Times have changed and times are strange
Here I come, but I ain’t the same
Mama, I’m coming home
Mama, I’m Coming Home – Ozzy Osbourne
TGIF and welcome to The Trader’s Desk. As has been the pattern the last few weeks, I’ll give a brief explanation of what an Opportunity Zone is, some quick observations, and then focus on Axe and why “stinking” of Yonkers is a double-edged sword for him.
What is an Opportunity Zone? (The WSJ review of Billions gives a really great explanation – I use some of it here)
Opportunity zones are real. The idea is part of the 2017 tax overhaul (however the Treasury Department just finalized rules for them in late 2019). Investors who have significant capital gains can take that money and invest it into an opportunity fund, for which they get a tax break. The fund in turn invests in businesses in designated disadvantaged neighborhoods. There’s no limit on how much you can invest, but you need to keep it invested for at least 10 years to get the tax benefit. That makes it less attractive for hedge funds, which likely won’t want to tie up their capital for that long. Consequently, in the real world, hedge funds have not moved aggressively into opportunity zones. There is also the question of just throwing money at these areas. While building shopping malls, business complexes and some housing is nice, if you don’t address the root of the issues, then in a few years all you have are empty shopping malls and business complexes. Continue reading ““From the Trader’s Desk”: Home is Where the Heart Is? Billions S5E3 “Opportunity Zone””
