Tuesday, 21 October 2014
Last updated 10 hours ago
Jul 9 2007 | 12:46pm ET
Moody’s Investors Services has issued a scathing attack on private equity firms, trashing the industry’s claim that companies are better off in private hands.
“The current environment does not suggest that private equity firms are investing over a longer-term horizon than do public companies despite not being driven by the pressure to publicly report quarterly earnings,” the report concludes. Moody’s is especially critical of the p.e. practice of borrowing to pay their own dividends, increasing rather than paying down a company’s debt.
“They’re taking capital out over a short period of time, providing themselves with a dividend in the first three years,” Moody’s analyst and report author Christina Padgett told Bloomberg News. “That’s not an investment; it’s a dividend.”
Padgett’s report goes on to accuse p.e. firms of fudging numbers to show an improvement in portfolio company performance, arguing that any uptick in performance is likely due to using debt to inflate returns, rather than the efforts of new, p.e.-installed management teams.
Unsurprisingly, the p.e. industry isn’t buying Moody’s’ analysis, with Douglas Lowenstein of the Washington-based Private Equity Council telling media outlets that p.e. ownership “can and does liberate management to focus on long-term growth.”
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...