whatok

Have fun taking your chances on that.

Sure, probably a bit earlier but the vast majority of [i]real professionals[/i] were stuck with Macs. Pro Tools M-Powered for example had to have been a minuscule portion of overall Pro Tools market and people still used that on Macs. Not having a real desktop solution for a long period of time was the last nail for a good portion of users.

Insider meaning someone who knew about this deal. If you are an insider shorting things before deals are announced, you absolutely can face criminal charges which can include a prison sentence.

It's almost certainly going to be all-stock and any takeover will prevent anyone receiving shares from buying puts or shorting stock of the acquirer for the duration of the lockup. If you are an insider buying puts now you could also potentially look at some jail time.

It doesn't really make much sense from a $ perspective and really only serves as a lesser (and rapidly diminishing) halo effect for the rest of the brand. Logic is one of those programs that keeps people on Macs. I'm sure I don't need to explain this to a Logic owner but audio engineering and production was strictly a Mac-only affair in the past and that has rapidly changed over the past decade. Macs have gotten increasingly difficult to work with due to constant OS updates breaking everything and have only gotten more expensive with less options for actual professional users who need real I/Os. Keeping Logic fresh is important to keep people from switching as everything else they do on a more macro level is pushing people in that direction.

Someone somewhere in Apple decided that holding onto this market was worth it for probably solely the halo effect. I can't think of any other reason and makes no sense from a strictly financial perspective.

This is likely to be all-stock and I see headlines coming in now saying that as well.

> And the ETF will typically deal with things like rolling the futures position ahead of expiry.

This listed as making commodity ETFs more suitable for "casual investors" is the exact reason why they always lose money on ETFs. Retail investors for the most part do not understand contango or backwardation and do not understand (even though it's listed at the beginning of every prospectus) that these are not buy and hold instruments. In fact, I'd argue that it's easier to understand roll costs by actually having to roll futures contracts yourself (which is not difficult at all) vs having it obfuscated away in an ETF.

Sure, but a majority of trading was done on CME futures. In either case, you still ran into the issue of negative prices. USO only recently started explicitly stating that they would also potentially invest in ICE futures alongside CME futures.

If anyone is trading futures and did not know they were trading on margin or trading highly levered instruments then they either are trading on a platform that has zero compliance or they misrepresented themselves as an investor.

If you only had farmers and individuals purchasing their goods allowed to trade futures, there is direct incentive for either party to manipulate the physical market through their actions, in ways that they only could, that wouldn't necessarily make any economic sense and could have spillover effects into the real economy. By having a more open market for futures, you theoretically have a more efficient market for all participants which you mention in your last sentence.

No.

From the story:

> Customers will be made whole, Peterffy said. “We will rebate from our own funds to our customers who were locked in with a long position during the time the price was negative any losses they suffered below zero.”

I'd imagine this is so they don't get sued and have some shoddy code pop up during trial.

> This depends on which stock index you're looking at. If it's the S&P 500, it's a cap-weighted index. 50% - not a typo - is made up of 5 companies: Microsoft, Apple, Amazon, Alphabet and Facebook.

I think you need to check your math on that. It's way off. I haven't read the rest of your post but if anything else in there is based on this error, it's also wrong.

https://www.ssga.com/us/en/individual/etfs/funds/spdr-sp-500...

10% would have been high over that timeframe but imagine what shape that business was in.

You valued and knew to value a suit for your purposes in 1995. Most people now or in 1995 did not drive three hours to buy a suit. The number of jobs that require a suit for everyday use is definitely down vs 1995 and you can rent a suit (not vouching for fit here) if you need one for interviews which is the primary use for most people who do not wear one on a daily basis.

I'm not disagreeing with anything you said on making a good impression but that doesn't change anything on the fact that Neiman Marcus has never been for middle class shoppers. A one-off purchase does not make a customer base.

I think it's more because the examples people are familiar with are cherrypicked "heads I win, tails you lose" examples that have recently been recognizable American brands. Someone linked a list of LBOs elsewhere in here and TXU was at the top of the list. A lot of people lost a lot of money on that deal but you didn't see the kind of press Toys R Us got. I'm guessing a tiny percentage of people here even know what TXU is. Toys was a brand everyone recognized and PE got paid on that even though they went under.

