Tuesday, October 31, 2023

Alpha Males at FII7


Carlyle Group CEO Harvey Schwartz stressed the presence of alpha opportunities even in the face of high interest rates and geopolitical conflict.

Harvey Schwartz had an "alpha male" reputation prior to Carlyle hiring him as CEO.  His alpha attitude came through loud and clear in the FII7 interview.  

After giving a PEUmercial for Carlyle's financial offerings Harvey schooled the interviewer:

Interviewer:  "I want to do a rapid fire round if we can." 

Schwartz:  "I thought that was really my job.  I didn't even know I was scripted for that, but I'm glad I fulfilled that for you."

Interviewer: "Ha, hah"

I wonder if Schwartz would have given David Rubenstein the same treatment?  Rubenstein served as interviewer for the Jamie Dimon, Stephen Schwarzman et al PEU panel.

It was interesting to hear all the references to the intelligence in the room at FII7 and how that would change the world for the good.  

The "Davos in the Desert" group has been changing the world to increase their power, their pocketbook and enrich other members of their exclusive club.  

China used the PEU boys and its Saudi Arabia's turn.  Crown Prince MBS plays by his own rules and they can change in an instant.  The greed and leverage boys should enjoy it while it lasts.

The smartest people are needed to stem a looming conflagration in the Middle East.  So far, the language is of retaliation at increasing orders of magnitude.  That kind of "rapid fire" usually leads to something bad.

Update 11-1-23:  Effective altruistic (changing the world for the good) Sam Bankman-Fried, another brilliant person, is unable to remember many actions he took as CEO of FTX.  Temporary memory failure is not unusual among the insider crowd.  Texaco/BP's Lord John Browne and Ivanka Trump had similar lapses.  The common element:  a courtroom.

A NASA climate scientist who predicted weather impacts from increased greenhouse gas emissions stated he:

"cannot help but feel “a sense of disappointment that we scientists did not communicate more clearly and that we did not elect leaders capable of a more intelligent response.”

Those elected leaders listened to the PEU class, supposedly the most intelligent people, the very people attending FII7 to get access to Saudi money. 

Update 11-7-23:  Schwartz has cut costs at Carlyle as the PEU under performed relative to peers on fundraising.  FT reported:

When pressed by an analyst to outline new financial targets for Carlyle, Schwartz declined to give a specific timeframe, stating his review of the group was ongoing.

Update 11-16-23:  The Carlyle Group cut its latest Asian fund target from $8.5 billion to $6 billion.

Saturday, October 28, 2023

MBS Hosts Policy Making Billionaires

The Future Investment Initiative or "Davos in the Desert" met this past week in Riyadh, Saudi Arabia.  Crown Prince Mohammed bin Salman heads the country's sovereign wealth fund, essentially the power behind the event.  The seventh version's theme was "A New Compass."  A graphic showed a compass with two dials going in opposite directions.

America's policy making billionaires turned out in droves, even with the Israel-Hamas war raging.  Many stayed away after the murder of Washington Post journalist Jamal Khoshoggi.  The Carlyle Group's David Rubenstein served as a panel moderator.   

J.P. Morgan's Jamie Dimon, BlackRock's Larry Fink and Blackstone's Stephen Schwarzman served on that panel.

Schwarzman took a shot at people working from home.  He wants people back in the office to prop up Blackstone's commercial real estate holdings.

The greed and leverage boys turned out for the Crown Prince's signature event.  How will what was discussed in Riyadh turn into U.S. government policy?  Stay tuned.

MBS and the PEU boys get their way while everyone else gets a different form of MBS, mighty bowel syndrome. How much pressure can the little people stand?

Update 10-29-23:  National Security Advisor Jake Sullivan will meet with Saudi officials tomorrow on the Israel-Hamas war.

CNBC ran this story just after the gang was in Saudi Arabia for the MBS Investfest:

Update 10-30-23: Saudi Defense Minister Khalid bin Salman, the brother of Crown Prince Mohanned bin Salman is in Washington, D.C. to meet with White House officials on the Israel-Hamas war.  KBS will meet with Defense Sec. Lloyd Austin and Secretary of State Anthony Blinken, both former PEUs with Pine Island Capital.  

Update 10-31-23:  A theme of FII7 was how the people in attendance are some of the smartest people on the planet.  They're needed elsewhere to solve an intractable conflict, not far from Riyadh.

World Champion boxier Tyson Fury is the latest sports celebrity to endorse Saudi Arabia.  His next two fights will be there and Fury will get a whopping £160m for his efforts.

Update 11-2-23:  The scientist who warned about global warming in the 1980's expressed:

“a sense of disappointment that we scientists did not communicate more clearly and that we did not elect leaders capable of a more intelligent response”.

The 80's birthed a number of private equity underwriters (PEU), now referenced as the intelligent people who are going to solve our problems and the people who influence government policy (much more than scientists).   In the U.S. politicians Red and Blue love PEU and increasingly more are one.

Thursday, October 26, 2023

Believing in Freedom: PEU Style

Someone recently said:

"I believe in Freedom and I'm delighted to join..."  

Was it a Red Team candidate for Speaker of the House?  No.  

