This week's interesting finds

Marc-André, partner since 2017 (Montréal, Québec) 

English: The crowd rarely stays invested long enough to build real wealth   

This week in charts 

Income

KKR and Carlyle Take No Carry on New Private Credit Funds 

Two of the world’s biggest private credit firms have launched funds that will take far less profit than is usual for the industry — another sign of how power has started shifting toward investors in this $1.5 trillion market. 

KKR & Co. and Carlyle Group Inc. won’t take the portion of profit known as “carry” on returns from two new European direct-lending vehicles, according to people familiar with the matter who weren’t authorized to speak publicly. 

Both the funds have so-called “evergreen” structures, the people familiar said, meaning investors can withdraw and put in money at regular intervals, unlike this market’s more typical closed-ended funds. As a fairly novel type of instrument in the industry, evergreen funds sometimes have different profit arrangements than is the norm.

Private credit has been a magnet for firms attracted to its extravagant returns. But now they’re having to work harder to win over limited-partner investors, many of whom have less cash because of the weak economy and are restricted on what they can allocate to direct lenders. LPs can also pick from a ballooning number of private credit funds, or general partners, putting pressure on the latter to offer competitive terms on sharing profit. 

KKR and Carlyle’s moves come amid a broader debate within private credit over how carry is calculated. The sharp rise in central bank rates has let fund managers blast through their hurdle return levels, prompting investors to ask whether they’ve earned the windfall. A few funds are pegging the hurdle to the base rate to make profit shares fairer. 

U.S. Considers Dropping Sanctions Against Israeli Billionaire in Push for EV Metals 

As part of its quest to gain access to minerals critical to the energy transition, the U.S. has recently considered a plan to drop sanctions against an Israeli mining magnate accused of corruption, according to people familiar with the matter. 

The plan involves the U.S. lifting sanctions on businessman Dan Gertler, whom it accused nearly six years ago of corruption, to allow him to take part in mining deals with Saudi Arabia, the people said. 

Those mines, in turn, would ultimately deliver metals to American companies, the people said. Saudi Arabia, the U.S. and Gertler have held early-stage talks about potential deals that could benefit all three parties, they added. 

Under one multibillion-dollar proposal that was being discussed, the Saudis would buy stakes in cobalt and copper mines in the Democratic Republic of Congo that are currently paying royalties to Gertler. The U.S. would get some of the rights to production from those mines. 

Because Gertler is sanctioned by the Treasury Department and barred from doing business that has a U.S. nexus, the government is working on ways to remove him, the people said. A deal isn’t guaranteed, and the talks could fall apart, the people cautioned. 

Gertler, a longtime diamond merchant who made a fortune in Africa and has for more than a decade been controversial there, has ramped up efforts to get removed from the sanctions list in recent years. 

The Treasury Department sanctioned Gertler in 2017, accusing him of amassing his fortune through opaque and corrupt mining and oil deals in Congo through connections with former Congolese President Joseph Kabila. It imposed further sanctions on entities affiliated with him in 2018, accusing Gertler of using his close friendship with Kabila to act as a middleman for mining asset sales in the country. 

In a February letter to a U.K.-based nongovernmental organization, Gertler said though he didn’t believe he should have been sanctioned, he had ended his activities in Congo and transferred significant assets. He said he believes his initial investments in the country “built critical infrastructure, created employment, and catalyzed development of the natural resource sector.” 

Justyna Gudzowska, senior policy adviser to the Sentry, a watchdog group co-founded by actor George Clooney, said it was surprising that the U.S. would consider allowing Gertler to collect revenue streams stemming from the activities that got him sanctioned in the first place. Gertler “should have to relinquish any interest in those streams before sanctions relief is even contemplated,” she said. 

Saudi Arabia is looking both at buying stakes in or the entire copper-cobalt projects, some of the people said, in deals that could be worth around $2 billion. Some of the projects in Congo that the Saudis are looking at include those owned by Swiss mining and trading giant Glencore and Eurasian Resources Group, a Kazakh-backed mining company, the people said. A spokesperson for ERG said it is often approached by various investors but that it doesn’t intend to sell its Congolese assets. A spokesperson for Glencore declined to comment. 

Cobalt and copper are key components of the so-called clean economy. Used for electric vehicles and wind farms, copper is in hot demand by governments and companies the world over. 

Chinese companies refine three-quarters of the world’s cobalt supply and produce about 70% of the world’s lithium-ion batteries, raising concerns in the West about reliance on Beijing. 

Walmart says users of weight loss drugs are buying less food 

Walmart's U.S. CEO, John Furner, told Bloomberg News that the company is seeing signs that people taking GLP-1 agonist appetite suppressant medications are buying "less units, slightly less calories." 

The retail giant is comparing shoppers who pick up a prescription for those medications at its pharmacies to shoppers who are otherwise similar but aren't filling those scripts at Walmart. Using anonymized data, it's looking for patterns in the spending of those groups, and it says the first group is buying less food. 

Doug McMillon, CEO of Walmart, Inc., said in August that the growing popularity of the drugs was helping its sales. 

According to Trilliant Health, prescriptions of those medications quadrupled from late 2020 to 2022, with 9 million prescriptions filled in the last three months of last year. 

Walmart previously recorded stronger grocery sales when high inflation was driving wealthier shoppers to its stores. In summer 2022, after inflation had topped out at 9.1%, the company said it saw more customers in higher income brackets shunning expensive grocery stores in favor of Walmart's lower prices. 

This week’s fun finds 

So Much for ‘Learn to Code’ 

After all, computer-science degrees, and certainly not English, have long been sold to college students as among the safest paths toward 21st-century job security. Coding jobs are plentiful across industries, and the pay is good—even after the tech layoffs of the past year. The average starting salary for someone with a computer-science degree is significantly higher than that of a mid-career English graduate, according to the Federal Reserve; at Google, an entry-level software engineer reportedly makes $184,000, and that doesn’t include the free meals, massages, and other perks. Perhaps nothing has defined higher education over the past two decades more than the rise of computer science and STEM. Since 2016, enrollment in undergraduate computer-science programs has increased nearly 49 percent. Meanwhile, humanities enrollments across the United States have withered at a clip—in some cases, shrinking entire departments to nonexistence. 

But that was before the age of generative AI. ChatGPT and other chatbots can do more than compose full essays in an instant; they can also write lines of code in any number of programming languages. You can’t just type make me a video game into ChatGPT and get something that’s playable on the other end, but many programmers have now developed rudimentary smartphone apps coded by AI. In the ultimate irony, software engineers helped create AI, and now they are the American workers who think it will have the biggest impact on their livelihoods, according to a new survey from Pew Research Center. So much for learning to code. 

ChatGPT cannot yet write a better essay than a human author can, nor can it code better than a garden-variety developer, but something has changed even in the 10 months since its introduction. Coders are now using AI as a sort of souped-up Clippy to accelerate the more routine parts of their job, such as debugging lines of code. In one study, software developers with access to GitHub’s Copilot chatbot were able to finish a coding task 56 percent faster than those who did it solo. In 10 years, or maybe five, coding bots may be able to do so much more. 

