Even though Side Pockets reconcile several of the differences between hedge funds and private equity, such that the former can more easily invest in the latter, the question of valuation is still bouncing around like a just-fumbled football.
These are but two of the many reasons cynics will cite when they say hedge funds are playing with dynamite and don’t know it. That is to say, pricing discipline and thorough due diligence are the hard lessons learned in the 30-year history of the private equity market.
One can understand the cynics who say these are two worlds that should never, ever converge. Indeed, it could be a collision with bodies strewn everywhere. But opposites do attract, and it’s equally easy to see how their distinguishing features make them perfect complements.