Private Equity Industry Update

Private Equity Industry Video Update | THL Partners

Following yesteday’s look at the “new normal” of private equity, here is a good video update on the private equity industry from a partner at a major private equity firm. The economic recovery is still very shaky and private equity firms and investors are having to decide when is the right time to get back in the market again. Scott Sperling of Thomas H. Lee Partners, one of Boston’s largest private equity firms, says his firm is aggressively looking for new opportunities especially in the services and business outsourcing sector as well as retail but that this recovery is “fragile.” He also mentions the gap in valuation between what the company is valued at in the public market and what private equity firms think it is actually worth. E-mail subscribers can watch the video here.

Companies are still valued higher than private equity firms are willing to pay, and in order to pay 7-9 times cash flow Sperling says he must be certain that the economy is stable. Part of this may be a hope on the buyout side that these companies would be willing to sell for less than they are worth due to economic pressure. Sperling closes with the negotiations between the FDIC and private equity firms and the recent regulation, advocating strongly for lowering the reserve requirement so that private equity firms and their companies are not competitively disadvantaged.

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Tags: private equity investors, private equity update, news, trends, industry data, one year later private equity, 2009, 2008, economic crisis, private equity fdic, banks, fdic regulations, capital

Government Bailout of Banks

Here is a video on the future of hedge funds. This video discussion with Suzanne Murphy and Mark Daniel confirms that while hedge funds had a tough year last year they are doing well this year. She also confirms what I commonly stress here that perhaps hedge funds making money in every market condition is a misconception, hedge funds have still preserved capital better than the broad markets have over the past few years. The video discusses how asset flows in the industry are stabilizing and many groups are beginning to allocate new capital to hedge funds.

This video also discusses how new hedge fund regulations will be coming into place, the question is can the hedge fund regulators effectively regulate.

The greatest quote of this video: “hedge funds were not the cause of this financial crisis. The hedge funds are not being bailed out here, investment banks and car companies are.” If you are viewing this article through our daily email newsletter please click here to watch the embedded video now.

View over 100 free videos within our Hedge Fund Video Library

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Tags: Government Bailouts, Government Funding, Government Bailouts of Investment Banks, Bailout money for banks, banking, banks, asset management, hedge fund, hedge funds

Sir Allen Stanford

Sir Allen Stanford Fraud Case | SEC

Below is a short video on Sir Allen Stanford who was just accused of fraud by the SEC. Below the video please see additional resource on this unfolding case.

Resource #1:

Resource #2: The Securities and Exchange Commission charged R. Allen Stanford with an $8 billion fraud centered around the sale of certificates of deposit, saying the flamboyant businessman hoodwinked investors by promising high and seemingly safe returns.

As the SEC charges were made public Tuesday morning, U.S. marshals and Federal Bureau of Investigation agents raided Stanford offices in Houston.

The SEC said that Stanford Investment Bank sought to lull investors into thinking their investments were safe, providing assurances that the bank invested the money in liquid financial instruments that were monitored by a team of more than 20 analysts. source

Resource #3: The England & Wales Cricket Board yesterday suspended relations with Sir Allen Stanford after he was charged with what United States investigators allege is a “massive, ongoing fraud.

A Dallas Federal court was asked to freeze Stanford’s assets and his company was put in the hand of receivers after the Securities and Exchange Commission took drastic action following days of intense speculation about his company as US Marshals raided Stanford’s office in Houston in the early hours of the morning Stateside.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said Rose Romero, director of the SEC’s Fort Worth office. source

Resource #4: We thought Bernie Madoff’s world record in Ponzi-scheming would be safe for a while, maybe for all of time. But now comes the news that the SEC is investigating one R. Allen Stanford, a billionaire who runs a money-management firm out of tropical, tax-free St. Croix. To his moneyed clients, Stanford offers certificates of deposit that offer “unusually high and consistent returns” (double the market average, according to Business Week). Hmmm, where have we heard that phrase before? Oh, also: The company overseeing the firm’s books is “a tiny accounting firm in Antigua” whose CEO recently died. Oh, dear. Stanford manages $51 billion, just nosing out the amount that Madoff had “under management.” source

Resource #5:

Resource #6:

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Tags: Sir Allen Stanford, Stanford Fraud Case, SEC Charges Against Allen Stanford, Allen Stanford SEC Case News, Allen Stanford Ponzi Scheme, Ponzi Scheme, Bank Fraud, Banks, investments

Sir Allen Stanford

Sir Allen Stanford Fraud Case | SEC

Below is a short video on Sir Allen Stanford who was just accused of fraud by the SEC. Below the video please see 5 additional resources on this unfolding case. If you are viewing this article via our daily hedge fund newsletter please click here to watch the embedded videos:

Resource #1:

Resource #2: The Securities and Exchange Commission charged R. Allen Stanford with an $8 billion fraud centered around the sale of certificates of deposit, saying the flamboyant businessman hoodwinked investors by promising high and seemingly safe returns.

As the SEC charges were made public Tuesday morning, U.S. marshals and Federal Bureau of Investigation agents raided Stanford offices in Houston.

The SEC said that Stanford Investment Bank sought to lull investors into thinking their investments were safe, providing assurances that the bank invested the money in liquid financial instruments that were monitored by a team of more than 20 analysts. source

Resource #3: The England & Wales Cricket Board yesterday suspended relations with Sir Allen Stanford after he was charged with what United States investigators allege is a “massive, ongoing fraud.

