NEW YORK (
)-- The more things die, the more they stay the same.
During the past 12 months, boneheaded writers like me have pronounced many things dead. With the one-year anniversary of Lehman upon us and the market somehow rallying beyond virtually anyone's expectation, it seems like a decent time to look at what has actually died. The quick and easy answer is, not much.
And while we reflect on what has died and what hasn't, it is also worth thinking about what's been pronounced dead, and by how many people. The idea being to add some kind of quantitative analysis, however imperfect, to such a highly qualitative debate.
Toward that end, I did a
search pairing the words "Death of," with various companies and sub-industries of finance. The results have their peculiarities, but in general I'd say the more results something got, the more dead it is:
Take private equity (450,000 results). Often pronounced dead, the dirty truth is that the industry is essentially impossible to kill. That's because, in the good times, big institutions like
signed generous deals with private equity firms allowing them to hold onto their money for years and years.
Because private equity is, well, private, it is especially difficult to know about all the problems the industry may be having. But since some buyout firms are public, we can get at least some insight from the stock market. The most prominent of the listed firms is
The Blackstone Group
, whose shares are roughly flat over the past year, better than
Bank of America
What's more, private equity continues to attract talented executives from the banking industry. The latest example is
Chairman and former
Chairman Dick Parsons joining media-focused private equity firm
Providence Equity Partners
Say what you want about Citigroup, Parsons is still a highly-regarded executive. Besides, the phrase "Death of Citigroup," only gets 152,000 results--fewer than private equity.
Also, on Thursday,
The Carlyle Group
, another private equity giant, is thinking about going public again, a plan it had shelved due to the crisis. Not to be outdone, Kohlberg Kravis Roberts & Co., the iconic firm that orchestrated the RJR Nabisco takeover chronicled in
Barbarians At The Gate
has been steadily moving toward seeking its own public listing, reportedly targeting the spring of 2010. Surely this is a sign of health (as well as of lots of rich guys looking to cash in).
Hedge funds were pronounced dead 1.36 million times, according to Google, maybe reflecting the fact that they are easier to kill than private equity. That is because investors can at least attempt to pull their money out, though when things got really hairy, this feature turned out to be less reliable than advertised.
one of the few publicly-listed hedge funds, has seen its shares fall 30% in the past year, but it remains very much alive.
To be sure, many hedge funds have died. Nearly 700 hedge funds liquidated in the first half of this year, according to
Hedge Fund Research, Inc.
which crunches such data on the industry. But that is less than four percent of the total, HFR says.
Meanwhile, hedge fund giants like
Citadel Investment Group
, have stuck it out and are expanding into other businesses like investment banking (527,000 death pronouncements plus another 210,000 if you include the phrase "investment banks").
I confess to being among the false prophets, having typed up my own eulogy of
a year ago.
are technically no longer investment banks, but they still practice the art, along with commercial banks like
. That is not to mention smaller investment banks like
that remain independent of Fed regulation and are thriving.
In my and others' defense it is worth pointing out that one of the remarkable things about finance is how quickly things "die" and are reborn. Junk bonds (just one death pronouncement because their death and rebirth preceded Google) and securitization (42,500) are good examples of this. Indeed, securitization really can be said to have died and been reborn during this crisis, as there was a brief time--perhaps only a few months--where securitizing was not going on. During that time, executives at investment banks and private equity firms continued receiving paychecks and hedge funds continued trading.
Even companies that can really be said to have died live on, as can be seen in the brisk trade in shares of
Some probably live more in death than they ever did in life. Whoever cared about
until it showed up without a pulse at the Federal Reserve building a year ago?
Of course, much of this premature death announcing can be attributed to good old-fashioned media hyperbole. If it's any consolation to those in finance, the phrase, "Death of Media," got 15.2 million search results, compared to just 9.45 million for "Death of Finance".