Absolute Return Podcast #64: Crude Crash: Should Investors be Buying Oil?

By April 27, 2020 No Comments

April 27, 2020—Crude Oil Futures Hit Negative $37.00 per Barrel in Record-Setting Rout. Should Investors Be Buying?

IPO Window Opens Back Up as Social Capital SPAC Completes Upsized $720 Million Initial Public Offering. Will We See More IPOs?

Private Equity Firm Sycamore Tries to Wriggle Out of Deal For Victoria’s Secret. Will the Gambit Work?

A Discussion of the Tough First Quarter for Private Equity and Where We Go From Here.

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Welcome investors to the Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies. Your hosts Julian Klymochko and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by accelerate financial technologies. Accelerate because performance matters. Find out more at www.Accelerateshares.Com.

Julian Klymochko: Welcome investors to Episode 64 of The Absolute Return Podcast. I am your host, Julian Klymochko.

Michael Kesslering: And I am Mike Kesslering. 

Julian Klymochko: Today is a lovely Friday, April 24th. Market is closed for the week and going over the main events that you need to know and our insights on those events, so firstly. 

    • Crude Oil futures hit negative Thirty-seven dollars per barrel, not a typo. They went way negative, which was definitely unexpected, unprecedented, a record setting route. Should investors be buying oil here? 
    • The IPO window opened back up as Social Capital. Their special purpose acquisition company completed an upsized 720 million dollar initial public offering. Are we going to see more IPO finally? 
    • Private equity firm Sycamore. They are trying to wriggle out of a deal for Victoria’s Secret that they announced just two months ago. Will this gambit work? 
    • Lastly, we are going to touch on the blog post I put out earlier this week. A discussion of the tough first quarter for Private Equity and where we go from here. 


Julian Klymochko: But really an event that everyone was talking about, especially on Monday as it was happening. The May contract for WTI, West Texas Intermediate, which is a blend of crude, basically the most quoted and most traded crude oil contract globally is Texas crude. WTI crude oil futures turned negative for the first time ever, plunging as low as a minus thirty-seven dollars and sixty-three cents a barrel. That is right. Oil trading at negative Thirty-seven dollars per barrel. Now, before we get into this discussion, I just wanted to clarify what a WTI futures contract is. Well, a futures contract is obviously a financial contract between a buyer and seller for 1000 barrels of crude oil delivered into Cushing, Oklahoma, where energy companies own storage tanks with roughly 76 million barrels of capacity.

What happened here was prices went negative for the front month WTI contract. Basically, the May contract, which was set to expire the day after it went negative sale, also on Tuesday. Just prior to expiry went negative and this contract was settles, and the unique thing to crude futures contracts and other futures contracts is they settled with physical delivery (i.e. if you are long WTI futures contract at expiry, you need somewhere to put a bunch of oil. If you own one contract, you need somewhere to put a thousand barrels of crude oil. And that’s just the way the contract works) and so storage at the delivery point in Cushing, Oklahoma, was full, and so you had desperate holders of this contract who had nowhere to put the oil because storage was at capacity. They are willing to pay other people thirty-seven dollars just to take that oil contract off their hand. That is right. This lack of crude oil storage created a dynamic, such that contract holders needed to sell at a negative price or risk taking delivery of oil with nowhere to put it.

Now we’re going to talk about who the main losers of this absolute destruction and oil prices, really holders of the United States Oil Fund ETF, which is basically retail bag holders, people who bought who didn’t know how the product worked. They did not know how futures work. They did not know how contango works and how that whole roll yield works. And basically what contango is, it’s just a pricing dynamic such that if you want to invest in oil, you just can’t buy oil.

What they do is they buy a futures contract which have monthly expiries and each month you sell one to buy the next one. When May is about to expire, sell them in May, contract roll into the June contract or a later futures contract. And that’s how you get oil exposure without having to take delivery of it, and what contango refers to is when prices in the future are significantly higher than the spot or the prompt a month futures contract. While the May futures contract on Monday dipped as low as negative thirty-seven dollars per barrel, the June contract was still, what, around $20 to positive per barrel. If you’re selling out, May and rolling to June, you have a massive negative roll yield where to get an equivalent amount of barrels per oil exposure, you have to pay an enormously more amount to just given that contango in the futures curve.

