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 31 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 1 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
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.”
Bank: Successful money managers often make poor committee members
“The more important things tend to be the soft skills. Is this person a good listener? Is this person open-minded? Do they work well and collaboratively in a group? Those are things, interestingly, that often aren't typical of really successful money managers b…”
Bank: Portfolio diversification died after 2015 as US large-caps dominated
“The second phase I like to characterize as the death of diversification in 2015 onwards, which is the more simplistic the portfolio, the better from a returns perspective. The more U.S. Large cap equities you owned, the better your portfolio did, and you reall…”
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: Passive Public Equity Is Less Compelling Given Current Valuations
“I think from here, passive, the anti-active version is just less compelling than it has been in a long time. If you go back to 2014, and you look at the expected returns for equities at that time, and you run it forward, it was about four percent, and what we'…”
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: Mega-Firm Consolidation Helps Distribution but Adds Zero Investment Value
“I understand the business logic of consolidating into a big apparatus. You can push product through, you can distribute more easily. You got this army of salespeople, your advisors. Nobody has ever been able to explain to me the investment rationale. How does …”
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…”
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: Donor-Backed Institutions Have Much Lower 'Embarrassment Risk' Tolerance
“And the last one, which I think is the most delicate, is variance risk, or what I'll call with clients embarrassment risk, which is how far behind benchmarks, peers, whomever, are you willing to be at any given time?
That one is something that is generally unk…”
Bank: 14 to 17 investment committee members is too many
“Charlie Ellis would tell you five to seven committee members is the right number. We see some institutions where they have 14 to 17. That's too many. It's very well understood that after a certain point, the loss of motivation and the loss of coordination of a…”
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: One US college or university closes or merges every week
“Higher ed is a classic case, where you have one college or university closing or merging with another every week now.”
Bank: College-age population will drop 15% over next few years
“On top of that, you have an enrollment cliff coming around the pike because people stopped having children in the global financial crisis, and so those kids would be 17 or 18 years old now, enrolling in college in theory, but there's gonna be 15% fewer of them…”
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: Allocators can assess research intensity on day-one launches, not temperament
“The thing you can see often is business analysis, research intensity. You can reference those things with peers and former colleagues and bosses. What you can't see are things like portfolio management and temperament.”
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: 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: Generalist public investors are at a clear disadvantage in biotech
“So biotech's another example where there's clearly in that marketplace an advantage to specialization. There aren't many like that in public markets where the generalists are clearly at a disadvantage to the specialists.”
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: Talent shift toward multi-manager hedge funds will continue
“So I think that shift of talent toward these bigger platforms is likely to continue.”
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.”
Bank: A Fund Manager's LP Base Can Be a Source of Edge
“And I think the LP base can be a source of edge for managers, depending on who's in there.”
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: 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: 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…”
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: Allocators should stay silent after asking questions to reveal manager temperament
“The biggest one is being quiet after you ask. There is a strong tendency psychologically to fill space with words. Oftentimes it's elaborating on a question or changing the framing of a question if you don't immediately get an answer. And instead of doing that…”
Bank: 25% of 430 Capital Providers at McGuireWoods Were Larger PE Firms
“This year, there were 430 capital providers to go along with, obviously, a growing number of sponsors as well. Interestingly, about a quarter of those capital providers Or people from other larger private equity firms who recognize that it's a sourcing apparat…”