Super Cities №269—How One Giant Investor Describes WeWork

Brendan Hart

T Rowe Price is a giant investor. Headquartered in Charm City, TROW's assets are about $1.2 trillion.

They used some of those assets to back the now-neutered WeWork. The investor describes the history of that investment:

In 2014, we made a small private investment in this upstart provider of amenity-rich office space that, unfortunately, has since caused us outsized headaches and disappointments ... Massive losses soon followed, but the CEO promised profitability was just over the horizon ... In 2017 and again in 2019, we sold stock in tenders totaling about 16% of our shares and 50% of our initial investment.

The disgust oozes off the page, doesn't it? I love it.

But TROW was not done. It had more to say about why WeWork was such a mistaken destination for capital.

While it’s possible that WeWork’s new management will improve operations somewhat, we are ready to declare this a terrible investment ... we believe the WeWork debacle was an error in judgment, not in process.

Whether process or judgment, TRP should have known this investment would not end well.

How?

Perhaps they should have taken notice when WeWork responded to one of its many controversies by declaring it would develop “an innovative, software-driven mechanism to help manage the provision of alcohol in our spaces.”

Sane people – good investments – do not butcher language so indiscriminately.

Perhaps investors should start listening to Teddy Roosevelt.

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