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 4,765 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
Morfit: Financial segment disclosures reflect internal bureaucracy, not true unit economics
“Financials are reported out as a function of the bureaucracy of the company, not necessarily as a function of the real economics of the business. So the segment disclosures you're getting are not necessarily the true economic picture, but if you're a good secu…”
Wagner: Slow-moving climate risk creates mispricings against volatile annual reinsurance swings
“Year to year, you don't have big changes in the risk of a large hurricane. Over 10 years, 20 years you do, which is kind of what we've seen, but it's a slow moving increase in risk. That's what's fascinating to us is because you can have these year to year cha…”
Seides: Allocating to private equity is now mostly about diversification, not alpha
“I think most of it today is about diversification. It used to be the case that you only participated in these alt strategies for alpha.”
Arndt: Not enough alpha exists globally to actively deploy a $45B equity book
“Today the equity book is maybe forty-five billion dollars, and we're just not going to find enough skill out there in the world to invest forty-five billion dollars”
Converting cash-pay debt to PIK is a definitive signal of distress
“If you're restructuring your deals where you're converting some of your current cash into PIC, there's only one reason you're doing it. You're doing it because the company doesn't have the free cash flow to service your loans.”
Sullivan: Parachuting former Fortune 500 CEOs into small buyout boards fails
“I think one thing we learned pretty quickly was not straightforward to bring in a guy who'd been a successful CEO at a big Fortune 500 company and have him parachute into an LBO situation as a board member or operating partner. You had to find people with the …”
Sullivan: 40 years of PE returns were driven by falling interest rates
“Some of the success that our managers generated in the nineties and the first half of the 2000 was due to equity multiples going up in general. The whole 40 years until very recently was a story of declining interest rates and multiples ought to go up in a mar…”
Sullivan: Founders, not VCs, control modern late-stage startup exit timelines
“The biggest problem is they're not really in the hands of the venture capitalists. They're in the hands of the entrepreneurs. If you're an entrepreneur who doesn't want to bother being a public company, they're real questions for institutions about how do they…”
Sullivan: Scaling buyout funds suffer Peter Principle as target companies grow
“The challenge along the way is that sometimes the skill set that works with the small company is not Applicable to the bigger company. Also, bigger companies tend to be better managed, so maybe there's less you can do with them while you own them. There is a P…”
Sullivan: A $5B fund at 15% pays far more carry than $500M at 30%
“The carried interest on a five billion dollar fund compounding at 15% return is a lot more than the carried interest on a five hundred million dollar fund compounding at a 30% rate return. Plus, obviously, the fees are 10 X.”
Sullivan: Buyout managers anchor to cost basis instead of cutting bad deals
“They get too anchored to cost as a measure of value, and if they can't get cost, they're going to do whatever they can to get their cost back, and in fact, they might be better off to sell an investment that is not going to perform well no matter how long you …”
Sullivan: GP-led secondaries fail to do limited partners a true service
“The problem, from my standpoint, is we always thought at Yale, one of the reasons we hire these guys is because they know when's the right time to sell an asset. And we're sort of relying on them to do that. And then if they default that decision back to us an…”
Sullivan: Private equity sells winners in 4 years and holds losers for 12
“What winds up happening is the good businesses get sold in three or four years. The bad businesses hang around for 10 or 12 years. The GPs just think, well, I can fix this, and two years from now it'll be better, and a lot of times when an asset isn't performi…”
Ovitz: The lens for evaluating tech founders and creative artists is identical
“Nothing. I had founders start with an idea, and usually nothing else. Let's put off to the side a technical founder who may have come up with a fabulous algorithm that no one else has, but he still has to have an idea for it. What's he gonna do with it? What's…”
Whelan: Percentage-based private market targets cause pro-cyclical over-allocation
“Early days at Yale, we were targeting market value as a percentage. And so when you're in a bubble, it tells you to over allocate at the top and under allocate when you're in the bottom. So we changed that to grow every client's portfolio by their expected ret…”
deVeer: Lead private credit lenders hold a free call option on companies
“The point is you have this free call option as a lender to own companies if you have to. And if you're lending to good companies and you control your outcomes, where you're a lead investor, you can probably get to better resolutions.”