A Dallas Federal court was asked to freeze Stanford’s assets and his company was put in the hand of receivers after the Securities and Exchange Commission took drastic action following days of intense speculation about his company as US Marshals raided Stanford’s office in Houston in the early hours of the morning Stateside.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said Rose Romero, director of the SEC’s Fort Worth office. source

Resource #4: We thought Bernie Madoff’s world record in Ponzi-scheming would be safe for a while, maybe for all of time. But now comes the news that the SEC is investigating one R. Allen Stanford, a billionaire who runs a money-management firm out of tropical, tax-free St. Croix. To his moneyed clients, Stanford offers certificates of deposit that offer “unusually high and consistent returns” (double the market average, according to Business Week). Hmmm, where have we heard that phrase before? Oh, also: The company overseeing the firm’s books is “a tiny accounting firm in Antigua” whose CEO recently died. Oh, dear. Stanford manages $51 billion, just nosing out the amount that Madoff had “under management.” source

Resource #5:

Resource #6:

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Tags: Sir Allen Stanford, Stanford Fraud Case, SEC Charges Against Allen Stanford, Allen Stanford SEC Case News, Allen Stanford Ponzi Scheme, Ponzi Scheme, Bank Fraud, Banks, investments

Bank Market Values

Market Values of US Banks 2009

A trader on the west just sent me the picture below. Click on the picture below to enlarge it, pretty interesting to see the differences between JPM and Citi.

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Future of Hedge Funds

Q & A: Future of Hedge Funds

Reporter Question: With both hedge funds and the large investment banks providing prime services to them both failing what do you think the future of the hedge fund industry looks like?

Answer: While times like this are painful for many investors and managers of hedge funds this type of “weeding out” is needed, at least some level for the hedge fund industry. Major databases report that there are between 7 and 10,000 hedge funds in existence. The number of hedge funds in existence is far greater than any of the databases report. There are thousands of hedge funds in Europe and America who have no need to register with a database, are seeding strategies or simply don’t have the man power or knowledge to know that they should be listed within these databases.

As the number of hedge funds in the industry has increased over the past 7 years institutional investors have raised the bar in terms of minimum assets, track record and risk management checks which all must be in place. Naturally it has become more challenging to raise assets as there are more fund fighting to raise capital. This competitiveness along with the current volatility in the markets has lead to a constant push to create new investment models and strategies. During a bull market these strategies seem to perform well but it is not until times like these in which these new ideas and many old are re-tested.

These markets and the recent downfall of some hedge funds will do many things to the future of the hedge fund industry:

1. Weed out the hedge funds started by those with minimal trading experienced based on momentum trades made during bull markets
2. Remind us all of the importance of risk management procedures at both the business and portfolio management levels
3. Encourage more hedge fund seeding and track record building before any active marketing is completed
4. Shift more due diligence focus from general risk management questions to potentially more pointed questions, including worst case scenarios which have been played out through Bear Stearns and now Lehman Brothers

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Hedge Funds vs. Banks

Hedge Funds Serving Corporations

One long-term trend I’ve seen in the hedge fund industry is that hedge funds are now competing with banks within several dozen areas of business. Here is a short list of why some corporations are turning to hedge funds instead of Banks.

• Some commercial banks may not have enough money to lend because of timing or relationships in place with the corporation
• Some companies launching hostile takeovers need large amounts of cash quickly and hedge funds can sometimes provide the quickest solution at a competitive rate
• A company may need to borrow money overnight or for several days to make payroll until more of their receivables come in
• Some corporations use hedge funds to fund risky projects that wouldn’t fly with many banks
• Lately corporations have turned to hedge funds or sovereign wealth groups in times of desperation, when they need large infusions of cash to stay afloat

Yesterday I sent a note out about Hedge Fund Conference Email Alerts. The email-based subscribers to my blog could not see the email opt-in form though. If you would like to sign-up for free for these alerts please see this page: Hedge Fund Conference & Event Alert Email List

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Family Owned Businesses

Challenges of Family Owned Businesses

Many wealth individuals or families seek out single and multi-family offices while managing a family business or just after selling one or two family owned businesses. Since this is often the case it might help family office relationship managers to be well experienced or read within the niche of family ran businesses.

I just found a great PowerPoint presentation discussing the challenges of managing a family owned business enterprise and what one group has done to address these challenges. Please click here to read the PowerPoint presentation.

- Richard

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Family Office Customer Service

Private Banking & Family Office Customer Service

Here is a short video that I found interesting about how Family Offices and private banking groups can improve their customer service. In this video a hotel manager from a prestigious 5 star hotel in Switzerland is interviewed about how to maintain industry-leading high quality customer service on a broad scale.

- Richard

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Top Banks in the US

List of 30 Top Banks in America

I just found this list of the top 30 banks in America. I know it is slightly outdated but I get requests for lists of top us or global banks so I just wanted to throw this out there as a resource. Hope this helps, let me know if you have a better list to share with everyone.

- Richard

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Interest Rate Swaps

Interest Rate Swaps & Currency Swaps Video

Here is a short video by Mike on interest rate swaps and currency swaps. An interest rate swap is where you swap a floating rate for a fixed rate of return, this is because some hedge funds or other investment groups would otherwise shy away from pegged investments which can fluctuate. This video explains what swaps and interest rate swaps are in clear and simple terms.

Tired of reading articles? Watch more videos like this one above within the Hedge Fund Videos Directory.

- Richard

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