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Hedge Fund Exposure to Tech Hits Record High | Bloomberg Technology

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Hedge Fund Exposure to Tech Hits Record High | Bloomberg Technology

Bloomberg Technology Begins (00:00:00)

  • Joe Mathieu introduces the show from Washington.
  • Caroline Hyde and Ed Ludlow host the show from New York and San Francisco, respectively.
  • The show will discuss hedge fund exposure to technology, YouTube CEO's plans, and an interview with Ring CEO.
  • Markets are struggling due to macro factors.
  • There is a wall of money from the supply side to the bond market.
  • Seven-year debt auction appetite has been weak.
  • Nasdaq is being pulled down, while Stoxx 600 in Europe is bouncing off its lows.
  • Longer-dated yields are rising, indicating reduced risk appetite.
  • Cryptocurrencies are under slight pressure, with Bitcoin trading around $67,500.
  • BYD, a Chinese EV maker, has announced a hybrid drivetrain capable of traveling over 1200 miles on a single charge.
  • The news has boosted BYD's U.S. listing shares and generated discussion on social media.
  • Apple shares rose over 1% after WWDc invites were sent out.
  • A court in China dismissed a case against Apple regarding App Store fees and commissions.
  • This follows similar legal challenges in the United States.
  • Hedge fund exposure to technology has reached a new record high.
  • Strong earnings reports from tech companies last week contributed to this trend.
  • Goldman Sachs Prime Brokerage reports that the "Magnificent Seven" tech stocks now account for close to 21% of hedge funds' total exposure.

Kristin Roth DeClark, Barclays Global Head of Tech Investment Banking (00:03:35)

  • Hedge funds' exposure to tech stocks is at a record high, despite limited growth opportunities in the public market.
  • Issuers are looking to 2025 for IPOs due to expectations of lower rates and a more stable market.
  • Private minority stake sales are gaining popularity as an alternative to IPOs, while take-private activities have increased in the tech industry.
  • Convertible interest is expected to be active this year, with companies exploring various financing options.
  • There is a shift in enthusiasm from public markets to private markets, with more interest in M&A and strategic activities, especially in early-stage AI technology businesses.
  • YouTube CEO discusses the platform's growth, surpassing one billion hours of watch time on living room screens, and its unique position in the streaming landscape.
  • YouTube's future revenue growth will come from expanding monetization offerings for creators.
  • BHP does not intend to make a firm offer for Anglo American due to disagreements on views regarding South African regulatory risk and the cost of the deal.
  • A former board member of OpenAI revealed that the board was not informed about the original 2022 launch of ChatGPT until after it had already happened.

Seth Fiegerman, Bloomberg News (00:14:50)

  • Former OpenAI board member Helen publicly criticized the company and CEO Sam Altman for misleading the board about product development and commercialization, raising concerns about trustworthiness and transparency.
  • OpenAI faces competition from European rival Francis Mistryal AI, which is expanding into the United States and recently hired a key member from OpenAI.
  • Klarna, a Swedish fintech company, has achieved rapid growth in Europe, reaching a $6 billion valuation in less than 14 months, operating with a small team and an open-source model.
  • French President Emmanuel Macron supports Klarna's independence and opposes its acquisition by a large American tech firm.
  • The broader market is experiencing a slight decrease in risk appetite, with rising bond yields and underperformance of the Nasdaq 100 compared to other U.S. benchmarks.
  • Semiconductor stocks are down after a period of strong rallies, with every chipmaker experiencing losses.
  • Moderna underperforms with a 5% drop after a record-breaking 10-day winning streak.
  • Amazon outperforms the market due to news of an expanded partnership with Germany's SAP, focusing on the integration of generative AI.

Elizabeth Hamren, Ring CEO (00:21:55)

  • Ring, the home security camera company, is rebranding to focus on a broader mission beyond safety and security, introducing new products and services to cater to diverse uses, including a $20 per month subscription service.
  • Ring has achieved profitability and is experiencing double-digit growth, with plans to continue investing in computer vision and AI to enhance its video service.
  • Amazon, Ring's parent company, is shifting its focus from growth at all costs to profitability, with the majority of its customers subscribing to its subscription service, which significantly contributes to the company's business health.
  • Ring's point of differentiation lies in its software, which takes advantage of the hardware capabilities to provide unique features and functionality.
  • Amazon benefits from the enthusiasm of customers who share Ring videos on social media platforms like TikTok and Instagram Reels, driving awareness of the product and attracting new customers.
  • Hedge funds' exposure to tech stocks has reached a record high, but there are warnings about excessive confidence in the future trajectory of AI and the risk of making serious mistakes.
  • PWC's arms are set to start selling products, becoming the first reseller of ChatGPT enterprise products for business use.

Eric Hippeau, Lerer Hippeau Managing Partner (00:31:00)

  • The number of U.S. public companies has declined significantly, from 8,000 in the 1990s to less than 4,000 currently, due to increased regulations and the availability of private capital.
  • Companies are opting to remain private longer, as they can access more capital in private markets, limiting exit opportunities for investors and hindering future growth and financial benefits.
  • Hedge funds' exposure to technology stocks has reached a record high, reflecting their optimism in the tech sector's momentum and potential for high returns.
  • The Sarbanes-Oxley Act of 2002 imposed significant burdens on smaller public companies, leading many to delist, merge, or go private.
  • The high cost of going public, including compliance costs, deters companies from listing on public markets, affecting their valuations and limiting employee liquidity.
  • Apple won a legal battle in China over its App Store fees, providing some relief amid growing global scrutiny of its practices.
  • Meta has removed hundreds of Facebook accounts associated with covert influence campaigns from various countries, using AI tools to detect disinformation before it gains traction.
  • Labeling AI-generated content is becoming increasingly important to combat misinformation.

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