Allied Capital

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MMmonkey, thanks for the response. Unfortunately I have no clue what a BDC is and the links you provided require me to apply for the value investors club. Would you care to provide a little more detail as I would really appreciate it. Thanks again.

Business Development Company, similar to American Capital Strategies. They do everything along the entire ladder of the cap structure (senior, mezz, preferred equity, equity).

This post will show my lack of PE knowledge, but I hope I can learn from you guys. Could one of you guys (GameTheory or MMmonkey) explain the difference between how Allied Capital operates and how some of the bigger PE firms like Carlyle/Blackstone/KKR operate? I would really appreciate it!

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Allied Capital is a crooked pyramid scheme. If you want the details, read Fooling Some of the People All the Time by David Einhorn. The level of corruption in this company is too much to list in a message board post. I would avoid them at all costs. I highly recommend the book. I'm in the middle of it right now and its incredibly interesting.

I haven't read the book, but Allied is a very small minority co-investor in one of our portfolio companies, and they seem fine to me.

You could also check out: www.foolingsomepeople.com to get the gist of it--there's some interesting background on the war b/w Greenlight and Allied, e.g. correspondence from lawyers, etc. I heard that COO of Allied is resigning at the end of this year. Note that Einhorn pledged 50% of profits from his short trade on Allied, which he says is only "slightly behind", and 100% of profits from the book, to charity.

IBPEHFVCYou could also check out: www.foolingsomepeople.com to get the gist of it

I just watched the speech, and the things Einhorn points out are ridiculous. The best part was when he says "Theres a name for that" (now I understand the pyramid scheme reference sei99) in regards to how they are issuing new equity to meet the dividend requirement. Definitely a very interesting/thought provoking speech.

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