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Restructuring__

@Restructuring__

Dec 11, 2025

This is Kelly Granat

The Co-CIO at Lone Pine Capital, one of the most storied and successful hedge funds in history

She sat down today with ILTB and revealed how to pick stocks and lead an investment firm
Here are 7 key insights:
1) What Every Great Business Has in Common
2) Lone Pine’s Biggest Mistake & How They Fixed It
3) The Short-Termism Epidemic
4) Strategies & Opinions on AI
5) Finding Value Beyond Tech
6) Balancing Fundamental & Macro Awareness
7) The Investing Mindset That Separates the Best from the Rest

A (Long) Thread 🧵

1) What Every Great Business Has in Common

Kelly believes the best investments have a competitive moat, strong business models, and outstanding leaders. A great company has a desirable product, scales efficiently, and can continue to grow for years with minimal risk. However, paying too much for a company can make it a negative investment, even if it is good. Valuation and timing are crucial.

One major signal is a leadership change. If a good CEO takes over a company that has a strong base but isn't doing well, the upside can be massive. Ulta Beauty is a good example. It had a fundamentally strong business, but its marketing and culture were bad. When Mary Dillon, who is experienced in consumer goods, became CEO, she changed the company's strategy and image. This unlocked huge value. Lone Pine kept an eye on her career and invested early because they knew she could fix the problems.

The best turnaround investments happen when a company’s biggest weakness aligns perfectly with a new leader’s expertise. Some businesses, however, don’t need superstar leadership to succeed. Their models are so strong that they compound naturally over time. Visa and Mastercard are great examples. Their revenue grows as global transactions increase, and their business model is nearly impossible to disrupt. Lone Pine invested in them early but should have held longer. For these companies, leadership matters less than buying at the right price. Great investing is about balancing leadership-driven turnarounds with long-term compounders—and knowing when the market is mispricing both.

2) Lone Pine’s Biggest Investing Mistake & How They Fixed It

In 2021, 2022, the market was rewarding high-growth firms that were burning through their cash flow. Lone Pine’s valuations focused more on long-term projections than near-term realities.

Lone Pine recognized early that the Fed was behind on inflation and that a rate-hiking cycle was coming. While they started adjusting their portfolio, they didn’t move quickly or aggressively enough to reduce exposure to high-growth names before the market turned. When the sell-off hit in early 2022, all high-growth stocks collapsed together.

The mistake wasn’t just in valuation. It was also a portfolio imbalance. Lone Pine had too much exposure to e-commerce, payments, and software, sectors that had thrived in a low-interest-rate environment. When the market changed, having so much invested in just a few stocks hurt them. In early 2022, they totally revamped their investments.

They sold off a lot of their tech stocks and put their money into industries they had experience in. This shift led Lone Pine to try a wider, more diversified investing plan. Instead of depending on just a few big names, like Nvidia, they went with a mix of industries and investing methods that fit their main philosophy.

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Restructuring__

@Restructuring__

Nov 9, 2025

Mauboussin just published its latest 88 pages research piece on “Capital Allocation”

These are the 7 key findings you should study and master:

1)Lack of Capital Reallocation
2)Sources and Uses of Financial Capital
3)Sources of Capital over Time
4)Debt-to-Total Capital over Time
5)Capital Deployment Breakdown + Overtime
6)Private Equity as a Percentage of Total M&A Volume
7)Cash Conversion Cycle by Sector

A Thread 🧵

1) Lack of Capital Reallocation

This behavior is consistent with status quo bias, which suggests that people tend to continue doing what they are doing even in the presence of preferable alternatives.

It is also compatible with the escalation of commitment, the idea that we would rather escalate a commitment to a prior action than change course.

2) Sources and Uses of Financial Capital

An important clarification is made here.

"One way to assess whether a company will require external capital is to compare its growth rate in net operating profit after taxes (NOPAT) to its return on invested capital (ROIC). Firms, young or old, that grow faster than their incremental ROICs need to access external capital. This is fine, indeed desirable, if the company’s ROIC is in excess of the cost of capital.

A classic example is Walmart, a global retailer, which grew faster than its ROIC in its first 15 years as a public company. The important point is that the company created a lot of value because its ROICs were well above its cost of capital. Even though Walmart required external capital to support its growth, the stock delivered an annual total shareholder return of 33 percent during that period, three times that of the S&P 500."

