The Truth Behind Private Equity’s Megaboom | TCAF 207

Summary

• Private Markets Growth: The podcast discusses the rapid growth of private markets, highlighting that private equity, private credit, and other alternative assets now total approximately $25 trillion, with expectations for significant future expansion.
• Wealth Channel Engagement: There's a focus on how major private equity firms are increasingly targeting the wealth management channel due to institutional investors reaching allocation limits, with firms like Blackstone leading the charge.
• Evergreen Funds: The discussion emphasizes the rise of evergreen funds as a more flexible investment vehicle for wealth managers, allowing continuous investment and some liquidity, which is more suitable for individual investors compared to traditional closed-end funds.
• Private Credit Opportunities: Private credit is highlighted as a major growth area, with the potential to expand significantly as banks retreat from certain lending markets, although concerns about terms and market saturation are noted.
• Institutional Partnerships: The podcast notes strategic partnerships between traditional asset managers and private equity firms, such as T. Rowe Price and Goldman Sachs, to leverage each other's strengths in distribution and private market expertise.
• Market Challenges: Concerns are raised about the potential risks in private credit and equity markets due to rapid growth and increased competition, which may lead to looser terms and higher risk.
• Brand and Culture: The importance of brand and cultural alignment in the asset management industry is discussed, with firms needing to effectively communicate their values and investment philosophies to attract wealth managers.
• Educational Initiatives: The role of education in marketing is emphasized, with firms investing in educational platforms to better inform advisers and clients about private market opportunities and structures.

Transcript

Where do you live? >> Between uh DC and here. >> Okay. Uh >> so I split my time. >> Where you where are you more often? >> Here. I'm here pretty much every Our office is three blocks up from you. >> So why are you also in DC? >> It's where I built the home podcast studio when I started AGM during co >> you know you could move the microphones. >> I could I could you know I know I could move the microphones. >> It is it's a cool background though. So it's hard to >> I listen I listened to your show and I really liked it and um I know it's very longunning. You've done a ton of episodes. >> He called it but he caught one. >> No, you Dude, you're you can do it. You're good. You're good. >> Appreciate it. >> It's good to hear from another podcaster. >> I thought that this episode was just going to be I thought I was going to be in this seat. Josh was not supposed to be here. So, I invited you. >> Surprise, surprise. >> So, I invited you and somebody who canled 24 hours ago. >> Dead to us, right, Nicole? >> And I'm not going to name companies. I'm not going to name names. I'm not going to do it. No, I'm not going to do it. But let's just say it rhymes with Stop. Stop. Stop. Stop. Stop. >> Do it. [Laughter] >> And listen, you are not encumbered by corporate speed. You could >> Yeah, but I saw I saw the person's title and I don't know how they even got into our show. >> What do you mean? We have to go. >> This person was like the vice president of human resources or something. It's like a >> It's not CEO. It's not a portfolio manager. >> It was not. It would >> I would never I would have edited this person out if they came here. >> It was none of those things. I only want to hear from Michael. >> But I guess like there's I thought the doc looked kosher to me like there's too much smoke. Come on. >> Some people can't handle it. >> All right. All right. Well, you can handle the truth. >> I will say it does bring up an interesting point in this space is that I think firms take their brand very seriously >> as they should. >> As they agree. >> Um but at the same time they may have to reccalibrate some of that as they think about working with the wealth. they're going to lose cuz John Gray is not taking himself seriously and uh Harvey Schwarz is not taking himself seriously. I think the best the leading avatars for the private equity market are people like David Rubenstein who mix it up with the crowd and have unexpected conversations and are not scripted when they do media, they're going to they're going to win because that's what the advisor audience responds to. So, if you want to come on and read your PR talking points, you're not going to do that here, right? I don't even know where where is the venue for that, Yahoo Finance. Like, where where could you go where they're like, "Tell us what questions we can we can ask you." I don't even know if that even exists anymore. So, anyway, you ready for this? >> Yeah, I'm ready. I thought we were going. I was I was ready. >> We're go We're going. We start recording you the minute you get off the elevator. I don't know if you know this. >> So, you've been potting for a while. When did you start? Couple years ago. >> 20 April 21 was the first podcast. >> Okay. Okay. This show started This show started in June 21. So Oh, really? >> I think a lot of a lot of pods were born in that era cuz none of us knew what to do with ourselves. >> Okay. >> We can talk. >> Yeah. How many episodes have you done? >> 170. >> It's amazing. Congratulations. Thank you. >> Congratulations. How many have we done? >> 206. >> Not too bra. >> I got I got to I got to pick up the pace here. >> Those are rookie numbers. Come on. >> Yeah. Yeah. Um, are you, as far as you know, the predominant podcaster in the alternative asset space? I think you probably are >> focused on the intersection of private markets and private wealth. Yes. Ted Ted has obviously done this for >> But Ted goes way more hedge fund than you do. >> Ted's more institutional. I feel like >> Ted's more Yeah. >> Do you not consider hedge fund? So So he I I haven't done as much on the hedge fund side. Um, and then I would think of hedge funds as alternatives. I think what they haven't done as much of is work with the wealth channel in the same way that the larger alternative asset managers. >> They tried. It didn't go well. The returns were bad. But they >> we'll see if they try again. >> They had their moment 15 years ago after the financial crisis and um unfortunately it was like the worst time to get into global macro. >> Yeah. >> But that's what all the advisers were looking for. They wanted the people that called the crisis correctly. Um unfortunately those people then went on to predict 10 other crises and the end result for wealth management clients was when can I get out of this thing? So and you know this history >> well this this is I think important thing to talk about in the context of evergreen funds which I'm sure we'll discuss which is >> how should advisers think about investing in private markets and >> what's evergreen funds you buying like Christmas trees? I'm I'm kidding. No, I agree. I I actually I'm going to do a lot of questions with you. >> Yeah. >> Mostly because I have not paid close enough attention to this space over the last 5 years as I should have. But also our audience, we have a lot of people working in wealth management and a lot of people who are the clients of people working in wealth management. And I think it hasn't really dawned on everyone that the era of three basis points, Vanguard, you don't need anything else. Like I don't think everyone has accepted that that investing era is over and we're in a new era. So I think because of that there's a lot of just I don't want to call it ignorance but there's just like a lot of um I'm too afraid to ask these questions. What is an interval fund? What is this? What is So I'm going to pepper you with like give me definitions as as we discuss. >> Sure. Make sure Wait, where's your Invesia open? How are you going to do this? >> No, no, no. But like when you talk to Ted, when you talk to Ted Sides, >> y >> you guys are speaking at a level that makes sense given his audience which is institutions. >> Y >> my audience, they want to learn. >> Y >> but like they're not ready to they're not ready to hear some of those terms without us pausing and saying what does that mean? >> Which is good. I mean I think look like that's one >> it's missionary work. It's missionary work of >> course but I mean that all the firms are doing that like what's Blackstone doing? Blackstone University Apollo has Apollo Academy. Yeah, >> you know, etc., etc. And they all know they need to educate the adviser. >> We did that at I Capital. That was a huge part of what we did. We're eye Capital is still doing it today. And but that that I think is a hugely important >> education is education is marketing. >> Yep. >> These firms pay for their education, their universities out of the marketing budget. Nothing wrong with it. >> Um, you know who I had here the other day? I had Shanali Basak here and uh >> I think she maybe has like the most consequential um role in this ecosystem out of anyone >> because she's like basically going to be the face of IAP >> um and the voice of IAP when she starts doing media. >> Did you know Michael is uh one of the first what employees there? >> Uh I know that first. Yeah. Helped build the sales team. >> Number nine. >> Okay. >> Number nine. >> Yeah. And uh so she so she's like I'm so excited because you know working at one private equity firm basically that's the whole story that I have to tell and that's the whole job is marketing that but sitting at eye capital I work with every firm and I can really put my contacts to good use >> by connecting people from all over the ecosystem. Oh, I I think she's like perfectly positioned for >> Oh, I mean that is critically important, right? Like somebody has to >> connect public and private. Somebody has to make sense of what's going on in the industry. >> Uh what the different firms are doing, how they're doing it, how advisors think about private markets, how to fit into a portfolio. All those