Aim Well Before Shooting for the (Private Equity) Stars

If you are shooting for the stars it may be wise to look for some reference points to be sure you are aiming in the right direction. Careful navigators always check the Pointers to confirm they have correctly identified the Southern Cross before marking the route.

PE Duration Disambiguated (Smooth Capital)

Getting responses to questionnaires is an art and I can’t say I master it. Nevertheless, I had a few especially kind readers of my previous post who contributed their opinion (thanks!) to the embedded polls. Their results make it more interesting and “independent” to define “surprising” certain different data available in the industry.

IRR Alpha Looks Bigger [More Subtly Fooled #1]

When a standard of measurement of returns allows close to 70% of investment managers (GPs) to claim their funds are first quartile performers (i.e. ranked in the top 25%) (1) – such as the case of the IRR – something is obviously wrong.

Introducing the [α + β-Cen] Reports

I am pleased to introduce first issue (number 0 in beta) of the [α + β-Cen] Reports whose objective is to provide “rational and quantitative” valuation indications and forecasting references to private markets’ fund investors.

The Price of Private Funds Is Less Wrong

If Prof. Malkiel had taken his “Random Walk” in Midtown Manhattan, the private capital industry’s enclave, he could have found that prices can be “less wrong” there than down Wall Street – to a level that could offer, over the life of a private fund, reasonable arbitrage opportunities but not without risk.

Private Capital Beta: Theory Reloaded

In a recent Financial Analyst Journal article titled “Do (Some) University Endowments Earn Alpha?” the authors find that endowments mostly fail to deliver alpha and what looks as alpha can be almost totally explained by the inclusion of alternative investments in a static asset allocation. Digging further, the authors find that there is no strong statistical evidence of selection skill relating to the private equity and hedge fund portfolios.