Eli Combs

There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets

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If you think portfolio risk management is just about diversification, think again. This article sheds light on some surprising strategies that challenge common perceptions. Here are some thought-provoking takeaways: - Did you know that reducing the number of investments in a portfolio can sometimes actually decrease risks? It's all about strategic selection. - Contrary to popular belief, actively managing risk doesn't necessarily mean more frequent trading. In fact, a hands-off approach can be a smart move. - One of the key points discussed is the importance of understanding the correlation between investments, a factor often overlooked in risk management strategies. - Asymmetric risk and the role it plays in portfolio management is explored, offering a fresh perspective on balancing risk and return. - Ever considered tail risk hedging? This article dives into this lesser-known strategy that can enhance risk management effectiveness. Share your thoughts and feelings on these unconventional risk management strategies. https://lnkd.in/ecgSpH93

📰Reuters quoted us yesterday afternoon regarding AMAT's #earnings, #outlook, and aftermarket share-price reaction in an article by Jaspreet Singh titled, "Applied Materials' third-quarter forecast disappoints investors, shares fall." 👩🏽‍💻Applied Materials stock reported earnings and outlook yeasterday after market close. #AMAT is up over 32% year-to-date, more than 3x the #NASDAQ 100 (#QQQ) and just under 3x the S&P 500, thus expectations for it were high and aftermarket short-term investors nudged the share price down because they were looking for a more solid beat and outlook; yet even so, shares were still priced higher than they were on Monday and Tuesday as well as the month prior to that➡i.e.,overall things still look good. ⚙The aftermarket crowd seemed to be pushing the price down more than deserved. With results beating expectations, we predicted that if the general market opened up on Friday there was a good chance that the stock recover some of its overnight drop➡which it did and then some. 📈What created reluctance amongst traders was the wide third quarter forecast range management gave of adjusted earnings per share for the third quarter of $1.83 to $2.19; that nearly 40 cent window creates short-term negative uncertainty for the semiconductor equipment company➡but it doesn't derail the thesis of increased computer chip demand. QUOTED EXCERPT: 💡"Investors are nudging the share price down because they were looking for a more solid beat and outlook," Michael Ashley Schulman, chief investment officer at Running Point Capital said, adding that the results do not knock "the wind out of a #semiconductor #chip recovery theme". "Les #investisseurs font baisser le prix de l'action parce qu'ils attendaient un résultat et des #perspectives plus solides", a déclaré Michael Ashley Schulman, directeur des #investissements chez Running Point Capital, ajoutant que les #résultats ne remettaient pas en cause "le #thème de la reprise des puces à semi-conducteurs". #future #uhnwi #multifamilyoffice ~~ "We deliver custom investment solutions, family office services, innovations, and unique perspectives to you and your family—we are your family office—you can emphasize your enjoyments, priorities, and legacy.” ~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-24-78

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Saw this on Bloomberg: "Publicly traded companies’ profits fell along with interest rates over the last four decades, while profit rates for privately-held firms climbed “substantially,” according to researchers for the Federal Reserve Bank of San Francisco. Private returns began to rise relative to public corporations in the late 1970s and are now more than 50% higher, the authors found. “This shift is substantial, with private company returns surpassing public corporation returns by over 10 percentage points after 2000.” When I read this, I am reminded of a paper by Michael Jensen entitled "The Eclipse of the Public Corporation" published in 1989 (yeah, I've been around a while) which stated: "Despite the protests, this organizational innovation should be encouraged. By resolving the central weakness of the public corporation—the conflict between owners and managers over the control and use of corporate resources—these new organizations are making remarkable gains in operating efficiency, employee productivity, and shareholder value. Over the long term, they will enhance U.S. economic performance relative to our most formidable international competitor, Japan, whose companies are moving in the opposite direction." https://lnkd.in/exR7-afv Private companies are not focused on the quarter, they are focused on creating value, longer-term value. Public companies, if they miss expectations by a penny, get punished severely lately - the focus on the quarter. Admittedly, if they are owned by GPs/funds, they can be used inappropriately to create payouts to LPs (see yesterday's post), buy generally, it is a better form of company. Thoughts?

