Sunday, June 17, 2018

Pardon Michael Milken for Redemption of PEU Class

Convicted financial manipulator Michael Milken hosts the American version of Davos, thus he rubs elbows with insiders of the American branded Government-Corporate Monstrosity.  As a thought leader of our "greed is great" economy where the spoils go to a select few, Milken is missing but one thing.  It's the right to return to his former playground, which morphed from leveraged buyouts to private equity.

Those close to President Donald Trump are reportedly pushing the idea of pardoning Michael Milken, the junk-bond king who personified the 1980s buy-and-destroy era.

Bloomberg News reports that support for pardoning Milken is coming from Trump confidants including Treasury Secretary Steven Mnuchin, former White House spokesman Anthony Scaramucci, son-in-law Jared Kushner and attorney Rudy Giuliani, who prosecuted Milken when he was U.S. attorney in the late 1980s.

Sponsors of Milken's 2018 conference include Apollo (Leon Black), Ares Capital, Bain Capital, Blue Mountain Capital, Citadel, CVC Partners, Generation Investment Management (Al Gore), Leonard Green Partners, Moelis, and TCW (Carlyle Group affiliate).  The conference underwriter was WorldQuant.

The buy, bleed and flip era is here thanks to private equity underwriters.  They would love to have their founder rehabilitated.

President Trump is just the man to rewrite Milken's history of harm.   Trump is the great salesman, the P. T. Barnum for the greed and leverage boys. 

He rehabbed the Kushner name with its interesting history

Jared’s father, Charles, spent 14 months in federal prison for tax evasion and witness tampering connected to a blackmail scheme against his sister’s husband. Jared’s sister, Nicole Meyer, is under federal investigation after promoting her family’s connections to the White House while soliciting Chinese investors for a pair of luxury apartment towers Kushner Cos. is building in Jersey City.
Jared and Ivanka spoke at a Milken Institute event on December 8, 2014.  The event was billed as a conversation with the couple, who are now key White House advisors.

I suggest a huge statue of Michael Milken be erected on the Washington Mall.  He is that foundational to our current leadership in business, the White House and Congress.

Thursday, June 14, 2018

Healthcare Ground Zero for PEU Flippers

America's absurdly expensive healthcare system is the latest target for private equity underwriters (PEU).  The greed and leverage boys  have doctors offices, hospices, home health agencies and specialty hospitals in their sites.  With each buyout private equity underwriters saddle healthcare companies with greater levels of debt. 

Their management practices focus on maximizing revenues to pay higher interest costs, management fees and pass cash to the PEU sponsor. 

Take KKR with its recent $10 billion deal for Envision Healthcare, a provider of emergency medicine physicians.  This comes on top of KKR's 2017 buyout of WebMD, an online provider of medical information, and a stake in PharMerica Corporation.

TPG Capital and Welsh, Carson, Anderson & Stowe will partner with Humana to buy Kindred Healthcare's home health, hospice and community care division, formerly known as Gentiva.  The two private equity firms will buy Kindred's specialty hospital division with its long term acute care hospitals and rehabilitation assets, both inpatient and outpatient.  Kindred had $3.2 billion in debt before the buyout.  It remains to be seen how much additional debt will be added after deal close.  

Ex Medicare Chief Tom Scully is a partner with WCAS and knows the healthcare tea leaves, especially under a Republican administration.  He has insights into reimbursement for all of Kindred's post acute care portfolio and WCAS plans to make big money off Kindred's pieces/parts.  

PEU greed will not solve the ills of America's dysfunctional healthcare system.  It is the plague that will cause widespread harm to countless citizens, through suboptimization of care and pirating of resources in an attempt to fill an insatiable desire for money.

Sunday, June 3, 2018

Employees to Leave Shuttered Toys R Us with No Severance

The PEU boys reneged on employee severance pay mostly because they don't care about the little people.  Cash goes to sponsor via management fees, deal fees and dividend bleeding.  None is left for the hardworking people who've spent their career at Toys R. Us.  However, just before declaring bankruptcy Toys R Us paid executives $8 million in bonuses.

Employees reached out to Robert Menendez and Cory Booker for help.  That pair may toss Toys R Us employees an anchor.  Blue Team corporacrats work for the sponsors of the world, not the common man.. 

Update 6-19-18:  The Atlantic weighed in on the PEU stain left by the Toys R' Us bankruptcy.

