Tidbits

[Blake Hampton]

Paul Volcker Jimmy Carter: The man who beat inflation

 

[Blake Hampton]

“There are two times in a man's life when he should not speculate: when he can't afford it and when he can.”

 

- Mark Twain

[DooDiligence]

https://arstechnica.com/science/2025/06/hondas-hopper-suddenly-makes-the-japanese-carmaker-a-serious-player-in-rocketry/

 

edit to add a video:

 

 

I know it was a short hop but I really like that this rocket doesn't look like a dildo.

 

Edited June 18, 2025 by DooDiligence

[Spekulatius]

Went to a meeting with a libertarian  group and hat a chat with a fellow who is a risk manager for hire. He advises investors that don’t have their own risk manager and vetted investments and advises them on risk (portfolio, market exposures , governance). He worked at various banks and now has st up his own business with some colleagues.

 

He told me that the biggest bubble out there that he is aware  is private credit. He specially mentioned loans to private equity business (that have a hard time getting exits) that are financed by private equity loan funds as well. Apparently instructional investors are seeking exits and he sees those funds getting pushed to retail and pension funds looking for yay the last sucker. He mentioned  specifically covenant lite loans, PIK etc. The private equity names he dropped were Blackstone, KKR.

 

I asked him how big he thinks (in $ terms) the problem is, but he didn’t know. He did say it was big enough that he thinks private equity needs a bailout from this  and they will get it due to their political connections. Make of this what you want and it’s worth what you pay for.

 

It seems to me that we are a bit further ahead with the private equity party than I thought. nut again who sayyid if any of this is true from a random guy on the internet writing down what another random guy he met over some beers told him.

[Blake Hampton]

12 minutes ago, Spekulatius said:

Went to a meeting with a libertarian  group and hat a chat with a fellow who is a risk manager for hire. He advises investors that don’t have their own risk manager and vetted investments and advises them on risk (portfolio, market exposures , governance). He worked at various banks and now has st up his own business with some colleagues.

 

He told me that the biggest bubble out there that he is aware  is private credit. He specially mentioned loans to private equity business (that have a hard time getting exits) that are financed by private equity loan funds as well. Apparently instructional investors are seeking exits and he sees those funds getting pushed to retail and pension funds looking for yay the last sucker. He mentioned  specifically covenant lite loans, PIK etc. The private equity names he dropped were Blackstone, KKR.

 

I asked him how big he thinks (in $ terms) the problem is, but he didn’t know. He did say it was big enough that he thinks private equity needs a bailout from this  and they will get it due to their political connections. Make of this what you want and it’s worth what you pay for.

 

It seems to me that we are a bit further ahead with the private equity party than I thought. nut again who sayyid if any of this is true from a random guy on the internet writing down what another random guy he met over some beers told him.

A lot of this was covered quite well in a recent special Report section of The Economist. I see so much speculation in markets that I just mentally threw it on top of the pile:

The Economist: New, untested and dangerous

 

It had a cool cover too:

 

 

Edited June 18, 2025 by Blake Hampton

[Blake Hampton]

"The lack of transparency in private markets means regulators and investors might not see a problem coming until the very last moment."

 

The Economist: The debt barons who are taking on the banks

 

Scary stuff.

[Blake Hampton]

I can't recommend reading The Economist enough.

One of the only great financial publications I can't personally attest to is the FT, and the only reason I don't read it is because it's so god-darn expensive. Outside of possibly that one, I don't think there's any better journalism than The Economist.

 

Edited June 19, 2025 by Blake Hampton

[dwy000]

14 hours ago, Spekulatius said:

Went to a meeting with a libertarian  group and hat a chat with a fellow who is a risk manager for hire. He advises investors that don’t have their own risk manager and vetted investments and advises them on risk (portfolio, market exposures , governance). He worked at various banks and now has st up his own business with some colleagues.

 

He told me that the biggest bubble out there that he is aware  is private credit. He specially mentioned loans to private equity business (that have a hard time getting exits) that are financed by private equity loan funds as well. Apparently instructional investors are seeking exits and he sees those funds getting pushed to retail and pension funds looking for yay the last sucker. He mentioned  specifically covenant lite loans, PIK etc. The private equity names he dropped were Blackstone, KKR.

 

I asked him how big he thinks (in $ terms) the problem is, but he didn’t know. He did say it was big enough that he thinks private equity needs a bailout from this  and they will get it due to their political connections. Make of this what you want and it’s worth what you pay for.

 

It seems to me that we are a bit further ahead with the private equity party than I thought. nut again who sayyid if any of this is true from a random guy on the internet writing down what another random guy he met over some beers told him.

