“For politicians seeking broad support, private equity has become an easy target. The investment firms that do business by buying up companies and loading them with debt have been criticized for rewarding themselves with dividends while the businesses they own go under. Private equity firms were at the forefront of the so-called “retail apocalypse,” which saw the destruction of many of the country’s beloved retailers.
Private equity’s hold on the retail industry solidified in the mid-2000s, when firms swarmed, lured in by a combination of low interest rates, recognizable brand names and the view that retailers’ steady cash flow would continue indefinitely.
But the debt load firms placed on those retailers left them hamstrung. When digital commerce permanently altered the retail industry, the companies had no capacity to make investments in technology and in their stores that were needed to compete against Amazon.”
Link: https://www.cnbc.com/2019/07/18/the-link-between-warrens-attack-on-private-equity-and-toys-r-us.html
You can replicate their returns by creating a leveraged portfolio via S&P futures...for a tiny fraction of the usurious fees but with some unfortunate clarity in the volatility profile. The advantage P.E. has is their phony mark-to-market. They create the valuations themselves so their leveraged portfolios seem to steam along with about as much price volatility as a bond fund.
Ironically, that is why anyone will have a tough time bringing the private equity managers to heel. Pension funds are absolutely desperate for the leveraged returns with soothing price volatility. We have so many underfunded pension funds that you will have to pry these investments out of their cold, dead fingers. Look for CALPRs, and every other state pension fund to start squawking if anyone tries to kill the only investment that they think can save them from insolvency.
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