Babies lacking object permanence—the understanding that things they cannot see continue to exist—love the game of peekaboo. An adult hides their face from sight, then suddenly comes back into view, prompting squeals of delight. Grown-ups no longer enjoy being deceived—unless they invest in private equity and venture capital, where hiding bad news is part of the fun.
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A huge gap between the valuations of publicly listed companies and their unlisted peers’ has opened in 2022. Lincoln International, a bank, reckons the enterprise value of firms held by private-equity funds globally rose 1.9% in the third quarter, leaving them up 3.2% for the year to date. The S&P 500, by contrast, fell 22.3% in the same period.
That is a relief to many institutional investors, such as pension funds, who cannot afford big…