The hottest Capital allocation Substack posts right now

Private equity is facing a big change as key investors, like Yale and Harvard, are selling off their holdings. This shift raises questions about whether private equity is just going through another cycle or if there are deeper issues at play.
Today, private equity is struggling to exit investments, meaning firms can't show returns, which makes it hard to attract new money. This cycle of problems is creating a 'velocity crisis' that could hurt the industry overall.
The problems in private equity suggest that the strategies that worked for decades might not be effective anymore. Firms may need to rethink their models or focus on fewer, stronger investments to survive.

Hedge funds offer a way for individual investors to access top managers and diversify their investments, but they often come with extra fees that can eat into returns.
The Brevan Howard fund stands out for its ability to manage risk and provide steady returns, even in tough market conditions, making it a reliable choice for investors.
Investing in hedge funds can be a rollercoaster ride with ups and downs, so it's important to learn from both your successes and failures when picking managers.

The post discusses the experience of heading to the USA for the first time and shares insights on a small cap company in the UK.
An in-depth study on serial acquirers highlights the importance of CEOs with strong capital allocation skills.
The paper 'The Art of Not Selling' by Chris Cerrone emphasizes the importance of patient and strategic investing decisions over succumbing to external pressures.

Investment community concerned about management's strategic vision at Match
Match's revenue increased by 6% to $3.4 billion in a year
Potential for Match to return over 30% of market cap to shareholders in the next five years

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Over 50% of an earnings call focuses on short-term demand trends, which is not helpful for long-term investors.
Earnings calls should address long-term value, competitive environment changes, and management's strategies for improving competitive advantage.
Investors and CEOs should prioritize questions that affect the business's value in the long term, rather than short-term fluctuations.

Warren Buffett has been acquiring Occidental Petroleum shares and the company is focused on returning shareholder capital.
Occidental Petroleum is committed to limiting production growth and allocating capital towards shareholder return.
Crude oil prices are expected to be volatile, and Occidental Petroleum has a high dividend yield compared to other E&P competitors.

Rare businesses with high returns and ability to reinvest capital are very valuable.
Most businesses do not have the qualities for exceptional value.
Challenges in investing in rare businesses include rarity, high cost, and uncertainty about future growth.

Berkshire Hathaway's success is attributed to good capital allocation and long-term planning.
Avoiding costly mistakes is crucial for long-term success in investments.
Berkshire's strategy of holding a few successful long-term investments has driven significant growth.

A hurdle rate is the minimum return a business wants from an investment based on its risk. If it's set too high, the company might miss good opportunities.
There are different ways to calculate a hurdle rate, like looking at the cost of raising funds or considering the risk of the specific project. Using the right method helps better match the risk and reward.
Hurdle rates can change based on business type, geography, and currency. It's important to understand these factors to make smart investment decisions.

Play in areas where there is less competition and more control over outcomes.
Being able to focus on 'boring' investments can lead to long-term success.
Having control over capital allocation and operational decisions can create significant value.