🍋 WeBroke

The latest on-cycle private equity recruiting chatter, plus WeWork headed for bankruptcy, and hedge fund bots better than humans.

Together With

“Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.” — Adam Neumann

 

Good Morning! Job openings crept up for a second straight month to 9.6 million and the Fed took it easy yesterday, leaving interest rates unchanged.

It’s been a rough year for hedge funds. Investors pulled $80 billion from the industry in redemptions and computer-driven funds outperformed human stock pickers in October, according to a Goldman study. Private equity firm CVC postponed its IPO plans. And it sounds like ChatGPT could be the new Lehman Brothers - the SEC chair thinks AI could spark the next global financial crisis.

Today’s edition is brought to you by Eckard, an investment firm offering 16%+ passive income returns.

SQUEEZ OF THE DAY

WeBroke

WeWork might officially be the worst startup failure of all time. Multiple reports broke this week that the office space company is filing for bankruptcy.

WeWork has now lost 99.99% of its value. Before its IPO flopped in 2019, the company was valued at $47 billion. But after yesterday’s close, its market cap hovered at a mere $65 million. 

The company has one week to reach an agreement with bondholders before it defaults. An official bankruptcy filing is expected early next week.

The company warned of substantial doubts about its future in August, so this isn’t unexpected. Adam Neumann’s brainchild burned $530 million during the first six months of 2023 and only had $205 million of cash on hand. They have $15 billion in debt coming due by 2028.

Takeaway: WeWork just hasn’t been the same since its former CEO Adam Neumann got caught hotboxing on his private jet. Back in 2019, there was real hope WeWork could disrupt commercial real estate the way Amazon disrupted stores. So if you’re a hybrid worker somehow still bouncing around WeWorks in 2023 - you might need to find a new spot to work. 

CAPITAL PULSE

Markets Rundown

Stocks closed higher and S&P 500 had its best ‘Fed-day’ performance since July.

Movers & Shakers

  • (+) Garmin ($GRMN) +11% after beating quarterly estimates; raising its sales outlook.

  • (+) Apollo Global Management ($APO) +8% after the megafund posted strong credit growth.

  • (–) Estée Lauder ($EL) -19% after cutting its full-year forecast.

Private Dealmaking

  • NEXT Insurance, a small business insurer, raised $265 million 

  • Shield AI, a military drone tech developer, raised $200 million

  • CMBlu, a solid-flow battery developer, raised $107 million

  • JSSI, a Chinese chipmaker, raised $82 million

  • FusionAuth, an authentication management software, raised $65 million 

  • SkyCell, a vaccine transportation startup, raised $57 million

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HEADLINES

Top Reads

  • The rich are propping up the economy, 2 things that could make them roll over (YF)

  • Macro hedge funds turn bearish on equities (Reuters)

  • The Magnificent 7 stock market leaders went their separate ways in October (YF)

  • Federal jury verdict on broker fees rocks real estate industry (Axios)

  • KKR says asset-based debt among top private credit opportunities (BB)

  • Don’t use LinkedIn’s open-to-work sign (CNBC)

  • Why AI could help Europe create its own Apple or Google (TG)

  • How the world’s largest hedge fund really makes its money (NYT

  • The EV transition trips over its own cord (Verge)

  • Ares SPAC joins pile of busted deals to return cash to investors (YF)

BOOK OF THE DAY

Be Useful

The world’s greatest bodybuilder. The world’s highest-paid movie star. The leader of the world’s sixth-largest economy. That these are the same person sounds like the setup to a joke, but this is no joke. This is Arnold Schwarzenegger. And this did not happen by accident.

Arnold’s stratospheric success happened as part of a process. As the result of clear vision, big thinking, hard work, direct communication, resilient problem-solving, open-minded curiosity, and a commitment to giving back.

All of it guided by the one lesson Arnold’s father hammered into him above all: be useful. As Arnold conquered every realm he entered, he kept his father’s adage close to his heart.

Written with his uniquely earnest, blunt, powerful voice, Be Useful takes readers on an inspirational tour through Arnold’s tool kit for a meaningful life. He shows us how to put those tools to work, in service of whatever fulfilling future we can dream up for ourselves.

He brings his insights to vivid life with compelling personal stories, life-changing successes and life-threatening failures alike—some of them famous; some told here for the first time ever.

Too many of us struggle to disconnect from our self-pity and connect to our purpose. At an early age, Arnold forged the mental tools to build the ladder out of the poverty and narrow-mindedness of his rural Austrian hometown, tools he used to add rung after rung from there.

Now he shares that wisdom with all of us. As he puts it, no one is going to come rescue you—you only have yourself. The good news, it turns out, is that you are all you need.

“The seven rules to follow to realize your true purpose in life—distilled by Arnold Schwarzenegger from his own journey of ceaseless reinvention and extraordinary achievement, and available for absolutely anyone.”

ENLIGHTENMENT

Short Squeez Picks

DAILY VISUAL

Net Interest Payments on US Federal Debt

Source: Axios

SHORT SQUEEZ_V2

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DAILY ACUMEN

Wealth

Tom Greene delves into the age-old question: How much money do you need to be considered rich? In a world where we often measure wealth against Musk, Bezos, and Zuck, it's all about perspective.

With soaring costs for everyday items and a significant percentage of Americans living paycheck to paycheck, it's easy to feel like you're falling behind.

But here's the plot twist: you're already richer than you think. A whopping 60% of Millennials already consider themselves rich, while only 40% of Boomers share that sentiment. It's all about how you define "wealthy."

Money alone won't buy happiness or mend broken relationships.

Tom humorously explores the concept of wealth, inviting readers to ponder how much money they'd need to feel rich (spoiler: you already are). He even takes us on a global comparison journey, contrasting our toilets and gadgets with less fortunate parts of the world.

The takeaway? Life is expensive, but we're all a lot wealthier than we realize. So, the next time you're wondering if you're rich enough, just remember: it's all relative, and toilets are a luxury in some places!

HEARD AROUND THE STREET

Wall Street Corner

On-Cycle Private Equity Recruiting

On-cycle private equity recruiting has never really made sense to any of us. Investment Banking Analysts start getting hit up by headhunters in their first week on the job… for a job that they will start in two years time.

But such is the nature of the game now, with private equity firms fighting it out for the best talent.

Now one headhunting firm has shared insights on how investment banking groups are placing during on-cycle recruiting.

Safe to say no one is surprised…

The strongest 3 banks for megafunds and upper-middle-market placements were Morgan Stanley, Evercore and Goldman Sachs.

~50% of Week 1 acceptances (offers handed out during the first 7-day period of on-cycle recruiting) were from those 3 banks.

And the best groups on the street for placements? Morgan Stanley Tech, Goldman Sachs FIG, and PJT Restructuring.

Here are the top 8 investment banks by acceptance of Week 1 PE offers.

MEME-A-PALOOZA

Memes of the Day

 

 

 

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