Wednesday, December 28, 2016

Trump Meets with Carlyle's Rubenstein

Tuesday, December 27, 2016

Carlyle Looks to Expand Romanian Oil Assets

SeeNews reported:

Romania's anti-trust regulator said on Tuesday it is looking into a deal between  Romania's top oil and gas group OMV Petrom [BSE: SNP] and Mazarine Energy Romania for 19 oil fields and three rig.

The transaction is expected to be completed at the end of 2016, when Mazarine Energy Romania will assume operatorship of the fields and employment of over 200 staff currently employed by OMV Petrom, the oil and gas group said at the time. 

The capital for the transaction will come from the $500 million equity line provided by Carlyle International Energy Partners, a $2.5 billion fund that invests in global oil and gas exploration and production, mid- and downstream, oil field services and refining and marketing in Europe, Africa, Latin America and Asia. 

Carlyle's first investment in Romanian oil and gas came in 2015, courtesy of financially strapped Sterling Resources.

Supplying Europe energy is critical for the U.S. as it wants to decrease Russia's influence.  Carlyle may soon be in a better spot to make that a reality. 

Update 11-30-17:   European Bank for Reconstruction and Development (EBRD) said on Wednesday it has acquired an equity stake in Romania’s Black Sea Oil & Gas (BSOG).  Backed by the global alternative asset manager Carlyle Group, BSOG’s current portfolio consists of the XV Midia Shallow Block and XIII Pelican Block concession in the Romanian Black Sea.  

Update 9-1-21: reported:

Black Sea Oil and Gas (BSOG), a Romanian company backed by US investment fund Carlyle, could start gas deliveries from Romania’s Black Sea section at the end of this year when work on the Midia Gas Development project will be finalized.

The Carlyle Group purchased Sterling’s Romanian business in 2015 and set up a new company Black Sea Oil & Gas SRL.

Update 2-22-23:  Carlyle may be shopping its energy stake in the Black Sea:

...plans by BSOG's investor Carlyle to potentially sell the company were "normal" for an equity firm after it has finished building the project. 
It doesn't want to pay increased energy taxes like any good PEU.

Sunday, December 25, 2016

Carlyle Affiliate to Buy Cybersecurity and Threat Assessment Firm

Denver Business Journal reported:

Colorado cybersecurity firm Coalfire Systems Inc. is acquiring Veris Group to become a major cybersecurity and threat assessment consultancy to federal agencies, businesses and cloud-computing service providers looking to do business with the federal government.

Veris Group, based outside Washington D.C. in Vienna, Virginia, began looking in mid-2016 to make a deal to expand. One of Coalfire’s owners, The Carlyle Group, introduced the two companies soon after.

Veris Group draws half its business from federal government departments and intelligence agencies, lines of work Coalfire wanted to be in but hadn’t yet cracked.

Privately-held Coalfire is majority owned by The Carlyle Group and the Chertoff Group, two investment companies well connected to U.S. national security circles and the federal government.

Coalfire may consider other acquisitions leveraging Carlyle Group resources as opportunities become available.
Especially those with business with the federal government.  Carlyle cut its teeth with USIS, courtesy of President Bill Clinton's privatization of government security checks.  What does Carlyle see with President elect Trump that has them investing heavily in cyber and threat security?

Tuesday, December 20, 2016

Viola Benefited from Public Money

The DailyMail reported:

President-elect Donald Trump has selected Vincent Viola to be the next secretary of the Army, choosing yet another billionaire to join his historically loaded team of top advisors and administrators.

Viola is founder of Virtu Financial, an electronic trading firm. He also previously chaired the New York Mercantile Exchange and is a co-owner of the Florida Panthers National Hockey League team. 
Trump appointed another billionaire who has benefited from public subsidies.  The SunSentinel reported:

The Florida Panthers hockey team won one of the most important contests of its existence Tuesday, when the Broward County Commission agreed to give it $86 million in public funds.

The agreement increases the public investment in the team to $342 million, county officials confirmed.
Billionaires benefiting from public money will be in charge of the federal government's multi-trillion dollar budget.  It doesn't take a rocket scientist to see where this is going.  We'll see how much trickles down to the economically disaffected voters who put Trump in office.

Update 2-4-17:  Viola withdrew his nomination for Army Secretary citing "his inability to successfully navigate the confirmation process and Defense Department rules concerning family businesses."

Monday, December 19, 2016

Private Jets Sign of the Times

Global Jet Capital, a private equity affiliate, published research on the number of private jets delivered to the Middle East and the method of financing.  File this research under "the rich get richer" folder and set it on "they currently trust one another to make good on their debts" stack.

I smell a PEU IPO or flip in the near future. 

Sunday, December 18, 2016

CEO Rex Tillerson: Exxon's 147 Subsidiaries

The Guardian reported:

Rex Tillerson, the businessman nominated by Donald Trump to be the next US secretary of state, was the long-time director of a US-Russian oil firm based in the tax haven of the Bahamas, leaked documents show.

Tillerson – the chief executive of ExxonMobil – became a director of the oil company’s Russian subsidiary, Exxon Neftegas, in 1998.
Exxon had 147 subsidiaries as of 12-31-15.  Thus, there are more potential board slots for Mr. Tillerson.  Exxon has two subs in Kazakhstan and two Kazahkstan named affiliates, the one in the Bahamas and another Delaware based.

