In this episode of The Acquirers Podcast, Tobias chats with Jeffrey C. Hooke, finance professor and author of The Myth of Private Equity. During the interview Jeffrey provided some great insights into:
- IRR – The Faulty Metric of Private Equity
- The 3 Pillars Of Private Equity That Hurt Investors
- The Mark-To-Market Fallacy In Private Equity
- How LBOs Boost Returns By Using Leverage
- Enablers – The Strategic Secret of Private Equity
- Why LBOs Can’t Beat An Index Fund
- The 3 Types Of Private Equity
- How Private Equity Works
- Bring More Accountability To Private Equity
- Valuing Private Equity
- Private Equity Subscription Lines of Credit
- 75% Of Private Equity Funds Don’t Beat The Market
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Tobias: Hi, I’m Tobias Carlisle. This is The Acquirers Podcast. My special guest today is Jeffrey C. Hooke. He is a finance professor at the Johns Hopkins School. He’s written a new book called The Myth of Private Equity, and he has some critiques of the industry we’ll be discussing those right after this.[The Acquirers Podcast theme]
What is The Myth of Private Equity?
Claims That Private Equity Returns Beat Public Markets Is Untrue
Jeffrey: The Myth of Private Equity, Toby is that the private equity investment class, specifically, leveraged buyouts is the best thing for the investor since sliced bread. The myth is essentially that private equity beats the S&P 500, provides these super high returns leaving the public markets in the dust, and therefore, institutional investors like pension funds and university endowments should put a lot of money into the private equity class as opposed to buying stocks in the S&P 500.
Tobias: The returns that the private equity industry promotes seem to bear that out.
Jeffrey: The private equity industry, I think, some of the funds, they do run around saying the returns are 20% or 30% a year. When you look at the actual statistical data provided either through state pension fund public reports, or the various data services like Preqin, or Cambridge Associates, or PitchBook. Of course, a lot of people in the business don’t like to do that. But when you look at the actual facts, you’ll see that over the last 15 years the public markets, which let’s say for the sake of this conversation will define as the S&P 500 index. The public markets have beaten the typical leveraged buyout fund by a couple of percentage points. So, the claims of these fantastic returns simply are not true.
Tobias: Let’s just take a step back a little bit. So, for those who don’t know what– You describe, we talked about it a little bit earlier as leverage buyouts, but can you give us an overview of private equity? What is private equity?
The 3 Types Of Private Equity
Jeffrey: Okay, there’s three kinds of private equity. For those viewers that are not real in-depth knowledgeable type people in the finance world, private equity is simply an investor buying stock in a private company. It’s not listed on an exchange like the New York Stock Exchange, or Nasdaq. You’re buying private stock with the hope that the privately owned company will go public, and you’ll be able to sell your stock, whether the private company will sell itself at a merger to a larger company for cash. That’s the idea that I’m going to try to get out of all my investments in public stock and direct a small portion of that to private stock in the hope of getting a better return. That’s the idea.
Now, there’s roughly three classifications of private equity that your listeners should think about. The biggest one, and that’s the one that covered in this book is the leveraged buyouts. That’s the biggest one. The second largest, probably, venture capital, and the third would be growth capital.
How LBOs Boost Returns By Using Leverage
Jeffrey: I can describe just succinctly for the listeners what it is. Leveraged buyouts is when a private fund buys a low tech, profitable business. It’s been around for years, and tries to enhance its equity returns or boost up its returns by throwing on a lot of debt. It’s not any rocket science. If you buy a house for $100,000 and borrow $80,000 and the house increases in value by 20% in one year, well, then your equity return is going to be 100%. You invested 20% equity, you borrow the rest, house goes up in value by 20%, you made 100% return. So, the leverage looks terrific in boosting your return.
If you bought the same house for $100,000 and didn’t borrow a dime, you paid all of the money in cash, well then, your return at the end of that year is 20%. So, when the conservative situation, you had a 20% return which is not bad, and the situation where you borrowed a lot of money, you got 100% return. So, the leverage enhances the return. Of course, it also does that on the reverse. The house drops in value, you get wiped out, your equity gets wiped out. So, it cuts both ways. But that’s the idea behind the leveraged buyout private equity phenomenon. It’s been around for say, 30 years. We’ll borrow money and boost our returns, and since the stock market has tended to go up and private company values follow public company values, then the strategy has provided a profit and hasn’t provided as much profit for the investors as it has for the PE managers. We can get into that later.
