PE's zombie problem

+ Michael Mauboussin, Dan Rasmussen, SpaceX, Unicorns & More

Author

The Idea Farm
September 06, 2026

“The riskiest thing in the world is the widespread belief that there’s no risk.”

— Howard Marks

Research

Allianz argues Europe is shifting from policy ambition to execution as infrastructure, energy, and industrial investment is turning. They also note that while dividend and buyback investing is often associated with defensive investing, it may equally be viewed as a way to participate in Europe’s execution story today.

Michael Mauboussin examines the 40-year shift from public to private U.S. equity markets, including buyouts, venture capital, exits, and returns. Public listings are roughly half their 1996 level, while private markets raised more than twice as much capital as public markets from 2020–2025 amid tougher exits and higher rates.

PitchBook examines the buildup of “zombie” private equity assets (companies that remain solvent but lack exit paths) as higher rates and lower multiples expose aging vintages. Of 13,509 PE-backed companies, 33.8% have been held over five years.

Verdad examines whether corporate share issuance can act as a market- and sector-timing signal. US net issuance peaked at $1.5 trillion in 2000, and the 2000 and 2021 issuance manias were followed by -12% and -18% S&P 500 returns, while sector results show large differences in predictiveness.

Allspring Global Investments argues that higher interest rates have weakened the case for using dividend-heavy equities primarily as an income substitute. After investors leaned on equity income during the 2009–2022 low-rate cycle, the paper favors companies with greater balance-sheet flexibility to reinvest, pursue acquisitions, or return capital opportunistically.

Bonus Content

Daphne Koller walks through the deep challenges of drug discovery and the ways that AI can and cannot help. Link

Do you really want to be a billionaire? Link

Morningstar’s latest unicorn market monitor. Link

Apollo released their latest outlook on the housing market. Link

International equities offer more than geographic diversification. Link

Before the disclosure: Identifying SpaceX exposure in elite endowments. Link

Podcasts

8/27/2026 - 57 minutes

Verdad Advisers’ Dan Rasmussen discusses private equity’s challenges, AI’s impact on technology investing and value opportunities in Japanese small caps.

Meb’s Corner

9/4/2026 - 50 minutes

Inigo Fraser Jenkins makes the case for US equity exceptionalism, examines why bonds may no longer diversify equities, and lays out gold's shifting role as portfolios brace for higher inflation.