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.
why aren't all 35 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Ripley: Strong pre-fund returns do not predict Fund I success
“We found over time that simply having strong returns pre-fund is not a good prerequisite for a fund one. It's about the intangibles we learn about you that support them.”
Ripley: Buyout investors trained to accept 2x gross returns struggle to unlearn that standard
“We're generally looking for folks that trained at firms where the investment committee is a little more difficult, there's more of a culture of asymmetry internally, because if you're trained to the two X gross is acceptable, It's hard to shake that later. Tha…”
Ripley: Endowments wrongly prioritize manager pedigree over strategy base rates
“I tend to weight the quality of the game the manager's playing more heavily than most do. Most of the endowments I talk to tend to say we're looking for the best people, and the quality of what they're trying to do, or how hard it is, or the base rates around …”
Ripley: Seed and micro-VC lack performance persistence
“In the seed micro realm, I don't think there's a lot of persistence. There is more idiosyncratic lottery ticket type risk in some of these cases, depending on what groups to produce spinouts and where you were at that time.”
Ripley: Pre-fund co-investments are the best diligence before backing a Fund I
“We felt like the best diligence you could do on a sponsor before they raised a fund one was to make pre-fund co-investments, because that would give us the insights to see the things that matter before you back someone in a blind pool.”
Bank: 60% of venture capital firms generate less than cost
“60% of venture capital firms generate less than cost. So not only are you not keeping up with equities, you're losing money in more than half of venture capital funds raised.”
Bank: Fund managers willing to negotiate fees often suffer adverse selection
“A lot of times managers that are willing to negotiate With you on fees are not managers you'd want to invest in.”
Bank: GEM brought in an intelligence specialist to train on deception detection
“We had someone from an intelligence agency come in years ago and give us a tutorial on how do you detect deception? How do you read body language?”
Bank: Passion develops through mastering skills rather than preceding them
“The idea that passion comes from the pursuit of mastery, not the other way around. It's a big hoax out there that you're supposed to find what you're passionate about and then go do that. That's not where it comes from. The idea that you get up every day and t…”
Ripley: Buyout investors hit peak productivity between ages 35 and 55
“I generally think the sweet spot is when you've had 15 years of experience to 25 or 30, so call it, mid to late thirties to mid fifties, when you're most productive, most dialed in, most hungry.”
Ripley: Hedge fund investing is an apprenticeship business learned at top firms
“In almost all the cases, though, it's an apprenticeship business where you've trained at a good firm. You've been shown what good looks like from a research perspective, and most importantly, from a portfolio management perspective.”
Ripley: Buyout investing is fundamentally an apprenticeship business with high barriers
“A buyout is an apprenticeship business, fundamentally. You can't walk in off the street with no credibility or history and complete buyout deals, generally speaking, because you've got to get an investment banker to show you a deal. You've got to get a commerc…”
Ripley: GEM Has Recently Reduced New Software Buyout Allocations
“And even within buyout, we were adding software for a long time. We've been doing a little less than that recently.”
Ripley: Broad mandates turn off allocators and overburden emerging managers
“In those cases, they do themselves a real disservice because one, it turns folks like us off who say, now I don't know how to define you. And two, it makes the job a lot harder because then you're trying to cover four or five massive markets instead of one.”
Ripley: Retail meme trading makes short-side alpha much harder to generate
“We're living through another era now where meme stocks are going to the moon, and so the more short of the stock, the more it's being put up on Reddit and Robin Hood and places like that. That game has gotten a lot harder over time, and so we're looking for fo…”
Ripley: GEM evaluates emerging buyout managers by their apprenticeship firm
“We think that as a general rule, we need to have an opinion on the firm you came from to have an opinion on you, because almost all the folks that we evaluate on the emerging manager side are a product of wherever their apprenticeship occurred.”
Ripley: GEM Allocates to Concentrated Long-Only Managers Holding 5 to 25 Stocks
“And most of the long only managers that we invest with are going to have a fairly concentrated portfolio of fundamentally driven investment decisions. Call it maybe as low as five or six and up to maybe 20 or 25 kind of thing.”