But don’t want to get too technical. Want to focus on exactly what is happening here for investors. Typically, most market participants close any futures contracts ahead of expiration through cash settlement in order to avoid the risk of taking physical delivery. Only about 1 percent of contracts are physically settled. And really what happened was on April 20th and 21st, too many market participants held the contract, which is really heavily influenced by this United States Oil Fund ETF, which owned about 25 percent of the contract prior to selling it and rolling in to the next month. So basically you have this phenomenon where the pandemic has caused a massive demand destruction and you had a big surge in supply which really filled up all available crude storage and then no physical delivery available just because no storage was left, and that’s really never happened. Yeah, it is really unique. Negative futures contract pricing environment where holders actually had to pay counterparties to take hold of the contract. So who really holds the United States Oil Fund? The big loser here? Its retail investors, right?

Michael Kesslering: Yeah, absolutely. Retail investors, as well as large institutional players here. I believe it is about a 70/30 split is the estimate where 70 percent are approximately institutional investors and 30 percent retail speculators. Now, there are different holders of this, not every holder is expecting the price just to go up or down. Are just holding for price reasons, making a directional bet either going long or short. Others are using it for hedging and things of that nature.

Julian Klymochko: And it is a four billion dollar fund, right? Four billion?

Michael Kesslering: Yes and there is some interesting dynamics in terms of their USO AUM and because of the mechanism which is getting pretty, pretty in-depth into the arcane world of ETF. But because of the create to lend mechanism that is used by prime brokers in order to create more shares for shorting that some of their clients may want, it does result in the fact that when oil price is going down, so when the fund is going down, they’re actually getting inflows of AUM. There is an inverse correlation between the price of the fund and AUM growth has been seen in the past. But what’s interesting, as you mentioned, is I guess there’s a lot to unpack here with regards to USO, but no. one being that the USO oil has now stopped allowing for creation orders. Creation and redemptions are what keep an ETF in line with their NAV, and so because there is none of these creation orders that now it is trading at a very large premium. I believe that on the 21st it was as high as a thirty-six percent premium. 

Julian Klymochko: Wow. 

Michael Kesslering: To its underlying NAV. Currently it is about an 8 percent, but you know, a normal premium or discount for an ETF would be around 50 basis points.

Julian Klymochko: USO, The United States oil ETF, since they can create more shares, it’s just too large. It is now trading way more than by a premium to NAV. It is just way more than the underlying futures contracts are worth.

Michael Kesslering: Exactly, you are buying a dollar for a dollar and ten cents, basically.

And which isn’t a very good deal for you as an investor. The other aspect that has been very interesting with USO over the last few days here is that the fund has now been changing their holdings of their futures contract. So typically, they hold the front month contract, as you had mentioned. I believe before they made changes to their underlying portfolio, they were controlling about 30 percent of the June futures contract because they had already rolled out of the May contract. It has been indicated before that the CME has historically limited them to about twenty-five percent of the open interest on any WTI futures contract.

Julian Klymochko: And the CME being the Chicago Mercantile Exchange, basically the futures trading exchange that governs their trading.

Michael Kesslering: Yes, and so what this really means, like the fact that they are changing their futures holdings. What that means is instead of just holding the front month, the June contract, now. They are holding the June, July, August and September now in different proportions. And those waiting’s are no longer made public in advance, and so it’s really just giving investors less insight into what they’re actually holding in their portfolio as well as it’s really resulting in the fact that you’re not actually investing in a true pure play direction bet on spot oil prices as many investors, especially retail investors as well as institutional investors are wanting.

Julian Klymochko: And that is hugely problematic when a so-called passive ETF massively diverges from its stated intention and its underlying benchmark, right?

Michael Kesslering: Especially midday. They now made three portfolio changes and the latest one was today where they halt the ETF mid trading day and announce the changes that they are going to allow in their investment mandate to making their ETF, which is just crazy that they are not making these announcements after hours. These are definitely material changes that they are making to their ETF. In addition, if an investor really wants just exposure to the next contract, so not just the front month contract, there already is an ETF for that USL, which just has the, twelve months forward, it has those contracts in an ETF. It really kind of defeats the purpose of the entire ETF, but really why are they doing this? It is really just to save them from liquidation of the actual fund. This is just pure self-preservation, and why does this matter if an ETF is no longer tracking its benchmark very closely? Well, as we had mentioned, some industry participants, they are using it as a hedge. And if it’s no longer tracking the benchmark that they want exposure to, this becomes completely useless as a hedge. 

