I know what you're already thinking. Playboy is a dead porn brand that publishes a magazine and doesn't appeal to millennials or gen z right?
Wrong.
Leadership
Let's start with Ben Kohn, the CEO. Kohn has worked in private equity for 25 years and started a firm called Rizvi Travers which invested in pre IPO tech companies. They were the largest investor when Twitter went public and invested in Facebook, Snapchat, Square, SpaceX, Instacart, and Uber.
In 2011, Kohn partnered with Hugh Hefner and took Playboy private. Kohn became the CEO in 2017 with the goal of revitalizing one of the largest, most recognizable brands in the world. Since becoming CEO, Kohn has been shutting down most of the legacy business and most recently discontinued producing a domestic magazine. He's focused most of his attention so far on growing the high margin licensing business and direct to consumer business, transforming Playboy into a consumer lifestyle brand focusing on 4 categories:

• Sexual Wellness
• Style & Apparel
• Gaming & Lifestyle
• Beauty & Grooming

Kohn is also placing a strong emphasis on appealing to women and young people, something that Playboy had never done in the past. Over the last 3 years, the female audience has grown by 70% and 90% of their audience today is under the age of 40. Out of the total e-commerce sales, 40% of customers are women.
Financials
Playboy is already a profitable business. They have a highly efficient, high margin business model that accelerates with growth.
For the first 9 months of 2020, Playboy grew revenue by 78% from 57 million to 101 million and grew adjusted ebitda 129% from 9.5 million to 22 million. For 2021, they reaffirmed guidance of 167 million of revenue and 40 million dollars of ebitda. By 2025, Playboy is conservatively projecting 296 million of revenue and 140 million in ebitda, but expects it to be much greater. It's also important to note that they have over 400 million of forward booked minimum guaranteed cash flow, but they only recognize 67 million of that today, so the actual revenue numbers are much higher.
Playboy's business is monetized in two primary ways, licensing and direct to consumer. Licensing is a key part of the revenue stream and they anticipate it more than doubling moving forward. However, Playboy is extremely excited about its growing direct to consumer business as well which I will dive into in the next section.
Growth
Playboy has huge growth opportunities in each of their 4 product categories. First I want to point out that Playboy is HUGE in China and it's growing rapidly in India. In China, Playboy is one of the leading men's apparel brands with over 2500 brick and mortar stores and over 1000 e-commerce stores. Playboy sells products in over 180 countries and is the 17th most licensed brand in the world.
Style & Apparel:
Over the last 3 years, Playboy has partnered with Pacsun, Misguided, Supreme, and others. The Pacsun and Misguided businesses have increased almost 15x over the last 3 years. Playboy also launched Playboy Labs and partnered with Steve Aoki to promote the brand. Playboy intends on transitioning this business from a pure licensing business to a direct to consumer business going forward. They have future collaborations with Yandy planned as well.
Sexual Wellness:
The sexual wellness category is a 240 billion dollar industry today and is projected to grow to 400 billion by 2024. Currently, the industry is fragmented and made up of small businesses with no ability to scale. Playboy is poised to become the leader in this category through strategic acquisitions of existing companies and by growing its product offerings. Yes, I'm talking about lingerie, condoms, sex toys etc. They recently acquired the sexual wellness retailer Lovers for 25 million and expect them to add 45 million in revenue over the next 12 months. They are planning on making more strategic acquisitions in this space moving forward to become the leading direct to consumer brand in this field. They also began offering online sexual wellness classes for women, which have seen large growth since inception.
Gaming & Lifestyle:
The growth opportunities in this category are huge. Playboy is diversifying into online gambling, mobile gaming, CBD/Marijuana, and virtual reality. They have a social club/poker room opening in Houston this year in addition to their casino in London. They currently have partnerships with Microgaming as well as Scientific Games for mobile gambling apps like slots and poker, with plans to build more. They are also planning on entering the sports gambling market through partnerships with well known sports betting operators.
Moreover, they recently launched an exclusive furniture collection on Wayfair and plan on offering more in the future. They currently offer 3 CBD products and have plans to enter the legal marijuana market when it's legalized at the federal level, which might happen soon under the Biden administration. As of now they sell Playboy branded smoking materials like ash trays and grinders. They are planning on launching 4 more CBD products in 2021. Lastly, Ben Kohn said that experiencing Playboy through a virtual world format is something that is "extremely interesting to us". He gave an example of the Travis Scott and Unreal Platform collaboration.
Beauty and Grooming:
Currently, Playboy offers men's and women's fragrances and color cosmetics in Europe. They have plans to expand their product line and enter the North American market this year. In China, a place where Playboy has a large market presence, Men's grooming is one of the fastest growing categories and an area that Playboy is not in today. They are planning on entering this market in the near future with Playboy branded skincare and grooming products.
SPAC Merger
Playboy has a DA with Mountain Crest Acquisition Corp, $MCAC, with the shareholder vote taking place THIS TUESDAY 2/9/21. Once it's approved, the ticker will change to PLBY shortly after. One of the great things about this deal is that there are absolutely no warrants outstanding, meaning there will be very little dilution. They only have 1/10th of a right per share outstanding which automatically convert to common stock. Upon completion of the merger, PLBY will have only 37 million shares outstanding, which is a very low float. Any increase in volume and demand will send the stock price higher.
After the merger, PLBY will have a market cap of approximately 413 million. For comparison to other global brands, Nike's market cap is 185 billion, Disney's is 329 billion, and Lululemon's is 45 billion. Now I'm not saying Playboy is near those companies today. However, if they continue growing and realize their potential, they're massively undervalued.
Additionally, the management team all signed 12-month lock ups, preventing them from selling for at least one year. This is not a transaction sale, but a true capital raise to accelerate growth. They are in this for the long haul.
Conclusion
Playboy has big growth opportunities in multiple product categories to become a leading consumer lifestyle brand. They have a high margin profitable business model and a very healthy balance sheet. They have 100 million in free cash right now and only 40 million in net debt, or one times 2021 adjusted ebitda. They already have global brand awareness and the bunny logo alone has tremendous value. Ceo Ben Kohn knows what he's doing and has a proven track record of success.
It might be flying under the radar right now because all the hype is surrounding GME and EV socks. I believe when the ticker changes to PLBY and people realize that Playboy is no longer what it used to be, this has huge long term upside.
FYI: All of the statistics I mentioned are directly taken from the CEO Ben Kohn in his 1 hour webinar interview with SpacInsider.
Disclosure: Long 500 commons $MCAC
Disclaimer: Do your own due diligence too

Team has been involved in a substantial number of the digital media, sports, entertainment, leisure and gaming industries’ most significant merger and acquisition transactions, holding key positions at, and transacting with Scientific Games Corp, Inspired Gaming Group, FOX Bets, Ocean Casino Resort, Resorts International Holdings, PokerStars, DraftKings, Mohegan Sun, Caesars Entertainment Corporation, Harrah’s Entertainment, Tropicana Entertainment, Inc., TSG/Sky Betting & Gaming, Facebook, Inc, Wynn Resorts, Dubai World/MGM Resorts
Here's all the Bios. These guys are stellar! TEKK closed at $10.30 today. Still cheap!
If you don't like to read... you don't like to make money!!!!
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Matthew Davey — Chief Executive Officer and Director
Mr. Davey has over 25 years of experience within the digital media, sports, entertainment, leisure and gaming ecosystems, as well as experience in the public sector. He is an experienced public company executive officer and board member. He has served in executive management positions across the gaming technology arena. Over the course of Mr. Davey’s career, he oversaw more than ten mergers and acquisitions and over $1.2 billion in debt and equity capital raised to support the companies he has led.
