We show investors’ beliefs can explain the undervaluation of buyout private equity (PE) funds. The value of PE funds, by finance principles, corresponds to expected cash flows discounted for time and risk. Therefore, the undervaluation may stem from an incorrect stochastic discount factor (SDF) or a discrepancy between investors’ beliefs and the true distribution of discounted cash flows. We estimate beliefs from PE cash flows. Estimated beliefs are consistent with investors’ sentiment surveys. We find that investors’ pessimism about PE relative to public markets, rather than SDF misspecification, offers a potential explanation for the undervaluation of PE funds.

Presentations:

• 2025: 18th International Behavioural Finance Conference (London), 8th Annual Private Markets Research Conference (Lausanne)

• 2024: FinEML Conference 2024 at USI Lugano, CEPR/ESSFM (Gerzensee)

• 2023: Seminar at the University of Virginia Darden School of Business, EFA Doctoral Tutorial 2023 (Amsterdam), 7th Entrepreneurial Finance Association Conference (University of Antwerp), IAAE 2023 Annual Conference (Oslo), International Accounting & Finance Doctoral Symposium 2023 (SKEMA Business School), 6th Dauphine Finance PhD Workshop (Université Paris-Dauphine), 39th Conference of the French Finance Association (Bordeaux), 2023 Financial Markets and Corporate Governance Conference (Deakin Business School),  14th Annual Hedge Fund Research Conference (Université Paris-Dauphine, poster)

• 2022: Lunch seminar at the University of Luxembourg, 29th Finance Forum of the Spanish Finance Association (Santiago de Compostela), Science Slam Luxembourg 2022 (public performance)

Awards:

EFA Doctoral Tutorial Stipend 2023 (50th EFA Annual Meeting)

Excellent Thesis Award 2023 (University of Luxembourg,  Faculty of Law, Economics and Finance)

Best Paper PhD Workshop Award 2023 (39th Conference of the French Finance Association)

EFA Travel Grant 2022

Best PhD Student 2022 (University of Luxembourg, Department of Finance)