[What do you think of private equity? I've been looking at it for days and am considering building up a position. I'm waiting for a correction as the shares have been running a bit hot].

Private equity is an asset class in which capital is invested in unlisted companies in order to promote their growth or to restructure them. Typical investment areas of private equity firms are corporate takeovers, growth financing, restructuring, real estate, infrastructure and corporate succession.

In the past, high minimum investments of over €10,000 and limited transparency were major hurdles.

Today, private equity investments are easier as there are "low-cost ETFs (0.7 TER)" and platforms that enable access even for small investors.

In recent years, private equity has become a popular investment option as investors can benefit from the high returns and stability provided by strategic investments in private companies. In addition, participation in unlisted companies can provide further diversification. Three of the best known and largest companies in the private equity sector are KKR, Blackstone and Brookfield.

• KKR Kohlberg Kravis Roberts & Co.
  $KKR (+2,61%) is one of the oldest and largest private equity firms and has established itself as a leader in the global financial landscape. The firm is known for its broad-based investment strategy targeting a variety of sectors, including infrastructure, real estate and energy.

• Blackstone
  $BX (+2,63%) the largest private equity firm in the world, has also expanded its focus to these sectors, but is particularly known for its real estate and real estate funds.

• Brookfield Corporation $BN (+2,57%) is another major player known for its broadly diversified strategy, investing heavily in infrastructure and renewable energy alongside private equity. All three companies offer strong long-term growth opportunities, but Blackstone stands out due to its sheer size and market leadership.

Investing in shares or ETFs?

• One listed ETF that invests in private equity is the "Listed Private Equity ETF" $IPRV (+1,95%) This ETF offers broad exposure to listed private equity companies, making it a practical option for investors seeking access to the asset class without having to invest directly in private funds. Over the last 20 years, the average return on private equity funds has been around 12-15% per annum.
• The disadvantage is that although ETFs are cheaper than funds, they offer lower returns and are expensive compared to other ETFs.

Conclusion

Advantages:

• Potential for strong company improvements and increases in value.
• High potential returns due to growth potential.
• Access to exclusive investment opportunities.

Disadvantages:

• Higher risk due to corporate restructuring or market conditions.
• High minimum investment and costs with traditional private equity funds. ETF with 0.7 TER.

Interesting videos on the topic of private equity:

CEO Brookfield Corporation

https://youtu.be/vmt1Li1Rnes?si=CWbRjgbW2Op3_3Ig

KKR Head of Europe

https://youtu.be/3tOR4SKdP0E?si=ohmesMorNYBsGZH1

More on the topic at @JtoTheB

https://getqu.in/8kAzee/

All of these shares reached new ALL-TIME HIGHS at some point today ⤵️

Nvidia $NVDA (-1,38%)

Amazon $AMZN (+0,03%)

Netflix $NFLX (+1,62%)

Walmart $WMT (+2,73%)

JPMorgan $JPM (+1,94%)

Goldman Sachs $GOS0

Palantir $PLTR (+1,7%)

Blackrock $BLK

American Express $AXP (+1,14%)

Arista $ANET

Apollo $APO PR A

Blackstone $BX (+2,63%)

Booking $BKNG (+1,34%)

Instacart $INSTA (+0,27%)

Caterpillar $CAT (+2,96%)

Capital One $COF (+2,85%)

Discover Financial $DFS (+2,99%)

Electronic Arts $EA (+2,29%)

GE Vernova $GEV (-0,52%)

Hilton $HLT (+1,09%)

Howmet $HWM (+0,99%)

Interactive Brokers $IBKR (+2,13%)

$KKR (+2,61%)

Cheniere $LNG (+2,85%)

Morgan Stanley $MS (+2,63%)

Marriot $MAR (+1,27%)

Nasdaq $NDAQ (+1,99%)

News Corp $NWSA (+0,89%)

Oracle $ORCL (+0,68%)

Palo Alto $PANW (+0,58%)

ServiceNow $NOW (-1,5%)

