The Ledger, every show

“He said, in aggregate, buyout investments failed to match public market alternatives. After adjusting for the higher level of risk and the greater degree of illiquidity in buyout transactions, publicly traded equity securities gain a clear advantage.”

“Over reasonably long periods of time, aggregate venture returns more or less match marketable equity returns, indicating the providers of capital fail to receive compensation for the substantial risk inherent in startup investing.”

“I continue to think this takes several years. Maybe it's two, three, four years away. It's a question of how long does it take for that bid-ask spread to narrow?”

“I do not think there's going to be some calamity. The structure that the asset managers are using is just much better than what the banks used to use. You know, borrow short, lend long. So these are very long dated structures, which is great. You can work thro…”

“Where I think there is a challenge is when all this money comes in, the one thing it does for sure is compress spreads. I don't think the people buying in the wealth channel have the right understanding of what returns they should expect. There was a pocket of…”

“The biggest impact of that over the next couple of years is that when private markets unlock for liquidity, the first wave of that money from the institutional market is going to go back to the public markets. It's not going to get recycled in the private mark…”

“I think that's most of what the wealth channel today is going to get. Median, maybe median plus. Maybe you can get to top quartile with some of these funds, but at 20, twenty-five billion dollar private equity funds, it's hard to do that”

“Every industry as it matures gets concentrated into winners, and then some losers, and then specialists that have a place but are smaller. Saw that in hedge funds, and you're going to see it in private equity. There's going to be a shakeout of what's called th…”

“I'd be very surprised if you don't see one of the larger private equity players try to grow through acquiring teams. They are long capital and short origination or dealmaking capability relative to the capital they could command. So it does make sense that if …”

“The TRS data implies that one of Yale's lucky fellows will graduate to its core portfolio every three cohorts. In other words, 14 of 15 won't make it.”

“Almost every instance of a hedge fund lasting beyond its first generation has followed a business strategy that expanded beyond the manager's initial product offering.”

“Fresh money opportunities in private debt are really interesting, because rates have gone up, and there's a dearth of capital, particularly in the middle market. The problem with that is that the economy can't sustain itself on loans at 15%. It just won't work…”

“I don't think the remuneration for that in the future will be anything like it has been over the last 20 years.”

“I've already seen presentations from lenders offering NAV loans for up to 50% of a private equity portfolio value.”

“No matter how you look at it, NAV loans are a late-cycle response to the higher cost of debt and slowing fund flows that will bring uncompensated risk to LPs.”

“I think that it's probably fifty-fifty if you had a good hedge fund portfolio versus the market for the next 10 years, but I would never make what I thought was a fifty-fifty bet in public with Warren Buffett.”

“The best guys in the world are in this business are right about 55% of the time. Barely over, like, you flip a coin, you're fifty-fifty. Barely better than that, and those are the guys who eventually become billionaires.”

“So I think what you're likely to see is 10 years from now, there'll be an active management fee on the long side. And the hedge funds that are charging a 20% incentive fee, they're really going to be charging a fee on what's truly value added.”

“Middle market's been better than large. Small has been better than middle market. Median has outperformed the S&P. Bottom quartile, definitely not. Top quartile by a lot.”

“I've asked at every AGM I've spoken to this year, please raise your hand if you think your private equity portfolio is median or below. And there isn't a single hand that's ever gone up. Everyone playing is playing for the top quartile.”

“So what's happened is a lot of the institutional allocation portfolios who never used to invest in growth equity, their most successful venture investments have created a very meaningful bucket of growth equity that they can't exit.”

“So I will say whether it's next year or the year after the year after, I would be shocked if there isn't a significant compression. Maybe starts with the valuations of private AI companies and significant down rounds, and maybe that has downstream effects beca…”

“I think people will be talking about public markets and the potential for outperformance from active managers because you're teed up pretty well to have a good period of time for active managers.”

