Private Equity Recruiting is Bananas

M*therf*ckers Have Lost Their G*d-damned Minds

There is so much to unpack in this stupid piece about the annual private equity recruiting frenzy. First, let's stop calling kids who are weeks out of college "talent" merely because they got a job in an investment bank trainee program. They haven't proven that they're talented at anything just yet. Going to an ivy league school, having a trust fund and being a douche isn't dispositive of anything. So, everyone chime the f*ck down please. Second, these folks get paid $200k? And people say there's no wage inflation? Third, the idea that an ibanker trainee is going to be appreciative for the two years of training a bank has given them and, in turn, give later private equity business to said bank is ludicrous. As a practical matter, his/her connection to that bank lasts a mere few weeks prior to them securing the next bigger, better and more Tinderable gig with which they prefer to identify. This seems like an outdated model with bad assumptions baked into it. The only sure thing seems to be that no matter which one of the PE firms these trainees land at, they'll be hiring Kirkland & Ellis LLP as bankruptcy counsel for one of their busted portfolio companies. Fourth, we love this bit about recruiting being earlier than ever "after an agreement to hold back fell apart." Hahahaha. So, private equity firms - KNOWN FOR DEAL-MAKING - couldn't even come to a deal amongst themselves?? This is like mutually assured destruction among KKRWarburg PincusCarlyle Group LPApollo Global Management LLCBain CapitalBlackstone Group LPTPG and Golden Gate Capital. Here's a great idea: lets trip over ourselves - and each other - to hire people with literally "no work experience." Those interviews must be PAINFUL AF. And, oh, hey you Managing Director. We love that you're "often forced to cancel business meetings last-minute to interview candidates." We're sure a multi-billion dollar transaction can wait for some piss-ant Harvard bro who inexplicably and unnecessarily writes equations on glass to regale everyone with his rad math skills. So lit. On what basis are these kids REALLY getting hired then? We think its probably pretty obvious. And its questionable how this BS still flies. What does any of this have to do with disruption? Well, when you're competing with venture capital and tech to acquire "talent," desperate times seemingly call for desperate measures. Logic has been disrupted. And it's absurd.

Nordstom Going Private?

Saving Private Nordstrom

Nordstrom ($JWN) is reportedly exploring a (debt-laden) take-private transaction in partnership with one or all ofLeonard Green & Partners LP, Apollo Global Management LLC and KKR & Co. LLP. The market, broadly, is exploring shorting the bloody hell out of retail generally, and Nordstrom specifically.

Chart of the Week II: KKR Credit's Share of Shadow Banking

The shadow banking industry is off the races in 2017. KKR is now in the top-13 of lenders of leveraged loans, having lent more already in 2017 than in all of 2016. The Federal Reserve's leverage limit on banks has opened the door and KKR is barging through with brute force. Still, President Trump is considering loosening the standards on banks which would have the affect of increasing their ability to compete for issuance of the riskier leveraged loans. That would hurt KKR's growing share.

Private Equity Dogs = No Fortune 500 $KKR $BTU

The Fortune 500 list came out and one of the companies that fell off of the list is KKR ($KKR), with causation linked to the firm's horrendous Samson Resources investment. Ouch. Peabody Energy ($BTU) was another notable fallen star. Elsewhere in private equity, Paul Singer of Elliott Management Corp. gives zero f*cks about what we all think. And, interestingly, Avenue Capital Group israising a second distressed energy fund (of $1b AUM). There is a boatload of dedicated money to distressed energy still waiting on the sidelines and so we find it interesting not that Avenue believes it can raise money in this space but that it can deploy it - at this juncture and in this competitive landscape - on opportunities that will provide a good rate of return. That's obviously not a bullish sign for the space. If they're right. Finally, stay tuned for a new report on the net job effect of PE from HBS researchers. In brief, the previously study - which subsumed data through 2005 - showed only a "modest net impact on employment." PE firms loved that sh*t because it made them look not-so-evil. What's happened a lot since 2005? A lot of PE. And a lot of dividend recaps. Popping popcorn and waiting for the new findings....