Sunday, July 28, 2013

Personal Income Implodes

Zero Hedge posted this chart, which supports my long stated observation on the global race to the bottom on wages and benefits, which impacts disposable personal income.  This is also the time period where private equity underwriters (PEU's) became ubiquitous. 

On this timeline PEU greed hallowed out the economy

Donald Graham Owns 40% of WaPo

Donald Graham's 2.9 million shares in The Washington Post give him roughly 40% ownership of the company.  The SEC filing stated:

Percent of Class Represented = 39.5%

Calculated based on 7,341,602 shares of Class B Common Stock outstanding 6,202,149 shares reported by the Company as outstanding on May 3, 2013 plus 1,139,453 shares issuable upon conversion of Class A Common Stock beneficially owned by Mr. Graham, share for share, into Class B Common Stock)

Graham's WaPo just invested in Forney, a manufacturer of industrial burners.  What did Graham learn in Watford in Hertfordshire that leads him to believe the globe burns for industrial flame?  Graham says it's an attractive return investment for the Post, nothing more.  I smell a PEU.

Saturday, July 27, 2013

Wainstein's Path Aided PEU's

Kenneth Wainstein, a 1984 University of Virginia graduate, served the public in several high profile roles under President George W. Bush.  Wainstein wrote the Attorney General opinion that greatly expanded NSA searches to U.S. citizens.

The procedures "would clarify that the National Security Agency (NSA) may analyze communications metadata associated with United States persons and persons believed to be in the United States", Wainstein wrote.

This provided security contractors, like Booz Allen Hamilton, the opportunity to make billions off the federal government.

Contrast Wainstein's letter with UVA founder Thomas Jefferson's statement:

"As revolutionary instruments (when nothing but revolution will cure the evils of the State) [secret societies] are necessary and indispensable, and the right to use them is inalienable by the people." --Thomas Jefferson to William Duane, 1803. FE 8:256

Wainstein later became the White House Homeland Security Advisor and closed out Bush's term, including lingering concerns about the hapless Hurricane Katrina Lessons Learned report, crafted by Frances Townsend.

Wainstein left "public service" to defend white collar criminals.  He also conducts corporate investigations, the very thing the Bush administration failed to do competently with LifeCare Hospitals and Hurricane Katrina.  Did Wainstein help Carlyle's ARINC with their recent World Bank procurement problems which resulted in nearly a three year ban or Booz Allen Hamilton's nightmare as a result of Edward Snowden's revelations?

Wainstein would be judged harshly by Jefferson, the youthful version.  He would fit in with the older Jefferson, who turned down an inheritance that would've freed his slaves, later using those same slaves as collateral for a huge loan.  Wainstein clearly aided private equity underwriters.  The American public, not so much. 

Update 5-10-17:  Wainstein has been mentioned as a possible FBI Director nominee after the firing of James Comey.  Wainstein is a good fit for Trump's PEU loving team.

Friday, July 26, 2013

Weiner's Wife Worked for PEU & State Department

CBS News reported Anthony Weiner's wife "earned approximately $135,000 from the State Department while receiving $355,000 in consulting income for representing outside clients, as she remained a Federal employee and a trusted advisor to Secretary Clinton."  Weiner's wife worked for Teneo, where Bill Clinton chairs Teneo's Advisory Board. 

No wonder ex-President Clinton sees wealth potential everywhere.  People don't actually have to leave federal employment to make big money working for a private equity underwriter (PEU).  The Government-Corporate Monstrosity looks after its own.

Thanks to Economic Policy Journal

Saturday, July 20, 2013

WaPo Goes PEU

Bloomberg reported:

In what may be the most brazen diversification play in media, the Washington Post this week said it’s purchasing Forney, a Texas-based company that makes burners and flame detectors for industrial furnaces. 

Chief Executive Officer Donald Graham said Washington Post is pursuing a “decentralized operating philosophy.”
WaPo went from staunch defender of private equity underwriters to being one.

The Post’s “ongoing strategy of investing in companies with demonstrated earnings potential and strong management teams attracted to our long-term investment horizon.”

Oddly, the purchase price was not revealed, despite both United Technologies and Washington Post being publicly traded.  Neither company filed with the SEC on the agreement.