Most recently, Mr. Davey was Chief Executive Officer of SG Digital, the Digital Division of Scientific Games Corp. (“Scientific Games”) (Nasdaq: SGMS). SG Digital was established following the purchase by Scientific Games of NYX Gaming Group Limited (“NYX”) (formerly TSXV: NYX), where Mr. Davey served as Chief Executive Officer and Director. The NYX acquisition provided Scientific Games with a vehicle to significantly accelerate the scale and breadth of its existing digital gaming business, including the strategic expansion into sports betting. In his capacity as Chief Executive Officer of NYX, Mr. Davey developed and implemented a corporate strategy that generated strong revenue growth. Mr. Davey shaped company strategy to focus on digital gaming supplier platforms and content that provided various gaming operators with the underlying gaming and sports betting systems for their online gaming business. In 2014, Mr. Davey oversaw the initial public offering of NYX, and his experience in the digital media, sports, entertainment, leisure and gaming industries helped NYX recognize momentum as a public company. After the public offering, from 2014 to 2018, Mr. Davey oversaw seven acquisitions which helped establish NYX as one of the fastest growing global B2B real-money digital gaming and sports betting platforms. These acquisitions included:
• OpenBet: In 2016, NYX completed the $385 million acquisition of OpenBet. This was one of the more complex and transformative acquisitions that Mr. Davey oversaw at NYX. Through securing co-investments from William Hill (LSE: WMH), Sky Betting & Gaming and The Stars Group (formerly Nasdaq: TSG, TSX: TSGI), Mr. Davey was able to get the acquisition from Vitruvian Partners completed successfully, winning the deal against much larger and well capitalized competitors. By combining two established and proven B2B betting and gaming suppliers, NYX was well positioned to provide customers with exciting player-driven solutions across all major product verticals and distribution channels. This allowed NYX to become the leading B2B omni-channel sportsbook platform in the market and the supplier to over 300 gaming operators globally with an extensive library of desktop and mobile game titles, including more than 700 on NYX platforms and more than 2,000 on the OpenBet platform.
• Cryptologic/Chartwell: In 2015, NYX completed the $119 million acquisition of Cryptologic and Chartwell. The acquisition provided NYX with more than 400 titles of additional leading gaming content, a broader customer base, and direct exposure to PokerStars and Intercasino, part of the Gamesys Group (LSE: GYS) — two of the world’s largest online casino offerings.
• OnGame: In 2014, NYX completed the distressed acquisition of OnGame, a premier poker content, platform and service provider. This acquisition provided NYX with one of the best poker products in the industry, access to several regulated jurisdictions, and a valuable talent pool that was instrumental in the growth of NYX. The addition of OnGame further established a path for NYX to continue its growth in both European and U.S. markets.
These acquisitions, together with meaningful organic growth, increased NYX’s revenue from $24 million in 2014 to $184 million annualized in 2017. During that time, Mr. Davey helped build NYX to have over 200 customers in the global gaming industry and a team of 1,000 employees. Mr. Davey’s success at NYX ultimately led to its sale to Scientific Games for $631 million in 2018.
Mr. Davey joined Next Gen Gaming, the predecessor to NYX, in 2000 as the Vice President of Technology, was appointed as Executive Director in 2003 and named Chief Executive Officer in 2005. Prior to that, he was the Senior Consultant for Access Systems, a company that specializes in the provision of back-end software for licensed online casinos. Prior to joining Access, Mr. Davey worked for the Northern Territory Government specializing in matters pertaining to the internet and e-commerce along with roles in the Department of Racing and Gaming. Mr. Davey received a Bachelor of Electrical & Electronic Engineering from Northern Territory University, Australia (also known as Charles Darwin University).
Robin Chhabra — President
Mr. Chhabra has been at the forefront of corporate acquisition activity within the digital gaming landscape for over a decade. His prior experience includes leading corporate strategy, M&A, and business development at two of the global leaders in the digital gaming industry, The Stars Group (“TSG”) and William Hill, and a leading supplier, Inspired Gaming Group (Nasdaq: INSE). Mr. Chhabra served on the Group Executive Committees of each of these companies. From 2017 to May 2020, Mr. Chhabra served as Chief Corporate Development Officer at TSG and, from 2019 to August 2020, he also served as the Chief Executive Officer of Fox Bet, a leading U.S. online gaming business which is the product of a landmark partnership between TSG and FOX Sports, a transaction which he led. During that period, Mr. Chhabra led several transactions which transformed TSG into the largest publicly listed online gambling operator in the world by both revenue and market capitalization and one of the most diversified from a product and geographic perspective with revenues of over $2.5 billion. Mr. Chhabra’s M&A experience is extensive and covers multiple global geographies across the digital gaming value chain and includes the following:
• TSG/Flutter Entertainment Merger: In 2019, Mr. Chhabra led the TSG M&A team that was responsible for TSG’s $12.2 billion merger with Flutter Entertainment (LSE: FLTR). The merger between TSG and Flutter Entertainment is the largest transaction in the digital gaming industry to date. The combination created the largest publicly listed online gaming company with approximately 13 million active customers and leading product offerings, which include sports betting, online casino, fantasy sports and poker. The combined entity includes some of the world’s most iconic digital gaming brands such as Fanduel, Fox Bet, Sky Bet, PaddyPower, Betfair, PokerStars and SportsBet. TSG/Flutter Entertainment is one of the most geographically diverse digital gaming and media companies with leading positions in the United States, United Kingdom, Australia, Ireland, Italy, Spain, Germany and Georgia.
• TSG/Sky Betting and Gaming (“SBG”): In 2018, Mr. Chhabra led the acquisition of SBG from CVC Capital Partners and Sky plc, Europe’s largest media company, in a transaction valued at $4.7 billion. At the time of the acquisition SBG was the largest mobile gambling operator in the United Kingdom and one of the fastest growing of the major operators having doubled its online market share in three years. The acquisition of SBG provided TSG with (a) greater revenue diversification, significantly enhanced expertise and exposure to sports betting just ahead of the judicial overturn of The Professional and Amateur Sports Protection Act of 1992 (PASPA) by the U.S. Supreme Court, (b) a leading position within the United Kingdom, the world’s largest regulated online gaming market, (c) improved products and technology as a result of the addition of SBG’s innovative casino and sports book offerings and a portfolio of popular mobile apps, and (d) expertise in deeply integrating sports betting with leading sports media companies, positioning TSG to create more engaging content, deliver faster growth and decrease customer acquisition costs.
• William Hill (LSE: WMH): At William Hill, from 2010 to 2017, Mr. Chhabra served as Group Director of Strategy and Corporate Development where he led several transactions which contributed to William Hill’s transformation from a land-based gambling operator in the United Kingdom to a leading online-led international business. Mr. Chhabra led William Hill’s entry into the U.S. sports betting and online lottery markets with the acquisition of four businesses, including the simultaneous acquisitions of three U.S. sportsbooks, Cal Neva, American Wagering and Brandywine Bookmaking, in 2011 for an aggregate purchase price of $55 million. These businesses ultimately led William Hill to achieve a leading position in the U.S. sports betting market with a market share of 24% in 2019. Additionally, Mr. Chhabra played a key role in structuring William Hill’s successful joint venture with PlayTech Plc (LSE: PTEC) in 2008. The combined entity created one of the largest online gambling businesses in Europe at the time of its formation and led to William Hill’s buyout of Playtech’s interest for $637 million in 2013. Prior to the transaction, William Hill had struggled in its attempt to establish a strong online gaming platform and a meaningful presence outside the United Kingdom.
