The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Small: PE firms must build public market teams internally for effective collaboration
“Building it internally was important because the relationships of the people were a key to making it work. It wasn't just saying, Geez, Berkshire partners should have a public firm. Let's go hire a team to go do it. That would not get the collaboration that we…”
Seetharam: Stockbridge sells troubled holdings rather than pursuing activist board seats
“So the key is if we have a problem with the company, it's better for us to sell than it is for us to go on the board and try and change it.”
Seetharam: Stockbridge matched private equity diligence conviction on Skillsoft
“There was a business that we were invested in at Stockbridge, a company called Skillsoft. It's an education software business that Berkshire private equity ended up taking private. And we got to see what public information would allow us to understand about th…”
Berkshire maintains no internal walls between its PE and public equity teams
“Across the firm, we chose not to have any walls between the two businesses.”
Small: Private companies traded at higher multiples than publics in 2005-2007
“For the first time, we did comparable sheets with public companies, and we were seeing private companies go for more than public companies. So the control premium was higher than the liquidity premium.”
Stockbridge has entire team vote on admitting portfolio investments
“As an entire group, we discuss every idea that's making its way into the portfolio from a very early stage, which we call our tear sheet stage, where we're just introducing the whole team to the business to a final investment memo. Everybody from the newest an…”
Small: Stockbridge avoids biotech approvals and commodity-driven businesses
“So we don't invest in things like, is the drug going to be approved, or where commodity prices will ultimately drive the answer.”
Small: Stockbridge Sells for Only Three Specific Reasons
“Well, there's three reasons that you sell. One is you lose conviction in the thesis, and you think you should move on. Two is it gets so expensive that you think the returns looking forward aren't acceptable, or at least certainly compared to what else. Or thr…”
Stockbridge does multiples more research after buying a stock to combat bias
“We do a lot of work up front, but we do multiples of that work after we own a company. And just ensuring that we're not holding onto something simply because we did a lot of work and we have endowment effect and it's in our portfolio.”
Seetharam: Stockbridge Rarely Encounters MNPI from Berkshire Private Equity
“So we found it's extremely rare that we end up with MNPI on a company and the places where we've run into issues They've tended to be opportunities, not conflicts or issues. We've co-invested in things.”
Small: Internal data is necessary for operational change theses
“The private data would be great if you had an enormous change thesis. If you thought management was doing the wrong thing on major operational issues and you thought you could do better, I don't know how you make that decision without internal data.”
Small: Berkshire Partners Is Largest Investor in Its PE Funds and Stockbridge
“We're the largest investor in our private equity funds, and we're also, as a group, the largest investor in Stockbridge.”
Small: Stockbridge is essentially long-only and has rarely shorted
“We're essentially long only. We have a right to short, but we've done it only a couple times in our history”
Stockbridge and Berkshire PE acquired ~20% of ADS in 2017 after accounting restatement
“In 2017, we bought about 20% of the company after they were through their accounting restatement and then subsequently joined the board.”
Stockbridge makes only two to three new investments per year
“We invest in two to three things a year. We probably look deeply at 10 to 20 things a year with a pretty big team, and so the several hundred that we look at, we're putting them down very quickly for one of those reasons.”
Seetharam: Stockbridge abandoned short selling after a one-week trial
“For the first two years, I think we invested exclusively internal capital and tried a lot of things. So like Rob mentioned, we tried to short. The first short, I think, lasted a week. And we realized we were not going to be good at it. We didn't want to do it,…”
Recker: Michigan Retirement System Backed Accel, Blackstone, and Berkshire in Fund I
“But they were first fund investors with Excel Ventures, with Blackstone, with Berkshire Partners, just a long list of firms that were excellent firms. They were there in fund one.”
Rob Small: Stockbridge embeds members into Berkshire PE industry teams
“The private equity side is divided into industry teams. We put one of our people on each one of their industry teams, so that way they can learn about what they're learning about the industry.”
Berkshire Partners held Advanced Drainage Systems continuously from the late 1980s until 2010
“Berkshire Partners invested in the company in the late eighties when it was a small agricultural plastic pipe producer and held the business continuously until 2010 through multiple funds and then sold it to another P firm who took it public in 2014.”