A Presidential contender?  No.  

A Supreme Court Justice?  No.

It was Sue Gordon, former Principal Deputy Director of National Intelligence and former Deputy Director of the National Geospatial-Intelligence Agency.

Freedom is Freedom Consulting Group and Gordon just joined their board of directors.  Freedom is a new affiliate of WGD Capital.  

WGD doesn't stand for "What would Greed Do?", although it easily could.  It's an acronym, the initials of several super rich investors.

Sue Gordon wasn't the only new board member.  General Michael Hayden and Tom Donohue (the D in WGD) will also join Freedom's board.  

With additional financial resources, the company will also explore selected acquisitions to expand capabilities and customer segments. The additions to the Board of Directors will provide national security expertise and strategic insights to support the planned growth.

They will also provide non-lobbying political connections (should Uncle Sam's assistance or wallet be needed). 

I found this obscure story while researching the fake fight between Senator Tommy Tuberville and General Michael Hayden.  Hayden delivered an insult to Tuberville for holding up military promotions in a time of instability.  Tuberville fumbled the insult, so badly he harmed himself.  Embarrassed over his clumsiness the Senator turned the insult into a "death threat."  (Maybe South Park can do something with that.  They did make a cripple fight palatable.)

The "death threat" story sent me researching the parties new PEU ties.  I'd already written about Hayden's Chertoff Group and Tuberville's TS Capital (which imploded in a fraudulent fireball that somehow spared Coach Tommy).

Hayden's new board appointment led to Sue Gordon's "Freedom" quote, the unexpected nugget in that research.

“I believe in Freedom, and I’m delighted to join such esteemed colleagues on this board.”

That sums up our PEU world where politicians Red and Blue love PEU and increasingly, more are one.

Clarence's RV Angel

News reports indicate Clarence Thomas' was gifted ownership of a $267,000 recreational vehicle.  Anthony Welkins provided an "interest only" loan to Thomas which was forgiven in 2008.

Thomas' benefactor went on to serve on The Carlyle Group's Board of Directors.  Carlyle is a politically connected private equity underwriter (PEU).  Welters is Executive Chairman of BlackIvy Group, another PEU.  

Carlyle located in Washington, D.C. to pull the political levers of influence and tap Uncle Sam's wallet.  I assume BlackIvy Group had a similar motivation.

Politicians Red and Blue love PEU and increasingly, more are one.  PEUs provide significant fuel for the insider money funnel.  Supreme Court Justice Clarence Thomas is but one beneficiary.

Monday, October 23, 2023

China Threat: PEU Enabled

60 Minutes interviewed intelligence chiefs from the U.S., the United Kingdom, Canada, Australia, and New Zealand.  FBI Chief Chris Wray spoke about the Chinese "stealing more of personal and corporate data than every other nation combined."

Flashback to 2005:

....TPG, Newbridge Asia (an Asian affiliate of TPG) and General Atlantic teamed up to buy into Lenovo in 2005 to help strengthen the Chinese firm’s financial position at the time of its takeover of IBM's PC business.

Note: the former CEO of General Atlantic currently heads the World Bank.

The three private equity underwriters (PEU) cashed in their stakes in 2010.  I noted national security concerns that same year.

Turn to 2014:

 Lenovo bought IBM’s server business in 2014.

Google said it plans to sell the Motorola handset business to Chinese computer maker Lenovo Group Ltd.

The acquisitions were ultimately cleared by CFIUS.

WaPo reported on a schism inside the U.S. government on whether Lenovo products were safe to use.  The State Department and Air Force indicated they were not safe due to espionage concerns. The article said:

Lenovo tapped celebrities such as Kobe Bryant and Ashton Kutcher as spokesmen to broaden its appeal.

Recall that tens of thousands of U.S. jobs were sent to China in the 2000's and 2010's.  Virginia Governor Glenn Youngkin helped The Carlyle Group send auto parts manufacturing jobs to China.  

Carlyle and the Chinese government reached an accord.  A former major business reporter wrote in 2011:

I can't tell if the PE guys are being insincere when they talk about China or they are actually stupid. There is no way that the Chinese govt would let American firms come in and strip cash out of Chinese companies the way they've been allowed to in the US! I imagine the Chinese welcome the PE guys because they see it as another way (through PE orchestrated mergers) to get hold of more American technology and companies and jobs.

What is going on with the theme of the article that these guys never agree with each other? As if there are these deep philosophical differences in how they operate?!? Makes one just despair.

People spoke up along the way, Mr. Wray.  And we continue speaking.  Please aim the Five Eyes at the PEU boys.  Scrutiny is needed.

Update 10-24-23:  A decade from now the Five Eyes will be concerned about this:

"Powerful generative AI spyware in any location where data is created...." 

Update 11-16-23:  "PE firms trapped in China after $1.5 trillion spending spree" (Bloomberg

Private equity firms are struggling to sell China affiliates.  Reports say secondary buyers are demanding discounts of 30 to 60%.  Discounts in the U.S. and Europe run 10 to 15%. 

