Anyone else come across this guy on LI? Biggest shit talker out there and has a serious hatred for PE. His sole goal is to convince people that PE sucks and that GPs create no value. Sad to see someone go about their career with such a negative lens. Hamilton Lane made fun of him in an article a year ago and he went ape shit.
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Ludo was my masters thesis supervisor and I also took some classes with him.
He is an excellent, engaging and very funny professor. I would highly recommend taking any of his classes if you have the chance, or listening to videos of his classes. He also helped me score my first job in fund-of-funds land. It did take me a while to meander my way into direct PE, but that is of no fault of his own.
Do I love his comments on PE? Not really, but honestly I can't exactly find faults with his findings around the AVERAGE performance of the asset class. I'd like to think that you can either (i) consistently do better than average if you set your mind to it and pick a segment to specialize in (as my fund does) or (ii) provide similar but uncorrelated returns aka good diversification, but time will tell.
All in all, we should listen very carefully to our critics, for selfish reasons if nothing else: they may make good points we're too biased to see, which would improve our work if we address. And even beyond that, they may influence the thinking of capital allocators aka our LPs - so we should be ready to defend our stance in the same data driven (if not as funny!) way as he does.
Most of the time I don't think he knows what he is talking about - he has no real world knowledge of PE as he has always sat on the sidelines as a critic. A lot of his observations are really flawed.
Guy never worked a day in his life in PE?
Agreed - just a bitter old fart booing PE from the sidelines because he’s never even been on the field
“Stephen hawking says astrology is useless for predicting the future! Let’s hate on Stephen hawking not astrology” -OP
I like to comment and talk sh*t about basketball players online all the time, but I don’t even know how to dribble a ball
Hahaha sounds so spot on
Lol typical dud boo-ing from the sidelines
His view is a little more nuanced than he conveys.
In actuality he agrees that PE owners can be unparalleled at improving companies, but also sees wide ranging outcomes that can lead to ugly results (ie over leverage, layoffs, short term flipping) in the worst case. “PE is capitalism on steroids” to quote him directly.
Probably helps to remember that he is (a) an incredibly successful academic and (b) from the French speaking world, so it helps to filter out the arrogant style to get to the core of his message.
Oh he is beyond arrogant.
Can't find the Hamilton lane article, can you link it please?
Thanks
https://www.bloomberg.com/news/articles/2021-03-19/angry-oxford-academi…
25 years in economics and not 1 day of real life experiences in PE, and he’s talking down on the industry as if it’s somehow even remotely relevant to what he does
I can respect that he’s good at his area of focus, but would be offputting otherwise
I just think it’s comical that someone who works at an eLiTe institution built on the institutionalized scam that is secondary education around the world is saying this. This is coming from someone that went to an Ivy League school but it’s no secret that the absurd annual costs, perceived exclusivity, and backwards (non-merit based) admissions processes of these schools is criminal. We’re seeing now at places like Penn and Harvard how truly idiotic some educators are. Oxford is clearly no different and Ludovic is just another “holier than thou” and “smarter than thou” professor that has a personal vendetta against an asset class.
Agreed that a lot of his commentary is without merit and that he does have significant bias. There are other private markets academics that do actual good for the asset class like Oliver Gottshalg. This guy is just a meme.
I'd advise you to look into Oxford's admission process in a bit more detail. It is very different to what we have here and much more meritocratic (e.g., legacies don't exist, no diversity preferences in the process).
I'd also argue that an academic is likely to be more objective than our IR teams who have a vested interest.
I'd advise you to look into Oxford's admission process in a bit more detail. It is very different to what we have here and much more meritocratic (e.g., legacies don't exist, no diversity preferences in the process).
I'd also argue that an academic is likely to be more objective than our IR teams who have a vested interest.
He obviously writes with a negative bias towards private equity but the dude also definitely knows what he's talking about. I don't think criticizing his lack of real world PE experience is a valid point. Most of his comments focus on private equity performance vis-à-vis public markets - why do you need to have worked in private equity to comment that most PE funds have not actually added value after fees relative to public markets?
I also really liked his note on linkedin regarding NBIM's yet another attempt to get PE added to their portfolio. I mean, sure the dude could have toned down the snark but most (not all) of his points are actually valid. The only point that scratches me the wrong way is when he (and many other PE critics) states that these funds only want to invest in PE because these managers host fancy annual meetings with booze and food at five star venues. As though Nicolai Tangen and other senior professionals at NBIM need PE GPs to buy them food and booze.
Some of his points are valid, but just like you noted, it’s impossible to take him seriously because he sounds like an absolute dickhead and weaves in some absolute crazy and misguided takes that rub people the wrong way. It doesn’t take a genius to know not all PE funds add value either. There are others doing better work in this subject that don’t try and spark controversy for publicity.
Which LPs even attend more than a few annual meetings in person nowadays?
PE folks rightfully paint HFs as “below an index fund on average, and with a volatile upper quartile” without having worked on the public side a day in their lives. So if an academic says PE folks are eh on average, have bad downside (obvious given the impact of leverage), and kind of a winner’s market overall, what’s the issue? The whole industry is about the winners being “stickier” winners than HF winners are, but even PE partners aren’t waving the flag of the median fund’s return for reasons beyond diversification.
Because hedged funds are hedged, while PE/public equities is not.
Imagine if for every company your PE firm acquired, you had to short another one in the same industry of a similar size. And instead of taking out debt to finance your purchase leaving you short rates, you hedge your short position by buying puts on rates. That way any return you make over the next 5-7 years is from the spread between these two legs of your trade. It's hedged alpha, not long beta.
Continuing the allegory, in today's environment where your long business acquisition/short rates trade is performing like a turd, it's offset by the other side of the trade - your hedge - outperforming. And in theory, if you are good at your job, then your long position goes down by less than your hedge goes up, and vice versa when the market recovers. Your ability to generate returns for your LPs would be market neutral.
And that is why LPs put money w/hedge funds. Because even the dum dums at pension funds can understand that it doesn't make sense to comp a hedge fund's returns against a public equities benchmark.
Comping private equity - unhedged - to public equity - unhedged, is a different beast.
When public equities go up ("S&P is up 28% this year!" etc.) - HF is supposed to do less than that ("HF returned 8% this year"). Because it's hedged w/short positions. And when public equities tank ("S&P is down 10% this year!" etc.) - HF is supposed to do better than that (HF returned 8% again this year"). Because it's hedged w/long positions.
This is a lot of text based on a pretty flawed premise that (most) hedge funds meaningfully hedge, let alone as mechanistically as you posit.
What happens to be the barest minimum required to be an American LP?
I took a course with him and found him good, well founded, data-driven and funny...even toi some extent friendly to private market investments, if not to the average GP and fee levels vs performance.
His style may irk some, but as noted above it may be a convo of his perceived arrogance and the lack of flexibility on the takers side, to acknowledge the industry has flaws and returns in average have issues.
The fact that he never worked in PE is somewhat irrelevant, as he is an academic working on data.
As mentioned above, it is key to understand the criticism and be diligent in addressing it (put it in context, why the average may not be your case, where may be flaws in data/analysis/conclusions, or diverging pov) to learn, improve, argue with facts or simply to take his research and comments as they are.
He suffers from confirmation bias. He isn't objective.
Yeah, there can be a level of truth on your comment....
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