Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself.

https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...

Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill.

$15bn is tiny, presumably we’re talking about big ETFs like SPY here.

And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening.

In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.

What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets.

I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.

I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right?

There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.

ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.

> but we are far from agreeing that large financial institutions are inherently competent because they're large.

I don’t see anyone making that argument.

Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.

> Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?

- You

Could you please stop breaking the site guidelines, regardless of how bad another comment is or you feel it is? You've been doing it a lot, unfortunately, and we've already warned you several times. If it keeps up we're going to end up having to ban you.

https://news.ycombinator.com/newsguidelines.html

What’s the problem with my comment? The word “fuck”? The fact that the other commenter got offended because I pointed out their very real struggles with reading comprehension?

I did not call kolbes comments bad, but patiently explained where they got it wrong.

I think you’re seeing fighting where there’s none, at least not on my side.

For starters, "Yeah, I’m sorry that you can’t understand English" was obviously an egregious violation of the site guidelines.

We don't care about people saying "fuck". We care about the things that are in the guidelines, such as being kind, not being snarky, not calling names, and so on.

https://news.ycombinator.com/newsguidelines.html

There are billions of people on this planet who can’t understand English, there’s nothing wrong with them.

It’s really not unkind to point out when someone is aggressively misinterpreting really simple words.

What you wrote would be taken by most readers as an obvious personal attack. If you say you didn't intend it that way, ok, but we still have to ban accounts that post like that, because such comments are indistinguishable from garden-variety personal attacks.

Good luck with that perspective in life. I'll stick with writing clearly. You stick with writing poorly and flipping out whenever people misunderstand your intentions.

You broke the site guidelines badly in this thread. Please don't do that, regardless of how bad another comment is or you feel it is. We ban accounts that do that because it's so destructive of what this site is supposed to be for.

https://news.ycombinator.com/newsguidelines.html

> Such an arrangement would make Elon the beneficial owner of your shares.

Thanks for explaining why that won't work.

Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

I wonder what other schemes would work. B corp, maybe?

> Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

But that’s just playing along with the spirit of the rules, not a loophole.

> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.

Do you think big ETFs just buy shares willy nilly without any due diligence on company charters and bylaws?

Index funds do, that's pretty much the definition of an index fund.

ETFs are a different concept, but a good index fund will be structured as an ETF, and it looks like this thread is using "ETF" to mean "index fund"? If so, then the answer to your question is an unambiguous yes.

This is simply incorrect. Index funds still do basic due diligence, they would not trigger this poison pill.

I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?

Buy futures or other assets that will mimic the price.

The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".

How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.

No, you aren’t going to have higher volatility like this than you would buy triggering a poison pill like discussed in the article.

They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares.

Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures.

From the article:

> Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval

If it’s a passively managed index fund, then yes, absolutely.

That is not what passive management means.

For example in the case of SPY, that would go against their stated investment objective.

They also clearly state

> the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities

Alright, then I suppose they’d buy up to 14.9% and then create additional long exposure thru swaps or synthetic longs using options.

Or they’d just hit up twitter’s board, enter an agreement with them, and continue buying shares as normal.

The poison pill just requires prior approval from the board, which they would happily grant in this kind of a case.

... wouldn't that imply the ETF was 15% of the market or market segment overall?

Yes, which is excessive, I agree, but there’s nothing mechanically preventing it.

So you do agree with me that this is not going to happen.