You can’t always get what you want.

Such is the case with Simplify Asset Management, which has been bidding for ETF issuer USCF Investments and its owner, Marygold Companies, to no avail. Madison Dearborn, a private equity company, disclosed on Sept. 25 a deal to buy Marygold at $2.00 per share, intended to close in the first half of 2027. Days later, Simplify announced that it had offered $2.25 per share, which it then raised to $2.40 per share on Sept. 30. Marygold didn’t accept those offers, but Simplify got its attention.

Simplify’s CEO Paul Kim said he was approached that day by Marygold’s incoming CEO, Tim Rotolo, to gauge his company’s interest in buying USCF, Marygold’s ETF issuer, after the deal with Madison Dearborn closes. ETF Upside viewed text messages and call records that appear to support this.

“Why is somebody selling the business before they’ve actually bought the business?” Kim told ETF Upside. “I think it was a prearranged transaction that was rushed through, and the legal structure was structured so that it checks the bare minimum to get a transaction done, and I don’t think it was a process run to maximize shareholder value.”

Marygold and Madison Dearborn did not respond to requests for comment. Rotolo, who was named as the forthcoming Marygold CEO at the time of the deal’s announcement, declined to comment.

The Price Is(n’t) Right

Price isn’t the only metric by which to measure a deal. Seventy-five percent of Marygold’s shares are held by insiders who have favored the sale. The company said in an announcement that since a majority of the voting power backed the deal, it is not required to respond to alternative offers. “If you go to Simplify, you probably get rolled into their existing business where [with] Madison Dearborn … it seems to me that [Marygold] gets to operate as a standalone entity,” said Neil Bathon, managing partner at Fuse Research Network. “If 75% of the shares are held by people who would vote, which means the vote would go through, the board would take that into consideration.”

Indeed, Kim confirmed that the original idea was to fully merge with Marygold to achieve greater scale. “That’s the ultimate reason: Adding a related business with a lot of real blue-chip tickers into a business that wants to be a larger player in the commodities and alternative space and become more profitable by combining two relatively smaller scale properties into something that becomes a much more scaled and profitable operation,” he said.

If Marygold is also seeing interest in its other businesses (a UK asset manager, a UK financial planner, an American toiletry company and a New Zealand food company), that would also play into their decision-making, Bathon said.

Wheelin’ and Dealin’: Paying $2.00 per share for Marygold, including USCF, is “a steal,” Bathon said. At $2.40, Simplify’s offer is also an attractive price. “I can definitely see why Simplify would want to buy it there, because there’s other business lines [under Marygold] that I’m assuming [Simplify] could spin out,” he said. Simplify would then have to go through the hassle of offloading these businesses that aren’t connected to their world, but “if USCF was stripped out from Marygold as a standalone entity, it’s going to cost them more,” Bathon said.

“It would be worth dealing with the corporate actions of delisting and selling off the non-core pieces, some of which are already starting to be sold off,” Kim said. “I, as well as almost any buyer in this process, basically view the ETF business as a crown jewel, and certainly the only real meaningful part of the business.”

Earlier this month, USCF filed to liquidate five ETFs: The USCF Energy Commodity Strategy Absolute Return, Oil Plus Bitcoin Strategy, Dividend Income, Sustainable Battery Metals Strategy and Gold Strategy Plus Income funds. “It’s a regular business practice these days for firms to start all kinds of products and see what might stick and get rid of them quickly if they don’t build any momentum,” Bathon said.

What’s all the Stripe hype?

The payment processing platform Stripe has generated a lot of IPO excitement since it was reportedly valued at $159 billion earlier this year, even if the company’s executives haven’t indicated they plan on going public anytime soon. Several ETFs give investors access to major payment processing companies like PayPal and their buy-now, pay-later cousins, like Affirm and Klarna. But whether these investments are worthwhile depends on your view of the risks, sources said, as well as the ever-changing ways in which people buy things.

“Buy now, pay later [is] becoming a little bit more popular as a way to fund smaller purchases for younger consumers,” said Christian Magoon, CEO of Amplify ETFs, which has a fund dedicated to online payment companies. “It’s having a moment similar to what credit cards had 20 or 30 years ago.”

Square Dance

Given the Stripe excitement, it makes sense that ETF investors might want access to the companies behind these transactions, which, at least for PayPal, amounted to 25 billion last year. Still, the performance of such funds hasn’t been great this year: Global X’s Fintech ETF (FINX) and Amplify’s Digital Payments ETF (IPAY) are down 18% and 6% year to date, respectively. PayPal’s stock, as well as those of similar companies like Wise and Adyen, is down year to date. “Investors have had access to PayPal for a very long time now, and look how that has turned out,” said Michael Walstedt, founding advisor at Reliant Wealth Advisory. “The company is down 80% from 2021 highs.”

Stripe is an outlier — its current valuation is higher than its previous peak, in 2021. But that may have more to do with the trend of companies staying private longer, Walstedt said. And companies like Klarna, whose stock is down 51% this year, reflect the reality that despite BNPL’s popularity, it can create stress for its users, who tend to be more financially vulnerable.

Block It Off: One positive vision for the future of BNPL stems from its proximity to online transaction infrastructure. These companies are primed to take advantage of the next generation’s spending habits, Magoon said. “Whereas Visa, Mastercard [and] American Express were the disruptors and the up-and-comers 25 to 30 years ago, could this next revolution be the Stripes, the PayPals, the Blocks, the Affirms?” he said. “That’s the bet you’re making when investing in those types of companies.”