| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 0% | 0% |
Permanent Equity's 2025 annual letter emphasizes steady progress over explosive growth, highlighting successful implementation of Blueprint processes and board governance across portfolio companies. The manager reflects extensively on personal growth around truth-telling and overcoming fear of man, which he views as critical to effective leadership. The letter discusses the role of CEOs as arbiters of truth who must allocate attention, people, and capital effectively. A significant focus is placed on AI implementation, where despite substantial investment and hiring an AI expert, results were disappointing with frequent hallucinations and limited practical value. The firm is pulling back on AI ambitions while maintaining focus on relationships and judgment. The letter outlines plans to add outside board members cautiously to select portfolio companies. The manager emphasizes Permanent Equity's differentiated fee structure with no management fees, only performance fees tied to cash distributions. The overall tone reflects satisfaction with steady progress and long-term value creation approach.
Permanent Equity focuses on steady, unremarkable progress through disciplined capital allocation, truth-telling leadership, and long-term ownership of cash-flowing businesses without forced exit timelines.
Manager expresses gratitude for a stable year and acknowledges uncertainty about what the future holds, while emphasizing focus on steady progress and long-term value creation.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 6 2026 | 2025 Q4 | - | AI, Boards, Capital Allocation, Leadership, management, private equity, Truth | - | Permanent Equity's manager reflects on a stable 2025 marked by steady progress in portfolio governance and personal growth around truth-telling leadership. Despite significant AI investment, results were disappointing, leading to reduced ambitions. The firm maintains focus on long-term ownership, disciplined capital allocation, and plans cautious addition of outside board members to select companies. |
| Jan 5 2025 | 2024 Q4 | - | AI, Governance, growth, operations, portfolio, private equity, Small business | - | Permanent Equity reformed its governance structure with traditional boards and Blueprint operating system while generating $50M distributable cash flow. Made one acquisition (Brian's Cabinets) with strong portfolio performance from Pac Air and Rylee + Cru. Plans significant AI investment in 2025 to drive productivity gains across portfolio companies. |
| Jul 1 2024 | 2023 Q4 | - | Apparel, Entertainment, long-term, Lower-middle Market, private equity, Small business, value | - | Permanent Equity invested $85M in three acquisitions in 2023, including amusement ride manufacturer Chance Rides and children's apparel company Rylee + Cru. The firm targets misunderstood small businesses generating 20%-plus cash yields, leveraging their debt-free structure and 30-year horizon. Portfolio companies distributed $35M while reinvesting for growth, validating their cash-generative strategy. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI investments and experiments yielded disappointing results despite significant effort and hiring. Current AI technology frequently hallucinates and requires constant oversight, making it less useful than anticipated. The firm is pulling back on agentic AI ambitions while continuing to use basic AI tools. |
Artificial Intelligence Technology Automation Software |
Private CreditTraditional private equity fee structures are criticized for generating revenue independent of performance. The firm advocates for performance-based compensation aligned with cash distributions to investors rather than multiple fee layers. |
Fees Performance Compensation Alignment | |
| 2024 Q4 |
AIManager views AI as transformational like the internet, with potential for significant productivity gains in blue-collar work through automation of back-office functions. Plans to hire AI specialist and develop proprietary technology for practical applications. |
Automation Productivity Technology Innovation Implementation |
GovernancePermanent Equity reformed its board structure, moving from operating partner model to traditional boards with 3-6 members. New Blueprint system creates annual objectives, strategies, and accountability metrics for portfolio companies. |
Boards Oversight Accountability Structure Reform | |
| 2023 Q4 |
EntertainmentPermanent Equity acquired Chance Rides, the worldwide leader in carousels, trains, trams, and coasters. The business is cyclical but heavily moated and durable if not leveraged. Demand is increasing for physical amusement with new parks popping up globally. |
Theme Parks Amusement Manufacturing Cyclical Moats |
ApparelThe firm invested in Rylee + Cru, a children's apparel company that defies typical industry challenges through drop-driven ordering cycles, small boutique customers, and classic style extension. The business performance exceeds expectations despite the brutally competitive and fad-driven nature of the apparel sector. |
Children Fashion Boutique Drop-driven Classic |
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