6 days ago
Two gems of Wall Street finance I want to buy after a 10% index correction!
Matein Khalid
There are two gems in global finance that I believe can make serious money if purchased at the right price this autumn. Their high beta means a 16% hit if the S&P has the 10% index correction that Morgan Stanley projects.
The best thing at TPG for me is CEO Jon Winkelried, who I first met in Goldman Sachs' cathedral of money at Peterborough Court in 1990's London. He ran FX and commodities then but was later elected partner and the crown prince to both Hank Paulson and Lloyd Blankfein, for whom he ran both merchant banking and the global I-Bank. He joined TPG in 2015 and was the mastermind in two game changer acquisitions – merger arbitrage, real estate and private credit fund manager Angelo Gordon with $78 billion in AUM and later Peppertree Capital, a digital growth specialist with $8 billion AUM.
ADVERTISEMENT
TPG is now a diversified alt invest manager with $260 billion AUM and global franchises in private equity, VC/late stage tech (the firm nurtured the hyper growth of Airbnb, Spotify and Uber, three of the hottest deals in the annals of pre-IPO investing in Silicon Valley. TPG manages only one fourth of Blackstone's $1 trillion plus AUM but it does not have BX's outsized exposure to real estate and private credit at a time when razor slim credit spreads do not remotely price in the prospect of a global recession and the energy high yield debt market is an accident waiting to happen.
Will an economic slump mean busted deals, commercial real estate cash flow angst, credit spread widening and a fall in capital raising AUM and incentive fees. So I will only buy the shares when Mr. Market gives me a 20% discount and the shares tanked to 46, which I expect to happen before November.
All the public Wall Street alt asset managers will take a nosedive, led by Blackstone, KKR, Carlyle and Apollo. Yet Jon Winkelried is my fave crisis manager when the macro storm clouds darken and thus the ideal financier to be the great helmsman of TPG in the coming difficult year.
Winkelried's strategic machine is to rev up LP commitments and raise AUM to $500 billion in the next three years. Will he achieve this admittedly ambitious target amid Trump's capricious economic policy making. Yes but only if Tariff Man does not gut the US economy with a severe recession that then triggers credit contagion. After all, I remember when Blackstone fell from its IPO price of $32 in the summer of 2007 to as low as $5 in the post Lehman Black Death for private credit in the autumn of 2008.
A private equity firm only shows the true metal of its pasture as the Bard of Avon put it in his Henry V when it exits a strategic investment and that is why the judgement/intuition of the Big Guy is ultimately all important. Steve Schwartzman and Blackstone has a net worth of $52 billion, so I wonder what incentive does this master of the universe have at this stage of his career in his late 70's but Jon still has two decades of showtime left in his meteoric banking career.
TPG will surf the digital infrastructure/wireless data tidal wave created by AI and 5G. As rates fall, TPG will deploy $60 billion in cash to digital transformation growth companies all over the world. My buy/sell target on its shares are 48-65 range.
Intercontinental Exchange Inc (ICE) is a world class derivatives and data analytics exchange, which I believe is now takeover bait. Its product spectrum spans energy/natgas futures and options, financials (MBS, FX, equity indices) and softs (cocoa, coffee, sugar, orange juice). Q2 was a beauty and I am convinced we are on the eve of a commodity super-cycle that will make ICE a must own for the great and the good of Wall Street and the City of London. My buy/sell range on ICE is 160-210. Return on patience (ROP) is as critical as ROE in the money game!
Also published on Medium.
Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