Donald Graham's media credibility was already strained by years of silence after attending annual Bilderberg Group meetings, where global plotters gain insight into where money will be made.  Given Forney's combustion niche, how might that factor into our future?  President Obama wants to light the African continent with private money.  What else might need to be burned in the global future?  Surely, PEU Graham knows the predictions.

Wednesday, July 17, 2013

SEC Allows PEU Solicitation

MarketWatch reported:

The Securities and Exchange Commission put out a press release last week announcing its plans to lift a general solicitation ban on hedge funds and private security offerings.
 It went on to say:

Two days later, it put out another press release detailing its complaint against Kevin G. White, a purported private-equity and hedge-fund manager from Plano, Texas, for solicitations he’d been making for years. 
White is accused of taking investor money and spending it on personal items as well as misrepresenting his background and performance. 

Kevin should seek out Carlyle Group lawyers who helped the private equity underwriter with sticky lawsuits.  Michael Huffington sued Carlyle after it lost his $20 million in a "low risk, little downside" investment.  SemGroup shareholders also sued Carlyle after their investment evaporated from billions in losses on forward looking contracts.  SemGroup's SEC filings never mentioned the firm engaged in such trades and Carlyle went for a puffery defense

As for timing Blackstone is ready to solicit funds from individual investors for its mutual fund which will invest in twenty or so hedge funds.

Tuesday, July 16, 2013

Blackstone's PEU Mutual Fund to Invest in Hedge Funds

Bloomberg reported:

Blackstone Group LP (BX:US), the world’s biggest manager of alternative assets, is starting a mutual fund that will invest in hedge funds, part of an industrywide push to attract assets from individual investors.
The Blackstone Alternative Multi-Manager Fund will charge annual fees of 3.25 percent of assets, including a 1.95 percent management fee.

The dice rollers need more ka-ching, this time supplied by smaller investors.  As P.T. Barnum once said, when the carny got dangerously overcrowded.  "Step right up, folks.  This way to the Great Egress."  Welcome to Stephen Schwarzman's investor way out, BXMMX.

Monday, July 15, 2013

Carlyle Looks for Deals in Northern Iraq

It took ten years after the fall of Saddam Hussein for The Carlyle Group to go deal hunting in Iraq.  Note Carlyle is only looking for deals in the Kurdish part of the country.  I wonder how Kurds will feel about Carlyle's deals with Turkish billionaire Mustafa Koc? 

Carlyle cofounder David Rubenstein helped Presidents George H.W. Bush and Barack Obama celebrate the 5,000th recipient of a Points of Light award.  In the aim of shedding light, consider Obama's comment regarding Bush, the Elder.

“After he left the White House, he kept going and going and going, in between skydiving and other activities.”  
Other activities included advising Rubenstein's Carlyle Group. The same Rubenstein regularly dines with President Obama and his advisors.

DowJones reported:

Global private equity firm the Carlyle Group is waiting for the end of Ramadan before starting talks on a new $750 million fund for the Middle East and North Africa, according to two investors familiar with the matter.

Carlyle wants any prospective investors to not be hungry or overheated.  Rubenstein knows personally how Middle Eastern investors act when angered.

Saturday, July 13, 2013

Carlyle Group Petitioned for 10% ROE in Mountain Water Rate Increase

The Carlyle Group's Mountain Water filed for its first rate increase under PEU ownership.  PEU is an abbreviation of private equity underwriter, my pet name for the greed and leverage boys.  The Independent Record reported:

Mountain Water is asking for 10 percent return on equity, with a rate of return of 9.29 percent.

John Alke, the Helena attorney representing Mountain Water, told commissioners the company isn’t willing to lower its rate-of-return request.

“We conceded to several adjustments, not rate of return,” he said.

Mountain Water testimony filed in the case said 10 percent return on equity is a standard measurement used by the commission to determine rate of return.
Carlyle's 10% return on equity is magnified by other common PEU moves, adding debt in order to pay their "sponsor" a PEU dividend, charging management fees for Carlyle's management expertise, and flipping the company for a multiple of the original purchase price from an outright sale or IPO.  As for Carlyle earning any Mountain Water management fee:

Mountain Water Executive Vice President Leigh Jordan said that Carlyle’s lack of experience running a water utility hasn’t allowed it to quickly make efficiency and money-saving measures that could potentially help keep rates down.
How much are customers of Mountain Water paying to school Carlyle Group executives?  At least 10% ROE if the rate increase is approved.  

