Who is Hamilton Lane?
Hamilton Lane is a publicly traded private markets investment firm. The company runs a range of evergreen vehicles for retail investors, including its flagship Private Assets Fund (PAF), which managed roughly $3.6 billion at the close of fiscal 2025 and invests primarily in private equity secondaries and direct co-investments. The firm is led by co-CEOs Erik Hirsch and Juan Delgado-Moreira, and its shares trade on the NASDAQ under the ticker HLNE.
Business Model
Hamilton Lane earns revenue primarily from management and performance fees on the funds it operates, with PAF a central contributor to recent growth. In a recent change, the firm began collecting performance fees on unrealized gains in net asset value, rather than only on realized distributions, and simultaneously stripped stock-based compensation out of its fee-related earnings calculation. The firm also benefits from "day-one markups" on secondary interests, a permitted accounting shortcut known as a practical expedient. When PAF acquires a stake in another private fund at a discount to fair value, it can mark that stake up to fair value immediately, generating a reported gain that supports both headline returns and performance fee revenue.
Hunterbrook's Key Allegations
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Hunterbrook's analysis of Hamilton Lane's quarterly SEC filings found that day-one markups account for roughly a third of the total valuation gains across PAF's portfolio, rather than appreciation of the underlying companies. Newly acquired secondary positions are marked up to fair value the same quarter they are added, generating reported gains under a permitted accounting shortcut known as a practical expedient.
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Two simultaneous changes to Hamilton Lane's reporting moved the firm's fee-related earnings margin from roughly 32% to approximately 59% for the nine months ending December 2025. The firm added performance fees based on unrealized NAV gains as a revenue stream, then excluded stock-based compensation from expenses, a metric Wall Street uses to value firms like Hamilton Lane.
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About six months before Hamilton Lane began excluding stock-based compensation from its fee-related earnings calculation, co-CEOs Erik Hirsch and Juan Delgado-Moreira each received 544,000 restricted shares, grants valued at roughly $71 million apiece with vesting tied to stock price targets. Hunterbrook flags the timing as worth noting.
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PAF's annual returns have compressed from 20.8% in fiscal 2022, when the fund managed $330 million, to 12.6% in fiscal 2025, when it managed $3.6 billion. Assets grew roughly tenfold while returns nearly halved, and the since-inception figure of about 16% cited by Hamilton Lane is heavily weighted by the strong early years.
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Hunterbrook argues the structure depends on continuous inflows. New money buys more discounted secondary stakes, which generate more day-one markups, which support reported performance, which attracts more new money. As the fund grows, the marginal impact of each new dollar is diluted, which Hunterbrook contends helps explain why PAF's reported returns have begun to sag.
Key Charts
Adding performance fees on unrealized NAV gains and excluding stock-based compensation from expenses moved the reported FRE margin from roughly 32% to approximately 59%, per Hunterbrook's analysis of Hamilton Lane disclosures.
PAF's assets grew roughly tenfold between fiscal 2022 and fiscal 2025 while annual returns nearly halved. Hunterbrook notes the since-inception return figure of about 16% cited by Hamilton Lane is heavily weighted by the strong early years.
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