S1: Convestion with Randy Cohen, Senior Lecturer, Harvard Business School
Educational Alpha
The Disadvantages of LBOs
LBOs have the ability to trade on inside information. They don't have to pay a control premium. A lot of that edge flows back to mom and pop. There's some left over for investors. But even after taking account of that, if you look at the back test of our strategy, what you'll see is it really does underperform traditional PE by three to six percent a year on a gross basis.
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