Passages

Happy new year. I hope you closed out 2018 with some respite and relaxation.

Our family welcomed the arrival of a new son / little brother shortly after Thanksgiving, so I’m thrilled to be starting the year refreshed and well-rested. 👀

One delightful discovery during the sleepless nights has been Patrick Leigh Fermor’s collection of travel writings. Bleary-eyed with baby strapped to my belly, I recited lines of exquisite prose to the bambino, evoking distant lands and daring adventures from a vanished world.

Whilst following the young Fermor’s trek along the Danube toward Constantinople, memories of my own youthful journeys through Mitteleuropa often materialized.

Visions of a glorious hike through the Berchtesgaden Alps; the enveloping warmth of eiderdown on a chilly summer evening; a call to my father from a payphone to wish him happy birthday, after imbibing zwei Maßkrügen of beer.

My dad would die within three years of that call, but I can still hear the mirth in his voice. How I wish he could have met his grandsons. May they forge paths of their own.

It could very well be the delirium, but I’m hoping that this year will be more constructive for EM private markets than 2018 was.

I wish I had something concrete to pin my hopes on, but the sheer degree of negative sentiment is all I’ve got.

Ain’t going to be an easy row to hoe, I’m afraid. So, we might as well get on with it.

Alla prossima,
Mike

P.S. Thanks to those of you who encouraged folks to subscribe to this newsletter. Portico made a donation to Room to Read for each new subscriber, so thanks for contributing to children’s literacy.

———

Profit from Purpose

So, the President of the World Bank Group unexpectedly resigned to join an infrastructure investment firm.

Par for the course. The writing was on the wall a year ago.

(“Jim has a lot of credibility with private equity firms,” said David Rubenstein.)

In an e-mail seen by the Wall Street Journal, Dr. Kim stated:

I’ve concluded that this is the path through which I will be able to make the largest impact on major global issues like climate change and the infrastructure deficit in emerging markets.

Look. I’m sure it stinks to be working with the Trump Administration. And it’s hard to make it in DC on a net-of-tax salary of $500,600 whilst enjoying world-class benefits. From a pecuniary perspective, it’s best to hop near the market top. Now’s better than three years from now.

But may we just pause and reflect on his statement?

What, pray tell, is the point of the World Bank anymore? Why did it need $13 billion in extra capital?

And what does Dr. Kim’s early departure tell us about the ability of the Bank to mobilize private funds?

Also. I am not questioning Dr. Kim’s sincerity regarding private capital’s role in solving development challenges — even if it led to a regrettable endorsement — but given the Bank’s role in financing climate solutions and infrastructure in developing economies, don’t the optics here look a bit Swampy?

Anyway, the Bank’s next President may need to come up with a new mission statement.

Thankfully, s/he likely won’t be Jeffrey Sachs. #huawei

———

Deals!

We kicked off last year with everyone getting bulled-up on EM, and this newsletter offered some cautious optimism about the prospects for exits:

Here’s hoping that we see sustained portfolio and direct investment flows, and GPs seizing the opportunity to distribute capital back to their LPs.

Well, we know how that story played out. #sadtrombone

According to data from Thomson Reuters Deals Intelligence, EM saw a 17% reduction in the volume of completed M&A transactions. The downdraft was most pronounced in Africa and Eastern Europe — which both experienced declines of 31% — but the slowdown hit each region (see below).

599e287f-c305-4fad-9210-87bbf61081ba

Fun fact: the Thomson Reuters data show that SoftBank paid out $894m in investment banking fees in 2018.

———

Tough Crowd

Private Equity International released its 2019 LP Perspectives survey. If the 101 respondents are a representative sample — an open question — then it looks like it’s going to be another tough year on the fundraising trail for managers ex-Asia (see below).

26ff7765-5808-4435-a4be-12e8c6fc825f

We’ve discussed LPs’ herd behavior driving a tsunami of capital toward (large-cap) Asia several times over the years. That shows no signs of abating.

