Trends Watch: August 24, 2016

With this post, EisnerAmper‘s Alternative Investments Intelligence blog features its new Trends Watch, a weekly entry featuring founders at alternative investment firms . If you’re interested in being featured, please contact  Elana Margulies Snyderman. 

This entry features the thoughts of  Brett Hickey, Founder, Star Mountain Capital  

What is your outlook on the alternative investment industry?

We believe the alternative investment industry will continue to grow as investors look for better returns relative to the more generic publicly traded investment options, which continue to exhibit volatility and sub-optimal risk-adjusted returns.  

We believe that investors will continue to demand more transparency and alignment with their investment partners including how carried interest and profit participations are structured.

Finally, with increased competition, we believe that alternative asset managers who are specialized and focused on more underserved markets, will have distinct competitive advantages, and will continue to be the top performers. Moreover, we think investors will seek out these specialized asset managers.   

What are the next steps for the EU post-Brexit?

The EU continues to have a lot of uncertainly and questions around how they will operate and what they will look like going forward.  

We are currently mainly focused on U.S. private businesses.   

What keeps you up at night? 

We are concerned with the possibility of recession – perhaps within the next two years. Without adequate government stimulus options, a recession could be prolonged. As a result, we are investing in defensive, high quality, sustainable businesses with prudent capital structures.  

We focus on smaller, private businesses where we can have lower leverage and lower-risk investments which also provide the opportunity for higher returns; however, the cost to us is more labor intensity so we spend a lot of time actively looking for challenges before they have the opportunity to fester.