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How Selling More DJT Stock Makes Trump Richer -- And Shareholders Poorer

How Selling More DJT Stock Makes Trump Richer -- And Shareholders Poorer

Trump plans to water DJT stock by issuing millions of new shares. It’s part of a new Trump scheme to make money for himself and his bankers from a failing company that rang up just $4.1 million in revenue last year and lost more than $58 million.

At its peak, the market valued the company at $8 billion, which, in market terms, is a delusional fantasy. It’s true value is zero, especially if Trump is incarcerated.

The stock watering plan also reminds us that savvy investors and investment bankers make money when stocks fall and rise. Profiting off a loser company is a lucrative but risky and sophisticated game, not one to try at home. Unless you want to be wiped out financially right down to losing your house, since the potential losses to you are unlimited.

Here is how it works: By Issuing millions more shares of DJT, the Trump company ticker symbol, the company will collect cash to keep it going since it isn’t earning a profit or taking in much from customers. The new shares dilute the stock the way a bar watering the gin makes it less potent.

Shorts borrow shares from investors and sell them, paying a fee to the investor. If the stock price falls, the shorts buy back the same number of shares at the lower price, return them to the person they were borrowed from, and keep the difference in price between the sale and re-purchase.

People who hold shares are called longs. They have a long, or ownership position.

Watering helps those who short stocks, called shorts, in two ways.

Shorts borrow shares of stock, paying the investor a fee for the loan of their shares. The shorts then sell the borrowed shares.

Note: If you own a stock brokerage account that allows you to buy on the margin, the investment house can loan out your shares without you knowing it. The brokerage assumes the risk of making you whole if things go awry.

The first way that shorts benefit from stock watering is that millions of new shares become available to sell short. Right now, there are hardly any shares left to borrow and sell short.

For example, if a short sold at $26, roughly the DJT price Monday, and bought it back for $1 later, the profit would be $25 per share less than the fee paid to borrow the shares. In this scenario, the short seller makes a bank vault of cash while the loyal Trump supporter who held onto their shares gets wiped out.

While that’s a nifty and lucrative result, what happens if the stock price rises? Should the stock price rise, say to $51 from $26, the person with the short position would lose $25 per borrowed share. Ouch.

Second, issuing more shares lowers the value of each existing share, putting more downward pressure on DJT.

DJT trading began three weeks ago. DJT shares peaked March 26 at $79.38 and started falling. On April 15, the day Trump’s first criminal trial began in Manhattan, DJT shares traded at about $26. That means the stock has already lost more than two-thirds — down 71%, closing today at $22.84 — from its peak value. Ouch for real.

Trump owns 58 percent of the pre-dilution shares. But he can’t sell his shares for five months under a so-called “lock up” intended to reassure investors that the company isn’t a pump-and-dump scam to run up the share price so the insiders can cash out, leaving the buyers with losses when the stock collapses.

But Donald can still cash in and walk away with a fortune, perhaps several billion dollars, since at its peak, the company was valued at about $8 billion for reasons that have nothing to do with market fundamentals like profits and expectations of future profits.

How would that work?

Donald can pledge his DJT shares to an investment bank. The bank then loans Donald cash secured by those shares.

CEOs have done this for decades, pocketing cash without selling their shares — or having to tell investors! In those deals, the CEO or founder could borrow as much as 90 percent of the share value. If the stock rose, the investment house got the first 35 percent or so of the increase. If the stock fell, as we see with DJT shares, the investment house also makes money because it shorts the stock.

After the price collapses, the investment bank closes its short position by buying back cheap shares, and Trump’s loan is paid off.

The bankers keep the fat fees charged for arranging the deal plus any surplus on the short.

In this case, the investment bank might loan Trump only half of the value of his shares. In that scenario, it would double its money because when the bank closes its short position, its gross profit would be twice as much money as it loaned Trump. And then there are the fees the bank collects for arranging the deal.

It’s a win-win for Trump and the bank — and nothing but losses for people who went long, buying and holding DJT shares as they fell from almost $80 to zero.

At the upcoming April 22 hearing before Justice Arthur Engoron on Trump’s putative bond in the persistent fraud case, New York Attorney General Letitia James should ask if Trump hypothecated his DJT shares and collected cash through a loan against them.

If he did — and I think that is highly likely — this could seriously complicate collecting the nearly half a billion dollars Donald owes in disgorgement and interest. Trump can delay payment while he appeals, but he has no chance of reversing the finding of fraud, only of persuading a court to shave back the size of the award. That, too, seems unlikely for anything but a modest amount of what he owes.

