Despite the severity of the debt circumstances in Puerto Rico, the financial crisis has gone largely unnoticed. The lack of attention on Puerto Rico is particularly shocking when comparing the crisis to the current state of Detroit. The island has a population of 3.7 million and debts of about $87 billion; this compares with a…
Category: Blog Articles
Newly Formed Private Equity Funds “Stalking”, not “Pouncing” on Mining Assets—For Now
There has been a lot of buzz lately in the private equity world about the formation of new funds and the raising of capital specifically aimed towards acquiring assets in the mining industry. Specifically, in their article on Bloomberg.com, Jesse Risenborough and Ruth David talk about how this recently created pool of private equity money…
Aeropostale’s PIPE Dream
Men and women of my generation, and likely their parents, will be very familiar with the clothing company Aeropostale, as it was a fashion staple in the 90s and early 2000’s. However, since its heyday the clothing company has been in steady decline. Things have gotten much, much worse for Aeropostale in the last few…
Hedge Funds: A Solution to the Collective Action Problem
There is a collective action problem in any system where an informed vote is costly to a shareholder.1 Such a collective action problem is present among shareholders of publicly traded companies in the United States.2 Small shareholders are rationally apathetic in their voting decisions because they assume (usually correctly) that their vote will not change…
Tech in 2014: Bring out the Bubbly or Pop goes the Bubble?
Giants like Facebook and Twitter have entered the public markets with huge valuations, and more tech companies are expected to follow in 2014. However, this is only stirring the debate on whether those popping champagne bottles are the precursor of a popping tech bubble. Some say that we are seeing the dot-com bubble all over…
The Dilemma of Minimum Threshold Requirements
Recently, several well-known and publicly held private equity firms released their fourth quarter 2013 earnings. This self-imposed requirement at many private equity funds, however, creates an under the surface effect on earnings results—minimum threshold requirements. A significant source of profit for many private equity firms are the performance fees the general partners earn on the…
American Technology Entrepreneurs Take on Skeptical Indian Investment Market
Ambitious American technology entrepreneurs have recently started to target the investment market in India.1 Historically, India had a reputation for being a notoriously tough market for start-ups, even for the most promising young businesses.2 The inability to succeed as a start-up in India, however, is not due to lack of proposed innovations. Compared to America’s…
What is Real Estate Private Equity?
Since the 2008 Economic Recession, many of the maxims that investors have lived by have been challenged and proven wrong. One of these, albeit hasty and uninformed, maxims—that real estate is a safe investment that will continuously appreciate in value over time—has been convincingly disproven to anyone who has paid attention to the volatility of…
VCs Think Spotify Streams Revenue
In the early years of the digital music industry, entrepreneurs were passionate about music but had no understanding of how the music business actually worked.1 The entrepreneurs were, nevertheless, easily able to raise funds from venture capitalists due to the dot-com bubble.2 However, after the dot-com bubble burst, it became very difficult to attract venture…
Volcker Rule Revised in Response to Concerns of Smaller Banks
On December 10, 2013, five agencies, the Board of Governors of the Federal Reserve Board (“Federal Reserve”), the Commodity Futures Trading Commission (“CFTC”), the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency (“OCC”), and the Securities and Exchange Commission (“SEC”), promulgated a 71-page Final Rule to implement the Volcker Rule…