Mr. Chhabra has also successfully completed four transactions worth over $1.2 billion in Australia, the world’s second largest regulated online gambling market, and various partnerships in Asia. Additionally, he completed several technology and media related transactions, including William Hill’s investment in NYX, where he worked with Mr. Davey on NYX’s transformational acquisition of OpenBet.
Prior to working in the gaming sector, Mr. Chhabra was an equities analyst and a management consultant. Mr. Chhabra received a Bachelor of Science in Economics from the London School of Economics and Political Science.
Eric Matejevich — Chief Financial Officer
Mr. Matejevich is a seasoned gaming executive with extensive experience in both the online gaming and traditional casino industries. From February to August 2019, he served as Trustee and Interim-Chief Executive Officer of Ocean Casino Resort (“Ocean”) (formerly Revel Casino, which had a construction cost of $2.4 billion) in Atlantic City, where he successfully led the management team through an ownership change and operational turnaround effort. Over the course of seven months, Mr. Matejevich managed to reduce the property’s weekly cash burn of $1.5 million to an annualized cash flow run rate in excess of $20 million.
Prior to Ocean, from 2016 to 2018, Mr. Matejevich served as the Chief Financial Officer of NYX. At NYX, he focused his efforts on integrating the company’s many acquisitions and multiple debt refinancings to simplify its capital structure and provided liquidity for growth initiatives. Additionally, Mr. Matejevich was instrumental to the executive team that sold NYX to Scientific Games for $631 million.
Prior to NYX, from 2004 to 2014, Mr. Matejevich was the Chief Financial Officer of Resorts International Holdings and later, from 2011, also the Chief Operating Officer of the Atlantic Club Casino, a property under the Resorts International Holdings umbrella — a Colony Capital (NYSE: CLNY) entity. As Chief Financial Officer, he provided managerial oversight for all finance functions for a six-property casino company with annual gaming revenue exceeding $1.3 billion, 10,000 gaming positions, 7,000 hotel rooms and over 11,000 staff members during his tenure. Mr. Matejevich led the transition effort to integrate a four-casino, $1.3 billion acquisition from Harrah’s Entertainment and Caesars Entertainment (Nasdaq: CZR). As Chief Operating Officer of Atlantic Club, he lobbied for and was successful in obtaining the first internet gaming legislation passed in the United States. The Atlantic Club was the sole New Jersey casino proponent of the legislation.
Prior to serving in various gaming positions, Mr. Matejevich was a Vice President of High Yield Research for Merrill Lynch, where he managed the corporate bond research effort for the gaming and leisure sectors and marketed high yield and other debt transactions totaling $4.8 billion. Mr. Matejevich received a Bachelor of Science in Economics from The Wharton School and a Bachelor of Arts in International Relations from The College of Arts and Sciences at the University of Pennsylvania.
Our Board of Directors
Morris Bailey — Chairman
Over the past 10 years, Mr. Bailey has been a leader in turning around Atlantic City, as well as being among the first gaming executives to embrace online gaming and sports betting in the United States. In his efforts, Mr. Bailey partnered with two of the largest digital gaming companies in the world, PokerStars, part of the Stars Group, and DraftKings (Nasdaq: DKNG). In 2010, Mr. Bailey bought Resorts Atlantic City (“Resorts”) and initiated a comprehensive renovation which allowed for the property to be rebranded and repositioned. In 2012, Mr. Bailey signed an agreement with Mohegan Sun to manage the day-to-day operations of the casino. In addition to Mohegan Sun’s operational expertise and ability to reduce costs via economies of scale, Resorts gained access to their robust customer database. Soon thereafter, Mr. Bailey and his team focused on bringing online gaming to the property. In 2015, Resorts established a platform to engage in online gaming by partnering with PokerStars, now part of the $24 billion Flutter Entertainment, PLC (LSE: FLTR), to operate an online poker room in Atlantic City. In 2018, Resorts announced deals with DraftKings and SBTech to open a sportsbook on-property and online. For 2020 year-to-date, Resorts has performed in the top quartile in internet gross gaming revenue in New Jersey. Mr. Bailey’s efforts in New Jersey helped set the framework for expansion of online sports and gaming throughout the United States.
In addition to his gaming interests, Mr. Bailey has over 50 years of experience in all facets of real estate development, asset M&A, capital markets and operations and is the founder, Chief Executive Officer and Principal of JEMB Realty, a leading real estate development, investment and management organization. Mr. Bailey has notable investment experience within the energy, finance and telecommunications sectors through investments in the Astoria Energy Plant, Basis Investment Group and Xentris Wireless.
Tony Rodio — Director Nominee
Mr. Rodio has nearly four decades of experience in the gaming industry. Most recently, Mr. Rodio served as the Chief Executive Officer and director of Caesars Entertainment Corporation (“Caesars”) (Nasdaq: CZR), one of the world’s most diversified casino-entertainment providers and the most geographically diverse U.S. casino-entertainment company, from April 2019 until its acquisition by Eldorado Resorts, Inc. in July 2020. Mr. Rodio led Caesars through its $17.3 billion merger with Eldorado Resorts, one of the largest transactions in the gaming industry to date. Additionally, Mr. Rodio was instrumental to Caesars’ expansion into the digital gaming industry and oversaw the implementation of new digital segments such as its Scientific Games powered retail sportsbook solution that now operates in various states throughout the U.S. From October 2018 to May 2019, Mr. Rodio served as Chief Executive Officer of Affinity Gaming. Prior to Affinity Gaming, he served as President, Chief Executive Officer and a director of Tropicana Entertainment, Inc. (“Tropicana”) for over seven years, where he was responsible for the operation of eight casino properties in seven different jurisdictions. During his time at Tropicana, Mr. Rodio oversaw a period of unprecedented growth at the company, improving overall financial results with net revenue that increased more than 50% driven by both operational improvements and expansion across regional markets. Mr. Rodio led major capital projects, including the complete renovation of Tropicana Atlantic City and Tropicana’s move to land-based operations in Evansville, Indiana. Each of these initiatives, among others, generated substantial value for Tropicana. Ultimately, Mr. Rodio’s efforts at Tropicana led to its sale to Eldorado Resorts in 2018 for $1.85 billion. Prior to Tropicana, Mr. Rodio held a succession of executive positions in Atlantic City for casino brands, including Trump Marina Hotel Casino, Harrah’s Entertainment (predecessor to Caesars), the Atlantic City Hilton Casino Resort and Penn National Gaming. He has also served as a director of several professional and charitable organizations, including Atlantic City Alliance, United Way of Atlantic County, the Casino Associations of New Jersey and Indiana, AtlantiCare Charitable Foundation and the Lloyd D. Levenson Institute of Gaming Hospitality & Tourism. Mr. Rodio brings extensive knowledge of and experience in the gaming industry, operational expertise, and a demonstrated ability to effectively design and implement company strategy. Mr. Rodio received a Bachelor of Science from Rider University and a Master of Business Administration from Monmouth University.
Marlon Goldstein — Director Nominee
Mr. Goldstein is a licensed attorney with nearly 20 years of experience in the gaming space. He joined The Stars Group (Nasdaq: TSG)(TSX: TSGI) in January 2014 as its Executive Vice-President, Chief Legal Officer and Secretary until his retirement from the company in July 2020 following the merger of TSG with Flutter Entertainment, PLC (LSE: FLTR). Mr. Goldstein also previously served as the Executive Vice-President, Corporate Development and General Counsel of TSG. Mr. Goldstein was also the senior TSG executive based in the United States and was one of the primary architects of TSG’s strategic vision for its U.S.-facing business. During his tenure, TSG grew from an approximately $500 million market-cap company to an approximately $7 billion market-cap company through a combination of organic growth and strategic mergers and acquisitions. Mr. Goldstein participated in numerous M&A transactions and capital markets offerings at TSG, including several transformational transactions in the digital gaming industry. Notable transactions in which Mr. Goldstein was involved include:
• TSG/Flutter Merger: In 2019, TSG merged with Flutter for a $12.2 billion transaction value, the largest transaction in the digital gaming industry to date.