Meanwhile, capital scarcity continues to define the rest of EM. History suggests that such conditions are conducive to strong performance, but — as ever — the contrarians seem to be few and far between.

Moose Guen, CEO of MVision, provides a sobering outlook:

The interest in new markets like Latin America or Africa and even parts of Asia is extremely limited. Not because of lack of opportunity or experience, but due to local currency volatility relative to the US dollar and the net dollar returns … Over the next few years, GP headcount in those markets will be inhibited because it’s very difficult to finance them.

———

Risky Business

IFC SME Ventures teamed up with CrossBoundary LLC on a study that explores PE investing in fragile and conflict-affected situations (“FCS”) in Sub-Saharan Africa. The study reaches several conclusions that we’ve advanced in this newsletter — such as the merits of flexible mandates, financings, and fund structures — and it makes a convincing case not to invest in single-country funds in frontier geographies.

I found the most thought-provoking finding to be the determination that:

FCS funds with better net returns tend to either be highly active and in control positions on select investments or deploy standardized (but flexible) debt-like instruments to a larger group of investments … Small funds with a large array of minority equity positions can struggle to both realize liquidity and adequately manage their investments.

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Source: IFC SME Ventures.

That said, later in the report, an analysis of 312 exits from IFC’s frontier markets PE portfolio reveals that “minority positions have performed almost as well as majority positions in terms of median gross IRR.” I wonder if the discrepancy boils down to geographies (frontier vs. FCS) or a comparison of deal-level vs. fund-level returns.

In any event, the report provides some good food for thought.

———

GP Stakes

In private equity the managers do better than the investors.

The FT recently reported on Dyal Capital and the growing business of firms investing in private equity fund management companies. In essence, the business entails taking a minority stake in the GP — providing the manager an injection of permanent capital — in return for a share of the management fees and carry.

I haven’t seen data on the volume of transactions in this space, but I observed with interest the launch of Meteor5, whose management team includes MVision’s Moose Guen. The firm invests in emerging GPs, and it strikes me that a firm like this can play an important role in seeding new managers and accelerating their time to close — all with the benefit of having visibility on the product that LPs demand.

Whilst I’ve seen EM GPs sell their franchises in whole or in part to other asset managers, I’ve not seen much along the lines of the Dyal / Petershill / Meteor5 / etc. approach.

And I think I know why.

EM PE’s industry-level performance and the harsh fundraising environment raise questions about the viability of firms raising follow-on funds and harvesting investments. How does one get comfortable estimating the terminal value of fee income + carry?

It’s all a bit of a shame, but I wonder if some enterprising, well-capitalized folks might come up with a solution.

———

From the Bookshelf

There are times when hours are more precious than diamonds.

— Patrick Leigh Fermor, Between the Woods and Water (NYRB Classics: 2005)

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The information presented in this newsletter is for informational purposes only. Portico Advisers does not undertake to update this material and the opinions and conclusions contained herein may change without notice. Portico Advisers does not make any warranty that the information in this newsletter is error-free, omission-free, complete, accurate, or reliable. Nothing contained in this newsletter should be construed as legal, tax, securities, or investment advice.

Copyright © by Portico Advisers, LLC 2019, all rights reserved.

 

The Work

September is upon us, and Portico is marking the beginning of its third year in business. We’re not popping champagne bottles to mark the occasion, but it’s pretty dope to be here plugging away. After all, roughly one-third of U.S. businesses close within their first two years.

It’s not all peaches and cream, of course. EM PE is a hard-driving, competitive industry — and it’s one going through hard times.

During a recent discussion with a client, I shared my reservations about launching an advisory firm that caters to a shrinking industry.

“One of the challenges of managing a firm in this business,” he replied, “is that the downcycles are so brutal. Good people get discouraged waiting for the cycle to turn, and they walk.”