People will still get jobs, though they may not be as lucrative, says Matt Welsh, a former Harvard computer-science professor and entrepreneur. He hypothesizes that automation will lower the barrier to entry into the field: More people might get more jobs in software, guiding the machines toward ever-faster production. This development could make highly skilled developers even more essential in the tech ecosystem. But Welsh also says that an expanded talent pool “may change the economics of the situation,” possibly leading to lower pay and diminished job security. 

If mid-career developers have to fret about what automation might soon do to their job, students are in the especially tough spot of anticipating the long-term implications before they even start their career. “The question of what it will look like for a student to go through an undergraduate program in computer science, graduate with that degree, and go on into the industry … That is something I do worry about,” Timothy Richards, a computer-science professor at the University of Massachusetts at Amherst, told me. Not only do teachers like Richards have to wrestle with just how worthwhile learning to code is anymore, but even teaching students to code has become a tougher task. ChatGPT and other chatbots can handle some of the basic tasks in any introductory class, such as finding problems with blocks of code. Some students might habitually use ChatGPT to cheat on their assignments, eventually collecting their diploma without having learned how to do the work themselves. 

Richards has already started to tweak his approach. He now tells his introductory-programming students to use AI the way a math student would use a calculator, asking that they disclose the exact prompts they fed into the machine, and explain their reasoning. Instead of taking assignments home, Richards’s students now do the bulk of their work in the classroom, under his supervision. “I don’t think we can really teach students in the way that we’ve been teaching them for a long time, at least not in computer science,” he said. 

Why Silicon Valley Falls for Frauds 

Silicon Valley could be said to be in the business of reality distortion. Fundraising for startups can be as much about narrative as about economic fundamentals. Most venture capital portfolios are filled with companies that will fail because their model is wrong, their product won’t land, their vision of the future won’t pan out. The high dropout rate means that everyone is in search of the one thing that will reach escape velocity. Everyone is looking for an epochal success—a Steve Jobs, a Jeff Bezos. That creates a degree of hunger—even desperation—that can be exploited by someone who arrives with a great story at the right moment. 

On top of that, there’s just a huge amount of money—an absurd amount of money—in Silicon Valley, which accumulates around the gravity of perceived success. In 2021, $630 billion was pumped into venture-backed companies. That translated into vast funding rounds for companies that weren’t necessarily frauds but weren’t able to back up their vision with profits. [Professor of American history Margaret] O’Mara points to WeWork, which was nominally valued at $47 billion in January 2019 after outsized investments from VCs, including notorious mega-investor Softbank, before flopping on the public markets. This August, the company admitted it had doubts as to whether it could survive as a business. Hype cycles helped drive the flywheel—for FTX, it was in part riding a wave of FOMO among investors who wanted to get exposure to crypto but would only do so in a way that felt comfortable, through a scale player with pedigree backers. Either consciously or serendipitously, FTX and Bankman-Fried were accumulating that legitimacy. 

There is a pattern in major financial deceptions, according to Yaniv Hanoch, professor of decision science at the University of Southampton in the UK, who studies frauds. “What happens is that they manage to get over some sort of threshold. And then they’re able to recruit a few big names.” It seems likely, Hanoch says, that some of the big institutional investors that invested in FTX didn’t necessarily understand the crypto markets but crowded in because they assumed that others had done the due diligence. Among FTX’s investors were Temasek, the investment vehicle of the notoriously conservative Singaporean government, and the Ontario Teachers’ Pension Plan. “You see that pension funds get involved … because they think ‘OK, all this is kosher.’ There’s no reason for them to believe that it’s not kosher.’”

This week's interesting finds

Meghan, partner since 2023 (Toronto, Ontario)  

This week in charts 

U.S. electricity consumption 

Index concentration   

Propane-powered heat pumps are greener 

Electricity can be made from the sun, the wind or the atom rather than by burning fossil fuels. Cars, buses and perhaps even lorries can be powered by batteries rather than petrol or diesel. But other parts of the economy are trickier to decarbonise. One such awkward chunk is the heating, in homes and business, of air and water. In the EU, where much of this is done by burning oil or natural gas, commercial and residential heating accounts for about 12% of the bloc’s greenhouse-gas emissions. 

In principle there is a solution, in the form of heat pumps. These work like a refrigerator in reverse, gathering heat from the outside, concentrating it, and piping it into a building. The EU hopes to replace a third of the 68m gas and 18m oil boilers in residential buildings with heat pumps by 2030. That could mean a 28% fall in the total residential emissions generated by oil and gas—and that number should rise as more of the electricity powering those pumps comes from low-carbon sources. 

But there are problems with ambitious targets. Compared with boilers, heat pumps are expensive, often costing twice or three times as much as a fossil-fired boiler. Another is that, since they pump cooler water to radiators, they work best in new, well-insulated buildings. Around 60% of Europe’s housing stock is estimated to fall short of the required standards, and will need extensive—and expensive—renovation work to make them suitable. 

And there is another drawback, too. Although heat pumps powered by low-carbon electricity are undoubtedly better, from an environmental point of view, than fossil-fuelled boilers, their credentials are not entirely green. Most residential models contain environmentally damaging gases which European legislators are poised to outlaw. Redesigning the machines to work without them could mean delays in installing them. 

A heat pump’s efficiency is lower in winter, when there is less heat to be gathered from the air, although they work at temperatures as low as -25°C. But heat pumps tend to produce water heated to around 55°C. This is lower than most gas boilers, which might manage 75°C or so. That means that fitting heat pumps to older buildings often needs extra insulation, bigger radiators or even underfloor heating, all of which is disruptive and pricey. 

Most modern heat pumps use hydrofluorocarbons (hfcs) as their refrigerants. These transform from liquid to gas at the right sort of temperature, and can carry a good deal of heat. But hfcs are also potent greenhouse gases, with climate-changing power that can be several thousand times higher than carbon dioxide, the main man-made greenhouse gas. Leaks of hfcs from heat pumps and other equipment, such as certain types of refrigeration and air-conditioning systems, account for around 2.5% of the EU’s total greenhouse-gas emissions—not far off the amount caused by air travel in the region. 

With that in mind, the EU had planned this summer to put the finishing touches to new rules that would have required hfcs to be replaced with cleaner alternatives by 2027. But discussions have broken down. One side, backed by Germany and the Netherlands, is keen to get on with the phase-out. The other, supported by a number of eastern European countries and some heat-pump manufacturers, wants the deadline moved into the 2030s. 

According to the European Heat Pump Association (although not all its members seem to agree), the rapid phasing out of hfcs would “slam on the brakes for heat pump deployment”. It argues that a laxer schedule would give the industry more time to develop propane-based systems that could be installed more easily in a greater variety of homes. 