Nineteen Exxon companies are in the Bahamas.  Oddly, not one map in the company's analyst presentation showed any presence in the Bahamas. 

Six subsidiaries are based in Qatar, while three are in Saudi Arabia.  The Cayman Islands have but one Exxon affiliate.

Exxon is a global company.  Corporate structures and executive incentive compensation are complex and intertwined in today's world. 

President Obama's health reformer Nancy-Ann DeParle received private equity payouts from her former employer CCMP while in the White House.  This occurred after the Obama team declared DeParle "divested all conflicting assets."

The Guardian helped shed light on Mr. Tillerson's longtime board seat with Exxon Neftegas.  There likely are many more scattered around the globe. 

Exxon's analyst presentation showed another key metric.

Mr. Tillerson's production of jobs during his tenure was not nearly robust as his executive pay.  One could even call him a job terminator for the elimination of 40,000 jobs.

This is the management swamp that enriches executives and funds political campaigns of both stripes.  It's the Red Team's turn.

Forbes Columnist Predicts PEU Double Under Trump

Forbes Antoine Gara believes private equity underwriters could become much richer under President elect Donald Trump's tax reform initiative. 

Trump's talk of killing the private equity industry's carried interest tax deduction has generated major headlines, but if it comes with broader tax reform it could create the biggest opportunity for the industry since firms like Apollo, Blackstone, Carlyle and KKR listed their shares on public stock markets. Lowering corporate and individual tax rates could give private equity firms reason to convert from tax-avoiding pass through partnerships into ordinary corporations, opening up their shares to a far broader investor base.
Massive profits from disruption is the PEU way.  It's government's job to set the tea leaves for Leon Black, Stephen Schwarzman, David Rubenstein and Henry Kravis to read.

Such a move could unwind a chronic discount attached to private equity stocks despite their master of the universe pedigree. Eventually, it could double the wealth of the industry’s billionaire class.
That's the billionaire class that has done very well the last few decades no matter the political party in power.

The Carlyle Group just inked a deal for Revolution Studios.  The public may need to be swayed as to the patriotic value of the greed/leverage boys.   The heroes journey could be a corporate flip at 7x equity investment.  It may swell wallets but likely not hearts. 

American movies during WWII promoted the need to dismantle an enemy that allowed so much wealth and power to be concentrated in the hands of axis governments and their wealthy industrialist supporters. 

Time will reveal what comes out of Carlyle's Revolution Studios and the Trump administration but the prospect of billionaire's doubling their already obscene wealth is not appealing.

Thursday, December 15, 2016

Fed Gives Banks Extension on PEU Rule

In the year 2020 commercial banks will finally need to divest their private equity and hedge fund stakes.  Congress passed Dodd-Frank in 2010.  The 2020 extension will help Goldman Sachs and Morgan Stanley, as sponsors of captive private equity/hedge funds

Goldman Sachs’ exposure, mostly to PE, stands at around $6.9bn and Morgan Stanley owns about $2.2bn in PE funds, according to Bloomberg.
Goldman execs/alumni have three spots in the new Trump administration and Morgan Stanley's Erskine Bowles wants to make yet another fortune.

When the big money boys no longer trust one another to make good on their bets private equity can put considerable stress on a bank.  The Carlyle Group placed over $600 million in capital calls to CalPERS during the 2008 financial crisis.  As debt becomes more risky covenants can require sponsors to put up scarce cash.

Post Dodd Frank private equity underwriters loaned to corporations when banks would not.  Time will tell if President elect Trump calls the whole Dodd Frank thing off.  Until then captive PEUs got a reprieve from The Yellen Group.

Monday, December 12, 2016

Rick Perry's Two Energy Board Seats to Become One

Former Texas Governor Rick Perry is on the short list for President elect Donald Trump's Energy Chief.  Shortly after his term ended in January 2015 Perry joined the board of Energy Transfer Partners and its corporate relative, Sunoco Logistics Partners.  The plan is for the two companies to merge in January 2017.  A recent investor presentation showed:

The presentation had a slide specific to the Dakota Access pipeline:

The small print at the bottom states:

(1) 686 miles of converted pipeline + 68 miles of new build. 
(2) Bakken Crude Pipelines owned 45% ETP, 30% SXL (operator), 25% P66 (post closing of Bakken equity sale, ownership will be ETP and SXL - 38.25%, MarEn - 36.75%, and P66- 25%).

What might a Rick Perry led Energy Department do on the now halted Dakota pipeline?  I bet he'd jumpstart it and add a subsidy if he could. 

Sunday, December 11, 2016

Perry Possible Appointee to Department He'd Eliminate

Bloomberg reported:

Donald Trump has narrowed his search for energy secretary to four people, with former Texas Governor Rick Perry the leading candidate.
Yes, this is the federal department the Perry could not remember he wanted to eliminate in a 2012 Presidential debate.   Rick Perry stepped down as Texas governor on January 19, 2015.  At the time he said:

As to other endeavors, he said, “I actually don’t know and purposefully don’t know. I have had no conversations with anyone about employment after this."
It took eleven business days for Perry to land a spot on Energy Transfer Partner's board of directors from which he received $236,820 in 2015 board compensation.

Six weeks later Perry garnered a Sunoco Logistics board seat which paid him $128,490 in 2015.  Oddly, Sunoco Logisitics did not announce the appointment of Governor Perry in March 2015.  It took over two months for the company to file Perry's boardship with the Securities and Exchange Commission.  In January 2016 Perry received $100,000 in stock from Sunoco Logisitics according to their SEC filing.

