We Made an SEC Private Equity Whistleblower Filing
We made an SEC whistleblower filing based on an astonishing admission by a private equity firm, Riverside Partners.
Read more...Category Archives: Investment management
Carlyle’s Private Equity Secrecy Overreach
Carlyle pushed a private equity investor to redact large sections of a private equity agreement before releasing it. You can see those redactions exposed.
Read more...Rajiv Sethi: Spoofing in an Algorithmic Ecosystem
A London trader recently charged with price manipulation appears to have been using a strategy designed to trigger high-frequency trading algorithms. Whether he used an algorithm himself is beside the point: he made money because the market is dominated by computer programs responding rapidly to incoming market data, and he understood the basic logic of their structure.
Read more...Investors Like CalPERS and New York City in the Dark About Private Equity Fees
This anodyne-seeming section from a video at Privcap on The Future-Proof LPA [Limited Partnership Agreement] contains a real bombshell
Read more...Belvedere Management: Massive Criminal Enterprise or Defamed Fund Manager?
David Marchant says Belvedere Management is a “Massive Criminal Enterprise”. Has he gone mad, or hit the investigative journo’s jackpot?
Read more...Rob Parenteau: Draghi’s Doom Loop(s) – More Than Just the Euthanasia of the Rentiers
Draghi’s Doom Loop(s): why the ECB’s QE, combined with negative deposit rates, could set a 1987 style crash for bonds in motion.
Read more...Ilargi: Warren Buffett is Everything That’s Wrong With America
I’m sure readers can add to this antidote to the pervasive Warren Buffett hagiography in American media. For instance, Buffett lavishes praise on the executives of Wells Fargo, when Wells engages in abusive servicing (see here and here for examples). So Buffett is part of the cohort that has held bank leaders as competent and deserving of their leadership roles, which serves to hide the fact that a big chunk of industry profits rests on predatory behavior, like gotcha terms in checking accounts and credit cards.
Read more...Los Angeles Pension Fund Gives Up to $40 Million Approval Authority to Hopelessly Conflicted Consultant, Hamilton Lane
It often seems hard to fathom is how supposedly sophisticated investors like public and private investment funds give private equity firms so much discretion with inadequate oversight and controls. Try as they might, it is impossible for limited partners to find seasoned advisors, such as pension fund consultants and attorneys, who are not beholden to private equity sources of income.
We’ll look at a case study today, that of a top pension fund consultant and one of its clients, the Los Angeles City Employees’ Retirement System, or LACERS. As you will see, the Hamilton Lane reports do not contain sufficient business and financial analysis for a potential investor to make a reasoned decision whether to risk a substantial equity investment. Their role is to provide due diligence theater.
Read more...The Retirement Crisis
This interview, with Teresa Ghilarducci, who the Wall Street Journal called “the most dangerous woman in America,” discusses how and why pensions are under stress, and what can be done to fix them. While she agrees that the retirement crisis is real, she also argues that it is eminently fixable, particularly since there really is no free lunch. The alternative, of widespread poverty among the aged, also imposes costs on government and society.
Read more...Releasing Private Equity Limited Partnership Agreements from Carlyle and Grosvenor
We are adding two new private equity limited partnership agreements to our document trove, bringing the total to 23.
Read more...CalPERS Board Discussion of Fees Exposes Naivete, Misguided Aim of Fee Reduction Effort
Today, the Financial Times has a prominent article on how the giant public pension fund and private equity investing heavyweight CalPERS has a new push on to reduce the fees that it pays to private equity firms.
This would all be salutary, except that a board meeting in December exposed that CalPERS’s staff has an unduly narrow conceptualization of the charges that private equity firms are taking out of the companies that they buy with the funds of limited partners like CalPERS. As a result, this effort demonstrates how badly captured the limited partners like CalPERS are. They passively accept the parameters set by the general partners and ask for concessions only within that framework, rather than demanding entirely new arrangements in light of well-publicized abuses and gaping shortcomings in transparency and accountability.
Read more...Michael Hudson: The War on Pensions – The US Budget Anti-Pension Law
On the Senate’s last day in session in December, it approved the government’s $1.1 trillion budget for coming fiscal year.
Few people realize how radical the new U.S. budget law was. Budget laws are supposed to decide simply what to fund and what to cut. A budget is not supposed to make new law, or to rewrite the law. But that is what happened, and it was radical.
Read more...Blowback from Oil Price War: Sovereign Wealth Funds Selling Investments
While there has been ample discussion the impact of falling oil prices on the national budgets of major oil producing nations, there’s been less media focus on how some of the countries that face budget squeezes are likely to react.
Consider what a difference nine days makes. Moody’s gave six Middle Eastern countries a thumbs up on December 8, based on the assumption that oil prices will average $80 to $85 a barrel in 2015. With WTI now at $55.33, it appears reasonable to assume a price of $60 or below for the first half of 2015. The consensus is that production cuts will lead to much firmer prices in the final two quarters,* but $70 a barrel would now seem a more reasonable forecast for the year.
Here is the money part of the Moody’s assessment (emphasis ours):
Read more...CalPERS Lowering Private Equity Benchmark to Justify Crappy Performance
It’s remarkable to see the lengths to which CalPERS will go to defend its loyalty to investments strategies that don’t deliver adequate returns relative to their risks. Hedge funds were a long-standing old example, and the new one is private equity.
Read more...Wolf Richter: Treasury Warns of Leveraged Loan Risk
Yves here. Wolf provides a detailed and informative account of a new report by the Office of Financial Research on the risk of leveraged loans. The big finding is they don’t like what they are seeing. And on top of that, part of their nervousness results from the fact that the ultimate holders of leveraged loans are typically part of the shadow banking system, such as ETFs, and thus beyond the reach of bank regulators.
Because these loans were issued at remarkably low interest rates, they aren’t a source of stress. But as their credit quality decays (recall quite a few were made in the energy sector) and/or interest rates rise (the Fed is making noises again), investors in mutual funds and ETFs will show mark to market losses that could well be hefty. Any bank with large amounts of unsold inventory would also be exposed; query whether regulators will let them fudge by moving them to “hold to maturity” portfolios.
Oh, and what is the biggest source of leveraged loans? Private equity funds when they acquire or add more gearing to portfolio companies.
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