Despite what their trade body says, a number of producers, including Viessman and Robert Bosch, two German firms, along with Mitsubishi Electric, a Japanese one, have already launched propane-filled heat-pumps. They tend to be large “monoblock” systems that are mounted outdoors, where any escaping gas can disperse quickly and harmlessly into the air. Viessman says that, besides its eco-friendly credentials, propane also makes it easier to produce heat pumps that can supply water at 70°C—the sorts of temperatures that gas boilers produce. That could remove the need to replace radiators or install underfloor heating in many cases, saving a considerable amount of money.   

Private Equity Is Piling Debt on Itself Like Never Before 

Hit by a drought of deals and dwindling cash, some buyout firms are starting to resort to backroom financing to help meet fund commitments or enable succession planning. The loans — backed by assets including the promise of future income — carry interest of as much as 19%, a rate that's more akin to the charges faced by consumers rather than corporate borrowing. Even a junk-rated company in the US paid 10% on a bond recently. 

Those high costs aren’t deterring private equity firms and experts say demand is at an all-time high. While some of the biggest lenders — such as Carlyle Group Inc.’s AlpInvest Partners — say these debts are relatively safe, others are already starting to take precautions by adding covenants that enable seizure of other underlying fund assets, highlighting worries about possible losses. Some are warning of perils when a firm faces claims from more than one type of loan simultaneously. 

“If the value of the fund drops, for example, you’re looking at a margin call situation,” said Jason Meklinsky, chief revenue and strategy officer at Socium Fund Services, a New Jersey-based firm that helps administer PE portfolios. “It would be like a volcano meets a tornado.” 

For an industry long used to easy money, the rush for such loans marks a reversal in fortune. Buyout firms have been battling rising interest rates and economic uncertainty, forcing takeover volumes to almost halve this year. Cash on hand at PEs is near the lowest since at least 2008, according to data from PitchBook. 

“The investor universe is unbelievably unaware of the underlying leverage throughout this entire ecosystem,” said New York-based Dan Zwirn, founder and chief executive officer of Arena Investors LP, an institutional manager overseeing more than $3.5 billion in assets. “That hasn’t hit the PE investors yet, but it’s becoming more clear for real estate investors,” he said, referring to the recent delinquencies in the commercial property sector. 

The need for extra financing sometimes comes from pressure from the investors in private equity funds, known as limited partners or LPs, requiring private equity managers, known as general partners, to make larger commitments to their own funds to ensure they have more skin in the game. The required amount of GP investment has crept up to as much as 5% of the total fund size, in some cases, from a norm of around 1%, according to Duhamel. 

The management companies ultimately have control over where the proceeds from the new style of borrowing go, though it’s not typical that they’re used for dividend payouts, said Josh Ufberg, partner at Atalaya, a New York-based alternative investment advisory firm focused on alternative credit, including NAV and GP lending. 

“A lot of it is driven by GPs’ need to fund existing commitments as the pace of exits declines and fundraising is more difficult and valuations are rocky,” said Michael Hacker, global head of portfolio finance at AlpInvest Partners, a core division of Carlyle. He was referring to the PE business model of buying up companies, taking them private and selling them back to the market at a profit after a period of time.   

This week’s fun finds 

Happy Thanksgiving to all of our readers!

EdgePointers got together for some turkey, potatoes and pumpkin pie before the long weekend.

The joy of driving   

Google User Data Has Become a Favorite Police Shortcut 

Google maintains one of the world’s most comprehensive repositories of location information. Drawing from phones’ GPS coordinates, plus connections to Wi-Fi networks and cellular towers, it can often estimate a person’s whereabouts to within several feet. It gathers this information in part to sell advertising, but police routinely dip into the data to further their investigations. The use of search data is less common, but that, too, has made its way into police stations throughout the country. 

Police say these warrants can unearth valuable leads when detectives are at a loss. But to get those leads, officers frequently have to rummage through Google data on people who have nothing to do with a crime. And that’s precisely what worries privacy advocates. 

Traditionally, American law enforcement obtains a warrant to search the home or belongings of a specific person, in keeping with a constitutional ban on unreasonable searches and seizures. Warrants for Google’s location and search data are, in some ways, the inverse of that process, says Michael Price, the litigation director for the National Association of Criminal Defense Lawyers’ Fourth Amendment Center. Rather than naming a suspect, law enforcement identifies basic parameters—a set of geographic coordinates or search terms—and asks Google to provide hits, essentially generating a list of leads. 

By their very nature, these Google warrants often return information on people who haven’t been suspected of a crime. In 2018 a man in Arizona was wrongly arrested for murder based on Google location data. Despite this possibility, police have continued to embrace the practice in the years since. “In many ways, law enforcement thinks it’s like hitting the easy button,” says Price, who’s mounting some of the country’s first legal challenges to warrants for Google’s location and search data. “It would be very difficult for Google to refuse to comply in one set of cases if it’s complying in another. The door gets cracked open, and once it’s open, it just becomes a floodgate.” 

Google says it received a record 60,472 search warrants in the US last year, more than double the number from 2019. The company provides at least some information in about 80% of cases. Although many large technology companies receive requests for information from law enforcement at least occasionally, police consider Google to be particularly well suited to jump-start an investigation with few other leads. Law enforcement experts say it’s the only company that provides a detailed inventory of whose personal devices were present at a given time and place. Apple Inc., the other major mobile operating system provider, has said it’s technically unable to supply the sort of location data police want. That’s OK, because many iPhone users depend on Google Maps and other Google apps. Google’s search engine owns 92% of the market worldwide and is currently the focus of an antitrust lawsuit from the US Department of Justice. 

Tech companies rarely help without a legal order. But with a warrant in hand, police can get an unparalleled glimpse into a person’s life. They can obtain emails, text messages and photos in a camera roll. Those requests hinge on police having a suspect. It’s when there’s no suspect at all that Google’s help is most coveted. 

Google can paint the most detailed portrait of a person whose account uses a feature called Location History. For these users, Google compiles a list of places they’ve been with their phone, registering their locations on average every two minutes. The company invites users to enable the feature when they use apps such as Google Maps, whether on an iPhone or Google’s Android. (The notifications are more insistent on Android.) Google pitches the feature as a way to remember trips you’ve taken, rediscover old haunts and get insights on where you’ve spent time and how far you’ve traveled. The company says that the feature has always been opt-in and that users are regularly reminded of the data collection. An estimated one-third of all active Google users have Location History turned on.

This week's interesting finds

Ryan, partner since 2019 (Toronto, Ontario)   

This week in charts 

U.S. government yields 

Trade with China   

EU unafraid of trade war with China 

Europe put itself at risk of a trade war when European Commission president Ursula von der Leyen announced the anti-subsidy investigation on Wednesday, accusing China of keeping car prices “artificially low by huge state subsidies”. 

The investigation could see the European Union try to protect European carmakers by imposing punitive tariffs on cars it believes are unfairly sold at a lower price. 

Trade with China makes up around 2.5 percent of eurozone GDP, but economy commissioner Paolo Gentiloni appeared to be unfazed by the warning when asked about whether the bloc’s economy could survive any tariffs. 

