Kravis, the Globe and us
Wellington Financial’s 15 minutes is sure to be over soon. But before it is, here is our eigth tenth instalment regarding the mainstream media following our corner of the blogosphere (look under the topic “PR” for the other 9). The piece was about KKR co-founder Henry Kravis. At our marketing manager’s encouragement, I broke my rule (for the 2nd time this year) regarding speaking to journalists 1) to whom I’m not related or 2) who are not already long time friends. Fortunately, breaking that rule wasn’t a bad thing as the subject of the story was very much down the middle of the plate after our week of blogging on the “Kravis PE trends” topic.
Once you read the piece by the Globe’s Mr. Milner you might think I’m star struck, having tossed aside decades of up-close-and-personal experiences with politicians and business leaders. But Mr. Kravis made a good case regarding KKR’s sanity, as you read here last Tuesday afternoon (16 hours before you could get it online or in print anywhere else). But, if you think we are comfortable with what’s going on in the credit market, just have a quick read through any of our posts on the topic from the past nine months…’cause we ain’t comfortable at all with some of the trends, and we are being scrupulous in avoiding the herd mentality when it comes to our own loan transactions:
“Maybe there is a credit bubble after all” June 1-07
“Moodys worried about slide in lending standards” April 12-07
“Next stop: corporate subprime?” March 25-07
“Stock earnings yields vs. bond yields” March 21-07
“Carlyle founder worries about leverage party hangover” March 20-07
“More subprime fallout at HSBC” March 18-07
“US mortgage liquidity crisis part 2” March 15-07
“US mortgage liquidity crisis at hand” March 14-07
“Sub prime market not so sublime” March 12-07
“Credit where it’s not due – Part 2” February 17-07
“Financing growing purchase price multiples” November 29-06
“The Pros and Cons of Covenants” November 23-06
“When they say no covenants” October 23-06
Looks as though we’ve been busy bees. And despite all of the blogging, we’re enjoying our best business run of our 7 year history. Maybe we’ve been bitten by the lax credit standards bug as well!?!
MRM
Nice quote. I’m not as bullish as Henry Kravis. It’s an AUM game for him vs a ROR game. Excess capital needs to be deployed to get paid. Paying 15x EBITDA incl synergies is not sustainable. I understand the cost of capital advantage these days but there is a bubble developing.
Good quote – mentioned in same article as Kravis – worth framing I would think!!!