I've never been a big fan of Warren given her pious rhetoric toward Wall Street and attack on PE. Blindly vilifying the entire industry so she can gain a few political points, making it seem as though she fighting for the little guy and battling the evil of Wall Street typically referencing a few bad situations (ToysRus, Sears) and spinning it to make it appear as if that is the industry norm but this is ridiculous.
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Saying private equity has anything to do with recent events might be the dumbest thing I've ever heard. The name literally fucking tells you that they're not involved with the likes of GME or AMC
Tell us something we don't know
I open-mouth kissed a horse once.
(That's something you don't know.)
I predict that the PE industry will be more under scrutiny in the future, since the public is starting to get to know a bit more about the industry.
Btw Warren is a Bankruptcy Lawyer, hence I expect her to know more about Finance than the average Joe.
She does know more but she isn't above saying false crap to score political points. She literally accused the entire financial industry of manipulating markets without any reasoning or specific examples.
I mean, you're referencing two of the most obscene cases and saying "this isn't what the industry is really like," but lets all be honest for a second. Pretty much the entire private equity "toolkit" for generating value is laying people off, cutting back on service, raising prices, and then selling the company. It's pretty much the definition of a slash and burn. And with the rise in popularity of SPACs, that's only going to get worse.
Not defending the connection of PE with what's going on in the markets, but I think the underlying point she's making is more a case of vulture capitalism. After all, her constituents are probably unlikely to understand the difference between and investment banker and a bank teller, so expecting her to put out a position paper that is wholly accurate in every respect is... well, unlikely. One thing Democrats seem to have learned from the GOP in the past few years is that the electorate seems to care less about hard policy than about sloganeering. Well... here's the result. "Financiers bad!" is an easy sell.
I think you've read Barbarians at the Gate one too many times. The majority of PE firms do not lay off people or cut back on service, but the opposite. They provide capital to the founders to grow faster, increase their product or service offering, and hire more people. Unless you're working on distressed assets, the slash and burn you're talking about is the last tool in the toolkit.
Exactly! Slash and burn might be the case for some of the big deals taking public companies private but that really isn't the norm anymore. I myself work in the MM space and it's all about infusing capital to grow the business and a lot of the time it starts with adding personnel.
It has truly become the Trumpian era in both parties even though the Republicans have been a lot worse because a good part of them are trying to usurp the democracy. Almost no one in either party is actually trying to explain and find solutions to our issues in good fate. The fact that Biden is President is pretty extraordinary when you think about the current political dynamic.
the only thing I wanna see changed is that carried interest is taxed as ordinary income (and before you fling shit, I think all income should be taxed the same and most deductions shouldn't be allowed)
beyond that, free market
At least AOC got a break today from the wrath of WSO. The day is still young, though.
I think the point she’s trying to make is that the public and private markets can sometimes play hot potato with a company. Ignore negative research to make the company look as good as possible so you win the pitch. Then try and get them acquired by a larger company at a high valuation, just to watch them pump money into them while kicking the can on unit economics. Uber and others decided to spend millions of dollars on political lobbying instead of anything else. IBs do whatever it takes to get their client valued at a high range while VC/PE try and grow the company at all costs, with all the big money coming in the form of carry, taxed at the long-term gains rate. If the company you’re invested in is bad, you are motivated to sell it for as much as possible, no natter who you might be throwing the hot potato to. Hedge funds will also take massive positions and then plead their case to the public, effectively trying to legally manipulate the stock up or down.
I’m not saying everyone in finance is evil or the industry needs to be completely revamped but there are some core issues that I completely understand people being upset over.
The guy who wrote that axios article is making something out of nothing. Any of you actually read Warren's letter? OP didn't. She mentions private equity just once in a list of things:
Private equity is involved in the stock market. Take privates, M&A, private to IPO offerings, etc. PE funds have hedge fund arms; these investing firm structures get murky.
I did read it and that fact that she lumps PE in with what went on last week with GME is idiotic. You are correct in that PE does play in the private markets but it is on the fringes, as you mentioned either taking private or IPO. PE does not actively trade and invest in the public markets outside of any potential hedge fund arm, there may be a few instances where PE does play in the private markets beyond IPO, taking private and hedge fund arms but that is not the norm.
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