Julian Klymochko: Yeah. 

Michael Kesslering: And then as well as we had mentioned, that some investors just want to make a directional bet on the spot price of oil. Well, now, this is no longer a pure play bet on this. It is also becoming useless in that sense.

Julian Klymochko: In any event, investors cannot get exposure to spot oil, right? They thought the best way to do it was rolling front month futures contracts. Clearly, that has turned into an absolute disaster. And what we saw was it was so mechanical, it’s become such a huge part of the market is basically the tail wagging the dog, such that sophisticated hedge funds and commodity traders would completely front run the USL fund because they knew that there is such a large portion of the market there to sell it. This day on this time of the month and by the next month contract. You had massive front running, which costs the ETF investors a massive amount of money.

Michael Kesslering: Absolutely, and what is also interesting about the USO is that they state the exact timeframe that they’re going to be rolling there contract typically, and that’s usually over three or four days, which I find very interesting, that it’s something that most funds would indicate that will be rolling, but they won’t give you a definitive timeframe for just that reason. You are kind of worried about people front running your trade, but overall, this just is an absolutely crazy situation where the actual functioning of an ETF has really broken down.

Julian Klymochko: Yeah, imagine if USO was still holding the contracts as they went negative like any ETF can’t go negative, so people are scratching their heads. Like what happens when you are holding an asset that has a negative value in an ETF. That is a whole rigmarole that no one really knows how that would happen. As you indicated, they are diversifying into a mini contract just to mitigate that risk now, which no one really thought of before. The absolute shocking thing here is if you go to a retail-trading platform like Robinhood, USO, this United States Oil Fund ETF is now one of the most popular products. And so the question was, should investors be buying to try to capture that bounce back in oil?

Absolutely no. Do not buy USO, because it really does not track at all the underlying spot price of oil. You really can’t get exposure to that as an investor unless you own like an oil well or something of that nature. You can do it financially because there is this notion of futures contracts, negative role yield, contango, etc. The only people that should be trading this type of strategy or this type of product are those who are well versed and know exactly about contango is people who know what negative role yield is and are willing to accept those risks. It is really not anything that should be traded by amateurs and definitely not the futures contracts. You hear about some horror stories where retail investors were trading futures and actually held some, and now have to take delivery and they have no idea what to do with it. It is a crazy dynamic where investors have flooded into the oil markets trying to bet on a rebound in crude price and just got absolutely demolished, got run over. You have kind of hedge fund sharks just picking off retail investors. It is a real sad story, but who knows why it has become so popular. If you are thinking about trading USO. Please, please stay away. It is basically a recipe to lose money, and that’s really all I got to say about that. 


Julian Klymochko: Onto some private equity M&A. What happened? Initially, the background of the story in late February, a private equity firm, Sycamore, struck a deal to buy a fifty-five percent interest in Victoria’s Secret from the owner L brands for approximately five hundred and twenty five million. That is just two months ago when the whole Corona virus… it was not a pandemic at that point. People are well aware of it in the market, they were aware that it was spreading globally. At that point, it was starting to break out in Europe quite a bit. Coronavirus was not something that was unknown like such as, say, a year ago. Just two months later, Sycamore is trying to back out of the deal to the effects of the Coronavirus pandemic. Claiming that the closure of Victoria’s Secret stores skipping a rent payments and furloughing of employees represented a breach of conditions of the acquisition agreement. Now, what Sycamore is is a private equity firm that really tries to buy struggling retail companies, I believe they bought Staples, they have bought Talbots and some other struggling retailers, but it’s really their specialty. Victoria’s Secret has really struggled lately. They have fallen out of touch with shoppers and shoppers, really just shifting away from their overtly sexy imagery and kind of…what would it be unrealistic body types. But what do I know about that? Nonetheless, if we get to the numbers, which I do know about. During the last fiscal fourth quarter of L Brands, same store sales dropped 2 percent.

