Private Market, Public Mind

Here's how a private market insider looks at building wealth

Private markets by nature are difficult to get a handle on because information is sparse.

Whether owned directly through specific funds or indirectly through mutual funds that purchase private assets, they are becoming a sharper focus for portfolios.

That’s why I reached out to the man behind The Private Public Investor. Through his publication Alex shares his unique perspective on portfolio building and how it relates to the greater economic picture.

You can find his articles ThePrivatePublicInvestor. Let’s get started.

Colton: How would you describe your investment philosophy?

Alex: My investment philosophy is never concrete and always changing, but broadly, I usually follow a 50/50 barbell approach of large, blue chip stocks when they crash, and the other 50% being organic, ground up ideas that usually require more risk, and is where I am open to deploying more capital if the opportunity presents itself (like AMD last April’25).

I also utilize social arbitrage to see what retail investor sare following to see what the trends are in the market, so I can then look forward past them.

Colton: It sounds like a thoughtful approach based around anattractive entry point.

That’s how margins of safety are built and where risk/reward ratios really tilt in the investor’s favor.

As more investment conversations happen online as oppose to in an office I think that’s a wise move. We’ve seen how social media, particularly Reddit, can make meaningful impacts on the market.

The work you and others are doing to democratize investment research is important because it gives investors more avenues to think for themselves.

With your expertise in private equity, how should investors be looking at the space to support their portfolios?

Alex: Most investors should not look into private equity as an investment vehicle in my opinion, unless you work in the space.

Private equity managers are penny pinchers and you really have to identify a good fund to be able to invest.

Most retail investors aren’t accredited anyway, so they could only invest in general, broad market PE ETFs with lower alpha than just single, public securities like Apple or META.

Colton: Candidly, I’m fairly new to the private space and I’m glad you’ve confirmed my initial suspicions.

It’s easy to get caught in an esoteric wave and want to be a part of an investment trend because it sounds sexy. It goes to show that sticking with what you know has and always will be a tried and true method of allocation.

What are some of your favorite tools when conducting investment research?

Alex: Claude, Gemini, FRED (macro) ,TradingView, YahooFinance, Company Websites, and Public Filings, My Brain.

Colton: A few of these tools I’ve been using for a while like Yahoo Finance, good old fashion company websites. When I think of getting more comfortable with AI models I can only see more use cases becoming available to investors.

Research in tools like Claude is more pointed and acts as an open discussion instead of people typing in a request only to have to sift through dozens of pages to find data.

What popular investment thesis do you currently disagree with?

Alex: Salesforce (CRM) as a good investment in the SaaS space. I love SaaS (VEEV, NOW), and could be wrong on CRM, but I really do think beyond enterprise customers, SMBs will utilize in-house, custom CRM databases.

Private Equity is very archaic and even these funds are creating their own. I don’t see the long term value proposition beyond enterprise-scale customers.

Colton: I’ll share my experience on this: I’ve talked to a former SalesForce employee and he confirmed they only look at businesses doing tens of million in revenue a year.

I did work with a client who’s business was connecting small businesses with SalesForce but it was not the same experience as I got working at a large firm.

On that note I’m currently looking at building my own CRM due to flexibility and relevance to my business so real world anecdotes support your thesis.

What are the 3 most important metrics you look at with a company?

Alex: 1-2yr Forward PE, FCF/Share Revenue, EPS growth.

Colton: These three metrics help investors understand both the price they’re paying and the quality of the business they’re buying.

A 1–2 year forward P/E ratio estimates how expensive a stock is relative to its expected future earnings, providing a more long term view of valuation than trailing earnings alone.

Free cash flow (FCF) per share growth measures how effectively a company is turning its operations into actual cash that can be used to reinvest in the business, reduce debt, repurchase shares, among others, making it one of the cleanest indicators of financial strength.

Earnings per share (EPS) growth reveals whether that top line growth is ultimately translating into higher profits for each shareholder.

Together, these metrics answer three essential questions:

• Is the stock reasonably priced based on future expectations?

• Is the business generating increasing amounts of cash?

• Is it growing both its sales and profits in a way that benefits shareholders over time?

I’ll leave this question open to interpretation. What’s thebiggest risk investors face with AI?

Alex: Falling into the trap of not thinking for themselvesand falling into analysis paralysis.

Too much information can be overwhelming, but taking a step back, realizing everyone is feeling the same way, and sticking to your investment plan for the long-term is the way to win here.

I think AI will create even more asymmetry in the stock market, as the information scraping will all be the same.

Short-term patterns may be more predictable, but long term value will be more hidden.

Colton: This is exactly why building your own investment philosophy is critical.

Why ChatGPT thinks an investment is a good purchase may not align with your goals, risk tolerance, or personal restrictions. This goes back to your forward thinking metrics. It’s great to see where a company has been but simplicity will always be in favor when evaluating a portfolio.

Alex thank you for your time and expertise in the private space. It’s an area of investing that doesn’t allow for readily available information so it’s great to get an insider’s opinion.

For anyone looking to get more round out their investing knowledge and get approachable investment research subscribe to Alex at ThePrivatePublicInvestor