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Finishing up a productive week at the annual Milken Institute Global Conference in California. It was an honor to participate in a panel discussion on the significant changes we’ve seen in asset management over the past few years, and what they mean for our business moving forward. My thanks to fellow panelists Kamal Bhatia from Principal Asset Management, Dan Bienvenue, CFA, CAIA from CalPERS, Katie Koch from The TCW Group, Tony Minella from Eldridge, and our moderator, Matt Brown from CAIS. I truly enjoyed our conversation and the opportunity to share and compare insights on the issues affecting our business.   From the generational amount of cash still sitting on the sidelines, to the rise of alternatives from being the subject of a mostly academic exercise to one that carries significant urgency for investors today, it was a privilege to share my thoughts and those of our clients on such an important stage. Milken offers a unique opportunity for our industry to talk openly about the challenges we face and opportunities we see in serving those who entrust us with their financial futures. And a conference like Milken reminds me of two fundamental truths that guide our firm through all market cycles and environments: access is what drives alpha for investors so it’s our job to find more ways to provide them with more of it, and if we focus on the things we can control and the fundamentals of what we do – investment excellence and world-class service for our clients – then we’ll be ready for volatile and uncertain market conditions. #MIGlobal

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With the Sprott Uranium Trust's discount to NAV at a near YTD high, notable events this past month included: 1) The Department of Energy's $3.40B RFP for low-enriched #uranium . 2) Renewed M&A in the Athabasca Basin via Paladin Energy's takeout bid for Fission Uranium (fair bid, we don't envision any competing bids). Spot uranium ended the month of June -4.5%, settling at $85.50 per lb (Numerco). **Not investment advice, just opinion, observation & analysis. Pls note the disclaimer** https://lnkd.in/gYAn38_d #equityresearch #investmentbanking #nuclear #greentransition #zerocarbon #economics #mining

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New or smaller VC, PE or HF manager? AUM less than $50 million? Great Performance? Trying to raise assets? Struggling and failing?   Sounds all too familiar: It’s due to poor or non-existent marketing Let’s get real about raising assets for “sub-institutional” managers, those with AUM between $0 and $50 million. IT’S HARD AND A STRUGGLE.   Raising assets in a crowded, hyper-competitive, complex and complicated market from investors that are risk averse, stringently selective and idiosyncratically demanding is more challenging and difficult than most new and sub-institutional managers understand. The fact is the majority of sub-institutional managers fail to get AUM beyond personal capital long with small amounts from family and friends even when they have exceptional performance. Plainly speaking: There is a lot of BS, hype, propaganda and completely wrong information about marketing and fundraising for small managers with AUM less than $50 million Since 2011, Johnson & Company has specialized in meeting the marketing challenges for "sub-institutional" managers. 25+ years experience, expertise and skill uniquely equips a new or smaller manager with the FACTS and proven structured, disciplined and focused PROCESS supported by independent high-integrity data and research, accurate information, objective insight, expert instruction and frontline intelligence that optimizes marketing process execution to maximize the success, efficiency, economy, expedience and effectiveness of raising assets. If you’re a new or smaller manager, with AUM less than $50 million struggling and failing to raise assets, first get the facts: https://johnsn.com/facts If after your review of the “FACTS”, you’d like a candid, no-nonsense conversation about marketing and raising assets, contact me, I welcome the opportunity. bryan@johnsn.com