Whether it’s cheating at golf, cheating novice roulette players at the Trump Castle casino, cheating illegal immigrants out of their wages in building Trump Tower, cheating on his wives, cheating insurance companies, cheating on damages from 9/11 — he suffered none but collected big time — cheating on his income taxes, cheating on his property taxes, or trying to cheat by stealing an election and overthrowing the government, remember that Trump is always and everywhere looking to make money for himself with no regard for who gets hurt.

Reprinted with permission from DC Report.
Joe Biden

In Late March, Both Fundraising And Polling Are Improving For Biden

Last week,The Economist's presidential polling average set in motion a reevaluation of the general election when President Joe Biden pulled ahead of Donald Trump for the first time since September 2023.

To be clear, Biden isn't suddenly the odds-on favorite to win in November, but the fundamentals of the Biden-Trump contest do appear to be shifting in a slightly more favorable direction for Biden.

In the 18 Biden-Trump head-to-head matchups conducted by reputable pollsters (1.8 stars or higher-plus in 538’s pollster ratings) since the March 7 State of the Union address, Trump led in nine surveys, Biden led in seven, and they were even in two. This is a modest improvement from the 18 comparable surveys leading up to Biden's speech. In those surveys, Trump led in 10, Biden in six, and two found the candidates evenly matched.

Better yet, the average of these polls shows Biden improving overall, from 1.1 percentage points underwater before the State of the Union, to 0.8 points underwater afterward—which may seem like a negligible shift but is meaningful where averages are concerned. (Note: None of the polls used here account for how third-party candidates affect the outcome.)

Included in the post-SOTU polling was this month’s Daily Kos/Civiqs survey, which found Biden leading Trump by a single percentage point, 45 percent to 44 percent—a slight uptick from January, when the two were even.

But truth be told, the horse-race polling is among the least of Biden's gains in the contest. The Biden campaign's fundraising in February combined with that of the Democratic National Committee eclipsed the totals of Trump and the RNC.

Filings posted last week showed that the Biden campaign raised $21.3 million in February, while the DNC raised another $16.6 million; the Trump campaign reported raising $10.9 million, while the Republican National Committee raised a similar $10.7 million.

But the more pronounced disparity came in cash reserves available to Biden and the Democrats. Biden and the DNC closed out February with a combined $97.6 million cash on hand—more than doubling the $44.9 million banked by Trump and the RNC.

Democrats’ associated committees boast a cash advantage over Republicans as well:

  • Democratic Congressional Campaign Committee has $14 million more money banked than the National Republican Campaign Committee ($59.2 million to $45.2 million).
  • Democratic Senatorial Campaign Committee has a $7 million cash-on-hand advantage over the National Republican Senatorial Committee ($31.9 million to $24.8 million).

Other underlying fundamentals are also moving in a positive direction for Biden and Democrats. While Republicans led Democrats in 538's generic congressional ballot aggregate throughout most of January, February, and much of March, Democrats have now pulled even with Republicans, at roughly 44.5 percent each.

In Civiqs’ tracking polls, the public opinion of Biden's efforts to create jobs are better than they have ever been, with 42 percent agreeing that he’s doing enough and 48 percent disagreeing.

And while voters' views on the condition of the economy remain well underwater, they are trending in the right direction since falling in the first half of 2022, during the throes of inflation. At net -24 points “good,” the numbers now are on par with how voters viewed the economy in late September 2021.

And voters' estimation of their family finances are the best they've been in roughly two years, since early March 2022.

Current public opinion about the economy and personal finances are double-digits better than they were during the final month of the 2022 midterms, when Democrats turned back the vaunted red wave that historical norms foretold. In fact, voters’ view of the economy is 22 points better now than it was on Election Day 2022.

The data points aren't unrelated. Now that voters are getting more clarity on the choices this cycle, Democratic donors are demonstrating greater enthusiasm for their ticket than are Republican donors. And that cash advantage is giving Democrats more room to advertise and assemble a ground game.

While voters will be settling into their choices later this year, partisans on both sides are already starting to “come home” to their party—which is particularly important to see on the Democratic side since the media had fixated on soft support for Biden as an early narrative.

Civiqs polling from January and March is a perfect example, with Biden bumping his support among Democratic voters by a couple points, from 88 percent to 90 percent. Trump likewise boosted his GOP support from 90 percent to 92 percent.

