What is the secret sauce? Feel like I don't know anything
I look at the SM HFs that consistently generate returns year after year. A lot of these hire PE guys.
What is the secret sauce? How do they do it? I am in a large cap PE firm right now and there is no secret sauce to what I am doing. It is just classic over-complex models and neurotically detailed diligence.
This leads me to believe that the secret sauce lies in idea generation. When you look at some of the top investors (e.g., Elliott or Abdiel - these are just two that come to mind), you see backgrounds in Law, Philosophy, History, and other Liberal Arts studies.
This leads me to believe that the key to the success of being a hyper-successful public markets investor is first principles logic and an ability to develop a coherent thesis about the world around you and that that is the context in which "good" idea generation is grounded.
What I think is interesting is that PE doesn't train these skills at all for the most part. You model what CIMs you have available, and there is nothing proprietary anymore (for the most part) in the large-cap space.
For this reason, I draw parallels betweenand venture in terms of the critical thought required (taking extraneous factors out of the question, such as crummy VC firms that can't get deal flow to where they have the luxury of critical thought, to begin with).
Maybe I am not thinking about this correctly though (the above thoughts are a bit meandering). Please let me know what you think, and please be nice, I am just trying to think through this subject out loud with the help of this forum.