Wes Edens’ Obama Waterfall
To review: Fortress Investment Group’s IPO, on Feb. 9 2007, was priced at $18.50, opened at $35 and traded as high as $37 that day. But in case the last $2.06 (at Friday’s close, after the stock traded at a new all-time low of $1.80 intraday) evaporates, Wes Edens & His Merry Men know where the blame lies: a the feet of an administration that doesn’t take office for another 54 days.
If legislation were to be enacted by the US Congress to treat carried interest as ordinary income rather than as capital gain for US federal income tax purposes, such legislation would materially increase the amount of taxes that we and possibly our equityholders are required to pay, thereby reducing the value of our common units and adversely affecting our ability to recruit, retain and motivate our current and future professionals. Senator Barack Obama, the President-Elect, has publicly stated that he supports similar changes to the tax code.
Nothing to do with, say, threatened hedge fund redemptions, or over-paying for ski resorts and dodgy train tracks. Glad we got that clear.
by Michelle Leder
Footnoted Nov. 19 2008
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