Professor Polk: 'Evil Persists'

Here are some notes from CapitalSource's Bill Polk's talk at the Barnes Buchanan Conference. Professor Polk gave an informative and amusing lecture on the state of the debt markets. (He's not actually a professor to my knowledge, he just seems like one.) He provided nice historical perspective on the "immense volatility" in the markets today and some scary details about being in the "midst of unprecedented challenges to the global financial markets." Times are tough and the price of debt is going up, but (like Mike Barnes and others) he called his message "relatively positive for the security industry." In perhaps the most repeated phrase of the conference, Polk said security's not a bad place to be because "Evil persists and the capital markets know it." Debt may be getting more expensive for security companies, but "let me assure you that there are industries out there that don't have a prayer of raising a dime of debt." "Expect to see more club deals," he said. "More lenders working together to structure deals to diversify risk." Adding to something Henry Edmonds talked to me about before the conference, (Edmonds is CEO of The Edmonds Group in St. Louis and a former business partner and business school buddy of Polk's) Polk said the "distressed transaction market will open up." In some instances the deals will come up not because the operating company itself is in trouble, but because the "hedge fund investor is in trouble." (Here's the story I wrote from my conversation with Henry.) And, repeating something I've heard Polk say before, "a great CFO is a great investment," especially now. He advised alarm companies to "go out and get a great guy or girl and treat them well."