The other sector is venture capital, which is really the rage now, because of the rocketing type valuations for high tech companies. The venture capital is really when the investor firm targets companies that aren’t quite ready to go public, they don’t have a proven business model. Most of them are out in the mother’s garage. They’re not like Steve Jobs working in his mother’s garage anymore. They’re usually a lot bigger than that when they get venture capital. But they’re not quite ready for prime time, and then growth capital would be companies that are between a standard leveraged buyout candidate, which is some established business with a good customer base or brand name in a good profit record. But there’s more proven than your venture capital type firms. That’s growth capital. So, there was the three kinds. Leveraged buyouts, venture capital, and growth capital.
Tobias: The Myth of Private Equity, the book that you’ve written, that’s largely about the leveraged buyout stage. Is that fair?
Jeffrey: Yeah, I would portray myself more as an expert in leveraged buyouts, though, I would tell your listeners some of the issues that would be problematic for investors, and say, buyout funds also surface in venture capital and growth capital. Most sectors of which have a hard time beating Public Market Index.
Tobias: What is the slip twixt cup and mouth, where it does seem that the promise is that we can buy these companies more cheaply, we can sell them at the best time to sell them, where we’ll put some leverage on them, we’ll also have an operational improvement. That sounds to me like that’s a pretty good recipe for generating returns. Where’s the problem with that approach?
Why LBOs Can’t Beat An Index Fund
Jeffrey: Well, that was the approach that was effective when the business really got out of the blocks 30, 35 years ago, and it worked well. That particular strategy laid the foundation for the business’s early success, which I say out a duration of about 10 or 15 years. But as you often see, and you’ve probably seen it in your own work is, when a sector be it metals or commodities are in this case, leveraged buyouts, when it has success, the tendency for Wall Street and the investment community is just to throw money at it thinking that the past will predict the future. By the early 2000s, there was much, much more money chasing buyout deals. As you got a little closer to the present, so you have many funds, there’s hundreds of them now chasing the deals that have the same profile, these low-tech moneymakers.
The formula which worked 10 or 15 years behind that buying cheap, fixing it up a little, putting on debt, it didn’t work the last 10 or 15 years, not because the private equity managers are stupid. They’re not. But they’re paying higher prices. So, they’re paying higher prices are competing for the same product. Finally, from the investor’s point of view, the fees which are high early are still high. The fees are 3% or 4% off the top as I think many of your listeners have heard about. When you’re taking 3% or 4% off the top as a manager, and sure, that’s great for the managers they’re making billions, it just makes it almost mathematically impossible to beat up an index fund where the fees are one hundredth to that. It’s just tough to do.
Tobias: How does the industry work?
How Private Equity Works
Jeffrey: The industry works by a group of, say, people like myself or perhaps a lot of good financial knowledge know how to close deals, collection of them will set up the fun. A lot of times, these are successor funds from prior teams. But so, a team sets up a fund, recruits a lot of big institutional investors, let’s say, throwing $500 million. That’s their bank account. That’s their checkbook. Then the team runs around and looks for companies to buy. That process takes a couple of years finding companies, participating in the negotiations, working with investment bankers that are conducting auctions. So, it takes two or three years minimum to spend over $500 million, and, of course, raise the debt to finance all these deals. Then you’ve got a little period of three or four years where you’re supposedly improving the companies.
You bought, the company– It was already pretty good to begin with. Otherwise, nobody would lend money to it. But you now, you’re trying to improve it that questionable whether that’s always going to be the case, the companies were so good to begin with. It’s tough to improve them, but you try to, and then you hope that you can sell them five, six, seven years after you own them. Now, that’s not always the case. A lot of these funds now hold the investments for 12, 13 years. But that’s the theory. Take a few years to buy the companies, then you have a few years to try to improve them, then you have a few more years to sell. Hopefully, you’ve done all that, and you’ve made some money for your investors, you’ve certainly made a lot for yourself as a manager. You made some money for your investors, and then you’re going to raise another fund to do it all over again.
But it’s a little bit like what you see on your website. It’s a concentrated approach. The fund is only going to buy 10 or 12 companies, much like say, a value investor, you talked about on your podcast before might look at 10 or 15 value opportunities. So, the funds are somewhat concentrated in a small group of companies much like a concentrated value fund would be and most of your buyout investors are going to say, “We’re value buyers.” So, they’re looking for bargains. But as I said a minute ago, the bargain’s little tough to find these days. It’s just too much competition.
