E379: Why Great Investment Firms Eventually Stop Performing

What if the biggest problem in asset management today isn’t investment performance—but misalignment between managers and the investors they serve? In this episode, I sit down with Luke Sarsfield, Chairman and CEO of Ridgepost Capital, to discuss how incentive structures shape long-term outcomes in private markets. Luke explains why Ridgepost leaves most carried interest with underlying managers, how alignment creates better LP relationships, and why middle market specialists can offer diversification that many large-cap private portfolios lack. We also explore long-term thinking, public versus private market pressures, culture, mentorship, and why compounding relationships may be the most valuable asset in investing.

Highlights:

• Why alignment matters more than asset gathering in private markets
• The hidden correlation risk inside large private equity portfolios
• Why Ridgepost focuses on management fee ownership over carry
• How long-term incentives improve investment decision-making
• The tension between public market short-termism and private market compounding
• Why culture and mentorship compound harder than capital
• The importance of building teams without creating groupthink
• Why relationships become the ultimate competitive advantage over time

Guest Bio:

Luke Sarsfield is Chairman, Director, and Chief Executive Officer of Ridgepost Capital, an investment platform focused on partnering with specialized alternative asset managers. Prior to Ridgepost, he spent more than two decades at Goldman Sachs, where he served in several senior leadership roles including Global Co-Head of Goldman Sachs Asset Management and Chief Commercial Officer of Asset and Wealth Management. Across his career, Luke has focused on building enduring investment businesses, aligning incentives between managers and LPs, and helping scale world-class investment platforms with a long-term orientation.

Are you interested in sponsoring the How I Invest Podcast? Please email David Weisburd at david@weisburdcapital.com.

We’d like to thank AlphaSense for sponsoring this episode!

Sponsor:

AlphaSense is the AI-powered market intelligence platform trusted by 85% of the S&P 100, helping investment professionals make faster, more confident, data-driven decisions. Built for hedge funds, asset allocators, private venture capital firms, and investment bankers, AlphaSense uses advanced AI and powerful search across premium proprietary content to surface the insights that matter most—before the market moves. Elevate your research and stay ahead of the competition. Visit https://www.alpha-sense.com/howiinvest/ to learn more.

Stay Connected with David Weisburd:

X/Twitter: @dweisburd LinkedIn: https://www.linkedin.com/in/dweisburd/ Weisburd Capital: https://www.weisburdcapital.com/

Stay Connected with Luke Sarsfield:

LinkedIn:https://www.linkedin.com/in/luke-sarsfield/

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Capital. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) The Asset Management Incentive Problem Ridgepost Is Trying to Fix (1:31) Why Carry Creates Better Investors Than Management Fees (3:03) The Hidden Correlation Risk Inside Private Equity Portfolios (4:45) Why Public Markets Assign Almost Zero Value to Carry (7:09) The Surprising Reason Great Managers Eventually Scale Anyway (9:38) Why Finance Quietly Rewards Short-Term Thinking (12:33)How a Public Company Can Still Think in Decades (17:57)What Asset Management Firms Are Actually Worth Today (23:33)The Common Pattern Across Every Great Asset Manager (31:53)The Most Important Career Decision Most People Get Wrong