Is it time to short shorts?

One scoop to start: Rio Tinto and Glencore held talks as recently as October about combining part or all of their businesses, according to people familiar with the matter, but the discussions didn’t progress.

A potential tie-up: The owner of France’s Natixis Investment Managers and Italian insurer Generali are close to announcing an agreement to create an asset management joint venture that would bring together two of the biggest European names in the sector.

And another scoop: France’s Bureau Veritas broke off merger discussions with FTSE 100 group Intertek in favour of pursuing a €31bn combination with Swiss rival SGS, underscoring the appetite to consolidate in the certification sector.

In today’s newsletter:

• The endangered breed of short sellers

• Solomon says start-ups don’t need IPOs

• On the ground at JPMorgan’s San Francisco conference

Are short sellers in their final days?

Short selling has always been a tough way to make a living on Wall Street. Warren Buffett once mused that there were no short sellers on the Forbes 400 list of the wealthiest Americans.

Those who dare go against the market face the threat of litigation and private investigators. As Buffett noted, their targets are also highly motivated to keep their game going as long as possible.

Even established short sellers such as Enron’s foil Jim Chanos have thrown in the towel. Trying to call out bad behaviour when the stock market is hitting new highs is a little like entering a party and telling everyone to turn down the music. No one wants to hear it. 

Nathan Anderson of Hindenburg Research is the latest to call it quits, announcing on Wednesday that his firm would be disbanding after seven years running.

He appears to be going out on a high note, calling time after he gripped financial markets with a series of high-profile short bets, most famously his probes of Nikola Motors in 2020 and Adani Group, which began in 2023.

Two months ago, Adani was charged by prosecutors in New York over what they said was a long-running bribery scheme. It appeared to vindicate many parts of Hindenburg’s crusade, which roiled Indian financial markets.

Adani has called the allegations “baseless” and said it was seeking all “possible legal recourse”.

For Anderson, the trade has bookended a short career in which his star burnt bright, thanks to the proliferation of dubious businesses taken public in 2020 and 2021 through special purpose acquisition vehicles.

Many of Anderson’s targets are now virtually worthless, though a few like Carvana, his most recent bet, have seen their shares surge.

His withdrawal has created yet more questions about the future of short selling, particularly so-called activist short sellers who publish detailed research on their targets after they have put on positions betting on their decline.

In recent years, the practice has drawn deep scrutiny, partially because of how little money they have left to bet against companies. Researchers such as Hindenburg had turned to other funds to bankroll their trades.

The US Department of Justice subpoenaed many short sellers as part of a dragnet of the practice, but Hindenburg was left untouched by the probe. The dizzying way in which short bets are funded has led to rising internal industry dissent.

“All of us are figuratively speaking looking into the abyss,” one prominent short seller told DD. “All of the short sellers are at each other’s throats on Twitter. I equate it to playing the fiddle while Rome is burning.”

The political backdrop’s also crucial: US president-elect Donald Trump is promising a deregulatory push that may make shorting even harder. He’s also being advised by Elon Musk, whose company Tesla arguably has led to the greatest short selling losses in history.

Fittingly, perhaps, Anderson announced his retirement just days before Trump’s inauguration.

David Solomon to start-ups: there’s no need to go public

On Wall Street, competition is fierce among large investment banks to take the next tech giant public.

When he was a mere investment banker, Goldman Sachs chief David Solomon wore Lululemon as part of a successful pitch to take the athleisure company public in 2007.

Now as chief of the banking giant, Solomon says companies should think twice about going public as many founders and investors are holding on to companies for longer.

Solomon this week warned private companies should take “great caution” before listing. “It’s not fun being a public company,” Solomon told the FT at an event hosted by Cisco this week. “Who would want to be a public company?”

In his view, not only are public markets unforgiving but the depth of capital available in private markets also has removed the need to list at all in order to raise money.

Some of the biggest start-ups today, such as Stripe, artificial intelligence group OpenAI and Musk’s space exploration company SpaceX, have held off listing despite swelling valuations in the tens and even hundreds of billions of dollars.

