Author’s note: I’m trying something a little different in today’s note. I’m not going to rail or editorialize. Well, maybe I will just a little bit, because I can’t help myself. But mostly I’m just going to present the publicly available filings and information as they stand because a) I think they speak for themselves, and b) I am intensely curious as to whether anyone in mainstream financial media will pick up the ball here and run with it.
Chamath Palihapitiya, who took Virgin Galactic public, steps down from space company’s board
February 18, 2022
ChaChaCha is the naming convention for Chamath Palihapitiya’s universe of LLCs and Trusts. Cute, huh? These are the vehicles where he “manages his liquidity”, to use his phrase, across the myriad of public entities and investments he controls.
Nine of these vehicles – ChaChaCha DNA I, LLC; ChaChaCha DNA II, LLC; ChaChaCha DNA III, LLC; ChaChaCha DNA IV, LLC; ChaChaCha SPAC B, LLC; ChaChaCha SPAC C, LLC; ChaChaCha SPAC D, LLC; ChaChaCha SPAC 5, LLC; and ChaChaCha SPAC F, LLC – are SEC reporting entities and you can track their filings here.
There is no method of which I am aware to track the ChaChaCha Trusts that have been established, except as they are referenced in a public filing by a reporting entity, like in footnote 5 of this doc.
In addition to the ChaChaCha entities, the enterprising financial sleuth may also want to examine the SCS Sponsor entities, the SCH Sponsor entities, the Social Capital entities, the Suvretta entities, the Hedosophia entities, and the personal filings by Chamath Palihapitaya. You will find many other entities and individual names in the course of your search. Again, all of this information is publicly available on the SEC EDGAR (electronic data gathering and reporting) website.
This is the Bloomberg price chart of Virgin Galactic Holdings (ticker: SPCE), the company where Chamath served as Board Chair until his resignation last week (Feb. 17), with insider trades (acquisitions in green, sales in red) superimposed.
In truth, the proportion of insider sales to insider purchases is even higher than this sea of red flags would indicate. That’s because the automated Bloomberg process for reading EDGAR filings doesn’t read footnotes and other ways of hiding the net effect of transactions on a given date.
For example, here’s the Bloomberg chart for Chamath’s insider transactions, showing three net sales (red) and two net purchases (green). In truth, the only net purchase for Chamath was that very first flag, on Oct. 25 2019, when the SPAC transaction was finalized and Chamath bought 10,000,000 shares of SPCE at $10/share.
Here are the filings and the transactions for the other four flags on this chart, all of them net sales.
December 14, 2020: sale of 3,800,000 shares at prices ranging from $24.67 to $27.54, for net proceeds of $97.8 million.
March 2-3, 2021: sale of 6,200,000 shares at prices ranging from $32.29 to $37.90, for net proceeds of of $212.8 million.
At this point – early March of 2021 – Chamath has sold ALL of his stock in SPCE for a profit of $210 million. He has no ownership position in the company that he founded. He is still Chairman of the Board.
March 18, 2021: cashless exercise of 3,881,000 warrants at a notional price of $11.50 and simultaneous sale of 1,423,000 of resulting common shares from the cashless exercise of warrants at a price of $31.36, for net proceeds of $44.6 million and the remaining ownership of 126,000 shares after tax effect.
The cashless exercise of warrants makes this show up as a green flag in Bloomberg (net purchase of stock), even though it was purely a sale. It’s also complicated by the fact that the warrant exercise took place through a vehicle that Chamath controls (The Social-Capital Partnership III, L.P.), and “the reporting person [Chamath] disclaims beneficial ownership of the securities reported herein except to the extent of his pecuniary interest therein, if any”. LOL.
September 16, 2021: gift transfer of the last remaining 126,000 shares of SPCE stock to the ChaChaCha 2019 Trust DTD 9/20/2019.
At this point, Chamath has no further ability to suck anything out of Virgin Galactic. He has pocketed $255 million. He is still Chairman of the Board.
I am going to leave it to the enterprising financial sleuths out there to review the public statements that Virgin Galactic Holdings made over this time span. You can find all 192 of the company’s public filings here.
I am also going to leave it to the enterprising financial sleuths out there to review the public statements that Chamath personally made over this time span regarding Virgin Galactic. A cursory search on CNBC should prove … illuminating.
And of course, let’s not forget the sellside Renfields who made all this possible. Here’s one of literally hundreds of such puff pieces by Wall Street “analysts”, this from September, 2021. Again, I will leave it to others to chronicle this.
There is an old phrase for this sort of behavior. The first word is “pump” and the second word is “dump”.
But I think we must recognize that in this Golden Age of liquidity and fraud, where the SEC and the DOJ ignore anything like this and instead devote the full measure of their regulatory attention to those awful short sellers who say mean things about stocks, the old phrases have lost their meaning. No, it’s time for a new phrase for a new age, and I’ve got just the one.
Ben, never considered this, but how do direct option purchases other than grants show up for Insiders? I was just thinking, as many SEC filings as I’ve read, can’t remember seeing a Form 4 with regard to direct option purchases.
I would wager that cha-cha-cha played the Delta game with more than 50% of all MEME stocks, with out-of-the-money call options. He announced it regarding GME, tweeted it out on several others 1Q 2021.
Keep exercising those financial analyst skills! Ben has asked on the Forum what are the most powerful ways to tell the stories that need telling. Seeing posts like this, that just state the facts, rank way up there for impact. Not every bit of skullduggery is as cut and dried and has the facts at hand to point out for those with the skill to do it. Glad to have Ben’s keen eye looking out for the Pack.
That’s a great question, Carl. My sense is that when options are used in this manner (cough, cough, Elon), it’s through cut-outs like a friendly HF.
Good reporting. Thank you. Nothing to see here, move on. Much like…
Does SPCE ever become a buy henceforth?
I was early money on the MRNA insider selling. For a while it was as smart and as productive as pissing into the wind. Nobody cared. Moar jabs. NGU. Now that it’s come down to earth people have started to notice.
I’d have to look at their cash position before I’d even hazard a guess. Looks like they’re totally focused on the “near space tourism opportunity”, and that strikes me as a long slog under the best of circumstances.
How many $400,000 tickets can you really sell? At least SpaceX is focused on commodity space freighting, not hauling the sons of oligarchs and lottery winners to the Karman line.
Looks like someone was paying attention or read your note.
I should have read this thread before getting involved with Cha Cha Cha! After watching ChaCha on CNBC, I thought this guy was a genius, and bought IPOC which turned into Clover Health. Then I realized I had been had so I converted my IPOC to OpenDoor, another ChaCha SPAC. Now, I’m going to ride these 'investments down to the ground" just like my first investment: Coleco. No pain, no gain!