If the figures in this EM PE talent management survey are to be believed, fatigue with the industry explains more than 20% of staff turnover. Boy, do I feel that fatigue sometimes — and I’m not even working in an EM PE firm.

All that said, Portico’s still profitable with zero debt. We missed our (über-) aggressive revenue target, but that’s okay. It was at odds with two other goals I had for the year: launching a product (accomplished, but a serious time commitment) and making sure we had happy customers.

On the latter, we conducted a client survey over the summer to gauge our progress. The findings were favorable: all of our clients were “very satisfied” and our Net Promoter Score is maxed out at +100.

The other encouraging indicator is that all of our new clients have come through referrals.

Portico-Net-Promoter-Score

As for new targets, I experienced an epiphany last month. It came to me shortly after I’d achieved one of my personal goals for the year (attaining two stripes on my belt in BJJ). The epiphany was this: the stripes didn’t matter. I still get crushed, sometimes even by people with less experience. The value (and the pleasure) is in the work itself.

So, no hard targets for year three. I’m going to focus on doing the work and being helpful to others.

Entrepreneurship is way overhyped, but the liberty to chart one’s course makes for a gratifying odyssey.

Two closing thoughts:

First, I’m contemplating some content ideas for year three — a podcast (I know, saturated) and / or in-depth interviews with investors, thinkers, writers, etc.

Which of the following interests you most?

  • Podcast exclusively on EM private markets
  • Podcast on EM private markets + other topics
  • Transcripts of interviews exclusively on EM private markets
  • Transcripts of interviews on EM private markets + other topics

Second, I will be in London in October. Please drop me a line if you’d like to grab a coffee.

Alla prossima,
Mike

Advent + Walmart Brazil

Advent International completed its acquisition of 80% of Walmart Brazil, and it’s reportedly planning to invest an additional $485m across its existing stores. As we discussed in February (Always Low Prices), Walmart’s footprint of 471 stores generated revenues of $9.4B in 2016, but delivered seven straight years of operating losses. Why? “[P]oor locations, inefficient operations, labor troubles and uncompetitive prices,” apparently.

Advent purportedly plans to convert Walmart’s hypermarket formats into cash-and-carries, a format that is growing in popularity amongst local consumers. This should help the company improve one of the 5Ps — Price — by extending steeper discounts to customers.

But I’m curious as to how Advent will address another P — Place. Allegedly, Advent does not expect to roll out new stores; how will they address the so-called “poor locations”?

No clue, but it will be one of many interesting stories to watch in Brazil in the months to come.

African PE: Quo vadis?

Earlier this year, EMPEA released a report on The Road Ahead for African Private Equity. It’s quite good and it contains some refreshingly candid observations on the region.

There is a compelling exhibit that hits at one of our biggest frustrations: the concentration of capital in larger segments, and the relative scarcity of capital available for small and mid-size businesses (see below).

EMPEAAfrica

While the chart includes only a handful of countries (and excludes South Africa), I think it’s directionally accurate — the featured countries accounted for roughly half of the investments that took place in Sub-Saharan Africa between 2015-17.

Five additional findings jumped out at me:

  1. Growth equity deals have evaporated, declining by 45% from 2016 to 2017, reaching the lowest total since 2009.
  2. Managers need to bring more than money to the table — operational capabilities are required.
  3. Deal structuring needs to be more flexible and sophisticated. As one endowment representative lamented, “Many GPs are inclined to throw common equity into companies and call it a day.”
  4. Tech-enabled business models are appearing across verticals, creating a richer landscape for VC and PE alike.
  5. Permanent capital vehicles may be a better fit with the investable market than the traditional PE model.

Creador + Goldman Sachs on Asia

Brahmal Vasudevan — founder and CEO of Creador — recently shared some views on PE in Southeast Asia (where performance has been “quite poor”).

Of course, he’s talking his book at a time when Creador is marketing its fourth fund (which it will undoubtedly close at or above target).

