Transcript
Introduction
Patrick
It's been a while since we discussed private equity on the show, so I was excited about this week's conversation. My guest is Dan Rasmussen, the founder of Verdad Advisers. Dan worked in private equity but has also spent years studying the entire field. Dan identified several key drivers of private equities, outsized returns, size, value, and leverage. His firm uses these factors as a starting point to build a portfolio of public equities that behave like their private brethren. We cover a ton of ground discussing the perspective returns for all equities, forecasting, and tons of different investment strategies. Please enjoy this wide-ranging conversation with Dan Rasmussen.
Private Equity Investing and Its Myths
Dan
Private equity is a really fascinating world. I think it's an asset class that very few people understand. From 1980 till 2010, it was probably the best place you could possibly invest, returns, net of fees for about 6% in excess of the public market. Private equity, this is all the more remarkable because we know so much about how difficult active management is and how high fees can drag on returns. Here you had a very complex, clearly very active, they're taking control of every company and very high fee asset class dramatically outperforming. The question is, why was that? Why did it work? Then even more interesting, perhaps, is that it hasn't worked since 2010.