HBS Professor Randy Cohen Discusses Replicating Private Equity in Public Markets on Alpha Exchange Podcast
In this episode of the Alpha Exchange podcast, Harvard Business School Professor of Finance and Entrepreneurship and PEO Partners Co-Founder Randy Cohen discusses how to replicate parts of private equity returns in liquid public markets using leveraged buyout economics and equity factors. The program analyzes valuation smoothing effects, fee structures, and the limitations of public portfolios regarding control and operational improvements.
The Alpha Exchange podcast released a conversation with Randy Cohen on October 28, 2026. Cohen is a Professor of Finance and Entrepreneurship at Harvard Business School and co-founder of PEO Partners, a firm focused on bringing private equity strategies to public markets. His academic background covers asset pricing, investment management, and the challenge of identifying genuine investment skill, providing professional support for the views presented in the episode.
According to the show notes, Cohen describes an approach to private equity replication that begins with the economics of a leveraged buyout (LBO). He notes that companies attractive to buyout investors generally exhibit strong profitability, attractive valuations, healthy cash generation, and relatively manageable business risk. These characteristics overlap meaningfully with established equity factors. By adding industry selection and a measured amount of leverage, Cohen argues that a liquid portfolio can capture important elements of traditional private equity exposure.
The episode also explores the differences and challenges facing this replication strategy. Private equity managers can make operational improvements and exercise control, while public portfolios offer liquidity but expose investors to daily market volatility. Additionally, the smoothing of private valuations—what Cliff Asness has called 'volatility laundering'—complicates the comparison. The discussion covers these trade-offs, the substantial role of fees, and the potential for liquid private equity to serve as a complement rather than a replacement for traditional allocations.