Last week shares in private equity firm EQT saw a 25% pop on the first day of trading.
Interesting to see private equity listing again – something that marked the top of the last cycle (except Carlyle/Oaktree both listing in 2012).
EQT raised 5.3bn SEK of new money and 13.5bn of sales by shareholders – a telling sign.
In the meantime over the last year the existing listed players have also started to convert their shares from limited partnerships to common stock – widening investor bases.
Often peak noise tends to lag the underlying trend that caused it.
Worse the trend is often already receding when noise picks up.
A great example is the refugee situation in the EU.
This is a chart (source: UN) of arrivals into Europe by land and sea.
Although the numbers peaked in the autumn of 2015 the noise still continues.
This is important for investing – next time you find yourself pondering noisy news flow, ask yourself – what is the data saying? What is the underlying trend doing?
It took the government 30 pages to come to the conclusion that was obvious from the start of the program.
“Help to Buy was originally intended as a short-lived scheme but will now last for 10 years and consume over 8 times its original budget, yet the value achieved from its extension is uncertain.”
“Around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the large sums of money tied up could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need.”
“…we still see consumer spending really strong ….the consumer continues to be strong so the caution that we see is really on the commercial side…So the consumer, despite the headlines we all get up and read every day, looks pretty good.” American Express CFO.
“…you are starting to see some places where the slowing is beginning to hit and I mentioned Germany as an example for Europe. But the channel slowness that we have seen in a few places does definitely continue… I think, as we look out, I think there’s going to be continued cloud for some time.” Honeywell CFO.
Interesting contrast between these two companies, suggesting consumers are doing well while there is clearly slowing in the industrial economy.
Turns out Iger considered buying Twitter but decided against it.
“The troubles were greater than I wanted to take on, greater than I thought it was responsible for us to take on. There were Disney brand issues, the whole impact of technology on society. The nastiness is extraordinary.”
Full Interview in the NYT coinciding with the release of his memoire.
They have a big store of the latest investment letters from all the hedge funds.
Naturally stay tuned for interesting snippets as we trawl through these.
However, if you can’t wait we thought we would share it for our readers to dig themselves.
Common sense disclaimer. Just because a big hedge fund is buying a stock doesn’t mean you should. One never knows what offsetting hedges or positions they hold. Be smart, do your own work, use common sense and invest responsibly.
Something to think about in relation to investing. Original ideas.
“Coming up with a genuinely original idea is a rare skill, much harder than judging ideas is. Somebody who comes up with one good original idea (plus ninety-nine really stupid cringeworthy takes) is a better use of your reading time than somebody who reliably never gets anything too wrong, but never says anything you find new or surprising.”
A long but fascinating read about the interplay of technology and oil.
Exemplified by the Kern River oil field story – how technology renders even the best estimates wildly wrong.
“From the beginning, it was evident that the Kern River field was rich with oil, millions upon millions of barrels. Wildcatters poured into the area, throwing up derricks, boring wells, and pulling out what they could. In 1949, after 50 years of drilling, analysts estimated that just 47 million barrels remained in reserves—a rounding error in the oil business. Kern River, it seemed, was nearly played out. Instead, oil companies removed 945 million barrels in the next 40 years. In 1989, analysts again estimated Kern reserves: 697 million barrels. By 2009, Kern had produced more than 1.3 billion additional barrels, and reserves were estimated to be almost 600 million barrels.“