Sunday, October 22, 2023

FII 7: Davos in the Burning Desert

Saudi Arabia's Future Investment Initiative (FII) kicks off its seventh iteration this week, October 24-26.  The FII is part of Saudi Arabia's sovereign wealth fund, headed by Crown Prince Mohammed bin Salman

It started in the wake of Crown Prince's shakedown of royal family relatives and business leaders.  Western leaders set that aside until the murder of Washington Post journalist Jamal Khashoggi.  

The murder marred attendance at the Crown Prince's October 2018 "Davos in the Desert."  By 2019 many were ready to "move on."

The pandemic disrupted things for the next few years but the Crown Prince wants to reorient the globe with Saudi Arabia at the center.  It launched a series of measures to help governments in 2021.

The Kingdom has been pursuing a deal of the century peace with Israel that would benefit Palestinians.  It sounds similar to the economic peace White House advisor Jared Kushner pushed under his father-in-law's White House.

FII 7's agenda shows a plenary session:

"Compass Point:  Is Democracy in Peril"

There are four more compass points on the agenda.  They include:

  • Charting the Uncharted
  • A Blueprint for Multidimensional Leadership
  • Geopolitics of Tech Investing
  • Navigating Megatrends

That gives FII a five point compass.  The meeting has a number of interesting breakout sessions.  One is "How to Democratize Crypto Investing."  Wasn't democracy just in peril?

Other sessions include:

KPMG is a serial ethics abuser, having recently settled a £1.3 billion lawsuit over shoddy work on Carillion audits over a nineteen year period.

Fortunately, those attending the Crown Prince's soiree need people to funnel them more money, add to their power/influence and eventually give them eternal life or a means off the planet they helped ruin.

Remember the real "Davos Men" have been working on income inequality since 2015.  They never shared they were only addressing "the have" side of the equation.  

That brings us to the Crown Prince's "Davos in the Desert."  It's literally on fire.

Update 11-5-23:  The United Arab Emirates censored a John Oliver episode on McKinsey and its role advising the Saudi government.  The UAE broadcaster edited out the portion referencing the murder of journalist Jamal Khashoggi in a Saudi consulate.  

“Criticizing the royal family, criticizing the crown prince in Saudi Arabia is a terrorist offense and you can be prosecuted for terrorism."

And the terror the Saudi royal family inflicts on its citizens?

Saturday, October 21, 2023

South Park and Carlyle in Loan Talks

The Carlyle Group is in talks with South Park creators for an $800 million loan (Bloomberg).

The loan to Park County, a media company created by Trey Parker and Matt Stone to manage their various assets, would be backed by the intellectual property from the hit TV show....

South Park has a rich history of tackling the unsafe:

"I remember thinking "this is so wrong", but at the same time couldn't stop laughing. South Park at it's best." 

Which makes it a great fit for a politically connected private equity underwriter (PEU).  I wonder if Carlyle co-founder David Rubenstein sees any historical parallels with South Park's "cripple fight" and the current turmoil within the Red political team around a House Speaker?  

It may become the subject of Carlyle's "Remembrance of Things Past."  Carlyle's Jason Thomas helped advise the White House into the Fall 2008 financial crisis.

The White House, National Economic Council, Washington, DC
Special Assistant to the President for Economic Policy and Director for Policy Development, 2006-2008

In this capacity, Mr. Thomas acted as the primary adviser to the President for public finance.

Carlyle's South Park loan, should it go through, likely ensures the show will never do an episode mocking the greed and leverage boys.  There will never be a Jason character fretting over the collapse of the global financial system outside the Oval Office.  There will never be a David character strolling through the halls of Congress non-lobbying lobbying to keep his preferred "carried interest" taxation.

I wonder how the investment did under Carlyle's ESG scoring, especially their social and human capital dimensions?

Update 11-4-23:  Carlyle's Jason Thomas authored a report "Brave New World AI and Its Downstream Implications." 

UK PEUs: Sell Affiliates to Themselves


UK private equity managers now see selling companies to themselves as their best option to offload investments, according to new research, as a moribund IPO market and the higher cost of financing deals make traditional exit routes more difficult.  

Disposals to so-called continuation funds are the most popular option for private equity executives seeking an exit from their investments, according to a poll of 200 senior UK-based industry professionals carried out by Numis.  

The results, due to be published this week, underline the rising trend of private equity funds turning to newer funds raised by the same firm as they seek to sell their assets to return cash to investors. 

The piece warmed my heart when it stated:

The growing use of continuation funds has attracted scrutiny with the chief investment officer of asset manager Amundi last year likening parts of the private equity industry to a “Ponzi scheme” that would face a reckoning in the coming years.
Private equity underwriters (PEU) have considerable leeway in valuing assets.  Selling an affiliate to another fund in the same PEU seems hardly arms length.  This is not a new practice.  The Carlyle Group sold PPD to itself  in 2017 before ringing the IPO register in 2020.  In between Carlyle bled PPD for dividends.

Ponzi schemes, like any scam, can eventually blow up.  A PEU implosion could impact pension funds, thus pensioners.

The Bank of England recently set up a lending facility for non-banks.  Are they anticipating trouble with private equity underwriters (PEU)?  