Germany, one of the world’s biggest carmakers, is more reticent since its large, well-known brands are more exposed to the Chinese market than French manufacturers. 

Although Berlin had concerns before the announcement, German Finance Minister Christian Lindner backed the probe in comments on Friday. 

Experts believe Chinese cars undercut European competitors by around 20%, and Brussels believes this may be due to illegal practices but Beijing argues its industry is reaping the benefits of investment. 

In the race to produce more clean tech, the EU is seeking to avoid its past mistakes. 

When Russia invaded Ukraine last year, the bloc scrambled to find alternative energy sources and has poured billions of euros into bringing production closer to home. 

This year von der Leyen has spearheaded multiple plans, including regulation, to advance the green transition and secure Europe’s critical raw materials supply. 

The EU this year also agreed to a deal for more chip production in Europe to produce the necessary components for electrical goods. 

Lego ditches oil-free brick in sustainability setback 

Lego has abandoned its highest-profile effort to ditch oil-based plastics from its bricks after finding that its new material led to higher carbon emissions, in a sign of the complex trade-offs companies face in their search for sustainability. 

The world’s largest toymaker announced two years ago that it had tested a prototype brick made of recycled plastic bottles rather than oil-based ABS, currently used in about 80 per cent of the billions of pieces it makes each year. 

However, Niels Christiansen, chief executive of the family-owned Danish group, told the Financial Times that using recycled polyethylene terephthalate (RPET) would have led to higher carbon emissions over the product’s lifetime as it would have required new equipment. 

Lego has instead decided to try to improve the carbon footprint over time of ABS, which currently needs about 2kg of petroleum to make 1kg of plastic. 

The Danish toymaker initially had a target of eliminating all petroleum-based plastics in the 20 or so materials it uses in its play sets by 2030. It made a quick start in 2018 by swapping out oil-based polyethylene for a plant-based version of the same plastic that it uses in about 20 different pieces including trees and bushes. 

It is also on track to eliminate single-use plastic bags used in packaging its bricks by 2025 with many current sets featuring paper containers instead. 

But replacing ABS, a plastic that makes the bricks durable as well as easy to put together and pull apart — what the toymaker calls “clutch power” — has proved far harder. 

Lego is now aiming to make each constituent part of ABS — acrylonitrile butadiene styrene — more sustainable by gradually incorporating more bio-based and recycled material.’ 

The group intends to triple its spending on sustainability to $3bn a year by 2025, and Christiansen conceded that could hurt its profit margins as it would not pass on the higher cost of buying sustainable materials to consumers. 

Brooks said that Lego had shifted from having a singular focus on sustainable materials to aiming for lower emissions and potentially circular materials that can be recycled and re-used. “RPET is a great example of why we’re not trying to be so dogmatic,” he added. 

Law firm develops new tactic to help companies defend against an activist investor ‘ambush’ 

On Wednesday, law firm Norton Rose Fulbright Canada will unveil a new corporate bylaw it has designed to thwart what it describes as “sneak attacks” from dissident shareholders who are trying to vote one or more directors off a company’s board. Otherwise known as “Vote No” or “Against” campaigns, such efforts differ from more common proxy battles in that they do not require activist investors to provide advance notice of their attack. 

The law firm is proposing an amendment that companies can choose to adopt as part of the corporate bylaws that govern how members of their boards of directors can be added or removed. According to a Norton Rose webinar presentation reviewed by The Globe and Mail, the proposed bylaw would automatically postpone any shareholder meeting for 45 days where it appears that one or more unopposed director candidates will not receive enough votes to be elected. However, the board can also choose to waive the postponement. 

The goal of the sneak attacks is to prevent directors targeted by activists from rallying shareholder support, thereby making it easier for them to be removed. Some question whether the tactic is widespread enough to require companies to adopt a new bylaw, but Walied Soliman, chair of Norton Rose Fulbright Canada, says updates to the Canada Business Corporations Act that took effect last year created a loophole that needs to be closed. Norton Rose Fulbright Canada has a history of proposing new corporate rules to offer better protection against activist threats. 

The purpose, Mr. Soliman said, is to “ensure that disclosure is adequately provided to companies.” Otherwise, he said, it would be possible for dissident shareholders to take advantage of low voter turnout at an annual general meeting to boost their own voting power. For example, a dissident shareholder with a 25-per-cent stake in a company where only 40 per cent of total shareholders cast ballots to elect directors could wield majority control. 

Stealth proxy fights used to happen “all the time,” Ms. Carson, CEO of Carson Proxy, a Toronto-based firm that often works with activist investors, said in an interview. 

“If you are paying for lawyers and paying for a proxy solicitor, you’re not going to do a stealth campaign because you’re going to want to be assured of a win,” Ms. Carson said. “Doing it stealthily on the hopes that, fingers crossed, you get enough votes to get rid of the directors, that is just bad strategy.” 

“I actually work with activists,” she said, “and I am not getting calls from activists saying, ‘Hey, we want to do more Against campaigns.’ ”   

This week’s fun finds 

EdgePointer of the month 

Olivia Kao 

After meeting Olivia it shouldn’t be surprising to learn that her original dream career was becoming a journalist. Luckily for us, she chose to study business after a stint as the City Desk intern at The Toronto Sun. Olivia still has the curiosity that first pushed her towards media and nurtures it by researching hobbies old and new. Whether it’s looking at chess strategies, finding new ways to live a long and healthy life or just looking into the latest gadget/outfit/accessory, she’s happy to dig deep into finding the best option available. Although it might seem like a broad range of interests to keep track of, Olivia’s other superpower is her incredible organizational skills that keep the rest of us in awe. 

Before joining EdgePoint, Olivia worked as a regional sales manager at Invesco Trimark and an account manager at TD Canada Trust. She earned both her B.Comm and MBA from the University of Toronto. Among her many designations, Olivia is a Chartered Investment Manager (CIM) and an Associate Diploma (ARCT) from the Royal Conservatory of Music. 

For her list, Olivia decided to share her top-5 things she can’t live without:

• Leuchtturn1917 weekly planner and notebook (A5) I need to plan and organize my life, and I’m a bit old fashioned and prefer using pen and paper. One side allows you to jot the appointments, and the other side allows you to include detailed notes. 

• Kindle This is where I am not old fashioned and prefer an eReader over a book. Having moved too many times, I like to be able to carry large quantities of books in a tiny device, and to be able to read late into the night under a pile of blankets. 

• Oura ring I wear it more than my wedding ring. This tracks my sleep patterns, my temperature and all my vitals to ensure my body is getting the rest and activity I need. 

• Ninja Foodi Power Nutri Duo Smoothie Bowl Maker I’ve been drinking some form of a green smoothie for the past 15 years and I rarely go a day without it. Right now, I am loving this Ninja blender. 

• Aesop Geranium Leaf hand wash If I’m going to kill germs, I might as well splurge and have one that smells nice! 