I worked in this industry (underwriting and managing high yield debt usually from PE buyouts) for a long time.  Its been fascinating to watch it evolve. For the longest time it was all underwritten by investment banks and distributed to smaller banks. Then the loan funds got created (CLO's etc) and the hedge funds played, and then the debt side of the PE firms got involved.  At first they were just holding and managing but now they're underwriting too.

 

What's been lost along the way are the controls and risk management triggers that used to be rampant when banks held the debt.  First it was loose covenants, then covenant lite, and now there are practically no covenants at all.  And the baskets for permitted activities expanded and expanded.  Right now there's very little distinction between loans and bonds and owners rely on the structural distinctions for protections (1st lien vs 2nd lien vs unsecured vs subordinated etc).

 

What it means is the can gets kicked way down the road until bankruptcy is almost inevitable.  Previously a covenant would be tripped to get a restructuring started but now its just positioning into a chapter 11 filing.  And the fascinating part is where the PE equity owner starts buying up various tranches of debt in their own deal (or thru friendly hands) to control the restructuring.  And then dont even start once the synthetic holders get involved (and a deal can have 3x the amt of synthetic debt as actual)

 

Its fascinating but the one reason I would never invest in those funds is that there is no chance you are getting a decent risk adjusted return on your investment.  

[Ulti]

3 hours ago, dwy000 said:

He did say it was big enough that he thinks private equity needs a bailout from this  and they will get it due to their political

I have a family member in the PE business. It seems like the only way out

is either European style zero interest rates/ refi or the current proposal of “ placing it in everyone’s retirement accounts “ or both…. They make it sound so easy

https://www.wellington.com/en/wellington-news/wellington-vanguard-blackstone-collaboration

[Sweet]

Could we keep to the spirit of the thread?

 

The goal being investing ideas in the back of your mind, which you want to share, but aren’t sure if it’s worthy of creating a new thread about.

[Spekulatius]

On 6/18/2025 at 5:42 PM, DooDiligence said:

https://arstechnica.com/science/2025/06/hondas-hopper-suddenly-makes-the-japanese-carmaker-a-serious-player-in-rocketry/

 

edit to add a video:

 

 

I know it was a short hop but I really like that this rocket doesn't look like a dildo.

 

Cool stuff, but that’s a smallish rocket engine as evident from the output. I guess they want to explore the control mechanism of those rocket engines.

 

Honda has aspirations in aerospace:

https://www.hondajet.com/en/Products/HondaJet-Echelon

 

It’s one of the cool things with Japanese companies. They have these long term projects that they fund that result in excellent products in some cases. There are quite a few that went into the semiconductor industry with niche products and some generate awesome margins. For example Toto (known for toilets) makes wafer chucks and I recall the EBIT margins are ~40% for this business:

https://jp.toto.com/en/products/ceramics/elewafer/

 

 

Edited June 20, 2025 by Spekulatius

[DooDiligence]

55 minutes ago, Spekulatius said:

Cool stuff, but that’s a smallish rocket engine as evident from the output. I guess they want to explore the control mechanism of those rocket engines.

 

Honda has aspirations in aerospace:

https://www.hondajet.com/en/Products/HondaJet-Echelon

 

It’s one of the cool things with Japanese companies. they have these long term projects that they fund that result in excellent products. There are quite a few that went into the semiconductor industry with niche products and some generate awesome margins. For example Toto (known for toilets) makes wafer chucks and I recall the EBIT margins are ~40% for this business:

https://jp.toto.com/en/products/ceramics/elewafer/

 

 

 

Honda looks fascinating. A quick look at their latest 20F made me dizzy though. Too complicated to contemplate.

 

You made me Google "electrostatic chucks" 

Semi manufacturing is not a simple business.

[Buckeye]

There was an article in today’s Rag about Faith Kipyegon trying to become the first woman to break the 4 minute mile. Coverage starts in just a few minutes! 

 

[Gamecock-YT]

The FT's Alphaville with a great article on private equity's insurance business links. I've always thought this was going to blow up in a bad way at some point:

 

https://www.ft.com/content/ee40241a-c568-4673-88df-001c0244fb37

 

Quote

Inside the private equity-insurance nexus
...
Historically, PE business models have relied on PE firms or financial sponsors (general partners) raising funding at arm’s length from investors (limited partners) such as insurers, pension schemes, and family offices. Funds raised would then be used to lend to PE-sponsored corporates. The PE firm itself would retain limited risk on the underlying assets (eg high-yield bonds, leveraged loans), which they mostly originated to distribute to investors. [However] . . . by acquiring life insurance liabilities, PE firms take control of how insurance premiums are invested and use these to, among other things, provide credit lines to PE-sponsored corporates.

