendered many wood lots uneconomical to log and worth more leased to companies as carbon sinks.

Write to Ryan Dezember at [email protected]

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JPMorgan Buys Nutmeg to Bolster Digital Banking Push in U.K. | Sidnaz Blog


JPMorgan Chase is entering a crowded digital banking marketplace in the U.K.



Photo:

johannes eisele/Agence France-Presse/Getty Images

JPMorgan Chase


JPM 0.61%

& Co. agreed to buy digital wealth manager Nutmeg Saving and Investment Ltd., part of a push to establish a retail banking presence in the U.K.

Nutmeg, founded in 2012, has more than 140,000 customers and £3.5 billion under management, the equivalent of around $5 billion. A price for the acquisition wasn’t disclosed but people familiar with the transaction said it was between £500 million and £1 billion.

JPMorgan said in January it would launch a new digital bank in the U.K., offering consumer banking services there for the first time. Called Chase, it is currently being tested internally with JPMorgan employees ahead of a public launch later this year.

Nutmeg’s savings and investment products won’t initially be offered through the retail banking project, the bank said.

JPMorgan is entering a crowded digital banking marketplace in the U.K. Regulators encouraged new startups, including Starling Bank Ltd. and Monzo Bank Ltd., to boost competition in the wake of the last global financial crisis. These so-called challenger banks have forced traditional lenders to improve their digital offerings but have struggled to earn profits.

JPMorgan last year considered making a bid for Starling Bank, founded by

Anne Boden

in 2014, according to people familiar with the situation.

JPMorgan previously tried to launch a digital bank in U.S. cities and markets where it didn’t have Chase branches, but closed the product, called Finn, in June 2019 after slow pickup. Bank executives have said they learned lessons from that program, including that the Chase brand resonated better than a new name.

Write to Simon Clark at [email protected]

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Hedge-Fund Manager Who ‘Came Undone’ Is Headed to Prison | Sidnaz Blog


On a summer Friday afternoon last year, hedge-fund manager

Dan Kamensky

broke bankruptcy laws. That evening on a recorded line, he pleaded with a banker to say the whole thing was a misunderstanding.

“Maybe I should go to jail,” Mr. Kamensky said on the call.

Mr. Kamensky reports to federal prison on June 18. His hedge fund is in the process of closing, and a career that included stints at white-shoe law firm Simpson Thacher & Bartlett and storied hedge fund Paulson & Co. has been wrecked.

“He came undone,” U.S. District Judge

Denise Cote

said during a court hearing on May 7.

Mr. Kamensky, 48 years old, worked in the high-stakes, high-conflict world of distressed investing, which aims to profit from companies teetering on the brink of or in bankruptcy. He launched his hedge fund, Marble Ridge, in 2015 with $20 million and was managing nearly $1 billion a few years later.

Running his own firm became stressful for Mr. Kamensky. He was anxious, had difficulty sleeping, lost weight and had trouble concentrating at the office or at home, he says. His fund, while it grew quickly, was still a relatively small player in the distressed market, which is dominated by giant private-equity companies, hedge funds and major law firms.

In 2017, Mr. Kamensky began working with a psychologist and a sleep specialist. He also consulted an executive coach, while in the middle of the day he would head to a meditation studio. He began to feel healthier and more relaxed, he says. He enjoyed family time again, playing games like Scrabble and doing crossword puzzles.

His efforts to control his emotions began to unravel in a bitter fight over struggling luxury-goods retailer Neiman Marcus Group Ltd. Things got worse in the coronavirus pandemic, which removed the support system of coaches and therapists that Mr. Kamensky had erected to help deal with his pressures.

Mr. Kamensky began buying bonds of the department-store chain in 2018 for about 60 cents on the dollar. Neiman was owned by private-equity firm

Ares Management Corp.


ARES 1.30%

, which made an ill-fated bet that the chain could thrive despite an onslaught from online competitors. Neiman had one hidden gem; under Ares ownership it had acquired a thriving German online site called MyTheresa.

Interviews with Mr. Kamensky and court documents and transcripts show how the fight over MyTheresa led to Mr. Kamensky’s downfall.

