为什么私募股权困境并非下一次重大经济危机的前兆

<p>We are fixated on two problems: the price of oil and the frailty of our banking system. We are catastrophizing at a pace I have rarely seen, accelerated by negative commentators who are rarely proven right but are always given the microphone — either because they are super-rich or because they are super-short. Too cavalier? I wish it were. The oil situation is so fluid that it's difficult to opine today and have it hold up overnight. But the banking issue is more static and lends itself to more-than-momentary analysis. So let's leave the oil story to the crush of events, and instead address the dangers to the system posed by private equity and private credit. Where does it stand in the pantheon of crises? Is it the global economic crisis of 2007-2009, or something lesser, such as the Long-Term Capital Management collapse of 1998, or the savings and loan crisis of the 1980s and 1990s? Or has there never been anything like what's occurring now, and it's therefore difficult to analogize to anything? The inability to understand the crisis and the fear it engenders makes it hard to grasp the real concerns here and magnifies them to the point where it feels like one of those earlier ones. Many are too young to remember the S &amp; L crisis, but it was very hard to grasp at first, before we realized that crooks had gamed the system until it almost brought it down. Spoiler alert: I am going to spend the rest of this piece arguing that it is none of those three, just a difficult-to-understand tale made worse by the arrogance of several of the perpetrators, and the desire among a host of commentators to analogize to canaries in coal mines at a drop of a problematic hat. One of the most unnerving things that almost instantly happens when you try to analyze how much trouble we are really in is that we don't know how much money is actually at stake in private equity and private credit; how big is the problem? These days, people throw around the trillion-dollar amount pretty easily. I have heard that there could be anywhere between $1.8 and $3 trillion "involved," and that makes "the problem" as big as the systemic collapse of Fannie Mae, Freddie Mac, Bear Stearns, AIG, and Lehman Brothers during the 2007-2009 crisis. I struggle with how to arrive at these amounts, or how the media seems to arrive at them with such certainty. Further, I recognize that I don't know how much leverage there is in private equity and private credit. Lehman at its height — or nadir — was levered more than 30 to one. This fact, and not its "size" as judged by its capital or market cap, is what mattered. Do I know, for example, how much Blue Owl Capital, an alternative asset manager, is levered? How about private equity giant Blackstone ? Do I really know anything about other big players like Apollo Global Management and Ares ? Are we talking about gigantic amounts of private equity debt bundled into bonds? Are we talking about investors who borrowed money to buy these bonds and now find themselves underwater? The answer is that we have no idea what we are talking about, which is why the fear keeps building. Everybody is clueless, and when you are clueless, you are scared. We are all scared. Here's what we do know: just like in the 2007-2009 crisis, the companies we regard as "in trouble" are all publicly traded. Their common stocks' prices can inform us of the depth of the problem. For example, we may fret about their burgeoning yields amid declining stock prices. For example, Blue Owl's common stock yields 10%. Ares yields 5%, while Blackstone yields 5.58%. You could easily argue that something is very wrong when you see those oversized yields. But all of these companies, including Blue Owl, can pay dividends. Plus, the common stocks of KKR, which yields 0.86%, and Apollo Global, at 1.95%, show you that these private equity firms aren't necessarily known for big payouts anyway. The stocks have been tremendous victims of this moment: Blue Owl fell 40% so far this year, Apollo slipped 27%, Ares fell 27%, Blackstone lost 30%, and KKR decreased 32%. Those declines have been bandied about endlessly. Again, though, those declines are not dispositive of anything but fear. It is not as if things are going badly by the moment, and the stocks reflect those woes. The stocks reflect fear, not substance. The actual portfolios these companies have, at least to the naked eye, seem palatable if not outright positive. Unlike in 2008, when many mortgages were fraudulent, and many others had little money down, these assets have real value. They just lack a price. And they lack a price because their managers seem reluctant to set one, because the only way to get a price is to come to the market with the goods. The private equity companies seem to have stopped doing one of their primary jobs: ringing the register and taking a profit after fixing up a company that they took private. Wasn't that what these companies were expected to do? How we got