75% Of Private Equity Funds Don’t Beat The Market
Tobias: They’re concentrated. They’ve got a lot of leverage on them, and they tend to buy smaller companies then the index that they’re comparing themselves to. So, they’ve got these three advantages that should show pretty good outperformance over the index at least as a cohort. Is that the case?
Jeffrey: That’s the promise, that’s the hope. I’m sure these investors walk into these funds putting up their tens of millions of dollars with that hope. But as the results pointed out that hope, at least for the last dozen years, it hasn’t been achieved there. The funds simply are not beating the markets from the investor’s point of view. Now, if the funds perhaps charge lower fees, let’s say they’re only charge the typical fee structures. I’m sure a lot of people have heard is called 2 and 20. If the fees were be reduced say by half, we’d not be having a different conversation. I think quite a few of these buyout funds would be being the market.
As it is now at about hundred buyout funds, only the top 25 would beat the stock market. It doesn’t say much for the business when 75% are not meeting the stock market. Now, some person who likes sports not could say, well wait a second. Major League Baseball player is batting 250. So, they’re striking out or getting out 75% of the time, but the investment business 25% batting average is horrible.
IRR – The Faulty Metric of Private Equity
Tobias: The part of the problem I understand is the calculation of the results. So, can you perhaps walk us through how the results are calculated and why that might give a misleading impression of what’s occurring in the funds?
Jeffrey: Well, first, your listeners ought to know that the actual numbers, the results are opaque. They’re often hidden. They’d be surprised that they’re– The industry has convinced legislators in many states to keep private equity fees hidden like the Pentagon keeps the nuclear launch codes hidden. There’s actually laws passed, where this is a secret, some national security type secrets. But for those where the numbers are out there, you’d be looked at three measurements, the first one is the most popular. It’s called the internal rate of return, and probably a lot of your listeners learned that in school if they took finance. That’s like, “Well, here’s the rate of return and using a discounted cash flow calculation.” For the last 10 years, it might be 10%, or 12%, or something of that nature.
They usually calculate the internal rate of return or the fund, and then compare it to something like the S&P 500, or they want to be actually, intellectually, honestly, they have to allow some premium to the S&P 500 to account for the illiquidity, which means that you can’t sell a private equity investment like you can sell a stock like Amazon stock. The first one’s the internal rate of return. But since it can be manipulated in various ways, and the ones that would be most obvious, and the easiest to explain is if you sell your good deals first as a fund, sell the good ones first and hold the dogs for eight or nine years, the way the math works is you boosted your rate of return. So, a couple of professors designed a return mechanism that’s a little more comparable to say running a mutual fund with an index. That one can also be manipulated. I like it a little better, but can also be manipulated by selling the good deals first. So, you got some questions both one and two that have been addressed, not just by me, but other people that observe the industry.
Valuing Private Equity
The one I like the best is probably the total value in versus the total value out. That’s the easiest to understand for a lay person. So, I’ll just give you an example. If people put in a $100 million into a private equity fund, and then eight or nine years later, when everything has been sold, they got $150 million back. So, $150 million back divided by $100 million in produces a ratio of 1.5 times. So, you’re not losing money, but 1.5 is not exactly hitting a Grand Slam or hitting a cover off the ball or throwing a touchdown pass to use a sports metaphor. 1.5 is the industry average. Yet, if you listen to the propaganda, “Oh, we’re getting 20% or 30% rates the return.” Well, if you just get a pencil out and do it on the back of an envelope, 1.5 doesn’t seem to produce those kinds of numbers. So, you have a little complexity and opaqueness running into these numbers, and so, you tried to do the best you can with what you have. I’ve looked at them all be a little tough for a listener to do that, because a lot of the numbers are paywall. So, if you want to look at a rate of return for a fund, you’ve got to pay $10,000 or $15,000 to a data service to get the information, or you can read a book like I wrote, or maybe you can go to the internet. Some of this stuff is there. But it’s a little tough to ferret through it.
Tobias: It’s part of the problem also that you commit a certain amount of money or hasn’t invested to the fund, you commit to say a billion dollars or whatever, $100 billion up front, and then it’s drawn down at various times, and so the IRR begins on each tranche as it’s drawn down or each commitment as it comes into the fund. Does that complicate the IRR calculation? Is that part of the problem?
Jeffrey: No. There’s no mathematical complication to that. That’s routinely done in any corporate invest.
