In general, historical evidence indicates that returns in the private markets do not persist over time. Managers and market segments that perform well initially, when they are smaller, less efficient, or less affected by competition, tend to perform less well as they grow and come to offer little to no alpha over broad-based benchmarks.
At its core, Barrel Rate seeks to generate an outsized multiple of capital by partnering with private equity general partners and independent sponsors who are able to identify proprietary opportunities, structure transactions with downside protection, and capture excess returns by growing their companies to a scale where market efficiencies produce excellent exit prospects. These dynamics exist independent of market cycles or debt availability.
While Barrel Rate will invest primarily in the United States, we also will consider opportunistic investments in other developed markets, such as Europe, while maintaining our focus on small-cap and emerging managers.
Barrel Rate’s Managing Principal, Jefferson Stone, leads the Firm’s investments and operations. Jeff has worked in the private capital markets since 1997 when he joined Pacific Corporate Group after working for a small law firm for three years. After graduating from the Wharton School of Business in 2001, Jeff joined Probitas Partners in San Francisco, where he helped to shape the firm’s pioneering intermediary and market-making program in the private equity secondary markets. Jeff then joined the William Flora Hewlett Foundation in 2006, where he served as a senior member of the foundation’s investment team for nearly 10 years. In that capacity, he oversaw a broad-based portfolio of private equity and alternative assets that included total commitments of over $3 billion. Since 2015, he has served as a member of the Board of Directors of Axiom Asia Private Capital and served as an advisor to various private market participants and firms. Jeff received his MBA from The Wharton School of the University of Pennsylvania, where he was both a Palmer Scholar and a Siebel Scholar, and a BA from the University of California, San Diego, where he graduated Magna Cum Laude.
Jeff’s greatest loves include his family, baseball and statistics. For a baseball to be “Barreled”, a batted ball requires an exit velocity of at least 98 mph. At that speed, balls struck with a launch angle between 26-30 degrees always garner Barreled classification; for every mph over 98, the range of launch angles expands. Why does this matter and how does it apply to private equity? A player’s Barrel Rate is the strongest predictive statcast measure when forecasting future home runs. We take limited data, analyze it rigorously, scour the market to evaluate and understand the competition, wait patiently for the perfect pitch, and then give our investors the best chance to hit a “home run.” Fortunately, we are allowed an unlimited number of strikes before we choose to swing!