Thursday, December 13, 2007

Why Private Equity Will Win

Looking at the mess in the financial markets right now, I've been trying to come up with where the buying opportunities are at. Right now it seems all banks are just trying to get the "evil buzzwords" (sub-prime, CDO, etc) off their sheets. They will continue to unload all these assets at prices way below their worth. This is done because they have to answer to the public. Every move they make is being scrutinized. The banks are willing to do anything right now to alleviate the short term pain and fear investors have. Thats why the private equity firms are going to come out on top. Right now they are analyzing these assets and buying them at pennies on the dollar. Look at the deal Citadel got on Etrade's assets. Now I see Blackstone is putting together a fund to buy loans and CDOs. They've got the ability to recognize what is a value, and they are taking advantage of the fear in the market to lock in massive future profits. Is this making Blackstone (BX) a buy as we head into future market uncertainty? Time will tell, but right now, its beginning to look that way.

Here's the Bloomberg article from this morning.

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