things I think are top of mind, right? And they're going to have to think about and and there's productization around it. There's model portfolios. There's >> I mean different adviserss have different types of clients. All of those things. >> All right, hold your thoughts. Let's start the show. He's He's brimming with information. >> We're going. [Applause] [Music] [Applause] [Music] Today's episode is brought to you by Wisdomree. Enhance your portfolios with expert insights from Wisdom Tree. With increased portfolio consultations provide a comprehensive review that includes unbiased, forward-looking investment ideas tailored to your needs. The experienced consultants at Wisdomree leverage insights from a global research team to offer fresh perspectives and help you achieve your client's portfolio goals. Wisdom Tree offers a range of services including individual fund analysis, asset allocation guidance, portfolio stress testing, risk deconstruction, and more. The review includes a detailed analysis of your portfolio, helps pinpoint unforeseen risks, and includes actionable insights. Connect with Wisdomree for a nocost consultation today. Visit wisdomtree.com/portfolio [Music] consultations. Before investing, carefully consider a fund's investment objectives, risk, charges, and expenses contained in the prospectus available at wisdomree.com/investments. Read it carefully. There are risks involved with investing, including the possible loss of principle. Oh my god. Episode 207. Ladies and gentlemen, you're now listening to one of the best investment podcasts in the world. We have a very special guest here today. He is a podcaster, thought leader, operator, expert in an area of the market that is in one of the biggest bull markets any of us have ever seen. Super excited to learn from him today. Maybe push back a little bit. We'll see what happens. Either way, we're going to have some fun. Michael Sigmore is a partner and co-founder of Broad Haven Ventures, a global early stage investor that makes principal capital investments in financial technology companies and venture capital funds. Michael is also the founder of Alts. Alt goes mainstream. No S alt. >> No S. All right. Don't always trust me up till you should change it. It's not too late. >> You know, I've thought about that. I've built I've built out the brand. >> Nah, just do it. >> Uh if you added an S, nobody would care. Yeah, >> the brand is you. As you know, it's not like somebody else could sit in the seat and do alt goes mainstream. You're the brand. >> Boy, Michael, you guys are also an investment bank. >> Uh, yes. We have an investment bank called Broad Haven about 65. >> You said that. You didn't listen to my >> wasn't listening. I was distracted. >> No, you didn't. You didn't say that. You didn't say that. >> You said it. Co-founder of Broad Haven. Play. Do I have to play the tape or can we >> a G that makes principal capital in You didn't say they're an investment bank. I said it. You didn't say it. >> What? What do you mean? What is Broad Haven Ventures? were the principal investment arm that sits on top of the investment bank that my >> So I said I said it wrong what you guys do. >> Not what I not what I he knows what he said. >> It was incomplete. >> All right. All right. Just kidding. Michael, it's so great to have you here and uh I've been overdosing on um listening to you over the last couple of days and I'm so excited to have this conversation. Uh let's start let's start with this. How big is the alternative investing market right now? Give us some sense of the the scale as we sit here today. >> Yeah. So, uh I'll go from a a chart from Brookfield which is uh probably based on some other data like the Bannon companies, the prequins etc of the world about 25 trillion of assets in alternatives or private markets today. Now private markets is not just private equity which is what we may think of. It's also private credit and hedge funds and infrastructure um secondary real estate GP stakes. So >> it's about 25 or so trillion today. Private equity is the biggest asset class within private markets. Now >> over time let's see what happens with things like secondaries. I think if there's going to be a $50 billion fund that's raised, secondaries is probably the first place that that would happen. Interesting. Secondaries is private equity funds that have holdings they'd like to get liquidity on. A secondary fund would come along. It's just another private equity fund, but they specialize in buying those assets away from the primary. Correct. >> All right. Why is that so vital and necessary right now? The second is it because there's a lack of liquidity >> to some extent. Yes. So there's uh in in today's world of private markets, yes, absolutely. There's been a lack of liquidity, lack of distributions mainly because the institutions and we'll talk about this as it relates to the wealth channel. I think that's all part of the story here is that part of why the alternative asset managers, the Blackstones, Apollos, KKRS, etc. of the world are choosing to work with the wealth channel is because institutional investors have reached a point where they're relatively fully allocated >> 15 20% invested sometime I mean the Yale Harvard endowments or sometimes >> when I hear that stat when I hear that stat I hear it cynically like I hear it like the institutions can't physically buy any more of this stuff we need a new buyer hey we're super interested in democratizing this for wealth management I I don't mean to be cynical. >> How could they not be? Obviously, >> but how can you not be when that's the the rhetoric? >> A very fair question of private markets. I think there's certainly some truth to that when you think about alternative asset managers as businesses. Their customers are their LPs. So institutional LPs are their customers. Now the wealth channel is another customer of theirs. And particularly as some of these firms are in public markets or have taken investments from GP stakes firms like so they've taken in capital to grow their business. >> We don't say that name here >> grow their business >> dead to us. >> Um >> they you know they need to think about other pools of capital. It's not just private wealth. It's insurance too. Insurance has been structurally underallocated to private markets and that I include like things like private credit in that relative to uh institutions. But I think let's put that aside the cynical aspect aside for a second because I think there's another >> Can we start Can we start with the cynical side? Just just lean into a little bit more. >> Let's get it. Let's get it out of the way. >> Let's get it out of the way >> for sure. So look, I think um >> these these are very these asset managers are are the best in the world. >> They're very good at generating revenue and profit for their shareholders and themselves. They they charge higher fees >> and now they're all buying insurance companies because like it's just it's a neverending supply of money and investments and fee related earnings and profits and carry and all that good stuff. >> Sure. So I think you hit on an important aspect from the business of asset management which is they charge a management fee and they charge carry. As you guys well know from the evolution of the mutual fund industry, the rise of ETFs, the traditional asset managers who also are getting into private markets in a big way, whether it's Franklin or Tro, Black Rockck, etc. >> They've seen a fee compression in traditional asset management. That's the way mutual fund industry went and alternative asset managers generate higher fees. So I think if the instit I'm hearing that cynically, too, though. >> Sure. So the the next piece of the puzzle here is >> the institutional side as they've become bigger consumers of private markets. There was a wave in alternative asset management where big institutions think like the Maple 8 so the big Canadian pension plans uh Ontario teachers um the CDPQs of the world etc. They started going to private equity firms and saying, "Hey, we want to co-invest alongside of you or we want to build out a direct investment capability." Why did they want to do that? In part because they wanted access to this part of the market, but in part because they wanted to blend down their fees. >> Yeah. And strip out strip out the fund. We don't need a fund. We're coming with money. You have the product. Let's do it that way. >> So smart. >> There's definitely a piece of that where I I think we've moved away from two and 20 is the common parliament. That's right. 50% management fee, 20% carry. That's more likely the case to be in private equity than it is in private credit. And there's a reason for that. There's, you know, some element of like you have to hire the team. They have to find the companies. They have to do the diligence. We could debate whether it should be 2 and 20. I don't think it is 2 and 20 anymore. I'll use another example of, you know, certain fees have gone down. So like EQT is one example. They're a big 270 billion euro private equative asset manager. Their fees have stayed relatively constant about if you look at one of their last uh management presentations about 142 basis points or so that stayed relatively constant. It's not 2% anymore. And that gets to your point of >> the fees have come down in private markets. Will they come down to true vanguardization of private markets? Probably not. >> I actually think they should they should be high. It's a very complex thing to manage a portfolio of privately held investments. They should not look like an ETF. Um so we I guess what I'm trying to figure out is um and maybe there is no good answer. Maybe this is just the way it is. >> I heard you talk about uh you estimate there's $250 billion in private equity that's just wealth management channel money. And I think you're including the Meil Lynch and the Morgans who have always done private equity investing and now the mega raasic creative planning etc. Is that the number? Is it is it a quarter of a trillion dollars in wealth money? >> I think that was specifically related to