Seeing the value of MyTheresa, Ares decided to separate it from Neiman, giving itself full control of the online site and leaving the bondholders with just the company’s bricks-and-mortar stores. The move borrowed from classic private-equity tactics, but still came as a surprise to Mr. Kamensky, who said he thought Ares had gone too far by taking a company’s crown-jewel asset for nothing in return.

“It’s like someone takes your wallet out of your back pocket on the subway and stares you right in the face while doing it,” he said. A spokesperson for Ares declined to comment.

Dan Kamensky’s fund began buying bonds of Neiman Marcus a few years before the department-store chain filed for bankruptcy.



Photo:

Richard B. Levine/Zuma Press

In press releases that revealed his private letters to Ares’s board, Mr. Kamensky accused the private-equity firm of “lining its pockets” and “looting” Neiman. He said Ares broke the law by moving assets out of an insolvent company and had conflicts of interest. Word got out that he would sue to stop the deal.

Then Ares and Neiman fought back.

James Sprayregen,

a lawyer representing Neiman, warned that if Mr. Kamensky sued, “we’re going to come down on you like a pile of bricks,” Mr. Kamensky later testified. Mr. Sprayregen, a bankruptcy lawyer at Kirkland & Ellis LLP, didn’t return calls seeking comment.

Mr. Kamensky’s fund did file suit in 2019. Neiman responded, stepping up the fight by suing Marble Ridge for defamation, alleging that Mr. Kamensky’s lawsuit hurt the retailer’s business position. “A defamation suit is unheard of,” he says. While litigation is common in the world of distressed debt and restructuring, a defamation suit is unusual.

Neiman eventually agreed to restore nearly half of MyTheresa to its creditors. Almost all of the creditors went along, but Mr. Kamensky thought it was a bad deal and continued to push Ares to give more of MyTheresa to Neiman’s creditors. “It felt like I was tilting at windmills,” says Mr. Kamensky, a reference to the novel “Don Quixote,” which he loved as a youth.

With the battle over MyTheresa already joined, Covid-19 hit and Neiman filed for bankruptcy. Mr. Kamensky’s fund fell 12%, adding to his pressures.


‘There was a fuse exploding. I lost it.’


— Dan Kamensky

Staying at his Long Island home because of the pandemic, he worked in a cramped bedroom that he had converted into an office. A puppy once relieved himself on Mr. Kamensky’s foot during a business call. Sometimes, after working late into the night, Mr. Kamensky slept in the same room.

It became difficult to work with his coach and consult with colleagues. “Everything became more ad hoc,” he says.

As one of the few Neiman bondholders opposing the chain’s restructuring plan, Mr. Kamensky took a seat on Neiman’s creditors’ committee, which was tasked with advocating for the rights of investors during bankruptcy proceedings. He had to act in the interest of all creditors, rather than push for things that would benefit only his firm.

Once again a deal was reached on MyTheresa but Mr. Kamensky rejected it. He had spent millions on the fight and wanted to have the right to buy a bigger stake in MyTheresa to potentially boost his fund’s profits. He would offer to buy the preferred shares in MyTheresa that would be issued to other creditors.

By July, he was close to getting what he wanted and his hedge fund had recouped about half of its losses. Mr. Kamensky was feeling optimistic. But on July 31, he was blindsided by word that another bidder was also trying to buy the preferred shares. The bidder, he learned, was investment bank Jefferies LLC, one of his longtime brokers.

He feared Jefferies could scuttle a deal he had been pursuing for more than two years, just days before completion.

“There was a fuse exploding,” Mr. Kamensky says. “I lost it.”

At 3:20 that summer Friday afternoon, he texted

Joe Femenia,

his contact at Jefferies, “DO NOT SEND IN A BID.” In a phone call 20 minutes later with Mr. Femenia and

Eric Geller,

a Jefferies colleague, he yelled and cursed at the men, according to a Justice Department probe.

Mr. Geller not long after told a lawyer for the Neiman creditors committee that Jefferies wouldn’t bid because Mr. Kamensky told the firm to back off.

Mr. Kamensky realized he had violated the law. As a member of the creditors committee, he shouldn’t try to stop a higher bid that could benefit other investors.