Gen Z falls for online scams more than their boomer grandparents do 

Compared to older generations, younger generations have reported higher rates of victimization in phishing, identity theft, romance scams, and cyberbullying. The Deloitte survey shows that Gen Z Americans were three times more likely to get caught up in an online scam than boomers were (16 percent and 5 percent, respectively). Compared to boomers, Gen Z was also twice as likely to have a social media account hacked (17 percent and 8 percent). Fourteen percent of Gen Z-ers surveyed said they’d had their location information misused, more than any other generation. The cost of falling for those scams may also be surging for younger people: Social Catfish’s 2023 report on online scams found that online scam victims under 20 years old lost an estimated $8.2 million in 2017. In 2022, they lost $210 million. 

There are a few theories that seem to come up again and again. First, Gen Z simply uses technology more than any other generation and is therefore more likely to be scammed via that technology. Second, growing up with the internet gives younger people a familiarity with their devices that can, in some instances, incentivize them to choose convenience over safety. And third, cybersecurity education for school-aged children isn’t doing a great job of talking about online safety in a way that actually clicks with younger people’s lived experiences online. 

The kinds of scams that target Gen Z aren’t too dissimilar to the ones that target everyone else online. But because Gen Z relies on technology more often, on more devices, and in more aspects of their lives, there might just be more opportunities for them to encounter a bogus email or unreliable shop, says Tanneasha Gordon, a principal at Deloitte who leads the company’s data & digital trust business. Younger people are more comfortable with meeting people online, so they might be targeted with a romance scam, for instance. 

There’s another factor here, too: Many experts say that the responsibility for remaining safe while using these apps should not fall solely on the individual user. Many of the apps and systems that are designed to be convenient and fast to use could be doing a lot more to meaningfully protect their users. Gordon floated the idea of major social media platforms sending out test phishing emails — the kind that you might get from your employer, as a tool to check your own vulnerabilities — which lead users who fall for the trap toward some educational resources. Privacy settings should also be easier to access and understand.

This week's interesting finds

 

Rameen, partner since 2023 (Toronto, Ontario)   

This week in charts 

Large caps vs. small caps 

Billionaire Divorces Spur Crackdown by China’s Market Regulator 

A rising number of divorces among China’s wealthy tycoons is stoking investor concerns about the market impact of big stake sales and spurring a crackdown by the nation’s securities regulator. 

At least eight major holders of the country’s listed companies split shares worth $3.9 billion so far this year after ending their marriages, according to data compiled by Bloomberg. 

While the specific reasons for the divorces are unclear, repeated warnings from the China Securities Regulatory Commission hint at concerns that tycoons are using divorces to bypass rules on selling stock that have helped to prop up the market as the economy sags. 

Company executives and shareholders with a stake above 5% can only sell as much as 2% of the float within a 90-day period in the open market. After divorcing, ex-partners until recently were able to sell at least double that amount. 

Legal experts expect more eye-catching divorces in the near future as a law effective Jan. 1 — intended to protect women — will force both sides to disclose their assets in divorce proceedings. That could help uncover more assets — namely salaries, investments, inheritances and real estate — that tycoons would prefer to keep quiet. 

Most of China’s wealthy have not yet adopted prenuptial agreements, as many marriages were sealed before couples got rich. China’s wealth boom began when it started to embrace the market economy in the late 1970s. 

The new rule on disclosure could push Chinese executives to take more precautions like signing prenups before marriage, said Jeremy Morley, a lawyer specializing in international family law. Some local courts in China have already begun adopting asset disclosure this year, he said.

The Man Who Trapped Us in Databases 

One acquaintance called it “the Hank show.” [Hank] Asher was its star, but his performance had, over time, widened to friends and colleagues and customers and accomplices and, ultimately, to everyone, everywhere. He was one of the first and best data miners of the digital age: a person who built his own reality, then sucked the rest of the world in. He had made his first fortune painting South Florida’s growing forest of condo towers, and his second as a drug runner. He spent years in the cross hairs of the D.E.A. and the Florida Department of Law Enforcement, and yet a decade after his death, his data and database products still course through the computer systems of the F.B.I., the I.R.S. and ICE; through 80 percent of the companies in the Fortune 500; through nine of the world’s 10 biggest banks; and through a good part of America’s roughly 18,000 law-enforcement agencies. Our world — and my world, as a reporter seeking data — runs on what he built, even if, a decade on, the man himself has largely been forgotten. He’s the ghost in our machines. 

One of Asher’s innovations — or more precisely one of his companies’ innovations — was what is now known as the LexID. My LexID, I learned, is 000874529875. This unique string of digits is a kind of shadow Social Security number, one of many such “persistent identifiers,” as they are called, that have been issued not by the government but by data companies like Acxiom, Oracle, Thomson Reuters, TransUnion — or, in this case, LexisNexis. 

My LexID was created sometime in the early 2000s in Asher’s computer room in South Florida, as many still are, and without my consent it began quietly stalking me. One early data point on me would have been my name; another, my parents’ address in Oregon. From my birth certificate or my driver’s license or my teenage fishing license — and from the fact that the three confirmed one another — it could get my sex and my date of birth. At the time, it would have been able to collect the address of the college I attended, Swarthmore, which was small and expensive, and it would have found my first full-time employer, the National Geographic Society, quickly amassing more than enough data to let someone — back then, a human someone — infer quite a bit more about me and my future prospects. 

Persistent identifiers let algorithms map in milliseconds a network of people I’ve met, lived near or interacted with online or off, and they show the trajectory of my life — up, down and sideways. They help health systems assess my living conditions, impacting what kind of care I get from my doctor. They affect how much I pay for car insurance. They help determine what kind of credit cards I have. They influence what ads I see and how long I wait on hold when I call a customer-service line. They allow computers inside police departments, intelligence agencies, hospitals, banks, insurance companies, political parties and marketing firms to understand personal behavior and, increasingly, as artificial intelligence and machine learning expand into every corner of society, to predict and exploit it. 

Remembered by industry insiders as the “father of data fusion,” Asher reigned over a vast shift in privacy norms. He shifted them himself, scooping up data sets no one else had wanted, monetizing information no one had ever thought valuable, collecting details others had thought too intimate, testing boundaries that more established companies — with their brand names and boards and reputational risks and publicly traded stocks — had yet to ever dare test. 

Why him? One answer is that Asher had a mind for this stuff. He scanned volumes of information too enormous for most humans to take in, finding secrets in the data that most humans would never recognize. A computer scientist who helped build Matrix told me that his former boss could look at a mass of numbers on a whiteboard and see immediately what others could not, picking out patterns in seconds. Artificial intelligence hadn’t really been part of Matrix, the executive said, not back then: “That was still Hank. Hank was the algorithm.” But that’s only one answer as to why him. 

Another answer, the better one, is that Hank Asher never cared about norms.  

This week’s fun finds 

Buon appetito! Connor’s moai (our version of bringing EdgePointers together for a meal) was a build-your-own Italian sandwiches and fish balls made by his nonna. Thankfully, summer’s almost over and we can enjoy our carbs.   

