private markets

“One of the things we did most recently at this February, getting back to your question about the February meeting, we increased our allocation of privates incrementally. So we went from, you know, originally it was five, 15%, then it was at 20% the last severa…”

“We've decided that we can afford to have more illiquidity in the portfolio. So we've slowly pushed that allocation out Toward 25, 30, and maybe even 35% in private markets with a very high focus on managing those cash flows and liquidity.”

“But in the public markets, especially in months like we just had in October, you're able to buy really great long-term outcomes for half off of a multiple you'd be willing to pay for in the private markets.”

“I think Wellington 10 years from now will be more global... I think we will have more alternative skills... I think we will be, in maybe third, we will have more of our assets in privates.”

“It seems like the public markets have become more passive, more of the sort of investing decisions and like providing capital to companies that are growing is occurring in the private markets while the public markets are for mature companies to kind of harvest…”

“If you're going to build a concentrated portfolio of a handful of positions, you can't do quant. It can't be pure quant. The stats don't work. You need to build a pretty diversified portfolio for a pure quant approach to make sense.”

“I think really most of this is really just a wealth transfer of appreciation from the public markets into the private markets, and many of these people have lower costs of capital, right?”

“Now I think private markets are much more expensive than public markets, and you can see this with the venture-backed stuff like WeWork. Private markets say it's worth seventy-five billion. Public markets say it's worthless. You can see it in the deal multiple…”

“Yes, we have a portfolio that Currently is heavily weighted to hedge funds and hedge strategies and private markets.”

“If you are the kind of person to do that, you're the type of person that builds Coinbase, which is, as an example, which is most recently, the values I've seen in the private markets are seventy billion dollars, right?”

“If you're only investing in public companies and not talking to private companies, you're only hearing half the story. If you're talking to them, but not investing in them, they're only telling you half the story. And on occasion, the tip of the spear innovati…”

“I would argue it's less risky than the public markets. Like, if you asked me to put another dollar today, In the public markets or with our private managers, and I love our public managers, but it would definitely be in the private markets.”

“Obviously right now we're experiencing a pretty dramatic correction in the public market where I think the public market companies are much cheaper than what we're seeing done in the private market”

“And so from an asset allocation perspective, we increased our exposure to privates from 25% to 35%.”

“I think the high net worth investor, the wealth channel, will be a huge participant in the private markets, and they should be.”

“I think portfolio construction is at least 50% of return in the private markets.”

“In the public world, in bonds or even in stocks, a basis point matters. 10 basis points, you're like salivating. In the private markets, we're kind of like, ho hum, a hundred basis points here, a hundred basis points there, no big deal, who cares?”

“The nice thing in the private markets right now is you don't have as many critical players in terms of being in a position To take down the economy or threaten the liquidity of the whole financial system. As long as the banks are forced into a more conservativ…”

“The amount of capital in private markets, it's almost 10 trillion dollars in private markets AUM, and two trillion of that is held by VC firms, which is astonishing when you think about those numbers for early stage investments.”

“We're not like the asset management institutions that are going to measure our researchers on their outperformance of names that they pick because it's a long-term measurement cycle, especially with private markets.”

“Don't try to time vintage your allocations to private markets. You can't do it.”

“We went from 10 to 20% in terms of target, 10% in privates to 20%, and they want to do it overnight. You can't. You can't increase it more than one and a half to two percent a year.”

“Some of the best vintage year returns are in years like this, leading up to and during a market correction or a recession.”

“Obviously, they all have to get audited, and it all has to be gap, and you've got to get Houlihan Loki or someone else to sign off on the valuation, but I don't think you're going to see the volatility in private markets. You're just going to see a real slowdo…”

“And then equally, if you look at the size and scale of this industry, 12 odd trillion on its way to 20 trillion across private markets in the next decade, this is an important part of the economy, period.”

“There's nothing automated about it. There's nothing that a supercomputer can replicate. There's no ETF version of private equity or private markets more generally. It's a people business, and therefore you have to understand The traits and DNA of those people,…”

“The fact that illiquidity premium had been completely obliterated as more and more money poured into private markets.”