Ripley: GEM refuses to provide income floors to emerging managers
“When we back any emerging manager, we don't put a bridge or a floor under them because we think that discourages risk-taking behavior. It sets the wrong mindset and doesn't educate them on how hard it's going to be in most cases.”
Bank: Fund Size Is GEM's Top Consideration When Underwriting PE Managers
“Fund size is probably the number one aspect that we underwrite.”
Bank: Carve-outs favor buyers because corporate sellers prioritize divestment speed over price
“So corporate carve outs are always been our classic example, where on the other side was a big public conglomerate, new CEOs installed, wants to divest from a particular business unit that's underperforming. That's a great setup. They typically have a time clo…”
Bank: GEM seeks outperformance through manager selection, not portfolio construction
“I don't believe that we're trying to win in terms of portfolio construction in the way the assets are assembled. We're mostly trying to win through manager selection within those tools.”
Bank: GEM Targets 3x Net Return and 5-7% Public Outperformance for PE
“Do they have a credible path to generating a three X net return? That's our bogey for private markets. We expect private equity in particular to deliver five to seven percent ahead of public markets over time.”
Bank: Deal Teams Need Dedicated Sourcers to Prevent Dry Pipelines
“The sourcing construct is something that Jay brought over from his private equity days, which was this view that if your deal people are doing a deal, then your pipeline is running dry. And so you need a separate set of people that are constantly refilling tha…”
Bank: Next decade will require alpha engines amid persistent inflation volatility
“More inflation volatility likely. Higher interest rates for longer likely. U.S. Stocks have a huge valuation premium relative to the rest of the world. Maybe that persists, but maybe it doesn't. And maybe expected returns going forward are lower. And maybe you…”
Bank: The Best Portfolio Is What an Investment Committee Can Stick With
“I have a very strong view that the portfolio a committee can stick with is the best portfolio for them, and if you constantly bang your head against the wall trying to get someone to believe that active can be better, The first whiff that it underperforms, the…”
Bank: Asset managers divide into AUM-maximizers and returns-maximizers
“I've come to view the money management world as really being subdivided into firms that are looking to find their way into the AUM Hall of Fame and others that are looking to find their way into the Returns Hall of Fame. And those are very different sets of in…”
Bank: LPs Cannot Contractually Structure Fund Alignment If It Isn't Inherent
“That becomes a critical analysis piece, because you cannot structure your way into alignment if it is not inherent to the person you're across the table from.”
Ripley: GEM evaluates AI tools to detect upcoming manager spinouts
“Caroline Dallas, who leads our sourcing, has been looking at different AI tools so she can surveil and understand signals of when someone might spin out so we can prepare ourselves even sooner.”
Ripley: Willingness to walk away from deals strongly correlates with sponsor success
“Demonstrating a willingness to walk away from deals, we find it correlates very strongly with long-term success of a sponsor.”
Ripley: Most independent sponsors GEM backs pair with past operators
“Most of the independent sponsors we back are paired up with an operator they worked with previously.”
Ripley: GEM allocates roughly 60% to buyouts and 40% to venture
“In most portfolios for our clients, we're 60% buyout, 40% venture, roughly speaking.”
Ripley: GEM receives three to four spinouts per week
“We're at a point where we're seeing three or four spin outs a week that people, Hey, I'm leaving good for a max. I'd love to talk to you, et cetera.”
Bank: Outsourced investment offices face the highest trust bar in finance
“I always say anytime you're trying to be the investment office for an institution or a family, you have to clear the highest trust bar in asset management. For a family, it's their hard-earned legacy. For an institution, you're often engaging with a committee …”
Bank: Allocators must secure capacity rights early before manager success becomes obvious
“One of the things that we do with a lot of relationships is look to secure capacity rights in the future. That tends to be the scarcer resource because once it's obvious, the manager's good, it's too late. And so you'd better have a relationship early.”
Bank: Institutional portfolios face the 'Four Horsemen of Risk'
“I think institutions have four horsemen of risk.
There's shortfall risk, which is the probability that over time you will just not meet your liability stream.
So you need to have a portfolio that
Gives you a fighting chance to get there over long periods of ti…”