Steel Dynamics $STLD (+2,32%)

Stryker $SYK (+0,94%)

Royal Caribbean $RCL (+1,44%)

Reddit $RDDT (+0,02%)

Trade Desk $TTD (+3,3%)

Visa $V (+1,2%)

Wells Fargo $WFC (+2,6%)

⚠️⚠️⚠️Breaking News⚠️⚠️⚠️

ATTENTION to all who have a deposit with Trade Republic, today more than 100 savings plans will be executed with me, the real offensive starts at 15.30 and can take up to 4 hours, as there may well be "massive" "failures" and "delays" during this time, I ask you to keep calm, take a deep breath and not to bombard Trade Republic customer support with inquiries. Thank you very much 😁

As far as the Ultimate Homer "ETF" is concerned, many new stocks were added in September 😁

In since September 2

🇺🇸Chipotle $CMG (+0,88%)

🇺🇸Costco $COST (+2,72%)

🇺🇸Domino's Pizza's $DPZ (+1,58%)

🇺🇸Texas Roadhouse $TXRH (+1,37%)

🇺🇸TransDigm $TDG (+1,75%)

Newly launched today

🇺🇸Booz Allen Hamilton Holding
$BAH (+2,41%)

🇺🇸Blackstone $BX (+2,63%)

🇺🇸KKR & Co
$KKR (+2,61%)

🇺🇸Vulcan Materials
$VMC (+0,47%)

🇺🇸CSX $CSX (+2,03%)

🇺🇸Carrier Global $CARR (+1,94%)

🇺🇸Hilton Worldwide $HLT (+1,09%)

🇺🇸Merck & Co $MRK (+3,21%)

🇺🇸Moodys $MCO (+0,75%)

🇺🇸Rollins $ROL (+1,96%)

🇺🇸Toll Brothers $TOL (+2,48%)

🇺🇸Watsco $WSO (+2,28%)

🇺🇸Cardinal Health $CAH (+0,74%)

🇺🇸Colgate Palmolive $CL (+2,1%)

🇺🇸Emerson Electric $EMR (+2,39%)

🇺🇸Nordson $NDSN (+1,06%)

🇬🇧BAE Systems
$BA. (-1,27%)

🇬🇧RELX
$REL (+2,92%)

🇬🇧Bunzl
$BNZL (+1,76%)

US election campaign - major figures from the business world support Kamala Harris

In a letter to presidential candidate Kamala Harris, 88 personalities with immense experience in the management of billion-dollar companies have announced their support for her candidacy.

The reasons given are:

• Harris past performance as Vice President (strong record of promoting investment and global competitiveness of U.S. businesses)
• Harris' choice is the best way to support the continued strength, security and reliability of U.S. democracy and economy
• Harris would advance fair and predictable policies that support the rule of law, stability and a sound business environment

Among the endorsers are:

• A. Mulally (ex. CEO Ford $F (+3,04%) )
• V. Prabhu (ex. CFO & Vice-Chair of Visa $V (+1,2%) )
• I. Nooyi (ex. Chairman and CEO of PepsiCo $PEP (+2,3%) )
• J. Sinegal (Co-Founder & ex. CEO of Costco $COST (+2,72%) )
• C. Gifford (ex. Chairman of Bank of America $BAC (+1,37%) )
• K. Chenault (ex. Chairman & CEO of American Express $AXP (+1,14%) )
• B. Heyman (ex. Managing Director for "Private Wealth" at Goldman Sachs $GS (+3,42%) )
• T. James (CEO & Executive Vice Chairman of Blackstone $BX (+2,63%) )
• D. Schulman (ex. President & CEO of PayPal $PYPL (+2,1%) )
• R. Brewer (ex. CEO of Walgreens Boots Alliance $WBA (+0,7%) , ex. COO of Starbucks $SBUX (+1,68%) )

https://www.cnbc.com/2024/09/06/harris-endorsed-trump-murdoch-yelp-snap-ripple.html

Private Equity

One possibility $CSPX (+1,08%) (S&P 500) to beat?

