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Gary Shapiro analysis of Bain Capital

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  • Gary Shapiro analysis of Bain Capital

    Guys - Over the last few months, I have watched in dismay over the attacks against Bain Capital. Bain Capital, in my opinion, does what most companies do: They invest and try to grow.

    Sometimes this means one will fail. Personally, I have invested in three dealerships that succeeded and one that we eventually closed.

    All four were on "life support" when we purchased them. The three that are still in business now employ 102 people directly, plus all the businesses with whom we do business.

    The one that we closed had 21 employees when we purchased the store.

    The other three had 60 employees when we started with them.

    Some people would say we killed jobs. Others would say we saved 60 jobs, created 42 more and "lost" 21.

    Mr. Shapiro is the president and CEO of the Consumer Electronics Association. His analysis is as follows:

    ************************************************** *

    1.) Eighty percent of the companies Bain invested in are still profitable entities employing Americans. Bain invested in 77 companies during Romney’s tenure as CEO, 10 of which produced seventy percent of the company’s gains. These companies have added thousands of jobs to the private sector and have had a positive impact on the lives of many people. This is an amazing record for a business that invested in weak and failing companies.

    2.) Bain refused to invest in legal but morally questionable businesses. Under Mitt Romney’s leadership, Bain refused to invest in companies that sell alcohol, guns and tobacco products.

    3.) Union pension funds invest in Bain. Government-worker pension and retirement funds have invested around $1.5 billion in Bain. These funds have benefited unionized teachers, social workers and public-health personnel in states like Iowa, Nevada and Ohio. Many Obama supporters would be startled to learn that they owe some of their success to the success of the company that Romney launched.

    4.) Universities and left-leaning foundations invest in Bain. According to the New York Post, the Oprah Winfrey Foundation, the Charles Stewart Mott Foundation, the Doris Duke Foundation, the Metropolitan Museum of Art, the Ford Foundation and the Heinz Endowments are all Bain clients, as are Purdue University, the University of California, the University of Michigan, the University of Virginia and the University of Washington. While not necessarily political organizations, universities are overwhelmingly left-wing, and each of the foundations listed funds liberal causes.

    5.) Private equity capital funds like Bain remain the best-performing investment of the largest state employee fund in the country. According to a California State Teacher Retirement Fund System Representative , since 1988 private equity companies like Bain have outperformed every other asset class to which the fund has allocated the cash of its 856,360 members, most of whom are in unions. When critics charge that all Romney, via Bain, was interested in was making money for investors, they’re right: investors like teachers.

    The New York Post said it best: “Is Bain really a gang of corporate buccaneers who plunder their ill-gotten gains by outsourcing, euthanizing feeble portfolio companies and giving cancer to the spouses of those whom they fired? If so, union bosses, government retirees, liberal foundations and elite universities thrive on the wages of Bain’s economic Darwinism.”

    While one can argue whether Romney’s Bain experience is relevant to the presidency, Democrats should take their allegations and attack ads about Bain off the table.

    Yes, Bain made some bad investments, and workers lost their jobs. But Bain invested in lots of weak businesses that might not be in existence today had it not been for Bain’s support. Our entire economy depends on a system that allows for winners and losers, and we should respect our country’s freedoms, which allow for upward mobility and entrepreneurship.

  • #2
    I personally never got why they felt the need to keep attacking Bain. But it is silly season so its to be expected. I have banned myself from watching anything political on TV and have cut back quite a bit from reading it also. I get way too worked up over politics.


    • #3
      Since this is a political post, aren't you going to delete this Craig? You've made it clear we can't make posts like this. I'm sure you don't see this as "political", which it is. If someone made the same post, but wrote it leaning to the left, you would have deleted this. This is actually the funniest thing I've seen all day.

      :confused::doh! 1::applause:


      • #4
        Originally posted by Persisting1
        Since this is a political post, aren't you going to delete this Craig? You've made it clear we can't make posts like this. I'm sure you don't see this as "political", which it is. If someone made the same post, but wrote it leaning to the left, you would have deleted this. This is actually the funniest thing I've seen all day.

        Persisting1 - I have made it clear that one may not post links to outside sources as "proof" of one's point. You see a post with analysis of Bain Capital as a "political" post. I see it as analysis of a private business. Bain Capital is not running for office.