Bears raid a Krispy Kreme doughnut van making deliveries on an Alaska military base 

Two bears on an Alaska military base raided a Krispy Kreme doughnut van that was stopped outside a convenience store during its delivery route. 

The driver usually left his doors open when he stopped at the store but this time a sow and one of her cubs that loiter nearby sauntered inside, where they stayed for probably 20 minutes Tuesday morning, said Shelly Deano, the store manager for Joint Base Elmendorf-Richardson JMM Express. The bears chomped on doughnut holes and other pastries, ignoring the banging on the side of the van that was aimed at shooing them away, Deano said. 

The bears eventually came out and wandered in front of the convenience store and gas station a bit before heading into the woods.

This week's interesting finds

Jason, partner since 2018 (Toronto, Ontario)  

Huawei NearLink Technology Promises a Paradigm Shift in Wireless Connectivity 

NearLink technology represents a significant leap forward in wireless connectivity, a culmination of the efforts of over 300 domestic and international leading enterprises and organizations. This innovative technology harnesses the strengths of traditional wireless technologies such as Bluetooth and Wi-Fi, resulting in an unparalleled performance boost. 

Compared to conventional wireless connections, Huawei NearLink boasts an impressive array of advantages. With 60% lower power consumption, it’s a step towards a more energy-efficient future. Its lightning-fast speed, six times faster than current technology, ensures smoother and more efficient data transmission. Moreover, NearLink reduces latency to a mere fraction, 1/30th of traditional connections, elevating the user experience to new heights. Additionally, it supports up to 10 times more group connections, making it ideal for multi-device and industrial applications. 

This cutting-edge technology finds extensive application across various sectors. From consumer electronics to smart home systems, new energy vehicles, and industrial manufacturing, NearLink is set to revolutionize the Internet of Everything in HarmonyOS. Imagine seamless connectivity and enhanced performance in cell phones, PCs, and cars, all while consuming lower power and offering broader coverage, leading to a more secure and integrated experience. 

Apple disputes French findings, says iPhone 12 meets radiation rules 

France's Agence Nationale des Fréquences (ANFR) told Apple on Tuesday to halt iPhone12 sales in France after tests that it said showed the phone's Specific Absorption Rate (SAR)- a gauge of the rate of radiofrequency energy absorbed by the body from a piece of equipment - was higher than legally allowed. 

The watchdog said it would send agents to Apple stores and other distributors to check the model was no longer being sold and a failure to act would result in the recall of iPhone 12s already sold to consumers.

Industry experts said there were no safety risks as regulatory limits on SAR were set well below levels where scientists have found evidence of harm. 

The limits - based on the risk of burns or heatstroke from the phone's radiation - are already set ten times below the level where scientists found evidence of harm. 

Croft said the French findings could differ from those recorded by other regulators because ANFR assesses radiation with a method that assumes direct skin contact, without intermediate textile layers, between the device and user. 

France's junior minister for the digital economy, Jean-Noel Barrot, said a software update would be sufficient to fix the radiation issues. 

Germany's radiation watchdog BfS also said the French decision could have implications for all of Europe.   

Defending the portfolio’: buyout firms borrow to prop up holdings 

Private equity firms have started to borrow against their funds to backstop overly indebted portfolio companies, a new financial engineering tactic meant to cope with higher interest rates and a slowdown in dealmaking. 

The manoeuvres, which lenders have dubbed “defending the portfolio”, have cropped up as many older private equity funds run low on cash just as the companies they own struggle with their own debt loads. 

Buyout firms have turned to so-called net asset value (NAV) loans, which use a fund’s investment assets as collateral. They are deploying the proceeds to help pay down the debts of individual companies held by the fund, according to private equity executives and senior bankers and lenders to the industry. 

By securing a loan against a larger pool of assets, private equity firms are able to negotiate lower borrowing costs than would be possible if the portfolio company attempted to obtain a loan on its own. 

The Financial Times has previously reported that firms including Vista, Carlyle Group, SoftBank and European software investor HG Capital have turned to NAV loans to pay out dividends to the sovereign wealth funds and pensions that invest in their funds, or to finance acquisitions by portfolio companies. 

The borrowing was spurred by a slowdown in private equity fundraising, takeovers and initial public offerings that has left many private equity firms owning companies for longer than they had expected. They have remained loath to sell at cut-rate valuations, instead hoping the NAV loans will provide enough time to exit their investments more profitably. 

But as rising interest rates now burden balance sheets and as debt maturities in 2024 and 2025 grow closer, firms recently have quietly started using the loans more “defensively”, people involved in recent deals told the FT.“ 

Private equity executives who spoke to the FT noted that the borrowings effectively used good investments as collateral to prop up one or two struggling businesses in a fund. They warned that the loans put the broader portfolio at risk and the borrowing costs could eventually hamper returns for the entire fund.“ 

We get pitched left and right,” said one executive at a large US buyout firm that has resisted such loans. “To me, it seems like pretty risky financial engineering.”   

EU to launch anti-subsidy probe into Chinese electric vehicles 

Brussels will launch an anti-subsidy investigation into Chinese electric vehicles that are “distorting” the EU market, a probe that could constitute one of the largest trade cases launched given the scale of the market. 

The investigation has been planned for months, and the EU’s concerns regarding China’s electric vehicle trade practices were conveyed by von der Leyen to Chinese premier Li Qiang in a bilateral meeting on the sidelines of the G20 summit in New Delhi last weekend, according to a person briefed on the discussion. 

Shares in Chinese electric-vehicle makers sold off on the prospect of greater regulatory scrutiny from Brussels, with Warren Buffett-backed BYD falling about 2 per cent and rival Xpeng dropping almost 3 per cent. Other electric carmakers, including Great Wall Motor and Li Auto, were also lower following the announcement. 

Action against Chinese carmakers in Europe has been demanded by member states, concerned that major domestic carmakers risk losing their leadership as the green transition reshapes the market. 

The probe could constitute one of the largest trade cases launched as the EU tries to prevent a replay of what happened to its solar industry in the early 2010s when photovoltaic manufacturers undercut by cheap Chinese imports went into insolvency. 

If found to be in breach of trade rules, manufacturers could be hit with punitive tariffs. 

In the case of the solar industry, Brussels launched a tariff regime against imports of Chinese photovoltaic cells in 2012 but later scrapped the controls in order to boost installations of renewable power.“ 

This is an important move by the commission, signalling the willingness to use trade instruments more proactively to protect the European industry and avoid the replication of the solar panels failure experience in the past to the crucial car industry,” said Simone Tagliapietra, senior fellow at the Brussels-based think-tank Bruegel. Europe also needed to “step up” on economic security, she said, in response to China’s own measures such as export controls on critical metals gallium and germanium.  

This week’s fun finds 

Hiker is Saved After He Begged ‘Help Me’ on Wildlife Bear Camera 

A wildlife bear camera saved a stranded hiker’s life after viewers spotted him pleading “Help me” on a livestream. 

The unidentified hiker got lost while hiking a remote mountain range in Katmai National Park in Alaska, U.S. on September 5 as a result of bad weather and poor visibility. 