Rick Perry's penchant for corporate welfare can be seen in his 2004 $35 million gift to The Carlyle Group's Vought Aircraft Industries.  Vought didn't even submit an application for Perry's $35 million working capital gift.  

Perry claimed Vought created over 29,000 Texas jobs, a bold faced lie.  Vought didn't employ company wide its Texas commitment when the Governor made his absurd claims.  The Carlyle Group sold Vought in 2010 six years after receiving Rick Perry's $35 million gift. 

Give Perry the Energy Department reigns and he will use the federal purse to enrich corporations to the detriment of workers and the general public. That may be President elect Donald Trump's wish.

As the world becomes darker Perry's possible appointment as Energy Chief has a comedic side.  Perry's ability to forget is clear.  Will Trump voters forget Donald's promises to toss out insiders and drain the swamp?  

Update 12-13-16:  Trump picks Perry for Energy Chief
ead more here:

Saturday, December 10, 2016

Trump Wants Exxon CEO as Secretary of State

President elect Donald Trump will name Exxon CEO Rex Tillerson as his Secretary of State.  For decades American foreign policy has been driven by oil and wars. 

Tillerson stated in 2006 when Congress considered repealing tax breaks

"I think the bigger concern I have is not so much the economic direct effect of the fact that they want to take a tax break off here or there. But it's the message it sends the rest of the world that you don't have to provide stable (regulatory) frameworks, and if that happens, none of us are going to be able to take the risk in this business." 
At the time Exxon had $37.3 billion in cash.  Today cash is down to $3 billion in the wake of declining oil prices.

Tillerson spoke to the Council on Foreign Relations in 2012:  He said:

And yet the United States today remains the third-largest oil producer in the world, second only to Saudi Arabia and Russia.
Similarly on the natural gas side, United States, given the seasonality of the year, at any time is either the world's largest natural gas producer or the second-largest natural gas producer.  We go back and forth with Russia.
So it's my hope that at some point energy security can become a policy issue in our foreign policy discussions with Mexico, Canada and the United States. Between the three of our countries today, we produce 15 million barrels of oil a day. That is a force to be dealt with in global oil markets. Our expectation by the year 2020 is that North America will be producing 18 million barrels a day, and there is more capacity in the system to go beyond that, and to go beyond it at even potentially a faster rate.. 
Backing up corporate titan Rex Tillerson at State will be neocon John Bolton.  Are more wars over oil in our future?   Bolton had a role in Iraq and I'm sure he was ecstatic over Libya.  

Trump's appointment of Tillerson means a tax free sale of his over $150 million in Exxon stock.  That's a $20 to $30 million benefit to a CEO nearing retirement. 

Ten years after complaining about the elimination of a tax break Tillerson may get a huge personal one, courtesy of Donald Trump.  

It's a Wonderful Life: PEU Remake

Dealbook revealed how much private equity underwriters (PEU) made in 2015.  These modern day Robber Barons made between $50 million and $800 million last year.  Most PEUs have real estate divisions, which leads to our second Dealbook story. 

Several PEUs are ready to cash-in on cheap European real estate and have sent eviction notices to families who've paid rent in full and on time.

Citizens don't have much of a chance when the PEU class not only sponsors politicians, but are appointed to serve in critical policy roles.  In America the Blue team is packing up, making room for President elect Donald Trump's numerous PEU appointees. 

Trump's corporate casino:  No matter the roll, PEU dice always win.

Carlyle Ready to Ring Register on PPD

PPD, a pharmaceutical testing company, had no debt before The Carlyle Group and Hellman & Friedman purchased PPD in 2011.  It now has over $4 billion in debt according to Seeking Alpha.

Trying to get a piece of busy M&A activity in healthcare, PPD is hoping for a valuation of about $5B, or a deal value of more than $9B when including debt.
Carlyle and Hellman borrowed $2.1 billion to buy PPD, providing $1.8 billion in equity.  Carlyle played at least one debt for dividend trick on PPD.

We took advantage of access to cheap credit to complete over $700 million in dividend recaps from the third quarter in companies such as PPD in the United States...

Sometimes when we do a recap, we don't actually think of that as a realization
Seeking Alpha reported the size of Carlyle's potential bounty for five years of ownership:

When including dividends already paid, they could see a return of more than 3x their investment should a sale take place at $5B.
That would be $7.2 billion, meaning Carlyle's already gotten their original investment back before putting PPD on the blocks.  There's speculation Carlyle might take PPD public but private equity underwriters (PEU) prefer to keep their numbers away from public scrutiny.  An S-1 would reveal how much Carlyle, Hellman and executives made from PPD under PEU ownership. 

Update 2-5-17:  Reuters reported Labcorp is in the running to buy PPD for more than $8 billion.

Thursday, December 8, 2016

Labor Pick Puzder is PEU Partner

President elect Donald Trump stacked his cabinet with another private equity underwriter (PEU).  Trump nominated Andrew Puzder, CEO of CKE Restaurants, an affiliate of Roark Capital.  Roark purchased CKE from fellow PEU Apollo Global in 2013 for a reported $1.6 billion.  The company's press release stated:

CKE Inc. (“CKE” or the “Company”) announced today that an affiliate of Roark Capital Group has entered into a definitive agreement to acquire a majority stake in the Company with senior management retaining a minority stake. 
The sale price — which the news service Reuters reported at $1.65 billion to $1.75 billion, citing anonymous sources — represents a healthy return for Apollo, which took the company private in 2010 for about $1 billion..
Puzder's minority stake makes him a PEU partner, as evidenced by an SEC filing.

