‘Uncommon Investors’ Study the Consumer, Say PE Needs Better PR
Jonathan Sokoloff of Leonard Green & Partners started off the “Common Sense from Uncommon Investors” session at the 20th annual Milken Institute Global Conference by focusing on the value of being nimble and knowledgeable. He told the tale of buying Whole Foods stock at an ultralow $10 per share during the Wall Street crash almost a decade ago, then enjoying its climb to $100.
“We felt the consumer move to healthy eating and healthy food was unstoppable, that the stock market had overreacted,” Sokoloff recalled. What’s the moral of the story? Act when you see an opportunity, and understand the marketplace in which your portfolio companies seek to make profit.
The discussion took a turn from strategy to the public image of the private equity industry, which was represented by several members of the panel. These firms buy publicly traded companies with throngs of employees and often restructure, rebuild, or merge them to boost their value. Then the companies are sold to new investors. Sokoloff, along with Stephen Schwarzman, chairman and CEO of Blackstone, lamented PE’s poor reputation and said the field needs better PR.
“At Blackstone, we are the fourth-largest employer in the United States,” Schwarzman said. “We currently have approximately 600,000 people who work at our portfolio companies. That’s not including our real estate businesses and so forth. People mistake us for financial people, I don’t know exactly why. The way we make money is that we actually have to build our companies and grow them.”
As Sokoloff put it after noting PE’s clean record during the crisis and how it has strengthened the finances of pension funds, “We need some better PR and some help in how we market ourselves.”