Michael Mauboussin – Great Migration Public to Private Equity - [Invest Like the Best, EP.189]

Invest Like the Best with Patrick O'Shaughnessy

Colossus

Investing, Business, Technology

4.8 • 2.4K Ratings

🗓️ 1 September 2020

⏱️ 59 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

My guest this week is Michael Mauboussin, the head of consilient research at Counterpoint Global. Michael is an all-time favorite guest here on the show, and this is his fourth appearance. We discuss one of the biggest topics in the world of investing: the shift from public to private markets that has taken place over the last several decades. We explore the reasons for this shift, the biggest overall changes in capital markets, and what the future may hold. Along the way we explore other fascinating topics like the rise of intangible asset investments, employee-based compensation as a form of financing, and more. If you enjoy this conversation I urge you to read Michael’s paper on the topic which will be linked in the shownotes. Please enjoy this conversation with Michael Mauboussin.

This episode of Invest Like The Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis.

If you’re a professional equity investor and haven’t talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com/Patrick.

For more episodes go to InvestorFieldGuide.com/podcast.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

(2:27) – (First question) – Motivation for writing the book from public to private equity

(2:28) – Public to Private Equity in the US: A Long-Term Look

(3:02) – The Incredible Shrinking Universe of Stocks

(4:48) – Size of the public vs private markets

(7:20) – History and changes in the public to private markets

(12:00) – Public market vs venture capital returns

(16:48) – Persistence of returns

(20:01) – Role of price and EBIDTA on the returns of a buyout

(23:31) – How buyout forms are sourcing the debt

(29:31) – Transition to businesses relying on intangibles

(29:42) – Capitalism without Capital: The Rise of the Intangible Economy

(30:13) – Endogenous Technological Change

(30:36) – Should Intangible Investments Be Reported Separately or Commingled with Operating Expenses? New Evidence

(34:18) – Explaining the Recent Failure of Value Investing

(36:21) – Superstar firms and increasing returns

(42:38) – Role on monopolies in creating network effects

(4:52) – The allocators perspective in these investments

(49:16) – How does this all impact public market active management

(51:54) – Advice to young people getting into the investment industry

(52:30) – Jeremy Grantham Podcast Episode

(53:30) – Other areas he is researching/looking into

(55:44) – How investment work and Santa Fe research influence eachother

(56:54) – Investors to learn from

(57:15) – John Collison Podcast Episode

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Follow Patrick on Twitter at @patrick_oshag

Transcript

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0:00.0	This episode is sponsored by Cannellist.
0:02.1	Cannellist is the leading destination for public company data and analysis.
0:06.4	I'd heard of Cannellist over the past few years and became more interested
0:09.5	after meeting the founder and CEO last year to pick his brain about SaaS businesses.
0:14.2	Founded by a former Bicide analyst who encountered friction in sourcing, building, and updating models,
0:19.6	Cannellist is now used by over 300 institutions, including the largest money managers in North America
0:24.9	and by a number of guests on the show.
0:27.2	With detailed company-specific models on over 4,000 public companies,
0:31.2	Cannellist platform lets analysts update their own models in seconds,
0:34.7	complete with KPIs and segment data, adjustments, and restatements.
0:38.4	Everything you want and expect in your own models on virtually every investable public equity.
0:43.4	If you're a professional equity investor and haven't talked to Cannellist recently,
0:46.8	you should give them a shout.
0:48.3	Learn more and try for yourself at cannellist.com slash patrick.
0:52.3	That's c-a-n-a-l-y-s-t dot com slash patrick.
0:57.8	Hello and welcome everyone.
1:02.1	I'm patrick ochanisie and this is Invest Like The Best.
1:05.2	This show is an open-ended exploration of markets, ideas,
1:08.6	methods, stories, and of strategies that will help you better invest both your time and your money.
1:13.8	You can learn more and stay up to date at investorfieldguide.com.
1:21.1	Patrick ochanisie is the CEO of ochanisie asset management.
1:25.0	All opinions expressed by patrick and podcast guests are solely their own opinions
	...

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