In connection with the Merger, certain affiliates of Apollo, our directors and certain members of our senior management entered into the Partnership Agreement. All executive officers and directors investing in Class A Units and receiving awards of Class B Units were required to execute the Partnership Agreement and become limited partners of Apollo CKE Holdings, L.P.
How much did Puzder pocket in the flip in 2013?  Rest assured no Senator would ask such a gauche question.  Might they feed back his recent words on problematic humanity?

A NYT piece reported:
Mr. Puzder said that increased automation could be a welcome development because machines were “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”
Andrew Puzder knows executive enrichment:

Executive pay at CKE was outsized for the food industry, given the size of the company. Puzder’s compensation, for example, peaked at $10.1 million in 2011. 

When the company sold to Apollo, it inked a deal in which the executives were hired for a four-year term, and contractual provisions that would have forced Apollo to pay out more than $8 million in cash for firing Puzder.  

During the last year that disclosures were made, CKE said that it paid for dues to recreation clubs, car allowances and even personal use of the company aircraft by executives and their family members, which the executives paid income tax on. The perks themselves came up to about $241,000 in the most recent year data was reported. 
Here's what this implies for labor:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out.
A former business reporter (think WSJ, FT, Bloomberg) wrote those words in 2011.  It was a stark assessment at the time.  It remains a warning as President-elect Trump populates his cabinet with the greed and leverage boys.  It's a PEU world and the Red Team's in charge after eight years of Blue abdication. 

Workers don't have much a hand in the Trump Casino.  The deck looks stacked.

Blankfein the Younger Now Carlyle Group PEU

The son of Goldman Sachs CEO Lloyd Blankfein switched private equity underwriters.  Alex left Bain last year for Washington D.C. based Carlyle Group.  The District of Columbia is a great spot to interact with politicians, PEU lobbyists and become comfortable in the insider swamp, now in the midst of a team change.

Carlyle set itself up long ago for either a Republican or Democratic led federal government.  Greed knows no bounds.  Watch Alex.  He's being PEU groomed

Update 1-8-17:  Carlyle hired Goldman to stir up interest in NBTY.

Monday, December 5, 2016

General Mattis and Jeb Bush Make News

Two prominent political names, General James Mattis and former Governor Jeb Bush made the news with their respective appointments.  President elect Donald Trump announced he would nominate General Mattis for Pentagon Chief/head of the Department of Defense.

The Orlando Sentinel reported on Jeb's new gig with a Florida lobbying firm:

Former Florida governor Jeb Bush will act as a consultant for the lobbying firm Buchanan Ingersoll & Rooney, the firm announced Monday. 

The firm, which has offices in Tallahassee, Fort Lauderdale and four other Florida cities as well as in New York, Washington and Philadelphia, lobbies governments on behalf of industries including finance, health care, energy and education.

 "There are very few people who have the breadth of experience that Governor Bush has both in the public and private sector."
Both General Mattis and Jeb Bush share the embarrassment of serving as board members for questionable companies.  WSJ reported

Retired Marine Corps Gen. James Mattis, President-elect Donald Trump’s nominee for secretary of defense, has a four-year-long connection with Theranos Inc., the embattled blood-testing startup.

Gen. Mattis joined Theranos’s board in July 2013, a couple of months after his retirement. 

Theranos is the subject of criminal and civil investigations by the U.S. attorney’s office in San Francisco and the Securities and Exchange Commission, which are trying to determine if the company misled investors and regulators about its technology and operations. 
Fortune reported why some potential investors avoided the company.  Bill Maris talked about why Theranos did not meet his investing criteria:

"It had no experienced life science investors involved.  It had no experienced life science investors or scientists on board.  It did not have an experienced CEO that had worked in life sciences...  It had no peer reviewed articles, no data at all.'

'Science works on openness and transparency.  So if it's a science based company you want to at least see the data."
The interview also mentioned the need for experts in the field to serve on the board of directors.  Those are the reasons seasoned healthcare investors stayed away from Theranos.  Whistle-blowers eventually revealed the extent to which Theranos did not live up to their image.

President elect Trump appointed General Mattis for his ability to read situations.  Handsome board pay can blind objectivity.

Governor Bush knows this from his experience on the board of InnoVida,  Jeb refunded $270,000 of his pay from the company which was convicted of fraud.  It took businessman Jeb Bush nearly three years to realize he'd been had.

“When someone as prominent as Jeb Bush lends his name to a company, it gives the creditors a level of false security.”

Read more here:
Jeb never shared what he knew as a board member of InnoVida.  I expect General Mattis to remain quiet as well.

Both men got jobs because of their expertise.  Both provided their name and connections for years to companies that were questionable, even outright criminal in the case of InnoVida.  That raises questions as to their judgment. 

Update 12-8-16:  General Mattis is not in the first wave of politically influential board members fleeing Theranos.  

Saturday, December 3, 2016

Depopulating Workplace: Global Future

One aim of business used to be to provide jobs so people could afford to buy goods and services.  During the Industrial Revolution Henry Ford paid his workers enough that they might be able to afford his Model T product. 

That philosophy is long gone as employers work to depopulate the workplace.  Physicist Stephen Hawking warned recently (source: ZeroHedge):

“The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining. 