the Evergreen fund. >> Oh Evergreen. So it's more than that. >> Yeah. And just Blackstone. >> It's just Blackstone. >> Yeah. Blackstone. So, Blackstone is that that 250 roughly speaking, it's probably a little higher today than when I when I >> So, so where do you So, where do you think it's headed? >> Like, let's say end of decade, like what do you think that number is going to look like in dollars? >> We're we're certainly talking trillions of dollars from the wealth channel. So, here I I'll break down the the >> I think you're going to be I think you're going to be right. >> So, about 140 trillion of assets on the institutional side. There's a rough roughly similar number on the p global private wealth side individual investor side about 145 trillion. So this is data from Bane Bane and company's private they put private equity report out every year. Private wealth is around roughly speaking around like 1 to 3% allocated to private markets. >> So rounds to zero basically >> institutions are 15 to 20. So maybe it shouldn't be 15 to 20 in the next 5 years and that depends on the client. Family offices have invested in private markets in many cases for years. >> Yeah. >> If they're qualified purchasers or qualified institutional buyers, they're probably having some allocation to either private equity funds or companies directly or other parts of private markets. But when we think about how early it is the to your point like the mosaics, the LPLS, the Schwabs, the Fidelities, they're just starting to get into this now. Some platforms, uh, the High Towers, the Focuses, the Dynasties, these RAI aggregator rollup platforms. >> Um, and then private equity back firms, they're they're getting into it and some have advisor teams that are doing it. But even still, there's still relative under penetration. I would say it's this is again rough rough numbers but I think it's the 8020 rule maybe even the 9010 rule of at many of these firms even the big wirehouses there's you know 10% of the advisers are doing 90% of the flows today so I I I think it is going to be >> let's put a pin on that because that's an important stat for us Michael do you agree with the statement the the more former wirehouse advisors work at an RAIA the higher the likelihood that that RAA is actively allocating to alts >> 100%. Because wirehouse guys, they learn that when >> they're selling performance and RAS were typically selling planning. So it's just a very different mentality. >> So when you say like High Tower Dynasty, everyone that works there used to work at Morgan Stanley. Yep. >> And Meil Lynch. And they spent 25 years, let's say, guy, a guy in his late 40s, early 50s, um, spent 25 years telling their clients the reason to have an account with them was performance. So, and they used alternatives as part of their pitch. They don't really believe in financial planning. Now, they have some young CFPs. They throw the kid at the client. They're like, "Hey, do a financial plan for this guy. You do it." And then they get to check a box and get higher compensation. There's not like a hardcore wave of CFP believers at the wires. Nothing wrong with that. Just pointing out what it is. The clients actually care more about performance than meeting with the CFP kid. So, it's a nice fit. Those are the people who when they break away, they go to Dynasty or High Tower. Those are the people most likely to take meetings with Blue Owl and Carlile and all these firms and want to know like which of your products can I include in my portfolios because I'm going to be pitching the performance of these products. I >> I think it's a really important point in two contexts. One is you have >> but I think that's what's changing. >> Yeah. So So these things are all >> What in the world? >> Look at this velocity like that. That is ominous. >> Nicole. Wow. >> Oh, all right. No money. I'm sorry. A a raven just perched on your shoulder. It's not an omen or anything. I wouldn't worry about it. I wouldn't think too much about >> for private markets or for public market. >> Yeah. No, this will be fine. >> I don't know. Yeah, it's a black raven. I don't even know what we're saying. But one other one other aspect of this that's important. >> Let him let him cook. >> What were we talking about? The bird. >> So, one uh definitely not fly eagles fly. We can all agree on that. >> Commanders fan. >> Yeah. Well, we'll see what happens this year. Uh sports is a piece of that we can we can talk about sports. I think that's another interesting element of all of this too and and it relates to the branding and the collision of culture and finance which you guys have done a great job of covering in a number of ways and bringing to life but that I think is actually part of the story here. But before that on on the point about the advisers thinking about this from a business building perspective yeah I don't think we can ignore the trend of private equity investing into wealth management as part of this >> say more say more >> so >> you just interviewed Carl about this heckenberg >> yep talk Carl is one example of that he has a fund called constellation wealth capital he raised billion dollars or so in his first fund to take minority stakes in raas is so the likes of Crescent and Leo uh Alphaore which is alts focused raia u and I think that that's a good example of this one of many I mean many private equity firms have invested into either platforms like the high towers dynasties focuses of the world or in creative planning general atlantics investor and creative uh TPG more recently as well >> bane and mariner not mariner um uh Carson >> yep yep right so the private equity funds come in, they buy a stake in the RAIA, all of a sudden the CIO at the RAIA, the chief investment officer is way more receptive to private equity. >> Well, they need they need to grow the business. And I will say this, so there's two sides of the coin. Uh, one aspect of it, and again, I think the most important aspect is their fiduciaries. At the end of the day, they have to remember that. The other side of it is from the business building perspective is when you think about what private markets can do to a portfolio we can get into the certain aspects of this but private equity or private credit it's not daily marktomark in many cases now certain structures are creating more frequent marks so get evergreen funds but the traditional closed end draw down structure private equity fund they mark once a quarter and that valuation is not daily marktomark like a public equity portfolio in periods of volatility in public markets that can be a challenge for a wealth manager's business. Private equity, private credit because of their marketing cycle, they may not have that same volatility in a certain period. I think there's there's data that shows that private equity can outperform over certain longer periods of time and market cycles relative to public equities in certain cases depend again that depends on the >> private credit has demolished public fixed income demolished >> like it's I don't it's not even a horse race anymore. >> So that's a good point. Uh what do you say to the people who would listen to that talking point >> um about the lack of day-to-day volatility because there are no marks for 90 days. I'm sure you've heard the criticisms of that. I'm sure you've heard great defenses of that criticism from the industry. So Cliff Aes calls this volatility laundering and he flies into a rage over this and I told him he's rightly bitter. >> I get it because he so he has a portfolio of public stocks and bonds. he has to answer to clients why am I in a 15% draw down over the last month whereas the private equity manager kind of gets to skate through a lot of that unless it's a sustained draw down and then the marks will come down usually on a delay so like how does the industry respond to that um that I don't want to call it a charge but like that criticism like don't tell me lower volatility >> it's not a charge that's the point >> I think there's >> it's right it's one of the benefits of the selling point >> so I I think there's definitely on on both sides there's some where you where you sit is where you stand element to it. So >> we all have >> philosophically people will have their biases. People who are in private markets will have their biasy and people who are in public markets or in hedge funds will have their biasy. >> Um when it comes to how they're thinking about that I think there's there's valid points on both sides. I think it really comes down to what does a client need and what do they want and what's appropriate for their portfolio. I think whether you're a traditional asset manager, whether you're an alternative asset manager, the most important thing is you have the right product structure at the right time that's delivered to the right investor. And that could be for a certain client. Maybe that's a closedend draw down fund for a QP client who has 100 million in net worth and they want to invest in private equity. They can take that eli liquidity risk and as long as and maybe they have they're working with an adviser or a team that can build out that private equity program and that understands that they're going to have a J curve in the first few years. So they're going to be paying out money effectively for capital calls. They're not going to be seeing money come back. So the IRRs might not look great relative to if you put it into public equities, you know, today or maybe maybe not four or five months ago, but eight months ago or something like that, right? And and then you have to think about it over longer term, but then by year eight or nine, you'll have the harvest period and you'll be getting capital back. And in an ideal world, in a private equity fund, you're getting more capital back and you put in. So over a 10-year period, if you smooth out the IRS, then that would have bested what you could have done over that same period in public. >> You have to wait a really long time to be able to determine >> this 10% allocation we put into private markets was a good alternative or a bad alternative. Like