        If you wish to disagree with the points as made by either Gary Shapiro or myself, feel free to do so. Do it in your own words. Do NOT post a link to something to prove your point.

        If this was AVS, Audioholics or Home Theater Shack, you would have been banned for "attacking" the administrator of the forum. Please note that instead of banning you, I have offered you rebuttal space.


        • #5
          Questioning you is not attacking you. You have deleted posts that have had no links. You have deleted posts that you have not agreed with. You and your admins have continuously stated no politics are allowed.


          • #6
            I'm not looking for a fight. If anything, I'm wasting my time.


            • #7
              Once again, if you wish to make a rebuttal, feel free. So far, all you have done is gone the personal route.

              For the record, I did not say you attacked me. I said that your behavior here would have gotten you banned for "attacking" on those other fora. There is a difference.


              • #8

                Can we assume that everyone on the "left" is upset with only one issue - the perceived predatory practices of Bain? Could part of the issue be the perception that Romney (and the other partners in Bain, plus the investors) made obscene profits in "turning around" some of the companies? If we can believe the stories that Romney made roughly 250M at Bain, how much is that per successful turn around (and what did the other partners and investors make off of each of these businesses)? How much work do you have to do to earn 15-25M per successful "turn around"? How many more jobs might have been created if some of these profits were left in the businesses they turned around? How much do the partners & investors at these private equity companies deserve in profit?

                I'm just trying to get to some of the other potential issues people may have about companies like Bain. I don't think that we have to assume that all liberals detest capitalism and profit. The questions might involve fairness and perceived manipulation.



                • #9
                  Jim - Let's look at Bain compared to General Motors. General Motors has $45 Billion in taxpayer's money and $50 Billion in loss carry forwards approved out of the bankruptcy court.

                  While this was occuring, General Motors closed dealerships and eliminated other US businesses to the tune of 50,000 jobs. Bond holders had $20 Billion STOLEN from them in this bankruptcy.

                  (Side note - Chrysler at least paid back the tax payer with its acquisition by Fiat).

                  Even if EVERY ACCUSATION made against Bain is TRUE, GM is 1000 times "worse" than anything Bain is even accused of, and in GM's case, they took taxpayer dollars to do it.

                  If we look at the loss carry forwards, every man, woman and child in the USA paid $217 to bail out GM. If we just count those who pay federal taxes, the bill is about $500 per taxpayer. As a FORD dealer, I was forced to subsidize a competitor.

                  The "left" applauds all this. (Keep in mind that it is almost always the "left" that applauds the use of taxpayer's money to prop up a failing General Motors, but even so called "right wingers" like Newt Gingrich have attacked Bain Capital when it was politically expedient to do so)

                  There is "speculation" that Romney made $250 million in his 18 years with Bain. Let us stipulate that he did.

                  Staples was started by BAIN pretty much from the start. Staples currently has a market cap of $8.1 billion.

                  It had almost no market cap when Bain invested in the two stores 26 years ago.

                  The above is information that is readily available to anyone to look.

                  For now, let us look at this as if Staples was the ONLY success Bain had. Romney's $250 million "take" amounts to 3.1% of the market cap of Staples.

                  Speaking from personal experience, the one dealership we closed was "sold back" to Chrysler in 2008. We received 6 digits from Chrysler, but owed far more than that.

                  I am quite confident that, if I was running for congress, some media person would LOVE to point out that we received 6 digits while closing the dealership, ignoring the debt we had to pay off (and which is not deductible, by the way).

                  Back to this issue at Bain - In an hour, I have found over $100 BILLION in market cap for companies Bain has turned around.

                  Romney's cut, assuming $250 million, was less than 0.25% of this.

                  If someone wins the Powerball for $250 million, he is a celebrity. If a business owner gets $250 million for building $100 Billion in market cap, he is a target.

                  Jim - Thank you for an intelligent, thought provoking post. This not sarcasm. These conversations are needed. :applause:


                  • #10
                    When did turning around distressed companies become such a bad thing? Guess I didn't get the memo...


                    • #11
                      Yahoo Finance has an article about Mitt Romney. This article is intended to show Romney in a negative light. The basic theme is as follows: Romney stated in 1985 that Bain would buy a company, build it up over a period of years, then sell the company for a profit.

