An excellent article Thursday in the Financial Times, “In the new liquidity factories, buyers must still beware,” by Mohamed El-Erian, the CEO of Harvard Management Company. He explains that a great deal of the liquidity in the markets is created not by the monetary authorities, but by the participants themselves, and works through a simple […]
Read more...Apologies for a light day; some family demands took precedence. Hope to have a more normal series tomorrow. A item in today’s Financial Times, “Unions vow to fight the ‘cancer’ of hedge funds,” may seem to be old news, labor versus capital, but there are some new elements in this story. First, the unions have […]
Read more...In the post above, we discussed how hedge funds’ desire to play financial games like bankruptcy contests by their own rules is backfiring. Not only are they failing to get their way, but their efforts to win special treatment are confirming an increasingly dim view the public has of them. In Friday’s Financial Times, Gillian […]
Read more...Forgive the Financial-Times-heavy series of posts today, but it seems to work out once a week or so that the FT has a lot of good material that isn’t replicated in the US press. John Kay’s comment on private equity funds in Tuesday’s FT is skeptical without being doctrinaire. His big question is whether the […]
Read more...Private equity funds are under fire these days. Their very size and success is starting to work to their disadvantage as the great unwashed public becomes increasingly uncomfortable with their concentration of power. Witness the fact that, in the fight to acquire Texas utility TXU, suitors Texas Pacific and KKR made overtures to environmental groups […]
Read more...A New York Times story by Andrew Ross Sorkin, “Of Private Equity, Politics, and Income Taxes,” discussed pending legislation to change the tax treatment of private equity fees. A post on the blog Conglomerate (which is most assuredly not liberal, I would place it as centrist to somewhat right) has has a series of posts […]
Read more...I trust readers don’t mind the high proportion of Financial Times stories today. You’ve probably figured out that the FT often runs stories that don’t get reported in the US. While the title of this post is a bit of a mouthful, the concept is pretty simple. As you know, the pricing of risky credit […]
Read more...Environmentalists have been cheering that, to win approval of the proposed leveraged buyout of Texas utility TXU Corp., acquirers KKR, Texas Pacific Group, and Goldman Sachs have agreed to drop plans to build 8 of 11 coal-fired electricity plants that TXU had aggressively pursued. According to a story in CNN Money, “Green Groups Strut Their […]
Read more...One thing people in a position of power often have trouble understanding is that it is sometimes necessary to cede a bit of one’s authority to minimize interference in the long run. In that way, you get to choose the concessions you make, and you have the further advantage of looking gracious and cooperative. The […]
Read more...An excellent special report on the prospects for private equity firms in the Economist. In essence, the article says that these firms’ success is beginning to work against them, in the form of concerns about their concentration of economic power, and, due to their large aggregate scale, increasing difficulty of earning superior returns: Last year […]
Read more...We’ve had accounting fraud, pay that seldom bears any relation to performance, and options backdating. And it appears we aren’t done yet. The next bit of CEO malfeasance that is getting a bit more press is that CEOs are working in concert with private equity firms to buy the companies they head on the cheap. […]
Read more...The Financial Times reported yesterday, as its lead story, that a record number of companies had gone private in 2006, lowering the value of listed companies in the US: The value of companies taken private reached record levels in 2006, with New York and London’s stock markets taking the brunt of the $150bn of de-equitisation, […]
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