🍋 PE 🤝 IPO Alternatives

Private equity firms are trying to solve a question that investors haven’t really cracked the code to - is there a better alternative for portfolio companies than going public?

Together With

"The intelligent investor is a realist who sells to optimists and buys from pessimists." — Benjamin Graham

Good Morning! Elon Musk’s startup Neuralink said its first brain implant malfunctioned, right after hitting the 100-day mark. T-Mobile and Verizon want to buy parts of US Cellular, and Sony and Apollo want to break up Paramount and sell the company for parts. Weekly jobless claims jumped, and recession-proof stocks are boosting the stock market. Plus Planet Fitness wants to boost prices and where new college grads want to work.

Mother's Day is approaching this Sunday, and if you're searching for inspiration, check out our guide: Top 9 Gift Ideas for Mother's Day.

SQUEEZ OF THE DAY

PE 🤝 IPO Alternatives

The IPO market is starting to slowly bounce back to life after two rough years. And, right now, the value of unexited private equity portfolio companies is over $3.2 trillion. 

But don't let the recent IPO successes of Reddit and the like fool you - volumes are still at a decade low, and bankers think the IPO market may not fully bounce back to life until next year.

In addition to a weak IPO market, startups want to stay private for longer now - they can avoid regulatory scrutiny, investor updates, and are not having much trouble raising capital either.

Take Reddit, for example, that raised $1.4 billion over two decades before making its IPO. The amount of funding Google’s parent company Alphabet received before its IPO? Just $25 million.

Private equity firms are trying to solve a question that investors haven’t really cracked the code to - is there a better alternative for portfolio companies than going public?

Investment banks that make millions helping companies go public are helping private equity firms come up with alternative exit strategies, ranging from private sales of shares, semi-public exchanges, and even reworking traditional investment frameworks. 

Takeaway: Of course, private equity investors have themselves to blame a little bit for the weak IPO market. Back in 1997, the number of public companies peaked at around 7,500. But thanks in part to an LBO boom, that number has almost halved and there are fewer than 4,000 public companies right now. With trillions of dollars tied up right now, PE firms are starting to grow a little impatient, but if anyone can cook up a financial fix, it's the world’s best paid financial engineers.

PRESENTED BY KALSHI

Are You “Short” Drake?

If you are not living under a rock, you may have heard of the rap battle between Kendrick Lamar and Drake. 

The rivalry dates back to 2013, and in October 2023 JCole reignited the beef with his verse on "First Person Shooter," prompting Lamar to release "Like That," which criticized Drake's latest album and drew comparisons between the two. 

Drake responded with leaked tracks "Push Ups" and "Taylor Made Freestyle," and since then both rappers have continued exchanging diss tracks trying to one up each other.

Will one of Drake’s diss tracks hit #1 on the Billboard Hot 100? PushUps is currently #17.

Nearly 60% of folks think it will (aka they are “long” Drake). Looks like they think he will drop another song that could hit the top spot.

HEADLINES

Top Reads

  • Neuralink’s first in-human brain implant has malfunctioned (CNBC)

  • T-Mobile, Verizon in talks to buy parts of US Cellular (YF)

  • Sony and Apollo plan to break up Paramount (Reuters)

  • Weekly jobless claims jump to 231,000, the highest since August (CNBC)

  • Recession-proof stocks are leading the market's latest leg higher (YF)

  • ​​Where the class of 2024 wants to work (Axios)

  • Planet Fitness raising prices even as customers grow cost-conscious (CNBC)

  • Why financial bankruptcies are a unique animal (Axios)

  • Trump Media investor convicted of insider trading ahead of merger (CNBC)

  • Apple to power AI servers with its chips (YF)

  • Fitness startup that Peloton tried to buy is growing as workout trends shift (CNBC)

CAPITAL PULSE

Markets Rundown

Stocks closed higher on Thursday thanks to positive earnings.

Movers & Shakers

  • (+) Warby Parker ($WRBY) +18% because the eyewear maker posted strong quarterly results and guidance.

  • (+) Yeti ($YETI) +13% after the drinkware company posted strong Q1 earnings.

  • (–) Roblox ($RBLX) -22% after the video-game company lowered its full-year bookings guidance.

Private Dealmaking

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BOOK OF THE DAY

Set For Life

Building wealth is always possible, even while working full-time, earning a median income, and paying off debt. By layering philosophy with practical knowledge, Set for Life gives people in their twenties and thirties an action plan to conquer their financial goals early in life.

With more than 140,000 copies sold, this anniversary edition gets a refresh with new content, updated numbers, and even more valuable tips and tricks learned over the last five years.

Scott Trench—real estate investor, co-host of the BiggerPockets Money Podcast, and CEO of BiggerPockets—demonstrates how to accumulate a lifetime of wealth over a short period of time.

Even starting with zero savings, you can go from a five-figure income to six figures, from an active job to passive income, then finally to the ultimate goal of financial independence.

Set yourself up for life as early as possible, and enjoy life on your terms!

“Retire early from your nine-to-five and reach financial freedom with the actionable advice in this personal finance best-seller.”

DAILY VISUAL

Dividend Recaps Are So Back

Dividend recaps coming back after the December Fed pivot

Source: Apollo

DAILY ACUMEN

Fear

The things we fear the most are frequently the very things we need to confront to grow.

Avoiding our fears can inadvertently set boundaries on our potential and personal development.

By gradually getting closer to what scares us and understanding it, we can diminish the power it holds over us.

Taking a metaphorical leap towards our fears, rather than away from them, often leads to unexpected growth and new opportunities.

This approach not only helps in overcoming obstacles but also in expanding our capabilities and experiences.

ENLIGHTENMENT

Short Squeez Picks

  • 6 leadership strategies and which to use when

  • How to optimize the remote work environment for productivity 

  • Focusing tips from a Harvard professor with ADHD

  • How to start rituals that make every day feel special

  • Why you should de-optimize your life

MEME-A-PALOOZA

Memes of the Day

 

 

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