• TSG/Fox Bet Partnership: In 2019, TSG entered into a partnership with FOX Sports to create FOX Bet in the U.S., a leading U.S. online gaming business. Wall Street Research estimates an approximate $1.1 billion valuation for Fox Bet post-partnership with The Stars Group.
• TSG/Sky Betting & Gaming: In 2018, TSG acquired Sky Betting & Gaming, the largest mobile gambling operator in the United Kingdom at the time, for $4.7 billion.
• TSG/CrownBet and William Hill: In 2018, TSG simultaneously acquired CrownBet and William Hill, two Australian operators, for a total of $621 million in a multi-part transaction.
• TSG/PokerStars and Full Tilt Poker: In 2014, TSG acquired The Rational Group, which operated PokerStars and Full Tilt and was the world’s largest poker business, for $4.9 billion.
Through his ability to legally structure large and complex transactions, Mr. Goldstein was integral to TSG’s vision of becoming a full-service online gaming company. Additionally, he assisted in structuring TSG’s capital markets activity, which generated liquidity for acquisitions and strengthened its balance sheet.
Prior to joining TSG, Mr. Goldstein was a principal shareholder in the corporate and securities practice at the international law firm of Greenberg Traurig P.A., where he practiced for almost 13 years. Mr. Goldstein’s practice focused on corporate and securities matters, including mergers and acquisitions, securities offerings, and financing transactions. Additionally, Mr. Goldstein was the founder and co-chair of the firm’s Gaming Practice, a multi-disciplinary team of attorneys representing owners, operators and developers of gaming facilities, manufacturers and suppliers of gaming devices, investment banks and lenders in financing transactions, and Indian tribes in the development and financing of gaming facilities.
Mr. Goldstein brings experience and insight that we believe will be valuable to a potential initial business combination target business. Mr. Goldstein received a Bachelor of Business Administration with a concentration in accounting from Emory University and a Juris Doctorate with highest honors from the University of Florida, College of Law.
Sean Ryan — Director Nominee
Mr. Ryan is a digital media and technology operator with extensive global experience in online payments, e-commerce, marketplaces, mobile ad networks, digital games, enterprise collaboration platforms, blockchain, real money gaming and online music. Since 2014, Mr. Ryan has been serving as Vice President of Business Platform Partnerships at Facebook, Inc. (“Facebook”) (Nasdaq: FB), where he leads a more than 500 person global organization that manages the Payments, Commerce, Novi/Blockhain, Workplace and Audience Network businesses. Prior to his current role, Mr. Ryan was hired in 2011 as the Director of Games Partnerships to lead and grow the global Games business at Facebook. While the Director of Games Partnerships, Mr. Ryan focused on re-shaping Facebook’s games and monetization strategies to derive more value for Facebook, its users and its partners, including the addition of a Real Money Gaming offering in regulated markets. Mr. Ryan’s team helped accelerate a major trend in engagement through cross-platform games and therefore the opportunity to increase users through establishing games on multiple platforms. Prior to joining Facebook, Mr. Ryan created the new social and mobile games division at News Corp, an American multinational mass media corporation controlled by Rupert Murdoch. While at News Corp, Mr. Ryan led the acquisition of Making Fun, a San Francisco social-game start-up, that created News Corp’s games publishing division.
Before joining News Corp., Mr. Ryan founded multiple digital businesses such as Twofish, Meez, Open Wager and SingShot Media. Mr. Ryan co-founded Twofish in 2009, a virtual goods and services platform that provided developers with data analytics and insights for individual application’s digital economies. Twofish was later sold to online payments provider Live Gamer, where Mr. Ryan served on the board of directors. From 2005 to 2008, Mr. Ryan founded and led Meez.com, a social entertainment service combining avatars, web games and virtual worlds. The white label social casino gaming company Open Wager was spun out of Meez and was later sold to VGW Holdings, Mr. Ryan also co-founded SingShot Media, an online karaoke community, which was sold to Electronic Arts (Nasdaq: EA) and merged into its Sims division.
We believe Mr. Ryan’s experience will be valuable to a potential initial business combination target and would provide an expanded perspective on the digital gaming landscape. Mr. Ryan received a Bachelor of Arts from Columbia University and a Master of Business Administration from the University of California, Los Angeles.
Tom Roche — Director Nominee
Mr. Roche has more than 40 years of experience in the gaming industry as a regulator, advisor and independent auditor. Mr. Roche joined Ernst & Young (“EY”) as a partner in 2003 and opened its Las Vegas office. He was subsequently appointed as the Office Managing Partner and Global Gaming Industry Market Leader. In 2016, Mr. Roche relocated to the EY Hong Kong office to supervise the expansion of the EY Global Gaming Industry practice in the Asia Pacific region. Mr. Roche has been integral to numerous transactions that have shaped the current gaming landscape, including:
• Wynn Resorts (Nasdaq: WYNN) initial public offering: Mr. Roche was the lead partner on Wynn Resort’s initial public offering, which raised $450 million in 2002.
• Harrah’s Entertainment/Apollo Management Group & Texas Pacific Group: Mr. Roche headed the regulatory advisory services on the buyout of Harrah’s Entertainment, the world’s largest casino company at the time, for $17.1 billion.
• Dubai World/MGM Resorts: Mr. Roche headed the regulatory and due diligence advisory services to Dubai World in its approximately $5.1 billion investment in MGM. Dubai World bought 28.4 million MGM shares, or 9.5 percent of the casino operator, for $2.4 billion. It then invested $2.7 billion to acquire a 50% stake in MGM’s CityCenter Project, a $7.4 billion 76-acre Las Vegas development of hotels, condos and retail outlets.
• MGM Growth Properties (NYSE: MGP) initial public offering: Mr. Roche provided tax and structural transaction services to MGM Resorts in the creation of MGM Growth Properties, a publicly traded REIT engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. MGM Growth Properties raised $1.05 billion in its 2016 initial public offering.
Mr. Roche also directed EY advisory services to boards and management teams for profit improvement and technology related initiatives. In addition, Mr. Roche provided advisory support to the American Gaming Association on several research projects, including those specifically related to sports betting, the revocation of The Professional and Amateur Sports Protection Act of 1992 (PASPA) and anti-money laundering best practices in the gaming industry. Equally, he has assisted government agencies in numerous international locations with enhancing their regulatory approach to governing the industry especially in the online gambling sector.
Prior to joining Ernst & Young, Mr. Roche served as Deloitte’s National Gaming Industry Leader and as the co-head of Andersen’s Gaming Industry Practice in Las Vegas. In 1989, Mr. Roche was appointed by then Governor of the State of Nevada, Robert Miller, to serve as one of three members of the Nevada State Gaming Control Board for a four-year term, where he was directly responsible for the Audit and New Games Lab Divisions. As a board member, he spent a substantial amount of time assisting global jurisdiction regulators enact gaming legislation in the design of their regulatory structure. During his career, Roche has been involved in numerous public and private offerings of equity and debt securities. His background includes providing casino regulatory consulting services to casino licensees and to federal and state agencies including the National Indian Gaming Commission and the Nevada State Gaming Control Board, and industry associations such as the Nevada Resort Association and the American Gaming Association.
