PRIVATE EQUITY COMPENSATION: Carried Interest [Pros and Cons]

Posted on April 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

DEFINITION

By Staff Reporters

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Carried interest accounts for the bulk of private equity fund managers’ compensation. It is calculated as a share of fund profits, historically 20% above a threshold rate of return for limited partners.

In contrast with most other forms of employment compensation and business income, carried interest earned from fund investments held for at least three years is taxed as a long-term capital gain at a rate below the top marginal income tax rate.

Critics of the provision contend it taxes highly compensated private equity managers at a lower rate than comparably paid providers of labor or business services.

Defenders of carried interest argue taxing it as income would be unfair because it represents capital gains even if they’re not derived from recipients’ capital.

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UNITEDHEALTH: Stock Dives

Posted on April 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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UnitedHealth stock nosedived 20% in morning trading, falling by $116 per share from Wednesday’s $585 close to $469. The Minnesota-based firm is on track for its steepest daily loss since Aug. 6, 1998.

The losses came after UnitedHealth’s first-quarter financial report was worse than analysts expected across each of the three major quarterly yardsticks: revenue, earnings per share and future earnings outlook.

Furthermore, after the opening bell, the Dow Jones Industrial Average tumbled 1.3%, or around 500 points. The S&P 500 moved up 0.4%, while the tech-heavy NASDAQ composite gained 0.5%.

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Very Few Stocks UP but Many Stocks DOWN

Posted on April 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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🟢 What’s up

  • Hertz Global soared 56.44% on the news that Bill Ackman’s Pershing Square Capital has taken a $46.5 million stake in the rental car company.
  • Travelers Cos. rose 1.13% in spite of massive losses from California wildfires, which didn’t hurt the insurer’s bottom line as badly as Wall Street feared.
  • Abbott Laboratories gained 2.77% after the pharma company missed sales estimates but still beat earnings forecasts.
  • Gold miners continue to climb as gold keeps hitting new highs. Newmont rose 2.51%, while Gold Fields gained 3.35%.

What’s down

  • Tesla sank 4.94% after the company’s share of EV sales in California fell below 50% in the first quarter, while export controls threaten plans to produce Cybercabs in the US.
  • United Airlines fell 0.01% despite reporting its “best first-quarter financial results in five years,” according to management. The airline took the unique measure of providing two different financial outlooks for the year ahead: one for a stable economy, and one for a recession.
  • Lyft shed just 0.46% on the news that the ride-hailing company is acquiring European taxi app Free Now for $199 million.
  • Interactive Brokers Group reported a 47% increase in trading volume last quarter that helped it beat revenue expectations, but the brokerage still tumbled 8.95% after missing profit forecasts.
  • Palantir gave up some of its recent gains following its big NATO announcement, sinking 5.78% today as investors collected profits.
  • JB Hunt Transport Services’ management team warned that the logistics company sits squarely in the crosshairs of the trade war, pushing shares down 7.68%.
  • Omnicom Group tumbled 7.28% after the advertising firm missed revenue estimates thanks to economic uncertainty.

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