“Today you can get capital privately, at scale . . . you can also get liquidity in the private markets,” Solomon said. “So the reasons to go public, when you really reach an incredible scale, are getting pushed out.”

You might be surprised Solomon played down the power of public markets. Goldman’s a top IPO adviser and has made a killing on the business for decades, leading the IPOs of Facebook and Twitter, among other high-profile listings.

But the bank has already started to shift its resources to supply services to very large private tech companies that have pushed off public offerings.

Business in that arena is booming. One of Goldman’s greatest successes came in 2023, when the bank helped Stripe privately raise $6.5bn.

Goldman is putting its money where its mouth is. It recently formed a “capital solutions” business as it bets that lucrative fees lie in the ever expanding private markets.

Dispatch from JPMorgan: can the deal hype last?

Johnson & Johnson’s $14.6bn purchase of neuroscience drug developer Intra-Cellular brought an end to a year-long drought of the elusive biotech mega-deal.

Investment bankers, investors and other advisers descended on San Francisco this week for JPMorgan Chase’s annual healthcare conference brimming with enthusiasm.

As the three-day get-together dragged on, however, the thrill started to wane.

Robert F Kennedy Jr’s nomination as the next US health secretary haunted biotech stocks, while the Federal Reserve’s indication that it will slow down the pace of interest rate cuts led to the XBI biotech index — which tracks the sector — trading flat this week.

“There’s a lot of uncertainty in the market place — a lot of it related to the FDA and how dysfunctional it could be. While buyers are certainly looking and there are willing sellers, buyers are very disciplined,” said Andrew Weisenfeld, managing partner at MTS Health Partners.

“They are not sloshing around money,” he added.

Still, others said that less volatility (after interest rates settle) could give biotech a boost, and fuel more deals.

“Policy uncertainty is impacting buyer confidence, and may hold back some larger deals in the front half of 2025. We should have clarity on much of this by mid year,” Leerink Partners’ Tom Davidson told DD.

Another banker predicted the return of the $5bn healthcare deal, telling DD that with Intra-Cellular, there will be five deals bigger than $5bn this year.

Will those predictions pan out? Let us know what you think at due.diligence@ft.com.

Job moves

• Brookfield has appointed Bruce Flatt as chair in addition to his role as chief executive, after Mark Carney announced that he is running to replace Justin Trudeau as Canada’s prime minister.

• Ken Griffin’s hedge fund Citadel has hired Gregory Hayday, a managing director at Farallon Capital Management, to its London office, a source tells DD. Hayday will work with portfolio manager Pedro Maqueda on global merger arbitrage and join in the third quarter.

• AlixPartners has named David Garfield and Rob Hornby as co-chief executive officers of the consulting firm starting in February. They replace Simon Freakley, who is now executive chair.

• Weil Gotshal has hired Simon Caridia as a partner in its London finance practice. He previously worked for White & Case.

Smart reads

Office remodel The pandemic upended work habits and office rituals, the FT writes. Five years on, what does the future of the corporate HQ look like?

Slipping behind Measured next to its rivals, America’s second-largest bank has been a third-rate investment, Lex writes. Bank of America’s stock is up 2 per cent over the past three years — compared with JPMorgan’s 67 per cent or Citigroup’s 20 per cent.

Door fiasco A start-up promised pharmacy chain Walgreens that its high-tech fridge doors would revolutionise shopping, Bloomberg reports. It has become a $200mn mess.

News round-up

American Express to pay $230mn to resolve deceptive marketing allegations (FT)

Pension funds dabble in crypto after massive bitcoin rally (FT)

Apple CFO denies company enjoys 75% margin on its App Store (FT)

TikTok’s rivals can expect revenue and user gains if US bans app (FT)

Bank of America profits boosted by loan growth and robust trading (FT)

Morgan Stanley earnings jump on trading and dealmaking boom (FT)

Retail trading platform eToro files for US IPO and chases $5bn valuation (FT)