“It'll be a long time, unless you're a quant manager, before the ultimate decision gets made by an LLM.”

“Earlier this year, I had Ed Grefenstedt, who's the CIO of the Dietrich Foundation. And I'll just tell you one thing, then you'll say, wait, that's possible. 90% in privates, like half of that's in venture, like as much as 20 or 30% in China.”

“According to Arctos Partners, the six largest private banking and wire house platforms committed a hundred and ten billion dollars to funds last year. Approximately twice the amount invested from the six largest institutional investors in North America.”

“Yale will be deluged by inbound interest, most of which will be of lesser quality than Yale has reviewed historically.”

“Spinouts of top investment managers may find Yale an attractive partner, especially knowing that Yale does not ask for economics in the newly formed business.”

“As many of the fellowship managers return to the market and struggle without Yale's backing, Yale may find it more difficult to be seen as an emerging manager allocator of choice.”

“So he picked the Vanguard S&P, 500 index fund. We picked five fund of funds for 10 years for a million dollars for charity. The bet started in January one of 2008.”

“In a recently publicized NAV loan transaction, Vista Equity Partners took a one billion dollar NAV loan to complete a five billion dollar refinancing for portfolio company Finastra.”

“Carlyle, HG Capital, and SoftBank reportedly used NAV loans to distribute capital this year.”

“Average downloads for sponsored episodes exceeded average downloads of non-sponsored episodes, confirming our belief that a good conversation would not suffer audience dilution solely because of sponsorship.”

“I do think that it's likely that the new wave of technology innovation is happening on blockchains. The applications that we're using every day, the most powerful ones, 20 years from now may well come out of this web three ecosystem. But I think that's a decad…”

“The first section is called toolkit and it's five tools interviewing decision-making or two of the five, the other three are negotiations, leadership and management. These are all things that CIOs and investment professionals need to be effective in their jobs…”

“I think there's a research study this past year that showed that generally speaking, active managers are quite good at buying securities. They're just really lousy at selling them.”

“Unfortunately, the vast majority of new funds will lack the resources to be on the cutting edge.”

“When Warren looks at this, he's looking at the entire universe of active managers, and saying that if you take all these people together, and they charge fees, together they make the market, you charge fees, and you're going to lose. And he's absolutely right.”

“There's going to be a rollover in technology at some point in time. And there was earlier in my career, you know, in 2000, and that that's likely to happen, at least in the valuation of companies and the access of capital to companies, which will cause some of…”

“And even if you look at the academic data that consistently maligns hedge funds, what you find is that for whatever reason, this universe of hedge funds on a gross basis adds value. And far more value than the traditional long only does on a manager by manager…”

“Even Chanos had a dedicated short selling business in the early nineties that really failed once or twice.”

“There is something to the structure of what Yale did and the discipline that has been proven that David has been able to teach other people. It could Seth Alexander, who I worked with, and Paul Valente at Bowdoin, and Andy Golden at Princeton, and Peter Ammon …”

“From 1994 to 1999, that five year period, Yale's U.S. Equity managers that they hired underperformed the market by 40 percentage points cumulatively. Eight percent per year for five years. Not a single manager was fired.”

“For all intents and purposes, it is, because it'd be very difficult for, unless there's a market crash, for the hedge funds to come back”

“I just think that we have a trend. That's happened now with passive investing, and particularly the S&P 500, that is setting people, those people up for disappointment in the same way that it did 10 years ago.”

“If you measured these fund-to-funds against the Morgan Stanley World Index, which is not the right index because it's a hundred percent invested, it's almost a tie. International stocks, so everything but the US, are actually down over this nine-year period.”

“In terms of allocation to great managers on the early stage side of venture, that is still highly sought after, and allocations haven't changed at all.”

“I could look back at my time at Yale and say, boy, investing in hedge funds was so easy. You could invest in a diversified group of mergers, doing merger arbitrage, and make 14% net with very little risk.”