you really have to wait for that harvest period when you start pulling your money back out. And you look, this is why it's predominantly an instit in institutional market because most normal people, it's hard for them to wrap their heads around investing with a 10-year. I mean, we do it all the time with 401ks, but it's just it's still hard. >> Yeah. I I mean, great point in two context. One is uh maybe 401ks again with the right managers with the right structures uh for investment and there's the regulatory and legal side that needs to be figured out that I think is still in question despite the executive order. >> Maybe that's the right vehicle for that because it's capital you're not gonna >> I agree with that part of it. >> Take the money out and you don't need it and you don't need it in a year from now. You don't need it in three years from now. So I think that's that's an important piece of this is you need to match the right vehicle or the right duration with what you're trying to achieve as an investor. I think the other piece of this too is like there is an element of private markets and building a private markets or private equity program that is very institutional in quality and in nature and you need to have the ability to do that in order to invest in more traditional private equity. So that 10-year draw down closed end vehicle. We're starting to see that change in this industry with the creation of evergreen funds where I do not call them liquid. They are very much not liquid. They they are >> Tell our tell our uh listeners what an evergreen fund is. >> So evergreen funds are they're not closed end draw down vehicles. Draw closed end draw down vehicles means you commit capital and it's generally over a 3 to 5 year period that it's called >> the fund closes. >> Fund closes. You can't get your money out. You can't call up and say hey I want to redeem. also don't put new money in, >> right? >> You don't you you commit a million dollars, that capital gets called 30% in year one, 30% in year two, 40% in year three. Just making up numbers, but based on the cadence of the investment managers, >> uh processing of deals, sourcing companies, and deciding to invest, an evergreen fund is different in that there's continuous ability to invest. There's also the ability to withdraw capital. >> There's nuances based on the type of funds. Yes, they they they >> they limit the amount that a that an investor or investors can redeem in any given time >> because they need to manage the liquidity, but they're constantly looking at different investment opportunities. And I think this is the important piece of evergreen structures is that the firm needs to have enough deal flow to be able to handle both the amount of capital they raise because they can raise in continuous offering format. It's not like most private equity funds in the in the historical context would say I'm going out I'm raising a $25 billion fund. >> That was more less common. A few firms do that million dollar fund. >> Exactly. But like a CVC they raised 26 billion euros in their last fund. So like like we're going to go raise $26 billion or $26 billion. They do that fund raise for 6 to 18 months. Once that fund is closed, it's closed to your point. You can't get in if you if you miss that close. I think that's an important point though for the advisor community and why evergreens can make sense for certain >> using evergreen and interval uh synonymously. >> Evergreen funds I I look at I I think of as the broad umbrella term for interval funds, tender offer funds. Those are different types of >> structure. What's a tender offer fund? >> Tender offer fund and interval funds are both they can be closed and or open-ended. But tender offers mean that there's a there's a period where investors can actually tender some of their capital for redemption versus interval fund. There's specific intervals. Yes. Generally quarterly. Although in a tender there's a board. >> How time are we talking? medium rare >> depends. Some people like their >> So just on the surface, the interval fund, the evergreen fund makes way more sense for wealth management than the traditional closed fund because we're not institutions. We're human beings. Things happen in our lives and maybe we don't we we can't demand the right to get 100% of our capital out. But if you tell me, god forbid, you go into a stretch in life where you need to reinvest in your own business or something horrible happens to a family member, it's not 0% liquidity. And vice versa, regular people don't typically make their money via windfall. They make money over time, over years. So having a vehicle that they can add a dollar amount into every year makes it more utilitarian for that person. Um so I I totally get why that structure has become so popular. >> What percentage of the assets that the wealth channel is putting into alts would you say is going into interval funds right now? >> Most of it. >> I don't know the exact number. >> It's like almost all >> depends on how you define the wealth channel. Again like if you think about family offices then I think that's RA >> it's mostly interval funds RAAS in warehouse is mostly interval >> so and and this is public public data but I capital had talked about this that because they have over 240 or so billion maybe I'm off by by a few billion at this point of of assets on their platform. They do both closed end funds but they do a lot of evergreen funds on the private market side. A good portion of their flows have been evergreen funds. They're working with the the the wealth channel and it's all advisor. It's wirehouses and it's raia channel or independent channel. The majority of the flows are through the through evergreen structures. >> You refer to the eye capitals as placement agents. Is that or is that not the the right? >> I think it's more of the pipes and plumbing of >> So they call I know they call themselves a platform. Everybody wants to be a platform now. >> They are. But they're all but they're also directing advisors toward one fund not another. >> There's so there's different models. Uh I Capital has multiple models and for context I was I was an early employee at I Capital. I helped build the investor network or distribution team. >> Question without question with that. Just saying look at it. I mean look at it now. >> Got to be very proud of that. >> Yeah. I mean, look, I I think the market structure needed to be built just like the pipes and plumbing of equities, fixed income derivatives needed to be built and has evolved over time and has become more electronified over time. Private markets is obviously much younger. I mean, Blackstone is a 40-year-old company. They're the biggest a trillion plus of assets. It's still a young industry when you think about the size and scale. And if it's if it is 25 trillion of total assets in private markets, I mean equities is what 110 trillion fixed income is similar number. >> The reason I the reason I love what you did is that I existed in this industry prior and there were a lot of advisers who wanted to sell private investments to their clients. It was a wild west. There was no platform where you could look and say compare this fund to three of its nearest peers and let me rank it on different did not exist. There was no way to automate the paperwork process or explain what the paperwork means that your client's about to sign. Did not exist. You had guys running around with PPMs, private placement memorandums, doing regggd offers, uh like ridiculous conversations, extra legal in many cases. and what you have done and and uh I know there are others I um but like those platforms that now exist I think they have brought order to a very chaotic process >> I think the >> even if you don't like the investments you got to you got to agree that they are good for investors the fact that this exists >> well I think that's a big piece of the puzzle to making sure that the wealth channel is served properly because if you think about it yes the investment is important so I I don't want to minimize that and selecting the right fund is absolutely critical. It's probably even more critical in private markets than it is in public markets. But putting that aside for a second, just the operational challenges of investing in a private fund, whether it's a draw down closed end fund or even an evergreen fund, unless you create the straight through processing system leveraging technology, it's much harder to do. And that's why that's why it's been so important. And I I don't think the the private wealth investing in private market story can actually take place without the technology market structure evolution. Those two things can't be decoupled. You need that evolution from pre- to post trade in private markets just like you had in equities, fixed income and derivatives. And that and that's that's the other piece of this is you have to create the right packaging and the right postrade processes cuz you the example you gave earlier about the client needing to make sure that it's easy for them. I think the part of the reason why an evergreen structure is important for the wealth channel is it's also helps the adviser run their business. They don't want to have to wait till the next draw down fund to be able to put a new client who comes in. You deal with this all the time. You have new clients who come in we'll allocate you in five years. Right. >> Yeah. You want to have an evergreen offering that you can say, "Hey, I just had a new client came in. >> I can allocate to this manager because this is part of our private equity program. We've vetted this fund or our private credit program. We like this manager. We have an account with them already. We've worked with them across our client base." And that could be get in today >> accredited and qualified purchaser. And you can put a $10,000 minimum or $100,000 minimum in for one client. And then you could put a $5 million investment in for another client. And it makes it easy for the adviser. I think that's a big piece of this too is you have to meet the adviser where they are. >> One of the