I recently listened to Stephen A. Schwarzman talk about why he thinks shares of Blackstone are worth $100+ a share, whereas they're trading for ~$30 a share.
Regardless of whether you have an opinion on BX specifically, what about investing in the stocks of private equity firms, especially when the CEO's of those firms have stated that they have no fiduciary duty to their public shareholders (As many have: Schwarzman for BX, Howard Marks for Oaktree which I know isn't totally a PE firm but whatever, Rubenstein for Carlyle, I would imagine Ackman has said the same thing about Pershing Square.)
The Bull argument on private equity, as I read it: Investors are turned off by private equity firms with significantly complicated financials like Blackstone. However, PE firms add shareholder value and make good business sense, and Blackstone is significantly undervalued. It just suffers from investor prejudice, particularly during bear markets (Blackstone was trading for ~$5 a share back in the 2008/2009 days.)
The Bear argument, as I read it: Private equity is overwhelmingly vampiric, driving up the stock price of acquisitions by publicizing their involvement, sucking new acquisitions dry to pay their dividends and dumping them into bankruptcy when they're husks of their former selves (See Carlyle's involvement in Hawaiian Telecom)
Opinions? Would you buy the publicly available stock of a private equity firm? Will federal reserve rate hikes have a significantly negative impact on the private equity business?
Submitted April 19, 2017 at 10:09PM by DoctorPoopypantz http://ift.tt/2oRiMvH
