'stoned

For those that wanted to catch a glimpse of the beginning of the end for the private-equity rager and happened to tune into the obnoxious cheerleading taking place on CNBC reporting on the IPO-ing of the first major private-equity firm in history, Blackstone Group (BX)-- it was quite a spectacle. It was the brand of commentary and hyperbole that only accompanies a speculative mania. Private equity has had three runs over the past thirty years, the late 80s late 90s and today. Each previous time, you, as an investor did not want to be on the business end of their dealings. This time may be the mother of all private equity runs that may forever brand the corporate raiders for what they are--"robber barons." The company sold 133.3 million common units today, representing a 12.3% stake. It was one of the largest offerings in recent years. Closing at a price of $35.06, its market-cap is approximately $38-billion. Not ironically, it was the same Blackstone Group that Sam Zell sold his commercial real estate empire, Equity Office Properties, to in February of this year. Apparently unable to find another private equity firm willing to buyout his own company, and unable to LBO itself, Stpehen Schwarzman and The Blackstone Group turned to the public to liquidate a substantial portion of his business holdings. And as they always do towards the end of any mania, the public gladly obliged. Even the Chinese, gripped with their own brand of investor mania, grabbed a $3-billion chunk of the financial alchemist for their own. But back to Zell, who sold out his holdings to the same private-equity concern just 4-months previous. It was just 5-days, February 8th, before Blackstone had inked its deal with Zell and Equity Office Properties that the REIT sector, as gauged by the i-share Real Esate REIT Index (IYR), peaked before dropping nearly 20-percent over the subsequent 4-months. This event may not pin-point the exact point in time that private equity died, but a look back in history, when days, weeks and months bleed together--2007 will forever be remembered as the Private Equity Bubble and the beginning of its end.