Nevertheless, several observations jumped out at me, including:

  • The diversification benefits of regional funds;
  • The merits of maintaining discipline on fund size;
  • The relative scarcity of “high-quality companies that are growing rapidly and need private equity capital” in select markets; and,
  • The potential for adverse selection in control deals.

It’s an interesting contrast with this recent Exchanges at Goldman Sachs discussion about PE in Asia.

Goldman focuses on the “scale and sophistication” of managers, especially in China. But following all the bullishness and capital flooding into the region’s large / megacap funds, I wondered, “who’s the Muppet?”

Like, I don’t have any original insight on this. My rule #1 on China is: nobody knows anything about China — especially me.

But in my passive reading of the headlines from Zhongguo, I’m left with the impression that the winds of change are in the air. Maybe investors have grown complacent.

Mr. China Meets the Mekong

There are few laugh-out-loud books in the world of finance, but Tim Clissold’s Mr. China is one of them. So many instances of an investor being outwitted and outmaneuvered by a crafty operator.

One of the more memorable bits revolves around an acquisition of a Chinese brewery that (naturally) involved a joint venture partner tied to the central government. A few weeks after wiring $60 million to the JV, $58 million appeared to be missing.

Oops.

Missing funds are not at all the issue in this story about a deal-gone-wrong in Vietnam, but as I read the gossip piece, I couldn’t help but laugh.

I mean, it’s not funny … but it is.

Poultry firm Ba Huan JSC has sought the Prime Minister’s intervention in terminating its six-month-old investment partnership with Ho Chi Minh-based asset management firm VinaCapital. The firm said it agreed to investment terms it now claims to be unreasonable because they were initially stipulated in English.

In February, VinaCapital’s flagship fund Vietnam Opportunity Fund (VOF) had invested $32.5 million to acquire a significant minority stake in Ba Huan.

In its petition to the government, the poultry firm noted that VinaCapital is seeking an internal rate of return (IRR) of 22 per cent per year. It claims that the terms of the deal stipulate that in the event of the IRR not being met, Ba Huan will be fined or required to return the investment capital, along with a 22 per cent interest, or it must transfer to VinaCapital (or its partner) at least a 51 per cent stake in the company.

It also alleged that the partnership restricts it from engaging in any other business except chicken and eggs. Its litany of grievances includes what it claims is VinaCapital’s tendency to veto all board decisions, despite it being a minority shareholder.

So many layers.

I don’t know what’s true here … I don’t even have an opinion. I just take the chuckles when they come.

 

A Most Damning Indictment

Several years ago, I was in Marrakech for the UN African Development Forum. As I waited for a car to take me to the airport, a young man in a black suit was lingering nearby, and he was staring at me in a most uncomfortable way.

It got so awkward that I turned to him and asked:

Tatakallam engleezee?

Yes.

Hey man, how’s it going?

I am good, sir. Where are you from?

The United States.

America. I love the United States. I have applied for a fellowship there.

Where?

MIT.

MIT? Are you an engineer?

An economist. I have a master’s degree in applied economics.

Oh. Do you work for the UN here?

No. I am a volunteer. There are no jobs for applied economists in Morocco. Just with the government. I presented my thesis, which [something something labor market, econometrics, etc.]. But they don’t have any jobs. So, I want to go to America to get my PhD and find a job there. It is very nice there.

Have you been?

No.

[Chitchat about Atlanta and T.I. before car rolls up]

Now, as I rode to the airport, I thought about that young man and how frustrating it is to be underemployed — to have knowledge and skills that can be of value to companies and your country, and yet find yourself unwanted. And I thought about the fickle finger of fate that dictates the range of potential life outcomes based on where one’s born and to whom.

I thought about the PE firms pursuing higher education deals in Africa and across the emerging markets. And I thought about all these students (and their parents) paying tuition to get a handhold on the ladder to a better life, and the risk that new graduates might end up like this young man, with a degree that the market doesn’t value.