Tobias: I mean in the sense that you’ve committed this money and you have to have this pool of money sitting there where you’ve got a cash call presumably earning eventually nothing, and then it doesn’t count until it’s drawn down, and used in the fund.
Jeffrey: Yeah, you made a good point that Warren Buffett made a couple of years ago at his annual report. He said, “Well the rates of return are a little misleading,” because, yes, the investors, I guess they could leave the money in the S&P 500, or bonds, or something. Yeah, they do have to keep money set aside for when they get that call from the private equity fund. “Hey, we just bought a company, send me $50 million, so you could put in the equity.” You’re right. There may be some forced liquidity by the investors themselves. That’s a good point.
Tobias: But you also say that there’s another little trick that they use using lines of credit.
Private Equity Subscription Lines of Credit
Jeffrey: Yes. I don’t want to get too technical for the audience. But I’ll try to explain it. The idea has become that instead of just selling the good deals first, you have couple other techniques to boost, put a fire under your returns even though that might seem little artificial to people. The credit line is one that’s been increasingly popular. So, the idea is some of these PE funds have grown so big. I wouldn’t say some up. Several dozens of them. Maybe even hundred are big enough now where the fund themselves can borrow money on their own credit if they’ve got enough money. So, they’ll go out and buy a company and do a buyout deal. Then they’ll hold it for six months. Then after they’ve held it for six months, they drop it into their latest fund.
The way the math works instead of the fund owning the company for say, five years, and then selling at the fund will only own the company for four and a half years. Five year holding period versus four and a half years. A lot of people are hearing this, but what’s the big deal, it’s only six months? But you’d be surprised a six-month difference can add a couple of percentage points to the rate of return, thereby making the fund manager look even smarter. Yeah, the problem from the fund point of view today is everybody’s starting to do it. So, pretty soon, they’ve got to think of something else like that.
Tobias: If you have that approach, if that then delays the call on the equity, isn’t that actually boosting those returns?
Jeffrey: Well, yeah, but it’s a question of you’ve bought the company with the intention of dropping it into the fund. Is this an artificial way of kicking up the returns? I would say it is. Would a securities lawyer who deals with misrepresentations define that as well? I don’t know. You’d have to look at all the contracts associated both with the fund and the way the fund bought the company, and then dropped it into the investment vehicle. I’m not an attorney. But I just think it’s a little shaky. Again, if you look at the way people have talked about it, it seems to me the majority of observers think it’s a little shaky and misleading to boost the returns in this manner.
Tobias: What’s the main problem? Is it that there’s now so much competition in there that every company that comes up for–? There’s a competitive auction for companies as they’re sold, and so they’re paying higher prices. That’s clearly the case. In addition to that, there are high fees charged by the firms. Then there’s this gamification of the returns the– I guess the funds in their defense, they’d say, well, this has been capital efficient. We’re only drawing down what we require at the time that we require it. But the IRR calculation does seem to be, it’s not a representation of what the customer receives. So, you’ve got these three sources of that contribute to lower returns than seem to be advertised. Is that a fair representation of what the main issue is or issues?
The 3 Pillars Of Private Equity That Hurt Investors
Jeffrey: Exactly. I don’t think I could summarize it any better. High pricing because of the competition. The high fees, and then the gamification as you pointed out. Now, each one of these could be rented at one with less funds out there that would take 10 years or so for the lower returns to sink in. I think eventually that will happen. As far as the fees go, I think the industry to its creditors have been incredibly resilient with keeping the fee structure as it is, even though, the returns have been mediocre. So, you got to give them credit.
They’ve fostered this aura of the fund managers all being geniuses. It’s remarkable. It’s going to take a while. The gamification returns, I just don’t see that being curtail without some government intervention or maybe some plaintiff’s lawsuit, one some big fund has lost money, some big pension plan. I lost money because they were messing with the true returns. That’s a possibility, but now it all be down the road. So, you got those three pillars that are sent to hurt investors in a negative way.
Tobias: Those criticisms of the industry have been around for a little while, and there’s Dan Rasmussen, who I’ve had on the podcast a few times, he does a private equity replication in public markets, and that’s his exact criticism that you can achieve the same returns without the illiquidity and without the fees. But presumably, these are so well known that it’s striking that people do continue to invest. So, my question, I guess, is, who are the investors in these funds, and why are they ignoring this evidence?