                      Here is Romney's quote:

                      Bain Capital is an investment partnership which was formed to invest in startup companies and ongoing companies, then to take an active hand in managing them and hopefully, five to eight years later, to harvest them at a significant profit," Romney tells employees of Bain & Company, the consulting firm that spawned the new venture.

                      We are supposed to not like this, according to Yahoo finance.

                      This is the free enterprise system. Bain would do well and profit by building and selling companies that made a profit.

                      Now ... let us look at the flip side of this ... if buying a company with the idea of making a profit when selling the company is BAD, then buying a company, getting it to lose money, and then selling it at a loss would be GOOD.

                      An easy example of this is Solyndra. The Federal Government gave Solyndra $550 million in loans, and now Solyndra is out of business.

                      According to the logic of YAHOO, this must then be good.


                      • #12
                        The above post, and recent events in the news has me to the point where it is time that the gloves were removed.

                        Chase Home Theater has expansion plans that will go one of two directions:

                        1. If the current president is re-elected, and his policies put into effect, we will be running a very small, lean company. We will continue with SHO-10's, VS-18.1's and SS-18.1's.

                        When the current SS-18.1's are gone, they won't be replaced.

                        The M-1's will have a single order of 300 units, and then they will be phased out.

                        2. If Romney is elected, and his pro-growth policies adopted, I will be investing between $200 and $300 K into Chase Home Theater in order to bring into the market the SHO-tower, Mini-Sho (6.5 incher) and a powered SS-18.1. This will, in the first quarter of 2013, mean two full time jobs at CHT plus all the work going to our suppliers.

                        Some may think this is a political statement - but it is an economic statement brought out by the politics of others.

                        I am supporting Romney not because of personal reasons. I am supporting him because his pro growth policies are what this business needs to SURVIVE.

                        It has also been said to me in PM's that I risk alienating customers over my stance on this.

                        I am willing to take that risk.

                        Durable goods dropped 13.6 percent last month.

                        Economic growth was adjusted from 1.7 percent down to 1.3 percent in the second quarter.

                        We are spiraling downward, and Mr. Obama wants to solve this downward spiral by increasing taxes and regulations in 2013.

                        Where we go from here will be up to the American People. My family and I will survive regardless who is elected. I am hoping America chooses growth over fear.


                        • #13
                          Craig, I salute you for you willingness to put it all out there and call it like you see it. The world needs more of this, and less of political correctness.
                          LCR: Gedlee Abbeys for LR and Nathan for Center Surround & rear 4 x Sho10's
                          Subs: 4 x 18.2
                          Electronics: Marantz SR7002, Acurus 200x3 (LCR), PS3, HTPC, CDP300, Mits HC1500, Elite Peregrine 2.35 156" Acousticpro4k


                          • #14
                            Another "Green" company here in NE called Katana Summit who builds wind towers has announced closing its doors.
                            I hope you keep growing Craig. Looking forward to some Chase subs in my future.
                            I shaved my balls for this :salute:

                            Denon DVD1920, NAD C352, Hafler XL280 & XL600, B&W 602s3, MiniDSP, CHT 18.T(the duo), Acoustic Research PR1212
                            Tama drums, Zildjian cymbals, Jackson & Epiphone guitars, Marshall amps


                            • #15
                              This seems to be one of the most vitriol campaigns I can remember. Accusations of sexism, class envy/distinction, even to the point of Romney responsible for killing the wife of a laid off worker by Bain. Every commercial seems like a new attack, with the opposing side responding with "facts" that reverse the other's statements.

                              The common man is told his taxes will go up with his policies, or will go down with mine. The economy will improve, or continue to decline. Jobs will grow, jobs will decline. We're loosing jobs to China because of the other guy. Both candidates say the same thing.

                              Predicting the economy is an art, not a science, but the one thing that scares me most is the mounting debt, and our loans to faltering China. That, and our present regulations war on coal and gas - the cheap energy sources.

                              I think Craig has some very enlightening factual views from a small business man perspective and analysis of two successful very large businesses. Where will our economy be when the health care bill is in full force? My company is teetering on the edge of collapse. So to me, his comments are resounding.