One of the tenets floating around my brain that gets amplified further as each year passes is: Don’t play against the best in the investing game, figure out how to ride behind them.
Few hear about the cyclists supporting the main star, the lineman supporting the quarterback, etc. In some sense, LPs support start GPs by providing the raw material to their process: capital.
I’ve been somewhat privy to the investment process of marquee investment funds as a “strategy consultant” performing commercial due diligence. Patrick OS had a saying for some of his early guests on his podcast “Invest Like the Best.” It was “This is What You’re Up Against.” That paired with my prior window into underwriting has always stuck with me.
Investments I’ve made into companies with narrow mandates (e.g., sell or focus on one narrow product area, say something like Peloton, which I haven’t owned but describes what I stay away from broadly speaking) have tended to not go well. Core reason being I lack conviction to hold them. The reason for lacking conviction is not truly understanding what I own, and depending on management’s words to define the variant view.
Investments that have gone very well tend to be “things” with broad mandates. Publicly traded private equity funds, diversified debt funds, public investment holding companies. Essentially when I remove myself from the underwriting seat of investing in narrow mandate investments and just focus on paying a reasonable price for an investor with a broad mandate, things tend to go alright.
To that end, Brookfield Infrastructure Partners (BIP) has been a longtime holding of mine. It’s a publicly traded private equity fund focused on infrastructure – and has a great management team that a strong track record in their process of acquisitions and divestitures. At times it gets expensive and rarely it gets cheap-ish. That said the long-term holder has done well:
I look forward to continue holding units in this entity for a long period of time.