The Inefficiency Advantage: Why the Best Alpha Lives in Private Markets' Hidden 90% - Raphi Schorr - Deputy Chief Investment Officer and Partner - HighVista Strategies
It gives a look at how a multi-strategy allocator thinks about sourcing and underwriting in fragmented private markets, including segments it says sit beneath most institutional investors' radar. Useful framing for advisors whose clients are being offered private market exposure and want to understand how managers describe their edge.
Summary
By the alternatives in wealth deskOn this episode of The Distribution, Brandon Sedloff speaks with Raphi Schorr, Deputy Chief Investment Officer and Partner at HighVista Strategies, about why he sees inefficient markets as the main place alpha remains in private investing. Schorr describes how the firm deploys $14 billion across lower middle market private equity, venture capital, private credit and public biotech, and discusses backing fund-one venture managers, GP-led secondaries in the lower middle market and the pattern recognition he says comes from 20 years of manager and company selection. The conversation also covers his path from physics and operations research into investing and the structural themes he is watching
- HighVista Strategies deploys $14 billion across lower middle market private equity, venture capital, private credit and public biotech, according to Schorr.
- He argues lower middle market private equity operates beneath the radar of most institutional investors.
- He describes backing fund-one venture managers as a way to build decades of compounding access, and cites that 50% of the S&P 500 is venture-backed.
- GP-led secondaries in the lower middle market are discussed as sponsors seek to hold their crown jewels longer.
Chapters
From the publisher’s description| Time | Chapter | Length |
|---|---|---|
| Intro | 1 min | |
| Meeting Raphi Schorr and HighVista Strategies | 1 min | |
| Mathematics and early investing exposure | 4 min | |
| From physics to operations research | 3 min | |
| Joining HighVista and the shift to private markets | 3 min | |
| Building the firm from day one | 4 min | |
| What HighVista does today | 4 min | |
| Inefficient markets and where alpha lives | 5 min | |
| Pattern recognition in lower middle market PE | 3 min | |
| Balancing analytics with relationships | 3 min | |
| Access and the venture capital power law | 4 min | |
| Backing fund one managers | 8 min | |
| Creating optionality through early partnerships | 6 min | |
| Structural themes for the next 36 months | 4 min | |
| What keeps Raphi up at night | 2 min | |
| Closing thoughts on talent and opportunity | 4 min |
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