Mon, Jul 26, 2021|Whitney Tilson

New York City Is Roaring Back to Life; Michael Rees: how a private equity chief turned the tables on his peers; Are You a Bezos?; Mark Zuckerberg Rides His Electric Surfboard & Waves Flag for the 4th

1) In my August 18 e-mail, I shared a provocative Facebook post by James Altucher: NYC IS DEAD FOREVER. HERE'S WHY.

I disagreed with Altucher, writing at the time: "I think New York will bounce back, as it always has." I also posted lots of feedback from friends here.

A year later, it's clear that my friends and I were right and Altucher was wrong. Overall, my hometown – like the rest of the country – is absolutely booming. Here's a recent picture I took of the Metropolitan Museum of Art:

There's one big exception, though: Professionals who work in big office buildings by and large still haven't returned, so the city isn't out of the woods...

Here are a number of recent articles about the situation here:

P.S. I loved the new Moynihan Train Hall, an expansion of (and located across the street from) the dismal Pennsylvania Station, the main intercity and commuter rail station in New York City:

2) This is a wild story in the Financial Times about a guy who basically came out of nowhere to become a billionaire over the past decade by buying stakes in other funds: Michael Rees: how a private equity chief turned the tables on his peers. Excerpt:

Until Michael Rees became a billionaire this year, he was arguably the most popular man on Wall Street.

Like other successful financiers, Rees works in private equity, an industry with $3tn in unspent capital and a seemingly insatiable appetite for buying houses and hospitals, theme parks and prison payphone systems, genealogy websites and just about anything else that generates cash.

But unlike most of his peers, Rees makes money by buying pieces of the financial industry itself. He has won the trust of dozens of executives, who sold him shares in the closely held investment firms that underpin their personal wealth and have become the most powerful institutions on Wall Street.

In little more than a decade the firm that Rees co-owned, Dyal Capital, has paid out well over $10bn to buy minority stakes in some of the best-performing companies in finance. He has forked out hundreds of millions of dollars to the founders of private equity firms including Silver Lake and Providence Equity; to hedge fund managers including Jana Capital; and to firms such as Golub Capital (GBDC) and Owl Rock (ORCC), which are displacing banks as chief lenders to a swath of corporate America.

"Rees realized, long before anyone else," says Egon Durban of Silver Lake, the technology investment group that Dyal took a stake in five years ago, "that alternative firms with their resilient cash flows would be particularly attractive for investors in a low interest rate world."

This year Rees, 46, became a billionaire in his own right. Having started Dyal in 2011 as an experimental division on the fringes of asset manager Neuberger Berman, he broke free of his parent company and pulled off a $12bn transaction that amounts to one of the biggest ever stock market debuts by a U.S. private capital group. The enlarged company, known as Blue Owl (OWL), instantly achieved a market capitalization close to that of Carlyle Group (CG), Ares Management (ARES), and other more established rivals.

The deal created an all-purpose firm that not only gives top financiers a way to convert their paper fortunes into cash and potentially lower their tax bills, but also provides billions of dollars of debt to finance their buyouts. Yet it has embroiled Rees in a messy falling-out with some of the people he helped make rich.

So raw are the emotions surrounding the deal that few are willing to talk about it on the record. But in private conversations, financiers gave contrasting accounts of a transaction that depending on which contested allegations you believe either involved broken promises and purloined secrets, or an opportunistic hold-up in which Dyal's enemies sought to extract a heavy price.

Two private credit funds – in which Dyal owns stakes – claimed to be so disturbed by the prospect of having to compete with Rees for business while also sending him their internal information that they sued to stop the deal.

The acrimonious dispute highlights the tangled relationships governing the U.S. financial system – and calls into question whether Rees, who won acceptance into the top echelon of finance, has soured his friendships on Wall Street with his bid to create a financial powerhouse of his own.

3) I think Amazon (AMZN) founder Jeff Bezos is one of the greatest entrepreneurs of all time. But some of his recent escapades have certainly opened him up to some ribbing... This New York Times op-ed, Are You a Bezos?, is hilarious! Excerpt:

Yet by being worth around $200 billion and having few people who are likely to tell him the truth about, say, how he looks in a cowboy hat riding his phallic rocket, he has become the Dorian Gray of dorkiness, a locus classicus and fun-house mirror through which a sizable contingent of usually white men, approaching middle age and unpossessed of Ryan Gosling's looks, should see ourselves, if we become honest enough to admit the errors of spending our way into regrettable stylistic choices.

There's an onomatopoetic quality to Mr. Bezos' name.

A dentist with a Lamborghini is a Bezos. So is anyone in commercial real estate who, having just embarked on his first extramarital affair, starts shaving areas of himself that should not be shaved.

I turned into a Bezos the day I decided to try and pull off a fanny pack and a pair of bootleg Dior shorts.

Pretending to be an oenophile makes a Bezos of many a man. So does deciding that it is not enough of an accomplishment to run a financial services company; that what one really needs is a side job on the weekends as a tropical house and EDM D.J.

If you returned from your first trip to Burning Man at 50, you are treading dangerously close to Bezos territory.

If you have made attempts to book a singer like Jennifer Lopez, Stevie Wonder, John Legend, Patti LaBelle, or Christina Aguilera at your wedding, birthday party, or child's religious gathering, you are a Bezos.

4) Ditto for Facebook (FB) founder and CEO Mark Zuckerberg... This cracked me up: Mark Zuckerberg Rides His Electric Surfboard & Waves Flag for the 4th.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.