Blackstone to Go Public?

Blackstone? Public? Say it ain’t so, Joe!

I snickered when I first heard the news; it sounded more like a trial balloon.  The air was thick with irony the day Blackstone Group slipped the idea of selling 10% of the firm for a mere $4 Billion clams.

The firm has been in the vanguard of promoting the concept that companies "back away from being public," on the onerous requirements of SarBox, and lastly, the undervalued nature of the equity markets.

I still don’t believe it. If it turns out to be true — and so far, its just a rumor — I would have to do a 180 on my prior views on the firm and its leadership.

It would mean that all those high falutin’ ideas turn were just so much pablum. BG would be like every other Wall Street entity, a crowd of snake oil salesman, only this crew were a little slicker in their patter, a little smoother in the line of bullshit they were pushing.

The first thought that should pop into your head whenever you read or see someone touting a position that seems "off" is to ask "What are these guys selling?"  Now we know: Themselves.

What was in it for them to press an argument that may turn out ot be mere PR spin? More than money — they created an image, a brand with an air of cool around it, that greased the skids for their takeovers; To hell with the public markets, we have so much cash that we are above all that nonsense. Quarterly conf calls? Fuggedaboutit! I got your Sarbox right here!

Only all those intellectual arguments may turn out to be just another set of lies from another sleazy commission based broker. Now that it has served its purpose, we are on to the next argument. 

Barron’s Mike Santoli points out that:

"Many are asking why Blackstone chief Stephen
Schwarzman would reverse his stated anti-IPO position and subject
himself to the quarter-by-quarter scrutiny of a public company, which
he has decried in the past. Well, Schwarzman and other LBO artists buy
average companies which they perceive to be under-managed or misvalued
by the public, and retool or leverage them up in private.

One thing’s for sure: Schwarzman (he of the $3
million birthday party and Fortune magazine’s recently crowned "New
King of Wall Street") doesn’t consider his company anything near
"average," or "under-managed." And he and his partners are probably
confident that, like Goldman Sachs
(GS), Blackstone can enjoy the rewards of public ownership without ever
divulging exactly how its money is made. While the investment climate
is strong, that is.

But mustn’t this mean the peak of the easy-money
craze for financial engineering and ever-larger private buyouts?
Probably not. After all, Goldman’s IPO didn’t mean happy days on Wall
Street were about to come to a crashing end. That didn’t happen until
10 months later

When the Smart Money sells, ask yourself who is buying.  Answer: Dumb money.

10 Months? That sounds about right . . .


Business as Usual?
Barron’s MARCH 19, 2007

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Rules for Real Estate Agents

We sold our house last year — priced it reasonably, and at our first open house (Thanksgiving weekend!), got a reasonable bid. We ended up selling the house to that couple.

Whenever you hear talk of a Real Estate bubble, remember that it matters much less if you own (versus rent). In effect, we rolled out of one over-priced property and into the next over-priced property. When you are a homeowner, actual prices matter less than the spread between properties.

We closed yesterday.

In the process, we dealt with a lot of different agents on our buy and the sell. Some were terrific (who we would not hesitate to recommend and/or use again), a few were jackals, and one or two were deeply disturbed psychopaths who were obviously off their meds, likely violating a condition of their parole.

Along the way, we developed somes Do’s and Don’ts. (I’m sure readers have their own suggestions; use comments and let fly!)

This is a free lesson for the smarter, blog reading agents out there. Its a tough residential housing market, and if you want to earn your living selling real estate, pay attention and heed this advice:


1. Don’t waste our time.

I know some people do not know what they want, and you should feel free to schlep those poor bastards all over creation, burning valuable weekend time in the process.

However, when someone
gives you a very specific list of attributes and a broad price range, don’t drag
them around town(s) showing them everything but.

This is rule #1 for a reason: If you waste my time, I won’t do business with you PERIOD. If I tell you I DO NOT want a house with X and Y characteristics, and you drag me to 3 X & Y houses in a row, you are toast. Next agent, please.   

2. Don’t lie to us

In nearly every real estate transaction, the truth will eventually reveal itself. If a prior deal fell thru due to an engineer’s report, I will find that out. If the prior owner paid 1/10 of the selling price 25 years ago, that will be discovered also (not that it matters).

Some of the lies were so transparent as to be laughable. Others were more skillfully concealed. If I ask you a direct question, and you lie directly back, and I discover this lie via an expensive engineer’s report (which would have been unneccessary had you told the truth when asked), I will present the bill to you — and your corporate HQ. (Then collect in small claims court on a theory  of fraudulent misrepresentation).

Stop bullshitting, start adding value, and you might get a sales commission out of it.

3. Don’t tell us what is right before our eyes.

This is one of those nervous R/E habits: chattering on and on about the obvious. If you want to point out small details we might miss — for example, the kitchen drawers pull out all-the-way, or there is a built-in water filter in the kitchen sink, that’s fine. Even telling me the floors under the wall to wall are all hardwood adds something.

But seriously, I have two good eyes and so does my wife. I can see that THIS IS A BATHROOM; I can tell that THIS IS A WALK IN CLOSET.  We actually had one agent solemnly intone: THIS IS THE KITCHEN. Really, how can you tell? Were the fridge, stove and dishwasher clues?

Its not helpful and is actually very annoying. STF up occasionally.

(continued below)

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