Oxford Professor: Philly Private-Equity Shop Unfairly Mocked Him

Maybe masters of finance should think twice before trying their hand at satire.

That may be the lesson after a leading area financial consultant, Hamilton Lane, recently appeared to skewer an Oxford University professor known as one of the leading critics of private equity — those hotshot investment opportunities not available on the stock exchange.

In the unlikely setting of Hamilton Lane's 2021 market overview, the Bala Cynwyd firm trigged the contretemps when it included text and cartoons apparently mocking scholar Ludovic "Ludo" Phalippou.

The Oxford University finance professor has criticized private equity as "a billionaire factory" and has testified about its lackluster performance for Pennsylvania pension funds. The field includes Wall Street investment managers who buy private companies to resell them at profit while charging pension funds and other big investors high fees to get in on the action.

The 90-page Hamilton Lane report included a four-page fable with cartoons also lampooning a fictional rodent musician, "Baylor Slift," a not-so-subtle fictional name for mega pop star Taylor Swift. The singer has been publicly irate over a $300 million private-equity deal in which she lost rights to her early songs.

But the main fictional target was "Pluto Haddock," a corrupt academic advising the Swift-like figure against private equity — while faking his own research for pay.

Phalippou didn't find any of it amusing. He saw the blustery professor as strikingly personal, even though the character was portrayed in the cartoons as a goose.

The firm's creation is, like Philappou, a "mathematician and statistician" and "renowned private markets expert." The goose peppers his speech with French expressions like "trompe l'oeil."

The name Pluto is close to Ludo. And "Pluto Haddock" in Philappou's native French resembles the French expression "plutot ad hoc," which means "'rather ad hoc,' i.e. opposite of rigorous," he argued in a LinkedIn post.

"This type of attack hurts," Phalippou, 45, told me in a phone call from England. "Hamilton Lane decides to openly insult me, ridicule me, misquote me, and attack me ad hominem."

Phalippou challenged the firm to the modern equivalent of a duel — a debate on Zoom.

He says he is also considering legal action. Citing British disclosure laws, Phalippou has demanded Hamilton Lane send him internal emails and any other records in which he, or Professor Pluto Haddock, might be discussed.

Hamilton Lane denies that Pluto is Ludo.

"Our humorous take on this collective academic perspective" is not a portrait of Phalippou, a firm spokesperson, Kate McGann, said in a statement.

Rather, "Professor Pluto Haddock represents a generic version of the various academic perspectives against the private markets industry." The text should be read, the firm said, "in the spirit in which it was intended, a fictional lively discussion around industry data and findings."

McGann wouldn't comment on Phalippou's call for a debate. So much for the lively discussion.

While the combatants may be obscure to the public, the quarrel, first reported by Bloomberg News, reflects a serious debate. As private-equity investors have made billions buying private firms and retooling them for resale, often at the cost of many jobs, their critics have grown apace. Phalippou is an international leader among such detractors.

What is beyond dispute is that Hamilton Lane is thriving. Over the past year, it took in revenue of $316 million, of which $166 million was pretax profit.

The Main Line firm was paid $2 million last year to advise Pennsylvania's largest pension system — the $60 billion public school retirement plan known as PSERS. It recommends private-equity funds to buy and reviews how well past choices do.

Hamilton Lane has also acted as a legislative lobbyist, joining PSERS managers in 2019 to help blunt a push for it to more fully disclose private-equity fees and performance.

For his part, Phalippou was a key analyst in the release of a highly critical 2018 report from a blue-ribbon panel that lambasted PSERS's weak investment results. He told me recently that the fund managers greeted him with hostility while he was doing his research.

For PSERS, the question of its investment performance has grown embarrassing in recent weeks.

Earlier this month, the board belatedly disclosed that it had officially endorsed inaccurate investment returns. It has hired two outside law firms to find out what went wrong.

While Hamilton Lane has not been named in that mess, it did choose to compare an academic critic to a honking goose. It may have to explain that comparison in court.

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