Friday, January 27, 2023

BS Earnings for Q4

Institutional investors want out of 7% of Blackstone Property Partners.  However, corporate private equity gained 3.8%. 

Its opportunistic and core real estate funds depreciated by 2% and 1.5%, respectively. Secondary funds fell 1.8% while corporate private equity and private credit funds gained 3.8% and 2.4%, respectively.
Word was that private equity lagged, i.e. lowered more slowly than the public market.  Some may have expected lower equity pricing to show for the greed and leverage boys in Q4.  Not so for Blackstone.

Thursday, January 26, 2023

Rubenstein Interviewed RLJ in Palm Beach

Carlyle Group co-founder interviewed Robert L. Johnson in Palm Beach the day before Thanksgiving for Bloomberg.  (President Joe Biden was at Rubenstein's Nantucket estate while the RLJ interview occurred).

Host Rubenstein actually acknowledged his firm's investment in Johnson's private equity firm.  The pair covered Johnson's history with BET and the Charlotte Bobcats before discussing owning the Washington Football Team.

Johnson said giving money to politicians is "part of the game" but finds the political appointment system as "lacking integrity."  Both men are policy making billionaires and have access to elected officials.

Flashback to 2007 when I reported that President George W. Bush served on the board of Carlyle affiliate CaterAir and called billionaire Johnson a "community banker."

The game continues with its lack of integrity.  Thank you Mr. Johnson for reminding us.

Wednesday, January 25, 2023

Gravity Exists for Levered Equity

Bloomberg noted that gravity still applies to levered equity.  Gravity in public markets has been more severe.  Think of private equity underwriters (PEU) as the Hudson Bay of finance.  CondeNast reported:

Gravity isn’t uniform all over the Earth’s surface. It’s a result of mass, which means the varying density of the Earth at different locations can affect how much you weigh there. Canadians aren’t all free-floating like Sandra Bullock, but the effect is definitely measurable. In the Hudson Bay region, the average resident weighs about a tenth of an ounce less than they would weigh elsewhere.

Private equity sponsors load affiliates with debt, deal fees and management fees.  The greed and leverage boys use nonstandard measures to juice performance numbers.

How all this plays out remains to be seen, however the reckoning awaits.  

Update 1-27-23:  Institutional investors want out of 7% of Blackstone Property Partners.  However, corporate private equity gained 3.8%. 

Its opportunistic and core real estate funds depreciated by 2% and 1.5%, respectively. Secondary funds fell 1.8% while corporate private equity and private credit funds gained 3.8% and 2.4%, respectively.

Gravity still works much slower in PEU land.

Tuesday, January 24, 2023

Joe Biden Loves PEUs: Zients, Rubenstein and son Hunter

President Joe Biden loves private equity underwriters (PEUs) and one is his son Hunter.  

Carlyle Group co-founder David Rubenstein met with Hunter Biden (Rosemont Realty), his dad and Jeff Zients (Cranemere Group, Portfolio Logic LLC) in February 2016.

During the first meeting — which took place on Feb. 12, 2016 — Jeff Zients, Hunter Biden, then-Vice President Biden met with David Rubenstein, a billionaire and founder of hundred-billion-dollar asset management firm The Carlye Group.

PEU Jeff Zients is expected to be President Biden's next Chief of Staff .  Hunter Biden served on the Advisory Board of Rosemont Capital's Realty arm and the Board of Ukrainian gas company Burisma

Then Vice President Joe Biden's PEU love is evident in this 2016 meeting.  He showed it once he became President with his many PEU cabinet appointments.  Now Biden stands to show it again by replacing PEU Chief of Staff Ron Klain with PEU Chief of Staff Jeff Zients.

Hunter's next two meetings with Zients included David G. Bradley who has a history of flipping companies.  Bradley sold GovExec to a private equity firm in March 2020.

Zients possible appointment as White House Chief of Staff has been all over the news, except Gov Exec.

The final PEU to meet with Hunter and Zients is Eric Lander (F Prime Capital).  The Hunter Biden laptop is a useful tool in playing follow the PEU.  It's the way the U.S. does business.

Politicians Red and Blue love PEU and increasingly, more are one.

Santos Met Epstein at PEU Conference

The George Santos insanity tour continues with his statement that he met Jeffrey Epstein.

"I met Epstein in a couple of private equity conferences," Santos said on the conservative podcast "The Rory Sauter Show" in August 2020. "I've never dealt with him personally, but I've met him, I've seen him."

Jeffrey Epstein was arrested in July 2019 and found dead in his jail cell the next month.  Epstein died before digital private equity underwriter Harbor City Capital employed Santos.

Harbor City Capital, reportedly hired Santos in 2020 to recruit investors, and he secured at least one investment in the six-figure range. 

