Word: ipos
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...Since then they have fallen below their IPO price, while public shares in Fortress Investment Group, a firm that specializes in hedge funds, are down 28% since the close of trading on their February 9 debut. Granted, that's a short-term, backward-looking view?never the best way to size up a potential investment. Yet as other shops like Kohlberg Kravis Roberts, Carlyle Group, Apollo Group, and British hedge fund manager GLG Partners toy with listing public shares, it's worth taking a critical look at the broader, ongoing forces impacting these stocks...
...There are other reasons to steer clear. In its IPO filing, Blackstone was very blunt about how erratic profit can be. That may be the nature of the private equity business model - buying existing companies and then spending years fixing them up before reselling and realizing gains - but it also makes it next to impossible to model future earnings and thus come up with a fair stock price, says Brian Hamilton, CEO of Sageworks, a financial analysis firm that specializes in private companies going public...
...that, the IPO filing revealed a Byzantine operating structure, over which investors holding public shares - technically "units" of the Blackstone partnership - will hold little sway. "When you buy 10 shares of IBM, you don't have much of a voice, but at least there's a democratization of how the organization is structured," says Hamilton. "You're not getting that with Blackstone. What you're getting is, Trust us, we have a good track record." And keep in mind that that track record is from a time when the company didn't have to deal with the constant and short...
...that if the super-savvy billionaires who run Blackstone are selling some of their stake in the company, you don't want to be on the buying end of that transaction. But if that logic really held up, you'd never want to buy around the time of an IPO?managers always have better insight into their company when it has just been listed. Yet folks who got in early at, say, Google, are probably pretty happy...
...Gore's role at Google is less formal. He started as a senior adviser when it was still a small company, before the IPO. "I assumed he'd give us geopolitical advice," says CEO Eric Schmidt, "and he did-but he was also superb at management and leadership. He likes to dive into teams that don't get a lot of attention-real engine-room stuff, like problems inside an advertising support group. He offers his strategies and solutions and then goes...