TPG: Dear Investors, We Just Made Worst Investment In History

Private equity firm TPG may have just made the worst professional investment in history: Just last spring, the firm dumped $1.35 billion into WaMu (WM) at $8.75 a share. Six months later, it’s gone.

Has TPG owned up to the real reason it vaporized this cash? Not yet–at least not publicly:

“Obviously, we are dissatisfied with the loss to our partners from our investment in Washington Mutual,” a TPG spokesman [told the Wall Street Journal]. “The unprecedented turmoil in global financial markets and resulting macro crisis of confidence has radically changed the dynamics for all financial institutions, and led to widespread losses among investors throughout the sector.”

Get that? It wasn’t TPG’s fault–it was that “unprecedented turmoil in global financial markets and resulting macro crisis of confidence.” Also, others are losing their shirts, too, so don’t blame us.


Here’s what TPG should be saying:

We analysed the WaMu deal in detail last spring before investing your capital. We concluded that the concerns about the financial crisis and WaMu were overblown and that the WaMu opportunity provided a good risk/reward profile. In hindsight, our analysis was dead wrong. We take full responsibility for your losses, and we are deeply sorry.

What’s the chance you’ll hear TPG say something like that? Put it this way: We wouldn’t bet on it.

See Also: Sic Transit WaMu


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