Author Topic: CPP Bought Neiman Marcus ?  (Read 38 times)

0 Members and 0 Guests are viewing this topic.

Offline MH

  • Full Member
  • ***
  • Posts: 7962
CPP Bought Neiman Marcus ?
« on: March 25, 2018, 10:31:25 am »
http://www.cbc.ca/news/business/retail-feature-1.4577670

What ? 

Quote
High-end luxury chain Neiman Marcus was taken private in a $5.1-billion leveraged buyout in 2005. Then the new owners flipped the chain again in 2013 for $1 billion more to a consortium that includes a name most Canadians would recognize.

The Canada Pension Plan Investment Board teamed up with Ares Management LLC to buy the chain, justifying the deal on the notion that high end retail was faring much better than everything else at the time.

I don't understand the LBO thing anyway.  It seems like these fail enough that nobody would lend Bain et. al. money for these schemes.  Does anybody know this topic well enough to comment ?  (ie. If you have to do a Google search don't bother)

Share on Facebook Share on Twitter


Offline msj

  • Full Member
  • ***
  • Posts: 362
  • I'm outta here...
  • Location: Vancouver Island
Re: CPP Bought Neiman Marcus ?
« Reply #1 on: March 25, 2018, 11:25:25 am »
Looks like the typical CBC hit piece: hindsight bias galore!

LBO firms often make money but they do not make money on every deal. Sometimes they go broke because of one deal or an entire sector going broke.

The CPPIB buys into a diversified portfolio of equity (public and private), real estate, and fixed income instruments.

At any given moment their portfolio is probably like mine: some investments are down and others are up.

Since they do not know what the future holds any better than the next person the reason they diversify is to increase their chances that the entire portfolio will increase over time even though parts of it won’t.

Allocating capital, whether yours or other people’s (i.e. leveraged) is hard so hindsight bias is easy especially when one has no experience and/or no skin in the game.

I started to buy Guess? in 2014 and proceeded to both make money, lose money, and ultimately make a pretty good return during a 4 year period of a falling stock price. 

It all depends on when you buy and when you sell which is to say if you buy low and then sell high you can still get a decent return even if the stock chart looks bad over that period of time.

Of course, the CPPIB is not as nimble as an individual so they do not have this luxury.

I also have bought Macy’s at $21 and am grateful that I did not buy it in 2013 at $45. 

Those are the type of comparable numbers the CPPIB is probably facing with the MN investment.

They bought too soon.  Hell, even with Macy’s at $27 perhaps I was too slow to sell and will see Amazon eat them.

But thats the problem, yes, I could have sold at $30 recently and gave it real thought.

However, I don’t know the future so I have erred on the side of holding and possibly losing what was a quick 40% gain.

As I said, investing is hard and I wish more people would try it, along with owning a business, to see what it is like to allocate capital (money and human). 

I've gotta have more cow bell! -Bruce Dickinson

Offline MH

  • Full Member
  • ***
  • Posts: 7962
Re: CPP Bought Neiman Marcus ?
« Reply #2 on: March 25, 2018, 12:19:55 pm »
Are buy/sell recommendations worth anything ?

I am just signing up with a new advisor, an Edward Jones rep who came recommended.

Offline msj

  • Full Member
  • ***
  • Posts: 362
  • I'm outta here...
  • Location: Vancouver Island
Re: CPP Bought Neiman Marcus ?
« Reply #3 on: March 25, 2018, 01:35:57 pm »
Stick to index funds until you are comfortable risking some capital.

Risk some for fun (very small amount) and expect to lose it.

Risk some with seriousness and hope to do as well as the index fund (if lucky or risk tolerant enough).

I do have a hot stock but it is pure speculation so no disclosure as I am enjoying the ride and hope to make a killing but will likely see a big fat $0. Better than playing the lotto though. 
I've gotta have more cow bell! -Bruce Dickinson

Offline MH

  • Full Member
  • ***
  • Posts: 7962
Re: CPP Bought Neiman Marcus ?
« Reply #4 on: March 25, 2018, 02:10:35 pm »
There MUST be a way to discover truly hot stocks though.  I know it's speculation but there must be a way to find better picks.  The rich do it...

Offline msj

  • Full Member
  • ***
  • Posts: 362
  • I'm outta here...
  • Location: Vancouver Island
Re: CPP Bought Neiman Marcus ?
« Reply #5 on: March 25, 2018, 02:28:07 pm »
The best way is to get lucky.

The next best is to do what you love and then get lucky and sell out.

Yeah, I admit that my fun fund is intended to get lucky. I choose stocks that are speculative where I hope to get at least 5 times return on it and my plan is to hold for a long time.

This is very hard to do as stocks can go way up tempting you to sell and/or way down tempting one to get out or preserve gains with a stop loss (for which how/when do you ever get back in?) etc...

Look at a chart of Amazon and you will see that in hindsight it looks easy but at any point in time along the way it is difficult.

However, it is compounding that is really your friend: the sooner you start saving the more effect this will have so the more comfortable your retirement. 
I've gotta have more cow bell! -Bruce Dickinson