Chris Mayer’s “Biggest fire sale in history”

By lysander72, March 31, 2012

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For your consideration:

I stumbled across Chris Mayer’s tease of “The biggest fire sale in history”.

Some highlights:
“This is our opportunity. There is no better, more-reliable way to make money than to buy something from someone who has to sell. Bankers are the best people in the world to buy from. Believe me, I know.”

“With the EU banking sector loaded with trillions of stuff it must sell, the mouths of knowing investors drool with money lust. These are deals the big boys do. Prem Watsa, the brain behind Fairfax Financial and dubbed by some as “the Warren Buffett of Canada,” gets to do these deals. Wilbur Ross, the billionaire investor famous for investing in distressed assets, gets to do these deals. Warren Buffett he gets to do these kinds of deals.
Normally, you need a fat wallet to get in this club. But I recently found a way to get into this “club” that a public-school teacher could afford.”

Consider my interest piqued. It turns out Mayer is recommending OZM: Och-Ziff Capital Management. But looking into the matter further I discovered APO: Apollo Global Management. A recent IPO, in fact the articles that I found on Seeking Alpha date from April and they discuss the IPO. It was priced at $19. The writers were split on whether that was a fair price or not. In any case it now trades around $14.25.

There is a nice presentation, dated March 8th, 2012, here.

I have two main reasons to consider APO. 1) They manage public sector retirement funds. Having suffered through the recent turmoil in Wisconsin when Walker and the unions jousted, I was aware of the optimistic investment returns that are the basis of the claims of being fully funded. Wisconsin, for instance, is assuming a return of 7.8% annually. APO and I feel this to be a bit too optimistic. APO is hoping to gather more business when shortfalls become more apparent to the states by offering their “alternative investment” strategy.

2) More interestingly is APO distressed assets expertise. There is a nice discussion of their plan in the presentation linked above.

Their ENI (Economic Net Income) last quarter was a bit disappointing so that may be weighing on the stock some according to the analyst report I read. But pay outs should be increasing proving an even more respectable return.

I also note an IPO of Oaktree Management is discussed here.

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