I was struck by an article on the front page of today's Wall Street Journal which seemed to bemoan the fact that investment banks were being forced to act like, well, investment banks. The article noted that new regulatory requirements were causing banks to shift from risk-taking endeavors into more "staid strategies" such as "trading securities for clients, processing trades, exchanging currency, managing assets and advising clients on deals and financing." Last time I checked, these are the sorts of stable, low-risk, cash producing, midstream businesses (i.e., MidCos) that Investment Banks are supposed to pursue. In fact, if Wall Street had focused more on its MidCos last decade vs. engaging in principal risk taking, much pain and sorrow would have been avoided. With that, a moment of silence for my first employer...Tuesday, October 5, 2010
Why MidCos could have saved Lehman Brothers
I was struck by an article on the front page of today's Wall Street Journal which seemed to bemoan the fact that investment banks were being forced to act like, well, investment banks. The article noted that new regulatory requirements were causing banks to shift from risk-taking endeavors into more "staid strategies" such as "trading securities for clients, processing trades, exchanging currency, managing assets and advising clients on deals and financing." Last time I checked, these are the sorts of stable, low-risk, cash producing, midstream businesses (i.e., MidCos) that Investment Banks are supposed to pursue. In fact, if Wall Street had focused more on its MidCos last decade vs. engaging in principal risk taking, much pain and sorrow would have been avoided. With that, a moment of silence for my first employer...
Saturday, October 2, 2010
MidCo Hall of Fame - Google
In my previous post, I outlined the broad parameters that I use to determine whether a company qualifies as a MidCo. As a reminder, MidCos matter because it is my contention that they tend to be great businesses and as such are a a great place to pan for investment gold. As a close friend pointed out, Barry Diller made a career out of buying and selling them (see IAC). In this post, I will induct the first ever member to my MidCo Hall of Fame. First up is the king of all private sector MidCos - Google.
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| The MidCo Hall of Fame |
In my previous post, I outlined the broad parameters that I use to determine whether a company qualifies as a MidCo. As a reminder, MidCos matter because it is my contention that they tend to be great businesses and as such are a a great place to pan for investment gold. As a close friend pointed out, Barry Diller made a career out of buying and selling them (see IAC). In this post, I will induct the first ever member to my MidCo Hall of Fame. First up is the king of all private sector MidCos - Google.
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| "In Google We Trust" |
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