Wednesday, May 30, 2018

Corporate Apology Tour: Wells Fargo, Facebook and Uber

Recent commercials for Wells Fargo, Facebook and Uber attempted to wipe egg off each company's corporate face.  Wells Fargo promised to get back to their roots.

Wells Fargo’s problems took root more than a decade ago, when the bank started pushing employees to sell as many products as possible to customers.  Since then, Wells Fargo has discovered other issues with auto loans, mortgages, frozen funds and improperly closed accounts and has faced a number of other regulatory probes and litigation. 
In PEU like fashion greedy management wanted more and more at Wells Fargo, Facebook and Uber. 

Facebook's issues, meanwhile, have also been well publicized, ranging from the spread of fake news within its walls, the mammoth Cambridge Analytica scandal and questions over how Russian bots used the platform to manipulate democracy. 
Facebook also made promises after monetizing customer information:

"Facebook will do more to keep you safe and protect your privacy." Spam, clickbait, fake news and "data misuse" are all cited specifically as things that are going to change.
Uber had problems of its own.

At the start of 2017, a scathing memo exposed a toxic workplace where sexual harassment and discrimination was openly ignored (leading to the abrupt exit of its former chief executive, Travis Kalanick, along with several other executives). It also attempted to cover up a massive data breach affecting over 50 million users.

In addition, the firm faced issues over its license in London, had an internal spy unit exposed, and has been the subject of government investigations on both sides of the Atlantic, as well as repeatedly fighting lawsuits to limit the rights of its drivers.
Uber's ads promise to do better.  Warren Buffett offered $3 billion for a stake in Uber but a deal could not be finalized.  Buffett's capital allocation focus has much in common with private equity underwriters. 

The three ethically dodgy companies have spent over $60 million to "earn back trust" from customers and the public.  Widespread mea culpas bodes ill for leadership.  The ethical version would prevent the intentional harm, financial or personal, of employees and customers.  Greed is pervasive in our world. 

Tuesday, May 29, 2018

Rubenstein Launches Declaration Capital

Investment News reported:

When Mr. Rubenstein, 68, named his family office, he dubbed it Declaration Capital. He created the firm last year as he stepped back from his role as co-chief executive officer of Carlyle and became co-executive chairman.

The former White House staffer who became a leveraged-buyout legend will directly oversee Declaration Capital. He's also funded an affiliate called Declaration Partners, which has wider ambitions.

The staff includes Mr. Rubenstein's daughter, Alexa Rachlin.  Family offices are increasingly common for the ultra-wealthy to manage their fortunes and take care of their personal needs.

Declaration has completed about 10 deals, a person with knowledge of the matter said.
The former Mrs. Rubenstein said her husband only cared about money.  Since David Rubenstein signed the giving pledge I wonder what daughter Alexa Rachlin will do when more than half her father's money is given away to charity.  Maybe she'll share a little of the remainder with her mother.

Saturday, May 26, 2018

People Throw Money at Carlyle Chief

Carlyle Group co-founder David Rubenstein remarked on the current fundraising environment, calling it the easiest in thirty years.  His comment echoed reports from earlier this year. 

Step right up folks, cheap debt, low taxes, management fees, dividend recaps, rising leverage...There's no end to the good times!  
Private equity underwriters run the greatest show on earth.  When the show ends ladies and gentlemen, this way to the great egress.

Wednesday, May 23, 2018

CPA Commits Medical Fraud for PEU like Returns

A Dallas area hospice owner committed medical fraud to the tune of $60 million according to a federal indictment.  Novus administrator Bradley Harris is a certified public accountant.  He did more than fraudulently bill for hospice services.  CPA Harris wrote physician orders for controlled substances and prescribed those at a level that caused patient deaths.  He did this in order to grow his company so he could flip it for a huge profit.

His nefarious means went toward a very familiar end, one Michael Milken, David Rubenstein and Stephen Schwarzman have pursued.  The Carlyle Group reached a number of settlements for untoward behavior, Synagro (bribe), Semgroup (fraud), LifeCare Hospitals (patient deaths), ARINC (lofty bribe) and was on the road to a federal fraud charge with ManorCare until the case was dropped.

PEU buyouts are now epidemic in healthcare.  Sponsors want to sell new affiliates at a profit after loading them with debt, charging annual management fees and pulling cash via dividends/special distributions.

The greed and leverage boys will not make our healthcare system more affordable.  They may not kill people directly like Mr. Harris, but they will prioritize returns over actual care, causing suffering and premature death.