Greetings from the Trader’s Desk!
After a brief hiatus, I’m back to dissect “Golden Frog Time”. Since this episode revolved around an IPO and stock manipulation, there’s a lot for me to say. I’ll be breaking my post into two sections: first part on the new Head of Research, Taylor and second part on Axe and Ice Juice (ICEJ).
At Paley Live, I told the writers that they get the “fin speak” spot on. However, with “Golden Frog Time” I do have one issue. On the first trading day of an IPO, the stock is usually Hard to Borrow (you need to borrow stock in order to short it). Shares are usually locked up in restricted shares for initial investors, employees of the company, and Board members (like Ira). They are considered “locked up” due to a period of time (usually 90-180 days) where you can’t sell the shares. Most brokers won’t have the inventory, hence “Hard to Borrow”. The investment banks that took the company public (in this case Patriot) would have shares as well, but they would most likely not lend them out to short, as it is in their best interest to have the stock rise. This is a long way of saying that if Axe did want to short ICEJ, he probably couldn’t do it on Day 1. If I’m going to praise Billions when they get it right, I also need to call things out if they don’t seem right as well. Sorry!! (All references to “fin speak” are explained in more detail in our Billions: Glossary)
This was a very interesting episode for Taylor. We saw a few different sides of the new Head of Research, and I love the complexity of this character. I also love the fact that in “With or Without You” Taylor was not a rat. Yes, I know some people say “whistle-blower”, but where I come from, it’s called rat, and that is one of the worst things you can be called.
Taylor needs to get rid of an analyst, and they are going “by the numbers”, which for them, makes sense. That is Taylor’s world; it’s how they think. But Axe knows that along with getting the numbers right, you need to have that something extra – the want, the drive, the desire. Axe asks Taylor to basically analyze the analysts: look at them as they would a stock; who is going to outperform and who is overvalued.
Taylor’s interviews with the analysts are hysterical to me! I have met and worked with each and every type of those of people in this business: the cry-baby (Ben), the chip on the shoulder (Idaho), the insecure weasel (Pununzio) and the person who may not have the Ivy League education, and may have gotten the job the long way round, but will work twice as hard as anyone else because they have the desire to pick stocks (Rudy). I was so happy Taylor kept Rudy because “he’s scrappy and deserves the chance”. I’ve talked a lot about how just one person believing in you in this business can make all the difference, and in this case, Taylor comes through.
Taylor goes to Wendy for advice on how to fire someone. They are apprehensive and looking for affirmation. Taylor’s dad was fired from his job when Taylor was young and it had an effect on their home life. Wendy asks Taylor how the company did, and when Taylor says “it thrived” you can almost see it click in Taylor’s mind: the needs of the many outweigh the needs of the few. Those words (for me at least) are always equated with my favorite Vulcan, Mr. Spock. I see a lot of Spock in Taylor: logical, methodical, pragmatic. If Axe Capital is to thrive, then an analyst has to go.
Bryan is still on a quest to flip Taylor. He believes just because they share some of the same causes, they think alike. He does not realize that Taylor sees the world much differently than he does. Bryan is full of feelings and emotions and uses that to his advantage. Taylor, like Spock, is in a sense disconnected from emotions; they make their choices and decisions based on facts and logic. Axe Capital has made Taylor “feel alive” because they are doing what they love, and are appreciated for who they are: brilliant, analytical, and logical. If I ever do decide to change from #TeamAxe, it would only be to #TeamTaylor!
There is no one in this business who won’t sell you out if they think there is a nickel in it!
I find that strangely reassuring. It eliminates the possibility of disillusionment.
That exchange between Wags and Axe does seem to be a premonition of things to come.
Wags tells Axe ICEJ is legit. Patriot is taking it public and the analysts at the “Big 3” are all positive on it. I’m going to assume the “Big 3” Wags is talking about is Goldman Sachs, Morgan Stanley and JP Morgan. Those are 3 of the biggest sell-side firms on the street (you could replace BoA/Merrill Lynch with any of those as well). A call from an analyst from any of those shops, and it would definitely move the name.