DeVeer: Pro-Cyclical Retail Credit Capital Inherently Risks Underwriting Discipline
“I would not want 75% of my credit capital to be in a pro-cyclical structure like this, which it inherently is, and that's where you can lose discipline.”
Wealth clients prefer 8-10% evergreen funds over 11-14% drawdown lockups
“For managers that are in the, what I call, no man's land, And this is what I mean by that. Your returns are somewhere between 11 to 14% net returns is what you've delivered, and you are looking to lock up your capital for 10 to 15 years, and no one ever ends o…”
The optimal private markets portfolio contains between 22 and 27 funds
“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 …”
Mogelof: Daily Liquidity for Private Markets Erodes the Illiquidity Premium
“If you're going to do that, then you need to have some liquidity function, and that always is going to come at a cost. It could be an explicit cost, it could be an implicit cost, but at the end of the day, you can't magically say something that's illiquid is l…”
Papic: Policy second derivatives matter more than data in policy-induced recessions
“In policy-induced recessions, what really matters is the second derivative in policy, not data.”
Papic: Markets React to Rate of Change in Geopolitical Risk, Not Absolute Levels
“One of the things that I think is very important as investors start to incorporate politics and geopolitics more and more into their toolbox is just to understand that while you as a human being really cares about absolute levels of risk, the market is not hum…”
Marks: Private credit draws down less because valuations ignore market psychology
“Private credit and other private assets do not mark to market in the sense of reflecting the swings of psychology. When you go through a tough period and high yield bonds are down 10% and private credits down two percent, I think that's the explanation.”
Howard Marks: Private credit managers like avoiding mark-to-market accounting during downturns
“The people who run these funds Pretty much like the fact that they don't mark the market, because then in the bad times when the headlines in the papers are so negative, they don't have to go to the treasurer of the organization and say, we're down 10%. They c…”
Marks: Leveraged buyout math breaks down when borrowing costs hit 10%
“In the 20 teens, you could borrow money at six percent to do private equity deals. Now you have to pay it probably a nine to 10. Well, if you're going to buy a company and make 10 or 11% a year, you have to pay nine to 10% for the money, then a leveraged acqui…”
Reynolds: LPs Avoid Direct Public Stock Picking but Co-Invest in Risky Privates
“Very few institutional investors organizations are actively managing public equity portfolios. They're not choosing stocks directly, but almost all of them are choosing in private companies directly and co-investing in companies where they have less informatio…”
Separating asset allocators from governance oversight enables necessary boldness
“Career risk aversion drives a lot of behavior, and Bill felt to the extent you could put some distance between the asset allocator and the oversight or governance group, you had a shot at allowing the CIO to be more bold, because Bill always said, boldness is …”
Public equity offers lower expected returns as the price of liquidity
“I think private equity is true equity return, and public equity is a discounted or a lower expected return.”
Multi-billion VC funds need 50% concentration in few winners to 4x
“When they see a company they've backed in the seed in Series A, they will lean in hard on the subsequent Rounds to the point where at the end of portfolio construction, they might have 40, 50% of the fund in three or four companies. That, to us, is exactly how…”
Zorub: Teams should reject ideas lacking potential for 5% to 7% sizing
“Mediocre ideas tend to cancel each other out in the end, and they consume a lot of time and bandwidth, and so core to our process is I tell the team, don't spend any time on something that we don't think has the characteristics of becoming a large idea. Now, i…”
Charles: Market shifts impact PE firms by scale level more than strategy
“Changes in the market impact firms that share a level a lot more than firms that share the same strategy. That's pretty unique. A level eight infrastructure firm and a level eight buyout firm are impacted by the market in more similar ways Than a level two and…”
Charles: PE buyers are now suspicious of assets sold without continuation vehicles
“Well, now, if I'm a sponsor, and I'm getting a book from another sponsor, and they're not CV-ing it, I'm a little suspicious.”
