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The Takedown Of Sun Capital, Or The Sun Also Sets
An epic takedown of the once mighty private equity company by a very disgruntled limited partner.
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" Sh!t, and now it's all gone .."
Love Hemingway..
important astro conjuncture tomorrow could spell a big big crash type event check the futures tonight and watch asia post it on every blog you can, major divergence with the late moon eclipse is having major influence right now, putz crash window still opened and tomorrow is it.
Maybe the greatest fall ever
Is T-800 also wired to Keck?
I read about one supposed to happen on August 14...
http://www.luckydays.tv/coming-stock-market-crash.html
Tech analysis is a beautiful thing!
1. Saturn within orb of opposing Uranus.
2. Lunar node in Aquarius
3. Sun opposing Jupiter and Neptune.
4. Mars squaring Uranus.
Some graphs and colorful charts might make it more accurate tho.
Yes, when S&P is in conjunction with Uranus....
Sadly, the state of affairs is that your graph and correlation is about as accurate as a lot of the sell-side research out there.
Can you really go to work for a private equity company preying on the sick and wounded, and then act surprised when your bosses turn out to be a d*cks?
Perhaps some of these motivated LP's may decide to move Amway.
Bad timing...Didn't they hear... It is the 'New Bull' market according to CNBC's Larry Kudlow.
I saw that on his blog the other day. When this market and economy goes into another freefall, I will return to watching CNBC specifically to watch his show to see what he has to say. It's one thing to be optimistic and another matter to be a pollyanna with one's head in between one's legs.
I hope Kudlow's portfolio is seriously obesely overweight financials which he continues to buy and hold.
CNBC will be reduced to a test pattern.
That is E P I C , reads like a crime novel...well< I guess it is really.......the private jet and skiing piece was galling.
Hey TD, How's that SRS position workin out for ya? Just brutal.
What position. This poser doesn't trade, how can he have a position?
The disclaimer says nothing here is worth listening to or trading on, so there could be no SRS position.
Good thing too or his sphincter would be getting owned.
Attaboy TD This is the sort of skinny that keeps us coming back! if only I could figure out the math...
Does 'cash on the sidelines' include all these firms that have and are going bust ?
while much of this is true, private equity funds of all stripes and strategies are vastly overstating the value of their portfolios right now. when you only put 25% equity into the deal and pay 8.5x ebitda while borrowing 6.5x ebitda, then your ebitda falls by 40% and your multiple contracts to 6x, you are fucked. not complex math. the biggest "fail" will come when the endowments and pensions realize just how overvalued their portfolios still are!!!!
I love to see PE fail... comical. Those guys believed their own hype too much back in the good ol' days. Chasing deals at 15X EBITDA... with that they could have stayed in the public equity markets. (I guess they really wanted that carry?)
Anyway, I had this finance prof that earned ~$210K in 2007... (I know this because I said, "Fuck it" and went to state school where they reported everyone's salaries in the school newspaper.) He mentioned in class one day that he was approached by some PE buddies to work for 3X his current salary. (That's $630K for you CAPTCHA dunces.) He didn't take it because he said, "I like my current job and I don't have the stress. Besides, in 5 years they will all want my job." I guess he didn't believe the hype?
"Very Unhappy LP" should have put his money into a fund of funds.
I used to do leveraged loans, every relatively intelligent investor knew the Sun portfolio was a train wreck in waiting, they bought horrible companies in a time when anyone could get leverage to keep the game going. I certainly have no sympathy for the LPs, they are incompetent.
Can you provide your opinion on the deals from some of the other well-known PE shops, e.g. Blackstone, Carlyle, TPG, etc. In your opinion, are they all generally fucked or do you think some will do ok? What are you projecting for the economy going forward, so we know your assumptions. Thanks.
Generally all fucked. Avoid at all costs any large to mega buyout firm. All they give a fuck about is AUM and mgmt fees. When you pay 12x for a donut chain and lever it 7x, the math doesn't work, especially when growth falls off a cliff (and even if the HY market has ripped 40% YTD and fools fund refi's).
