Bloomberg - Evening Briefing - Hedge fund confusion

Bloomberg Evening Briefing

The pain—and the questions—kept coming as big name hedge funds took turns marking down the value of their stakes in private companies. Every time they wrote down holdings by millions—or even billions—of dollars, investors last year questioned whether they had gone far enough. Now, an exclusive Bloomberg News analysis offers a glimpse into one of the most opaque corners of the investing world, and the findings aren’t reassuring. In many cases, hedge funds and other money managers disagree over just how to value private companies. By the end of 2022, high-flying unicorns lost more than 40% of their value from the year’s peak, a sharper drop than the rout in publicly traded tech stocks and worse than the returns reported by most hedge funds in the space. Disagreements over what companies are now worth have profound implications for the ultimate investors–from wealthy individuals to pension plans. One takeaway is that even after a year of writedowns across the investment industry, more may be in store

Here are today’s top stories

Silvergate Capital shares plunged after the bank said the crypto industry’s meltdown triggered a run on deposits, prompting the company to sell assets at a steep loss and fire 40% of its staff. Customers withdrew about $8.1 billion of digital-asset deposits from the bank during the fourth quarter. Executives said Silvergate may become a takeover target.

Bed Bath & Beyond said it might not be able to continue as a going concern, bringing another US retail chain to the precipice of bankruptcy and potentially placing tens of thousands of employees at risk. The news comes less than a day after Amazon said it was firing more than 18,000 employees—8,000 more than expected—the biggest wave of terminations in its history.

Photographer: Gabby Jones/Bloomberg

While Amazon, Salesforce and other giants across technology and finance have combined to fire tens of thousands of workers, small and medium-size US businesses have been on a hiring spree. So much so that, according to new data, overall hiring far exceeded expectations in December while applications for jobless benefits fell to a three-month low. However, in a welcome sign for the Fed in its fight against inflation, the data also showed a sharp deceleration in wage growth in December. 

The US and Germany will send armored vehicles to Ukraine, a significant upgrade in firepower urgently sought by Ukrainian President Volodymyr Zelenskiy. France has already indicated it will do the same. Belarus and Russia meanwhile will undertake joint air force exercises as part of an ongoing build-up in combined military activities, the Belarusian defense ministry said. On the ground in Ukraine, Kyiv officials said Russian forces continued their assault on the eastern city of Bakhmut, shelling more than 60 settlements in the area, while also firing on the southern Zaporizhzhia region more than 100 times in 24 hours. Kyiv dismissed as a ploy a Kremlin call Thursday for a unilateral cease fire for Orthodox Christmas. Here’s the latest on the war.

German soldiers load “Marder” armored vehicles on a train at the troop exercise area in Grafenwoehr, Germany, in 2017. The class of vehicle, along with US Bradley Fighting Vehicles, may soon be sent to Ukraine. Photographer: Armin Weigel/DPA

The civil war between 20 far-right House Republicans and the rest of the chamber’s GOP delegation extended to a third day. Would-be Speaker Kevin McCarthy has now lost 10 votes, which means balloting for the post has gone on longer than any time since before the actual Civil War.

A new Covid variant first detected last year has quickly become the dominant strain in the US. The new version of the deadly pathogen has surged through the nation and has now been identified in at least 28 other countries, according to the World Health Organization. Is it more dangerous? Does it spread more easily? Here’s what we know.

The special counsel investigating Donald Trump has new emails, letters and other documents from election officials in battleground states, accelerating the federal probe of whether the former president should face prosecution for what the Jan. 6 committee called an attempted coup. Two years after the US Capitol attack and with the 2024 election cycle looming, Jack Smith may make critical decisions about whether to bring charges in a matter of weeks.

John “Jack” Smith Source: Bloomberg

Bloomberg continues to track the global coronavirus pandemic. Click here for daily updates.

 What you’ll need to know tomorrow

What’s Behind Tesla’s $860 Billion Nosedive?

Until fairly recently, higher-end Tesla cars had a setting (with apologies to Spaceballs) called “ludicrous mode,” which used their high-torque electric engines to achieve superfast acceleration. In the past year, ludicrous mode has also been an apt description of Tesla’s share price—only in reverse. From about $1.2 trillion at the start of 2022, the company’s market value has fallen more than 70%, to $340 billion. And while one of the more likely answers to the question “what happened?” would involve the company’s CEO and his behavior of late, the big picture is a lot more complicated

Photographer: Nina Riggio/Bloomberg

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