Munger interview WSJ 4/17/20

[rb]

Well the fed may buy shit CLOs at par. But that helps the last moron that bought that paper. Insert X hedge fund/trading desk here. But the PEs are shit out of luck. They need to issue new LLs and nobody is buying those. Not even the Fed. oops.

[racemize]

https://www.bloomberg.com/news/articles/2020-04-23/private-equity-to-get-squeezed-out-of-another-stimulus-program

Sounds like all these “sophisticated” PE investors now want some assistance from the government. Here’s a gem:

Privately, the industry complains that the Fed’s leverage limits are taking aim at a practice that the central bank itself has encouraged through its own monetary policy. Since the 2008 economic crisis, interest rates have remained low and are currently at zero -- a decision that has encouraged borrowing by corporations of all sizes.

Oh, why did the Fed make us take on too much leverage over the past decade! Who knew that leverage can be a bad thing!

Let’s see who makes it out of this stronger—PE with high leverage or BRK with cash on hand...

just as a data point, BX just said they took no money from the government, don't plan to, and have ample reserves to support their companies.

just as a data point, the largest 19 US banks 'returned' almost $80B to shareholders between the third quarter of 2007, when some felt trouble was being contained,  through the accelerating phase of 2008. Interesting to note that the $80B (and more) was 'returned' to banks as part of a plan labelled, as typically is in those cases, with capital letters.

The banks are much better capitalized at this point and the present environment, by itself, has little 'predictive' power but this is only to say that it may be risky to assess risk from the point of view of actors (like private equity) who tend to act pro-cyclically and to be lagging indicators.

 

BX has > $100 billion in available dry powder.

 

edit: anyway, you guys have helped me decide to continue not to post here.  Carry on!

[Munger_Disciple]

Speaking of PE, Dan Rasmussen (smart guy) points out major problems with the industry in this interview FWIW:

 

 

 

[Libs]

Speaking of PE, Dan Rasmussen (smart guy) points out major problems with the industry in this interview FWIW:

 

 

Thanks for posting. He makes a good case.

[Dalal.Holdings]

Another famed investor has gone "senile":

 

https://www.bloomberg.com/news/articles/2020-04-25/icahn-says-stocks-are-overvalued-virus-may-cause-downdrafts

 

Carl Icahn isn’t buying stocks right now. He’s hoarding cash, shorting commercial real estate and preparing for the coronavirus to wreak more havoc.

 

This is a time to be “extremely careful,” Icahn said in an interview Friday on Bloomberg Television.

 

Obviously no one knows where things end up, could just be confirmation bias for bears, but look forward to reading all the senility speculation about Carl too.

 

Carl seems to be practicing something called precaution...

 

I guess once again he is taking an opposing stance from his boy Ackman. Let's see who prevails this time.

[arcube]

Another famed investor has gone "senile":

 

https://www.bloomberg.com/news/articles/2020-04-25/icahn-says-stocks-are-overvalued-virus-may-cause-downdrafts

 

Carl Icahn isn’t buying stocks right now. He’s hoarding cash, shorting commercial real estate and preparing for the coronavirus to wreak more havoc.

 

This is a time to be “extremely careful,” Icahn said in an interview Friday on Bloomberg Television.

 

Obviously no one knows where things end up, could just be confirmation bias for bears, but look forward to reading all the senility speculation about Carl too.

 

Carl seems to be practicing something called precaution...

 

I guess once again he is taking an opposing stance from his boy Ackman. Let's see who prevails this time.

 

Some good commentary from Elliot.

 

https://www.docdroid.net/kfBxxVh/elliot-letter-april-162020-perspectives-paul-singer-elliott-pdf#page=9

[Dalal.Holdings]

Another famed investor has gone "senile":

 

https://www.bloomberg.com/news/articles/2020-04-25/icahn-says-stocks-are-overvalued-virus-may-cause-downdrafts

 

Carl Icahn isn’t buying stocks right now. He’s hoarding cash, shorting commercial real estate and preparing for the coronavirus to wreak more havoc.

 

This is a time to be “extremely careful,” Icahn said in an interview Friday on Bloomberg Television.

 

Obviously no one knows where things end up, could just be confirmation bias for bears, but look forward to reading all the senility speculation about Carl too.

 

Carl seems to be practicing something called precaution...

 

I guess once again he is taking an opposing stance from his boy Ackman. Let's see who prevails this time.

 

Some good commentary from Elliot.

 

https://www.docdroid.net/kfBxxVh/elliot-letter-april-162020-perspectives-paul-singer-elliott-pdf#page=9

 

Certainly as the global economy started shutting down, advisors should not have been  upgrading their recession probability forecasts “from 20% to 25%” and modestly downgrading their  Chinese growth forecasts“from 6.1% to 5.6%.”

 

Was definitely fun watching some of this stuff as it happened and “overreacting”.

[Dalal.Holdings]

https://www.bloomberg.com/news/articles/2020-05-02/buffett-stays-on-the-sidelines-amid-market-tumble-as-cash-climbs

 

Warren Buffett has been waiting years for stocks to look more attractive. He apparently didn’t think the first-quarter plunge was that opportunity.

 

The famed investor’s Berkshire Hathaway Inc. spent the quarter building its massive cash pile to a record $137 billion as the coronavirus slowdown started to grip the U.S. That was up almost $10 billion from the end of 2019, while Buffett spent just a net $3.5 billion buying shares of his and other companies.