Private equity is a topic of great interest to many private investors. Given the great interest here on Getquin for diversification in a well-positioned portfolio, many are looking for alternatives that can deliver better results than just the stock market. This is where the central question comes into play: "How can you outperform the index?"

In this post, we will look at private equity as a potential asset class for private investors. We will look at why private equity has historically delivered high returns and what challenges and opportunities there are for private investors to enter this market.

Background knowledge

Private equity refers to investments in unlisted companies. These investments are made by private investors who inject equity into companies in order to finance their growth, restructuring or takeovers. In contrast to public equity markets, where shares in listed companies are traded, the shares in private equity investments remain in the possession of a small group of investors (usually between 100-500 investors for larger funds)

Private equity differs from other asset classes in several respects:

• Liquidity: While stocks and bonds can be traded relatively easily and quickly, private equity investments are more long-term and less liquid. Investors must be prepared to keep their capital tied up for between 7-10 years.
• Access: Access to private equity is often more restricted. While stocks and bonds are accessible to everyone, private equity investments often require high minimums and are usually reserved for institutional or UHNWI investors.
• Influence and control: Private equity investors often have significant influence over the management and strategic direction of the companies they invest in. This is in contrast to the passive investments typically found in the public markets.

Historically, private equity has generated higher returns than the public markets. Studies show that, on average, private equity funds offer a higher annualized return than traditional equity investments. This is because private equity investors can actively intervene in the management of companies and often make them more efficient and profitable (source: Deloitte). In addition, many private equity strategies aim to buy companies at a favorable time and sell them at a profit after restructuring. However, these potentially higher returns also come with higher risks and a longer capital commitment. It is therefore important to be aware of the specific challenges and opportunities of private equity before investing in this asset class.

Advantages of private equity

As mentioned above, private equity has historically generated higher returns than many traditional asset classes. These above-average returns are the result of several factors:

• Active management: Private equity investors work closely with company management teams to improve operational efficiencies, drive growth and implement strategic initiatives such as buy and build strategies.
• Focus on growth: Private equity often targets companies that are in a growth phase or whose potential has not yet been fully realized through restructuring and optimization.
• Leverage: Using debt capital to finance acquisitions can increase the return on equity, even if this also increases the risk. Before the interest rate hikes, it was still common to finance such an acquisition with 70% debt capital. However, since debt capital has become more expensive, private equity funds achieve a significantly higher proportion of returns with operational value enhancement than with the leverage effect of debt capital.

Challenges and barriers

• High minimum investment and deal sizes: One of the biggest hurdles for private investors looking to invest in private equity is the high minimum investment and large deal sizes. Many private equity funds require a minimum investment in the millions, which often makes this asset class only accessible to institutional investors or UHNWIs. These high entry barriers can deter private investors from investing directly in private equity.
• Low liquidity and long commitment periods: Private equity investments are generally long-term and illiquid. This means that investors have to tie up their capital for several years, often over a period of 7 to 10 years or longer. During this time, it is difficult to recover the invested capital as there are no regulated markets for trading private equity shares. This is referred to as the "secondaries market" which, however, is not yet very well developed, especially in Europe. This low liquidity represents a significant barrier, especially for investors who need flexible access to their capital.
• Information asymmetry and lack of transparency: Another major obstacle for private investors is the asymmetry of information and lack of transparency in the private equity industry. Private equity funds and their portfolio companies are not subject to the same disclosure and reporting requirements as listed companies. This can make it difficult for private investors to make informed investment decisions and monitor the progress of their investments. The limited availability of information increases risk and requires a high level of trust in fund managers.

Opportunities for private investors

Direct investment in private equity shares

In my opinion, the most direct and effective way for private investors to profit from private equity is to invest directly in shares of listed companies that are heavily involved in private equity. Here are the reasons why:

Funds of funds and their dual fee structure

Investment funds that invest in private equity, also known as funds of funds, often have a dual fee structure. This means that investors not only pay the fees of the fund of funds itself, but also the fees of the underlying private equity funds. This double fee burden can significantly reduce returns and makes this option less attractive for private investors.

