Private Equity Style Returns From Japanese Value Stocks?

 Private Equity Style Returns in Japanese Value Stocks?

Nick Schmitz and Dan Rasmussen’s Verdad Capital Management is not your typical value fund. The firm uses a leveraged investment strategy based on the research conducted by Dan Rasmussen and his research partner Brian Chingono, which has been described as 'the key to private equity.'

Amazingly, across the 2,500 deals studied, when PE firms paid more than seven times earnings before interest, taxes, depreciation, and amortization for a company, their chance of success plummeted.

Verdad’s strategy is built around these findings. Rasmussen and Chingono’s paper on the topic of leveraged small-cap investing in the public markets would have had an average annual return of 25.1% from 1965 to 2013, significantly outperforming all other styles.

By investing...