here This point is very important and often overlooked. Many of the problems we face in private credit and private equity stem from suboptimal portfolio management. The role of these companies had been pretty specific: buy publicly traded but undervalued companies, improve them, and then take them public again at higher prices than they paid to take them private, often having extracted additional wealth along the way. Wasn't that the m.o.? In the last few years, however, many private equity companies felt that their portfolio companies weren't getting their due in the public markets. So they decided to keep them, nurture them, and own them rather than sell them in the public markets. They, somewhat brazenly, have been insisting that they will make more money that way. I remember when I first heard they were doing this, I said to myself, wait a second, this isn't right. These private equity companies just seem unwilling to accept the market's judgment, one that says they paid too much or they didn't judge the ultimate outcome effectively. It is an oddity. The firms may think their portfolio companies aren't getting their due. Yet, I agree with former Goldman Sachs CEO Lloyd Blankfein that we have had the greatest, most fecund moment in the history of all capital markets, and yet these private equity firms haven't been able to unload their portfolio companies at big profits? If they can't sell into this all-time-high market, when can they? Sure, they might want to hold on to all that they own, but it would be prudent to unload much more merchandise than they seem to be trying to sell, if they are trying to sell at all. It's vexing. Perhaps the market only has eyes for unindebted tech and health-care companies? Maybe the portfolio companies are in out-of-favor sectors with low price-to-earnings ratios? Or maybe these private equity firms misjudged the market's appetite for companies with heavy debt in industries that aren't as well-liked as they were when they were bought. In other words, these firms made misjudgments that caused them to own rather than rent their portfolio companies. They are, alas, stuck with them and are now making excuses for their misjudgments. That, and not anything else you have heard, is where the dilemma of the moment lies. If the private equity firms were a little less greedy and brought some of their portfolio companies public at prices that are good value for buyers and not a disaster for themselves, a lot of their problems would go away. Maybe I am too optimistic as I write this, but if these companies were to take some hits in the IPO market and accept that they aren't going to make as big a profit as they thought, then they — and we — wouldn't be in this jam. That's the hope. And that is why the situation isn't as dire or existential as you might think. The vast majority of the portfolio companies for all of these firms are in reasonable shape. Most of their companies could come public, just not at prices that please the managers. Now, remember we are dealing with two strains of pain here: equity and debt. The portfolio companies are almost entirely current on their debts. That's great news for the private credit firms. It doesn't mean all that much for the private equity firms because, as you can imagine, just because you own a company that can pay its bills doesn't mean you have a company that would make for a terrific IPO. Strike two So, if these companies can pay their bills and can ultimately go public, what's the big deal? Simple: the portfolio management process went awry a second time. It wasn't enough that these private equity firms universally embraced the concept of owning and not renting. They also decided, in a remarkable groupthink, that they would massively overweight enterprise software companies. Why not? For years, the biggest gains in the stock market came from enterprise software companies, starting with Microsoft a half-century ago. So why not go all in on enterprise software? Make it a big percentage, perhaps as much as 40%, of their funds? When I pore over what they own, I come up with that percentage, thereabouts. I would argue that the most successful private equity firm of our time may be Thoma Bravo, a privately held firm with $160 billion under management. Its forte is precisely what is most hated in the market right now: identifying undervalued enterprise software companies, including some considered pre-AI, that can be transformed into AI powerhouses if given time, without public glare. When you look at the portfolios of the private credit firms, you see Thoma Bravo stuff all over the place. I greatly respect this firm, as do others. Maybe that's why you never hear, out loud, the obvious indictment: "I can't believe how much Thoma Bravo these firms have." They are too good to slam. But in an atmosphere of hysteria over AI and how destructive it can be, having a lot of Thoma Bravo assets in any form — debt, senior debt, equity — it's a kiss of death. And