These days, it's hard to tell fact from fiction

Sometimes the consumer press scoops us big time, such as the news that investment banking giant Goldman Sachs has acquired private equity powerhouse TPG. This from consumer-electric news site CNET, reporting last month on the exit from Alltel by TPG and Goldman: “The deal was struck only seven months after Alltel was bought out by TPG Capital, a unit of Goldman Sachs Group, for $27.5 billion.” Five years from now, this may not be an error.

QUOTABLES
“Fund[s] of funds are a cancer on the institutional investor world. They facilitate the flow of ignorant capital. If an investor can't make an intelligent decision about picking managers, how can he make an intelligent decision about picking a funds of funds manager…?”

David Swensen, the influential head of Yale University's endowment (see also p. 66), interviewed last month in the Wall Street Journal. He decried a trend that is seeing other institutional investors attempt to mimic Yale's alternatives-heavy allocation mix

There is some truth in the accusation that in recent years, with the availability of easy credit, private equity has maybe got a bit lazy.”

Simon Walker, chief executive of the British Private Equity and Venture Capital Association (BVCA), concedes that before the credit crunch some private equity firms had prospered on leverage alone

“We are in a very different place than the US economy was in the 1930s. It is possible to have the worst post-war recession without getting anywhere close to what it was in the 1930s.”

James Poterba, president of the National Bureau of Economic Research, in an interview with the Reuters Investment Outlook Summit. He added that he expects the recession, which the NBER says started in December 2007, to be longer than average

“[The] BCE [deal] is the last gasp of an era. It was conceived at the height of the private equity wave, which has crashed.”

Steven Kaplan, a professor at the University of Chicago Booth School of Business, talking to Bloomberg