Non-correlated cash flows suffer secondary correlation if reliant on PE exits
Chris Heller · Chris Heller - Ten Years of Weird Alternatives (EP.420) · Dec 2, 2024 · at 16:57
Chris Heller, co-founder of Cordillera Investment Partners, explains how alternative assets that generate uncorrelated cash flows can still suffer from market correlation when relying on capital markets for an exit.
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“And we might find the most non-correlated business and its cash flows are not correlated with general GDP cycles. But if we own that asset or that company and we want to exit it to another private equity firm or take it public, even though we might have a non-correlated cash flowing asset, a general lack of liquidity like a 2008, 2009 environment would bring on the secondary correlation effect that says, great, you have this non-correlated asset, but you can't do anything with it now and you can't sell it.”
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