We believe Mr. Roche’s highly regarded reputation as a gaming auditor and advisor in the gaming industry will be valuable for us and a potential business combination target. Mr. Roche is a member of the American Institute of Certified Public Accountants and is licensed by the Nevada State Board of Accountancy and Mississippi State Board of Public Accountancy. He received his Bachelor of Science degree in Accounting from the University of Southern California.

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(Note the connections)
CargoMetrics Cracks the Code on Shipping Data
Scott Borgerson and his team of quants at hedge fund firm CargoMetrics are using satellite intel on ships to identify mispriced securities.
By Fred R. Bleakley February 04, 2016
Link to article
One late afternoon last November, as a ping-pong game echoed through the floor at CargoMetrics Technologies’ Boston office, CEO Scott Borgerson was watching over the shoulder of Arturo Ramos, who’s responsible for developing investment strategies with astrophysicist Ronnie Hoogerwerf. At Ramos’s feet sat Helios, his brindle pit-bull-and-­greyhound mix. All three men were staring at a computer screen, tracking satellite signals from oil tankers sailing through the Strait of Malacca, the choke point between the Indian Ocean and the South China Sea where 40 percent of the world’s cargo trade moves by ship.
CargoMetrics, a start-up investment firm, is not your typical money manager or hedge fund. It was originally set up to supply information on cargo shipping to commodities traders, among others. Now it links satellite signals, historical shipping data and proprietary analytics for its own trading in commodities, currencies and equity index futures. There was an air of excitement in the office that day because the signals were continuing to show a slowdown in shipping that had earlier triggered the firm’s automated trading system to short West Texas Intermediate (WTI) oil futures. Two days later the U.S. Department of Energy’s official report came out, confirming the firm’s hunch, and the oil futures market reacted accordingly.
“We nailed it for our biggest return of the year,” says Borgerson, who had reason to breathe more easily. His backers were watching closely. They include Blackstone Alternative Asset Management (BAAM), the world’s largest hedge fund allocator, and seven wealthy tech and business leaders. Among them: former Lotus Development Corp. CEO Jim Manzi, who also had a long career at IBM Corp.
Compelling these investors and Borgerson to pursue the shipping slice of the economy is the simple fact that in this era of globalization 50,000 ships carry 90 percent of the $18.5 trillion in annual world trade.
That’s no secret, of course, but Borgerson and CargoMetrics’ backers maintain that the firm is well ahead of any other investment manager in harnessing such information for a potential big advantage. It’s why Borgerson has kept the firm in stealth mode for years. In its earlier iteration, from 2011 to 2014, CargoMetrics was hidden in a back alley, above a restaurant. Now that he’s running an investment firm, Borgerson declines to name his investors unless, like Manzi and BAAM, they are willing to be identified.
“My vision is to map historically and in real time what’s really going on in economic supply and demand across the planet,” says the U.S. Coast Guard veteran, who prides himself and the CargoMetrics team on not being prototypical Wall Streeters. “The problem is enormous, but the potential reward is huge.”
According to Borgerson, CargoMetrics is building a “learning machine” that will be able to automatically profit from spotting any publicly traded security that is mispriced, using what he refers to as systematic fundamental macro strategies. He calls the firm a new breed of quantitative investment manager. In unguarded moments he sees himself as the Steve Jobs or Elon Musk of portfolio management.
Though his ambitions may sound audacious, one thing is certain: Borgerson doesn’t lack in self-confidence. Over the past six years, he has secretly and painstakingly built a firm heavy in Ph.D.s that can manage a database of hundreds of billions of historical shipping records, conduct trillions of calculations on hundreds of computer servers and systematically execute trades in 28 different commodities and currencies.
For his part, Borgerson seems an unlikely architect of such a serious, ambitious endeavor. Easygoing and fond of joking with his colleagues, he is a hands-off manager who credits CargoMetrics’ investment prowess to his team. His brand of humor comes through even when he’s detailing the series of challenges he had starting the firm. After using the phrase “It was hard” several times, he pauses and adds, “Did I mention it was hard?” Although Borgerson declines to provide any specifics about Cargo­Metrics’ portfolio, citing the advice of his lawyers, performance during the three years of live trading apparently has been strong enough to keep his backers confident and his team of physicists, software engineers and mathematicians in place. “Hopefully, it won’t be too long before we can make a more significant investment,” says BAAM CEO J. Tomilson Hill. Former Lotus CEO Manzi is optimistic about the firm’s prospects: “It has an unbelievable edge with its historical data.”
CargoMetrics was one of the first maritime data analytics companies to seize the potential of the global Automatic Identification System. Ships transmit AIS signals via very high frequency (VHF) radio to receiver devices on other ships or land. Since 2004, large vessels with gross tonnage of 300 or more are required to flash AIS positioning signals every few seconds to avoid collisions. That allows Cargo­Metrics to pay satellite companies for access to the signals gleaned from 500 miles above the water. The firm uses historical data to identify cargo and aggregation of cargo flow, and then applies sophisticated analysis of financial market correlations to identify buying and selling opportunities.
“We’re big-data junkies who could not have founded CargoMetrics without the radical breakthroughs of this golden age of technology,” Borgerson says. The revolution in cloud computing has been instrumental. CargoMetrics leverages the Amazon Web Services platform to run its analytics and algorithms on hundreds of computer servers at a fraction of the cost of owning and maintaining the hardware itself.
At his firm’s headquarters — where the lobby displays a series of colored semaphore signal flags that spell out the mathematical equation for the surface area of the earth —Borgerson leads the way to his server room. It’s the size of a closet; inside, a thick pipe carries all the data traffic and analytic formulas CargoMetrics needs. That computing power alone would have cost $30 million to $40 million, Manzi says.
CargoMetrics is pursuing a modern version of an age-old quest. Think of the Rothschild family’s use in the 19th century of carrier pigeons and couriers on horseback to bring news from the Napoleonic Wars to their traders in London, or, in the 1980s, oil trader Marc Rich’s use of satellite phones and binoculars for relaying oil tanker flow.
Other quant-focused Wall Street firms are latching onto the satellite ship-tracking data. But, Borgerson says, “I would bet my life on a stack of Bibles that no one in the world has the shipping database and analytics we have.” The reason he’s so convinced is that from late 2008 he was an early client of the satellite companies that had begun collecting data received from space and on land to build a large database of all the world’s vessel movements in one place.
That’s what caught Hill’s eye at Blackstone when he learned of Cargo­Metrics a few years ago. BAAM now has a managed account with the firm. “If anyone else tries to replicate what CargoMetrics has, they will be years behind [Borgerson] on data analytics,” Hill says. “We know that a number of hedge fund data scientists want his data.”
But too much reliance on big data can go wrong, say many academicians. “There is a huge amount of hype around big data,” observes Willy Shih, a professor of management practice at Harvard Business School. “Many people are saying, ‘Let the data speak; we don’t need theory or modeling.’ I argue that even with using new, massively parallel computing systems for modeling and simulation, some forces in nature and the economy are still too big and complex for computers to handle.”
Shih’s skepticism doesn’t go as far as to say the data challenge on global trade is too big a puzzle to solve. When informed of the Cargo­Metrics approach, he called it “very valid and creative. They just have to be careful not to throw away efforts to understand causality.”
Another big-data scholar, Massachusetts Institute of Technology professor of electrical engineering and computer science Samuel Madden, also urges caution. “What worries me is that models become trusted but then fail,” he explains. “You have to validate and revalidate.”
