🍋 Private Equity Boom
Good Morning! Hope y'all had a great Thanksgiving break. Now back to the grind and the longest week of our lives. The Omicron variant rekt markets for the 4ish hours they were open on Friday, with S&P 500 dropping more than 2%. Black Friday in-store shopping was up 48% compared to last year but still 28% lower than 2019 levels as shoppers spread spending throughout the season. Movie theaters are slowly coming back – over the 5 day Thanksgiving period, box office topped $142 million as people went to see movies like Encanto and House of Gucci.
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1. Story of the Day: Private Equity Boom
LBOs are back and private equity is boomin’. The boom is driven by a record level of fundraising activity and institutions like pension funds seeking higher returns in an extreme low interest rate environment.
PE firms have announced a record $945 billion worth of buyouts this year, 2.5x the same period last year and more than double the previous record in 2007. There have been five $10 billion plus deals in the US, the same as 2007 but below the record of nine in 2006.
Fundraising is also showing no signs of stopping with large firms such as KKR and Carlyle looking to raise even larger funds, targeting between $15 billion and $22 billion.
Private equity firms have raised $315 billion this year to invest in North America, pushing the cash available for investing to $756 billion (aka hella dry powder).
Last few weeks have been filled with announcements of yuge buyouts. Bain / Hellman & Friedman acquired Athenahealth for $17 billion, KKR / Global Infrastructure acquired CyrusOne for $12 billion and Advent/Permira bought McAfee for $12 billion.
It’s also just not private equity livin’ it up. The IPO market is also having a year (900 companies have gone public raising $300 billion) while merger activity is twice last year’s level.
Short Squeez Takeaway: Stock prices for private equity companies are also boomin’ e.g., Blackstone’s stock has nearly tripled since April 2020 and Carlyle is up 170% (S&P 500 is up 85% during the same period). Covid has been great news for PE firms and if interest rates stay around current levels, fundraising activity and stock prices should continue to go up.
2. Markets Rundown
Stocks fell sharply as investors reacted to fresh travel bans resulting from the discovery of a new Covid variant in South Africa.
Movers & Shakers
(+) Moderna ($MRNA) +21% vaccine makers saw their shares rally after the Covid variant news.
(+) BioNTech ($BNTX) +14% on the Covid variant news.
(–) United Airlines ($UAL) -10% as airline stocks were hit hard during Friday’s sell-off, as the new Covid variant sparked travel restrictions.
3. Top Reads
Arc lands $30 million for its $300k electric boat (Bloomberg)
Private space startup Astra reaches orbit for the first time (NewAtlas)
Red Sox owner wants to buy an NBA team (Axios)
What’s known and unknown about Omicron, the coronavirus variant identified in South Africa (Stat)
Elon Musk urges Tesla employees to reduce cost of vehicle deliveries (CNBC)
Why people with mental illness are at higher risk of COVID (NPR)
Canada releases 50M pounds from syrup reserve amid global shortage (Fox)
Fear of losing big (HumbleDollar)
For recruiters and job-seekers, it's a whole new ball game (InstitutionalInvestor)
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5. Short Squeez Picks
Invest Beyond the Stock Market with Alternative Investments in Art, Real Estate, and More
So you wanna be a Stock Picker
Starting fasting with exercise accelerates shift to fat-burning ketosis
6. Daily Visual: When is it acceptable to put up a Christmas Tree
Survey of ~2k people
7. Daily Acumen: Metacognition
One of the biggest differentiators between successful learners and people who struggle is metacognition. It is the process of thinking about thinking.
Metacognition is really about trying to create the best possible opportunity to learn what you’re actually trying to learn.
Examples of metacognitive activities include planning how to approach a learning task, using appropriate skills and strategies to solve a problem, self-assessing and self-correcting in response to the self-assessment, evaluating progress toward the completion of a task, and becoming aware of distracting stimuli.
In other words, be more mindful about your learning.
8. Career Portal
If you are looking for a new job, check out our Career Portal, where we curate the the best jobs in finance and crypto for you.
Employers: If you are looking to hire a candidate and want to post a job, just click on "Start hiring" on the top right corner of the Career Portal.