Investing Essentials: Trends vs. Fads in PE Investing
How do you identify investments that have a high probability of achieving growth and returning capital over the long-term? How do you separate short-term fads from industries and sectors with sustainable competitive advantages? In recent decades, certain sectors have witnessed meaningful investment by private equity firms — veterinary, dental, insurance brokers are examples — but how do you know when the tide will turn? In the late 90s, investors flocked to internet companies only to have the tech bubble burst in the early 2000s, losing large suits of capita. Over the past decade however, internet investments have supported strong returns—was it a theme or fad early on? In recent years, PE firms have focused on industries that do not fit the traditional buyout model—businesses with few assets and meaningful human capital and key man risk such as wealth management firms, insurance brokers, accounting firms and engineering firms. Will this support strong returns long term or is it yet another passing fad? Join IIR, Duane Jackson, to discuss some of the recent themes and fads in private equity to improve your investment thesis development.