Private Equity Guru Jonathan Lavine Breaks Down Today’s Hot Topics

Private Equity Guru Jonathan Lavine Breaks Down Today’s Hot Topics
  • Bain Capital's Jonathan Lavine said it is unclear what impact the Coronavirus can have on markets.
  • The U.S. economy should be placed in the "good, not great" category.
  • Lavine also said ESG is "part and parcel with good business."

Jonathan Lavine is a co-managing partner of Bain Capital and serves as the firm’s chief investment officer. On Tuesday he spoke with Bloomberg’s Guy Johnson to offer his take on some of today’s more pressing and hot topics.

Coronavirus Concerns

No conversation on the market direction is complete without discussing the Coronavirus. It is difficult to quantify the exact risk the virus has on markets because no one really understands what it is and how bad it can get, Lavine said in the interview. So far, the world has been “very proactive” in attempting to contain the virus.

If history repeats itself, the world can “move on” from the Coronavirus, similar to the SARS outbreak in the early 2000s, he said. Needless to say, a near-term impact can’t be avoided and the psychological impact also can’t go ignored.

Iowa Caucus

Monday’s Iowa caucus the official start to the 2020 U.S. Presidential election. But the process got off to a poor start and by Tuesday afternoon the results have yet to be made public. The blunder is “clearly not a positive” and creates additional uncertainty to the political landscape, according to Lavine.

There are some Democrat candidates that are viewed by market participants with less comfort, he said. But it is still early in the process but investors should keep watching for developments.

Bull Cycle Has Legs

The U.S. economy could, in theory, enter the very late into the bull cycle and it is also possible there are 10 years remaining, he said. It is very difficult, if not impossible to put a timeline on any economic cycle.

At present time, the economic environment looks to be “pretty stable” and should be included in the “good, not great” category, just by default of being more than a decade into a cycle. An economic cycle in its later-years tends to be more “fragile” it can get.

“The question is: what is going to be the exogenous event that tips that over,” he said. “Is it going to be the Coronavirus? Is it going to be something that happens in the election?”

Importance Of ESG

Lavine said that making good conscious decisions consistent with the ESG principle (Environmental, Social and Governance) is “part and parcel with good business.” Over time companies will become better at defining what impact it wants to have in its philosophy.

Perhaps more importantly, companies will become more vocal in advertising a measurable impact on their goals. This won’t be done in terms of a cost-benefit, but in terms of actual impacts. For example, Bain Capital’s decision to ban plastic bottles in its offices is a small gesture but also one which eliminated an estimated 2 million plastic bottles that could have ended up going to waste.

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.
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