Goldman Special Situations achieved 20% unleveraged returns post-2001 by conservative pricing
Adam Shapiro · Adam Shapiro – Post-Breeding Grounds for Rising Stars and Families (Capital Allocators, EP.319) · Jun 5, 2023 · at 10:23
Adam Shapiro, Managing Partner of East Rock Capital, reflects on his transition from Latin American private equity to Goldman Sachs's Principal Finance Group (later Special Situations Group) around 2001-2002.
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“And what this group at Goldman was doing was buying portfolios of assets, which could be real estate, aircraft, financial assets like receivables, and this was now, 2001, 2002, Nasdaq bubble had burst, and so you could buy these portfolios and not use any leverage And price them to sometimes 15% rates of return, and all the uncertainty sort of worked in your favor, because you would buy 30 assets at a time, and you'd price each one to the most conservative outcome. And so your surprises skewed positively, so if it didn't turn out to be 15% higher, it probably turned out to be 20, or even higher, without using leverage.”
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