Jeffrey: Well Dan and I have talked about this. As you pointed out, he runs one of the few, if not the only, what I call buyout replication funds. I wrote an article with a professor, friend of mine about producing a buyout replication fund where you basically developed an algorithm for a company that’s similar to a buyout for– You just buy public companies that are similar and then leverage them in your portfolio. I remember talking to investment consultant service.
Hopefully, thinking about maybe introducing the idea institutions, he said, “Well, no one’s going to want to buy it.” Now, the institutions are going, “I’m going to pay you for that.” They would prefer to invest in LBO funds directly rather than have a public equity substitute. So, you might say, and I’m sure Dan is reflected on this as well. I talked to him in a year, so but you have to look at the mentality of the institutional managers working at these big pension funds, or these endowments, or these large nonprofit foundations. They’ve sunk probably a billion dollars into these buyouts.
Maybe more, despite the fact that it should be known to most of them that they’re not beating the public markets. They may keep their eyes close or wear blindfolds, who knows. But you got to look at it from their point of view. Let’s say you’re working in a big foundation as the investment manager. You’re probably making more money than the president of the foundation. You’re making $1 or $2 million a year, and to justify that you have to say, my job is so complicated. I can’t just buy stocks, and bonds, and trade publicly.
I have to do all this complicated stuff like private equity, hedge funds, commodities, real estate, private funds, and so on. So, it has to be very complicated. I have to have a staff, and I have to get a big salary and a bonus. So, they don’t tell the board of directors, well private equity, most of these other things don’t be a simple index. What’s their motivation? Their motivation is to preserve my career and advance my compensation. I have to get into all these exotic investments.
Now, you might say, “Well, wait a second, Jeff. Would the board of directors of the pension plan object that they’re not using these investment vehicles to beat the markets and say, “Do not beat the market? Wouldn’t there be some objection?” No, the directors of a lot of these big institutions, the trustees, or the board of directors, they’re not finance people. The you look at us typical state pension plan. They’re smart people. They might be heads of the unions, they might be political appointees.
Sometimes, they’re the treasurer, this day. But a lot of times, the majority of these people, I’d say most times, the majority of these directors do not have any financial training. So, when the investment managers get paid a million or $2 million a year at some pension plan or foundation walks in with a stack of papers, this detailing all these complicated investments that they have to make when they throw out all kinds of mathematical equations and terms like alpha, beta, and standard deviation R-squared. The director’s eyes glaze over. They soon fall into a smooth, numbing sleep. So, the answer to your question is that, yes, the institution’s keep buying, but it’s mainly for the managers to preserve compensation jobs and career.
The Mark-To-Market Fallacy In Private Equity
Tobias: There’s this mutual myth, I guess that they each agree on the customers and the funds, and that’s that the returns are a lot smoother than they are in actuality and it benefits the investors because they don’t have to show the big markdown on that presumably, private markets are the pricing even though the market isn’t marked to market. The market is shifting all the time, and it’s as volatile as a public market investment. But you don’t need to show it because the market doesn’t come in at least until the end of the month, and then the manager has an opportunity just– it’s not literally the worst trade.
So, a private fund manager has all of that– if the fund is publicly traded that every single trade is known, and so the drawdown might look enormous, the volatility looks enormous, the private fund that might have an identical company, but it’s privately traded or it’s not trade at all, it’s private. They look at this other mark. So, the volatility reduction is false, it’s fake, but it’s real enough for the fund investors. Does that make sense?
Jeffrey: That’s been a practice that’s I’ve pointed it out. A couple other people, there’s a small coterie of people that share my views and publicize them. But you’re absolutely right. I’ve been an investment banker for many years before I became a finance professor, and I was also a private equity investor. I can tell your listeners that you’re absolutely right. The market for publicly traded companies has a very high correlation to the market for private companies. So, if you’re doing a merger deal as an investment banker, the pricing that you will get when you sell that company will correspond pretty well to public market pricing for similar companies. So, what happened in 2008, 2009 when the market cratered, the stock market crater private market values defined as what companies were selling for and M&A deals also dropped. It dropped significantly, probably 30% if you look at the data.
So, interestingly, buyouts even though, they’re more leveraged, if you look at statistics for what the buyout firms said happened, they said that when the market dropped 37% in 2009, they said by some sheer weight of fancy, I guess that our investments only dropped 30% which contradicts financial theory of the last 60 years, multiple textbooks and three Nobel laureates. No one questioned that. No one. Not the government, not the investors because it was all in their interest to show a smoother ride than the volatile public market. So, that marked to market conundrum or paradox has continued since then, which now we can look at it 12 years, where the leveraged buyout equity as a smoother rate of return than the stock market themselves, which of course, as I said a minute ago, turns financial theory upside down.