who owns the most Thoma Bravo paper in all its different forms? Blue Owl. By far. Blue Owl is a major debt holder in Thoma Bravo deals. I could argue that Blue Owl is being sunk by Thoma Bravo deals, even as the deals are doing incredibly well. It doesn't matter, though, does it? Isn't ServiceNow doing incredibly well? Is Adobe all that bad? How come Thoma Bravo isn't being sunk by these deals and Blue Owl is? Thoma Bravo, by all rights and circumstances, is still regarded as the premier acquirer of software companies. Not only that, but if you look at the companies, once acquired, they are often improved rapidly. Case in point: Anaplan, a software company purchased by Thoma Bravo for $10.4 billion in June of 2022. You often hear about this company being at the center, ground zero of the problem of private credit. That's because it wasn't known to be an AI-enabled company, and therefore, we can only conclude that this accounting and planning company is being eaten alive by artificial intelligence. Blue Owl was the administrative agent and lead arranger of the Anaplan Deal. It took down a huge slug of Anaplan debt. They are very exposed. That said, Blue Owl does have many investments. We don't know how much of their portfolio is Anaplan. Probably no more than 2-3%. But having any Anaplan right now is considered toxic, a scarlet letter of investing. Anaplan is private, so we don't know how it is really doing. But by all accounts, it is doing very, very well. In fact, it is doing much, much better than when it was public. How is that possible? Go to its website. You will see a company that is all-in on AI and has fundamentally changed since it went private. It is not hype. All the articles that I can find about this company indicate that it is in much better shape. In fact, I believe that if Anaplan were to go public right now, it might be an outstanding IPO. If that happened, many of the headline-risk problems we see every day in the private credit segment of the industry would disappear. One deal, done right, would make us all feel very different about this crisis. It would certainly do a lot to change the narrative. Yet no one is talking about that happening. Now here's where it gets tricky. It's not just the portfolio companies that are worrisome. It's the vehicles that own the debt. Everyone in the financial industry always wants to be able to sell to everyone. If you run a finance company and are only allowed to sell to institutions, you feel hemmed in. Why can't you sell to individuals? Why does the government care? Why do they need protection? That's been the attitude of almost every company in the financial business, from banks to private equity to hedge funds. They want to "democratize" their offerings, allowing them for all. The private credit firms have been very successful at democratization. It's not cynical. There have been some terrific investments in private credit that I argued should be made available to individuals. This isn't all a sucker's game. It just seems like it now. A liquidity issue But there was one aspect of private credit that does seem, in retrospect, not nefarious, but certainly greedy. The private credit firms were not offering as much liquidity to individuals as they might have expected or needed. Institutions don't mind being locked up for years and years. Individuals do. Most individuals expect instant liquidity because they are used to it. They can sell stocks immediately. They can sell bonds immediately. They can sell stock mutual funds and bond mutual funds instantly. So why can't they sell their shares in private credit packages instantly? Because they gave up that right when they decided to invest in private credit. Now, maybe individuals didn't realize they gave up that right when they invested. Maybe they didn't realize how important that right is. Maybe they didn't get compensated enough for giving up that right. In that sense, the sponsors were greedy. The individuals seemed to think these were just like mutual funds. Plus, they thought there was some sort of hardship redemption exemption they could rely upon to get their money out in an emergency. Let's bring us up to the present day. These private equity funds are now under siege from investors seeking their money back, largely because they believe the enterprise software portion of the funds they are in is going bad. They see publicly traded enterprise software stocks like Adobe , ServiceNow , Workday , and Salesforce underperforming, so they think privately held companies must be doing poorly, which means their debt must be doing really poorly. The upside of owning a pile of worrisome debt is not so hot. So, why not redeem? Why not get out before AI destroys their investment? Right now, there is a bit of a stalemate. The investors want out in increasing numbers. The private credit companies don't have to let them out. But they feel responsible, so they come up with creative ways to meet redemptions. Redemptions at Black