The Stock Market Is Shrinking. That’s a Problem for Everyone.

Mark

From the NY Times:
https://www.nytimes.com/2018/08/04/business/shrinking-stock-market.html?em_pos=small&emc=edit_my_20180806&nl=your-money&nl_art=2&nlid=20007425emc=edit_my_20180806&ref=headline&te=1

"When I say “shrinking,” I’m using a specific definition: the reduction in the number of publicly traded companies on exchanges in the United States. In the mid-1990s, there were more than 8,000 of them. By 2016, there were only 3,627, according to data from the Center for Research in Security Prices at the University of Chicago Booth School of Business."

Old_Skeet

The reduction in public traded companies which the article centers around is the main reason Old_Skeet owns a private equity mutual fund (LPEFX). Plus it sports a nice yield. Linked below is Morningstar's portfolio report on its holdings. Interestingly, Berkshire Hathaway is one of its thirty three stock holdings.

http://portfolios.morningstar.com/fund/holdings?t=LPEFX&region=usa&culture=en-US

Mark

I guess you'd have to call me unclear on the concept of what constitutes "private" equity then. The list shows the top 25 companies held by the fund and together they make up 76.44% of the funds portfolio. Investopedia has this to say about "private equity": "Private equity is capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity."

Looking at the holdings list for LPEFX only one of the equities listed is not listed on a public trading exchange. Maybe Alps should consider renaming the fund.

Ted

@Mark: Maybe this will help.
Regards,
Ted
https://en.wikipedia.org/wiki/Private_equity_firm

msf

It's like investing in a fund of hedge funds, in the sense that you're not investing directly in the funds (often you can't), and the funds in turn are investing in equity that you generally can't directly invest in either.

Which is why the fact that it holds only 43 securities is somewhat misleading. Indirectly, it holds more companies. So while M* (in its analyst review) says that this is a "a high-conviction portfolio" [read: few direct holdings], it also notes that the managers consider "both the private equity firms and their underlying deals". It seems that the managers are thinking about the fund's larger, underlying portfolio.

I've been in enough startups that private equity doesn't hold an attraction for me. But that's just me. I always regarded options as lottery tickets (most of which were ultimately worthless, and a couple basically paid back enough to buy a few real lottery tickets ).

The 43 securities break down as:

TYPE               Quantity    Percentage   Example
CEFs                  6          14.13%     HarborVest Glbl Private Equity Ltd
Communications Stk    6          11.73%     IAC/InterActiveCorp
Diversif Holding Cos  3          10.16%     Schouw & Co. AB
Diversif Financl Svcs 9          24.28%     The Blackstone Group LP
Investment Cos        6          17.38%     Aurelius Equity Opp SE & Co. KGaA
Private Equity        5           6.29%     Onex Corp.
Real Estate           1           3.09%     Brookfield Asset Management, Inc.
Industrials           6           7.27%     Danaher Corp.
Utilities             1           2.45%     Brookfield Infrastr Partners LP

Mark

Well if that's the 'alternate' spin then I guess I invest in private equity as well seeing as I hold 5 of their positions only without the 1.99% ER.