PIK Toggle

Good, free up capital and resources for healthy businesses. A lot more of these sitting on sidelines with lenders kicking the can down the road and waiting for greenshoots of recovery.

Asset light trucking is still cyclical with load volume following economic cycles and rates following general trucking cycles based on industry capacity, though they tend to be relatively variable cost businesses which helps to mitigate downside. The place to play is specialized / heavy haul which is more insulated than more commoditized trucking like van.

Aside from name recognition, what is their competitive advantage over buyout funds with more experienced operations and capital markets teams? They would likely need to carve teams out from other managers and even then, challenging pitch to LPs. Do agree that it’s a ripe market though for take privates and alternative exits for zombies that will never grow into the valuations marked in 21/22.

Think multiple expansion among universe of add-on candidates skews the returns calculus for what is really just a multiple arb play. Re your point on earnouts - founders and important employees will sign non-competes, however, it does raise an important point about the barriers to entry for the business, as there isnt much of a moat. Think it really falls into the same category as multi site healthcare where the party is over because you are now paying 2x what you would have in 2018 / 2019 for add ons.

Only a matter of time before we learn that the medallion fund is printing off of Indian soybean arb.

Highly recommend checking out one of my favorite podcasts of 2023: Josh Kushner’s appearance on @InvestLikeBest. Josh is a clear thinker and has crafted Thrive in an incredibly sensible manner that closely models the type of fund that I would like to begin one day: (i) small partnership, with human capital decisions largely indexed to intellect and drive > experience for junior employees, (ii) generalist model, cross border, stage, and industry, (iii) thematic with flexibility to incubate companies internally, and (iv) thinks of themselves as a product to founders, fostering innovation in areas that have a tendency to stagnate in traditional asset managers (diligence process, operational toolkit, etc.). Link: podcasts.apple.com/us/podcas…

You have too many unskilled people chasing too many high skilled positions and are already living off government coffers. Government stimulus and welfare has grown proportionate to technological development historically for this reason.

@im_just_a__cow @ObtainerOf

I think one of the bigger points is not everyone is going to interpret idiosyncrasies of the business or the market in the same way, you don’t even need to have unique insights to generate alpha, you just need to be in the 49% that believe xyz outside of consensus and be right.

I am not a particularly pious man but these people need to find a god, something to place value in that focuses on the beauty of life rather than guilting them into artificially experiencing the suffering of a far off group

Was there a reason why representation of whites and Europeans was explicitly blocked and the ethnicity of white historical figures rewritten? Was this the inability of your program to perform basic tasks, or, the result of deliberate censorship decisions?

One DUI from 15 years ago, two ex wives, leading the league in dead deal fees, x3 recap to BK under his belt, and has perfected the art of recutting the deal as his pen is hovering above the finalized SPA

Super interesting, primary thesis in these types of rollups, in addition to tech integration (which is very real), is increasing cross sell - Having a deep suite of SKUs that can be sold to aquired customers and acquiring new products that can be sold to incumbent customers. In theory, in addition to immediate rev synergies, depth and breadth of product categories serve as a flywheel, driving above market growth through downstream vendor rationalization in your favor. In practice, unless you have an extremely strong sales function / platform it doesn't materialize as expected. As is the case with most PE businesses, you will likely see the largest growth come from strategic, data-driven price increases. Though this market isn't as inelastic as is has been historically, S/D dislocation caused huge price increases and destocking trends. Will be interested to see it play out.

The same reason why true technological disruption is more easily attained in open and free economies

My contention is more with the merit behind admissions than grade inflation. An Ivy League background still holds weight in high finance because it was a pedigree that was accessible and highly correlated with career competence and success among the cohorts of those in power. Very few decision makers have realized that meritocracy left these insututions over the past 10-15 years and it has put those capable / often best suited for the job in a disadvantaged position relatively to others entirely due to variables outside of their control.

Think it’s certainty possible, but a net detractor not to have the plurality of the team in person. Private Equity, especially as a junior, is a mentorship business - if not only for learning, for the pressure to work harder than the person sitting next to you. Think having an individual remote is possible in fringe cases, but they would have to be a stellar candidate and a good story for not being in person, culture can disintegrate quickly if not everyone abides by the same rule book.

My view is that becomes increasingly necessary to specialize in a sector or product as you scale. Assets in the MM / UMM have generally traded hands multiple times and are thus (i) operationally sophisticated and (ii) are shown to enough sponsors that the market clearing price appropriately matches the risk presented by the asset. In these scenarios, in order to generate return, you must have nuanced insight that is most repeatably fostered by deep sector expertise. In the LMM, there are far more opportunities to (i) add value through introducing competent operators to the asset and (ii) underwrite well by finding underbanked processes where there is asymmetric upside potential in the clearing price of the asset due to information arbitrage – there is simply too little capital chasing the long tail of small companies for the market to be truly efficient.

Simon Kucher’s pricing group has knocked the cover off the ball in recent years. @InvestLikeBest also did a great segment on pricing last year with Madhavan Ramanujam, who wrote an incredible book on pricing optimization (Monetizing Innovations).