GMO Q1 2026 Quarterly Letter Part 1: What Barbarians Like To Take Private
GMO's Q1 2026 quarterly letter discusses the risks associated with private equity investments, particularly in software firms. The analysis indicates that private equity portfolios are increasingly concentrated in lower-quality companies, especially within the software sector. Leveraged buyouts, which dominate private equity capital deployment, are shown to be of significantly lower quality compared to public equities.
- ▪Private equity portfolios are increasingly concentrated in risky, low-quality software firms.
- ▪Leveraged buyouts represent roughly 80% of the capital deployed by private equity funds.
- ▪Public-to-private leveraged buyouts rank a full quality decile below small caps.
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