Richard C. Wilson speaks with Marc Halpern about how his investor group evaluates private investment opportunities. Halpern discusses deal screening, sponsor reviews, team due diligence, and portfolio strategy.
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About the guest
Marc Halpern. Marc Halpern is a co-founder of the Deep Due Diligence Investors Club and previously ran the Part-Time Investors club. He says he has spent five decades doing breakthrough R&D in chemistry and draws parallels between that work and identifying investment opportunities and managing risk.
Key takeaways
- Halpern evaluates the sponsor, the deal, and the market environment, which he calls the jockey, the horse, and the track.
- His group screens deals first because reviewing a deal can be faster than screening a large number of sponsors. Deals that meet its criteria then receive deeper sponsor review.
- The group uses an AI tool to screen deal flow, while Halpern says investment decisions still require human review.
- Deep due diligence can reduce risk but cannot eliminate it, because unforeseen events can affect an investment.
- Halpern describes diversification as a way to manage risk and says investors should choose a level that fits their capacity to understand different assets.
- Team due diligence brings together investors with different professional backgrounds, which can help expose blind spots.
- He recommends setting portfolio strategy and allocation before choosing individual investments.
- When assessing sponsors, Halpern looks at how they responded to adversity, including changing interest rates and difficult deal conditions.
- Halpern prefers working with sponsors who are also operators, because intermediaries can make deep due diligence harder.
- He advises capital raisers to accept a quick no and use their time to meet other potential investors.
Best quotes
"We're looking at the at the jockey, the horse, and the track. The jockey is the sponsor, you know, the right operator. The the horse, of course, is the opportunity itself. And then the track is the macroeconomics."
"You can minimize risk. You can You cannot eliminate risk. You can minimize risk. And then you can manage risk."
"The way we minimize risk is by performing deep due diligence on every opportunity before we invest. The way we uh the way we manage risk is through diversification."
"So so performing deep due diligence in teams is something that we do that is different and and my my performance has gone up since I've been doing things in teams."
"We we love AI as a screening tool and sometimes as part of to confirm things on the due diligence maybe. But in the end AI is not investing $100,000 each one of us is investing $100,000."
"take no for an answer and take no for an answer quickly."
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