It's a PEU chess board and the greed and leverage boys don't like to telegraph their moves.

Update 10-24-23:  Bubble Trouble did a podcast on this topic.

Tuesday, October 17, 2023

Andreessen on AI Associated Deaths: Murder?

The Hill

“We believe any deceleration of AI will cost lives,” Andreessen said on a web page titled “The Techno-Optimist Manifesto” on the Andreessen Horowitz website. "Deaths that were preventable by the AI that was prevented from existing is a form of murder.”

Andreesen is flipping the equation while venturing into the unknown and unknowable.  AI is more likely to cause deaths given our current understanding.

Algorithm's have harmed, even killed people by steering them to self harm content.  Social Media Victims reported:

Researchers have linked several aspects of social media use to depression and higher suicide risk. And according to the CDC, the suicide rate for male teens increased 31 percent between 2007 and 2015 and female teen suicides hit a 40-year high in 2015.

Tesla's autopilot was involved in car accidents where seventeen people died.  If deaths not prevented by AI progress are "murder" are deaths caused by AI progress also "murder?"

Tech bros aren't known for being consistent.  They are known for their insatiable need for more money, more toys, more bandwidth and wanting more minutes, weeks and years on this earthly plane.

Technology looks remarkably inept in solving the problems of our globe, at least at this point in time.  One biblical level event and the whole planet could become devoid of technology.  Maybe we could learn to live with one another again.  Maybe not.

Update 11-12-23:  Andreessen and other AI sponsors are balking at paying for the use of copyrighted material.  Isn't that the West's beef with China?  

Update 11-13-23:   AI books on foraging for food are out and they could actually kill someone.  Who would be charged for murder in the case of incorrect foraging information production?  Does Mr. Adreessen like mushrooms?  If so, he may wish to buy a human produced book on mushroom foraging.  I'd hate for Mark to be murdered by his own creation.

Monday, October 16, 2023

Nominee for U.S. Ambassador to Israel is PEU

President Joe Biden nominated yet another private equity underwriter (PEU) to serve in his administration.  His ambassador candidate for Israel is Jack Lew, managing partner for private equity firm Lindsay Goldberg LLC.  Lew joined Lindsay Golberg in 2017.

The Senate is yet to act on this nomination.  It remains to be seen if they will advance it in light of the horrific Hamas October 7 attack on Israel and Israel's declaration of war.   The war is underway.

Fellow PEU David Petraeus (with KKR) called the terror attack "far worse than 9-11."  The U.S. invaded Afghanistan and Iraq as a result of 9-11.  Petraeus commanded troops in both of those wars.

If approved Jack Lew will be the latest Biden PEU appointment.  His cabinet is chock full of PEUs.

Update 10-18-23:  A Senate Committee is holding a confirmation hearing today on Lew's appointment.

Update 10-22-23:  NyPo shared that Lew received over $14 million from his PEU work last year.  Their piece noted Lew's role in preserving private equity's preferred "carried interest" taxation, which he has received over the last six years.

Sunday, October 15, 2023

PEUs Rule

Private equity underwriters became ubiquitous over the last twenty five years.  They influenced the system via elected officials and regulators, ending up with certain advantages.  Jeffrey Hooke, senior lecturer in Johns Hopkins MBA program and a Wharton grad, speaks of private equity's virtuous cycle.  

The cycle includes leverage that only increases/maintains asset values, preferred taxation, secrecy, accounting leniency, and stacked return measures, all enabled by people charged with standing guard.  It's known as regulatory capture.

NYT wrote about policy making billionaires in 2011.  They've grown in numbers and influence since.


PEU chiefs have more riches and power every day.

We've had decades to see how they use it.

Update 10-16-23:  It seems the richest people in the world may not save us with their philanthropy.  Carlyle co-founder David Rubenstein coined the term "patriotic philanthropy," while disgraced FTX founder Sam Bankman-Fried offered "effective altruism."  They are two sides of the same coin.

Business Insider reported:

An Israeli billionaire businessman and his wife stepped down from their positions on a Harvard University board over the school's response to the Hamas terror attacks on Israel.

Idan Ofer, who owns Quantum Pacific Group, is the world's 81st-richest person, with a net worth of $19.9 billion.

Insider later added:

Les Wexner, the billionaire retailer and founder of Victoria's Secret, is the latest to pull funding from an elite school in the wake of the attacks last week.
Wexner funded Jeffrey Epstein for decades.

TeenVogue had the guts to print:

Every couple of years, a very wealthy, prominent individual dominates the headlines, having boldly vowed to give away their fortune to fix the crises of our time. A cynic might say they’re merely patching up problems of their own creation. Despite the glaring hypocrisy, a halo effect takes hold, allowing those who benefit most from deepening inequality to rebrand themselves as saviors.
As long as we’re reliant on the good will of the wealthy, big philanthropy will always have strings attached.

Abysmal leadership ensures the crises of our time remain firmly in place. Hamas had the gall to "pretend they were governing" before launching a horrific terror attack on Israel.  

....pride, envy, gluttony, greed, lust, sloth, and wrath bring war, famine, plague and death

Update 10-17-23:   The donor revolt at American Universities is spreading.

