If you work in private equity the last few months have not been kind to you. Man, dog, and Newt have all been ganging up on the industry, and it has not been helped by faux pas from its most famous alumnus, publicity around job losses and dividend-recaps-into-bankruptcy, or a renewed carried-interest debate.
Not to fear, though: coming to the rescue today are a rag-tag bunch of saviors including a cheesy website, a serial private equity CEO who’s pretty sure he was never instructed to torch the place for insurance money, aaaaaaand Blackstone’s Tony James: Read more »
Unlike some private equity famewhores, Steve Schwarzman is a modest, retiring type who shuns all ostentation and just wants to be left alone with his crabs. So it’s not surprising that he doesn’t want those gossip hounds at the Fed all up in his personal finances, and that he’s willing to go to extreme lengths to avoid just that. How extreme? Check this out:
Blackstone is converting part of its 14.1% stake in BankUnited Inc. to nonvoting preferred stock, these people said. The deal will shrink its voting stake to less than 10%, pushing the New York firm below the level at which the Fed requires personal financial data from the Florida bank’s owners.
It isn’t clear why Mr. Schwarzman is sensitive about providing such information. The longstanding Fed rule is in place to allow the regulator to gauge the safety of banks by evaluating the financial resources of their owners. The financial information gathered about a bank’s owners isn’t available to the public, even if requested under the Freedom of Information Act, according to people familiar with Fed policies. …
The matter of Mr. Schwarzman’s personal financial information is tied to BankUnited’s plans to convert from a savings-and-loan institution to a national bank. … As part of the conversion, the Fed requires detailed financial information from “principals” of entities that own more than 10% of the bank’s stock.
So … not that extreme? Two obvious things: Read more »
He gets it: no more comparing Obama to Hitler. The new plan is subtlety, which is why the Blackstone boss took to the FT today to show the President an olive branch. Then he whacked Obama with it repeatedly.
His best piece of advice? If you really want to fix what ails America, maybe you should get a private equity executive to turn things around. Just saying.
The US economy resembles a business badly needing turnround. Its growth is anaemic. Like many a faltering business, it has too much debt. No one, least of all S&P, believes that the latest deficit reduction package will solve this. There is too little investment. Corporations and consumers are cautious about spending, while the recent sharp drop in equity prices shows that investors do not want to risk capital in the market.
My firm has invested in, and advised on, hundreds of businesses in the past 25 years and we’ve seen companies successfully overcome such challenges.
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Do you remember what you were doing in June 1986? Steve Schwarzman does. He was sitting in his office at Blackstone asking two employees with divergent opinions on the firm’s third-ever potential investment, Tulsa steel distributor Edgcomb, if they should do the deal. Steven Winograd had pushed hard for a buyout while David Stockman had argued against it, worried that as Edgcomb’s profit margins were linked to steel prices, a downturn in business could result in the company selling inventory at a loss and its cash flow disappearing. “I had them both in my office,” Schwarzman says in King of Capital.
“Winograd argued that the company’s profits were of a repeat nature and that it had very interesting expansion prospects. Stockman said it was a dangerous deal to do and it wasn’t worth the price. I could see both sides, and I voted with Winograd.” The decision ultimately proved misguided, and the fund’s investors lost $32.5 million of the $38.9 million they’d put up. Shirley Jordan, the CIO of Presidential Life Insurance, called Schwarzman “a complete idiot” and told him, “I never should have given you a dime!”
A painful moment to be sure, but as it was nearly a quarter century ago and Schwarzman has since made his clients and himself very rich people many times over, one might assume he’d be over it. Well one would assume wrong. Speaking with Becky Quick for CNBC’s latest “Worst Trade Ever/Don’t Be Afraid To Open Up” series, Schwarzman said that not only his he “still upset about losing that money” but that he forces himself to think about it every single day. Read more »
As previously discussed, CNBC has been running a new series of interviews in which Becky Quick sits down with some financial heavyweight and asks him to discuss the “worst trade” he ever made. While seemingly the stuff of tedious job interviews, wherein applicants are asked to name their worst quality, such as being a workaholic, so far they’ve actually been quite interesting and shined a light on aspects of the subjects’ personalities that have helped shaped their storied careers but may not have been known to the outside world. For instance, Warren Buffett has a love of buxom milkmaids and this morning we learned that Larry Fink would not have gotten to where he is today without a serious stumble that resulted in making the conscious decision to stop second-guessing just how much ass he kicks. Read more »
In King of Capital, a new book out this week by David Carey and John Morris, the authors chronicle the deals and personalities that shaped the Blackstone Group, starting with how its founders, Steve Schwarzman and Pete Peterson, met at Lehman Brothers. We’re told many times that Schwarzman had a drive like no other to make money and absolutely “hated to lose it,” which informed the firm’s approach to risk taking and helped it to “avoid the kind of brazen, outsized gambles that caused some high-flying rivals to run aground.” But Steve is not just about the coin; he, too, loves to get his freak on. Read more »
Investors in Wynnefield Capital (Oscar Tang, Michael Steinhardt, Chuck Royce, Stephen Schwarzman, Larry Leeds, Michael Kassen, Walter Stern, Edward McAree) are up 17 percent year-to-date. But an insider trading case brought by the SEC nearly four years ago is still hanging over the firm. The small-cap fund filed a motion for summary judgement in the case last November.
[Wynnefield Capital Q1 Letter to Investors]
“We’ve been working with Goldman Sachs since Blackstone was founded almost 25 years ago and I’ve been personally working with them for over 40 years, and we’ve never had any circumstance where there’s been any question about their ethical character or their behavior on any transaction we were involved with.”
“We’re a major client of Goldman and we’ll will continue to remain a major client of Goldman.” (via Reuters)
Steve was kind enough to take some time out of his day to ruminate on the financial crisis over a seafood platter. In summary: This blows, thanks to ratings agencies and mark-to-market accounting, but Geithner is on the case, so don’t worry.
Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit crisis.
“Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half,” Schwarzman told an audience at the Japan Society. “This is absolutely unprecedented in our lifetime.”
45 percent of world’s wealth destroyed: Blackstone CEO [Reuters]
I am both saddened and outraged to have to tell you that the SEC has brought a civil complaint today against Ramesh Chakrapani in our Corporate Advisory Services Group, charging him with passing on inside information three years ago about a pending transaction on which he worked as a 30 year old vice president.
We are all shocked by this alleged breach of the law and violation of our firm’s compliance policies and ethical standards. This employee has been suspended and we have told the authorities that they will have our firm’s full cooperation in their investigation into this matter.
This is the first time in the firm’s 24-year history that any employee of the firm has been accused of any infringement of securities laws.
Steve Schwarzman on Blackstone Insider Trading Trouble: ‘I Am Personally Infuriated…’ [DealJournal]
LAST month, as Henry R. Kravis, the co-founder of Kohlberg Kravis Roberts & Company, and his wife, Marie-Josée, took their seats at the Water Cube in Beijing for a session of synchronized diving at the Olympics, they quickly recognized a couple sitting nearby: Stephen A. Schwarzman, the co-founder of the Blackstone Group, and his wife, Christine Hearst.
For a brief moment, there was an awkward pause as the longtime rivals took stock of each other. Then both men cracked smiles, and Mr. Schwarzman extended his hand, congratulating Mr. Kravis on his latest move: an attempt to take K.K.R. public despite a stock market mired in uncertainty and fear.
What Does Henry Kravis Want? [NYT via City File]