This case study presents a debate between Edward, advocating for the Yale endowment model and significant private equity investment, and Hatter, defending Queen’s College, Oxford’s successful, low-cost, largely passive approach. The discussion highlights contrasting investment philosophies, analysing the performance and risks of various strategies including private equity, hedge funds, and direct investing. A key point of contention is the illiquidity premium, with Edward arguing that patient capital earns extra returns in illiquid markets, while Hatter counters that this premium is competed away due to high demand. The Canadian pension fund model, focusing on factor investing and a reference portfolio, is introduced…Read the postAI does my Endowment and Canadian investment model case study

This paper by Ludovic Phalippou critiques the widespread use of since-inception Internal Rate of Return (si-IRR) to assess private equity performance. Phalippou argues that si-IRR is misleading, significantly inflating perceived returns and driving excessive capital allocation to private equity. He demonstrates how si-IRR is highly sensitive to early cash flows, susceptible to manipulation, and not a true rate of return, unlike calculations in public markets. The author proposes using horizon IRRs – returns calculated over fixed periods (e.g., 5, 10, 15 years) – as a more accurate and less manipulable alternative, while acknowledging limitations even with this approach. Ultimately, the paper aims to expose…Read the postAI does my IRR paper

AI-Generated Summary This research paper examines the relationship between financial leverage and COVID-19 death rates in English care homes. The authors argue that high financial leverage, particularly when accounting for operating leases, significantly increases death rates, especially during the first wave of the pandemic. This is because highly leveraged care homes are more likely to cut costs aggressively, potentially compromising resident care. The authors also find that care homes controlled by private equity firms do not have higher death rates once financial leverage is accurately measured. This suggests that the ownership structure itself is less relevant than the level of…Read the postHow Deadly Is Financial Leverage? Evidence from Care Homes during the COVID-19 crisis

Summary The paper, titled “On Secondary Buyouts”, examines the increasing trend of private equity firms selling companies to each other in secondary buyout (SBO) transactions. The authors find that SBOs underperform, particularly when made by firms under pressure to spend capital, but SBOs performed as well as other buyouts when no such pressure existed. Moreover, SBOs between firms with complementary skillsets outperform other buyouts. The paper also examines the controversial issue of Limited Partner (LP) overlap in SBOs and finds that despite the appearance of additional transaction costs for LPs on both sides of the deal, this is not the…Read the postAI generated — On Secondary Buyouts

AI Summary: The text is an excerpt from a PDF book titled “Fundamentals of Company Valuation” and aims to provide an overview of various valuation techniques. The text starts by explaining fundamental financial concepts like debt, equity, compounding and rate of return. It then progresses to introduce the concepts of no arbitrage and net present value (NPV). The text further explains how leverage and rate of return are not related in a functioning market. Finally, the text discusses financial ratios and their application in company valuation, specifically using the examples of LVMH and Samsung. It then outlines the principles of…Read the postAI generated — Fundamentals of Valuation

AI Summary The provided text is a case study from the Saïd Business School at Oxford University, exploring the redevelopment of the Spofford Juvenile Detention Center in the Bronx, New York. The case focuses on the negotiation between Eric Clement, a finance expert working for the New York City Economic Development Corporation (NYCEDC), and a consortium of developers who were awarded the contract for the project. The case study examines the challenges and opportunities of using financial acumen to achieve social impact through a mixed-use affordable housing development project. It highlights the tension between seeking commercial returns and ensuring the…Read the postAI Generated — Spofford case study

Based on Venture Capitalists and Employee Satisfaction, a recent working paper By Marie Lambert Ludovic Phalippou Alexandre Scivoletto Summary (AI generated) This paper uses employee reviews from Glassdoor to investigate the impact of venture capitalists (VCs) and private equity (PE) on employee satisfaction. The authors find that VC-backed companies have significantly higher employee satisfaction, with employees citing a supportive culture, growth environment, and positive hiring processes as key advantages. However, they also complain more about compensation and challenging work environments. When VCs exit, employee satisfaction drops and becomes more similar to non-VC-backed companies, but some of the initial differences persist.…Read the postAI generated — Venture Capitalists and Employee Satisfaction

“Capital Commitment” Summary (also generated by AI): Summary The article examines the effects of capital commitment requirements in private equity funds on investor portfolios and welfare. The authors propose a dynamic portfolio allocation model to analyse the impact of these requirements, specifically focusing on the costs associated with commitment timing and quantity risks. The study finds that commitment quantity risk, where investors cannot adjust their allocation at the time of capital call, is the most significant friction. This results in under-allocation to private equity, as investors fear being locked into suboptimal positions due to fluctuations in liquid wealth. The article further…Read the postAI generated podcast