🍋 Private Equity's New Hobby

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Good Morning! Netflix is rolling out its password crackdown in the United States. And with over 200k tech jobs lost to the recession, many software engineer graduates are turning to investment banking and consulting.

Office stocks are slammed by the slow return-to-office push, with some top stocks still down 80% from pre-pandemic highs. And more American women than ever are part of the workforce, with over 75% of 25-54-year-old women working.

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1. Story of the Day: Private Equity's New Hobby

Private equity firms are experts in buying other businesses. But they’ve shied away from acquiring their own. That all could be changing, though - the industry is consolidating as top dogs buy up their peers.

Firms want to grow their assets under management, the fees they generate, and establish new lines of business.

Take last week for example - TPG acquired fellow asset manager Angelo Gordon in an effort to establish a private credit business. And while an acquisition like that would have been unheard of a few years ago, they’re becoming increasingly commonplace. The past two years have seen the largest and second-largest number of private equity consolidation deals.

And there’s no sign of slowing down. Asset managers are hoping to take a page out of Blackstone’s playbook. The private equity behemoth bought GSO for around $1 billion in 2008, at a time when buyout activity had come to a halt. And now? GSO has almost $150 billion in assets under management.

The GSO acquisition was successful precisely because of the unique market conditions at the time. And there could be even more big-time acquisitions in 2023.

Takeaway: The M&A market is looking about as fun as a root canal right now. But hey, private equity firms? They're like treasure hunters in the middle of a storm. This could be their golden moment to play "Buy-a-Buddy" with their peers (and their shiny assets). A word of caution though - PE firms cherish their culture like their favorite deal toy. They’ll have to watch out that buying buddies doesn't end up shattering that precious thing.

2. Markets Rundown

Stocks closed lower as debt ceiling talks stall.

Movers & Shakers

• (+) Yelp ($YELP) +6% after an activist investor urges sale.

• (–) Autozone ($AZO) -6% after the company missed revenue expectations.

• (–) Zoom ($ZM) -8% after the company reported Q1 earnings.

Private Dealmaking

• RenRe acquired Validus, a reinsurance unit, for $3 billion 

• Anthropic, an AI research firm, raised $450 million

• Builder.ai, a modular app development platform, raised $250 million 

• Shutterstock bought Giphy from Meta for $53 million

• Spiff, a provider of sales commission software, raised $50 million

• Sabi, a B2B e-commerce provider, raised $38 million

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3. Top Reads

• Private equity’s big opportunity (Axios)

• Apple inks multibillion dollar deal with Broadcom for U.S. made chips (YF)

• Over $100B of U.S. corporate debt trades at distressed levels (Axios)

• Jamie Dimon warns of commercial real estate downturn (CNN)

• How much money the U.S. has left ahead of the X-date (Axios)

• Carl Icahn is $15 billion poorer and ready to fight back (BB)

• The surprising reason luxury goods are booming (Vox)

• BJ’s earnings tell the whole story of the US economy right now (YF)

• The mountain of FTX evidence (NYT)

• Bud Light sales continue to go flat (YF)

4. Book of the Day: The Yellow Pad

In 1958, as a college sophomore, Robert Rubin took a class that changed his life. The class was introduction to philosophy, and the professor, Raphael Demos, instilled in his students an idea that was simple yet profound: There is no such thing as certainty.

For Rubin, this led to a critically important question: How can we make sound decisions in a fundamentally uncertain world? While serving in some of the most significant roles in markets, business, and government, Rubin has grappled with that question.

Time and again, when faced with a high-stakes decision, he turned to his most trusted tool: a simple yellow legal pad. Rubin’s yellow pad (or more recently, his iPad) became an expression of a larger decision-making philosophy that has both lasted and shaped a lifetime.

In The Yellow Pad, Rubin lays out that philosophy with depth and detail, and presents a compelling intellectual framework for confronting some of the most difficult issues we face today.

The Yellow Pad contains a former Treasury secretary’s approach to economic policymaking. A former Goldman Sachs senior partner’s approach to personal investing and understanding risk. A former director of the National Economic Council’s approach to managing people in both private- and public-sector organizations. And much more.

Yet despite his lifetime of experiences, Rubin remains refreshingly open-minded, interested in exploring ideas rather than promoting ideologies. With its combination of wisdom and relevance, The Yellow Pad is an essential guide for anyone looking to make better decisions in life, work, and public policy.

“An astute and original guide for navigating uncertain times.”

5. Short Squeez Picks

• Obsessed with going to an elite college? Read this

• PF Chang’s 34-year-old CEO’s morning routine

• Best side hustles for college students

• The one quality startup founders need

• Best pizza in NYC, ranked

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6. Daily Visual: Changing Trends in Baby Names

_{Source: Axios}

7. Daily Acumen

The Diffusion of Innovation is a theory that explains how new ideas, products, or technologies spread and are adopted by individuals or groups over time. It describes the different stages of adoption and the types of people involved in the process.

According to the Diffusion of Innovation theory, adoption occurs in the following stages:

Innovators: These are the adventurous individuals who embrace new ideas or technologies early on. They are risk-takers and seek novelty and innovation.

Early Adopters: These individuals are influential and serve as opinion leaders within their social networks. They adopt new ideas after the innovators but before the majority. They are often respected and look for the practical benefits of the innovation.

Early Majority: This group represents the majority of the population. They adopt new ideas or technologies once they have been proven and accepted by the early adopters. They are more cautious and rely on the experiences and opinions of others.

Late Majority: This group tends to be skeptical and adopts new ideas or technologies only after the majority has already done so. They are more conservative and may have concerns about the risks or disadvantages.

Laggards: These individuals are the last to adopt new ideas or technologies. They are often resistant to change and prefer traditional or established practices. They may adopt only when they have no other choice.

Understanding the Diffusion of Innovation model can help individuals and organizations strategically introduce new ideas, products, or technologies. By targeting specific segments of the population and addressing their needs and concerns, adoption can be facilitated and accelerated.

8. Memes of the Day

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