Katie Moore

Several years ago, as the private markets industry started to shift, Katie Moore moved from the deal side of Hamilton Lane to join the client-facing side, where she could quickly ferret out answers clients were seeking by making the best use of the firm’s technology and data resources.

“The clients were more sophisticated, the questions were tougher, and the market opportunity was expanding so rapidly that it was helpful to have someone who knew the investment side and could also speak to that growing, challenging, evolving lift of strategies and sectors,” she said.

Now managing director and lead consultant to some of the firm’s largest clients, Moore advises on portfolio construction and risk. For the current market, she is seeing a slowdown in new activity on the equity side, yet investors are continuing to commit as opportunities unfold. With regard to distress, the firm isn’t tilting clients toward this part of the market just yet but is spending time investigating distressed managers’ strategy and competitive advantages. (“We just haven’t seen a wave of distressed companies come through yet in the private markets, but it may just be a matter of timing,” she said. “A lot of money has already been raised with that expectation.”) Moore believes the healthiest fund managers will uncover new deal opportunities as we round out the year. 

“We’re just getting Q2 performance numbers now,” she said. “For us, what will be interesting is what fund managers will be forced to spend more time on their existing portfolio, versus fund managers who are starting to seek out new deals.”

Moore started at the private markets firm as an analyst in 2007 after interning on the mutual fund desk at BlackRock and on the trading floor at Susquehanna. She credits her swift rise in part to the mentorship of Andrea Kramer (now global head of the Fund Investment Team at the firm, which currently has about $68 billion in discretionary assets and another $447 billion in supervisory assets), who taught her insights by taking her around the globe, from Latin America to Asia and from coast to coast.

CIO: What (actionable thing) have you learned over the course of your career that has proven itself this year?

Moore: One of the valuable lessons I have learned over my 16-year career is that good business always comes back to relationships. Our firm culture and identity is built around client centricity and putting our clients first. When I meet and talk with clients, I always try to listen and attempt to find a way to understand their biggest challenges so I can be a helper in that moment. This year has been especially challenging for my clients, colleagues, and myself personally, as we all navigate the “next normal.” The significance of connection and empathy have never been more important—even if it is over Zoom.

When I started my career at Hamilton Lane back in 2007, my role was to travel around the world meeting with private equity fund managers and recommending investment opportunities. That was a valuable experience for me to meet the market and understand the importance of partnerships in this business. Then in 2013, I was offered the opportunity to join the client side of our business as a senior relationship manager, where I started working with CIOs to help construct their private market portfolios. Now, more than ever, I appreciate the importance of my dedicated role, as my client relationships are deep and I am able to help them navigate and find solutions as well as plan for the future. The importance of communication and having these long-term relationships are vital to succeed and outperform in these challenging times. 

CIO: What investments (specific securities or sectors) look good to you now? And why?

Moore: From where I sit today, I can tell you that many of us in the private markets asset class had an idea in our head of what an economic slowdown could look like but I don’t think any of us contemplated a global pandemic scenario. What is interesting is that a lot of the trends that were underway before the pandemic have accelerated significantly. For example, digital health technology disruption—this was a big theme that had already been playing out in many different types of companies even pre-COVID.

One sector I am spending more time on with clients today is growth equity. Similar to my point above, the opportunity set was already on an upward trajectory before the pandemic—less leverage, less sensitive to entry and exit multiples, and in some ways a strategy that is disconnected from the traditional economy. This part of the market has a way of taking some OK businesses and introducing things like new software or other digital technologies that make those businesses better—and ideally giving them a path to profitability. We think this is an area with a bigger capital need and there are strong managers with good track records who are helping these companies scale and grow.

Going in to Q4 and 2021, we are also bullish on certain dislocation opportunities, although the wave has not hit just yet. Our teams are spending a lot of time with managers and evaluating deals in areas like structured equity, rescue capital, or other strategies like secondary-directs that are helping solve capital structure and cash needs for businesses and GPs’ portfolios. We are now in a place where we can see the difference between “winners and losers” more clearly, as struggling portfolio companies will take time and energy away from those GPs’ ability to focus on new deal activity. Our expectation is that there will still be strong companies that have over-levered balance sheets, or not enough cash and maybe covenant issues. The managers who own them likely won’t want to sell in this environment and will want capital to grow or pay down debt. The longer this drags on, more businesses are likely to need that cash, and so we want to have client portfolios positioned with GPs who can step in or let us co-invest.

Lastly, over time, buyouts and equity deals will come back in favor (and likely with less leverage, at least for a time) and so despite pull backs in fundraising, we have had minimal slowdown in the diligence and recommendation of funds that are core positions in our client portfolios. Across the board, buyout is the strategy with the most consistent performance historically—it’s the largest part of the market and we’re encouraged by the trend of increasing operational capabilities year-over-year. It’s not what everyone wants to talk about right now, but it shouldn’t have dollars meaningfully shifted away.

CIO: What ones don’t? And why?

Moore: We have certainly seen a slowdown in new deal activity, although not a total pause. If you look at dry powder globally, there is over $2 trillion today to spend over the next cycle and we think that equity investors will focus on businesses across the spectrum that have significant opportunity in the post-COVID era. In addition, the massive amount of global stimulus has helped keep investor sentiment up during the last few months. That means that clients are active and are keeping to their investment plans and we are supportive of that approach.

With that said, this economic recovery will likely be slow and opportunities will vary by region, sector, and asset. For example, we expect the prolonged pullback from the upstream energy space to continue, driven by both macro factors and continued ESG initiatives, which have grown in importance. However, we may potentially see some manager consolidation and renewed deal flow, which could still have a place in some portfolios.

Another area we are approaching very cautiously is in the distressed debt space, where we are seeing a massive amount of capital raised but limited opportunity set given rebounding and strong capital markets.

Ultimately, there is no one strategy or sector we aren’t constantly evaluating and considering for client portfolios as assets tend to perform differently in various stages of a cycle. Decisions on where to allocate capital are really on a manager-by-manager and client-by-client basis, and our job is to help sort through the increasing number of choices to make diversified allocation decisions that we think are best for a program’s unique long-term objectives.