News Analysis: Putting $200 Million Dollars into “Crocs” a Company whose “fourth-quarter revenue will be at the low end of what it had expected, and its quarterly loss will match its worst prediction” seems an unusual Investment Strategy some say. Additionally, its C.E.O. is retiring? Perhaps, if the money being spent is only the money of “Mere Investors”, but not of the Owners of a Private Equity Fund, one can understand. Or perhaps Surplus Investor Funds needed to be allocated at years end?
Private Equity Funds typically get a “Piece of the Pie” of what is invested and a “Piece of the Profit”. How can the Funds lose? Very difficult. How can Investors lose? Very easy, for they have already ‘lost’ a portion of their investments (the Ownership Percentages which the Private Equity Funds receive up front).
Going into 2014, Investors had better be prepared for a “Carnival Roller-coaster Ride” down the tracks after a little more climbing occurs over the next several months.
Assuredly, Smart Investors will use their OWN intellects in making the Final Investment Decisions for themselves and NOT be fed a “Croc” by any of the Private Equity Funds in the World. Caveat Emptor.
Reality.