With no cell signal and worsening weather on the trail, the panic-stricken hiker was left stranded seemingly without any hope of rescue — until he spotted a wildlife camera set up on Dumpling Mountain in Katmai National Park. 

The wildlife camera, which is operated by Explore.org on behalf of the U.S. National Park Service (NPS), is set up to give brown bear enthusiasts a glimpse of animals in the national park. 

However, Explore.org’s camera has seen a recent surge in live viewership ahead of the Katmai National Park’s annual Fat Bear Week tournament, which takes place in early October. 

The fat bear competition encourages viewers to try to identify the largest bear spotted on wildlife cameras as the creatures bulk up ahead of their winter hibernation, ultimately crowning one fan-favorite bear the fattest of them all. 

The big idea: why we need to learn to fail better 

For most people, failure is pretty simple: it’s bad, even shameful. Life is going well if you’re not experiencing failures, and we think that avoiding failure is obviously the right goal. We worry about what it says about us when we get something wrong (we’re not good enough!). The social stigma of failure exacerbates that spontaneous reaction. 

But what if we could learn to habitually reframe failure as a source of discovery and personal development? What if we could face problems and setbacks with honesty, determination and a healthy sense of realism? What if failure, as a token of our shared humanity, provided us with feelings of inclusion, not ostracism? 

Intelligent failures are to be welcomed, because they point us forward towards eventual success. They shut down one path and force us to seek another. The category encompasses wildly different phenomena, ranging from, say, a tedious blind date to the failed clinical trial of a promising new treatment. People who design clinical trials minimise the risks as much as possible. But there is no way to ensure it all works out before the trial is launched. The same can be said of that blind date. 

Many of today’s medical miracles – such as open-heart surgery to repair diseased vessels and valves – were once the impossible dreams of pioneers. Without their willingness to tolerate and learn from intelligent failures along the way, most of the life-saving advances we now take for granted would not exist. As cardiologist Dr James Forrester wrote: “In medicine, we learn more from our mistakes than from our successes.” But the truth of Forrester’s statement does little on its own to make it easy for the rest of us to navigate failure’s painful side effects. 

Fortunately, failing well can be learned. We can replace fear and shame with curiosity and growth. To facilitate this shift, it helps to recognise the human tendency to play in order not to lose, which holds us back from new challenges – and choose instead to play to win. Playing to win comes with the risk of failing, but it also brings rewarding experiences and novel accomplishments.

This week's interesting finds

Kevin, partner since 2022 (North Vancouver, British Columbia)  

This week in charts 

Real estate 

Crude oil 

Automakers find a tax credit loophole to increase EV leasing and boost sales 

Fed up with high gas prices and enticed by federal tax credits, Dave Walters decided he wanted an all-electric Hyundai Ioniq 5 for his next vehicle. 

The Orange County, California, resident initially thought about purchasing a used model, until he learned he could lease the vehicle and take advantage of a key loophole under the Inflation Reduction Act. 

Buying a used Ioniq, which is produced in South Korea and Indonesia, wouldn’t earn him $7,500 off through a federal tax credit. Leasing the vehicle would. 

“I ran the numbers — what it would be without the leasing credit and with the leasing credit — and that kind of put me over the top and that was the main thing of why I went in that direction,” he said. “It was a few hundred dollars less a month.” 

Under the IRA, leasing is categorized as commercial business and therefore exempt from regulations that require the vehicle and battery components to be made in North America. Most EVs for sale today do not qualify for the full tax credit because of where the vehicles or components are built. 

But leasing could save drivers thousands, as long as the companies receiving the credits pass the savings on to consumers. 

“I’m not surprised that the manufacturers are saying that they’re going to do more leasing,” said Charlie Chesbrough, Cox Automotive senior economist. “The IRA rolling on EVs and allowing them to qualify for that $7,500 really is a game-changer, and that makes a huge impact on our monthly payment.” 

For a $50,000 EV and a 36-month lease, Chesbrough estimates the full $7,500 tax credit equates to $222 in monthly savings for a consumer. 

Auto research firm Edmunds reports about 37% of EVs bought in April were leased, up from 25% during the first quarter and 13% last year. 

“It kind of creates a loophole for automakers to target more affluent customers who are probably more likely to be able to afford and actually get approved to buy an EV,” said Jessica Caldwell, Edmunds executive director of insights. “It also allows them to level the playing field against competitors who get the full tax credit when purchasing.” 

New player' in Calgary apt. market buys 263-unit property for $54M 

Vancouver real estate investor Wendy Cheung has purchased a 263-unit apartment property in southeast Calgary from Canadian Apartment Properties REIT (CAPREIT) for just under $54 million. 

And Cheung has plans to grow and increase her exposure to multifamily assets in Calgary and Edmonton. 

Nadeem Keshavjee, president of GreenBirch Capital, which helped facilitate financing for Cheung, said the Cedar Ridge Apartments at 135 Lynnview Road S.E. sold for $53,880,000 or $204,867 per door. 

“She has a number of real estate and commercial real estate holdings, but this is a notable transaction for her and she is actively looking for more,” he said. “She’s a new player in the (multifamily) market . . . 

"The financing that they were able to achieve was through CMHC’s MLI (Canada Mortgage and Housing Corporation) Select program. The buyer got 95 per cent leverage and a 50-year amortization, so really attractive financing. 

"There was also an element of affordable housing here. They designated 60 per cent of the units in the building to be affordable, meaning there’s a limit of how much they can raise those rents for the next 10 years. "And there’s also an energy efficient component to it as well with a commitment to improving the energy efficiency of that project by 15 per cent.” 

Cheung said the most attractive part of the deal was the MLI Select financing program. 

“That was the biggest reason that the numbers worked because we were able to capture a good financing component to it and then equity outlay was affordable," she explained. "Also because the building has good income and cash flow, which has runway where the rents are creeping up.” 

Cheung said she has been investing in real estate for several years. Over that time, she bought single-family homes initially and land in Surrey and Langley, B.C., long before the cities developed to the current degree. 

The transaction was one of a series CAPREIT has made in recent weeks as it continues to reposition its portfolio to focus on newer assets. The REIT has made six non-core dispositions in Canada – aside from the Calgary property – for a total of $121.4 million. 

Walmart Cuts Starting Pay for Some New Hires 

The country’s largest private employer changed its wage structure for hourly workers in mid-July, according to documents reviewed by The Wall Street Journal and Walmart employees. 

Under the new structure, most new hires will earn the lowest possible hourly wage for that store. In the past, some new hires, such as those who collect items for online orders, would have made slightly more than other new staff members, such as cashiers. 

The wage-structure change comes after Walmart and other large employers have for years steadily raised wages and added benefits to attract workers in a tight labor market. The retailer’s latest move suggests that the stresses companies are facing in trying to find employees are easing and that they need to find ways to offset those wage increases. 

Retailers are looking at ways to reduce costs in anticipation of some consumer weakness heading into the end of the year, including the holiday shopping season, said David Bassuk, global leader of the retail practice at consulting firm AlixPartners. In general, retailers face more sales and therefore higher labor costs through the late-year holidays. 