But what is most fascinating is the shift among independents, who favored Trump by 11 points in January. But this month, Biden cut Trump's lead among independent voters to just a handful of points, 37percent to 42 percent.

Biden's State of the Union remains a rallying point, giving Democratic voters something to cheer and offering a point of reassurance for some disaffected Republicans voters who defected from Trump to Biden in 2020. This week's Focus Group podcast, hosted by Sarah Longwell, featured the reactions of several Trump-to-Biden voters following the State of the Union.

I thought he was energized, chuckling, and that’s one of my biggest complaints about him. You know, not the age so much. It’s just, you know, he’s not, like, an enthusiastic, energized guy. ... You know, he made a couple of jabs at, like, Lindsey Graham, which comes off good in this, like, day and age. ... Sometimes you could tell he was going off script, which is good. He was, you know, flowing improv, which is good. He’s showing he’s competent.

It was the most that I’ve seen him be able to go off script that I can remember—but this, to me, felt like he was going off script. He was showing that he can do it, and he can do it well, which was a pretty good thing. And, I mean, to me, that answers some of the questions that people were having, or have made about him in the last couple of months.

He suffers from having a stutter. So a lot of times he stumbles over words, and it can be a little uncomfortable to listen to him. But I thought he sounded really sharp. He was very strong. He did go off script, but he was handling the hecklers really well.

If there's a takeaway here, it's that letting Joe be Joe—even amid some stumbles—is a better strategy than shielding him from the press and voters. Biden did himself and Democrats a world of good with his feisty State of the Union speech. And the Biden campaign appears to have switched into high gear in the weeks since, visiting every 2024 swing state in less than three weeks and putting the president on full display in a multitude of settings.

The other takeaway is that Republicans are continuing to disintegrate, with Trump's money woes eating away at their ability to compete by the day.

November is still many months away, but Democrats have reason to like the way things are trending as they work to build momentum heading into the August convention.

Reprinted with permission from Daily Kos.

What’s The Cost Of High Living?

What’s The Cost Of High Living?

Reprinted with permission from Creators.

 

The rich aren’t merely different from you and me. … They’re ridiculous!

I mean the uber-rich, the billionaire barons of Wall Street who literally live above the real world and are clueless about the gross inequality their financial schemes are creating. Take Kenneth Griffin, a hedge fund tycoon who’s the latest gold medal champion of conspicuous consumption. He just paid an obscene $238 million for a sprawling 24,000-square-foot New York City penthouse located 79 stories above street level at Central Park South — a strip nicknamed “Billionaire Row.” Griffin’s splurge on three floors of the luxury building is the most expensive residential purchase in U.S. history, exceeding the excesses of robber barons in the Gilded Age.

Adding to the overindulgence, he will live in his mansion in the sky only occasionally, for he also has a little $60 million penthouse in Miami, a backup $122 million mansion in London and posh crash pads elsewhere. Griffin is the poster child for that disgraceful Trump-GOP tax cut for the superrich, which they passed by claiming that beneficiaries like Griffin would put their windfall into jobs and wage increases for the working class.

Interestingly, his exclusive new skyscraper residence replaces a modest, 20-story building of affordable, rent-controlled apartments where dozens of middle-class tenants lived. All of them were evicted by the corporate developers to provide opulent digs for a few house-hopping billionaires. That ought to be illegal, but instead a state law specifically empowers high-dollar landlords to toss out middle-class and low-income tenants, demolish their apartments and put up a swanky new building. If you wonder where inequality and America’s affordable-housing crisis comes from … there it is.

Yet, Griffin is so out of touch with reality that he has complained that rich elites like him have “insufficient influence” in politics. Really, Ken? Who had the political clout to eject dozens of families from their homes?

Once upon a time, there was a place where the prevailing ethic of the very richest people was that monetary self-indulgence was tacky, and they had an awareness that wealth was a matter of good fortune, carrying with it an obligation to the Common Good.

Believe it or not, that place was the USA! Where did it go?

The prevailing ethic of today’s billionaires club is one of entitlement, superiority and grandiosity — including flaunting their wealth like the robber barons of old. They’ve contrived a new Gilded Age of plutocratic privilege, with the same sort of excesses as the old one, erecting ostentatiously enormous residences. For example, a ludicrously large “house” is now under construction in Florida for one of our modern-day barons, boasting 11 kitchens, five swimming pools, and a 30-car garage. A monument to garish greed.

