FINANCE Bloomberg Businessweek July 27, 202022
PE strategy. In such a buyout, a fund purchases
a business using borrowed money—which amplifies
the fund’s return—but puts most of that debt on the
books of that company. “It must be illegal,” Phalippou
thought. It’s not.
The early lessons from Kaplan gave the young
scholar a taste for a corner of finance that was little
researched at the time. Two decades later, Kaplan takes
issue with part of Phalippou’s research—particularly
his choice of the 2006 start date. Had Phalippou
chosen any other year from 2000 onward, the data
would have shown private equity outperformed the
S&P 500 index, Kaplan wrote in an email. Phalippou
says he does flag other time periods in the report and
that older funds do look better, but that 2006 marks
a moment when things changed. He also notes that
funds that focus specifically on buyouts did somewhat
better than PE funds overall, beating public marketsTHEBOTTOMLINE Forfundslaunchedfrom 2006 through2015,
Phalippou says, PE produced returns similar to those of public
stocks. It also generated fees that made some managers billionaires.but not by the wide margins they did before 2006.
The U.S. Securities and Exchange Commission
in a June 23 report blasted the industry for its poor
disclosure of fees and multiple conflicts of interest
in what’s seen as a warning shot to private equity
before the funds’ likely inclusion into 401(k) pen-
sion plans. The regulator’s message, coming a week
after his own, felt like vindication for Phalippou.
He says he’s now switching focus to environmen-
tal, social, and governance (ESG) investing—a topic
in vogue in finance. He’s curious about how to prop-
erly measure it and sees signs of greenwashing, in
which companies exaggerate the ESG benefits of an
investment. “I have managed to piss off some ESG
investors already,” he says. —Benjamin Robertson○ Netflix’shitnewshowbringsunwelcome attention to a
stockpickingpublisher’sempireTheNetflixrebootofUnsolvedMysteriesbringsback
the show’s heady mix of tales of unexplained deaths,
disappearances, and the occasional UFO story. The
new series, which has been one of the service’s most
popular shows since it started streaming on July 1,
begins with an episode tied to the world of stock
market newsletters.
Rey Rivera, an aspiring screenwriter, was work-
ing for a newsletter publisher in Baltimore. One day
in May 2006, the then-32-year-old rushed out of his
house after receiving a phone call from his office.
About a week later his body was discovered in an
annex of Baltimore’s Belvedere Hotel, below a hole
in its roof. Rivera seemed to have plunged through,
perhaps after falling from the building’s adjacent
tower. Police at the time said it was probably a sui-
cide, though they say they’ve made no official deter-
mination. Rivera’s family doubts he killed himself.
That’s where the show leaves it—it makes no
allegations connecting anyone to Rivera’s death. It
does spend a lot of time discussing his work with
his boss, Porter Stansberry, founder of the newslet-
ter group Stansberry Research. This was enough to
pique the interest of internet sleuths on Reddit, and
on the Twitter feed of Stansberry Research, people
responded to a recent tweet about a gold-miningstockwithcommentsaboutRivera. The story also
inspired articles from pop-culture-oriented outlets
such as GoodHouskeeping.com, which asked who
Stansberry is and what kind of business he’s in.
In an emailed statement, an outside spokesman
for Stansberry, David Churbuck, called the show “a
one-sided exploitation” of Rivera’s death. He said
everyone at the firm, especially Stansberry himself,
was “heartbroken” and had tried to help find out
what happened to Rivera.
Stansberry Research publishes dozens of news-
letters, offering tips on everything from trading
in retirement accounts to cryptocurrency to can-
nabis stocks. And it combines that with a dash of
populist gloom and doom. A few years ago, Porter
Stansberry posted lengthy video commentar-
ies darkly warning of “the end of America.” In a
more recent online video, he decries socialism and
demands for slavery reparations, saying they’re a
symptom of rising income inequality—and telling
viewers they can become a part of the fortunate
group getting rich if they follow his advice, which
the site offers to sell for an introductory one-year
subscription of $49.
The company says it has hundreds of thousands
of subscribers who pay to hear his newsletters’○ StansberryThe Newsletter Meets
Mystery T V