Private Equity
Beware of that hedge fund in the window
May 23, 2013: 3:29 PM ET
When hedge fund managers advertise, performance dips.
FORTUNE -- Hedge funds soon will be allowed to advertise their wares to potential clients, thanks to a provision in last year's JOBS Act (which had no direct relation to actual jobs). As will private equity funds, venture capital funds and other alternative investment vehicles that heretofore were prohibited from general solicitation.
Former SEC Commissioner Mary Shapiro opposed the change, so she basically sat on it (apparently believing her personal opinion trumped the directive of federal legislation). New SEC Commissioner Mary Jo White has suggested that she'll move this and other JOBS Act provisions along shortly.
So in a few months expect the pages of your favorite financial rag and website to contain advertisements for investment opportunities that you probably can't afford (since you'll still need to be an "accredited investor" to actually participate). For the 1%, however, a word of warning: Future performance is likely to be worse than past performance.
That's the finding of a new academic paper that examined the results of mutual fund advertising by companies also manage hedge funds. These advertisements don't specifically mention the hedge funds -- that still would be illegal under current law -- but they do compel wealthy individuals to ring the parent organization, which then does a classic up-sell.
The researchers learned that such advertisements generally follow a lull of hedge fund inflows, and result in a monthly bump of 0.5%. Not too shabby, considering that they were technically advertising for something else.
At the same time, however, the researchers found that monthly hedge fund performance post-advertisement fell by 0.1%. There isn't a specific explanation for the post-advertising performance dip, except perhaps that performance is negatively correlated to inflows (something that venture capital and private equity firms often talk about).
To be sure, a 0.1% decrease is not the end of an investor's world -- particularly if we're talking about a fund that had strong performance to begin with. But it also means that when these opportunities become more widespread, investors should consider that they'll likely be paying full price for items that ultimately will be discounted.
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Can KKR dance the Saks two-step?
Merging Saks with Neiman Marcus may make sense, but it won't be easy.
FORTUNE -- Kohlberg Kravis Roberts (KKR) reportedly is considering a massive luxury retail consolidation move: Buying both Saks Inc. (which just went on the block) and Neiman Marcus (being sold by a PE group that includes TPG, Warburg Pincus, Leonard Green and Credit Suisse) -- and then merging the two companies together.
To be sure, there are some good MORE
Dan Primack - May 23, 2013 10:58 AM ET -
Private equity deals
Apax Partners has agreed to acquire specialty apparel retailer Rue21 (Nasdaq: RUE) for approximately $1.1 billion, or $42 per share (23% premium to yesterday's closing price). Apax previously owned Rue21 before taking it public in 2009, and still retains nearly a 30% equity position. Its two directors on the Rue21 board recused themselves from board discussions and votes related to the deal. www.rue21
Del Monte Foods has acquired Natural Balance Pet Foods for an undisclosed amount. Del Monte shareholders MORE
Dan Primack - May 23, 2013 10:10 AM ETPosted in: Private Equity -
New York City loses its private equity boss
Head of NYC private equity investments heads to private firm in which NYC pension invested.
FORTUNE -- Yesterday came news that Barry Miller had stepped down as head of private equity investments for the New York City Employee Retirement Systems (NYCERS), in order to open a New York City office for Connecticut-based private equity firm Landmark Partners.
My immediate reaction: Is this a conflict of interest, given that NYCERS had just committed $400 million MORE
Dan Primack - May 22, 2013 10:58 AM ET -
Private equity deals
The Blackstone Group has offered to acquire Pactera Technology International Ltd. (Nasdaq: PACT), a China-based provider of global consulting and technology services, for approximately $680 million, or $7.50 per share (43% premium to Friday's closing price). Significant Pactera shareholders include GGV Capital (7% stake). www.pactera.com
The O'Gara Group, a Cincinnati-based provider of global security and defense products and services for use in counter-terrorism, has acquired the armored vehicle and transparent armor businesses ofBAE Systems (LSE: BA). MORE
Dan Primack - May 21, 2013 10:56 AM ETPosted in: Private Equity -
Gabriel Gomez's private equity deal
U.S. Senate candidate's investment performance.
FORTUNE -- Massachusetts voters are one month away from deciding whether or not former private equity investor Gabriel Gomez should be their next U.S. Senator, in a special election to succeed John Kerry.
To be sure, the ultimate decision won't be based much on what Gomez did, or didn't, do in his eight-plus years with Advent International. In fact, you wouldn't even know Gomez was involved in MORE
Dan Primack - May 20, 2013 4:44 PM ET -
Private equity deals
Vista Equity Partners has agreed to acquire Websense Inc. (Nasdaq: WBSN), a San Diego-based provider of network security solutions against cyber-attacks and data theft, for approximately $907 million. The $24.75 per share deal represents around a 29% premium to Friday's closing price.www.websense.com
Onex Partners has canceled its auction for Carestream Health Inc., a Rochester, N.Y.–based provider of medical imaging systems, after failing to secure adequate bids, according to Reuters. Onex had been seeking upwards of $3.5 MORE
Dan Primack - May 20, 2013 11:23 AM ETPosted in: Private Equity -
Can Silver Lake walk away from Dell deal?
Dell's earnings decline could have an impact on its buyout deal.
FORTUNE -- Dell Inc. this afternoon reported lower-than-expected earnings, including a stunning 9% year-over-year revenue decrease and 65% operating income decrease for the "end user computing" unit that houses PC and PC peripheral sales.
Silver Lake Partners obviously knew that the EUC business was in decline when it agreed to join forces with Michael Dell on a $24.5 billion buyout offer MORE
Dan Primack - May 16, 2013 4:14 PM ET -
T. Rowe dumps some Dell
Dissident Dell shareholder loses a bit of its voice.
FORTUNE -- T. Rowe Price still may want to vote against Michael Dell's proposed takeover of Dell Inc., but its opinion will no longer be heard quite so loudly.
Yesterday the mutual fund reported disclosed that it sold around 10.26 million Dell (DELL) shares during the first quarter, which represented around 12.5% of its holdings. It also acquired 5.8 million call options during MORE
Dan Primack - May 16, 2013 1:52 PM ET -
Private equity deals
123 LumpSum Holdings, a Hallandale Beach, Fla.–based purchaser of secondary structured settlement transactions, has raised an undisclosed amount of private equity funding from GCP Capital Partners. Bryant Park Capital Securities served as placement agent. www.123lumpsum.com
The Beekman Group has sponsored a recapitalization of NorthStar Alarm Services, an Orem, Utah-based provider of residential security alarm installation and monitoring services. Company management participated on the deal, and will maintain a "significant ownership interest."www.thebeekmangroup.com
Altasciences Group, a Canadian clinical MORE
Dan Primack - May 16, 2013 11:35 AM ETPosted in: Private Equity