High costs of private equity ETFs

Similar to funds of funds, private equity ETFs have high management costs. These ETFs also charge management and administration fees, which are in addition to the costs of the private equity holdings in the ETF. This results in a similar double fee structure that reduces the total return for investors. In addition, these ETFs are often more expensive than traditional equity ETFs, which further reduces their appeal. An example of this is the: $IPRV (+1,95%) with TER of 0.75%.

Specialized knowledge required for secondaries

The private equity secondary market, where shares in existing funds can be bought and sold, requires specialized knowledge and a deep understanding of the industry. Without extensive knowledge and contacts in the industry, it is risky for private investors to get involved in secondaries. The complexity and potential risks make this option impractical for most private investors.

Direct investment in shares of private equity companies as a solution

Instead, direct investment in shares of listed private equity companies offers a viable alternative. These companies are often at the forefront of the industry and offer investors the opportunity to benefit indirectly from private equity investments without the complications and high costs of other access routes. Advantages of this strategy are:

• Transparency: Listed companies are subject to strict disclosure requirements, which means more transparency and a better information base for investors.
• Liquidity: Shares can be traded on the stock exchange at any time, offering greater liquidity compared to direct private equity investments.
• Easy accessibility: Buying shares does not require a high minimum investment or specialized knowledge, making it easy for private investors to invest

Examples of listed private equity companies:

• $BX (+2,63%)
  : As one of the world's largest private equity investors, Blackstone offers access to a diversified portfolio of investments.
• $KKR (+2,61%)
  : Another leading player in the private equity industry with a strong track record and global investments.
• $CG (+2,94%)
  : A globally active private equity firm with extensive holdings in a variety of sectors.

By investing directly in these shares, private investors can benefit from the potential returns of the private equity industry without the disadvantages and complexities of traditional access routes. However, it is important to note that as an ordinary shareholder you are at the bottom of the food chain and private equity managers are paid their excess returns through a so-called "carry". This carry is the reason why private equity managers are paid more than handsomely.

Conclusion

Private equity offers private investors an interesting opportunity for portfolio diversification and potentially higher returns. Despite impressive results, high minimum investments, low liquidity and information asymmetry are significant barriers.

Direct investments in shares of listed private equity companies offer a viable alternative. These shares offer transparency, better liquidity and do not require high minimums. However, investors should note that as shareholders they do not receive the same returns as private equity managers who receive high levels of remuneration through carry.

Private investors should carefully consider how private equity fits into their investment strategy, conduct thorough due diligence and understand the specific risks and rewards in order to make informed decisions and successfully diversify their portfolio.

New long-term position

Hello, after a long period of consideration, I have decided to sell my shares in the Digital Security ETF and would like to replace this position with shares in a company in the financial sector.

My candidates:

Nu Holdings ( $NU (+2,85%) )

Moody's ( $MCO (+0,75%) )

Blackstone Group( $BX (+2,63%) )

• With $NU (+2,85%) I would be better diversified geographically and have a nice growth company with me
• Moody's is also a nice buy & hold company with a deep moat
• Blackstone would give me a little exposure to private equity. I'm already partly in that through Mutares ( $MUX (+1,47%) ), but Blackstone invests in larger companies/projects. So there wouldn't be too much overlap here

Which of the 3 companies do you think you would choose and why? Or would you choose a completely different one?

I already have some financials in my portfolio:

S&P Global ( $SPGI (+0,83%) )

Visa ( $V (+1,2%) )

Mastercard ( $MA (+1,58%) )

Blackrock ( $BLK )

Mutares ( $MUX (+1,47%) )

Everyone is always waiting for the $BATS (+1,07%) dividend. I have been waiting since May 06 for the $BX (+2,63%) dividend at Trade Republic. I am used to this from Scalable but not from TR? Is anyone else waiting at $BX (+2,63%) or individual fate? :-)