> This was helpful to me. How does the PE company fare in the bankruptcy scenario? Have they put up collateral or are somehow on the hook to the lenders?

All deals are different. You're probably not going to have any collateral put up by the actual PE firm in most cases.

> It's my understanding that the bankruptcy applies only to the purchased subsidiary, so the PE firm only stands to lose the principal they put in at the start.

In most cases this is true. Depending on how aggressive the firm has been and how long they've been involved, they might have already dividended out their principal.

> If so, it sounds like the PE firm gets all the upside, but is less exposed to the downside. So they are incentivized to rachet up the risk.

This is a correct but simplified conclusion. They're incentivized but there's usually a set of checks and balances in the form of banks providing financing and investors willing to finance deals. This system of checks and balances typically erodes as the business cycle/bull market rides on.

The binding constraint in most of these deals is how much leverage you're able to get away with.

All I've taken away from this is Valentino is more expensive in 2020 than it should be. By nature of you even being physically close enough to a Neiman Marcus in 1995, chances are you were of higher income than the rest of the country. They're still located in mostly more wealthy areas of the country.

No, it's not from thin air. Bridge financing is from cash on a bank's balance sheet (or as mentioned above, sometimes non-bank entities). Banks usually participate in bridge financing (some fees, loan on balance sheet typically on a short-term basis) because they want to also be part of syndicate financing (more fees, previous loan syndicated out to investors).

Banks infrequently get "hung" with loans and these usually are just bad deals that somehow got through. There are more hung loans now on deals that might have been okay under normal economic circumstances but are not feasible right now.

Neiman Marcus has no public market cap; it's a private company. You're probably referring to their debt.

None of those entities mentioned in there are creditors except Lloyds. Private equity deals sometimes have complex capital structures with absurd entity names but creating a "shell company" as described earlier doesn't allow you to get away with theft.

If this question is in reference to the hung loans I mentioned in my previous post, there won't be a need to; at least on those. This is small portion of overall bank business and banks are in much better shape than over a decade ago.

That's very different than the Enron-esque transaction described above. You are describing two separate companies. They're saying that some "shell company" takes a loss while the parent company makes all the profit.

PE is very cyclical and rates have been very low. Massively levered PE transactions are usually tied to the business cycle. When the economy is doing well you're able to get away with larger and more levered transactions than normal. If you add on low rates to this, you can get away with larger transactions.

All debt deals have covenants and covenant protection is at an all-time low right now; investors have decided that it is worth giving up this protection for whatever the potential investment happens to be. Covenants on the amount of leverage a company can take on are common but there's no universal formula for calculating leverage. It is not atypical to have multi-page definitions of how a company calculates EBITDA. Some firms are known for being very aggressive with this and are also very aggressive with issuing dividends shortly upon the close of a transaction. Aggressive dividend policies help PE derisk transactions substantially. The more money you are able to take out of the company (and sometimes able to issue debt to do so), the more you derisk your initial investment.

I could go on for days about whether any of this is good or bad, blah blah but as far as your observation that this seems to happen with all PE deals, PE is a multi-trillion dollar industry. Just think about how the world would look if that happened with all PE-backed companies.

I'm not a fan of private equity but I'm also not a fan of rants directed my way when I'm answering a question someone asked. Please take this somewhere else.

How does a PE firm make money if a shell company of theirs is losing money while another arm of it makes money?

Also, if the only financing a business can access is basically consumer credit card rates, they probably weren't a going concern.

> If I could run a company better/extract more value from it, say, by decreasing expense, increasing revenue, and therefore profits, I'd write myself a big check quarterly and continue running the company.

If you can. If you can't and your cash flow either stays flat or declines, you now have more debt to service. The more debt you have, the less leeway you have to execute on your plan. That's assuming you don't screw anything up in the business without considering any macroeconomic factors.

So you're saying that the original creditors made money off this and new creditors through secondary market transactions are left holding the bag? That's partially true but a massive portion of this debt is in pension funds or passive investments that track index funds. They track benchmark indices so they're buying these bonds at issue or shortly after. With no active management involved, they are also losing money when a company files.

Ok, a potential positive sum is definitely better than zero but once again, how exactly are creditors making money off this? The grandparent's post is implying that somehow no one is losing money in this situation. I'd like to hear how it works.

As with anything in life with leverage, debt-financed buyouts magnify the upside as well as the downside.