Bono Yelps: Rock Star Investing In A Troubled Economy

Interference.com is pleased to welcome back its hot new humorist and U2 commentator Jaime Rodriguez with this fascinating (and occasionally amusing or possibly infuriating) piece examining Mr. Hewson’s economic adventures.

Well, here we are in February, and everyone is still worried about the economy. Even President Obama announced spending freezes last week as a way to stimulate the economy.  To be honest, I’m not quite sure how it’s going. I was feeling rather stimulated for a moment, but then I realized it was the Mojitos. I suppose I shouldn’t write articles right after breakfast.

Anyway, the economy remains—how can we put this delicately—in hell.  Everywhere you look, people are walking around depressed, angry and paranoid.  And those are the ones who still have their jobs.

Bono, on the other hand is probably not feeling the worst recession since the 1930´s.

The 360 Tour breaks attendance records everywhere it goes. While football stadiums are completely packed, U2 won virtually no music awards this year, so even less money has been spent on traveling to award shows—and perhaps even on fancy beanie hats for The Edge. Yet, Manager Paul McGuiness claims the tour is still losing money.

I don’t know who advised U2 that this was the right time to build a multi-million dollar stage that looks like my Grandfather’s toupee, but from the looks of it, someone needs to stop the band from filing their taxes using one a piece of software like ¨Turbo-Tax.¨ Bono and the boys need to go old-fashioned and use one of those Certified Public Accountants.  The kind of accountants who reminds you – in between smoke rings – that it was income tax evasion that ultimately brought down Al Capone—and Wesley Snipes

So with all this economic hardship, this begs another question. How are Bono´s extra-curricular businesses going? We are not talking about U2 Inc, but rather all those investments Mr. Hewson likes to do, more specifically with his investment group: Elevation Partners. Sure, Bono is a gifted songwriter and musician. Without him and his artistic talents we wouldn’t have “One,” “With or Without You,” or his unreleased duet with Sara Palin: “I Never Met a Moose I Didn’t Kill.”

So is Bono a good investor? Have his extracurricular financial dealings paid off? Let’s take a look at the investments Elevation Partners have done over the years and see what type of financial results they’ve returned.

First off, what is Elevation Partners? Well, according to its website, Elevation Partners is a: ¨private equity firm that makes large-scale investments in market-leading media, entertainment, and consumer-related businesses.¨ The founder of course is Mr. Hewson himself.

The portfolio of investments made by the firm include: Move, Forbes, and Palm among others. Keep in mind as you are reading this, some of these investments might have been done with a long term view of positive results, so don’t jump to conclusions too harshly. Also, the firm just bought Yelp.com, a website that connects people with local businesses. We still can’t obviously judge if this was a good investment for Elevation Partners, but what we do know is that Bono put up $25 million hoping that the review site grows into an Internet powerhouse.

Let’s take a closer look at the investments Elevation Partner have done.

Palm:

We know Palm as one the industry leaders in mobile devices that allow users to share information anywhere. It was one of the original Smartphones, way before Blackberry and iPhone they were the toys of working professionals everywhere.

In October 2007 Elevation Partners invested $460 Million in Palm to own a 30% stake in the company.  At the time, the price per stock was $15.57. In late 2008, the brand almost disappeared when its stock reached an all time low of $1.54! Fortunately, thanks to some savvy marketing and important merges, the stock recovered and today costs $11.29 per unit.

Verdict: LOSS. Stock has lost $4.28 value per unit since Elevation Acquired it.

Move:

Move (formerly known as Homestore, Inc) is a real estate website that gives consumers real estate content, tools, and support among others.

In November 2005, Elevation Partners poured $100 Million into the site with the hopes it would become the next big internet thing. At the time the price per stock of Move was $4.65. With a horrid real estate market and bubble that was the catalyst for this recession, the price per stock of Move today is $1.73.

Verdict: LOSS. Stock has lost $2.92 value per unit since Elevation acquired it.

Forbes:

Forbes is the publisher of Forbes magazine, Forbes.com, and other media properties.  In August of 2006, the company announced that Bono´s Elevation Partners would buy a minority stake in the company. The percentage known by Elevation Partners is unknown.

This is one big ¨Ouch¨ for Bono as an investor. It is no secret that with the free flow of news and information, media companies have been struggling mightily. Forbes has no dodged the bullet. When Bono became a minority owner, the price per stock was at $18.40. Today? A hollow $0.37 cents per share.

Verdict: LOSS. Stock is at a low-point and speculation in wall –street is that Elevation partners want to sell its share.

SDI MEDIA:

SDMI Media Group is the leading localization services provider for media and entertainment companies. SDI provides foreign language subtitling and dubbing services for theatrical, home entertainments, broadcast and new media content providers throughout the world.

In August 2007, Elevation Partners acquired full ownership of SDI Media Group.

Verdict: WIN. Stock was bought at $25 and now it trades slightly over $28.

So that is a cursory analysis of the business deals by Bono´s firm. Being such a wealthy investor probably contributes to the criticism Bono has received plenty of over the years. Those who don´t like the man will attack and dismiss for everything from being a hypocrite on Africa to dodging taxes in Ireland to being egocentric to even faking his humanitarian pose. The economic phenomenon that is Elevation Partners will only enhance their arguments.

But before we start saying Bono is a horrible businessman, let’s not forget that consumers made The Snuggie one of the hottest selling items of last year. And don’t even get me started on Crocs and America´s addiction to Fanny Packs. Also, the man is one of history´s best songwriters, and that is ultimately what we should care about.

At the end of the day, of course, we are only human.   And I myself am a little embarrassed that – even though it’s not arrived yet – I’ve already spent $150 on that Suzanne Summers Thighmaster  I saw on that Infomercials last night.  I know that’s unwise.  But the fact of the matter is that I was running low on basic household necessities.  I mean, cut me some slack, my panic room wasn’t going to fill itself up with cream cheese frosting and Kahlua, now was it?

–Jaime Rodriguez, Contributing Writer

Follow Jaime on Twitter.com/jaimearodriguez