Sharpest LMM investors?
Which groups do you think are the smartest LMM investors? Let's define LMM as <$1B funds.
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The universe is very large, so it would be helpful if you would narrow it down to the sector(s) where you have interest.
Trivest
2nd. These guys do well and have had multiple 25x MoM exits
why the ms?
threads like these just result in people naming their own funds lmao
Actually my LMM fund averages 40x. I'm not allowed to tell you what it's called (I'm a landlord ok let me back up I have a 3 bedroom house and rent out 2 rooms to friends let me back up my parents bought me this house alright let me back u).
Riverside micro cap is decent
f
I worked the other side of them on a deal a while ago and was very underwhelmed, but might have just been that one MD/deal team
I imagine it's someone on the microcap team working OT to drum up hype. Have heard this a couple times on these forums and find it hard to believe.
Has anyone heard anything about Graycliff?
I feel like most LMM investors that have done really well over the past 15y have been doing just buy and build and selling up to MM PE. Kind of a rate based strategy and one that even from a secular perspective is going to be more scrutinized now because of how some of those platforms are doing now
Buy and build in the LMM isn't that reliant on low rates. Given they are normally acquiring 'mom & pop' type businesses, the sellers often aren't basing their price expectations on interest rates, and the deals are typically small and don't require significant debt.
The main source of rate reliance would be when exiting to MM PE (as the MM PE requires access to cheap debt), but that kind of applies to all PE.
Debt levels in LMM are way lower than up market as buy and build is a lot easier going from 1 location to 10 than 100 to 200. Good allocators have known for a while you should be in at the ground floor of PE (LMM) versus mega funds who are buying an asset for the 8th time and taking it public. Issue is most major allocators just can't commit to the LMM due to size issues but the more nimble allocators have been all over LMM for a while now. Doubt it changes either as the up market funds have raised way too much $ and will be forced to deploy.
Shore Capital in Chicago. Go listen to the invest like the best podcast with Justin Ishbia.
They seem to do really well in HC, their industrial and business services verticals are still young. Got approached for their CXO program- seems like a good shop for portfolio professionals
Did they make you go through the interview process or they simply poached you? Ditto on their healthcare being strong. Personally know a few people within that sector at the firm (on the CXO / Ops side).
One of the sharpest healthcare teams I’ve worked with
Consonance Capital Partners. Not sure if they're considered LMM though.
lol...
Consonance has a constant churn of junior folks though. It's a 2 yr and out program from analyst to VP essentially. It's just the partners holding down the fort.
Fair enough, I guess I'm basing it on their returns more so than being a place to work.
Why are they sharp investors
Great returns. Impressive operations team.
My fund, because we are really smart and good. :)
What’s the difference between lmm funds and independent sponsors?
LMM have committed funds backed by LPs vs. independent sponsor where there is no committed fund and you have to go out and find capital for the equity check on a deal to deal basis
A few that I know to be good (may not all be sub-$1 billion, but around that threshold)
Angeles Equity Partners
Pacific Avenue Capital Partners
QHP
Core Industrials
Crossplane
Warren Equity Partners
Percheron
Growth Catalyst Partners
GrowthCurve Capital
Invictus Growth Partners
Dunes Point Capital
Some of these names aren't very impressive
Like which ones?
Core has been growing like A WEED
Bump
Emerald lake capital - run by an ex-Ares head of industrials
Did a large co-invest w/ them, super sharp indeed.
Gemspring Capital - has doubled their fund size every time and raised new fund in 10 weeks… aparently returns are insane
There's a few LMM firms who are spin-outs from HIG and KPS that CRUSH. Just running it back to when those firms had their insane returns in smaller companies. Performance after a few funds will probably fall off like HIG/KPS (still very solid for MM/UMM) but the spin-outs kill early given the high motivation to produce carry for the partner(s).
Looked at them when they were raising Fund III - they basically told LPs they had 4 weeks to sign up LOL, there was no way I was getting past IC in that time frame + complete referencing. If I recall they had one 12x deal in Fund I or something, but it was pretty much because they bought that company at 2x EV/EBITDA and sold it above 10x EV/EBITDA. Is that necessarily value creation? Buying well and selling well is a skill for sure but with the tight timelines + insane fundraising pace and fund size increases, it was difficult to get comfortable. Returns are very impressive yes, but very tough to do adequate work when everyone is FOMOing. Personally didn't feel comfortable pushing IC to sign a check while barely having the chance to ask questions let alone speak to the team.
And 355m -- 750m -- 1.7bn fund size... I may be proven wrong and Gemspring goes on to continue generating great returns, very few firms have been able to scale this rapidly without hurting returns. Guys like Thoma Bravo are the exception rather than the rule unfortunately
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