other big parts of the story, the less cynical part of it because we address that part, institutions are fall, the wealth channels next, okay, is that the actual investment story here is that 83% of the companies in the United States that are doing $100 million in revenue are privately held. I'm sure a lot of them are private equity backed. Um the other side of it is the private credit side and private credit's just it's it's bonds for these private companies. It's loans. Uh the >> non-traded junk bonds they prefer. >> No, no, no. These these >> jk >> this part of the market banks were regulated out of and so instep these black stones of the world and said we could do it quicker. We don't have to syndicate it. We have an endless supply of money. We can do the underwriting better. We can negotiate if things go wrong. And it's all playing out and that is a huge part of how we got to where we are today. >> Oh, 100%. I mean, so you mentioned the let's talk about the private company side. 87% of companies in the US with 100 million in revenue or greater are private. Similar numbers in Europe and Asia. So I think that's a really that's an important point, >> right? which is >> it's the whole universe of investable assets and almost none of them are traded >> and if you don't have access to that you're missing out on all of that in a world where what Nvidia is 7 8% of the S&P 500 and you have indexation you have correlation you have concentration and the rise of passive all of those things I think if you're shut out of investing in p in the private markets and again I want to put the disclaimer on because it's important that you need to make sure you're investing investing in the right companies or the right funds. >> Oh, is that all? >> So, so that's the important piece. You can't just buy the >> You can't just fire up the spaghetti cannon and just start throwing. Okay. >> But part of part of that >> you're writing this stuff down for me, Doug. >> Michael, part of that is this. So, I totally understand private credit. It is wherever it's going 25 trillion, it's going to 40 whatever. I I I believe it. I 100% believe it. The problem is, as I see it, I get legitimately a dozen emails like this a week. And I just picked the most recent one. I partner with RAS, family offices, and institutional investors seeking differentiated private market opportunities as a blank billion dollar private credit manager. We originate loans in niche markets. Our portfolio is 100% senior secured, producing 12% annual cash distributions, and a 17% IR with a $2 billion track record, and blah blah zero credit loss. Okay. Um, is there too much money chasing too few deals where the terms are getting shittier because there is just a torrent of capital because the advisers the easiest thing in the world to sell is 12% income returns and they're steady and there's no volatility. It's the easiest thing in the world. Is that the danger? >> You said there's 11,000 private equity and private credit managers. That's a Doesn't that sound like too many? >> There's too many. >> It's a lot. And I think that that number is going to shrink because there's going to be consolidation in the market because the biggest players are going to buy. >> But to all right, but to his point, so it is crowded today and everyone's getting increasingly desperate to raise money. Not the big firms, but everyone else >> and the terms are getting worse >> and like what what do you make of that level of activity just generating bad outcomes? >> I'll talk about both sides because I think there there's credence to both sides and I I think >> Michael, look at that chart. Sorry, I cut off but percentage of covenant light term loans. It's basically 100%. Is this >> covenant light meaning the protections for the end investors are lesser because the desperation money? >> Is this misleading? What's going on here? >> No, that's look I I think >> you will answer for it now. >> That that's the case. There's an increase in pick coverage, right? payment fine where where the company can't come up with the cash so they'll just issue more bonds or more shares in lie of the that's never a good sign. >> All of those things are true and that is a cause for concern for the private credit industry. >> I think it's worth zooming out for a second on this which is private credit is a $2 trillion or so industry today. It was a few hundred billion a few years ago. So, it's grown massively. Anytime an industry grows fast, I think you have to take stock and step back and say, "Okay, is this growing too fast? Is there too much capital being raised and then deployed?" All of that that is true. I think what I would also say is if you believe what some in the industry are saying, so like Mark Rowan from Apollo, one of the biggest credit managers, you know, close to 700 billion of AUM, a large portion of that is in credit. And he would say that it's a $40 trillion marketplace over time. And that's because banks have been retrenching. There's been regulatory 40 trill. Yeah. >> Two trillion to 40. No wonder there's 11,000 firms chasing it. >> Yeah. I bet it gets there. >> So 11,000 just to just to be clear that that's Dave Leighton said that from Partners Group. They're a big manager. That's private equity managers. That that could be private equity managers who also have a private credit arm. >> I think the lines are blurring very rapidly. I think they're all doing it >> 100%. Um there are a lot of managers chasing private credit and the opportunities there and private credit and private equity are related too, right? Because a lot of the private credit activity to date has been in into sponsor back deals. So private equity you need the leverage to do the private equity deals etc. That's changing a little bit. They're in they're they're doing private credit across different categories within the space. So things like assetbased finance, so like aircraft leasing as an example, that's a different part of private credit. There's uh real estate credit, there's infrastructure credit, which is starting to grow as the infrastructure asset class grows. So I think private credit actually might be a lot bigger when you think about it's it's anything that not anything, but a lot of things that could otherwise have been on a bank balance sheet. Again, we could take both sides of this argument, and I think it's it's probably there's probably worthy arguments on both sides, but those in private credit would argue that it actually is it may be a concern for those who are investing in private credit if the space grows too fast and people start to compete for deals by loosening up terms. That might be bad for the investors, but there's also a set of people in the private credit industry who would say that it's actually good if you're taking that off a bank balance sheet because there's less leverage in private credit than there is in in the bank system. >> What does leverage look like in private credit? >> A few turns at most. So two to two to three times maybe. It's usually I mean some managers are doing less than a turn of leverage or one times leverage but banks are le gen generally leveraged what 8 to 10 times or so. So again I'm not I'm not I'm not here to defend private credit. I am not the foremost expert on private credit to be clear. Uh but I think when you listen to what the likes of uh Mark Rowan from Apollo is saying about this being a very big market that could be things that banks >> you better hope so because the banks are not going to stay out of this any longer. I listened to what JP Morgan had to say on the subject. Jaime Diamond spent like eight to 10 years subweeting uh this industry. >> Yeah. You think Cliff Asus is mad, >> right? So So the bankers, >> they looked at buying Monroe Capital. It's a $20 billion. >> So Jamie is like, "Yeah, we know about these fly by night lenders. They're not going to be here in the next crisis." Well, two things. We haven't had a crisis is one. And then two, we are now going through this massive um deregulation wave. And I guarantee you by the time Trump's term ends, all of the banks, the big ones, are going to have their own products competing with Aries, Apollo, etc. Folks, >> if you tell me private credit's 2 trillion going to 40, do we honestly think like uh Goldman, Morgan, JP Morgan, they're going to just sit here and watch it >> or they're going to take they're going to take a slice of fees for introducing a fund to their clients? No way. >> What happened with Goldman and Tro today? What was there? >> So, I have this. You can I read this? I would love to get your reaction to it and whether or not you think we're going to see more. Um Tro Price had a really big upside day today. Where the hell did I put this? Oh, here it is. Uh, bear with me. T-roll price shares rallied Thursday after the asset manager struck a billion-dollar deal with Goldman Sachs to sell private market products to retail investors. Goldman will buy up to a billion dollars in Trollric common stock through open market purchases. Bullish. The two financial firms will team up to offer wealth and retirement funds that give access to private markets for individuals, financial adviserss, plan sponsors, and plan participants. Um, and then David Solomon did like a a a PR quote, but basically like Tro has the infrastructure to sell funds in in 401ks to advisors through banks. Goldman has the private equity assets to put into those funds by virtue of all of their whole ecosystem. Tro doesn't have what Goldman has. Goldman doesn't have what Tro has. It's brilliant. I totally get it. We're probably going to see a lot more of these tie-ups. Okay, >> 100%. Yeah, we've seen it in the reverse with Black Rockck trying to build out its private markets capabilities by acquiring HPS. And >> how about Vanguard partnering with Blackstone? >> Blackstone and Wellington >> and Wellington. Okay. >> The three-party partnership. So I think that we're >> going down though if this continues because like these are mass market players that they can afford to undercut, charge less. I don't know. Seems like a double-edged sword for the