Basicaly, the Private Equity guys became trend followers, and not contrarians. When you have that much money at your disposal, you should never pay ‘UP’, you should be modelling and researching broken companies and industries, waiting and thinking. Those of us with little money should be doing what they were doing. All they did in this cycle was make the trend more pronounced and end many great stock runs with an exclamation point…to the upside (thank-you very much).
By the way – I love the New York Times. Love it more now that it is free. The design is so easy on the eyes. Best on the web to get you reading below the fold.
This week in New York more people than ever in the ‘biz’ told me I should be reading Dealbook. Than I met Andrew at an IAC Founders party. Thanks Dina for the invite. Andrew created it. He now has a pretty cool freaking job. He is funny and smart and I am happy he respects ‘off the record’ at least so far .
I don’t know about that middle name thing…but it is the ‘Times’.
Would it not be sweet to see the bear market contained to homebuilder, mortgage and housing stocks. It would be nice to see the idiotic private equity guys leave the rest of the world alone while they figure out what to by there. I just want a few months of peace from them, the brokers and homebuilders anyway.
While Cramer and CNBC try to get your interest rate down 1 percent, the stories with REAL growth sneak right along.
Priceline has been en fuego (I thought they did not exist anymore ). Shatner won’t die !
Amazon – checkamundo
Ebay – Rocking – not sure why
Blue Nile – oh my!
Google – search me
Baidu -Find shit in China
No wonder Cisco and Juniper are on fire.
Back to Yahoo – Yahoo is still in the doldrums, but anything could happen. Maybe the private equity guys will make a move into the internet musiness and surprise a few people.
Yes I am reminded of the line from “Wayne’s World” on days like today. The world is indeed upside down.
I thought Private Equity guys had tons of ANALists in back rooms crunching numbers. The goal being to find cheap stuff, that no one understood, steal the conmpany at a time of turmoil, fix the company, and ride out big gains before an exit. Like buying Hilton after 9/11 in the low teens. Maybe in 2003 in the low 20’s.
Not today I guess. Now, they surf the all-time high list, figure out how to structure wicked fees and than flip to a foreigner in a momentum fund sort of way.
I am a simple trend follower and Hilton (HLT) was already flashing a BUY as it was hitting all-time highs recently. I have no staff. I have a widget for this. At Wallstrip , we covered Morgan Hotels as a play on the Hotel Space. Increased travel and a cheap dollar have definitely helped this trend. Blackstone is betting on surging real real estate prices continuing, a continuing cheap dollar and no travel hiccups. A risky bet I think after such a great run. Time will tell.
I would hope that if I had enough money to give to Private equity Firms, that this was not the best deal they could find today. I am not saying that Hilton is not worth $100/share per se, it’s just that I would expect Private equity forms, especially one that is supposed to be ‘the best’, to focus on a different list than me.
Morgan Hotels is up 5 percent on the Hilton News, so I am happy they are not .
I am just an entrepreneur, investor and consumer so the US Dollar slide has been ‘beddy beddy’ good to me.
As an entrepreneur, there is massive deflation in startup costs. Let’s just call that one GOOD. Shit…GREAT!
As an investor, the massive printing of money has surely crowded the private equity market of late, but I am a small investor and a rising tide lifts all/most boats. I will call that good (at least for me), but dangerous. I believe it’s dangerous because it is inevitable to make way more of my investment choices expensive. I have too much education for me to be comfortable with that, even as a trend follower. Maybe this time it’s different .
As a US consumer that consumes way too much, it has been SPECTACULICIOUS because I have been fortunate enough to be able to afford the fuel increases, travel and leisure cost increases and food price increases and buy more basic goods at lower prices because of the whole ‘China Thing’. A trip to London would probably change my opinion of what is affordable.
Back to the investor thing…who is making the real MONEY off this trade? Can it and/or will it continue?
Today the Canadian Dollar rose to 92 cents. You Americans could care less. Where the hell is Canada on the map anyways. The trend followers have been printing money. There is money in this trade still. The decline may well accelerate. I posted on the trade in February and it has been a good one. With oil still likely to go much higher, the Canadian dollar should follow suit. A simple view, but one I believe in.