In development economics, increases in human capital are vital to long-term economic growth. But what happens if the gap between expectations and reality for newly minted college graduates becomes a yawning chasm? I think we know the answer …

Anyway, these musings came to mind recently after I read a most damning indictment of PE investments in for-profit universities. The academic study, When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education, explored 88 investments in U.S. for-profit colleges.

What did they find? In summary, following the buyout:

  • Profits↑ by upwards of 3.3x, driven by higher enrollments (↑ 48%) and tuition increases (↑ 17% relative to mean);
  • Graduation rates↓ by 6%;
  • Earnings of graduates↓ by 5.8% relative to a mean across all schools of ~$31k;
  • Per-student debt↑ 12% relative to mean;
  • Educational inputs↓ in absolute number of faculty, with 3% ↓ in share of expenditures devoted to instruction; and,
  • Rent seeking: revenue from public sources (e.g., federal grants and loans) ↑ from 60-70% prior to the transaction to 80%+.

Basically, students end up paying higher prices for inferior products and shittier prospects. Presumably agriculture isn’t a popular field of study, otherwise customers would know where to find the pitchforks.

There are many interesting findings in the paper, such as the nugget that “the returns to for-profit education [for the consumer] are zero or negative relative to community college education.” So, dig in. The online appendix with even more data is available here.

Or, you can look at slides 2, 10-15, and 20 in this presentation to the NY Fed.

From the Bookshelf

In every venture the bold man comes off best, even the wanderer, bound from distant shores.

— Athena in Homer, The Odyssey (Robert Fagles, trans.; Penguin: 1996)

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The information presented in this newsletter is for informational purposes only. Portico Advisers does not undertake to update this material and the opinions and conclusions contained herein may change without notice. Portico Advisers does not make any warranty that the information in this newsletter is error-free, omission-free, complete, accurate, or reliable. Nothing contained in this newsletter should be construed as legal, tax, securities, or investment advice.

Copyright © by Portico Advisers, LLC 2018, all rights reserved.

 

The Mid-Market Squeeze

In recent months, I’ve enjoyed some great conversations with individuals who have welcomed a frank discussion of the EM PE industry’s challenges. One recurring topic of conversation is the imbalance between supply and demand for capital for PE funds operating in the lower- and mid-market segments in EMs.

The hollowing out of mid-market funds animated my decision to found Portico, and it served as the impetus for our EM Mid-Market Survey, which we conducted in May. I am pleased to announce the release of Portico’s second research piece, The Mid-Market Squeeze, which shares findings from our survey.

We undertook this project with two objectives in mind: (i) to test our hypotheses for the supply-demand imbalance; and (ii), to illuminate potential paths toward solutions.

Most of our hypotheses were affirmed, in whole or in part, but the report’s overarching finding is that the declining number of EM mid-market funds is more than just a funding gap, it is a symptom of industry-wide problems. Our survey reveals four drivers for the mid-market squeeze:

  • Macroeconomic developments in EMs are not the reason why LPs aren’t committing to mid-market PE funds; it’s the failure of EM PE funds to deliver returns.
  • There is an acute funding gap for EM PE funds smaller than $100 million in size.
  • Development finance institutions are walking away from smaller EM PE funds, and investing with larger, more established firms. Moreover, their preferred ticket sizes are in the sweet spot of where commercial LPs prefer to play.
  • Institutional investors lament the lack of transparency in the EM PE industry.

The report offers a few thoughts on potential solutions to the mid-market squeeze, and prognostications on the road ahead. I invite you to click the button below to download a copy of the report. Please feel free to share it with colleagues, and of course, all feedback is welcome.

Finally, thanks go out to the 76 industry professionals who participated in this survey, as well as the winner of our prize drawing—a representative from an Asia-Pacific sovereign wealth fund—who selected the donation to UNICEF.