industry. >> Depends on the product construction. Uh but yes, absolutely. I think I think we're going to see more of this. I think this is the type of thing where firms will try to match their capabilities. Goldman, to your point, they have the private markets capabilities. They have 550 billion or so of AUM in private markets that they're not a pure play alternatives manager, but if they were, they'd be a top five in terms of AUM. So, like that's that's meaningful. They get to distribute their products through the Tro wealth channel. Tro and it could be Franklin, it could be Black Black Rockck. >> It will be Black Rockck. Black Black Rockck is gonna have model portfolios for adviserss very soon. And Larry Frink's annual letter >> on like page five, he just went all in. He said, "BlackRock has always had a foot in private markets, but we've been first and foremost a traditional asset manager. That's who we were at the start of 2024, but it's not who we are anymore. In the past 14 months, we've announced the acquisition of two of the top firms in the fastest growing areas of private markets. that's uh global infrastructure partners and HPS >> and HPS. >> Um we bought another firm to get better data and analytics. That's Prequin. Uh so we can better measure risks, spot opportunities and unlock access to private markets. We've transformed our company. That is the biggest asset manager in the world going all the way in on private markets. If it feels late, we're just getting started. >> We are we are just getting started, right? Because think of how much capital can go in to private markets from the wealth channel. A lot of the advisers who Black Rockck or Tro or Franklin and then all these alternatives managers are are working with and certainly on the traditional side are selling traditional products, mutual funds, ETFs, etc. They're very underpenetrated in alts whether they're wirehouses or or RAAS. So, I think we're going to see more of this just because you have to be able to spend a lot to do distribution. Well, Blackstone has 600 people or so and a huge team and budget and they've spent a lot of resources to build out their footprint in private markets because it is a ground game to sell. Now, what do traditional asset managers have? They have they have distribution. How do advisers figure out which of these firms to talk to and who's best at what product type? Is it just like you you learn from just like reading or >> but Michael part two of that question is when hedge funds came along not when they came along but it was often said that assets are an enemy of performance. I feel like with private markets, private equity, especially private credit scale is really important. >> Yeah, I think I think it might work the other way around. So, how do how would advisors know who to work with? >> Just call black black black stone and black rock and call it a day. Is that all you need? I think there will be a portion of the market that probably does that because what you're getting at is >> brand wins. And so I think >> the the nuance to your question which is a really good one because it I think gets to the core of what all of these asset managers are thinking about in their seale strategy discussions, boardrooms, etc. is how do we show who we are? What's our DNA? What are our values? What's our culture? And how does that transmit itself in terms of our investment culture and our brand? And how do we market that brand to the wealth channel? >> I gotta be honest with you, advisers don't care about that stuff. I think it's I think it's what is a big enough name that when I say it to my clients, they're not afraid anymore. And what's the price? I I have to be honest with you. I don't that branding culture [ __ ] like nobody cares about that. So that but that's a really instructive I'm glad you said that because that that's really instructive and an important >> agree with me that I'm right. >> Wait, hold on. Hold on. But think about it this way. Think about it this way. I think you're right to a certain extent, but to the extent that culture is the people, it matters a lot because how many relationship managers have we worked with that have had a very impactful part of our decision-m process and who we will and won't work with? >> Several. >> Right. So from that respect, it does matter. >> No, no, no. But how do they even get to the table to begin with? Because the company >> Yeah. was sufficiently lowered and we believed in >> but they have to have great people that are trustworthy that can educate >> no I totally agree with that what I'm saying doesn't matter >> these high fallulutin mission statements that have been crafted by a publicist advisor don't give a [ __ ] they don't they're not reading the the marketing materials >> that's why they that's why I think asset managers really need to think about >> how they want to evolve their brand to work with the wealth channel to your point earlier has figured that out John Gray being very authentic doing running videos on LinkedIn. Is he rapping? >> Like, >> so they're all going to start rapping. Is that Is that what's going on? >> Maybe. I mean, I think every firm needs to be >> Can I Can we have Can we have a little bit of fun? Can we do a little free association? >> Sure. Um, you were saying on on another uh lesser podcast that every one of these uh companies has sort of its own brand and its own like idiosyncrasies. Um, so I'm not terribly aware of the difference from one to the other. Um, I know there are a lot of memes being made about this now, which is fun and I follow those guys and gals. Um, so I'm going to tell you the name of one of these firms. >> You don't have to do it in one. Name a name an animal that you associate it with. >> No, you don't have to do it in one word, but like help us understand the cultures of which you you Okay. Apollo >> purchase price matters. >> No. God of light. >> No. Say that again. What is it? Purchase price matter. >> Purchase price matters. >> So, they're disciplined on what they're >> price sensitive. They're disciplined. They're they're their DNA. >> Okay. All right. Uh Aries, god of war. It's a god of war. Okay. My my Greek mythology wasn't great. I probably need to study up on that if I want to know all these matters. >> Why Why do they all to be Greek gods? What is this like a superiority complex or inferiority? >> Could be Aries. I think of they they obviously do a number of things, but when I think of Aries, I think of a fantastic credit franchise and an innovator in structure around credit and BDC world. >> Okay. KKR. Everybody everybody's gonna say barbarians at the I actually think they've they've >> I think of them as a >> you could say pass >> when it no when it comes to private equity and that they do other things obviously I think of them as a private equity firm to start they've done a lot of other things but >> so just just do a minute on GP stakes we haven't spoken about that it's >> wait I got two more I got two I got I got to get to these people care uh Carlile group >> private equity heritage So, okay. So, so like the Harry >> Rubenstein I mean they were they were one of the >> I mean there were obviously a few firms that were first KKR Apollo Blackstone Cariles in in that group. I think of them as private now they've obviously expanded beyond that but they're they're also high quality brand. I mean these are all high quality brands just in slightly different ways. Blackstone, >> the biggest >> behemoth they and they use Steve Schwarzman >> said a quote I had this former CFO of Blackstone on on my podcast a while ago. He made a really important point and a really instructive quote which was quoted Steve Schwarzman who apparently always used to say scale begets skill. So his view is scale is their advantage as a firm because scale begets skill. If you can put enough scale against an investment opportunity that requires a that requires skill but b you then have an advantage and that's why I think they've leaned so hard into scale. They've raised very large funds but scale is what enables them to have an advantage in winning deals. I think this actually relates to private credit a little bit too is like >> there like an IBM thing where there was like the old saying like nobody ever gets fired for choosing IBM. Does Blackston sort of have that aura about them where it's like when in doubt we'll just use Blackstone? I feel like they >> the B the B thing sort of blew over >> and the scale they did a they did a deal with with Kalpers. They they figured it out because they have the scale to figure it out and they have the brand and I think they've used their brand to be early and educate the market very early on. Blackstone University was an innovation in the space to educate adviserss but they've also put a ton of capital and I and I do think that in order to work with the wealth channel effectively and this is partially why we're seeing partnerships. This is why we're seeing consolidation you need to invest enough capital. >> You need people. You need wholesalers. >> You need people. But but you actually have to invest enough capital to do that. The firms that have the scale to put their balance sheet and invest capital to do all of that and and are willing to spend on marketing >> local area like shock troops who could show up and and be friends. >> You need you need John Mckante. >> You need John Mcken. >> How do you go to Ed How do you go to Edward Jones if you want to work with them, right? Like you got to be >> I have I have a guy who covers me. I have a guy who covers me uh for Black Rockck. No, no, no. He's at Offspring, though. >> Excuse me. Oh, he's at Offspring now. All right. Forget the story I was going to tell you. Everywhere I go, I just run into this guy. He covers me so well. I'll like show up randomly in a restaurant somewhere and he's like, "Hey, good to see you." >> Did you share your location with him or something? >> No, it's crazy. He's so good at what he does. Unbelievable. Michael, what area of the of the private markets? There's so many different areas. We haven't even spoke about really data