You bring up a good point though - Sun is expected to have a lot of bk's b/c by definition they are buying troubled companies. And in spite of their troubles, they didn't blow through their entire fund in 1 year like most the firms you mention. I would say Fortress, Blackstone, Carlyle, Bain, TPG, etc. have fucked their LP's even harder than Sun has. At least Sun still has 75% of their fund left.
Thanks for the insight. Always good to here from someone who actually worked on these deals.
Trust No One
http://vids.myspace.com/index.cfm?fuseaction=vids.individual&VideoID=761316
TD:
You are becoming the news!
pe is a f'n scam, every leveraged position looks great in a bull market.. wonder how those 3/30 twats at bain that bought all those retailers are doing? watch for this additional piece of fallout: law firms who built their business on pe clients are hurting right now with more pain to come
Shocking, Mr. LP! A couple of Wharton guys from Miami area stole your money! Their kind has been doing it for centuries...
These SOB's blew up a good company I work for in the early 90's.Scum suckers the lot, it was all about the Benjamins the hell with the workers. I was the only corporate officer to vote against their slash and burn approach, as expected I was fired and the company changed hands several times before finding a home with a bleed the company dry holding firm.
May they rot in hell.
A couple things on this:
1) The letter is 3-4 months old
2) Them deeming their mgmt fees (all $480MM of them) in Fund V is a great thing – b/c if the ship goes down, they go down with it. The are very aligned with their LP’s, to the tune of half a billion.
3) Firing ~50 people, or ~25%, of their work force over dramatizes what really happened –
a. 8 were on the Public Securities Team and their HF was an complete effing disaster, so they fired them (good).
b. Next, they shut down their Asia office b/c they had done 1 deal in 3 years, this is another 11 people.
c. Then they fired most of their NY staff for performance reasons, that was 10 or so.
d. They mistakenly hired a lot of people in 2006 and early 2007, assuming deal flow would continue to be high. Many of the layoffs were recent, green hires.
e. They still have a huge investment and portfolio ops team of around 70 people; this is very large by any PE standard.
4) A high number of bankruptcies is expected for what they do. When you buy distressed companies only, many won’t make it. To bitch about the high number of bk’s is asinine.
5) Saying that they are “preying on the sick and wounded” is ridiculous. They are distressed investors, and about 95% of the time, those “sick and wounded” companies are precisely that way because of incompetent management that is not working for shareholders. Blame management for being impotent or criminal, not Sun for trying to turn around the companies and make a buck.
I’m not generally a defender of Sun because they do have some big issues and the GP is famously greedy, but this letter is 1) old news and 2) filled with misinformed speculation and sensationalism.
This post on Sun should be required reading for every state pension fund, sovereign wealth fund, family office; this form of theft is regrettable the rule and not the exception. PE shops lost sight of how they got their money, from individual investors in the aggregate, and became obsessed with the size of their jets and the potential return on dangerous investments. Millionaires needed to become billionaires - quickly - and nothing that they owned represented true value because they always needed more. Now they find themselves with a new reality and an old (personal) capital structure. All they have talked about with their spouse is how much better life will be when they have more, so how can they sustain a marriage going forward on the certainty of less. This is not offered in sympathy. Much of the uproar of the last year was predicated on the highly leveraged, highly risky, home run philosophy of mere average investors, ignorant of macro principles who were only successful because the markets were strong. I hope on zero hedge you publicly identify the culprits, and help limit their ability to raise new money and do more harm.
What a whiner. Talk about sour grapes! Basically, this sh*t-for-brains didn't do proper due diligence on his investment in Sun (or he did his diligence, but decided to go for it anyway like every other investor during the go-go period because he was greedy). These investments are restricted to "sophisticated" investors for a reason - you stand to lose 100%! No risk, no return. Now quite your whining, accept responsibility for your stupid investment, and try to learn something from this and not repeat the same mistake again!