 

[Spekulatius]

24 minutes ago, Gamecock-YT said:

The FT's Alphaville with a great article on private equity's insurance business links. I've always thought this was going to blow up in a bad way at some point:

 

https://www.ft.com/content/ee40241a-c568-4673-88df-001c0244fb37

 

 

What could go wrong other than shoddy underwriting (to keep invested assets growing) and stuffing bad assets into insurance co as long duration assets.

 

Its funny how the perfect model thought by those private equity does already exist and it’s called Berkshire Hathaway. 

 

 

 

 

 

Edited June 28, 2025 by Spekulatius

[DooDiligence]

https://michaelrlowry.substack.com/p/critical-hurricane-forecast-tool

 

https://michaelrlowry.substack.com/p/noaa-proposes-permanently-closing

 

Insights on whether this will affect the P & C industry?

Does all this just get replaced with a Sharpie?

 

.

Edited July 1, 2025 by DooDiligence

[gfp]

https://www.cnbc.com/2025/07/23/house-bill-accredited-investor-sec-test.html

 

 

"Equal fees for all" !!

 

I'm sure some on this message board charge lower fees (lower, that is, unless your track record is shit) to non-accredited clients and performance based fees to accredited and qualified clients.  This proposed test would open up the charging of performance based fees to the poors and allow investments advisors to charge performance reallocations to average folks!  A win for the little guy

 

I know some smaller investors have been buying Fairfax India and Biglari Holdings to get an early taste for themselves but now they can pay their fund manager 25% of the profits to invest in Fairfax India and Biglari Holdings!

[DooDiligence]

1 hour ago, gfp said:

https://www.cnbc.com/2025/07/23/house-bill-accredited-investor-sec-test.html

 

 

"Equal fees for all" !!

 

I'm sure some on this message board charge lower fees (lower, that is, unless your track record is shit) to non-accredited clients and performance based fees to accredited and qualified clients.  This proposed test would open up the charging of performance based fees to the poors and allow investments advisors to charge performance reallocations to average folks!  A win for the little guy

 

I know some smaller investors have been buying Fairfax India and Biglari Holdings to get an early taste for themselves but now they can pay their fund manager 25% of the profits to invest in Fairfax India and Biglari Holdings!

 

Will there be a behavior module on the test? IDK, but this sounds like a great way to squeeze every last bit of juice out of retail and create a big black swan.

[Dalal.Holdings]

3 hours ago, gfp said:

https://www.cnbc.com/2025/07/23/house-bill-accredited-investor-sec-test.html

 

 

"Equal fees for all" !!

 

I'm sure some on this message board charge lower fees (lower, that is, unless your track record is shit) to non-accredited clients and performance based fees to accredited and qualified clients.  This proposed test would open up the charging of performance based fees to the poors and allow investments advisors to charge performance reallocations to average folks!  A win for the little guy

 

I know some smaller investors have been buying Fairfax India and Biglari Holdings to get an early taste for themselves but now they can pay their fund manager 25% of the profits to invest in Fairfax India and Biglari Holdings!

 

They need to get rid of the rules that prevent purchasing Expert Market stocks IMO.

 

These days you can buy all kinds of junk in Crypto, sports betting, events betting, or even regular equity land, but Expert Market stocks? Off limits for some reason

[gfp]

3 minutes ago, Dalal.Holdings said:

 

They need to get rid of the rules that prevent purchasing Expert Market stocks IMO.

 

These days you can buy all kinds of junk in Crypto, sports betting, events betting, or even regular equity land, but Expert Market stocks? Off limits for some reason

 

Well I agree (since I am not set up to buy expert market stocks).  But I'll bet Tim Eriksen is plenty happy with the current arrangement!

[DooDiligence]

Apparently you can't scale up dog walking.

[changegonnacome]

On 6/19/2025 at 2:11 PM, Ulti said:

I have a family member in the PE business. It seems like the only way out

is either European style zero interest rates/ refi or the current proposal of “ placing it in everyone’s retirement accounts “

 

The saving grace for the PE guys is that Scott Bessent is in the same predicament......the PE industry is riding two horses to get out of trouble town.....one is a return to ZIRP-like financial conditions.....the second is dumping this toxic junk into retail pension funds. I really hope they dont get away with it but suspect they will.

[DooDiligence]

10 hours ago, changegonnacome said:

 

The saving grace for the PE guys is that Scott Bessent is in the same predicament......the PE industry is riding two horses to get out of trouble town.....one is a return to ZIRP-like financial conditions.....the second is dumping this toxic junk into retail pension funds. I really hope they dont get away with it but suspect they will.

 

It's called trickle down economics.

[changegonnacome]

1 hour ago, DooDiligence said:

It's called trickle down economics.

Like when you piss your pants

[Gregmal]

I thought trickle down economics was when people like Doug Diligence lecture illegals while they’re trying to make a living after cutting his own lawn to save $100 rather than throw said desperados a bone of gratitude?