Borgerson grew up in Southeast Missouri, in a home on Rural Route 5 between Festus and Hematite. His father was a former Marine infantry officer and police official, and his mother a high school French and Spanish teacher. The family traveled 15 miles to Crystal City to attend Grace Presbyterian Church, which was central to young Borgerson’s upbringing: There he was a youth elder, became an Eagle Scout and received a God and Country Award. The church was across the street from the former home of NBA all-star and U.S. senator Bill Bradley, whose backboard Borgerson used for basketball practice.
When it came to choosing what to do after high school, Borgerson was torn between becoming a Presbyterian minister and accepting an appointment to the U.S. Coast Guard Academy or West Point. He went with the Coast Guard because, he says, “the humanitarian mission really appealed to me, and I had never been on a boat before.”
At the academy, in New London, Connecticut, Borgerson played NCAA tennis and was also a cutup, racking up demerits for such antics as placing a sailboat on the commandant of cadets’ front lawn and leading bar patrons in a rendition of “Semper Paratus,” the school’s theme song. Still, he graduated with honors and spent the next four years piloting a 367-foot cutter — which seized five tons of cocaine in the Caribbean — then captaining a patrol boat that saved 30 lives on search-and-rescue missions. From 2001 to 2003 the Coast Guard sent Borgerson to the Fletcher School at Tufts University to earn his master’s of arts in law and diplomacy. While at Tufts he volunteered at a Boston homeless shelter for military veterans and founded a Pet Pals therapy program for senior citizens.
Following graduation, from 2003 to 2006, Borgerson taught U.S. history, foreign policy, political geography and maritime studies at the Coast Guard Academy, and co-founded its Institute for Leadership. While there he would get up at 4:00 each morning to work on his Ph.D. thesis exploring U.S. port cities’ approaches to foreign policy. He would also travel to Boston to complete his course work at Tufts and meet with his adviser, John Curtis Perry.
Borgerson’s military allegiance runs deep. One weekend last fall he played football in a service academy alumni game. On another he attended the Army-Navy game. Still militarily fit at age 40, the 6-foot-5 Borgerson works out regularly at an inner-city gym aimed at helping youths find an alternative to gang violence; a few weeks ago he was there boxing with ex-convicts and lifting weights.
Leaving the Coast Guard was a hard decision for Borgerson, resulting in part from his frustration with the military bureaucracy’s stymieing of his bid to get back to sea for security missions. With his degrees in hand, he applied for a fellowship at the Council on Foreign Relations. During the application process he met Edward Morse, now global head of commodities research at Citigroup. Morse was on the CFR selection committee in 2007 and recommended Borgerson as a fellow.
Morse introduced Borgerson to commodities, and to trading terms like “contango” and “backwardation.” Morse himself had, earlier in career, gotten the jump on official oil supply data by hiring planes to take photos of the lid heights of oil tanks in Oklahoma’s Cushing field.
Working for the CFR in New York reconnected Borgerson with his Missouri roots. Bill Bradley’s aunt called the former senator to say: “The son of a family who went to our church in Crystal City is in New York. Would you welcome him?” Bradley did — and would later play a part in Borgerson’s career development.
While at the CFR, Borgerson became an expert on the melting of the North Pole ice cap, writing numerous published articles on its implications; this led him to co-found, with the president of Iceland, the Arctic Circle, a nonprofit designed to encourage discussion of the future of that region. Borgerson recently spoke to 50 international generals and admirals about the Arctic and is co-drafting a proposal for a treaty between the U.S. and Canada that would help resolve the differences the two countries have in allowing international ship and aircraft travel through the Northwest Passage.
His Arctic research led to an aha moment early in 2008, while he was still with the CFR, on a visit to Singapore and the Strait of Malacca with his Fletcher School classmate Rockford Weitz and their former Ph.D. adviser, Perry. Seeing the mass of ships sailing through the strait, Borgerson and Weitz decided to build a data analytics firm using satellite tracking of ships.
Like many successful entrepreneurs, the two struggled to find financing before reaching out to a network of friends and their contacts. One was Randy Beardsworth, who had sat with Borgerson at a 2007 Coast Guard Academy dinner, where Beards­worth, then the Coast Guard’s chief of law enforcement in Miami, was the guest speaker. Borgerson “made references to history and literature, and I thought, ‘Here is a sharp guy,’” recalls Beards­worth. “We have been friends ever since.”
But Borgerson didn’t turn to his new friend in his initial fund-raising. “He came to me in 2009, after he had been turned down by 17 VCs, was maxed out on his credit card, was married and had a newborn son,” says Beardsworth, who was reviewing the Department of Homeland Security as part of the Obama administration’s transition team. Beardsworth came to the rescue, not only committing to invest a small amount but introducing his friend to Doug Doan. A West Point graduate and Washington-­based angel investor, Doan took to Borgerson right away. “To be honest, it wasn’t his idea, it was Scott I invested in,” says Doan, who provided $100,000 in capital and introduced Borgerson to a few friends, who added $75,000. Manzi came on board as an investor in 2009, having been asked by Bradley to check out Borgerson’s plan for a data metrics firm. (Manzi knew Bradley from the late 1990s, when the latter was considering a run for U.S. president.)
With Doan, Doan’s friends and Manzi as investors, CargoMetrics was finally able to garner its first venture capital commitment in early 2010, from Boston-based Ascent Venture Partners. That gave the start-up the capital it needed to hire a bevy of data scientists to build an analytics platform that it could sell to commodity-trading houses and other commercial users. In 2011, CargoMetrics added Summerhill Venture Partners, a Toronto-based firm with a Boston office, to its investor roster, raising roughly $18 million from venture capital and angels for its data business.
By then Borgerson had already begun to contemplate converting CargoMetrics from an information provider into a money manager; he saw the potential to extract powerful trade signals from its technology rather than share it with other market participants for a fee. Among those he consulted was serial entrepreneur Peter Platzer, a friend of one of CargoMetrics’ original investors. Platzer, a physicist by training, had spent eight years as a quantitative hedge fund manager at Rohatyn Group and Deutsche Bank before co-founding Spire Global, a San Francisco–­based company that uses its own fleet of low-orbit satellites to track shipping, in 2012. “We had lengthy conversations on how to set up quant trading systems and how [commodities giant] Cargill had made a similar decision to set up its own in-house hedge fund to trade on the information it was gathering,” recalls Platzer. So Borgerson reset his course. Doan describes the decision as a “transformative moment” for the CargoMetrics co-founder. “The military trains you to be a strategic thinker,” Doan explains. “Scott had been tactical until then, making small pivots, and like a general who sees the theater of war, he moved into strategic mode.”
Borgerson’s ambition to succeed was in no small part fueled by the early turndowns by many venture capital firms and a fierce determination to best the Wall Street bunch at their own game. “There’s a lot that motivates me, including — if I’m honest — I have a big chip on my shoulder to beat the prep school, Ivy League, MBA crowd,” he says. “They’re bred to make money, but they’re not smarter than everyone else; they just have more patina and connections.” (Bred differently, he spent last Thanksgiving visiting his parents in rural Missouri. After breakfast he and his father were in the woods, shooting assault guns at posters of terrorists, with Gunny, his father’s Anatolian shepherd dog.)
Borgerson’s plan was not met with enthusiasm from the company’s then co-CEO, Weitz. CargoMetrics had been gaining clients and meeting its goals, and was on its way to becoming a successful data service provider. Weitz, who now is president of the Gloucester, Massachusetts–based Institute for Global Maritime Studies and an entrepreneur coach at Tufts’ Fletcher School, did not return e-mails or phone calls asking for comment. For his part, Borgerson says: “A ship cannot have two captains. The company simply matured and evolved into a streamlined management structure with one CEO instead of two.”