“The private markets have done what they do, which is they take forever to actually get reality checks. For the most part, the marks have been way slower and way less than I would have expected, even for this stage, given the increase in the cost of capital. So…”

“One of the counterintuitive things in private markets is I have invested a fair amount with emerging managers. Now, the irony is empirically, it says it makes sense. Like on average, even though they have a lot less in the way of assets, they outperform, but i…”

“If you look at the private markets, most of that focus is on the upper end of the middle market. And so you have these incredible businesses, Ted, I mean, 3040, fifty million dollars in revenue, great business plans, great growth potential who have trouble get…”

“So when we look at the market environment today, We definitely see more immediate value within the public segment of the opportunity set. A lot of people that may have left that market or are structurally tilted towards private markets really should think abou…”

“So I think what you're seeing in the private markets is actually what's happening. It's not that the value's Are inflated, or there's a lag factor. They're legitimate valuations, and it's why, by the way, you're in private equity. It just, sorry, it performs b…”

“To me, one of the big challenges has been the relative inexperience of a huge, huge segment of the private markets universe, whether it's at Hamilton Lane, whether it's at our clients, whether it's in the general partner community. When you think about people …”

“We have a saying here that it's very difficult to time private markets, but it's very easy for the markets to time you.”

“The 12 trillion dollar industry is bigger than the GDP of most nations. And I think it's headed to grow further in the next decade, perhaps to 20 trillion or more.”

“Most portfolios, if not all portfolios, including more retail as finance becomes more democratic, will involve some portion of Private markets at some point, whether that's 10%, 30%, leading up to 50%”

“When we're looking at managers, it feels like we're looking for managers with edge at the end of the day, and if you were to broadly say that you have behavioral edge, analytical edge, relationship edge, information edge, and execution edge, all of those exist…”

“And at the moment we're preferring private markets. We think the dislocation is better and, you know, more targeted in private markets, but that's not always the case.”

“So I would say today the risk associated with China investments in general are very reflected in the price premiums in terms of asset valuation or lack of bid for any assets in the private markets, for example.”

“And I think if there is a structural advantage to private markets advantage over public, it tends to be that the lack of liquidity is forcing a good level of behavior that I think is a wonderful thing.”

“So the window in the private markets, which are the next generation of either public equities that you'd like to own or could be competitive threats to the public equities that you already own, that capability has helped widen our aperture and helped Increase …”

“Some of the large investors are geared to certain strategies that incentivize them to write huge tickets irrespective of the market environment. In a way, that's indiscriminate capital deployment, which is really a big no-no in investing.”

“Setting that aside, it increasingly seems to me that something around fifty-fifty feels right, and the reason for that is because of the valuation lag that occurs in private markets.”

“We're actually growing our privates allocation at the moment, and we're happy to Do that.”

“To harvest the illiquidity premium, you have to take on the illiquidity risk. There is no free lunch. So these products, I think, are great. They will give you substantially similar exposures, but that liquidity profile is going to lead to slightly different p…”

“In the public markets, Ted, you pay a premium to put your own management teams in. In the private market, you get a discount.”

“I think the emerging market of marketing has maybe 10 years left, so that's a growthy 10 years, and that's exciting.”

“We've seen crazier prices on both sides by far in the public markets than I think you tend to see in the private markets.”

“And so, as the private market world becomes more and more accepted, we'll probably start to see the excess returns diminish.”

“Over time, Texas teachers, at our height, we were 42% private versus a 35% neutral, or down to about 38% private versus, still versus a 35% neutral now, and it really became tail wagging the dog, because there's more risk in private markets than there is in pu…”

“There's one type of smoothing in that evaluations don't occur as regularly as you do in the public market. The other thing that occurs is everything's lagged as well. So both of those things are going to show you to be more diversified than you actually are.”

“It just seems to me the world has basically gravitated slowly to the efficient market thinking, except for private markets, where arguably there are no markets, and where the real economy is inefficient, and you can take advantage of that.”

“That portable alpha, that's over two hundred million dollars of net value per year for over a decade. 2.25 billion since the inception of the program. Private markets, it's over a billion excess relative to the respective public markets since then.”

“I think we'll do it in the private space. You take all those small boutiques where people really spend their time and can optimize, but then we can scale them Through platforms and vehicles.”

“The only reason clients invest in privates is because you give differentiated returns. They take the illiquidity premium.”

“On the capital side, fundraising has been really hard. You've had this bottleneck in the private markets that's also affected public market fundraising.”

“A lot of clients have been allocating to hedge funds for diversifying strategy that can give you a high sharp ratio, no correlation to market risk, et cetera. That part of the market has grown dramatically over the last 10 plus years, and at the same time, The…”

“If you look at the people who have purchased control of North American sports teams over the last decade, 80% of them come from tech or private markets.”