“With not only jobs but entire industries disappearing, we must help people to retrain for a new world and support them financially while they do so,” he added.
Hawking wrote in his piece:

This in turn will accelerate the already widening economic inequality around the world. The internet and the platforms that it makes possible allow very small groups of individuals to make enormous profits while employing very few people. This is inevitable, it is progress, but it is also socially destructive.

We need to put this alongside the financial crash, which brought home to people that a very few individuals working in the financial sector can accrue huge rewards and that the rest of us underwrite that success and pick up the bill when their greed leads us astray. So taken together we are living in a world of widening, not diminishing, financial inequality, in which many people can see not just their standard of living, but their ability to earn a living at all, disappearing.
ZeroHedge stated:

Hawking also warned that artificial intelligence and increasing automation is going to decimate middle class jobs and worsen inequality, and risks creating significant political upheaval.

The majority of people are sick of the status quo and feel they have been "abandoned by their leaders," writes renowned physicist Stephen Hawking.
People see leaders gaining wealth and mobilizing public resources to reward supporters, many who led us astray and received public bail out money. 

President elect Trump has two cabinet nominees that received billions in FDIC subsidies that personally enriched them.   Neither man ran their respective bank into the ditch but got massive public subsidies and put up relatively little equity.  This is the status quo of which voters have grown sick.  

Dugout Ventures Joins Inkwell as New PEU

Private equity underwriters (PEU) have become ubiquitous.  Proof arises from several new boutique private equity firms.  The latest arrival was announced at PEHub:

A group of retired baseball legends, which include Nolan Ryan, David Ortiz and Barry Larkin, have formed Dugout Ventures, a new private equity firm focused on backing baseball-specific companies.

Dugout Ventures is the first of its kind. Where players not only endorse, but also invest and build the brands and products they use. And do so in a business environment being led by some of the most influential players not only on the field, but also in their post-playing business careers.

In addition to the primary group made up of players, Dugout Ventures is also announcing its first $50MM LP fund, where accredited investors can invest alongside the players. The fund is taking advantage of the new 506(c) regulations to announce this investment opportunity publicly through their website and social media.
Dugout joins Inkwell Group, a brand new PEU focused on the proven power of racial and gender diversity.  Who knew greed valued diversity and baseball?

What's next as private equity expands ad infinitum? 

Missing Initials in Stories on Trump & PEU Petraeus

Stories on President elect Donald Trump's consideration of General David Petraeus for Secretary of State have abbreviations like DOD, CIA, ISIS, and FBI.  They don't have the initials KKR, a New York based private equity underwriter (PEU) with $131.1 billion in assets under management. Here's what he does for KKR:

Gen. Petraeus is involved in the KKR investment process and oversees the Institute's thought leadership platform focused on geopolitical and macro-economic trends, as well as environmental, social, and governance issues.
Bloomberg had this to say about KKR in an interview with billionaire founder Henry Kravis:

Private equity holds trillions of dollars in assets, controls brand-name companies, and invests on behalf of pensions, endowments, and government funds around the world. Back in 1976, it barely existed. That’s when Henry Kravis, his cousin George Roberts, and their boss Jerome Kohlberg Jr. quit Bear Stearns and started their eponymous investment company, KKR, which is celebrating its 40th anniversary.

Kravis and Roberts, co-chief executive officers, have transformed not only how companies are bought and sold, but also how they’re run. They’ve also expanded the firm far beyond leveraged buyouts, diversifying into real estate and hedge funds as well as a few businesses once dominated by big banks. Today, through ownership stakes in more than 100 companies with a combined annual revenue of $200 billion, KKR indirectly employs almost a million people.
Politico, Counterpunch, and ABC News are three news organizations who failed to report General Petraeus' current job, Chairman of the KKR Global Institute.  In April 2015 Petraeus wrote in support of the Trans-Pacific Partnership

The consequences for Washington’s getting the TPP right are huge: opening some of the world’s fastest-growing markets to more U.S. exports; improving U.S. competitiveness; growing the global middle class; creating jobs; and fostering the prosperous, open and rules-based Asia that is in everyone’s interest.
I don't believe Trump supporters would be excited about growing the global middle class as U.S. wages have been stagnant for twenty years.

The majority of people are sick of the status quo and feel they have been "abandoned by their leaders."--Stephen Hawking
Will General Petraeus change from a billionaire PEU boss to a billionaire President?  It's up to Donald Trump, currently changing out the blue PEU team in favor or the Reds.  Billionaires like yes men and Trump can call Henry Kravis for a reference on the General's work at KKR.  Sir, yes Sir!

Friday, December 2, 2016

Trump Appoints PEU Foreclosure King

While WaPo has the nation scurrying around in search of Russian propogandizers President elect Donald Trump appointed yet another PEU for Treasury Chief.  Dune Capital's Donald Mnuchin rode a substantial FDIC subsidy to hundreds of millions in profits on IndyMac Bank, which Dune renamed OneWest Bank.

OneWest foreclosed on more than 36,000 homeowners under Mnuchin. During that time, the FDIC made payments to OneWest totaling more $1 billion.

Dealbook reported

The sale of IndyMac was unusual because it was one of the first transactions involving lightly regulated private equity firms acquiring a bank holding company.

IndyMac collapsed after defaults mounted on mortgages and panicked customers withdrew more than $1.3 billion of deposits over 11 business days.
They later sold OneWest to CIT.  Mnuchin currently holds nearly 2 million shares of CIT and just resigned from the board.  His CIT stock is currently worth over $80 million.

