"Investors Yawned"

Fortune's Adam Lashinsky has a great article about how Rich Kinder made a boat load of money taking his company, Kinder Morgan, Inc., private.

One of the hottest questions in investing circles is the role of private equity. In my mind one of the biggest things private equity has in its favor is that ownership by a single entity, or small group of entities, removes a big part of the "agency" issue. Most public companies are run by management teams answering to weak boards with little interest in the company and primarily owned by institutional investors who manage money for the actual owners of the company. Most funds take little interest in the actual management of the company and typically outsource most voting decisions, primarily to a company called ISS. In other words, there are typically three layers of "agent" in between the investor and the company, private equity only deals with one level of "agent."

On excerpt from Lashshinsky's article that highlights this problem:

"In February, Kinder had personally informed investors that a planned megaproject, the $4.4 billion Rockies Express pipeline under construction in Colorado and Wyoming, was fully booked for customers. That meant the Kinder Morgan empire was virtually assured of fat profits from the project. Still, investors yawned, and the weak response was all an aggressive investment banker needed to set the buyout wheels in motion."

It is probably accurate to substitute "Wall Street Analysts and Big Mutual Funds" every time "investor" shows up in that sentence. Also, you could add "Private Equity (and Rich Kinder) ate the lunch of the index hugging funds that couldn't or wouldn't buy Kinder Morgan stock." at the end.