Thursday, February 28, 2013

Two Paths to Satisfaction

Yesterday, I read a post at about "Will Infrastructure Ever Find Wings?"

This got me thinking that Infrastructure is a perfect "proving ground" for pensions and other stewardship investors to develop the skills and judgment they will need to empower themselves to become investors in cash flows, directly.

Instead of looking at Infrastructure as an Asset Class that can provide the returns they are looking for (it can't because it is not large enough to meet their needs), consider it a transitional phase to cash flow based investing in the Real Economy.  That will provide the "tonnage" -- the sheer volume of investments -- they need to get some satisfaction built into their investment activities, both financially and societally.

The second transition could be a program of "going private and staying private" partnerships with Management of pubic companies, or subsidiaries of public companies, that want to opt out of the game of "maximizing shareholder value" by teaming up with stewardship investors to agree on equity splits in a negotiated base case cash flow waterfall that will provide the right blend of financial goals and societal values to stewardship investors, and a path to ownership earn-back for Management.

Right now, by all accounts, pension funds and other stewardship investors "can't get no satisfaction" from their experiences with "business as usual" trading on price, in none of its many permutations.

This is a two-step process for them to get more satisfaction by investing in cash flows, directly.

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