Key Takeaways
Make Your Own Luck’ again in Private Markets: More operational improvement stories, especially those linked to capital heavy to capital light models. This desire to add alpha by controlling outcomes dovetails nicely with the more muted expected returns that we see over the next five years.
The ability to scale margins counts in a world where ‘Winners Take Most’: We are seeing a historic expansion in margins that have built scale, including leveraging technology to drive automation and digitalization as well as AI.
Caution on Cheap Assets: We want to refrain from buying apparently ‘cheap’ assets that face intense competitive pressures and/or shaky capital structures. Using an education analogy, we think a B is an A in this environment, but a C could be an F.