Update 10-19-23:   Powerful donors continue weighing in U.S universities.

Update 10-22-23:  A major investor pondered the implications of "the bank run on college university endowments." 

Update 11-2-23:   Bill Ackman lamented the PEU boys have to "police campus antisemitism." 

semeticrelating to the peoples who speak Semitic languages, especially Hebrew and Arabic.

Update 11-6-23:  Bill Ackman spoke to CNBC about his concerns regarding speech on Harvard's campus.  Jordan's Queen Rania shared her thoughts about the horrific Israel-Hamas war in Gaza.

Update 11-10-23:  PEU billionaires want to rule the airwaves:

Wall Street and Hollywood billionaires have discussed in recent weeks a plan to spend as much as $50 million on a media campaign to “define Hamas to the American people as a terrorist organization.”

It has long held the majority of war casualties, deaths and disability come from innocent civilians.  The conditions of war kill more people than bombs and bullets.   Intelligent billionaires should know this, yet they refer to these facts as "narrative."

“Public opinion will surely shift as scenes, real or fabricated by Hamas, of civilian Palestinian suffering will surely erode [Israel’s] current empathy in the world community,” he wrote. “We must get ahead of the narrative.”

....the billionaire collective has "a net worth of nearly $500 billion."

Update 11-29-23:   Billionaires are lining up behind Red Team candidate Nikki Haley.  Former free speech absolutists now want to restrict campus speech.

Update 11-30-23:  Those who ask challenging questions or write anything critical about our "policy making billionaires" get shunned and shut out, even in the sports world.   

Update 12-8-23:  PEUs giveth and taketh away.

In 2017, Stevens, the founder and CEO of Stone Ridge Asset Management, donated limited partnership units in his fund to Penn in order for the school to establish a center for innovation in finance. The donation is now worth about $100 million, according to a letter from Stevens' lawyers to Penn.

"Mr. Stevens and Stone Ridge are appalled by the University's stance on antisemitism on campus," reads the letter, which Insider obtained a copy of. "Its permissive approach to hate speech calling for violence against Jews and laissez faire attitude toward harassment and discrimination against Jewish students would violate any policies of rules that prohibit harassment and discrimination based on religion, including those of Stone Ridge."

The threat to withdraw the donation marks an escalation of the backlash elite universities are facing following growing instances of antisemitism on campus.

Is it that easy to take back?  If so, is it really a donation or something else.

Update 12-11-23:  Virginia Governor and former PEU Glenn Youngkin threw his weight behind fellow PEUs with his call that Harvard's and MIT's Presidents step down like Penn's President.  

Update 12-16-23:  The New Republic referred to billionaire Bill Ackman as the "plutocrat who thinks that being very rich entitles him to run more or less everything."  PEUtocrats Rule, like they have for decades.

Update 1-3-24:  The greed and leverage boys ousted Harvard University's President.  Their hold on power is nearly absolute.  PEU strings are attached...

Update 1-4-24:  Bill Ackman's wife committed the same sin as Harvard's former President, dissertation plagiarism.  Does she need to resign from her marriage?

Update 1-7-24:  The power of PEUs to toss out university presidents has been noted by others.

Update 1-22-24:  Larry Summers joined Bill Ackman in raking Harvard over the antisemitism coals. 

Wednesday, October 11, 2023

Tuberville Not Even Coach Class

Red Team Senator Tommy Tuberville is in the news for holding up military promotions during a time of increased global conflict as well as manufacturing a social media threat from former CIA Chief Michael Hayden.  

The former Auburn and Texas Tech head football coach co-founded a hedge fund, TS Capital Partners and various TS Capital corporations.  Tuberville was the "T" in TS Capital and his "S" partner was convicted of fraud.  

By July 2009, Tuberville was the subject of a Birmingham News story that touted him as an "amateur stock guru." In the story, Tuberville is reported as working at TS Capital Partners, looking to "drum up a little business for a big-time hedge fund run by Stroud Capital."

Tuberville's defense was essentially he was too dense to understand fraud was actually occurring.

"It is important to note that Coach Tuberville himself invested significant funds and has never received any return from his own investment."
Never received any return from his own investment?  That may help explain his June 2022 position on cryptocurrencies and retirement funds.

....the DOL says cryptocurrencies carry “significant risks of fraud, theft, and loss…”

Tuberville, however, says the DOL guidance undermines the ability of retirement plan participants to personally control how their assets are invested through brokerage windows.

Anyone putting their retirement money into FTX token FTT would have lost 96% of their investment between June 2022 and today.

Flashback to TS Capital's offering memorandum:

The “Offering Memorandum” presented to investors said Tuberville himself “is responsible for the investment direction, capital raising, and the day-to-day oversight of business decisions of TSCM. In this capacity, Mr. Tuberville provides the fund with strategic direction and guidance while overseeing investment opportunities. Mr. Tuberville also evaluates and researches each private equity investment opportunity considered by TSCM.”
That language makes Tuberville a private equity underwriter (PEU).  Former CIA Michael Hayden is also a PEU as principal for The Chertoff Group. 