The US Dollar is so weak that even tiny Israel has seen their currency – The Shekel – rise to 15 year highs against the US Dollar. It can’t be oil, Israel is the only country in the region without it. The investor in me considers this a wacky thing considering the daily danger of having most of your neighbors hating you. Seems like the last currency I would want to own on a fundamental basis.
While most of the world’s currency are rising sharply against the US dollar, the Chinese Wan stands relatively still. How? Why? Should we care? The ‘experts’ will tell you we should care. The manipulation is masking the deterioration and stress on the financial system. They say something has to give. I tend to agree with the experts, but when?
My ‘tell’ is oil. As oil prices stay strong, there is mucho stress on the system. The price of oil is priced in US Dollars so we are seing a rise in price for sure, but not nearly what it could be. I still consider it cheap and us lucky so far. The Europeans have had a strong Euro so the big price increase has been in US dollar pricing and their currency appreciation has masked the price increase. I don’t trust that one at all, but a trend is a trend.
In China something has to give. By keeping the Wan closely pegged to the dollar, the rising price of oil will surely work it’s way into higher prices for Chinese goods. So far, the ‘forces’ have kept this one at bay.
I thought Hellman and Friedman was mayonnaise until this morning.
As it turns out, these guys offer Private Equity wannabees a case study in Private Equity in technology. My wife thought Kevin Rose was cute (see previous post), but I think these dudes are hot and unlike Kevin…for sure Jewish . For you stock bears, it shows another reason why the dips will get bought.
Bulls and Private Equity dudes will be further emboldened by the Doubleclick deal.
It emboldens my belief that those with an audience will attract brands in a new branding cycle where those brands with cool messages will spend oodles of money across the web rather than on TV. This cycle is third inning while the stock analysts and bears whine about valuations and a bubble in ad spending. I like the web content trade more than ever.
Disclosure – long Wallstrip, howardlindzon.com and my blogroll
When yeoman farmers sent their savings to banks in London and Glasgow and Paris, they had to be able to count on it not being stolen. That was what allowed capital to be accumulated and deployed, and for the entire world economy to take off.
When I see what the top dogs at all too many corporations are now doing to that trust, I feel queasy. Outrageous — yes, obscene — pay. Greedy backdating of stock options, which in my opinion is straight-up theft. Managers buying assets from their trustors, the stockholders, at pennies on the dollar, then forestalling competing bids with lockups and insane breakup fees.
These misdeeds and many, many more are hammer blows at the granite foundation of trust we built in the 1940s and ’50s. How long democratic capitalism can survive these blows before it gives in and gives birth to revolution or to an out-and-out aristocracy, I am not sure.
We are killing ourselves with the shennanigans.
Is the answer putting Steve Job’s in prison for options backdating? Not sure. Killing all the private equity suits…maybe . Time will tell. In the meantime, it is wise to take more responsibility with your hard earned money.
FreePort (FCX) is being bought out at BIG all-time highs and Equity Office Properties (EOP) the same, proving once again that the biggest trend followers on Wall Street are dealmakers and the investment bankers.
It is too early to tell whether they are stupid prices, but surely both companies could have been had 2-3 years ago at fractions of their cost. So who really is a trend follower and why pay up?
I have to be honest, the bankers suck. They have the analysts, resources, information – the connections to get these deals done at better prices but instead of doing their job, they have become order followers of ego driven corporate management teams.
They see industries and stocks on the rise and they pay up. Chase Manhattan is my favorite bank because they are not ashamed of what the do and have taken the name . They Chase clients, accounts and deals.
Of course there are some smart private equity guys, but they do homework. They look for deals and give the marching orders to banks.
Banks are too lazy and poorly structured to find great new ideas because they are chasing industries on the move. They have become momentum hedge funds that make stocks overshoot on the upside and overshoot on the downside.
Until something changes, trends will take prices higher much faster and the same in reverse. It is a good time to be a trend follower despite the low volatility.
No wonder the Private Equity market has exploded in the last 5 years.
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