April 23, 2024

Lessons from the year’s top finance books

Warren Buffett, so the legend goes, reads some 500 pages a day. While you might not make it quite that far over the festive break, we hope you get a bit of time to catch up on your favourite titles. Here, Financial News runs through some of the best books we’ve read this year.

Isn’t private equity law fun? Just ask Skadden, Arps, Slate, Meagher & Flom, designers of some of the most Dickensianly complex buyout structures around. These include KKR’s takeover of Houdaille Industries, once a manufacturing conglomerate, in the first modern leveraged buyout.

“On 5 March, 1978, HH Holdings Inc held a ‘meeting’ at KKR’s office, which was attended by a single person, [KKR co-founder Henry] Kravis, who was its sole director. At this ‘meeting’, Kravis proposed 18 resolutions to himself and approved them by a 1-0 vote.

“Several days later, he did the same with HH Acquisition Corporation, another piece of the transactional puzzle. Later, when an error was discovered in an agreement between Houdaille Associates and HH Holdings, Kravis, in his capacity as the general partner of Houdaille Associates, wrote a letter to himself, in his capacity as the president of HH Holdings, requesting his own consent to amend the agreement.”

Such nuggets add some entertaining colour to Texas A&M Law School professor and former Sullivan & Cromwell lawyer William Magnuson’s romp through the first 2000-year history of corporations, For Profit. Come for the standout chapter on KKR, aptly titled ‘The Raider’, stay for the histories of the Medici Bank, Ford, Facebook and more.

Can’t We Just Print More Money? By Rupal Patel and Jack Meaning

Sometimes, finance isn’t really that complex. That’s the message as two Bank of England staffers try to explain some of the world’s biggest economic concepts through 10 simple questions.

The metaphors are playful. The Bank of England’s canteen used to charge a single price for chips, for example, leading to food waste — that’s the tragedy of the commons and negative externalities that lead to climate change. Threadneedle Street’s best triathlete clocks in at 2 hours 11 minutes, but still not as fast as specialists in each discipline — that’s competitive advantage.

There aren’t just lessons for personal finance here, but for high finance too, because the basic economic questions posed shine a light of most of the biggest debates in the City this year too.

Why does the UK still dominate some areas of finance despite Brexit? Well, “because we are good at it”.

Do banks’ crypto plays count as real money? Well, no, if you go back to first principles.

Will banks ever update their archaic settlement structures? Well, the current setup “is slightly more technically advanced than typing some extra zeroes into an Excel document, but not by much”.

Who Owns England? By Guy Shrubsole

In a low-rate world, it was hardly surprising that investors turned their attention to assets with a bit more yield. As our friends at the likes of Blackstone can attest, most property bets haven’t exactly turned out badly.

Writer and campaigner Guy Shrubsole does a good job of finding out just how much land institutional investors and corporations do in fact own in Who Owns England? Turns out, that figure is something like 18% of England and Wales, some 6.6 million acres. The likes of Zurich and various private investment funds make the list.

Food for thought as we all await central banks’ next steps.

To contact the author of this story with feedback or news, email Justin Cash

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