The Hedge Fund And Private Equity Stock Train Wreck

When some of America’s biggest hedge fund and private equity firms started to sell ownership through initial public offerings a few years ago, many investors rushed to buy the stocks. The hedge fund and private equity industries had produced Wall Street’s biggest fortunes, billionaires like Stephen Schwarzman, David Rubenstein and Daniel Och. There are now some 50 hedge fund and private equity billionaires—it seemed to make sense for investors to want a piece of the companies that made them rich.

But investing in hedge fund and private equity stocks has largely been a disaster for years. Blackstone’s 2007 IPO priced at $31; today the shares trade hands for $13. Fortress Investment Group sold shares in its IPO for $18.50; today the stock trades for $3.50. Sure these IPOs took place at the hedge fund and private equity top in 2007, but things are not getting better. Shares of New York hedge fund firm Och-Ziff Capital Management are down 43% in the last year. Fortress just reported that first-quarter profits fell 45% and Blackstone’s first quarter economic net income was down by 24%.....Then there’s Man Group, the world’s biggest publicly-traded hedge fund firm…..

http://www.forbes.com/sites/nathanvardi/2012/05/07/the-hedge-fund-and-private-equity-stock-stock-train-wreck/