Private Equity Chased Software. Big Tech Is Chasing AI. Dan Rasmussen on If They Are Making the Same Mistake Twice

Private Equity Chased Software. Big Tech Is Chasing AI. Dan Rasmussen on If They Are Making the Same Mistake Twice28 aug57 min

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Dan Rasmussen, founder and managing partner of Verdad Advisers and author of The Humble Investor, joins Kai Wu to examine the unraveling of private equity, the rise of private credit, and how AI is reshaping software, labor, and the economics of technology investing. They also explore the massive AI CapEx boom, why value investing has struggled in the intangible-heavy U.S. market, the unusual opportunity in Japanese small caps, and how investors can quantify intangible value in biotech.<a href="https://bit.ly/47V479B">Subscribe on Spotify⁠⁠⁠</a><a href="https://bit.ly/4bK2MVl">⁠⁠⁠Subscribe on Apple</a> Topics covered:<ul><li>Why private equity became a consensus trade and why exits are now clogged</li><li>How leverage and high debt costs threaten private equity returns</li><li>What publicly traded private equity funds reveal about true volatility and NAV discounts</li><li>How private equity shifted from old-economy buyouts into software and healthcare technology</li><li>Why AI may have erased code as a software moat while strengthening other intangible advantages</li><li>How ARR lending helped private credit finance software buyouts and created an obsolescence mismatch</li><li>What AI is doing to hiring, junior roles, productivity and the composition of work</li><li>Why the AI CapEx boom may be a crowded, path-dependent overinvestment cycle</li><li>Why traditional value metrics work better in Japan than in the intangible-heavy U.S.</li><li>How Tokyo Stock Exchange reforms, buybacks and dividends can unlock value in Japanese small caps</li><li>How R&D spend, specialist ownership and short interest can help quantify biotech value</li></ul>Timestamps: 00:00 Intro 04:03 Why private equity's debt burden changes the equity math 09:24 How private equity became a software momentum trade 13:29 Why code may no longer be a durable software moat 17:48 How private credit enabled software buyouts through ARR lending 23:56 AI productivity, jobs and why displacement is slower than expected 30:23 Why the AI CapEx boom may be the market's most crowded risk 34:29 Rational overinvestment, leverage and the timing risk in AI 38:46 Why consumers may capture more of AI's value than investors 44:07 Japan's below-book-value reform and the return of old-school value 51:03 Quantifying biotech value with R&D, specialist ownership and short interest 55:08 Dan's non-consensus views on private markets and JapanLearn more about the Excess Returns podcast network:<a href="https://excessreturns.co/?utm_source=chatgpt.com">https://excessreturns.co</a>No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.