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Breakingviews: The private equity divide

Monday, November 11, 2013 - 03:12

Nov 11 - Richard Beales and Jeffrey Goldfarb talk about why the shares of Apollo, Blackstone, Carlyle and KKR no longer move in lock-step and why it's mostly good for the buyout business.

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That time was investors in things that speak publicly traded private equity firms. We're pretty much the same. No longer the case to the polar had some great innings -- -- -- underlines the big difference right what would you have what does that mean you know the last one of the last big firm to go public was really Carlyle. A year or so ago. And -- in the year prior to that if you looked at that stock charts of Apollo Blackstone KKR and -- -- on the product yet but those three. You could overlay those stock charts and other words think they've moved lock step and it was a really curious phenomenon particularly because. What should Karlsson these four firms -- you and ask the private equity in the sense but. They all have very different ultimately sent to load of realistic blacks as realistic KKR's big balance sheet. Apollo is very much an investor in debt. It's -- Europe -- they've all got a different way of Cingular told by the Soviets that similarly on the analysts into. Focus on this. Management -- income right to safer but you know you took a private equity guy did anything they care about is the carries the game -- put up Blackstone kicked off -- actually fortress investment was the the first one to go public in February of 07 and lots of entertainment device and talk about six years now. I think initially what it was and it analysts and investors generally know how to think about these animals made. So what they did was then they compared them to traditional -- -- to -- -- he's got a lot that's that's right management and so -- -- that Rick -- -- writes that they would -- they constructed the sum of the parts models like really -- with that ended up doing is putting a lot of focus on -- so steady match in 2% one half percent and none -- it up on these huge gains and losses and the whole model is and it's not. It's not T. Rowe Price it's not you know black and these guys are in -- it to make big bets to invest money it returns. We carried interest of the profits the ridiculous that's really where the juices. And -- the -- -- started to look at the companies differently and -- -- is that the sewing up right in saying that this this in a period of credit that was trying to. Get rid of to exit at a pro certainly Apollo has been a huge seller Blackstone as a big seller these days and so what you're seeing and now is to that of the -- that those who is now so you've seen this great separation stocks were you at Apollo -- 120% blacks and up 8%. Carlisle last unfortunate but you see the difference now that's what's -- now. You know that the flip side of the millions and that's a good thing to have that title to be that if there's a bad period. You of these see the same kind of effective that's right exactly I mean but what you. You know what's this is good for the industry met everybody they're not model with it right on the -- the bad thing is that what this means is that investors are looking probably short term. They're probably very focused on hey who's returning money -- who's who's selling a lot of stuff. And distributing earnings and so what you may end up I was as it is a big portion of the shareholders kind of jumping around looking for returns. Right which is why I think part of the reason he -- disparity stock prices but it. Thanks to particularly great separation of product because of some of mold breaking news for you tomorrow.

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Breakingviews: The private equity divide

Monday, November 11, 2013 - 03:12

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