A reader asks:
You guys have recently quoted Slock in two podcast episodes that Private Equity Companies, those with over 100 million dollars in revenue make up 87 percent of that category versus only 13 percent of publicly traded company fall into the 100 million in revenue category, and that number is only increasing.
With that said, is this ONE of the reasons stock prices seem to continuously increase. As private equity companies continue to increase in number, there are less publicly traded companies therefore there is more money chasing the ever decreasing number of public companies?
Here’s that stat from Apollo’s Torsten Slok:
The Atlantic shared some data about the dwindling number of publicly traded stocks along with the corresponding growth in private equity investments:
The publicly traded company is disappearing. In 1996, about 8,000 firms were listed in the U.S. stock market. Since then, the national economy has grown by nearly $20 trillion. The population has increased by 70 million people. And yet, today, the number of American public companies stands at fewer than 4,000. How can that be?
One answer is that the private-equity industry is devouring them.
In 2000, private-equity firms managed about 4 percent of total U.S. corporate equity. By 2021, that number was closer to 20 percent. In other words, private equity has been growing nearly five times faster than the U.S. economy as a whole.
Private equity managed less than $1 billion in the mid-1970s. Today it’s more than $4 trillion. There is more than $2.5 trillion in dry powder alone globally:
Private equity is a big part of the U.S. and global economy now.
Here’s a look at the shrinking number of public stocks in the U.S. via Barron’s:
We’ve gone from more than 7,000 stocks in the