Walmart’s moves “signal the industry where things are either headed or what they should be considering,” he said. “I think we are starting to see the pendulum start to swing back to a different set of priorities.” 

The broader U.S. job market is cooling. Hiring slowed this summer and the national unemployment rate rose in August to 3.8%, up from 3.5% in July—reflecting more Americans seeking work. Workers’ average hourly earnings rose 4.3% in August from a year earlier, well above the prepandemic pace. 

Walmart’s move isn’t likely to lower short-term payroll costs because it is being offset by pay increases to thousands of other store staffers, some analysts said Thursday. 

Some economists have found that Walmart’s market power is a primary determinant of wage levels in local economies where the company has a large presence, especially at other retailers and grocery stores.  

This week’s fun finds 

Drenched doubleheader 

On an incredibly hot evening, EdgePoint Football Club played two tough games. The first match was close, but the heat took its toll in the second half resulting in a loss. As the sun disappeared, the squad recovered enough for a tie. The team’s season record stands at 1-2-1.   

Kyle takes us on a food trip to the Middle East 

For his moai (our version of bringing EdgePointers together for a meal), Kyle gave us a wealth of options to choose from. 

A group of radioactive boars are trotting through Europe 

Encountering a radioactive wild boar in the dark forests of Germany isn’t top of everyone’s bucket list. But, while their populations have been soaring in Europe, it’s not meeting, but rather eating them, that you need to worry about. That’s because they contain unsafe radioactive cesium (a liquid metal). 

The shaggy, tusked pigs roaming around the forests of Germany and Austria were thought to have been made radioactive by the 1986 Chernobyl accident. In fact, scientists from the Vienna University of Technology, in Austria, now show that Oppenheimer-style nuclear weapons testing is responsible for their long-lasting radioactivity. 

When nuclear weapons explode or nuclear energy is produced, radioactive cesium is created. When it enters the environment, it can threaten human health – and did just this when the Chernobyl power plant exploded in Ukraine almost four decades ago. 

But the study, published in the journal Environmental Science & Technology, shows that the radioactive contamination affecting the boars was also caused by atmospheric nuclear weapons testing by nations across the world in the 1950s and 1960s. 

Both events contaminated the radioactive boars’ food sources, including underground truffles.

This week's interesting finds

Judy, partner since 2018 (Toronto, Ontario)  

This week in charts 

Inventory levels 

Office real estate   

‘Deal of the century’: how UBS’s rescue of Credit Suisse proved a boon 

UBS’s top managers were sceptical when they were forced to rescue their scandal-ridden rival Credit Suisse. Five months on, the deal has made the bank Europe’s second most valuable lender. 

On Thursday UBS said the state-sponsored takeover had fuelled a $29bn gain, a record quarterly profit for any bank. Chief executive Sergio Ermotti also confirmed that UBS would get to keep its rival’s “crown jewel” — the domestic consumer bank — while also cherry picking the most attractive assets, clients and staff from the investment bank and wealth management divisions. 

The stock rose to its highest level since the 2008 financial crisis, extending a 31 per cent surge this year. This means that UBS’s market value has vaulted over that of BNP Paribas — ranking the bank second in Europe after HSBC — and has trumped that of US lender Citigroup. 

“The Credit Suisse acquisition will act as an accelerant to our plans,” Ermotti told analysts. 

Since the merger was sealed over a frantic weekend in March, UBS chair Colm Kelleher and Ermotti have overcome political concerns over its dominant market position — the combined bank’s $1.7tn assets eclipse Swiss GDP — notably by exiting taxpayer-funded government support facilities early. 

Now the pair faces the tricky task of integrating the businesses and matching expectations for what looks like one of the biggest steals in financial history. 

While removing state guarantees has damped political objections, UBS’ record gain prompted angry reactions in Switzerland, which is holding general elections in October.“ 

UBS’s figures are nothing but shocking,” said Cédric Wermuth, co-president of Switzerland’s second-largest political bloc, the Social Democratic Party. The takeover was the “deal of the century” he said, and had come at the expense of the Swiss people. 

The $29bn accounting gain on the Credit Suisse takeover — known as negative goodwill, or badwill — largely reflects the fact that the price paid for Credit Suisse — $3.4bn — amounted to only 6 per cent of its tangible book value. 

UBS also announced that the integration of Credit Suisse’s domestic retail unit would result in 3,000 redundancies in Switzerland in the coming years. Deeper job cuts from the group’s more than 100,000 combined workforce are expected to follow, but executives are being tight-lipped about their plans to avoid more controversy. 

“It must not be that in the end, it is the counter clerks who pay for the irresponsible behaviour of their bosses,” Wermuth said. Absorbing Credit Suisse is now expected to take up to three years — shorter than the four years initially signalled by UBS. Some analysts feared that when the deal was agreed it would derail UBS’s longer-term ambitions of growing its business in Asia-Pacific and the US, where it trails Morgan Stanley, the world’s largest wealth manager, in market share.   

This week’s fun finds 

EdgePoint Football Club’s fun in the sun 

Despite being slightly understaffed, the team notched a 2-0 win to level their season record to 1-1.

Sriracha: The good kind of heat 

Huy Fong Foods’ sriracha sauce—bottled in the instantly recognizable plastic bottle with a green squeeze cap and a large rooster logo—has inspired numerous tattoos, songs, merch, and even a custom Lexus car. 

Everyone from TV show host Alton Brown to venture capitalist Chris Sacca stocked up bottles of the iconic hot sauce amid the “#srirachapocalypse” in 2013, when Huy Fong’s factory was ordered to shut down for emanating odors so spicy they were a “public nuisance.” 

In 2022 and 2023, there has been an even bigger #srirachapocalypse, during which Huy Fong has claimed that the red jalapeño peppers used to make their version of sriracha have become unavailable due to supplier issues. Many small businesses have had to switch to less familiar, and beloved, hot sauces, and some devotees have resorted to paying far above normal supermarket prices for bottles on resale sites like eBay.

The company has reportedly spent no money on advertising—it’s earned its fabled status completely by word-of-mouth. “Run free, my child, and spread the sweet, spicy gospel of truth,” the company’s website reads. 

The original sriracha sauce—a mix of chili peppers, distilled vinegar, garlic, salt, and sugar—was created by Gimsua Timkrajang and Thanom Chakkapak more than 80 years ago in the port town of Si Racha, Thailand. Though it began as a homemade recipe, friends and family soon encouraged them to sell it commercially. The family eventually began distributing it under the brand Sriraja Panich, which was bought by Thai food manufacturing giant Thaitheparos in 1984. 

But the man responsible for inspiring much of the American mania for sriracha is Chinese-Vietnamese immigrant David Tran. In 1979, amid the Sino-Vietnamese War, Tran fled Vietnam on the Huey Fong and settled in Los Angeles the following year. He began his operation by grinding peppers by hand and selling the hot sauce from his blue Chevy van.