While we have generally found the most attractive opportunities for our Absolute Returns portfolio in areas other than IPOs, the business of private equity may be a slightly different matter.
While IPOs are often seen as an attempt to cash out by owners and management, the private equity model is proving uniquely successful – at least in terms of offloading via IPO some assets they acquired during the downturn.
A case in point would be Blackstone Group’s (BX) IPO of Seaworld (SEAS), a success seemingly predicated upon investor tolerance for risk – along with some very nice PR work involving penguins touring the Blackstone headquarters.
The IPO success resulted in significant financial reward for Blackstone and more significantly from private equity’s perspective, indicated market tolerance toward leveraged companies (of which there are a number in the IPO pipeline).
Should the private equity model continue to flourish in advantageous market conditions, we believe our holding Blackstone is likely to benefit accordingly.
In other developments, we exited our position in Two Harbours following its distribution of Silver Bay, whilst model holding MetroPCS benefited from an improved offer in the terms of its merger with T Mobile USA, eventually approving the deal and listing on the NYSE as TMUS.
We continue to seek attractive opportunities to deploy the cash currently at hand.
The investments discussed are held in client accounts as of April 30 , 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
- I am employed full time in the private shipping sector, having previously worked as a private consultant in the maritime industry and in hedge fund administration.