Harbor City Capital was accused of being a ponzi scheme by the SEC.  Santos worked for the firm in 2020 and 2021.  An investor who relied on Santos' representations filed a complaint with the SEC.

Santos "claimed almost no assets or income" in 2020 in his personal financial disclosure for his first Congressional campaign.  It's hard to believe a man with almost no assets or income in 2020 attended private equity conferences when Epstein was alive and working for Apollo founder Leon Black.

What's a little political puffery between PEUs?

Monday, January 23, 2023

Biden Chief of Staff: PEU to PEU

President Biden will change his Chief of Staff in the near future.  Current Chief of Staff Ron Klain (Revolution LLC) will be replaced by Jeff Zients (The Cranemere Group and Portfolio Logic LLC).  Biden will go from one private equity underwriter (PEU) to another.  

Zients left PEU Cranemere to join the Biden White House.   

The Cranemere Group Ltd.

Prior to (joining) Cranemere (as CEO), Jeff served as the Director of President Obama’s National Economic Council. Jeff previously served as the acting director of the Office of Management and Budget and also was responsible for the technology turnaround of Before serving in Government, Jeff served as the Chairman, CEO, and COO of the Advisory Board Company and Chairman of the Corporate Executive Board. During his tenure, these companies created more than $2 billion in equity value for shareholders. Jeff also founded Portfolio Logic, an investment firm focused on healthcare and business services, serving on several portfolio company boards. With his wife Mary, he was part of the founding group of the Urban Alliance Foundation which provides economically disadvantaged youth with job training.

An SEC filing on the Pediatric Services of America (PSA) buyout showed Zients role with Portfolio Logic.  Four of the five signatures on the deal were Zients.

About Portfolio Logic LLC 

Portfolio Logic, a Washington, D.C.-based investment firm, primarily focuses on healthcare and business services companies. Jeffrey D. Zients, Managing Partner, previously served as Chairman of both The Corporate Executive Board and The Advisory Board, two successful business-to-business content companies serving these industries.

Portfolio Logic bought out PSA in 2007.

A 2015 Justice Department settlement with PSA stated:

The U.S. Attorney's Office announced that Pediatric Services of America Healthcare, Pediatric Services of America, Inc., Pediatric Healthcare, Inc., Pediatric Home Nursing Services (collectively, "PSA"), and Portfolio Logic, LLC agreed to pay $6.88 million ($6,882,387) to resolve allegations that PSA, a provider of home nursing services to medically fragile children, knowingly (1) failed to disclose and return overpayments that it received from federal health care programs such as Medicare and Medicaid, (2) submitted claims under the Georgia Pediatric Program for home nursing care without documenting the requisite monthly supervisory visits by a registered nurse, and (3) submitted claims to federal health care programs that overstated the length of time their staff had provided services, which resulted in PSA being overpaid.

And the reason private equity firms keep buying healthcare companies?  PPACA (Obamacare) designer Nancy-Ann Deparle was a PEU.  She received payments for residual private equity holdings that were not declared on her financial filings.  Senator Rick Scott (Red Team) did his best to hide his PEU healthcare holdings.

Flashback to 2006 when Zients was trying to buy the Washington Nationals:

Jeffrey D. Zients may work full time on his bid to buy the Washington Nationals, but in the past year he has taken some swings at the private equity business.

The Nationals are currently being pursued by fellow PEU and Carlyle Group co-founder David Rubenstein.

Politicians Red and Blue love PEU and increasingly, more are one.  They need continued access to Uncle Sam's wallet and "Just Us politically connected PEUs" Department.  The Biden cabinet is chock full of former PEUs.

The question is how many undisclosed residual PEU investments does Zients have?  How many residual PEU investments remain undisclosed on the wider Biden cabinet?  

Health reformer DeParle returned to her PEU roots.  Will Ron Klain do the same?

Update:  Zients started another PEU, Capital Logic Partners with friend John K. Delaney:

Capital Logic Partners was a private equity firm that was based in Washington, District of Columbia. The firm focused on small and middle market equity investments in manufacturing and service industries.

Update 1-24-23:   Zeints met with then Vice President Joe Biden, Hunter Biden and David Rubenstein in February 2016.  It was VP Joe and the PEU boys, one of them his.

"If shame were still operative in the modern politics of America" then Zeints would not replace Klain and the Biden Cabinet would have public servants without PEU ties. 

Sunday, January 22, 2023

These Are the Days in Davos

Microsoft executives had their Marie Antoinette moment in the Swiss Alps, courtesy of a Sting concert.  It happened the day before announcing 10,000 employees would lose their jobs.  

I'm sure many more have lost faith in corporate leadership.  The move may have driven some workers mad.  These are the days at the World Inequality Forum in Davos, Switzerland. 

Update:  A fired Google engineer said tech giants view staff as 100% disposable.   That stings.

Update 1-24-23:  Microsoft execs must have missed the WEF podcast on generous listening.