Worse, the billionaire class is asserting its sense of plutocratic privilege by weaponizing their huge fortunes to get more for themselves at the expense of the rest of us. They’ve been spending massively (and often secretly) to build a culture of inequality across our land, using such ploys as the Republicans’ deplorable trillion-dollar tax giveaway to the rich. To their dismay, however, America’s workaday majority is rebelling, with newly elected democratic populists like Alexandria Ocasio-Cortez proposing a top tax rate of 70 percent on incomes above $10 million. “Oh, the horror!” shrieked billionaires like computer magnate Michael Dell: “Name a country where that’s worked,” he demanded dismissively.

Okay, Michael: How about the United States?

Yes, between the end of World War II in 1945 and Ronald Reagan’s start of coddle-the-rich government in 1981, the top tax rate never fell below 70 percent — and that was a period of unparalleled growth and prosperity for America’s middle class.

Dell, who lives in a sprawling 33,000-square-foot house with all the charm of a shopping mall, confuses value with money and has no grasp of the essential richness of American egalitarianism. We should not be listening to people like him (much less be governed by them) just because they are rich.

Populist author, public speaker and radio commentator Jim Hightower writes “The Hightower Lowdown,” a monthly newsletter chronicling the ongoing fights by America’s ordinary people against rule by plutocratic elites. Sign up at HightowerLowdown.org.

 

America’s Wealth Floods Into Already Wealthy Cities

America’s Wealth Floods Into Already Wealthy Cities

Reprinted with permission from Creators.

 

When Amazon chose a Queens neighborhood across from Manhattan for one of its new headquarters, James Corden remarked on “The Late Late Show,” “I gotta say, I really think this could be the thing that finally puts New York on the map.”

That was a joke. New York is already the capital of finance, media, fashion, art and advertising. Does it need tech, too? Actually, it already has tech. More than 320,000 tech workers toil in New York. Google, meanwhile, plans to double its employment in the city, to nearly 20,000. The Amazon move will add 25,000 new high-paying jobs.

The decision to split the second headquarters between New York City and affluent northern Virginia, a center for the federal government and the future home of a big Virginia Tech campus, points to what should be a disturbing trend: The rich regions are getting richer faster.

Amazon’s drawn-out search for another command post to rival the home base in Seattle appears to have been a stunt. The company had officials from 238 cities across the country working their tails off to attract the online behemoth. Being chosen could have been a game changer for some on its list of 20 finalists, such as Columbus, Indianapolis and Pittsburgh.

We understand. Amazon wanted a place with lots of tech talent and a big international airport. Wouldn’t Dallas, with lower taxes and room to grow, have fit the bill? Splitting the prize between two metropolises on the East Coast was not especially groundbreaking.

Amazon’s move to direct major growth beyond Seattle reportedly reflects its difficulty in finding enough tech workers there. The company was also being blamed for some of the area’s rocketing rents and home prices. But Amazon continues to add jobs in Seattle nonetheless. (Meanwhile, Seattle’s housing costs look like a bargain next to New York’s.)

It would seem that the North American continent is being tipped over to pour more of the wealth into a few superstar cities. The new tax law may make this trend only more extreme.

Riches from the $1.5 trillion tax cuts are largely raining down on America’s stock investors. In the United States, the wealthiest 10 percent now hold 84 percent of stocks. Next year, more than half the benefits of the tax reforms will be going to the top 5 percent of taxpayers. And where do said taxpayers hang out? The big-money cities.

There’s a political angle, as well. Even the finalists in red or purplish states — such as Austin, Dallas, Columbus, Denver and Miami — have liberal, cosmopolitan cultures. Giant corporations don’t want to operate in places where dark-skinned foreigners and non-heterosexuals, many of them employees, are likelier to get harassed.

Raleigh, for example, is a great modern city. But it is burdened by the culture war splitting North Carolina along rural-urban lines. Headlines about “bathroom bills” barring transgender people from restrooms matching their gender identity are unhelpful.

In the Amazon competition’s winning cities, many locals have taken to griping. Some complain, with justification, about the tax incentives offered a fabulously rich company. They’re worried about what an influx of affluent techies will do to their culture — their warehouse districts, funky bars and relatively affordable housing. And the biggie concern is congestion. New York City is already removing seats from subway cars so it can stuff more commuters in at rush hour.

Not many places would look askance at an offer of thousands of new jobs paying an average of over $150,000 a year. That’s a luxury that the “haves” have. And it looks all the time as if the haves are getting more.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

 

 

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