Worldwide Bubble in Financial Assets

By on July 8, 2007

The private equity buyout frenzy hit home again when the Blackstone Group recently made a $47.50 per share offer for Hilton Hotels (NYSE: HLT; 45.71), a long-time holding in the aggressive portfolio (purchased February 15, 2000 @ 7.63 per share). Past experience has taught that occasionally these buyouts fall through. Therefore, on July 5th, 40% of the position in HLT was sold at $45.58 per share. The $47.50 offer seems awfully generous and if the economy suddenly swoons, it might be rescinded. has an interesting take on the absurd price Blackstone is paying for Hilton at

Over the past 9 months, holdings in the aggressive portfolio have been acquired by outside entities left and right. Ace Cash Express, Symbol Technologies, and Outback Steakhouse have all been snapped up. Biomet has a $46 per share deal in the works with a buyout group. All of this activity has increased the liquidity of the aggressive portfolio, which I intend to deploy at some later date. I agree with Jeremy Grantham and Marc Faber that we’re experiencing a worldwide bubble in financial assets and it’s probably best to hold cash when it becomes available.

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