Finance Through TV Shows #1 | A Glimpse into the Financial World from 'Billions'

New York. Wall Street. Insider trading. Desire. Power. Money.

This is a showdown between Bobby Axelrod, a billionaire hedge fund titan, and Chuck Rhoades, a federal prosecutor.

Let’s dive into how Axelrod makes financial decisions in Episodes 1 to 3 of Season 1. Watch along and learn!

S1E01 | Know Thy Enemy

At the start, analysts get early wind of a merger: Electric Sun is acquiring Lumetherm at 41 per share, while the stock currently trades at 35 per share. They predict a 17% surge within two weeks post-deal—annualized to 442%. Buying two million shares would position them as major players. Axelrod initially agrees it’s a solid move.

But when he learns the new chairman is Scott Kazawitz, he changes course. A savvy hedge fund mogul doesn’t just crunch numbers—he studies his rivals. Axelrod knows Kazawitz owns a 19.3% stake in Lumetherm, secretly acquired through ties to Southern Wind Energy.

Then, the Thursday noon block trade by Merrill—timed during lunch to avoid attention—tips him off. Fortress Capital was dumping shares pre-merger to cover losses. While analysts saw this, they underestimated Kazawitz’s ruthlessness. The $41 offer? A smokescreen. Kazawitz was propping up Lumetherm temporarily, planning to ditch it—and Southern Wind—once he cashed out.

Axelrod’s call? Short the stock. It plummets to 31.19post−collapse,nettinghim31.19post−collapse,nettinghim18 million. Lesson: Dig deeper than the data.

Finance 101

Hedging (Hedge): Reducing investment risk by taking offsetting positions. It balances potential losses in one asset with gains in another.

Hedge Fund: A high-risk, high-reward investment pool using derivatives, leverage, and unconventional strategies to maximize returns.

S1E01 | Calculated Moves

Two analysts clash over Superior Auto: Long or short?

• Analyst A (Long): Aluminum wheels are replacing steel. Factory data suggests mass production.

  

• Analyst B (Short): Overproduction will glut the market. Stock tanks.

Axelrod spots Analyst B’s knowing smile—insider intel. He shorts it.

Key takeaway: Timely, exclusive information trumps all.

Finance 101

Options (Option): Contracts granting the right (not obligation) to buy/sell an asset at a set price by a certain date.

• Long (Buy): Pay a premium for rights (call/put).

• Short (Sell): Collect premium, assume obligation.

• Call: Bet on price rising.

• Put: Bet on price falling.

Four basic option trades:

1. Long Call: Unlimited upside if price surges.

2. Long Put: Profit if price crashes (max: strike - premium).

3. Short Call: Earn premium if price stays below strike.

4. Short Put: Earn premium if price stays above strike.

S1E02 | Frenemies

Axelrod deflects Chuck’s scrutiny by tipping off a journalist: Investigate Steven Birch’s suspicious swaps timing.

One moment, he’s toasting Birch at dinner; the next, he’s throwing him under the bus. In finance, alliances shift with interests.

Finance 101

Derivatives: Financial contracts deriving value from an underlying asset (high leverage, high risk).

Common types:

• Forward: Custom agreement to trade at a future price (private, high default risk).

• Futures: Standardized forward contract (exchange-traded).

• Swap: Agreement to exchange cash flows (e.g., interest rates).

• Option: Right to buy/sell (call/put).

• Credit Default Swap (CDS): Insurance against bond defaults.

Next Up in "Finance Through TV Shows #2"…

Inspired to conquer finance like Axelrod? Start with KWHS Wharton Investment Competition—the premier virtual stock sim for high schoolers, hosted by UPenn’s Wharton School.

Blossom’s KWHS prep series is coming soon!

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