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Human capital trends are valuable to senior professionals who manage firms, but these trends are difficult to track because of:
- The insular existences typically led at larger firms
- The focus on sourcing/executing deals
- A general distaste for dealing with management issues
Because CPI is active in the private equity and hedge fund spaces, we thought it would be useful to share recent observations. CPI interacts with employees at all levels who communicate positive and negative issues relating to firms' management, investments, succession planning, competitors, internal teams, etc. We are therefore aware of internal dysfunctions that dramatically affect firms.
This is a reactionary period marked by fear and uncertainty; a time when people tend to follow rather than lead. As Warren Buffet commented, "People are habitually guided by the rear-view mirror and, for the most part, by the vistas immediately behind them." This quotation is relevant to all investors; individual, institutional, and otherwise.
The troubled market and cynical investment community have created a desire for greater transparency within both industries. Interestingly, because of the popularity, institutional stature, mainstream profile and celebrated high returns of private equity firms and hedge funds, investors failed to recognize that these industries were risky asset classes.
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