Nic DiLoretta

Nominated by a respected allocator for his ability to come up with “very interesting names and new and smaller platforms,” Nic DiLoretta has been nominated to our list for two years by more than one allocator.

Case in point, in 2016, he saw an opportunity in telecommunications years before the term “5G” was popularized. Seeking a way to build a focused communications infrastructure portfolio, he had conviction that wireless spectrum could be additive to infrastructure portfolios as it was an underappreciated asset with infrastructure-like characteristics. Now the managing director and deputy head of private equity and real assets research at Aksia TorreyCove is tracking opportunities for an upcoming auction run by the FCC in December, for a segment in the mid-band spectrum.

Much of what he does is about building a theme and a hypothesis and seeing if there is an investable universe. It’s gaining a solid understanding of the market through extensive reference work, while trying to gain a 360-degree view of an emerging opportunity. It’s watching groups moving to a segment before it gets really hot. It’s tracking deal activity to see what is different, and doing analysis to separate the unique opportunities from marketing spin.

DiLoretta said, outside of communications infrastructure, people are currently “being patient, which isn’t necessarily a bad thing.” DiLoretta earned his MBA three years ago from the Marshall School of Business at USC while working full time, and says that experience has been helpful in overseeing his growing team of private equity and real assets investment associates. Also helpful to his skillset was starting his career in 2007 as an analyst in risk management with Pacific Corporate Group, where he learned the ins and outs of the industry by absorbing and breaking down large volumes of portfolio company information very quickly.

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

DiLoretta: Be adaptive but have conviction. You need to strike the right balance between IQ and EQ and know which situations call for managing versus leading.

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

DiLoretta: Assets/sectors that were performing well prior to COVID, strongly positioned businesses in their respective markets with long-term growth fundamentals and secular tailwinds, continue to show resiliency through 2020 and I expect will continue to perform in the future, such as digital infrastructure assets. Most of us have likely experienced interrupted Zoom video calls due to too much traffic on existing networks but as more attention is brought to this sector, managing valuation risk will be critical to successful investment outcomes. One area within communications that is of particular interest is certain spectrum bands repurposed for mobile usage. Cybersecurity is also an area that has long-term growth fundamentals as the world increasingly becomes more digital and the use of artificial intelligence expands. Cybersecurity will need to be ahead of the curve to protect existing and future technologies from being weaponized.

Perhaps it is due to the return of and continual threat of rolling blackouts and power outages in California, but this has highlighted that while we have made strides in expanding renewable power generation penetration, we are still far away from these resources being a source of base load generation. Expansion of battery storage capacity and technology is instrumental in making renewable sources more reliable but is only one part of the solution. We will still need to rely on natural gas to provide stable baseload and peak generation.

Public budgets will continue to be strained due to the pandemic and with municipal assets in desperate need of upgrade, we think now would be a good time for private capital to be a broader part of the solution.

CIO: What ones don’t? And why?

DiLoretta: There is still a great deal of uncertainty around what permanent behavioral changes we will see as a result of COVID-19 and how this will impact demand across various industries going forward. For certain segments within real estate and transportation/mobility of people, a patient approach is needed until there is better insight into future demand.