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📣📣PRIVATE EQUITY CONTAGION HITTING HEDGE FUNDS LIQUIDITY DRYING UP‼️ At the beginning of the year we saw the Private Equity firms like BlackRock, Apollo Global, and Blue Owl start to experience massive amounts of redemption requests. Now it is starting in Hedge Funds. King Street Capital Management is now...

11,853 görüntüleme • 20 gün önce •via X (Twitter)

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A couple of Citi analysts framed the whole issue perfectly. What if the retail investors fleeing these funds are selling at the very top, and the BDC holder everyone called dumb money is actually the smartest in the room? Their warning was blunt. The calm is deceptive. The next wave of stress will not be gradual. It will be sudden. Non-linear. That is the point. The surface looks fine. Decent NAVs. Confident managers. Underneath, it is a mess. And the mess is spreading. Now the big one. Switzerland's Partners Group. And this is private equity, not private credit. That is the escalation. The contagion is jumping lanes. And it is not just a US problem. It is global. Partners Group just capped withdrawals at its 8.6 billion dollar private equity fund. Redemption requests hit nearly 10% in a single quarter. The cap is 5%. Same move the credit funds are already making. These evergreen funds were sold as flexible private equity. Own private companies, skip the ten-year lockup, redeem when you want. Except you cannot. The assets are not liquid. So when requests are 10% and the limit is 5%, the message is simple. Everyone wants out at once, and the door is too small. This is not Partners Group collapsing. It is the liquidity illusion jumping from credit to equity. And that changes everything. This was never a few investors misreading Blue Owl. It is a full reassessment of private markets. Illiquid assets. Delayed marks. High rates. Dead deals. Locked gates. Investors are looking at all of it and saying the same thing. I want out.

Jeffrey P. Snider

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Chamath: “Private equity in general is totally hosed.” 🏢🚨 “I think the history of this is important.” “There was a long standing belief that the best way to generate the best risk adjusted return was to have what's called a 60/40 allocation. 60% to bonds and 40% to equities.” “Over many years, especially when we artificially suppressed rates at zero, a lot of people started to move their allocations away from 60/40 and they started to make more and more investments further out on the risk curve.” “The biggest beneficiaries of that were venture capital, private equity, and hedge funds.” “The thing with private equity is that because rates were zero, they had an infinite amount of borrowing capacity at very little downside to them, and so they were able to manufacture returns much faster than venture capital and hedge funds could.” “So as a result, you had an initial group of people that were defining the asset class, making a ton of money, and then you had all these fast followers that said, ‘Well, if they're doing it, I can do it too.’” “But then always what happens is then you have this flood of laggards that just flood the zone.” “And it's these laggards that make it very difficult to generate returns because they start overpaying for assets, they start mismanaging and under managing the assets that they do own.” “That created a lot of competition, and so that's why you see this hockey stick graph.” “And when you see that kind of graph, it doesn't matter what asset class it is. The returns go to zero.” “And so we've seen this in venture capital. We've seen this in hedge funds. And we're now going to see this in private equity.”

The All-In Podcast

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Private Equity Firms have found a new target in America, Hospitals 460+ American hospitals are now owned by private equity firms Just in the last few years, they’ve already managed to load an estimated 50 hospitals up with debt, forcing their bankruptcies and closures One private equity firm bought a hospital in Pennsylvania, “ Just two years after buying Crozier Health, Prospect took out a $1.1 billion loan and then sent nearly half of it straight to their investors while Crozier continued to suffer. It's fundamentally extractive, even among private equity industry folks. It's a controversial way to generate a return on an investment because it adds absolutely no value to the company in question” Private equity firms often use leveraged buyouts, loading acquired hospitals with debt to finance purchases. This debt, combined with strategies like sale-leaseback deals (selling hospital real estate and leasing it back to the hospital at high rents), can strain hospital finances Here’s another example of that: Steward Health Care, previously owned by Cerberus Capital Management, sold its real estate to Medical Properties Trust (MPT), incurring $350–400 million in annual rent, contributing to its 2024 bankruptcy - The hospitals own the land - Private equity buys the land and sells it to their own company - They then leases the land back to the hospital at hundreds of millions of dollars per month - They take out massive loans and pay their private equity executives hundreds of millions of dollars each The hospital goes bankrupt and closes Last month, a woman arrived at a Pennsylvania hospital with her barely breathing baby, only to discover the hospital had closed. Why? The hospital’s owner diverted millions to private equity investors instead of investing in healthcare. Now, patients and workers are paying the price.

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