But Victoria’s Secret, we’re down 10 percent, so you definitely can’t have double digit same store sales declines. The other huge drama that had revolving Victoria’s Secret and L Brands was the company’s founder Les Wexner was tied up in this whole Jeffrey Epstein, criminal court case. So that was another bad stain on the company that they needed to kind of distance themselves away from. So what is happening in this case? Specifically Sycamore arguing in court saying we want to get out of the deal.

However, Delaware law generally requires a target to make a, “reasonable best efforts to operate in its ordinary way as it waits for an agreement to become final” And really, the argument here is, what’s ordinary? If you’re struck by a pandemic and the law requires you to shut down your stores is agreeing with that and doing what the law is telling you to do and doing what your competitors are doing, is that ordinary or not? However, what is going on after Sycamore filed as L Brands sued Sycamore back to try to force them to complete the deal, saying the deal’s terms excluded the private equity firm from using the Coronavirus as a reason to back out. I got a quote here from the L Brands in their 32-page complaint and stated. “The parties agreed that Sycamore would bear the risk of any adverse impact stemming from such a pandemic. The deal’s specific terms expressly carved out any impacts resulting from pandemics”. That is a so-called material adverse effect clause, which really they are not claiming in this case. They are basically saying, look, you then operate an ordinary course. We just won’t close but really, I don’t think Sycamores exactly trying to get out of this deal. I think they are more so just trying to garner a price cut, try to get the asset a bit cheaper. Some additional details of the suit were that L Brands warn Sycamores of what they are going to do. And Sycamore actually agreed, raise no objection with these actions to address the Coronavirus pandemic.

And Sycamore being a retail specialist, they actually were doing similar things with their retail concept, this should not have been at all a surprise. As expected L Brands is seeking a Declaratory Judgment of specific performance to enforce its contractual rights. Basically lawyer talk for forcing Sycamore to close. Ultimately, I think what Sycamores gaming at here a price cut, trying to create a bunch of legal problems and ultimately it will probably result in a price cut. It is really; really difficult to see Sycamore getting out of this deal the way it is Paper up. Nonetheless, I mean the market is certainly concerned. Shares of L Brands fell as much as 20 percent on that news. What are your thoughts on this really interesting situation of a private equity firm backing out of this deal in which was a partnership? I mean, it is only fifty-five percent interest. Certainly this partnership not off to a great start, is it?

Michael Kesslering: No, it certainly is. You really laid out the case here that both sides are trying to make. The one thing that I would add is that L Brands, they will argue that their actions are just in line with what other retail stores are doing. And if they’re able to show that, then it’s likely that this would be proven to be just a course of ordinary course of their business. The original merger agreement, you know, this was in late February, perhaps a secondary argument that they can have is that Sycamore would have already had some knowledge of COVID impacts globally as it was evolving at that point. As you mentioned, it is highly likely that Sycamore is generally just using this as leverage to re-cut the deal. I guess the only other possibility is that although they see it as a very low probability of winning a judgment, that they believe it is worth the effort just because of the velocity of Victoria’s Secret’s deteriorating business model. And the really interesting thing about Victoria’s Secret right now is that they’re just so heavily reliant on in-store sales as they do have a lot of leases on their balance sheet. Their business model is not really well suited for online, but as well, because of that, they are really, really reliant on mall traffic. Those are kind of two areas that have been structurally deteriorating. Once again, that is something that was known prior to anything involving COVID, and the flaws with their underlying business model aren’t really a good excuse to be able to drop out of a merger. But as well, I would just add that, you know, why this is such an important deal to be looking at right now is because it may have some implications for some of the other deals in the retail space. 

Julian Klymochko: Major Implication. 

Michael Kesslering: Yes, you have Tiffany’s, which for full disclosure, we do have a position in as well as the Taubman deal and Delphi deals. 

Julian lymochko: One we just saw Stein Mark deal fall apart, right. They could not meet the credit conditions on the deal and the buyer walked.

Michael Kesslering: Absolutely, so although, you know, our view right now is that Sycamore does not really have much of a case. If that does change, that will have implications and the reverberations will be felt throughout the Merger Arb space.

Julian Klymochko: Yeah, that would suck. That would really suck. 

Michael Kesslering: Certainly. Certainly. 

Julian Klymochko: All right, so really one to watch here is Sycamore and L Brands, Victoria’s Secret. We will continue to monitor that situation. 