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🌟 Republic Acquires GoldenChain to Bolster Digital Asset Strategy 📈💼 In a significant move within the investment sphere, Republic has announced its acquisition of GoldenChain, the digital asset arm of GoldenTree Asset Management. Joe Naggar, previously a Partner at GoldenTree, will lead as the Chief Executive Officer and Chief Investment Officer of Republic Digital, marking a strategic shift to deepen Republic's engagement with digital assets. Key Highlights of the Acquisition: 1️⃣ Leadership Transition: Joe Naggar brings his extensive experience in digital assets to Republic, promising to infuse innovative strategies and expertise into Republic Digital’s operations. 2️⃣ Expansion of Capabilities: The integration of GoldenChain’s digital assets management into Republic's framework aims to enhance the firm's overall offerings and market presence in the rapidly evolving digital assets landscape. 3️⃣ Strategic Growth: This acquisition is designed to position Republic at the forefront of digital asset investments, leveraging GoldenChain's established expertise to tap into new market opportunities and drive growth. Implications for the Market: Republic's strategic move to acquire GoldenChain and establish Republic Digital underlines its commitment to expanding its footprint in the digital asset domain. This transition not only promises to bring enriched value to Republic's clients but also sets a precedent for future growth and innovation in the sector. 💬 How will the acquisition of GoldenChain by Republic transform the digital assets landscape? What challenges and opportunities could arise from this integration? 🔄 Engage with us in the conversation about the future of digital assets and investment strategies! 🔗 For further insights into this strategic acquisition, click here to read the full article: https://lnkd.in/emFHJW2J #Republic #GoldenChain #DigitalAssets #Investment #Finance #Innovation

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For the past four quarters, productivity has averaged 2.3% growth, well above the 1.5% 10-year average (see Figure 1).1 This rebound accounts for 77% of real GDP growth since Q2 2023, while labor input explains only 23%, indicating companies are finding greater efficiency even with full employment (see Figure 2) #CapitalAtRisk #ForProfessionalsOnly #MarketingCommunication

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Skate to Where the Puck is Going: Asset-Based Lending (ABL) allocations by institutional investors will rise dramatically over the coming decade as a huge percentage of the asset class shifts from banks and private markets. The little kid on the private lending block is all grown up now, as ABL is taking center stage with Direct Lending. A smart alpha strategy for capital allocators is to craft a portfolio of top performing managers across the Private Credit spectrum (Direct Lending, ABL, Opportunistic Credit) that can deliver strong, repeatable results. ABL is a $40T TAM, much larger in size than most imagine. Most portfolios are tied to corporate risk as the majority of portfolios are comprised of Public Equity market risk, Private Equity risk (LBO, Growth, VC) and Corporate Direct Lending. ABL offers diversification and low correlation to the equity markets. Pension plans, insurance companies and endowments/foundations and their consultants are cleverly re-evaluating their portfolios to build a more diversified, better insulated Private Credit portfolio, and part of this solution requires a greater allocation to ABL as this strategy has historically exhibited high absolute returns plus it has lower volatility when compared to the equity markets. Pension & Investment News just published a lead article of my interview covered by Lydia Tomkiw - I greatly enjoyed our engaging conversation:

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My latest Substack post analyzes $XOM once again catching $TSLA in terms of market cap. Last 5 qtrs: $XOM returned ~$40bb to shareholders via divvies, buybacks. $TSLA: $0.00 That is what really matters. But the key to investing is the second derivative, and as EV sales slow (good for demand for oil, obvs, and for $XOM) I fail to see the Silver Bullet for $TSLA. Why? Because Elon let his product line get old. No amount of robotaxi/FSD necromancy is going to change that. Trade accordingly. Excelsior! --Jim

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In the recent Myrtle Equities US Small-Cap Sector Index Series Monthly Report, various sectors continued to reach new ATHs. Of the 11 products within the series, only 1 (US Small-Cap Energy Sector Index, Ticker: MES) experienced a negative percent change MoM (-1.48%). The US Small-Cap Index recorded a 3.37% jump to 99.87, showing both a strengthening of market sentiment towards assets within the $300m-$2b market cap range and an increase in the popularity of investment strategies related to long-term value investing. During the month of April, the MBA 30-Year Mortgage Rate increased from 6.91% to 7.29%; during that same period, the US Small-Cap Real Estate Sector Index reached 95.03 resulting in a 2.19% increase MoM. This direct relationship between mortgage rates and real estate sector performance (one in which real estate sees an increase in demand while mortgage rates rise) indicates that US citizens are eager to become a part of the home-owner population, no matter the cost (to a certain extent). For more information about the US Small-Cap Sector Index Series, please see our Monthly Report below. For more information about Myrtle Equities products, please visit our website at the following link: https://lnkd.in/deYmN74t #US #stockmarket #investing #finance #financialmarkets #Intrestrates #index #smallcap #equities #stocks

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