Alla prossima,
Mike

Indonesia: So Hot Right Now

Having freshly returned from a trip through Southeast Asia, I was interested to see KKR’s Henry McVey release a new report on Indonesia, stating:

Indonesia has one of the most compelling stories that we see … and unlike in past trips, we are now confident stating that we think Indonesia is harnessing its potential into near-term economic and investment realities.

The macro is certainly compelling, and there are reasons to be optimistic (not least the forthcoming rail line connecting the airport with downtown).

I agree with McVey that “public market indices are often not the appropriate investment vehicles to actually gain access to compelling GDP-per-capita stories;” and based on my own meetings in the country, I share McVey’s conviction that there are attractive tech opportunities in private markets (see charts below). KKR is actively pursuing this thesis, having invested alongside Capital Group Private Markets, Farallon Capital Management, and Warburg Pincus in the local ride-hailing / transportation company GO-JEK last year.

Still, translating the macro into compelling investment returns requires deft navigation. One dynamic working in mid-market managers’ favor is the general scarcity of capital; there is less competition for deals from other financial sponsors in this segment, though local families and investors play an important role in the private markets ecosystem. The game changes once tickets climb north of $100m, where a large volume of PE capital is searching for deals.

KKR_Indonesia

Coffee Talk

In our April newsletter we highlighted the rise of secondary buyouts as an exit channel in Africa, and there’s big news from ECP portfolio company Nairobi Java House. Abraaj won the auction for the company, which reportedly drew 12 non-binding bids (including from Carlyle and TPG). Abraaj shall take full control of the company, which includes two additional franchises: Frozen Yoghurt and 360 Degrees Artisan Pizza. By my count this is Abraaj’s third secondary buyout in Sub-Saharan Africa out of four deals since 2014 (Mouka from Actis in 2015, Libstar from Metier in 2014).

While Abraaj has some experience in the QSR segment (Kudu in Saudi Arabia), and I’m curious about potential synergies with its investments in Brookside Dairy, Fan Milk, and Libstar, the firm has its work cut out for it. I struggle to think of an East African firm that has been able to achieve pan-African scale.

One experienced advisor in the region tells us:

The pan-African strategy is very difficult to execute due to: (a) the small size of most of Africa’s 40+ markets, which means you’re spreading the fixed costs of market entry across a small customer / revenue base; (b) the high cross-border costs of trade, which makes supply chains expensive to run; and (c), the economic, regulatory, and cultural differences between East, West, and Southern Africa. The difficulties cut in every direction.

While Ecobank is a partial exception (it has a long way to go to become a consolidated, sustainable business with deep insight into all of its local markets), the failures are numerous. For example, United Bank of Africa, which has met success in its home market of Nigeria, got burned in Kenya. South African retailers, such as Shoprite and Massmart, have struggled to gain traction north of the Limpopo.

The general lesson I draw is that African markets do not have a broadly even playing field. Any attempt to expand beyond one’s own region will only work if you make a massive investment, and you bring in heavy hitters with political influence. A more sensible strategy is to aim to become the number one player in your region rather than overstretching by seeking a continental presence.

🤔

Will Private Equity Build Africa’s Manufacturing Sector?

No.

The FT recently ran a comment piece imploring PE firms to drive the development of Africa’s manufacturing sector. Private equity can deliver—and has delivered—powerful developmental impacts in Africa. For example, an impact assessment of CDC Group plc’s Africa fund investments between 2004-12 shows direct job creation of 40,500 positions and a $600 million increase in taxes paid. I’m a believer in the potential of the asset class to deliver dignity in EMs; however, some of the author’s overzealous assertions bear some scrutiny:

Private equity has largely ignored investment in African manufacturing and industrial projects. [EMPEA] data show that 23 PE firms have made only 53 investments in the industrials sector in Sub-Saharan Africa since 2008.

PE firms have not ignored African manufacturing companies. First, by excluding deals in manufacturing companies outside of the industrial sector (e.g., consumer durables, food and beverage), the data understate the volume of investments that have been made in manufacturers.