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Four hours after he made his threat, Mr. Kamensky called Mr. Femenia again. On the call, he pleaded with Mr. Femenia to tell a different story to authorities—that Mr. Kamensky wanted Jefferies to bid only if it was serious about going through with the deal. “I pray you tell them that this was a huge misunderstanding,” Mr. Kamensky said on the call, which was recorded by Mr. Femenia. He said he could go to jail without Mr. Femenia’s help.

The creditors committee lawyer filed a report on possible wrongdoing in bankruptcy court. Mr. Kamensky apologized while admitting his wrongdoing to Justice Department lawyers.

In September, Mr. Kamensky was arrested in a surprise raid at his home, and in February pleaded guilty to one charge of extortion and bribery related to the Neiman bankruptcy.

Upon entering prison on Friday, Mr. Kamensky faces weeks of solitary confinement in keeping with Covid-19 guidelines. After completing his six-month sentence, he could face a lifetime ban from serving as an investment adviser.

While waiting to go to prison, Mr. Kamensky has given lectures to business and law students about the dangers of intense stress and letting emotions undermine one’s judgment. He spoke at several graduate schools, including the NYU Stern School of Business and the Duke University School of Law. He wonders, if he had been in his office with colleagues around, would he have reacted so quickly and angrily.

Mr. Kamensky is a “good man, but one who lost his moorings,” Judge Cote said at his sentencing. She said it wasn’t clear to her whether his actions had caused economic harm to creditors. Prosecutors requested a sentence of 12 to 18 months. Mr. Kamensky will serve six months of probation after prison.

“I regret letting anger get the best of me,” Mr. Kamensky says.

Write to Gregory Zuckerman at [email protected] and Soma Biswas at [email protected]

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U.S. Stock Futures Waver Ahead of Data | Sidnaz Blog


U.S. stock futures wavered, extending the week’s pattern of muted moves ahead of data on the trade deficit and job openings.

S&P 500 futures traded mostly flat and futures on the Dow Jones Industrial Average slipped 0.1%. The contracts don’t necessarily predict moves after the opening bell.

In Europe, the Stoxx Europe 600 added 0.1% in morning trade, and it is at its highest level in a year as gains in communication services and financials sectors were offset by losses in materials and consumer discretionary sectors.

Intermediate Capital Group

climbed 4.4% and Greggs jumped 2.3%.

The U.K.’s FTSE 100 rose 0.1%. Other stock indexes in Europe were mixed as France’s CAC 40 gained 0.1% and the U.K.’s FTSE 250 added 0.1%, whereas Germany’s DAX was broadly flat.

The Swiss franc, the euro and the British pound lost 0.1%, 0.2% and 0.3% respectively against the U.S. dollar.

In commodities, Brent crude fell 0.8% to $70.94 a barrel. Gold strengthened 0.1% to $1,899.80 a troy ounce.

German 10-year bund yields were down to minus 0.203% and U.K. 10-year gilts yields slipped to 0.803%. The yield on 10-year U.S. Treasury fell to 1.556% from 1.570%. Bond prices and yields move in opposite directions.

In Asia, indexes mostly fell as Hong Kong’s Hang Seng declined 0.3% after trading higher 0.7% during the session, Japan’s Nikkei 225 index was lower 0.2%, and China’s benchmark Shanghai Composite shed 0.5% after gaining 0.6% earlier.

NYSE employees eating lunch outside the New York Stock Exchange on Monday.



Photo:

Richard Drew/Associated Press

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Elliott Management Has Big Dropbox Stake | Sidnaz Blog


Cloud-computing company Dropbox went public in March 2018.



Photo:

Tiffany Hagler-Geard/Bloomberg News

Elliott Management Corp. has taken a sizable stake in software company

Dropbox Inc.,


DBX 7.01%

the latest target for the activist hedge fund, according to people familiar with the matter.

Elliott has told Dropbox it is the company’s largest shareholder after Chief Executive Officer

Drew Houston,

the people said. That suggests the hedge fund owns a stake of more than 10%, worth well over $800 million. The two sides have been in talks since earlier this year.

Dropbox, a cloud-computing company with a market value of roughly $11 billion, went public in March 2018 and has been trading below its IPO price for most of that time. Its modest valuation compared with those of other cloud companies such as

Salesforce.com Inc.

and

ServiceNow Inc.

has made it the subject of persistent takeover speculation.

Write to Cara Lombardo at [email protected]

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