Some Trump voters were foreclosed upon by OneWest Chairman Mnuchin, who got his hand slapped in 2011 for shoddy foreclosure practices.  Trump "change" voters got PEUd.

Update 1-4-17:   The non-prosecuting Blue political team turned its eye away from shady behavior by foreclosure king Mnuchin, who got his FDIC subsidy from the very same Blues.  Atlanta homeowners find the PEU boys fast to evict and foreclose.  Mnuchin knows the game and he'll soon steer America's financial course on behalf of his PEU peers.

Update 1-8-16:  The Blue California Attorney General who decided not to prosecute Mnuchin won a seat in the United States Senate.  Mnuchin donated to her campaign, the only Democrat on his list.

Update 1-25-17:   I'm not sure how Sears board member Mnuchin can be on both sides of a deal, as was Sears CEO Eddie Lambert when the company sold real estate assets to raise cash or pledged key real estate as security for loan deals.  Hedge fund ESL Investments holds a chunk of Sears real estate and is run by Sears CEO Eddie Lambert.  Board member Mnuchin has a $26 million investment in ESL.

Update 4-1-17: A bankruptcy judge fined Bank of America $46 million for abusive and cruel actions in foreclosing on a homeowner after the financial crisis.

Update 8-2-17:  The Blue team prosecutor who let Mnuchin skate is being promoted as the next Hillary, i.e. Presidential material.  She's perfect for out one party system that caters to big money.

Update 3-31-19:  Sears, now owned by ESL Investments, will end life insurance benefits for 90,000 retirees after paying over $25 million in executive bonuses.  Average age of retirees is 80 and life insurance is their last remaining benefit from the company they dedicated their life's work.  The greed and leverage boys have no shame.

Update 4-18-19:  Sears sued CEO Eddie Lambert and board member Steve Mnuchin for looting the company to benefit their hedge fund ESL Investments

Targeting Russians: Central Theme Post Election

One week ago I wrote:

The Washington Post - Propornot linkup points to group think that emanates from a central source, be it the winning political team, the losing team's techies wanting to massage the ego of their vanquished champion and/or a whittled down corporate media intent on disparaging those doing what they won't, look behind the political public curtain.
What's happened since?  ZeroHedge reported:

On November 30, one week after the Washington Post launched its witch hunt against "Russian propaganda fake news", with 390 votes for, the House quietly passed "H.R. 6393, Intelligence Authorization Act for Fiscal Year 2017", sponsored by California Republican Devin Nunes (whose third largest donor in 2016 is Google parent Alphabet, Inc), a bill which deals with a number of intelligence-related issues, including Russian propaganda, or what the government calls propaganda, and hints at a potential crackdown on "offenders."
Washington's Blog wrote:

US intelligence officials believe Russia helped disseminate fake and propagandized news as part of a broader effort to influence and undermine the presidential election, two US intelligence sources told BuzzFeed News.
Buzzfeed's piece stated:

The congressional Intelligence Authorization Act for this year, which could be passed through Congress as early as next week, mandates the revival of a Cold War-era panel known as the Active Measures Working Group, which would be a White House-appointed panel specifically tasked with unmasking and handling Russian influence efforts. That provision of the bill, initially proposed by Sen. Tom Cotton, has wide support from Democratic and Republican lawmakers on the Hill.
More data points that indicate group think from a central source?  That's my take. Here's what they don't want voters to focus upon:

Especially as the Trump team appoints private equity underwriters (PEU) to key Cabinet posts.

Update 12-4-16:  Washington's Blog ran Propornot and it's "science" by an experienced intelligence leader.  His take:  "It’s a prop for a disinfo op in order to serve a manufactured narrative."

Update 12-25-16:  "Group think that emanates from a central source" has been codified in Congressional bill.

Update 9-28-17:  Russian election tampering stories keep coming and are later debunked.

Update 10-23-19:  Washington's Blog will cease in part due to damage from being listed as a Propornot website.

Wednesday, November 30, 2016

Carlyle's Final Screwing of Brintons' Family & Employees

The Carlyle Group is exploring a sale of Brintons', the storied British carpet maker.  Carlyle hired William Blair to auction Brintons' five years after acquiring it for £38 million out of liquidation.  The story did not say how Carlyle put Brintons' in liquidation by buying company debt on the cheap.  The Brintons' family leveled about their unfair treatment by Carlyle. 

Rather than buying the family's equity stake, Carlyle bought the company's debt (at a discount to its face value, no doubt). Once they had acquired the debt Carlyle then used a controversial pre-pack administration to seize control – placing the carpet-maker into administration, then buying it straight back.

By using a pre-pack to acquire the business, Carlyle was able to jettison Brintons' pension fund – complete with its £10.5m deficit. 

I expect the family to be knotted and tufted about Carlyle's plans to get over £200 million from the sale.  The sixty five Brintons' employees laid off in February 2016 might be frosted about Carlyle's huge payday after theirs was eliminated. 

Carlyle dumped Brintons' pension responsibility on the public Pension Protection Fund.  How much will they get from Carlyle's monstrous profits on Brintons' sale?  Nothing, nada, zippo.  Auctioneer William Blair will get more than the Pension Protection Fund.

Carlyle promotes how they are the solution for underfunded pensions.  Just not Brintons', a five year PEU bled affiliate. 