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Restructuring__

@Restructuring__

Nov 3, 2025

Great private market update including:

1) EV / EBITDA Transaction Multiples
2) Comparison of Transactions Over and Under $1.0 Billion of Enterprise Value
3) Size of Deal and EBITDA over Time
4) Maturity Wall
5) PIK Interest Usage – Trend Analysis
6) Lender Foreclosures🧵

1) EV / EBITDA Transaction Multiples

Great PE datapoints:
- multiples are ATH (even above 2021 peak)
- sponsors are more conservative and leverage is down slightly

2) Comparison of Transactions Over and Under $1.0 Billion of Enterprise Value

Great data, perfect overview of size premium and multiple trajectory over time

Interesting that small businesses are highest multiple even, even higher than 2021

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Restructuring__

@Restructuring__

Oct 22, 2025

Coatue October 2025 State of the Markets Update

60 Pages on Public Markets every investor should read

Get the Full Deck below ⬇️

1) AI continues to drive markets higher while...
2) In addition, new names are winning the AI Race
3) The market is very expensive, but...
....
6) Coatue is not selling, the AI Bull Case
7) Coatue ROIC Math on AI
8) AI Bull and Bear Case comparison
9) AI Apps Landscape

1) AI continues to drive markets higher but...
Mag 7 is no longer outperforming

2) In addition, new names are winning the AI Race

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Restructuring__

@Restructuring__

Oct 14, 2025

"10 Years. 10 Hard-Earned Lessons in PE"

Beautiful piece, read it

1) On pursuing PE vs. other paths
2) Good work ceases to be enough once you become seasoned — a web of relationships is more important
3) It's all just selling at the end of the day. Communication and charisma.
4) Don’t expect fairness. Respect the powers of collateral damage.
5) Founders, management and industry operators are sometimes very underrated
6) The myth of the mighty senior partner
7) Even PE work becomes just a people, projects and admin job after some years.
8) Don’t allow PE to be your main thing
9) You need to make some mistakes to learn from them. It probably won't make a difference that you read this post.
10) Careers are often made out of nothing, or everything 🧵

1) On pursuing PE vs. other paths

2) Good work ceases to be enough once you become seasoned — a web of relationships is more important

Read 11 tweets

Restructuring__

@Restructuring__

Oct 13, 2025

We have all seen the email below, but what do it mean?

What are factoring facilities? And what is going on here?

1) Factoring Basics
2) Dummy Example
3) Common Factoring Structures
4) Reasons for Factoring
5) The infamous Weil email explained

1) Factoring Basics

Factoring is a form of financing that allows companies to convert their accounts receivable into immediate cash.

Traditionally, when a company sells goods or services, it issues an invoice to its customer, which is often not paid for thirty, sixty, or even ninety days. Instead of waiting for the cash payment, some companies opt to sell the invoice to a third party, known as a “factor”, at a discount, typically around 95 to 98% of the receivables face value (this discount represents the fee charged by the factor).

Importantly, factors often won’t advance the entire cash balance upfront. Typically, 75% to 90% of the receivable’s face value is advanced upfront, and the remaining balance is transferred, less the abovementioned discount, once customer accounts have been collected.

Therefore, once the customer has paid the invoice, the operating company will have collected the full receivables balance, less the factoring fee.

The Factor’s fee represents its earnings for providing upfront liquidity and assuming the risk that the customer may not pay on time, or at all.

2) Dummy Example

To numerically illustrate concepts, we’ll use ABC Co. as a hypothetical example.

First, imagine ABC Co. sells $100k worth of goods to a customer on sixty-day terms. Instead of waiting two months to collect, ABC Co. sells the invoice to Factor Co.

On the day of the sale, Factor Co. advances 85% of the invoice, or $85,000, to ABC Co.

When the customer eventually pays the full $100,000 on day 60, Factor Co. sends the remaining $15,000 back to ABC Co., but subtracts its $3,000 factoring fee.

In total, ABC Co. has collected $97,000, with $85,000 upfront and $12,000 later, with the $3,000 difference in cash collected and face value representing the cost of accelerating cash flow.

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