Private Equity Stock Review, Friday, 1/22/2010.
Los Angeles, CA 49..56F Rain.
Chicago, IL, 33..36F Cloudy.
Port Jefferson, NY, 28..41F Sunny.
1. We're Back.
2. Note on Google
3. Hedgeweek 2010.
4. Is Rodman (RODM) a Gold Play ?
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1. We're Back.
Okay, we're back with the names for the 2010 Watch List -- pronto. Our guess is that news just out (yesterday) -- could bump the groups valuation, by 20% over the short term.
1. Blackstone Group (BX) up 69%.
2. Fortress Group (FIG) up 97%.
3. Rodman & Renshaw (RODM) up 311%.
4. MVC Capital (MVC) up 47%.
5. Och-Ziff Capital Management (OZM) up 120%.
6. GLG Partners (GLG) up 29%.
We'll release the names, symbols and prices for now -- to mark our territory. More details coming later.
The stocks on our Watch List for 2009 gained an average of 82%. Interestingly the The Hennessee Hedge Fund Index, which tracks "returns" from more than 1,000 hedge fund managers, rose only 24.6% in 2009, thus proving our thesis that it's better to own the shares of a hedge fund, then it is to have them manage your money (at least in a bull market). Ditto with mutual funds.
As another example, the main hedge fund run by Daniel Och's Och-Ziff Capital Management (Symbol: OZM) rose 23% last year. However the share price soared by 120% from where we added to the Watch List at $6.24 last year and where it closed at $13.74. Hello -- that's nearly five fold better !
Let's shine the light on that just a little brighter. If you had given former Goldman Sachs'er David Och $10 million to manage last year year, you would have roughly $12 million this year -- as in big whoop (and paid him roughly $400,000 for his efforts). If on the other hand had you bought his stock when we added it to the Watch List, the same $10 million would be worth $22 million today (and you would have paid him - or us, nothing !).
So the pecking order in wealth creation via hedge funds is:
#1. Spend your money to start a hedge fund.
#2. Invest your money in a publicly traded hedge fund.
#3. Have a hedge fund manage your money.
(David Och's firm which he started in 1994, now has $23 billion under management. If he gets the once standard 20% of gains, "he" would have made a smidgen more than $1 billion last year alone -- on a mere 23% gain.)
Anyway, the "news" we are talking about is President Obama's "Bank's Will No Longer Be Allowed..." announcement yesterday -- to bump the banking giants out of the risky and/but/or lucrative private equity business.
Weird thing is this could be bad for the market in general (one less leveraged market buyer -- in times of buying), which would of course be bad for the valuation of the holdings currently being held by Private Equity companies. Still net/net we think the less competition to manage private equity dollars, the more potential dollars to be managed by the established players. All in all, right now there are more questions than answers -- which is generally when the easy (easier) money is made.
Our list is essentially the same as last year with two more names and a few more to come.
One overriding caveat to the entire group (past, current and future) is the "out-of-the-blue" governmental/regulatory risk which fall under the "We just don't like anything about you guys, including how much money you make, how much money you have and how little in taxes you pay."
And one new caveat is the actual possibility that the government decides that the entire private equity business (including non-bank owned) is also a danger to world at large -- and comes up with some way to limit their growth in assets. Whereas the banks are too big to fail, the hedge funds may be too big to..be trading..and on margin. They could even have a special tax which escalates along with the amount of leverage a fund has !
Pricing is from exactly one minute after President Obama's speech plus 15 minutes (yes, we use delayed quotes).
1. Blackstone Group (BX) $13.37.
2. Fortress Group (FIG) $4.91.
3. Rodman & Renshaw (RODM) $4.66 (Rodman by the way is now also a gold play! Check the news.)
4. MVC Capital (MVC) $11.77.
5. Och-Ziff Capital Management (OZM) $14.02
6. GLG Partners (GLG) $2.16.
7. Ares Capital (ARCC) $13.41.
8. KKR Financial (KFN) $6.23.
We understand there that there isn't an overwhelming amount of interest in this group -- amongst our subscriber list -- which we attest to a general lack of reporting on the group from traditional business media (WSJ, CNBC, Bloomberg, etc.) We only have a few thousand subscribers and nearly all of them (we can see by their email address) are from the hedge fund/private equity business.
This is why we have the website. http://privateequitystockreview.ning.com/
If you go there you'll find its really a great way to follow the industry via a variety of RSS feeds.
Hedgeweek's Annual report is out. You can find a link to it on the left hand side of our website
Notes, Rodman (see news headlines) is now also a "gold Play.
Going Concern Statements.
We would like to point out that the majority of companies listed on the
OTC Bulletin Board have factors which create an
uncertainty about the their ability to continue as a going concern. These
concerns are typically related to financing (or lack of), competitive
environments, lack of operating history and operating at loss levels which
is typical of most start-ups.
These statement can usually be found in their most recent 10Q filings and
typically you don't have to dig to far down past the financial tables. We
like to use http://www.pinksheets.com
for quick and easy access to SEC
filings. We think it would be wise for most investors to assume that all
companies listed on the OTC Bulletin Board (and many on NASDAQ) have going
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