Is Private Equity the New Religion?

Goldman Sachs CEO Lloyd Blankfein's does God's work.  Thus, private equity underwriters (PEU) must have a similar striving.  Seraphim Capital is a UK based private equity firm that recently launched a Space Fund to profit from the heavens.  Seraphim are six winged creatures that praise God on his throne. 

One Seraphim Managing Director also is cofounder and CEO of Angel Capital.  That's a second bit of name data supporting a holy alignment. 

It's hard to be heavenly with agnostic capital.  Dang!  This PEU almost passed the third test and joined the Lloyd Blankfein "I can take it with me" Club.   

Tuesday, November 29, 2016

Tax Cuts Coming: How Big?

WSJ reported:

“Right now in Washington nobody cares about the debt,” Carlyle Group co-founder David Rubenstein said at the SuperInvestor private equity conference in Amsterdam. “We have $20 trillion of debt and people say, ‘OK, $20 trillion, $22 trillion, $23 trillion—what difference does a couple of trillion make?’”
Mr. Rubenstein said he didn’t share concerns voiced by many since the election that Mr. Trump’s economic policies could fuel inflation. He pointed out that the inflation rate has remained near historic lows for years.

“I don’t expect there will be a lot of constraints on private equity going forward,” Mr. Rubenstein said. “I don’t think it’s going to be adversely affected by President Trump or his administration.”
As I've said before "Politicians Red and Blue love PEU."   The billionaire class loves its representative elect. The tax cuts are coming, the tax cuts are coming.

Trump's Medicare Chief Latest Double Dipper

President elect Donald Trump announced his nomination for Center for Medicare/Medicaid.  Trump's Seema Verma helped design state healthcare policy like President Obama's Marilyn Tavenner.  Tavenner refused to share a study on the future of healthcare in Virginia as it was privately funded.  Verma helped design health policy for Indiana but her company worked for both sides, the state and HP, a giant Medicaid contractor for the state.  IndyStar reported:

For more than a decade, the little-known private consultant has quietly shaped much of Indiana's public health-care policy. The state has paid her millions of dollars for her work — amid a potential conflict of interest that ethics experts say should concern taxpayers.

Largely invisible to the public, Verma's work has included the design of the Healthy Indiana Plan, a consumer-driven insurance program for low-income Hoosiers now being touted nationally as an alternative to Obamacare. In all, Verma and her small consulting firm, SVC Inc., have received more than $3.5 million in state contracts.

At the same time, Verma has worked for one of the state's largest Medicaid vendors — a division of Silicon Valley tech giant Hewlett-Packard. That company agreed to pay Verma more than $1 million and has landed more than $500 million in state contracts during her tenure as Indiana's go-to health-care consultant, according to documents obtained by The Indianapolis Star.

Verma's dual roles raise an important question: Who is she working for when she advises the state on how to spend billions of dollars in Medicaid funds — Hoosier taxpayers or one of the state's largest contractors?

In a written statement, Verma said unequivocally that she played no role in HP's contracts with the state. "SVC has disclosed to both HP and the state the relationship with the other to be transparent," Verma said. "If any issue between HP and the state presented a conflict between the two, I recused myself from the process."

But the recently ousted head of the state agency administering Verma's contract told The Star that Verma once attempted to negotiate with state officials on behalf of Hewlett-Packard, while also being paid by the state.

HP said it can find no one in its company with any recollection of such a meeting. Verma declined to answer further questions about her work with the state or HP.

Verma's dual roles have surprised some leading Republican lawmakers and expose one of many loopholes in Indiana's government ethics laws.  Government ethics experts told the Star the arrangement presented a conflict of interest.
Obama's health reformer Nancy-Ann DeParle received private equity distributions from the sale of healthcare companies while serving the public.  This after all conflicting assets were disposed.

One cannot serve two masters.  Arthur Anderson showed that consulting and public accounting don't mix.

Of course in a Trump administration there is only one master.  His name is Donald.

Update 1-14-17:  Big pharma retains its pricing protection courtesy of Congress.

Update1-5-18:  Verma wants to implement a work requirement for Medicaid recipients citing how work improves people's lives.

Saturday, November 26, 2016

Propornot: Hillary's Tech Revenge?

PEUReport has long relied on a number of blogs for information and research not available on mainstream media sources.  Recently, a brand new organization Propornot called a number of these reliable sites "Russian Propaganda."  Propornot's researchers did not reveal their identities or their methods.

Naked Capitalism - started 2006
Washington's Blog -  ramped up March 2007
ZeroHedge - January 2009
I was struck by the implicit duality of Propornot, basically "he who is not with me is against me."   American democracy encompasses a wide range of ideas and a political election campaign should cover the continuum of economic, political, scientific, spiritual thought and incorporate countless other dimensions of human existence.

Why is there a need to collapse thinking into "Russian propaganda"? Because one narcissist won the election and the other lost. Narcissists are never responsible for the ill things other people impose on them, robbing them of their birthright and natural greatness.

Hillary Clinton tried hard.  Despite the help of Alphabet/Google's Eric Schmidt Hillary did not win the election as designed by our Founding Fathers.  The great Google technological advantage was undone.  How could this be?

Propornot reduced a number of respected websites to Russian propogandizers.  Propornot is even offering a Google Chrome browser tool to help citizen's identify "Russians are coming" websites.