centers, infrastructure, GP stakes. What area are you most excited about or or and or what do you think resonates most with adviserss? I think what I'm most excited about is not necessarily the same as what resonates most with advisors. I think private credit resonates most with adviserss now for the reasons you discussed and I think it's also a very it's an entry point into private markets because it's >> not as illquid as private equity to understand. >> It's it's loans to companies. There's a there's a current yield. But I think that's an important piece of this too which is advisers want to yeah they want income generating >> assets and guess what in 2022 when rates went up these things are floating rates they didn't get killed the opposite they did great >> exactly so I I think private credit has been the first fora for many advisers secondaries I think is also very popular right now because sim similar thing it's uh there's a structural imbalance in the market so uh there's there's a lot of capital that needs to be unlocked and there has there's been a lot of capital raised in the secondary space, but there there's still reason to believe that the secondary firms can have their pick of what assets they want to go after. Now, there's there's structural challenges in private markets and there's innovation around >> prior to secondaries becoming as big as they have. You really had to rely on going public. That's increasingly difficult to do. >> Number of private companies has >> a lot of companies don't want it. Investors, the risk appetite after the first day or two, they're they just they abandon these companies. you don't have the research coverage on Wall Street to support a small cap or a midcap company like analysts aren't you know there aren't enough analysts cover all these so for that reason that's the structural imbalance you don't have the liquidity from public markets I guess philosophically when you have secondaries these are almost like public securities at that point >> well openai just did one it wasn't a secondary but their employees were able to set a $500 billion valuation and yet and yet a lot of these private companies even and the giants like OpenAI and the others. >> Is OpenAI not a public company? >> It's $500 billion. I mean, it's going to be past Walmart soon. >> That's a great example though of >> what private markets has become, right? There's this evolution in >> broader markets where the number of public companies has have from 2000 to today. >> We have like 3,500 public companies. That's it. And so how do you get access to the universe of company like a $500 billion company that's private >> and if they're doing secondary offerings there's some level of the it's not liquidity in the same sense as there's daily daily liquidity but SpaceX does tender offers on a regular basis so like these big companies need to figure out how to create liquidity mechanisms for their employees and or investors that I think is a great example of what private markets has become. It's I mean it's it's an entire universe that probably should be at the very least if people are investing in meme stocks and crypto they should also have the ability to but that part that part is still that part of the market is still not built out for the everyday investor not even close like even for even for RAS it's difficult to to get your hands on those shares >> sure and it's a pain in the ass and >> and that's why I think this is going to be adviser for a while as it as it should be the brokerage firms are starting to do this Schwab announced earlier this year that they're rolling out uh private markets offerings to their to their QP client broker through brokerage. It still has to be adviser. Either they the brokerage client has to call up their adviser or they have to ask for a Schwab adviser who sells private markets to be able to invest in it through their brokerage account. But soon you're going to see private markets products probably evergreen structures >> is in brokerage accounts. >> Um we're coming to the end of this but I I I can't let the moment pass without asking you. Is the is the douchiness quotient of the industry being like overplayed on social media? Is it not as bad? Because you probably know a thousand people working in the industry. I probably know a hundred or 200. Um I don't I don't really find that these people are any worse than any other people I've ever met in finance. Um but like let me play this for you. John, can you can you hit that link for me? Uh topic sex industry. Do you know who Johnny Hillbrandt is? >> No. >> Oh, you're in for a treat. >> All right. Do you have to log in in order to play? >> So, Michael, what else is going on? >> What'd you have for lunch tonight? >> I do. >> I'm ready for football season. >> Who are you guys open with? >> You're a Commander fan. Is that Is that cuz private equity owned? >> Makes sense. >> Of course. I mean, private equity came to save the day. Honestly, like it's so much better now than it was. >> Is that Does that say that private equity is uh >> it can be a good thing? We're going to see we're going to see a lot of I think minority stakes in sports teams and those are going to be very popular. >> The code brothers just took a 10% stake in the Giants at a $10 billion valuation. >> Yeah. I mean if you think about So sports teams are an interesting one though right because it's the media deals have just consistently grown in lock step as more people continue to watch sports as the streamers get involved. So, and I think there there's been data from Artos and others that sports are relatively uncorrelated assets to other parts of the market. >> No, they are uncorrelated. Come on. You still >> they they will be less uncorrelated if and when thousands of uh people are invested in them and then all of a sudden Yeah, because >> dude people are going to next game. It doesn't matter what the environment is. >> I think everything becomes correlated as more people invest in it. >> You don't think so? >> No. No. >> I'm not a thousand% sure if I agree with that. who who's the buyer once the Giants get to >> Saudi Arabia. Saudi Arabia, they I'm pretty sure Saudi Arabia is going to end up owning several major sports. Um it looks like they own golf. They forced a merger with the PGA. Like that happened in a year. It didn't really take that much money either. So if you think that they're not going to end up owning franchises in sports or owning entire leagues, you're crazy. Of course they will. You think the leagues will ultimately let that happen? They'll have no choice. >> You'll never have enough money to com How are you going to compete with Saudi Araco? >> No, it's it's >> it's it's trillions versus billions. >> 401ks. >> We only know 41ks, >> right? >> The nicks in my 401k. >> All right. Are we not going to be able to do this? >> I'm having issues getting it in. Yeah. >> All right. Can I play the audio? >> Yeah, you can just play the audio. >> All right. We'll go audio. >> All right. Hold on. Let me see if this works. >> Leverage by Yeah. Sycamore. Yeah, Sycamore just dropped a insane 23.7 billion dollars on Walgreens. Oh, it's so sick. It's It's the largest retail LBO in history. And it's uh so they took the company off the NASDAQ. Yeah, you know that play. Oh, it's going to be so sick, my man. Well, yeah, Walgreens have appears to have more annual revenue than any other company that's ever been acquired by PE. So, that's substantial. And look, I know a couple of the guys over at Sycamore. They're really salt of the earth fellas. I've golfed with a few of them. And one of them uh has a son on Tarantino's squash team. And actually the other um Tarantino spars with one of the other guys sons um in jiu-jitsu. Yeah. They're four years old. Yeah. Yeah. Very cool. Sorry, what was that? Oh, no. Sycamore has no healthcare experience. No, no, no. Uh but those guys are they're awesome. Yeah, they're going to absolutely print. They they already were. I know one guy that I know um he was rolling up pediatric dental offices. Yeah. In Arizona, California. Oh, he's absolutely printing. >> Yeah. Yeah. Yeah. The guy only flies private. Yeah. >> Oh, he's wearing a vest when he said it. I'm so sick by that. It's going to be very cool. I'm so thrilled for everybody. >> That's uh All right, enough. That's Johnny Hillbrandt, one of my favorite creators on Instagram. He's absolutely hysterical. >> He I don't know if you've never Nobody's ever sent that to you before. >> No. >> He has done like 500 of these videos as the same character and like it's the most pretentious [ __ ] you've ever seen in your life. And all of his videos are like, I'm in Nantucket, now I'm in the Hamptons, now I'm at F1 race. Like just on and on and on. And they're never not funny. But he has this he's doesn't work in the industry. I think he's a stand up comedian. He just has this persona down to a science. And don't like, it's not my fault. This that video I played for you has 6,000 likes. All of his videos blow up because everybody knows one of these people. Uh he's obviously an extreme version, but like is it unfair or is it sort of on the mark or do you know these people and they don't represent the whole industry? >> Oh man, look at the pause before he could >> I'm sure there are people like that. I I think there's a lot of people in the industry who one really enjoy building companies. >> Yeah. >> And that could be investing in and building companies that they're investing in. Also, I think at this point like the firms themselves are business builders and I think they they find that fascinating and interesting. Obviously, it's good for them, no doubt. But I think there's a lot of people in the industry who are not like that. I I will say those focused on the wealth channel and I've spoken with >> the channel. I've spoken with many of the heads of private wealth on my podcast. They're built their business builds. They're building a business within a business. I think they take their job very seriously and actually and believe in the merits of private markets. They understand the importance of educating the wealth