What we’re reading (1/7)
“Why Does Private Equity Get To Play Make-Believe With Prices?” (Cliff Asness in Institutional Investor). “Though some will plead the opposite, it’s not that hard to adjust even private marks in line with the market. If you’re levered long equities (and yep, PE’s ‘low-risk and low-beta’ investments are often levered long) and equities fall by 25 percent, you probably dropped at least that. Perfect estimates are not the point, and shouldn’t be the enemy of good estimates (for instance, some argue private equity betas are near 1.0 even with leverage, but nobody serious argues they are near zero). Sure, sometimes it’s more complicated. But remember, PE managers are among the world’s foremost experts in company valuation. You wouldn’t think the question ‘Approximately what would we get if we sold in today’s market?’ would be particularly tricky for them. That is, of course, if they actually wanted to tell you the answer and if you actually wanted to hear it. It does take two to do the nonmarking tango.”
“Ant Group Says Its Founder, Jack Ma, Will Relinquish Control” (New York Times). “One of China’s most influential financial tech companies, Ant Group, said on Saturday that the billionaire entrepreneur, Jack Ma, planned to relinquish control of the company. Mr. Ma’s retreat from the company he founded comes after the ruling Communist Party waged an unprecedented crackdown on Big Tech. Beijing had made Mr. Ma’s Ant Group and its sister company, the e-commerce giant, Alibaba, the crown jewels of his online empire, early targets in the campaign to curb the power of internet giants.”
“Burned By layoffs, Tech Workers Are Rethinking Risk” (TechCrunch). “Tech isn’t as collegial as it used to be. Rocket ships are being unveiled as sputtering messes, mission-driven startups don’t feel so mission oriented when responding to investor pressure, and widespread layoffs offer a loud reminder that jobs are breakable contracts not sacrosanct vows.”
“Poultry Farm Says Millions Of Chickens Could Starve From Rail Delays” (Wall Street Journal). “Service problems at Union Pacific Corp. have sparked a dispute between the railroad and one of the country’s biggest chicken processors, which says the lives of millions of birds are endangered by repeated delays in the delivery of corn. California-based Foster Farms has asked for regulatory intervention for the second time in six months, saying delayed shipments from Union Pacific have dwindled its corn inventory. The company said it has diverted feed from dairy cattle to the chickens, which are susceptible to quicker death.”
“Lumber Market Must Weather A ‘Treacherous’ 2023 After Last Year’s Staggering 66% Price Crash As A US Housing Slump Deepens” (Insider). “Lumber prices plunged 66% last year as the once red-hot US housing market faltered – and the commodity's troubles will likely continue in 2023, according to strategists.”