“Sports properties create a huge tax shield. They are not correlated with healthcare or tech or finance. You're not allowed to use a lot of leverage. So if you are a titan of private markets, You have a lot of levered exposure to all kinds of equity, and you ha…”

“And I just think, until we resolve what still looks to me like a standoff between buyers and sellers, it's not gonna move.”

“Pre-private markets infrastructure becoming the next market structure evolution, in my view, after equities fixed income derivatives, but very informative in terms of how I think about the technology evolution that's happening in private markets from pre to po…”

“The institutional world, which you've covered tremendously well with capital allocators. And the wealth worlds are kind of converging. Institutions are trying to think about how they think about private markets. The wealth channel is now starting to think abou…”

“The top six firms account for the majority of market share of capital raised in private markets. On average, the top six firms, 20, 24, they raised twelve billion dollars. The top seven through 25 firms only raised 1.7 billion dollars.”

“I'd say roughly about, on average, one to three percent of the 145 trillion of assets that Bain talks about is actually allocated to private markets within the wealth channel.”

“The wires, I still think will be the largest source of flows from the wealth channel into private markets.”

“Those types of things I think are what private banks are trying to do to differentiate themselves because now the wealth management space is getting increasingly competitive and crowded when it comes to accessing private markets.”

“Insurance companies are going to be much bigger allocators. Lincoln recently partnered with Bain and Partners Group, these really strategic partnerships. They have hundreds of billions of dollars in the general account to invest into private markets and So the…”

“That's really the big pony here, is there's trillions of dollars in Wealth Channel Capital that is looking to flow into private markets because they're under allocated.”

“I'd also tell you that the value add is much more significant, whether it's in credit or infrastructure, real estate, there's anywhere from a couple hundred to hundreds of basis points of excess returns that you can generate relative to public benchmarks.”

“Based upon our conversations with wealth platforms and advisors, we think that two to three percent should ultimately be 10, 15 plus percent. And if you were to do the numbers, that just means that there's literally trillions of dollars of money that's in moti…”

“The reality is private markets are growing by leaps and bounds. And if you think about it, even in the equity space, More and more companies are staying private for much, much longer. So it's early, early days before we worry or get concerned about our ability…”

“What we have seen in private markets is a very, very wide range between first quartile and fourth quartile managers. There, I would say, if you're a fourth quartile manager, you're probably not delivering value above your fees.”

“And they've realized that in private markets, for example, the optimal number of funds in a portfolio should actually be between It's like 22 and 27 funds, where as we started shifting there and offering more choice, our clients were like, aren't you diluting …”

“Today, on average, across all of Hightower, think of us as five to six percent allocated to privates.”

“We think that number is going to be 12 to 15% over the next three to five years.”

“There is very little money in DC today that's in alternatives or private markets. Small amounts, very bespoke plans, but virtually all of the allocations today are sitting in public markets.”

“There's no doubt in my mind in a decade from now, we will see very meaningful allocations within that DC market to private markets. Whether it's 10%, 15%, it's going to be really, really big.”

“What's more likely is we over time as an industry work on daily pricing, all of the various different private markets.”

“The bigger risks revolve around this idea of management of expectations, ensuring that why investors are embracing this match up with what can be delivered. It's awareness, education, and expectations management where it has the greatest surface area for risk.”

“The output of that is in the last short period of time, we've seen six public processes for sales of real estate companies to the private market, all of which seem to be happening at Large premiums”

“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…”

“Over time, as you see the world of wealth, utilize the private markets and go from low single digit utilization to mid single digit and high single digits. It's going to be a case-by-case conversation with a financial advisor and a family.”

“And if you look at the TPA adherence, they tend to have a bigger exposure to private markets.”

“There is more bad behavior in private markets than I think people realize. FTX, it's very public, but these companies, they're not filing always audited financials. They don't have the controls. Particularly when something starts to go bad, there's a lot of ba…”

“We believe privates belong in everyone's portfolio.”

“We do discuss and say that privates are not essential. Meaning we should choose to have them because of the return we believe they will deliver over time. And that return needs to be in excess of what's offered in public markets.”

“Our team has the view that there is still a lot of value to be had over the long term in private markets. Maybe not every private market. We want to be more discerning there. But we have the ability, and we have been growing that portfolio Substantially over t…”