Eventually, Doan went along with Borgerson’s plan. “We believe in Scott and that shipping holds the no-shit, honest truth of what the economy is doing,” he says. But buying out the venture capital firms several years ahead of the usual exit time would require a hefty premium over what they had invested.
Once again Borgerson’s early supporters played a key role. Manzi, a fellow Fletcher School grad who had mentored Borgerson since the company’s early days, put up more money (making CargoMetrics one of his single largest investments) and introduced him to a powerful group of wealthy investors. Separately, the CFR’s Morse suggested that Borgerson meet with Daniel Freifeld, founder of Washington-based Callaway Capital Management and a former senior adviser on Eurasian energy at the U.S. Department of State. Impressed by Borgerson’s “intellectual honesty, vigor and more than four years of historical data,” Freifeld brought the idea to a billionaire third-party investor, who took his advice and became one of CargoMetrics’ largest backers. “I would not have suggested the investment if CargoMetrics had not done the hard part first,” adds Freifeld, declining to name the investor.
A chance encounter in the fall of 2012 gave the CargoMetrics team its first taste of real Wall Street trading. Attending an Arctic Imperative conference in Alaska, Borgerson met the CIO of a large investment firm, whom he declines to name. When Borgerson confided his ambition and that CargoMetrics had developed algorithms to trade on its shipping data once it was legally structured to do so, the CIO suggested CargoMetrics provide the analytical models for a separate portfolio the money manager would trade. Live trading using CargoMetrics’ models began in December 2012. Manzi brought in longtime banker Gerald Rosenfeld in 2013 to craft and negotiate the move to make CargoMetrics a limited liability investment firm. Rosenfeld acted in a personal role rather than in his position as vice chairman of Lazard and full-time professor and trustee of the New York University School of Law. The whole process took a year and a half. During that time Blackstone checked in as an investor.
Bradley, now an investment banker, has yet to invest in CargoMetrics, explaining that he is unfamiliar with quantitative investing. But he may eventually invest in Borgerson’s firm, he says, because “we are homeboys. I believe in him and that things are going to work out ” — pausing to add with a smile, “based on my vast quant experience, of course.”
Borgerson has been in stealth mode since CargoMetrics’ early days, when he moved the firm from an innovation lab near MIT because the shared space was too open. He is much more forthcoming when boasting of the firm’s “world-class talent.” The team includes astrophysicists, mathematicians, former hedge fund quants, electrical engineers, a trade lawyer and software developers. Hoogerwerf, who has a Ph.D. in astrophysics from the Netherlands’ Leiden University, built distributed technical environments for scientists and engineers at Microsoft Corp. Solomon Todesse, who works on quant investment strategies, was head of asset allocation at State Street Global Advisors. Aquil Abdullah, a team leader in the engineering group, was a software engineer in the high-performance-computing group at Microsoft. And senior investment strategist Charles Freifeld (Daniel’s father) has 40 years’ experience in futures and commodities markets, including nine with Boston-based commodity trading adviser firm AlphaMetrics Capital Management.
“All were self-made people; none were born with a silver spoon,” Borgerson notes. One of his blue-collar-­background hires was James (Jess) Scully, who joined as chief operating officer in 2011, after his employer Interactive Supercomputing was acquired by Microsoft.
“The team we built treasures team success, which is Scott’s motto,” Scully says. “We want shared resources, one P&L, not ‘How much money did my unit make?’” Both Scully and Borgerson say Cargo­Metrics is like the Golden State Warriors, a leading NBA basketball team known for putting aside personal glory and playing as a band of brothers having fun.
Borgerson says he fosters a no-ego policy with “lots of play because investment teams are built on trust, and playing together builds trust.” Team building at CargoMetrics includes pub crawls, picnics at Borgerson’s house, poker nights, volunteer work in a soup kitchen for the homeless, Red Sox games and visits to museums.
Trips to the Boston docks or Coast Guard base are intended to remind the CargoMetrics team of the real economy. There are also occasional “touch a tanker” days. On one visit to a tanker, everyone was amazed that the ship was the size of a city building, Borgerson says. “They could smell the salt on the deck,” he recalls. “Wall Street can lose sight of the real fundamentals in the world. I don’t want that to happen here.”
Unlike the Rothschilds 200 years ago, only a small percentage of the trades that CargoMetrics makes relate to beating official government data. Most simply are aimed at identifying mispricings in the market, using the firm’s real-time shipping data and proprietary algorithms.
At a whiteboard in his conference room, Borgerson sketches out CargoMetrics’ general formula. He draws a “maritime matrix” of three dynamic data sets: geography (Malacca, Brazil, Australia, China, Europe and the U.S.), metrics (ship counts, cargo mass and volume, ship speed and port congestion) and tradable factors (Brent crude versus WTI, as well as mining equities, commodity macro and Asian economic activity). Using satellite data with hundreds of millions of ship positions, CargoMetrics makes trillions of calculations to determine individual cargoes onboard the ships and then to aggregate the cargo flows and compare them with historical shipping data. All that leads to the final comparisons with historical financial market data to find mispricings. If CargoMetrics observes an appreciable decline in export shipping activity in South Africa, for example, its trading models will determine whether that is a significant early-warning sign by considering that information alongside other factors, such as interest rates. If Cargo­Metrics believes a decline in the rand is forthcoming, it might short it against a basket of other currencies. “This is like a heat map showing opportunity,” Borgerson says, noting that CargoMetrics is not trading physical commodities. “We are agnostic on whether to be long or short, and let the computers spot where there is a mispricing and liquidity in the markets.” He sums up his simple, but still less than revealing, process by writing on the whiteboard “Collect, Compute, Trade.”
Borgerson says CargoMetrics is building a systematic approach that will work even when cargo cannot be identified — on containerships, for instance. It already knows a large percentage of the daily imports and exports into and out of China and island economies such as Japan and Australia. And although the firm cannot glean from its calculations on satellite AIS data the type of cargo, such as iPhones from China, it can measure total flow, which shows present economic activity. Cargo­Metrics’ data scientists are working on linking such activity to the firm’s data set of the past seven years to measure the evolving global economy. That will lead, Borgerson maintains, to more trades on currencies and equity index futures and, eventually, trades on individual equities. “Uncorrelated” is a mantra of Borgerson and his team. Well aware that correlated assets sent the performance of most asset managers, including hedge funds, plunging in the financial crisis, CargoMetrics is determined to come up with an antidote. Careful not to say too much, Borgerson lays out the simple principle that the process starts with placing many bets among uncorrelated strategies in different asset classes, like commodities, currencies and equities.
The goal is diversification, staying as market neutral as possible and remaining sensitive to tail risk in different scenarios. CargoMetrics’ analytic models help find asset classes that are outliers. Those may include a publicly traded instrument such as oil, another commodity or an equity for which shipping information was a leading indicator during times when other asset classes marched in lockstep. The historical ship data is then blended with this new information to seek opportunities. Identifying mispriced spreads among different trades within an asset class is another way of avoiding the calamity of correlation. Borgerson says the firm’s models will find instances where one type of oil should be a short trade and another a long one. The same goes for whole asset classes — shorting one that will benefit if virtually all asset prices plunge and buying another that will rise when oil prices gain. “We’re counting cards with the goal of being right maybe 3 percent more than we are wrong, as a way of making profits during good times and staying afloat during times of sudden, unpredictable but far-reaching events,” Borgerson says. The key, he adds, “is to know your edge and spread your risk.” CargoMetrics’ uncorrelated approach worked during the dismal first three weeks of this year, says Borgerson. Dialing down risk as volatility in the markets soared, the firm was on track in January to have its best month since it began trading.