Chuck Sr. has a big position in ICEJ but where did he get the cash? He’s got a lot of real estate, but he’s cash poor. Who would give a personal loan of that size to someone? Could only be Chuck Jr. Axe can now take down two birds with one stone, his golden frog poison play.
The two Chucks and Ira talk about the upcoming IPO, and Ira reveals he is selling his shares in his law firm. He believes ICEJ is his golden ticket. Since we know that for Chuck this whole ICEJ was a trap for Axe, does he even care what he could be doing to his family and best friend? I know Axe screws people all the time. But he’s a fund manager and usually he’s only screwing other managers, kind of like the mob only goes after other mob guys. Chuck is going to hurt the people closest to him. His diabolical laugh at the end of the episode makes me think he really doesn’t care. As long as he gets his white whale, all collateral damage will be worth it. Or will it?
Chuck gets stock monitoring and trading software on his computer, and it is the only time I can say he and I have ANYTHING in common. However, I do have 4 computers on my desk with that stuff, so there!
9:30 AM is opening bell and we’re off! (I would have loved for the show to have actually filmed something on the floor of the NYSE or at the NASDAQ for this.)
Mafee tells Axe a small retail broker, Traderight (think Schwab or Ameritrade) is buying a ton of shares of ICEJ. Wags knows it must be Chuck Sr., as funds or institutions would be going through Patriot, the investment bank who brought the deal public. On this news, it’s Golden Frog Time!
I do not judge Axe on his actions, right or wrong. I’ve been told my moral compass doesn’t point true North, so I’m not the best person to judge anyone. That being said, I will say that I admire Axe’s plays! Last season, he fooled everyone by faking getting out of the business to avoid the telecom meltdown he knew was coming and that was pure genius. Coming up with the idea to basically spike the swamp juice was brilliant! I tip my Mets cap to Bobby Axelrod!
But this time there’s a problem: Axe needs and goes to people he wouldn’t normally trust (a recurring theme for him this season). He is so consumed with the kill, he is being sloppy (he would never in a million years trust someone like Margolis for a play this big). I have made this observation on him too many times this season and I don’t think I did that once last season.
Wendy runs (rats) to Chuck when she finds out Axe Capital is short ICEJ. She is trying to warn him, and is even breaking her confidentiality clause to do it. Chuck plays the “I can’t believe you don’t believe in me” card, and I want to vomit. Chuck is an insecure little man who still does what his daddy says and still wants to get back at the bullies on the playground – 40 years later! Why anyone would believe in him is beyond me. In a state of spite, Wendy calls Mafee and gets in on the short action on ICEJ. Wendy calls in a short of the stock her husband is long right after visiting him. Hmm. The timing of this call could be everything.
Ira calls Chuck in a panic. The stock was tanking and then was halted. I’m not afraid of much when it comes to the market, but the halt of a stock is something I dread. When a stock is halted, you cannot buy or sell any shares. You are frozen. And, depending on the news, the stock can open anywhere when it resumes trading. A stock can be $20 before being halted, and then open at $2 (that’s a bit of an exaggeration, but you get my drift).
While reviewing the trading confirmations, Wags notices Wendy got a piece of the ICEJ short, and Axe is not happy. I wonder why that is. It actually may come in handy to him down the road.
After a long day of making a ton of money, Axe comes home to Lara having pizza and wine. Lara notes that she sees something she hasn’t seen in a while: Bobby Fucking Axelrod. We have not seen him much lately either. This day was not about optics or ass covering; it was just about making money and making plays. That is what Axe does best, for good or for bad. The shark is swimming again. However, although BFA is who Lara fell in love with, her head is still on his lie, and their romantic evening turns to frustration. Lara may forgive, but she doesn’t forget.
In several flashbacks, we see how Chuck set Axe up for a huge fall, even getting Boyd and Dake in on the action. He is giddy as a school girl believing he may have finally put the stake in Axe’s heart. And perhaps he has.
I’m a trader, and I’ll trade anything (I’m the moron who once shorted Apple), but if there is one thing I’d never bet against, it’s Bobby Fucking Axelrod, ever.