Update 10-20-13:  The testimony on this rate hike is fascinating.

Friday, July 12, 2013

Hillary Joins Bill as PEU Speaker

WaPo reported on Hillary Clinton's huge speaking fee of "more than $200,000" per event:

Hillary Clinton addressed an investor meeting in Los Angeles of KKR, the private-equity giant, and fielded questions from firm co-founder Henry Kravis. 

Like most retired Red & Blue public servants, they're enriched by private equity underwriters (PEU's).

Only Clinton’s husband is on a par with her in speaking fees among political figures.
Bill advised at least two PEU's to date,  Yucaipa and Teneo.  I'll bet Hillary will stick to PEU speaking fees and not accept a PEU Senior Advisor position before 2016.  However, the family is free to PEU multiply

Thursday, July 11, 2013

Reuters Helps Carlyle Drive Up ARINC Bids?

Reuters reported:

Carlyle Group LP is betting that industrial companies rather than buyout firms are more likely to meet its target price of up to $1.5 billion for the aerospace communications firm Arinc Inc, according to four people familiar with the matter.

Industrial conglomerate Honeywell International Inc and travel technology company Amadeus IT Holding SA are weighing offers in the second round of bidding for Arinc, the sources said, adding to the roster of companies participating in the auction previously reported by Reuters.

Lockheed Martin Corp, Rockwell Collins Inc and Thales SA, as well as a handful of private equity firms, also made it through to the second round, sources familiar with the matter told Reuters last month.
This feels like an anonymous White House senior official story, where the leak is intended to signal something to insiders or test public reaction.  Reuters failed to report Carlyle's $1 billion price tag when it shopped ARINC three years ago.

The $1.5 billion target, $500 million more, is for part of the 2010 version of ARINC.  Carlyle monetized ARINC's government consulting division by selling it to Booz Allen Hamilton for $154 million.  This totals $654 million or 65.4% more than what Carlyle hoped to get three years ago.

Reuters also omitted ARINC's 33 month ban by The World Bank for procurement violations, likely code words for bribery.  I wonder how ARINC's executive compensation/sales commissions figured into any illegal payments?

Will Reuters story garner greater interest in bidding, making Carlyle more money?  It remains to be seen.

Update 8-15-13:  Carlyle will sell ARINC to Rockwell-Collins for $1.39 billion. That's 55.4% more than Carlyle wanted three years ago. 

Wednesday, July 10, 2013

SEC Opens Door for PEU Puffery

Forbes reported:

The Securities and Exchange Commission (SEC) voted to allow a wide variety of companies far greater scope to privately sell their securities to US investors. Importantly, hedge funds and private equity funds were permitted to come along for the ride.

This opens the door to the possibility of mass mailing, email blasts and cold calling, as well as to full page ads in newspapers and magazines or commercials on Sunday morning television.
A good indicator of a firm's ethics is how they behave under stress.  The Carlyle Group pled puffery in a SemGroup shareholder lawsuit.  Carlyle defended its strong sales pitch to SemGroup shareholders and Michael Huffington, who lost $20 million in a "safe" investment in Carlyle Capital Corporation.

Carlyle won't tell these stories when it comes time to push new funds on smaller investors.  How long before their puffery defense is used in another investor lawsuit?

Monday, July 8, 2013

Carlyle Group Sells WaterPik to MidOcean

Northern Colorado Business Report reported:

Water Pik Inc. closed a deal Monday to change its ownership to an investor group led by New York City-based private equity firm Midocean Partners, CEO Richard Bisson said.

The ownership change came after EG Capital and the Carlyle Group decided to divest their ownership stakes of Water Pik, which makes dental water jets and showerheads. The Midocean-led investor group, which includes private equity firm Vulcan Capital, headed by Microsoft co-founder Paul Allen, now own privately held Water Pik.

The ownership change will benefit Water Pik as it seeks to expand its international sales, Bisson said.

The Carlyle Group couldn't help Water Pik expand international sales?   Hardly, it was time to flip the company.  "Monetize" sometimes comes via PEU trading.

