Tuesday , November 24 2020
Home / FT Alphaville / Private equity run amok

Private equity run amok

Summary:
This is a guest post by Daniel Rasmussen and Brian Chingono, partners of Verdad Advisers, a hedge fund focused on leveraged small value public equities, arguing private equity no longer offers investors a good deal.  Private equity’s historical success in the 1980s and 1990s came from using debt to buy small companies in a private market at valuations that were significantly discounted relative to public equity markets. That is no longer the case.Today, the average private equity company is bought at a 12x multiple of earnings before interest, taxes, depreciation, and amortisation (Ebitda). Rather than being undervalued, this is in line with the S&P 500. Private equity valuations/ S&P 500 valuations © S&P Capital IQ and Pitchbook (June 2019) While private equity is no longer

Topics:
FT Alphaville considers the following as important:

This could be interesting, too:

Scott Sumner writes Never reason from a quantity change

[email protected] (Mike Shor) writes Price discrimination

Menzie Chinn writes Stephen Moore: “Trump’s super recovery”

Global Economic Intersection Analysis Blog Feed writes 14 Million People Can’t Make Rent

This is a guest post by Daniel Rasmussen and Brian Chingono, partners of Verdad Advisers,...

FT Alphaville
FT Alphaville is a free daily news and commentary service giving finance professionals the information they need, when they need it. In a world where market professionals are inundated with information there is a pressing need to edit and filter, and hopefully sow a few ideas along the way. That’s where the FT Alphaville team comes in.

Leave a Reply

Your email address will not be published. Required fields are marked *