The Chertoff Group offers growth capital through a private equity fund, MC2 Security Fund, managed by our affiliate, MC2 Investment Management, LLC.

When sued PEU boys go from the smartest guys in the room to the most clueless.

Tuberville told a reporter this: “I’m not smart enough to understand all the numbers.”

Tuberville's investment acumen increased greatly as a member of the Senate.  His net worth is at least $4.5 million and he has been an active trader in areas covered by his Senate committee membership.  Some investments raised insider trading questions.

Tuberville is doing just fine for himself. 

It is not a crime to be not very smart.  It is not a crime to be somewhat careless.

The people of Alabama may wish to take note. 

Update:  Former CIA Chief Michael Hayden was appointed to the board of Freedom Consulting Group, a private equity backed firm serving the intelligence and national security community.

Update 10-12-23:  FTX transferred $500 million in crypto to a USB stick to prevent hackers from stealing it.  FTX CEO Sam Bankman-Fried told Alameda Research CEO Caroline Ellison giving her an equity stake in the hedge fund "was too complicated."  Ellison testified that she gave “dishonest” balance sheets to lenders that concealed billions of dollars in funds that had been siphoned from FTX customer accounts. 

From February 2022 to July 2022, the CFTC said Voyager "engaged in a scheme to defraud customers by misrepresenting the safety and financial health of the Voyager digital asset platform.  "While representing they would treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager's bankruptcy and huge customer losses," CFTC Enforcement Director Ian McGinley in a statement on Thursday. 

Update 10-29-23:   Tuberville said the Blue Team created wars in Ukraine and the Middle East.  That brings back memories of the Red Team congressman who said Japan was an ally in WWII.  Tuberville, blubberville....

Update 11-2-23:  Fellow Red Team Senators blasted Tuberville on the Senate floor for holding up uncontroversial military promotions.  Coach overworked one officer to the point of a heart attack.  

A member of Tuberville's team suggested anyone working an end around on his boss' block would be primaried.  

Update 11-3-23:  Coach blocked his own team in advancing 61 individual military promotions. 

Tuberville had previously said he wouldn't object to votes on individual nominees.

Previously, Tuberville was an "amateur stock guru" who partnered with a fraudster (but couldn't figure that out).  

FTX's Sam Bankman-Fried was found guilty of fraud.

Update 11-29-23:

Tuesday, October 10, 2023

PEU Stephens Group Scrubs Bankrupt Affiliate

Private equity underwriters (PEU) share widely about their winners.  The Stephens Group highlights their early investment in Walmart.  They don't talk about losers, even scrub them from their website.

CBS News did a piece on Mitchell Gold + Bob Williams going bankrupt overnight.  More than 700 people lost their job and their corporate promised 60 day severance pay vaporized under a bankruptcy filing.  

The piece did a good job of highlighting the evils of private equity (a mission of PEUReport since its establishment in 2007).  PNC Bank defaulted the loan due to paperwork issues, Stephens Group chose not to fill the funding hole.  

Mitchell Gold rues that they ever sold the company to begin with.  Now their baby is in bankruptcy.  It remains to be seen what emerges from liquidation.

What won't be revealed is how much money Stephens Group siphoned from Mitchell Gold + Bob Williams under their PEU ownership via management fees, deal fees, and special dividends/distributions. 

Update 10-12-23:  Stephens Group provided early money for the Clintons.  Private equity got a solid foothold under Bill's presidency, soared under W.'s and Obama's, and became official robber barons under Trump and Biden.

Monday, October 9, 2023

Fraudulent Airplane Parts Found in U.S.

The man behind fraudulent airplane parts provider AOG Technics is Jose Alejandro Zamora Yrala.  

It seems he faked more than critical airplane parts with nonexistent offices and stock photo employees.Several weeks ago AOG Technics was ordered by a London court to provide documentation of engine parts transactions.

Yrala has two other companies, Kensho Group Ltd and Sunwave Solutions Ltd.  How much of those are real?  He has a private equity underwriter (PEU) title of Managing Director listed as his occupation on Endole.

Kensho Group has been dissolved but ironically has the only operating website of Yrala's three companies.  

As for the quality of services one can deduce much from the image below.

I imagine Mr. Jose Alejandro Zamora Yrala might be difficult to find at that "adress."  Let's hope he is already in custody.  

Yrala, the SBF of critical airplane parts..

Update 10-25-23:  Bloomberg did a podcast on this story.  I neglected to include in the original piece there is a legitimate airplane parts provider with AOG in the name.  It is based in Florida. 

Saturday, October 7, 2023

Most Sickening PEU Story Yet

One man wants to "advance the core platforms of the Democratic and progressive vision."  His name is Scott Brighton and he is CEO of NGPVAN.  Scott shared his goal of:

"transforming NGP VAN’s product portfolio into a core technology platform that we, you, and our partners can continue to build upon. Our own innovation on top of that platform will focus on leveraging data and using new technology to enable more effective targeting, organizing, and fundraising. Our vision is to reassert NGP VAN’s core CRM as a “platform for Democracy” that the entire ecosystem can use to drive faster innovation that results in consistent election and policy victories."
NGPVAN is part of Bonterra, a social good software platform.  Bonterra is owned by Apax Partners, a private equity underwriter (PEU).  

