FireSide: Middle market private equity—Greed versus fear

As sky-high valuations continue to define public markets, investors turn to middle market private equity to seek a better balance of greed and fear.

About this episode

It’s a topic as old as investing: how can portfolio builders better balance greed and fear? Against today’s backdrop of high valuations and concentration in public equities, middle market private equity may offer that ideal mix of risk and reward.

Join Chief U.S. Economist Lara Rhame, Client Portfolio Manager Philip O’Brien, and Research Associate Madison Murphy as they examine the opportunity set in middle market private equity: what sets this sector apart, how secondaries can solve historic challenges and where investors are making the most of key trends.

Transcript excerpt

Lara Rhame: Welcome back to FireSide, a podcast from FS Investments. I’m Lara Rhame, Chief U.S. Economist here at FS, and today we’re going to talk about a topic as old as investing, which is balancing greed and fear, specifically against the backdrop of sky-high public equity valuations and a market that is placing no weight on any risks—I guess that’s kind of another way to say “fear.” In other words, the levers hard over on the greed side of that spectrum.

So really, our, our discussion today will be on how to bring a better mix, and a better balance, to this spectrum by investing in middle market private equity. And I’m joined by two new faces on the FS FireSide Podcast—though certainly not new to the firm. The first one is Madison Murphy, who works with me on the Research and Fund Communications team and has been at FS Investments for three years now. She focuses on private equity, multi strategy liquid alternatives. Madison, welcome.

Madison Murphy: Thank you, Lara. Thanks for having me on FireSide. Very privileged to be invited on.

Lara Rhame: This is going to be great.  My other guest is Phil O’Brien, who I have also had the pleasure of working with for four years now. Phil is a member of our client portfolio management team, and he specializes in global asset allocation and private equity.  Phil, welcome.

Philip O’Brien: Well, thanks for having us. Good to see you. Good to be here.

Lara Rhame: Phil, you know, you’re in person with us here in our home office in Philadelphia, but you live in Chicago. And I know that you’re almost constantly on the road—and something that I think is really important for everyone to know is that you’ve really spent decades helping advisors and investors understand markets. So, I think your perspective and how you’re taking these investment strategies and opportunities to your discussions is going to be really valuable.

Philip O’Brien: Oh, thank you. It’s a pleasure. I really enjoy it.

Lara Rhame: So, why are we here today? I’m actually going to keep this really simple. Phil, tell us, you know—greed versus fear—we are hard over on the greed side of that spectrum. How did we get to such an extreme place in market pricings and valuations?

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Lara Rhame

Chief U.S. Economist + Managing Director

Madison Murphy

Associate, Fund Communications

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