Does anyone else find it odd that Google's browser stood ready to identify Russian propogandists so quickly after the election, one where its Chairman chose sides and supported startup Timshel.  Timshel shows a 2016 copyright date and its first blogpost came in February 2016.  I could find no relationship between Timshel and Propornot, but it's hard to research an organization with no identified parties. 

The following is solely my opinion.  I believe Propornot is a logical fallacy, "post hoc, ergo prompter hoc."  After this, therefore because of this.  Hillary Clinton lost the election, therefore it was caused by Russian propogandists.   This allows the Blue Team to avoid any critical examination of their several decade embrace of monied, power interests to the detriment of the common person.

Propornot shows the harm that can be inflicted with "big data" that implies relationship but fails to show causation.  Propornot's loose assertions would not result in an arrest, much less a conviction.  But this is the court of public opinion and frequently the bar is low.

The Washington Post - Propornot linkup points to group think that emanates from a central source, be it the winning political team, the losing team's techies wanting to massage the ego of their vanquished champion and/or a whittled down corporate media intent on disparaging those doing what they won't, look behind the political public curtain.

Thirty anonymous schleps wouldn't get this much free media attention from a storied newspaper.  Rest assured insiders are behind Propornot and they don't care about free speech or democracy.  They have a narrative to push and it's a divide and conquer duality.  Rise above and read.  

Statement:  PEUReport is an anonymous opinion blogger that utilizes research and management theory to expose the scourge of private equity which preys directly and indirectly on the common person.  It's no accident that wages and benefits have stagnated or declined as private equity became ubiquitous and conjoined with our Red and Blue political elite.  As an anonymous blogger I have no expectation that WaPo would ever run anything I've found, much less take it carte blanche.

Update 12-1-16:  Wall Street on Parade has their own theory about Propornot.   They note the WaPo author is the Technology reporter who interviewed Google's Eric Schmidt in 2014.  Schmidt ran the Hillary campaign's technology strategy.  My cognitive dissonance theory is a step further.  It could be an error or an idea whose time is yet to come.

Update 12-2-16:  The House introduced a bill aimed at Russian propaganda websites. This supports my statement in the above post re: group think from a central source.  Another support:  News media and intelligence agencies blame Russia for Trump's presidential win.

Update 12-8-16:  Hillary came out forcefully against "an epidemic of fake news."

Update 12-15-16:  The Russians are coming meme exploded across mainstream media outlets.  The DailyMail bothered to interview a recipient of the leaked Podesta e-mails and he claims it came from a Blue team whistleblower.  That's a far cry from a Ruskie submarine drop.

Update 12-17-16:  Hillary blamed Ruskies and FBI for her defeat.

Update 1-2-17:  Reporters continue to trust intelligence services who blame the Russians. Rolling Stone's Matt Taibbi is pondering the story's truthfulness with so little evidence shared.

Update 3-25-17:   ZeroHedge identified further ties to members of the Blue Team wanting to shift blame for Hillary's blistering defeat to Russia.

Update 7-4-17:  NYT walked back its assertion that all 17 U.S. intelligence agencies agreed Russia was behind actions intended to interfere with the 2016 election.  It's now four agencies.

Update 10-23-19:  Washington's Blog will cease in part due to damage from being listed as a Propornot website.  This is a truly sad development.

Update 1-30-23:   Matt Taibbi revealed how Russian disinformation was spread.

Friday, November 25, 2016

Celebrate Wealth: It's Here!

And President elect Trump's victory has the financial markets seeing green.  Relax.  Life is good.  Any parallels to 2007/2008 are clearly the work of negative and cynical people who hate life.  Ignore anyone who refers you to a Forbes retrospective which stated:

Fast forward to the financial meltdown of 2008 and what did we see? America again was celebrating. The economy was booming. Everyone seemed to be getting wealthier....
And then the wheels fell off the economic engine as it careened down Debt Mountain and bounced through Risk Gulch.  It can't happen again.  Surely, our leaders have instituted safeguards for more than themselves.

The greed and leverage boys, PEUs and Wall Street, only want to help the common man with their retirement needs.  Their products and financial machinations are completely safe.  

One can only vote for change and hope.  The rest is in their capable hands.  Ignore naysayers and Russian propagandists who suggest our leaders are capable of greed, influence peddling, evisceration and revenge.  It's party time!  Borrow, buy for there is no day of reckoning.

Confession:  This post is either completely sarcastic or intended to keep PEUReport off the WaPo fake news list.  I report, you decide!

Clown Makeup? It's PEU Dry Powder

Bloomberg reported:

With plenty of money and a scarcity of deals, private equity firms’ cash piles are the highest they’ve been since the depths of the financial crisis.
VatorTV added private equity IPOs are at an eight year low:

Looking only at private equity-backed IPOs, there have been 18 so far this year, raising $5 billion, putting them on track for the slowest year since 2008, when there was $4 billion raised in 18 IPOs.
WealthManagement reported hedge funds haven't fared well either.

For the first time in six years, flows to hedge fund and liquid alternative managers have turned negative.
Hard to invest, difficult to exit and hedge funds imploding?  It sounds like the end of 2007 and 2008 just before the Bush team let Lehman Brothers sink. 

If you see dry powder laying about stay away and report it to your local authorities.  A PEU or hedge fund may be missing their nest egg.  You don't want to be blamed for their mishandling or loss.

Also, it's the time of year for giving.  If you have millions and want to help The Carlyle Group's assets under management turn positive give them a call.  They want more powder.