Julian Klymochko: We wanted to chat about something we have not seen in a while with a whole Coronavirus led bear market that really took IPO out of the picture. But that IPO window opened back up with Social Capital. Their founder, Chamath Palihapitiya, his SPAC special purpose acquisition company, went public this week in a seven one hundred and twenty million dollar initial public offering. This one was called Social Capital Hedosophia Holdings Corp III, which is, as I indicated, a special purpose acquisition company, a.k.a. SPAC. Initially planning on raising $900 million from a pair of SPACs that are going to go public on March 16th, but as listeners would remember, March 16th was one of the worst stock market days in history, calling it I believe those Black Thursday where the Dow dropped like 13 percent. Obviously they shelf that temporarily. Then, you know, went public about five, six weeks later and this is a popular one because Social Capital first SPAC be the first iteration, the deal that they put together was acquiring Richard Branson’s Virgin Galactic, which trades under the ticker space as SPCE, which is a huge retail speculator favourite. It is one of the most popular trades out there. They are looking to recreate that magic there, so that is an interesting IPO. Seven hundred and twenty million and a SPAC. I am not sure if we have ever seen one that big. This IPO cracking open on Friday, we saw two additional SPAC IPOs, one being CC Neuberger, the other being Chardan HealthCare Acquisition. Those raised three hundred and sixty million and eighty five million, respectively. In addition to that, we did see a biotech IPO. ORIC Pharmaceuticals raised $120 million.

It is really good. What is happening here? It is like during that bear market, we saw no IPO and now you are starting to see them again. Basically indicative that the market’s kind of healing from that like high velocity drawdown that we went through. S&P dropped a peak to trough thirty five percent. TSX was down 38 percent. Had a good bounce back here. Market is up about 25 percent up the loads, and the IPO just indicative that all is well in the market again. It’s not quite full steam, but at least that window’s cracked open such that we can get a good number of IPO is in the market and as firm who conducts back arbitrage, it is great to see some new issues in the market, isn’t it?

Michael Kesslering: Yeah, absolutely. In specific to this area of the market, you know, SPAC. The positive aspect is that this issuance has traded up as well. That will be an indicator to other firms that are looking to SPAC IPOs. That the market there’s healthy demand for these vehicles, but as well they’re likely is pretty good demand from merger ARB funds as well as there has been a decrease in the amount of M&A deals announced. This is an area for Merger Arb funds to look at deploying some of their capital, which is a positive for the SPAC market and equity markets in general, but not really a whole lot to add here. Other than that, I think you gave a pretty good outline of that. You know, SPACs have been one area of the equity markets that still remain strong. I believe there has been almost $4 billion dollars issued so far within SPACs this year. It is a historically bad start for the year. That remains a small, bright spot within the markets here.

Julian Klymochko: Yeah. The other space that’s doing relatively well: large cap growth names like Amazon, Netflix, etc. I also wanted to touch on this ORIC Pharmaceuticals Biotech IPO, which raised $120 Million. Just looking at the stock, it actually traded up 61% on its debut of trading, indicative of our risk appetite coming back into the market, which is great to see because we went through something traumatic. And a lot of times investors are gun-shy and don’t want to participate in the more speculated IPO, but thankfully that’s going away. Hopefully we do see some more issuance here. And, you know, that’s a great thing for Arbitrages as well, getting more SPACs to trade. 


Julian Klymochko: The other thing that I wanted to chat about this week is I put out a blog post a few days ago talking about the rough quarter that private equity had in the first quarter. And by private equity, we’re actually talking about private equity replication through liquid public securities. I also did a webcast on this available on our Website. You want to check that out at accelerateshares.com. Basically talk about this private equity replication strategy which was first discovered and written about by Harvard Business School Professor Eric Stafford in 2015, where he defined private equity replication as levered small cap value investing. It is basically a three factor model and intuitively this model makes sense. If we think about private equity and we define private equity as leveraged buyouts.

Firstly, leveraged buyouts are generally conducted on smaller companies, so significantly smaller than that of the average S&P 500 business. And historically, if you look at academic research, small capitalization stocks have outperformed the market pretty dramatically. This is known as the small-cap anomaly. Secondly, leveraged buyouts are typically executed at lower EBITDA multiples than the S&P 500 and historically, stocks with lower valuations have outperformed, this is known as the value anomaly. 

