FORTUNE -- Now would very likely be a horrible time to start a venture capital firm. After a lost decade, that sector finally has had some decent years, valuations are astronomical, and the smart money is getting out, not in. It would be a similarly complicated time to challenge the giants of private equity, which are slapping together the types of gargantuan deals that only the biggest and best-financed can handle.
But what if your background were in big, beaten-down technology companies, and your investment thesis called for finding under-the-radar, mid-sized technology companies that are somewhat stalled or otherwise in need of a financial shot in the arm? Then you'd be the new tech-investing arm of Centerview Capital, an addition to the private equity firm built around former Gillette CEO Jim Kilts.
Centerview rose to prominence for its investments in consumer companies like Del Monte (where Kilts is chairman) and Nielsen. Its sister organization, Centerview Partners, is a boutique investment-advisory firm that has represented the likes of Heinz (in its sale to 3G Capital and Berkshire Hathaway), Dell (in its sale to Silver Lake Partners) and Onyx Pharmaceuticals (in its sale to Amgen), billion-dollar-plus deals all.
Its entry into technology comes at what looks like a decent time. Big- and old-tech stalwarts like Microsoft, Cisco, Oracle and HP all trade for tiny multiples to their earnings, at least compared with the overall market and particularly with social-media growth engines like Twitter, Facebook, and LinkedIn. The new partners of Centerview's $500-million tech fund are Ned Hooper, 45, and Sandhya Venkatachalam, 38, both former business-development and strategy executives at Cisco, and David Dorman, 59, a former CEO of AT&T and chairman of Motorola. (I first met Dorman when he was CEO of bubble-era flameout PointCast, a tremendous cautionary tale from yesteryear that Dorman omits from his Centerview bio.)
The group just recently completed raising its fund, which Fortune's Dan Primack wrote about in June, before the partners began to talk publicly about their plans. It already has made one investment, Hooper says: a company in its target size of companies with between $25 million and $100 million in revenue, and more likely than not privately held. (Hooper says Centerview plans to announce the investment in January, a more advantageous time for publicity for the company in which it has invested.) Investments like these typically would require equity checks in the neighborhood of $60 million to $80 million for control of the company or $20 million to $40 for a stake in it, meaning Centerview's capital should last a handful of years at its targeted pace of three to four deals a year.
To normal businesspeople, private companies with revenues of nearly $100 million would be big. But the name-brand private equity industry calls this the "mid-market," a euphemism for small. (A total digression: Read Jesse Eisinger's screed lamenting that we think of finance as an industry at all, rather than as the useful intermediary between savers and companies that it was intended to be.) Centerview's competition in this end of the market includes firms like Silver Lake's Sumeru fund, Thoma Bravo, Technology Crossover Ventures, and Vista Equity Partners.
The knock on mid-market technology investing is that the types of companies in which Centerview either will invest or buy outright will never have the type of rapid growth of a Facebook or even a Skype, where Venkatachalam worked with ex-Cisco colleague Tony Bates. (Bates frequently is mentioned as a contender for the CEO job at Microsoft, which bought Skype and where Bates still works.) The reverse of that argument is that the savvy investor can make steadier returns in such companies, which are less volatile and potentially less susceptible to technology risk.
The mid-market also is predicated on a slow- or even no-growth economy, and it prospers in an environment where capital is scarce -- a scenario that is becoming more likely as time goes by. What's more, companies that sell technology to businesses stand to benefit when chief information officers need to make do with less. "Our thesis," Hooper says, "is around companies that improve productivity and competitiveness."
Centerview's thesis also is about timing. So far, it appears to be good.
Fortune profiles investors who have done just that
FORTUNE -- Given that Apple (AAPL) suffered its worst trading day in four years Wednesday -- losing nearly $35 billion in market value by the closing bell -- this might seem an odd time for Fortune to run a profile of investors like Terry and Jeanne Gregory (pictured at right) who have put almost their entire life savings -- about $2.5 million -- into MOREPhilip Elmer-DeWitt - Dec 6, 2012 11:54 AM ET
The weeks before the numbers are released are critical
FORTUNE -- No matter how the market may squeeze Apple (AAPL) in the up and down of daily trading -- its forward P/E ratio as of Monday's close had been compressed to 10.53 -- the stock tends to seek its own level by the time the company issues its quarterly earnings reports.
Which makes the charts posted over the weekend by aapltrader99's Randy MOREPhilip Elmer-DeWitt - Jun 26, 2012 7:07 AM ET
Three Silicon Valley insiders created an investment fund to solve the ultimate tech-boom problem: owning too much startup stock.
FORTUNE -- In 2010, after three years as a communications manager at Facebook, Kathy Chan left. The 28-year-old's Facebook shares were the equivalent of a winning lottery ticket -- the company's valuation in private markets had already soared to $23 billion, but it was still a few years from its IPO. To MOREJessi Hempel, writer - May 17, 2012 5:00 AM ET
Like the tortoise in Achilles' footrace, they may be perpetually unreachable goals
"There's scant evidence that the stock market itself has paid much if any attention to analysts' price targets in recent years," writes Needham's Charlie Wolf in a note to clients Thursday that raises his own Apple (AAPL) target $80 to $620.
He's got a point. the average target among the two-dozen analysts we sampled on October 19, the day after Apple's MOREPhilip Elmer-DeWitt - Feb 9, 2012 9:14 AM ET
Breaks through previous intraday record of $427.75 set last week
UPDATE: Apple closed Wednesday up $4.41 (1.04%), to hit a new all-time high of $429.11. At one point in afternoon training it hit $429.47.
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Apple (AAPL) quickly set a new intraday high Wednesday and kept climbing in early morning trading, although it's not clear why.
It could be that investors are moving into the stock ahead of next week's quarterly earnings MOREPhilip Elmer-DeWitt - Jan 18, 2012 10:08 AM ET
Buying puts or calls just before the numbers come out is a fool's game
Apple (AAPL) is a company that tends to surprise Wall Street every time it reports its quarterly earnings, usually on the upside, occasionally on the down.
As a result, the stock often makes big moves the next day -- sometimes as much as 5% and 6%.
Given the power of stock options to leverage your investment dollars, you might MOREPhilip Elmer-DeWitt - Jan 15, 2012 8:12 AM ET
Strike prices range from $335 to $400 as traders scramble to deal with a market in free fall
A hedge-fund trader hoping to make some quick money in Apple (AAPL) weekly options would be hard-pressed to make sense of the chart at right, a snapshot of thinkorswim.com's AAPL options board taken at 10:30 a.m. Monday morning.
The bottom two graphs show open interest in Apple weekly calls (left) and puts (right) as of MOREPhilip Elmer-DeWitt - Aug 8, 2011 11:35 AM ET
After a five months of jagged ups and downs, AAPL overtakes a record set on Feb. 16, 2011
Investors who stuck with Apple (AAPL) through thick and thin this year got their earthly reward Friday.
With only two trading days left before what's expected to be yet another boffo earnings report, the stock broke out of its Max Pain trading range and set a new all-time record.
After hitting an intraday high of MOREPhilip Elmer-DeWitt - Jul 15, 2011 4:07 PM ET
Take away the crash of 2008, and you can see Apple's share price go up $100 every year
Terry Gregory, who collects what he calls "useful stats" at AAPLInvestors.net, has created the chart at right that shows the year-over-year percentage increases in Apple's (AAPL) share price every month for the past five and half years, starting with January 2006.
Investors troubled by the stock's lackluster performance in the winter and spring of MOREPhilip Elmer-DeWitt - Jul 10, 2011 6:19 AM ET
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