Private Markets Valuations…do these quarterly marks properly represent fair value or are they make believe…contrived from the fictional world of GP machinations?  Do these interim valuations, as one commentator put it, “not matter;” or as another proclaimed provocatively, are they simply a case of “volatility laundering.”  Is the gap or “lag” with public market equivalents relevant…are we anchoring to the right bogey…or arbitrarily comparing objective value to an emotionally manic patient, to paraphrase Warren Buffett?  In today’s episode, our inaugural episode of Capital Decanted, we are going to lean in to this divisive and complex topic with some help from Scott and Andrea.

Guests:

Scott Kupor, Managing Partner, A16z

Andrea Auerbach, Global Head of Private Capital, Cambridge Associates

⁠Episode Sources

After a four decade relative period of global stability, the world order has fractured and grown more unpredictable. The new multi-polar reality poses a major problem for leaders and investors as our traditional guardrails, narratives, and structures seem less useful. How should an investor integrate geopolitical trends into their investment thesis and what pitfalls and common mistakes should we watch out for?

Guests:

Anastasia Titarchuk, CIO, New York State Common Retirement Fund

Marko Papic, Partner, Clocktower Group

Since the arrival of Modern Portfolio Theory (MPT) in the early 1950’s by the legendary Harry Markowitz, the industry has been sturdily anchored to this philosophy and all of it’s artifacts when constructing portfolios. In recent years, however, an enterprising handful of large institutional asset owners have begun challenging the common wisdom of a strategic asset allocation approach given it tends to breed silo behavior, unhealthy competition for resources and attention, unrecognized duplication or disjointed risk exposure across the portfolio, and difficulty in managing the capital pool holistically around a view of the future. This is the story of how CAIA convened some of the most reputable and largest asset owners in the world to amplify the benefits of TPA and perhaps, the beginning of a new era.

Guests:

⁠Episode Sources

Permanent Capital or GP Stakes structures aim to take further advantage of long-dated patient capital in private markets. Furthermore, they allow the LP to participate in additional cash flow streams with the GP that are elusive in a traditional fund structure. In other words, it allows LPs to get exposure to a variety of alternative asset managers as minority owners in the GPs themselves. But does this provide a purer incentive alignment of investors and GPs or simply split allegiance and attention between multiple masters?  In this episode, with the help of the largest GP Stakes participant, Blue Owl, and a large LP in their fund, USAA, we examine the evolution of the approach, its idiosyncratic and multi-faceted return stream, and try to honestly assess some of the myths that haunt the space.

Guests:

⁠Episode Sources

It’s another coming of age story on Capital Decanted. In this case, since Dayton Carr conceived the space in 1984, we’ve seen private capital secondaries morph from a niche set of transactions of distressed limited partner selling to a more than $600B asset management and liquidity tool utilized by the most sophisticated LPs and GPs in the world and now devoid of the original stigma that plagued these activities. We’ll examine that winding and explosive history of their beginning and then tackle the state and progression of today’s market with partners from the two largest secondaries funds on record.  

Introduction (0:47)

Halftime (47:15)

Guests (52:34)

Guests:

Vern Perry: Global Head of Blackstone Strategic Partners

Taylor Robinson: Partner, Lexington Partners

Episode Sources

Blockchain, Bitcoin and Bubbles, oh my. No technology in history has caused more rancor and division for investors than crypto and blockchain. But does history teach us that passion might portend something special? With the help of the most authoritative crypto investor on the planet, A16z’s Chris Dixon, we explore the history of computing platform evolution and the conditions to identify the next one while avoiding frothy FOMO. We discuss how to construct a responsible framework for investing in emerging technologies versus a casino mindset. We review the inherent advantages of blockchain networks for content creators and founders and conclude with some of the more promising use cases on the horizon. 

Introduction (0:48)

Halftime (1:01:41)

Guests (1:07:03)

Guest:

Chris Dixon, Partner at A16z

Episode Sources

One of the key doctrines of modern investment management is diversification, and yet it is remarkably absent from team construction across all spectrums of the investment profession.  Countless studies have shown that there is a diversity premium for organizational performance, capital allocation and indeed, investment outcomes and yet we seem trapped in mid teen representation of women.  More concerningly, progress seems to have stagnated in recent years.  In this episode we lament the lack of impact but more importantly delicately attempt to unearth the root causes of this flattening of the curve, namely the pipeline, COVID, and the DEI movement.  Join us for this earnest and honest assessment of what works, what doesn’t, and how a more mature discourse is needed on this generationally important topic.

Introduction (0:48)

Halftime (43:58)

Guests (47:23)

Guests:

Nicole Musicco, Former Chief Investment Officer of CalPERS and angel investor

Ron O’Hanley, Chairman and CEO, State Street 

Private Credit has risen from obscurity within the private equity financing world to a greater than $2T asset class in just over a decade.  In this episode, we examine the conditions (M&A, debankification, regulation, staying private longer) that accelerated post the GFC that created a torrent of issuance and demand for private credit across direct lending, asset backed credit, structured credit, and innovative special situations.  And more importantly, we debate whether we’ve come a little too far, too fast, and if some rationalization and refining is needed before this exciting space continues its upward trajectory.

Introduction (0:47)

Halftime (39:40)

Guests (45:51)

Guests:

Katie Koch, CEO, TCW

Kipp DeVeer, Partner and Head of Credit, Ares Management

Episode Sources

Permanent Capital or GP Stakes structures aim to take further advantage of long-dated patient capital in private markets. Furthermore, they allow the LP to participate in additional cash flow streams with the GP that are elusive in a traditional fund structure. In other words, it allows LPs to get exposure to a variety of alternative asset managers as minority owners in the GPs themselves. But does this provide a purer incentive alignment of investors and GPs or simply split allegiance and attention between multiple masters?  In this episode, with the help of the largest GP Stakes participant, Blue Owl, and a large LP in their fund, USAA, we examine the evolution of the approach, its idiosyncratic and multi-faceted return stream, and try to honestly assess some of the myths that haunt the space.

Introduction (0:47)

Halftime (41:46)

Guests (47:05)

Guests:

Episode Sources

Since the arrival of Modern Portfolio Theory (MPT) in the early 1950’s by the legendary Harry Markowitz, the industry has been sturdily anchored to this philosophy and all of it’s artifacts when constructing portfolios. In recent years, however, an enterprising handful of large institutional asset owners have begun challenging the common wisdom of a strategic asset allocation approach given it tends to breed silo behavior, unhealthy competition for resources and attention, unrecognized duplication or disjointed risk exposure across the portfolio, and difficulty in managing the capital pool holistically around a view of the future. This is the story of how CAIA convened some of the most reputable and largest asset owners in the world to amplify the benefits of TPA and perhaps, the beginning of a new era.

Introduction (0:48)

Halftime (51:40)

Guests (57:21)

Guests:

Episode Sources