channel. They know that's critical both in educating advisor and end client if they want to actually be able to do this well. And I think they also know that if it they if advisors don't have a good experience and clients don't have a good experience from the start, they won't work with them. Again, advisors are very fickle and rightly so. >> One shot. I totally agree. >> You have one chance. Yeah. >> So I think a lot of a lot of those in the wealth channel who I speak with I think they really do care about how they do this and making sure they do it right so that private markets does become something that is another tool that the advisers can choose. I think the other thing that that is important to say is we don't live in a world without memes. >> We never have agreed >> and we certainly won't anymore. I we've gone through the memeification of everything, but certainly the memeification of financial services. I think that's an important point and something for those in financial services, asset managers to really think about and understand because I think they need to realize and think through how they want to work with the wealth channel that might be different. They may have to evolve how they do things and think about things a little differently and lean into that a little bit in a way that's true to who they are and who their brand is. But also recognize that at the end of the day, finance is a serious business. It's people's money. That's probably, if not the most important thing, it's one of the most important things that people have and hold sacred because it enables them to do all sorts of things in life from take care of themselves and their family to do whatever they want. So making sure that that advisors and then clients have a good experience, their money is safekept and they generate returns. Private private equity and private markets don't work unless the returns are higher than public markets. Why? Why do it? It has to be done subject to the same pressure that every other asset class is subject to. >> I don't know, man. I take minus 50 basis points for no liquid. I mean, for no marks, I'd pay it honestly. So the guy that's being caricatured here is not the guy that they would send to interface with a wealth management firm. That's more of like a portfolio manager. And he keeps saying due to my role, I I have substantial wealth due to my role. Like that is that is not the face that any private equity or credit firm would show to financial planners or fiduciaries. >> And it can't be. I mean they they really need to make sure they understand >> who the adviser is. There's different types of adviserss. There's different types of clients. They need to make sure they're understanding what product they're selling and they need to build their brand in a way that reflects who they are. I think we're going through a huge brand evolution in asset management. I think we're seeing this collision of culture and finance. And I think firms are going to need to lean into that. I think they are going to need to think about culture and how to appeal to culture. >> Not just culture, but like how to broadcast >> like show people what your culture is about. And they need to do, but they need to do it in an authentic way. I think they need to they need to be out there talking to people. They need to come on podcasts like this and just be able to chop it up. >> Can I tell you something, Michael? That's important. >> Can I tell you something? I think they could all learn a lot from paying attention to the way that you carry yourself and what you're doing. So, I hope they are. I'm sure they are. And, uh, you do a really great job communicating the virtues of the industry. I could tell you're passionate about it. And, uh, we we had a lot of tough tough questions for you. I thought you came through with flying colors. >> Can I just say one more thing? Nope. >> You know, >> so I'm just kidding. Go ahead. Go ahead. >> No, no, no. I was rapping. >> The moment passed. No, I know you were rapping. >> You want to say something nice about Michael? >> No, no. The moment passed, so it's okay. Go ahead. >> Let's bring it back. I want to hear >> No, no. Really? Really and truly. It was It was a It was a bad joke. It would have It would have It would have played, but the moment is over. Wrap it up. >> I'm so sorry I stopped on that. >> That's okay. >> All right, guys. Want to say thank you to Michael Sigmore for coming by. I want to tell people where they can follow you because I think like we did an hour probably doesn't do justice to all the things that are happening in your space. People are going to want to learn more as a result of this conversation. I know I do. Where should they follow you? Where can they get more information um about the things you talk about? >> So, uh Alco's main hat on. >> Yeah. Oh, wait. You got a headphone on. >> I got >> Sorry. Forget it. Don't do it. >> This is uh this is coming your way. I got I got some hat hats for you guys. >> Alco mainstream. So that's >> Yeah. So So yeah, Alco's mainstream is on Substack. So I write every weekend and I have a podcast uh at least once a week, sometimes more. >> Your Substack is amazing. I've told you that before. Excellent. >> Appreciate that. Do people want to hire you like every day? Like like how many people are trying to just be like, "We'll buy your we'll buy your thing, just come work here." How? It's got to be everywhere. >> It has happened. It has happened. I think look, I I think it's important to stay independent. I work with a lot of different firms. I think that's part of the the the importance of this is being able to talk about what's going on in the industry and putting the pieces of the puzzle together for everyone. >> Yeah. >> From a 40,000 foot view. >> I think every firm needs to have their own way of educating and their own amplification methods. That's through socials, through their own content that they produce. But I think also having independent platforms for that is important. So I want to stay independent. Well, you have you have probably the leading independent platform for it. So, I think it's amazing. Hey, we always end the show asking people what they're most looking forward to. I'd love to hear anything in your life or in your business or any events you're going to. What are you What are you looking forward to right now? >> Future proof. >> You could say >> I am looking forward to future proof. I' I've written about this. I I actually really am. I think future proof is this great intersection of finance and fun. You You guys have figured it out. You guys have figured out how to celebrate adviserss and make sure that they understand who they are and how to build their business, but do it in a way that's fun. And I I think >> Are you bringing the pot out? >> I'm I'm going to I'm moderating a panel. >> Okay. >> Uh >> is it on also there's a traditional asset manager on there, too, because we're going to talk about the convergence. >> Okay. But no, I I think there's something that it's hard to explain other than seeing it in person, but people in casual outfits on a beach, but talking about really interesting intellectual topics within their industry. I think it creates this unique element that you can't get from sitting in an office or or or just doing a conference in Midtown. Totally. And I I think that's um I I always look forward to it every year. I think it it creates this way of of just thinking about what you're trying to do as a business. I mean, the adviserss are really they're trying to learn from each other. >> You know who this you know you know who this guy is? >> No. >> My friend Robert Bahari. He's a independent uh financial adviser in Australia. >> How many Australians do we have coming? Do you think >> 25 or 30? >> 25 or 30 Australian. How cool is that? Right. Um, so shout out to Robert for coming by the studio. We really appreciate you sitting in for this. And uh, >> we had an audience today. >> We're gonna have Yeah, we're gonna have So we're gonna have 30 financial advisors from Australia at Future Proof of California. I think the Canadians are sending over a hundred. So it's like it's it's really it's really cool thing. I'm so glad you're going to be there. Uh, and I I'll try to catch a session. Michael, what are you looking forward to? Uh, >> the Giants losing to the commanders. >> Life. Giants. Yeah, Giants. >> Football season's good answer. >> I'm looking forward to Russell Wilson getting out of New York. It's enough already. >> Yeah. >> I don't want I don't want It's >> You're on the Jackson Dart bandwagon. Is that what it is? >> I don't want to go 0 and three and the crowd is going to demand Jackson Dart. >> That's That's my prediction for >> But New York is a fickle market. >> Well, yeah. So, we're very we're very discerning. You're a Giants fan, too, you know. Yeah. So, that's the thing I'm not looking forward to. I'm not going to focus too much on it, honestly. I'll watch all the games, but I'm not going to get upset. It's just It's not our era right now. It's just not right. You think that's fair? >> Uh I will not. No. We bought him last summer or last uh last season. >> I think we could be okay. It's just not This is not like watching. >> It's so depressing. I can't Let's just >> All right, guys. I'm going to get out of here. Thank you so much to John, Duncan, Nicole, Rob, Graham, Chart Kid, Matt, Sean, Keith, everyone who works on our shows, Daniel, Travis. Uh what a week we've had. Huge thanks to our guest, Michael. Uh please follow off goes mainstream. Great podcast, great education. The Substack is lit as well. guys, next week know what are your thoughts on Tuesday on the YouTube channel because we will be in Huntington Beach for Future Proof. Um, we will have a Compound and Friends episode though at the end of the week and it'll be live. We are hosting the CEO of uh Franklin Templeton, Jenny Johnson. Jenny is an absolute killer. Michael Batnick and I are so excited for that conversation. So, look for that next week. Thank you so much for watching. Thank you for listening. We'll see you soon. Heat. Heat. [Music]