5 ms·

This is a serious f'n problem, and I'm glad it's finally being recognized. When I see PE groups in China outbidding their Western counterparts by absurd multip

by mbesto 7y ago

This is a serious f'n problem, and I'm glad it's finally being recognized. When I see PE groups in China outbidding their Western counterparts by absurd multiples, it just reeks of ulterior motives. EDIT: Spelling police got me.

commandlinefan 7y ago
> wreaks of you mean "reeks" (i.e. "smells", usually bad). It might wreak havoc on the U.S. economy, but it can only "reek" of ulterior motives.
- deleted 7y ago
  [deleted]
tlb 7y ago
High bids are not strong evidence of ulterior motives. They reflect the fact that many US companies prefer not to take on foreign investors, so those investors have to bid much higher to get the deal.
- mbesto 7y ago
  > so those investors have to bid much higher to get the deal. And return less money to their fund than they would if they were acquiring companies domestically? Scratches head...
  - tlb 7y ago
    There is a lot of unwanted money sloshing around. If you’re an oligarch or kleptocrat with billions to invest, you’re gonna have to accept lower returns. One reason that Ivy League endowments get consistently above-market returns is that everyone is comfortable taking their money. EDIT: I sort of conflated foreign and kleptocrat money there, saying they both have to outbid preferred sources. Most foreign money is not from kleptocrats, of course.
- JumpCrisscross 7y ago
  > They reflect the fact that many US companies prefer not to take on foreign investors There is no evidence for this being the cause of the price premium. There is substantial evidence that capital flight predicts which countries overpay for foreign assets. Russia and China are better explained by the capital flight hypothesis.
  - nostrademons 7y ago
    Economically it'd be both. Capital flight increases the supply of loanable funds available for foreign investments. Unwillingness to take on foreign investors decreases the demand for this. High supply + low demand = a poor price.
    - JumpCrisscross 7y ago
      > Economically it'd be both It could be both. We only have evidence for the supply hypothesis (i.e. capital flight). American companies requiring a higher price for foreign investors sounds plausible. But it's a guess for which we have zero evidence, particularly at a systemic level. (Fixed demand and higher supply still lower prices.) One test might be found in comparing pricing and flows for foreign investors around investment vectors companies have discretion around (e.g. private investment or M&A) to vectors with which they don't (e.g. public markets). You'd have to control with prices and flows from American investors in those markets, too, which makes it difficult.
yourbandsucks 7y ago
Everyone panicked about the Japanese buying up American assets, too. It's all about 'rising tides lifting all boats' until there's a chance of someone else's boat being almost as high as ours. Then all of a sudden it's about the foreign threat, ulterior motives..
- president 7y ago
  In this case, someone else's boat has been ramming ours while some of our ship crew conveniently looked the other way. People have been shouting "foul" on China for a while now but it was the greed of many members of American congress and financial elite who were profiting from business deals with China that caused them to look the other way. Thankfully, we've gotten to a point where people aren't willing to put up with China's antagonistic behavior any longer.
  - yourbandsucks 7y ago
    What foul, specifically? Currency manipulation stopped over a decade ago. Is it a 'foul' for them to run their domestic economy/politics the way they want? Or to buy freely traded American assets, as everyone's freaking out about here? None of that is them 'ramming' our ship. People are just mad because they thought we'd reached the end of history and the Chinese would know their role and play second-fiddle to Superior Western Culture forever. They're figuring out that that's not a natural law, and they're piiiiiisssed.
    - president 7y ago
      No, people are mad because here we have a totalitarian, protectionist, mercantilist nation that has no rule of law governing their people or their economy and subsidizing and weaponizing their companies to slowly strangle western economies by stealing their IP and defrauding foreign investors. You can get pretty far when you lie, cheat, and steal, especially when there isn't anyone there to punish you. I wouldn't call that first-fiddle "superior Chinese culture" though.
      - 7y ago

by mbesto 7y ago

commandlinefan 7y ago

> wreaks of you mean "reeks" (i.e. "smells", usually bad). It might wreak havoc on the U.S. economy, but it can only "reek" of ulterior motives.

deleted 7y ago
[deleted]

tlb 7y ago

High bids are not strong evidence of ulterior motives. They reflect the fact that many US companies prefer not to take on foreign investors, so those investors have to bid much higher to get the deal.

mbesto 7y ago
> so those investors have to bid much higher to get the deal. And return less money to their fund than they would if they were acquiring companies domestically? Scratches head...
- tlb 7y ago
  There is a lot of unwanted money sloshing around. If you’re an oligarch or kleptocrat with billions to invest, you’re gonna have to accept lower returns. One reason that Ivy League endowments get consistently above-market returns is that everyone is comfortable taking their money. EDIT: I sort of conflated foreign and kleptocrat money there, saying they both have to outbid preferred sources. Most foreign money is not from kleptocrats, of course.
JumpCrisscross 7y ago
> They reflect the fact that many US companies prefer not to take on foreign investors There is no evidence for this being the cause of the price premium. There is substantial evidence that capital flight predicts which countries overpay for foreign assets. Russia and China are better explained by the capital flight hypothesis.
- nostrademons 7y ago
  Economically it'd be both. Capital flight increases the supply of loanable funds available for foreign investments. Unwillingness to take on foreign investors decreases the demand for this. High supply + low demand = a poor price.
  - JumpCrisscross 7y ago
    > Economically it'd be both It could be both. We only have evidence for the supply hypothesis (i.e. capital flight). American companies requiring a higher price for foreign investors sounds plausible. But it's a guess for which we have zero evidence, particularly at a systemic level. (Fixed demand and higher supply still lower prices.) One test might be found in comparing pricing and flows for foreign investors around investment vectors companies have discretion around (e.g. private investment or M&A) to vectors with which they don't (e.g. public markets). You'd have to control with prices and flows from American investors in those markets, too, which makes it difficult.

yourbandsucks 7y ago

Everyone panicked about the Japanese buying up American assets, too. It's all about 'rising tides lifting all boats' until there's a chance of someone else's boat being almost as high as ours. Then all of a sudden it's about the foreign threat, ulterior motives..

president 7y ago
In this case, someone else's boat has been ramming ours while some of our ship crew conveniently looked the other way. People have been shouting "foul" on China for a while now but it was the greed of many members of American congress and financial elite who were profiting from business deals with China that caused them to look the other way. Thankfully, we've gotten to a point where people aren't willing to put up with China's antagonistic behavior any longer.
- yourbandsucks 7y ago
  What foul, specifically? Currency manipulation stopped over a decade ago. Is it a 'foul' for them to run their domestic economy/politics the way they want? Or to buy freely traded American assets, as everyone's freaking out about here? None of that is them 'ramming' our ship. People are just mad because they thought we'd reached the end of history and the Chinese would know their role and play second-fiddle to Superior Western Culture forever. They're figuring out that that's not a natural law, and they're piiiiiisssed.
  - president 7y ago
    No, people are mad because here we have a totalitarian, protectionist, mercantilist nation that has no rule of law governing their people or their economy and subsidizing and weaponizing their companies to slowly strangle western economies by stealing their IP and defrauding foreign investors. You can get pretty far when you lie, cheat, and steal, especially when there isn't anyone there to punish you. I wouldn't call that first-fiddle "superior Chinese culture" though.
    - 7y ago