Private Equity Dogs = No Fortune 500 $KKR $BTU

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The Fortune 500 list came out and one of the companies that fell off of the list is KKR ($KKR), with causation linked to the firm's horrendous Samson Resources investment. Ouch. Peabody Energy ($BTU) was another notable fallen star. Elsewhere in private equity, Paul Singer of Elliott Management Corp. gives zero f*cks about what we all think. And, interestingly, Avenue Capital Group israising a second distressed energy fund (of $1b AUM). There is a boatload of dedicated money to distressed energy still waiting on the sidelines and so we find it interesting not that Avenue believes it can raise money in this space but that it can deploy it - at this juncture and in this competitive landscape - on opportunities that will provide a good rate of return. That's obviously not a bullish sign for the space. If they're right. Finally, stay tuned for a new report on the net job effect of PE from HBS researchers. In brief, the previously study - which subsumed data through 2005 - showed only a "modest net impact on employment." PE firms loved that sh*t because it made them look not-so-evil. What's happened a lot since 2005? A lot of PE. And a lot of dividend recaps. Popping popcorn and waiting for the new findings....
 

Notable (Goldman Sachs, Puerto Rico, Lazy Media & More)

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  • Gibson Dunn & Crutcher LLP. Better late than never, we guess. The firm has announced the acquisition/growth of its oil and gas team down in Houston. 
  • Goldman Sachs. Somehow its poor quarterly performance - largely due to poor distressed desk trades - is Morgan Stanley's fault. 
  • Lazy Media. Perhaps the folks at Fortune should call us because their research skills are soft. The other day Fortune reported on Quantum Partners' purchase of Violin Memory out of bankruptcy. Of note, QP is a fund tied to billionaire George Soros. The article - not particularly informative in any way whatsoever - doubled-down on its uselessness by noting that "terms of the deal were not disclosed," which, for those of us who know better, reeks of journalistic laziness. Why? Well, of course the terms needed approval by the bankruptcy court and so they were 100% publicly available. $25.6mm (including the DIP/exit facility rollup). Just saying.
  • Puerto Rico. Apparently it has been a distressed investing quagmire. 
  • Owl Creek Asset Management is shutting down its Asia fund, voluntarily (cough cough) chopping 10% of AUM off. An interesting move considering a general view that there'll be a lot of opportunity there...
  • Varde Partners, a $12b US-based buyout and distressed investing firm, is turning its attention to Asia.

Busted Tech II (Unicorpse bankruptcies coming?)

In the wake of Plastc (to be clear, unmistakenly NOT a unicorn) filing for chapter 7 leaving millions of pre-orders unfulfilled, Fortune notes "Startups Rarely File for Bankruptcy. Could that Change?" Welcome to the party, Fortune. It has already started to change. The irony is that bankruptcy should actually be taken as a sign of success, to some degree. Why? Because it may indicate that there is actually something salvageable, e.g., IP. Otherwise, you're looking at a mega-failure cloaked in an acqui-hire, see, e.g., Tilt (an Andreesen Horowitz bust - highly recommend reading the link), Beme (a Casey Neistat joint). Which humorously, startups/VCs still try to spin as successful exits rather than the dumpster fires they were.