Tobias: Guess you always do fairly well on exams that you mark yourself.
Enablers – The Strategic Secret of Private Equity
Tobias: Who are the enablers of the chicanery?
Jeffrey: Okay, so look, the private equity titans, the big rich people that own billions of dollars that run these funds, they’re not loners. They’re not perpetuating the myth of these great super returns by themselves. So, they have a lot of cooperation. Maybe, it’s inadvertent cooperation, but it is cooperation. I call the co-operators are the enablers, fellow travelers. So, you have the customers themselves, we just discuss why the customers are not really raising any objections.
The government, which I would say who would have ostensible control over the private equity from a regulatory point of view would be the Securities and Exchange Commission, the SEC. They only have a handful of people that look in the industry, and they haven’t really filed any suits against mark the market, or return smoothing, or any other things we’ve talked on. So, you have the customers themselves that are enablers, you have the government basically sitting on the sidelines, even though, this is a mammoth industry now.
The business media, it’s been an enabler. They’ve tended to be an echo chamber. It’s expensive to investigate the claims. You have to get into the data service, you have to be very facile with numbers, and how the data services report. So, in their defense, a lot of the reporters in the business media don’t have the resources, and perhaps wouldn’t have the technical knowledge to really dig deep. Anyone, I’ve talked to a couple of them about this, they say, “Look, if it’s not cold, if it’s not a cold fact laid out there, the editor doesn’t want us to report it, they’re just afraid of being ridiculed by the industry or contradicted.”
So, those would be the three branches of enablers. Then you have some of the investment consultants and wealth management firms that have been pushing this big for pecuniary reasons, because they would get paid for recommending a private equity fund or at least investigating. Whereas, if they were to recommend an index fund to their clients, then the clients would say, “Well, an index fund, what do I need you for? Why am I paying you a million dollars to advise me in investments, if you suggest I go to an index fund? Well, Thanks for the advice. Now, see you later.”
Tobias: You have some criticism for academics as well.
Jeffrey: Well, academics, and I’m part of the academic world. Academics, we have tended to critique private equity, I don’t think we’ve been up-to-date. A lot of the academic research that you see on private equity returns is pretty old. So, as I point out it’s five or 10 years old, so, it’s really not up-to-date. As a result, it reflects a lot of old information when the industry was doing better. So, the academics have tended to use stale information when they write these papers. Not all of them, but quite a few of them. They’ve come in up to speed. I’ve read a couple of recent studies that are quite good, and would reflect my point of view.
The other thing is, when the academics and there are various private equity centers that prestigious universities, and they tend to spend more time on the mechanics that we’ve covered already, how do you identify a good deal, how does investment firm, close it, evaluate it through due diligence on it? And then as you’ve mentioned earlier, improve it and then finally sell it. So, it tends not to be analytical a lot from a coursework perspective, but more descriptive, or how to–
Bring More Accountability To Private Equity
Tobias: Got it. If you had a magic wand, what do you do to change the industry or change the way the industry is viewed?
Jeffrey: I think the industry is so influential and so wealthy that any change is going to be very, very tough. So, as I point out in the last chapter, any hope for reform is so far out in the future, and the probability is so small. We shouldn’t even be talking about it. But if you were going to reform the industry, I think the first thing I would do is, I’ll have the government try to pass some legislation where there’s more clarity as to what all the numbers are, what the various rates of return are, how they compare, what the fees are? I think that would really clear the air. With that information disclosure out there, you’d probably eliminate 50% or 60% of the funds within two years because they just couldn’t cut it.
Tobias: Jeff, we’re coming up on time. If folks want to get in touch with you or follow along with you
research or find the book, how do they go about doing that?
Jeffrey: Well, the book is certainly available in all the book selling websites and at your bookstores. That’s one way to do it. I do have a website, Jeff Hooke where you can look at my background, and maybe look at some of the papers that I’ve written with some of my colleagues at Johns Hopkins and George Washington University. You can drop me an email. It’s like I’m anonymous on the Johns Hopkins University Carey Business School website. So, I’m not hard to track down.
Tobias: And the book is The Myth of Private Equity by Jeffrey C. Hooke. Thank you very much for your time, sir.
Jeffrey: My pleasure. Thanks again.
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