What is known about Scott Brighton?  Forbes stated:

In May 2017, Scott Brighton, chief executive of Aurea, an ESW portfolio company, walked into the Portland, Oregon, offices of intranet-collaboration software maker Jive Software. ESW had just agreed to buy Jive for $462 million in cash and fold it into Aurea. Brighton was there to give senior management a message: Jive’s work environment was about to change drastically. 

 “They were pretty clear their model was to reduce costs as much as possible, and with the engineers they said their goal was within a year everyone working at global competitive rates, which is like Bangladesh or Egypt rates,” says Sid Bos, vice president of engineering and one of 250 employees in Jive’s Portland office. 

According to Bos, ESW viewed employee perks and benefits as excessive, including the free weekly bagels in Jive’s offices. “They were proud of their model and tools, like their WorkSmart key-logging tool,” he says. 

This fall ESW closed Jive’s main Portland office, and after a mixture of buyouts, layoffs and voluntary exits, nearly all its 250 employees are gone. Less than a dozen remain as contract employees working from home. 

“Almost everybody is a foreign contractor,” says Jim Janicki, who was CEO of Dallas-based Ignite Technologies when it was purchased by ESW in 2013. “They keep some and they let most go, and those they keep they turn into contractors.”

So the man who trashed a professional workplace, harming many people and their families, wants to offer a "platform for democracy?"  

Brighton's NGPVAN letter states:

This will, regrettably, involve a workforce reduction across Bonterra.

Such a surprise...  

Scott tries to recover with:

We are committed, long-term partners in ensuring this country continues to uphold democratic values from a position of global leadership. We understand, with the deepest possible moral conviction, the vital importance of our role as your partner.

A PEU affiliate is not capable of the "deepest possible moral conviction."  Greed does not allow it.  Scott's history shows the lowest common denominator of global leadership.  The bar lowers and lowers and lowers to where providing free bagels is excessive. 

Political and corporate insiders have the challenge of doing something with the gobs of money they throw at one another.  Politico reported:

Democrats up and down the ballot have long relied on NGP VAN to run their campaigns. Now, consultants and former employees are concerned that repeated layoffs will lead to problems with the party’s most vaunted tech tools.

Why not reform a democratic platform to improve margins while digesting more insider money?  Unless, their PEU owners want to tilt the election playing field?

CEO Brighton can hire foreign contractors in nondemocratic countries to build and maintain the new platform.  Someplace where they don't have perks or benefits.

Politicians Red and Blue love PEU and increasingly, they are one and the same. 

Update 10-8-23:  Apax Partners got its name from PEU Alan Patricof.  He co-founded Primetime Partners in 2019 which invests in companies serving the over 60 population.  Patricof is 88.  His earthly gains will remain on this plane.

Friday, October 6, 2023

Carlyle Gets Unique Credit Offers for Medtronic Divisions

Medtronic's latest annual report to shareholders states:

We’ve been focused on separating our Patient Monitoring and Respiratory Interventions businesses.

The Carlyle Group is in exclusive talks to buy those businesses.  Carlyle may finance its buyout with debt that provides for an expansion of the principal in lieu of interest payments. 

Bloomberg reported:

The private lenders are looking to provide a roughly $2.6 billion unitranche loan, which is a blend of senior and subordinated debt popular in the private credit world, according to people familiar with the matter. They are offering the option to PIK a portion of the interest expense, meaning it would be paid with more debt.

Pricing is currently being discussed at 550 basis points over the Secured Overnight Financing Rate, SOFR, according to the people. Half of that spread would be eligible for PIK treatment, the people added

With three-month SOFR at 5.4%, (Carlyle affiliate) Medtronic is looking at paying nearly 11% in annual interest costs.

It's debt with built-in leverage expansion.  

Carlyle likely sees "interest rolled into debt" as cash flow positive.  That would help make the deal work.  It's kind of like a temporary rebate that comes back to haunt at refinancing.  The financing laid out would add over $350 million in additional debt to those Medtronic divisions over a five year period.

Remember what Oaktree's Howard Marks said in a recent interview with Carlyle Group co-founder David Rubenstein:

"Nobody ever repays their debts.  They just refinance it...."

Yes, the PEUs do.  That said, we are entering the "loan to own" era where senior creditors will increasingly take over companies unable to refinance.  

If you like chaos in our political system, just wait.  PEU affiliate musical chairs could cause quite the scramble.  That should worry anyone wanting a stable, affordable healthcare system.

Thursday, October 5, 2023

Palantir's PEU Chairman Pans Client

Britain's National Health Service is considering a five year $579 million contract with vendor Palantir.  The deal will "help the agency analyze medical data, detect patterns and ultimately overhaul its entire system."

Bloomberg reported:

Peter Thiel, who is still Palantir’s chairman, has described the UK’s affection for the NHS as “Stockholm syndrome,” and recommended that the country could “rip the whole thing from the ground and start over,” in a speech at the Oxford Union in January.

Wow, the Chairman insulted his company's client, one considering increased business with the firm.  It's a PEU world.