Green: In outbound VC sourcing, responsive companies are usually low-performing
“And we had a rule at Bessemer. If the company called you back, it really sucked. It was the CEO you call every two days for a month. That's the CEO you want to get on the phone.”
Green: Preferred stock in capital-efficient software creates strong downside protection
“If you build a business with 20 of revenue, you're growing 30. And you've only burned three million bucks. You're doing something right. And if we can get in there and own preferred stock at the top of the cap structure, and it's recurring and has 80% gross ma…”
Farber: Early one-off horizontal drilling boosted short-term output but damaged ultimate recoveries
“One of the ways that a lot of our peers adopted was when horizontal drilling was quite early, before we had really refined the well design and the fracking methodology, people went and drilled a lot of one-off horizontals in virgin acreage on drilling units th…”
Farber: Private equity investors irrationally sell 3x to 5x winners too early
“There's an anchoring effect in private equity, like in every area of investing, that is not rational. It's a very real and tangible thing. In our business, That's manifested by people looking at a three bagger or five bagger and saying, well, that's a great de…”
Farber: CrownRock exit driven by completion tech reaching theoretical maximums
“There's only so much resource that you're ultimately going to recover, and we just felt like we were getting closer to the sort of maximum economic recovery point, and that, that changed the risk calculus. You had this big asset, you had market risk in retaini…”
Peters: Equities Drive 90% of Institutional Portfolio Risk
“If you look at the real risk in their portfolio, it's probably 90% driven by equities, and it comes in all sorts of different forms, private equity, public equity, credit. You end up with portfolios that there's just one risk factor, which is equities.”
Bank: $5B VC funds must capture rare generational companies
“And if you're raising five billion, just multiply all those figures. You basically need one of five generational companies within that portfolio to meet the return bar.”
Bessent: Microeconomic company data drives macro decisions better than aggregate models
“My style, still the Duquesne style, is that the micro drives the macro. We can get a huge amount of information from what companies are telling us. We can't predict the PCE deflator better than anybody. We can't have a better model for LEI, but if trucking com…”
Sandler: In late 2019, short-term stock movements detached from fundamentals
“What we began to notice in 2019 was stocks were behaving unpredictably, even if you really knew the fundamentals. It was as if the things that we were doing in the short run Didn't matter at all.”
Miller: Point-source CCS yields PE returns only in pure-CO2 industries
“Really where you want to focus in carbon capture are in industries that emit pure CO₂ as an industrial byproduct. Industrial accident is a better way to think about it. So those are really ethanol plants, ammonia, so fertilizer, and then natural gas processing…”
Nesbitt: Unfunded primary commitments will cause PE interval funds to fail
“If you use the typical institutional playbook, you can't, okay? If you're doing primaries, you got these big unfunded commitments, that implementation approach will not work. You're going to get yourself in trouble. But first of all, you've changed strategy on…”
Salem: Throwing a golf club should immediately disqualify an asset manager
“If you get on a golf course and you see a manager that you either have money with or might consider giving money to, And they hit a bad shot and they throw their golf club. Disqualifying. Disqualifying for business, for managing money. Why? Because they can't …”
GPIF Relied on Foreign Investors to Break Domestic Financial Conflicts
“It's GPIF that needs equities to perform to deliver on their pension obligations. So they realized that all of these complex relationships and conflicts in the Japanese financial services market meant that only outsiders could come and constructively cut some …”
Japanese Family Firms Suppress Valuations to Reduce Inheritance Taxes
“Being listed and managing it with cash on the balance sheet is our way of handing the company off to the next generation. And if we can do that at .6 price to book, we save 40 cents on the dollar in terms of the inheritance tax.”