How Clearlake Capital’s José E. Feliciano is finding value across private markets

Macroeconomic Outlook:

• Jose Feliciano anticipates decreasing interest rates despite a "high for longer" period and significant geopolitical tensions (war in Europe, Middle East conflict, Asia tensions, US election).
• He predicts a resumption of economic growth, though likely uneven with increased volatility in stock markets and macro factors.
• ClearLake Capital prioritizes identifying investment opportunities across economic cycles rather than predicting macroeconomic direction.

Investment Strategy and Toolkit:

• ClearLake operates with an $80 billion asset base, leveraging flexibility to invest across the capital structure (buyouts, debt, restructurings) when traditional private equity firms cannot.
• The firm deployed $3–4 billion during the 2020 capital market shutdown by capitalizing on significant debt repricing and distress.
• Current opportunity set includes selective buyouts, special situations (carve-outs, turnarounds), and idiosyncratic distress accessed via debt or restructuring.
• The firm has returned upwards of $15 billion in capital to Limited Partners (LPs) over the past 2–3 years.
• Exit strategies are diverse, including sales to strategics, other sponsors, public IPOs, and the use of continuation funds to provide liquidity while retaining value creation benefits.

Sector Focus: Technology:

• Technology remains the firm's largest sector, with a specific focus on software and Healthcare IT.
• The firm targets the transition of companies from one-time software sales to Software as a Service (SaaS) models.
• ClearLake is bullish on the next 18–24 months, viewing the current tech landscape as having a "15-year supply" of IPO-ready companies that are underfunded or undervalued due to high previous valuations.
• The firm aims to transform high-growth tech companies into slower-growth entities and subsequently reignite growth through operational improvements.

Sector Focus: Industrials and AI:

• Feliciano asserts that "every company is a technology company," urging all boards to hold dedicated meetings on AI transformation.
• Operational Playbook ("OPS"): The framework focuses on Operations, People, and Strategy to make companies "bigger, better," resulting in faster revenue growth, better margins, and higher valuation multiples.
• AI Application: The firm views AI as a force for good that drives efficiency (e.g., automated customer service) and leverages proprietary, specialized datasets (e.g., in Healthcare IT) to power machine learning models.
• Case Study (Self-Storage): The firm transformed a building product company by acquiring electronic entry systems, shifting the business model from one-time sales to recurring revenue through app-based access and maintenance, thereby increasing ROI for facility owners.

Partnership and Firm Culture:

• ClearLake was co-founded by Feliciano and Big Dog Ibali (17+ years ago) with a conviction to combine sector expertise with broad investment mandates.
• The founders refused to compromise their core investment strategy during fundraising in the Great Financial Crisis, even when it meant sacrificing ownership or economics.
• The partnership is built on complementary skills (Feliciano: analytical/engineering background; Ibali: distinct perspective) and shared values of humility, teamwork, and education.
• Firm culture draws inspiration from Goldman Sachs' 14 principles, emphasizing that clients come first and constant improvement is essential.

Philanthropy and Diversity:

• Feliciano co-founded the "Supercharged Initiative" with his wife, Kwanya Jones, focusing on education, entrepreneurship, empowerment, and equity.
• The firm has invested over $200 million in funds managed by women and underrepresented minorities, viewing this as an "arbitrage" on underused talent rather than pure charity.
• Significant donations have been made to educational institutions (Princeton, Stanford) and nonprofits addressing the digital divide (providing Wi-Fi and computers).

Unique Investments:

• Chelsea FC: Acquired to apply private equity operational rigor to a passion-driven asset, focusing on digital media distribution, fan engagement, and transforming revenue models from match-day attendance to multi-year media and sponsorship contracts.

Lightning Round Insights:

• Greatest Strength: The ability to analyze mistakes without dwelling on them, allowing for rapid, emotion-free decision-making.
• Best Advice: Follow personal instincts and understand one's own strengths and weaknesses.
• Mentors: His parents, for instilling intellectual curiosity and a sense of social responsibility.
• Admired Investor: Warren Buffett, for creating a unique business model spanning economic cycles and industries.
• Current Excitement: The democratization of knowledge via technology, enabling global access to education and self-improvement.