To improve the firm’s models, eight of its data scientists hold a weekly strategy meeting, nicknamed “the Shackleton Group” after the band of sailors shipwrecked in the Antarctic from 1914 to 1917. Hoogerwerf and Ramos co-lead the group. At one recent meeting they were deciding how much risk, including how much liquidity, there was in a possible strategy; reviewing whether to keep previous strategies; and assigning who would research new ones.
The Shackleton Group’s meetings are free-form, with a lot of “I’ve got an idea” interjections that disregard official roles. “We hit the restart button a lot,” says Ramos, a former director of business intelligence and a quantitative economist at law firm Dewey & LeBoeuf who joined CargoMetrics in late 2010. “That’s why our motto is ‘Never lose hope.’” A bet on oil, related to Russia’s production, was stopped at the last minute in 2014, when Russia invaded Ukraine. Some currency-trading strategies have been abandoned in theory or after failing. Strategies the Shackleton Group likes are passed on to the firm’s investment committee of Borgerson, Scully and Ramos for a final decision. CargoMetrics has a unique set of big-data challenges. Historical shipping patterns may not be as useful in the new global economy now that shipping freight prices are plunging, a sign that trade growth rates may be changing. And analysts point out how hard identifying oil cargo can be in certain locations and instances, even in more-­predictable economic times. “While it may be easy to say that ships leaving the Middle East Gulf are typically carrying crude oil, knowing the type of crude is sometimes quite difficult,” says Paulo Nery, senior director of Europe, Middle East and Asia oil for Genscape, a Louisville, Kentucky–based company that analyzes satellite tracking of ships. Borgerson maintains his team is well aware of the dangers of data mining and getting swamped by noise. “If you run computers hard enough, you can convince yourself of anything,” he says. To make sure CargoMetrics’ algorithms for identifying cargo are valid, the firm spot-checks manifest data filed at ports and imposes statistical confidence checks to guard against spurious correlations.
Getting the jump on official government statistics is likely to become tougher too thanks to the recently formed High-Level Group for the Modernization of Official Statistics. Although the U.S. is not a member, Canada is a key player helping to lead the mostly European nation group (including South Korea) in coming up with a global blueprint for measuring and reporting economic activity.
Reflecting on his journey to Wall Street — raising money, hiring employees with different skill sets, making changes to Cargo­Metrics’ culture, overcoming legal and regulatory hurdles — almost gives Borgerson second thoughts about whether he would do it again. “I’ve sailed ships through tropical storms, captured cocaine smugglers and testified before Congress [on his Arctic research],” he says, “but this was the hardest.”

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The Villains
Some names/nationalities/character description have been changed because of privacy
Clicki finished 5th in the tourney for 180k$, he was familiar with winning these amounts and was gutted after being coolered brutally. An absolutely amazing score and run for a 888$ dollar buy-in tournament nonetheless. In the meantime Gary received his hospital bill, I think it was around 2300$. His insurance magically covered all the expenses and his parents never found out. He tells me he’s going to take it easy for this summer, as he did take several loans to finance his trip to Vegas. He even applied for a loan at the local bank beforehand, you can imagine that did not come through. However Gary wouldn’t be Gary if he wasn’t talking about other opportunities that would come in the (near) future. ‘’I think I first should play an EPT main event in order to gain some experience for the WSOP main event. I’m not gonna bother with small tourneys anymore’’. I always love it when Gary talks about high buy in tournaments while his tank is at 0, call it ambition.
I figured that by renting out my place I could travel a bit through Europe.
As a result of that I found myself with my friend Rien in Bratislava later that summer.
After a good start on the first day I’m off the next one, I’m sitting down in a cash game and there seems to be a seat reserved. At the reserved place there is already 2k euro in chips, this is always a good sign. Usually well known local players seem to do this and they aren't the best players, often semi shady types that wanna show the table they have money and the authority to reserve a seat while everyone is already playing.
Around one hour later the exact type that I expected shows up, it’s the type you’d see walking on the street and you would know; he probably doesn’t work for the government so to say.
His name didn’t really surprised me either: Boris
Because of his overly aggressive play I know to win a 500 euro pot of him and he immediately doesn’t like me that much. He’s talking a bit of shit to me in Slovakian but I think it wasn’t too bad. I just won a nice pot of him so I wasn't too bothered with it anyways.
It’s just one of those many characters you come across in poker.
This brings me back to the story of another classic Villain story out of Dublin. I never got his name but he turned out to be some kind of Polish drug dealer.
After playing a small tournament in Dublin, an acquaintance of mine is playing in a 4 card poker game. I’m having a look at his table and one guy immediately stands out.
He’s wearing a nice suit, a typical Louis Vuitton handbag across his shoulder, sunglasses of a designer brand, you get the picture. He’s leaning back in his chair and on his left is a table full of cocktails, probably around 6 different drinks. He has a massive stack in front of him of around 4000 euro (blinds are 1/2).On his right is a woman who’s with him, whenever it’s his turn he just says POT, instructing the dealer next to him to count the pot and that would be exactly what he would bet without even taking a glimpse at his cards. After this ritual, that occurred every single hand, the woman next to him would show him his cards.
Although 4 card poker isn’t really my game, a game with a guy who isn’t even watching his cards before making full pot bets should be beatable.
I decide to sit down and every pot is big because he’s in every pot. At one moment I’m observing him and expertly he moves a chip with an unknown substance to his nose, while sitting on the table with nine other people. Jesus, this guy must be more crazy than I could imagine, sniffing cocaine (?) in public.
The dealer, an older woman, also noticed what happened and was looking in shock yet did not make a fuss about it.
One player in particular, got really unlucky in multiple pots against him.
After a while the player, with either Indian or Turkish roots, starts complaining a bit.
The Polish cocaine sniffer promptly replies with: ‘Shut up Durum Kebab’
I thought this comment was out of order yet incredibly funny and really had to make an effort not to burst out laughing.
The floosupervisor was called to check what’s going on and of course he was the first one to describe the situation. ‘Durum Kebab is complaining about a 2k pot he lost, you know how much I lost last month? 60k!’
The attendance of a supervisor didn’t hold him back from telling the other player that he should shut up or he would sleep for a long time.
I would come across this same exact person roughly 28 hours later. It’s around 3:30 am as I’ve been listening to an arguing drunk guy in the room next to me long enough to start complaining about it at the reception.
Once I arrive at the reception there’s a couple in front of me. Probably the most beautiful woman you’ve ever seen and the Polish guy. He’s wearing a Rolex and I can clearly see a Cross tattooed in his hand palm.
This was definitely another woman than he was with the night before, I wasn’t surprised about that. The first thing I hear him saying is: ‘I want the presidential suite’
That’s not available sir. ‘Not available!? When is it available? I need the best room you have’
Followed by: ‘I wanna top up my credit’
My best guess was he was putting on a little bit of a show to impress the beautiful woman who was with him.
After receiving the best room available he made clear that the employee shouldn’t mention his stay to anyone because he knew what would happen if he talked. Basically I heard this guy make two death threads within 28 hours and get away with it. I was curious to know the story behind this guy and when I asked Greg, the security I had known for years. His answer was distinctly: He is well known for being deep in ‘the business’.
Fun fact about Dublin: There are no drinks ordered after 12 (?) on Sundays. I was surprised and pointed out that the hotel that hosted the event missed out on a lot of revenue. The owner looked into a room with 60 people, ''You see those people? If we keep serving them, 70% won't show up at work tomorrow. It's government instructions.'' You've got to love the Irish.