Sunday, July 7, 2013

Geithner Joins Clinton, Blair as Huge PEU Fee Speaker

Ex-Treasury Secretary Tim Geithner already made over twice times his public service salary from giving three speeches.  FT reported:

Tim Geithner, the former US Treasury secretary, has been elevated to the highest rank of public speakers, alongside former world leaders Bill Clinton and Tony Blair, after receiving about $400,000 for three speaking engagements. 

Oddly this story also broke the news that Bill Clinton was the headliner for The Carlyle Group's Investor Meeting last September in a meeting of the CGI's squared.  Geithner already pocketed $200,000 in fees from the PEU boys, Blackstone and Warburg Pincus.

He spoke in June alongside Nicolas Sarkozy, France’s ex-president, and Mario Monti, Italy’s former prime minister, at Deutsche Bank’s annual conference in the UK. Mr Geithner gave a speech before taking questions from Peter Hooper, the bank’s chief economist who has invited him to participate in a “few client events this year”, the bank said.

Mr Geithner was also the main attraction at Blackstone’s annual meeting in April, and the following month appeared at Warburg Pincus’s annual meeting. He was paid no more than $100,000 by each of the private equity groups, according to people familiar with the matter. 
The Carlyle Group employs a Sarkozy.  Mario Monti worked for Goldman Sachs.  Note the invitation to work with a few client events, i.e. more huge fees for Geithner.  The Government-Corporate Monstrosity, Eisenhower's Military-Industrial Complex on trillions in federal steroids, takes care of its own.

Look for Geithner to land a PEU Senior Advisor slot in the near future.  It's the rage amongst retired Red & Blue public servants.

(Thanks to Economic Policy Journal)

Update 7-11-13:  Hillary Clinton joined the $200,000 a speech club.  

Obama to Power Africa: Soros & Albright to Profit?

WaPo's WonkBlog reported:

Obama promised $7 billion in financial support over the next five years to bring “electricity access” to 20 million new households in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania, as well as help countries like Mozambique develop their oil and gas resources.
The Blue team has a number of high profile members, Madeline Albright and George Soros with investments in power generation services

APR Energy LLC, a leading provider of major turnkey temporary power generation services, announced today that private investment funds managed separately by Soros Fund Management LLC and by existing investor, Albright Capital Management LLC, have committed to invest $250 million in the Company. The transaction provides substantial new growth capital, which APR Energy intends to use to significantly increase its fleet of power generators and expand its operating footprint in South America and Africa.
How might a portion of that $7 billion make its way into the pockets of Madeline & George?  Reuters gave several clues:

The company (APR Energy) primarily supplies government utilities in developing nations with interim solutions from six months to three years while the utilities look to install lasting power solutions. APR is also targeting mining, oil and gas industries for future business.

Soros and Albright teamed up on another investment, adding communication towers in Africa.  Towers need power.  Follow the money.

Update 8-9-14:  PEU's Carlyle Group and Blackstone will joint venture with Africa's richest man on powering Africa.  Good thing these people have rich government subsidies.

Update 3-23-22:   Madeline Albright died today.  Cancer took her life at the age of 84.

Friday, July 5, 2013

Toasting Abysmal Leadership

The Guardian reported:

David Rubenstein, the co-founder of the powerful Washington investment firm the Carlyle Group, noted that sequestration – designed to be terrible – has not increased Congress's desire to pass a real budget. In fact, it's done the opposite:
"The deficit is down to $350bn [from more than $1tn], so the ardor to do anything has completely gone."
Why do politicians need ardor to lead?  Passing a series of budget bills is their job, which they've long abdicated into an omnibus spending bill.  When that got too hard they lowered the bar to sequestration.  It seems Congress can only do things by passing bills with automatic triggers.

There is no leadership anymore.  The front stage has the Red and Blue party at odds over nearly everything.  The back stage has the Reds and Blues catering to the David Rubenstein's of the world, a form of greedership.

The White House postponed PPACA's employer requirement until 2015.  This helps corporate chiefs and their private equity underwriter (PEU) owners.  Ironically Carlyle officials dined with their White House counterparts a number of times recently.  

PEU Rubenstein visited Congress numerous times to maintain preferred tax rates via carried interest.  The Carlyle Group likes trading companies that do business with Uncle Sam.  They've dumped pensions in a number of takeovers.

How far does private equity greed reach?  I wonder how many PEU billionaires over age 65 are on Medicare...