Third, adding leverage amplify its returns. So when you add debt, you utilize margin, etc. your return has amplified positive or negative. If one were to concoct a formula to generate long-term market beating returns, is private equity formula leveraged small cap value that would really be it. Under this multi-factor approach, using size, value and leverage, our private equity replication formula, under this definition, private equity, that portfolio declined by 37 percent in the first quarter of 2020. It certainly is a risky and volatile strategy and it has suffered a pretty significant drawdown down, much more significant than the overall S&P 500. However, there is a bright spot to touch on here because historically private equity portfolios have had exceptionally strong returns coming out of recessionary bear markets, which we just had.

For example, the U.S. suffered an economic recession from March 2001 until October 2001. Right now, analogous to that, we are going through a recession currently. From the market bottom, in 2001, during this recessionary period, the S&P 500 continued to struggle for several years. However, the private equity replication portfolio had a dramatic bounce back, compounding at double-digit rates of return for a number of years. When you return up 60 percent, the S&P 500 was down six. 3 year, return 50 percent and that’s I believe that is annualized on a five year basis coming out of the 2001 recession. Private equity replication had forty six point four percent annualized return, which is, I believe after that, five years of forty-six percent returns. You are earning nearly a seven-fold return. Meanwhile, S&P 500 hit six percent annualized, so keep that in mind. Then if we go to the last great recession of 2008. Private equity came screaming out of the gates as a measure from the bottom of that last big recession, clocking in on a one-year return of over 160 percent; nearly triple that of the S&P 500. 

And the five years from the bottom in 2008. The S&P 500 had a total return of one hundred seventy five percent, which is good. However, it pales in comparison to private equities. Three hundred one percent return over that five-year timeframe. Private equity replication is a risky, volatile strategy, but it is something that can do exceptionally well coming out of recessionary bear market, which, you know, is something that we could be coming out of right now.

Michael Kesslering: Absolutely. So, Julian, why would someone invest in a product such as this as opposed to just a more traditional private equity fund?

Julian Klymochko: Well, there’s a number of issues with traditional private equity being high fees, 2 and 20, that 2 percent management fee, 20 percent performance fee or carry, which can add up to about 7 percent per year. Private equity replication, you can get at a small fraction of that. Then there is the whole illiquidity. Traditional private equity are typically locked up seven to 10 years or longer to get your money back. 

Private equity replication. You can basically get liquidity, which is good and bad. I mean, you do have to sit through pretty tremendous volatility. Perhaps you will sell at the wrong time. Traditional private equity does lock you up. Then with private equity replication, you do have a lot more transparency, a lot more control over that. That is something to consider and obviously traditional private equity is highly favoured by institutional investors as an asset class due to its historical outperformance. It is something to keep in mind. As you know, you can generate the same returns, significantly lower fees and better liquidity through private equity replication and in this environment. I think it has a really good chance of generating great returns, as we saw coming out of the last two recessions in 2001 and 2008, but I digress. A lot of cool things happen this week. Glad we could share our insights with you on this episode of The Absolute Return Podcast. If you like it, check out more an absolutereturnpodcast.com. That is it for us. Obviously, you should follow us on Twitter. Mike, what is your Twitter handle? 

Michael Kesslering: It is M_Kesslering

Julian Klymochko: And mine is at Julian Klymochko, K-L-Y-M-O-C-H-K-O. Until next week, we wish you all the best in your investing and trading. We will chat with you soon, cheers.

Thanks for tuning in to the Absolute Return Podcast. This episode was brought to you by Accelerate Financial Technologies. Accelerate, because performance matters. Find out more at www.AccelerateShares.com. The views expressed in this podcast to the personal views of the participants and do not reflect the views of Accelerate. No aspect of this podcast constitutes investment legal or tax advice. Opinions expressed in this podcast should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information and opinions in this podcast are based on current market conditions and may fluctuate and change in the future. No representation or warranty expressed or implied is made on behalf of Accelerate as to the accuracy or completeness of the information contained in this podcast. Accelerate does not accept any liability for any direct indirect or consequential loss or damage suffered by any person as a result relying on all or any part of this podcast and any liability is expressly disclaimed.