Update 10-21-23:  Marc Cohodes wrote "Peter Thiel is and always has been Dirty."

Update 11-11-23:  Billionaire Peter Thiel had this to say about his past support for Donald Trump:

“There are a lot of things I got wrong,” he acknowledged. “It was crazier than I thought. It was more dangerous than I thought. They couldn’t get the most basic pieces of the government to work. So that was—I think that part was maybe worse than even my low expectations.”

And these are the people driving government policies...

DOJ Agrees to Suspend Corporate Criminal Risk for Acquirers


Under the policy, the DoJ will not bring charges against an acquirer that voluntarily reports misconduct committed by a company it buys within six months of the deal closing, whether the illegal activity was identified before or after the purchase.

Let's say the illegal activity was identified during the acquirer's due diligence undertaking.  That acquirer is knowingly taking on that legal risk.  

What is the potential acquirer's ethical obligation when they discover the illegal activity?  Do they report it to pertinent legal authorities?  Do they inform the current board of directors?  

Let's say they do none of that.  How nice of the DOJ to suspend criminal charges against that acquirer should they report it within six months of closing.

Wednesday, October 4, 2023

Rubenstein Interviews Oaktree's Marks

Bloomberg Wealth
had a PEU to PEU interview.  Host David Rubenstein of The Carlyle Group and Declaration Partners spoke with Oaktree's Howard Marks.

Rubenstein referred to private equity geniuses.  Friends might use another name (starts with "P" and rhymes with geniuses).

In prior interviews he spoke of private equity underwriters (PEU) doing God's work.  Greed is one of the seven deadly sins, so the "barbarian" moniker is a better fit.  

Marks said "Nobody ever repays their debts.  They just refinance it....  Many more companies are going to flounder."  It's the looming "loan to own" era.

Rubenstein spoke of the $32 trillion national debt but neither man confessed to their role in preserving private equity's preferred "carried interest" taxation.  

Marks said he would serve the government as part of his civic duty.  That is an established role for Wall Street giants and PEUs.  The Biden cabinet is chock full of PEU boys.  It's a feature of our democracy, that uber wealthy insiders volunteer for government service in order to keep the system stacked in their favor.  

Bloomberg is generous in giving these two men a platform to increase their obscene levels of wealth and influence.

Tuesday, October 3, 2023

Carlyle Dumps Consumer, Media and Retail

The Carlyle Group brags of having a head's up on changes in the economy via its ownership stake in a vast number of companies.  So what does Carlyle's dropping retail, media and consumer investor team mean?   A Carlyle chief noted "the increasingly challenging investment trends in this space."

Carlyle, a politically connected private equity underwriter (PEU) made huge returns on Beats, Supreme, Golden Goose and Moncler.   The man behind those investments is now with Kim Kardashian's SKKY Partners.  

Carlyle's website shows 37 current investments in the space.  What happens to Carlyle's partnership with Patrick Doyle, former President and CEO of Domino's Pizza?  

Carlyle and Mr. Doyle will source opportunities internationally across sectors, and will initially put an emphasis on the consumer and retail sectors in North America and Europe.

Carlyle no longer wants your retail dollar but the PEU clearly wants access to your retirement funds. 

Monday, October 2, 2023

Fed to Back Up the Whole PEU Mess?


Private equity firms have been increasingly adding another layer of debt to their complex borrowing arrangements, raising concern among some investors about potential risks to the wider industry and the financial system.

Hit by a drought of deals and dwindling cash, some buyout firms are starting to resort to backroom financing to help meet fund commitments or enable succession planning. 

The loans — backed by assets including the promise of future income — carry interest of as much as 19%

The Bank of England recently set up a lending facility for non-banks.  Are they anticipating trouble with private equity underwriters (PEU)?

“The investor universe is unbelievably unaware of the underlying leverage throughout this entire ecosystem,” said New York-based Dan Zwirn, founder and chief executive officer of Arena Investors,

Obscene leverage level sand Carlyle Capital Corporation in the run up to the Fall 2008 Financial Crisis.  JP Morgan sees some parallels between 2007-08 and today's financial environment.

JPMorgan equity strategists have reiterated their concern that investors are looking through too many risks and are too complacent, with headwinds gathering pace and tailwinds petering out.

The Carlyle Group took a stake in Captrust, an amalgamation of registered investment advisors.   Fellow PEU GTCR invested in Captrust several years ago.

Since 2020, Captrust has made 29 acquisitions of registered investment advisory firms. It now has $832 billion of assets under management.

Those RIAs are in position to push PEU investments.   Should the Fed have to step in and back up the whole mess my wise friend's thoughts would be realized (yet again).

In the end they are the greatest socialists; they are funded, aided and abetted by central planners. The worst part about the whole scheme is it's clearly a ponzi supported by the government for the benefit of the insiders.  They are the welfare Queens. Yet, the masses are more worried about a malnutritioned family getting an EBT card that doesn't support enough calories a day to live healthy.  Oh the strong casting of judgment on the weak.  What men we have among us.  This whole thing needs to come down hard.

People wake up slowly, then all at once.  Stay tuned.