Quarterly fund reports. Part update, part marketing

Happy Thursday and welcome. As always, let's dive in.

Today we’ll be talking about everyone’s favorite topic: Portfolio monitoring.

The problem for LPs is that most GP portfolio updates are written as if the prior quarter never happened.

You get a company description. You get this quarter's developments. Maybe a KPI or two. And then you move to the next company.

What you almost never get is a dashboard showing the overall status of each portfolio company linked back to the original investment thesis. Where did we say this business would be at this point in the hold? Where is it actually? What's changed in our thinking - and why?

Instead, the report resets. Fresh narrative. Clean slate. This quarter, the dental roll-up completed three add-on acquisitions and is tracking ahead of its consolidation targets…

Great. But what did you write about the dental roll-up last quarter? And the quarter before? Is this trajectory consistent with what you underwrote when you bought it? What was the original thesis - and is the business actually living up to it, or just staying busy?

Yes, the current mark is a guide but how and why has it changed?

Most reports make that question surprisingly hard to answer.

Sidebar: I should say that some GP reports are genuinely good - but they are far from the majority.

I recently saw a quarterly report from a large-cap buyout fund with roughly twenty-five companies in the portfolio.

Each company had a two-page narrative update. Well written, detailed, clearly prepared with care. 50 pages of updates.

What it didn’t have were tables. Or deltas. Or any indication of how the key numbers had moved since the last quarter.

If you wanted to understand what actually changed, you had to go back to the previous report, find the same company, and reconstruct the movement yourself.

Multiply that exercise across twenty-five companies and you start to see the problem. The information exists, but the structure of the report makes the signal hard to see.

This is not a conspiracy. It's just incentives.

GPs raise the next fund. That means the quarterly report - however carefully designed to look like a disclosure document - is also, functionally, a marketing document. The goal is to tell a coherent story. Emphasise what's working. Give context for what isn't. Land the narrative.

The best GPs do this thoughtfully, and it's not dishonest. But the report is not built to give you the analytical picture you need. It's built to give you their picture. Which is a different thing.

You'll get headline figures. You'll get a portfolio update section that's somewhere between a press release and a progress report. You'll get a market commentary written during the week before distribution, where the actual purpose is to frame whatever the marks are doing - and whatever was top of mind for the associate on the other side writing this.

What you'll rarely get is clear attribution. How did NAV move from last quarter to this one, and why? What drove it - realisations, markups, new investments, valuation methodology changes?

The headline number doesn't tell you. And most GPs don't make it easy to find out.

Here's what I actually want to know every quarter: