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Quote of the Week: Volatility Vote of Confidence

by

September 14, 2012

“We are trying to make exceptional returns. In order to do that, we actually need a bit of volatility. Price volatility, technological innovation and changing government regulations all cause assets to be mispriced.”

 

 Who said it. David Foley, chief executive of Blackstone Energy Partners, in an interview with the WSJ

 

In Context : You don’t often hear PE investors putting much faith in commodity market volatility, so the above quote caught our eye. According to the article (and as we mention elsewhere in this issue), energy-focused funds have raised tens of billions of dollars this year. But Foley says these amounts are “nothing” compared to the actual size of the global energy industry. The market cap of Exxon alone is USD 400 billion, he said, as a way of backing up that assertion. The Blackstone executive posits that the volatility of commodity markets can be managed and opportunities can be exploited with discipline and knowledge. He claims that his funds under management, raised since 1997, have generated a net internal rate of return of 37% across 21 transactions. (Image Source: Bloomberg TV)

 

Where we found it: WSJ Blogs

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