⚠️ The Private Equity Market Has Stalled

Author

The Idea Farm
March 31, 2024

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“Nothing in life is as important as you think it is when you are thinking about it.”

— Daniel Kahneman

Research

Jeremy Grantham’s latest piece digs into the U.S. stock market, bubbles and AI, real assets, and underrecognized long-term problems.

"The most expensive 20% of U.S. stocks are by definition always expensive, but today they are in the worst 10% of their 40-year range (compared to the top 1000 stocks). In great contrast, the cheapest 20% are in the best 7% of their range."

— Jeremy Grantham

Bain describes private equity as a market that’s ‘stalled’ due to a rise in interest rates. The report walks through current investments, returns, exits, fund-raising and more. Some stats:

  • The total value of companies that the industry sold privately or on public markets declined by 44% (lowest in a decade)

  • Deal value fell by 37%

  • Exit value declined by 44%

  • 38% fewer buyout funds closed

  • The value of aging unexited companies hit a record high $3.2 trillion

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Facts & Figures

Stanley Black & Decker has paid a dividend for 147 consecutive years, longer than any other industrial company on the NYSE. Link

An alien CryptoPunk sold for 4,850 ETH (US$16.42 million) in March, the second highest sale price in the history of the preeminent digital art collection. Link

The ratio of commodity prices to the S&P 500 is near all-time lows. Link

Apple has created ~$2.7 trillion in wealth from its IPO in 1981 to the end of 2022, more than any other company. During that same time period, Apple suffered three drawdowns of 70% or more. Link

For natural resource equities, the average dispersion (measured by the average performance in the top 50% versus the bottom 50%) is close to 50%. Link

“The Federal Trade Commission, which polices deceptive business practices in the U.S., says reported impostor scam losses tripled between 2019 and 2023 to $2.7 billion.” Link

“Over the past 30 years, battery costs have fallen by a dramatic 99 percent; meanwhile, the density of top-tier cells has risen fivefold.” Link

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