Second, how many manufacturing companies are there in Africa? Within the industrials sector, according to Thomson Reuters Eikon there are only 57 private African companies generating between $50m and $500m in revenue.

Middle market funds, in particular, have an enormous opportunity to unlock potential in this sector. Doing so will … create value for investors by creating a robust deal pipeline with attractive exit opportunities …

Maybe? There have been—and will be—some excellent returns from manufacturing deals in Africa; but has the traditional EM PE model created value for investors?

According to Cambridge Associates’ African Private Equity & Venture Capital Index, the 10-year horizon pooled return is 4.51%, and the pooled return has not exceeded 5% over any multi-year period. This may be a function of the constituents in Cambridge’s database—Ethos, for example discloses a USD gross IRR of 20% since its third fund—but the pooled return suggests investors are taking on equity risk + country risk + illiquidity, and receiving 200 basis points over 10-year Treasurys.

With this return profile, why should pensioners, endowments, and foundations be subsidizing African industrial policy?

On a related note, McKinsey Global Institute released a fascinating report on Chinese investment in Africa that shows who is likely to drive the growth of manufacturing on the continent: Chinese firms. McKinsey estimates that there are more than 10,000 Chinese firms operating in Africa—3.7x more than previously estimated—and nearly one-third of them are in the manufacturing sector (generating ~$60 billion in local revenue, with 12% market share). Says McKinsey:

In sectors such as manufacturing, there are too few African firms with the capital, technology, and skills to invest successfully and too few Western firms with the risk appetite to do so in Africa. Thus the opportunities are reaped by Chinese entrepreneurs who have the skills, capital, and willingness to live in and put their money in unpredictable developing-country settings.

In the Beach Bag

Jul17Books

I don’t know if these are the books I’ll end up reading, but here’s what I’m planning to pack for the beach this year:

  • Business Adventures, by John Brooks
    The “best business book” say Warren Buffett and Bill Gates.
  • Evicted: Poverty and Profit in the American City, by Matthew Desmond
    Most Americans are one accident away from financial ruin: 25% can’t pay their monthly bills in full, and 44% can’t meet a $400 emergency expense. Desmond’s book looks at the precarious state of Americans’ living situations. In Milwaukee, for example, “a city of fewer than 105,000 renter households, landlords evict roughly 16,000 adults and children each year.”
  • The Devils of Loudun, by Aldous Huxley
    I quite enjoyed Huxley’s Grey Eminence, which chronicled the life of Father Joseph—advisor to Cardinal Richelieu and advocate of policies that led to the Thirty Years’ War—so I thought I’d return to the trough for his take on mass hysteria and witch hunts in 17th-Century France.
  • The Demon in Democracy: Totalitarian Temptations in Free Societies, by Ryszard Legutko
    A Polish freedom fighter contemplates the similarities between liberal democracy and communism.
  • Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, by Carlota Perez
    A recommendation from Marc Andreessen.
  • The Thirty Years War, by C.V. Wedgwood
    With talk of the Westphalian system’s decline, why not read Dame Wedgwood’s classic for a refresher on the madness that led to the peace?
  • Musashi, by Eiji Yoshikawa
    A novel chronicling the life of the infamous samurai, and teacher of bushido, Miyamoto Musashi.

From the Bookshelf

I have given up newspapers in exchange for Tacitus and Thucydides, for Newton and Euclid; and I find myself much the happier.

— Thomas Jefferson, letter to John Adams, 21 January 1812 (Monticello, Virginia).

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The information presented in this newsletter is for informational purposes only. Portico Advisers does not undertake to update this material and the opinions and conclusions contained herein may change without notice. Portico Advisers does not make any warranty that the information in this newsletter is error-free, omission-free, complete, accurate, or reliable. Nothing contained in this newsletter should be construed as legal, tax, securities, or investment advice.

Copyright © by Portico Advisers, LLC 2017, all rights reserved.