1 00:00:00,080 --> 00:00:06,000 Speaker 1: M This is mesters in Business with very renaults on 2 00:00:06,240 --> 00:00:10,440 Speaker 1: Bluebird Radio this weekend. On the podcast, I have a 3 00:00:10,560 --> 00:00:14,520 Speaker 1: special and fascinating guest. His name is Steve Romick. He 4 00:00:14,640 --> 00:00:18,760 Speaker 1: is the managing partner at First Specific Advisors, a shop 5 00:00:18,800 --> 00:00:21,799 Speaker 1: in l A that runs about twenty six billion dollars 6 00:00:22,120 --> 00:00:25,680 Speaker 1: in assets. He has also run the Crescent Funds since 7 00:00:26,880 --> 00:00:29,960 Speaker 1: it's about eleven billion dollars UH, and the numbers on 8 00:00:29,960 --> 00:00:34,000 Speaker 1: that fund are really quite astonishing. One of the reasons 9 00:00:34,040 --> 00:00:38,960 Speaker 1: I first wanted to start doing podcasts and interviews of 10 00:00:39,040 --> 00:00:44,159 Speaker 1: asset managers was because of people like Steve Romick. You know, 11 00:00:44,400 --> 00:00:47,040 Speaker 1: he's not on the cover of magazines, you don't see 12 00:00:47,120 --> 00:00:49,760 Speaker 1: him on television all the time. But here's a guy 13 00:00:49,880 --> 00:00:53,880 Speaker 1: running real money, a substantial amount of assets, with a 14 00:00:54,080 --> 00:00:58,280 Speaker 1: fantastic long term track record, and he is not a 15 00:00:58,320 --> 00:01:02,480 Speaker 1: household name. I think the average forget the average investor, 16 00:01:02,840 --> 00:01:07,040 Speaker 1: the average professional probably doesn't know who Steve Romick is. 17 00:01:07,400 --> 00:01:11,560 Speaker 1: And that's too bad because folks like this really allow 18 00:01:11,640 --> 00:01:15,920 Speaker 1: you to learn an important lesson about how to manage risk, 19 00:01:16,080 --> 00:01:19,280 Speaker 1: how to take advantage of opportunities, what you should be 20 00:01:19,319 --> 00:01:23,760 Speaker 1: thinking about as a portfolio manager, as an investor. Really 21 00:01:23,920 --> 00:01:29,319 Speaker 1: just a fascinating guy with a really interesting history. I 22 00:01:29,400 --> 00:01:32,280 Speaker 1: found our conversation to be really intriguing, and I think 23 00:01:32,319 --> 00:01:36,240 Speaker 1: you will also so. With no further ado, First Specific 24 00:01:36,280 --> 00:01:43,400 Speaker 1: Advisors Steve Romick. This is mesters in business with very 25 00:01:43,440 --> 00:01:48,760 Speaker 1: results on Bloomberg Radio. My special guest this week is 26 00:01:48,800 --> 00:01:53,240 Speaker 1: Steve Romick. He is the managing partner of First Specific Advisors, 27 00:01:53,280 --> 00:01:57,400 Speaker 1: a shot that runs over twenty six billion dollars in equity, 28 00:01:57,440 --> 00:02:01,920 Speaker 1: fixed income, and alternative strategies. He was the Morning Star 29 00:02:02,160 --> 00:02:06,200 Speaker 1: US Allocation Fund Manager of the Year. He also manages 30 00:02:06,360 --> 00:02:09,760 Speaker 1: the eleven billion dollar f p A Crescent Fund, which 31 00:02:09,760 --> 00:02:16,400 Speaker 1: he has been running sinceince inception in Steve Romick, Welcome 32 00:02:16,800 --> 00:02:20,720 Speaker 1: to Bloomberg. Thank you, Barry. So let's go back to 33 00:02:20,800 --> 00:02:23,200 Speaker 1: the early days of your career. You began as an 34 00:02:23,240 --> 00:02:29,920 Speaker 1: analyst in tell us what industry you were covering. I 35 00:02:30,160 --> 00:02:33,519 Speaker 1: I started out as a generalist. I I actually started 36 00:02:33,520 --> 00:02:37,480 Speaker 1: as a generalist to who knew nothing about everything. I 37 00:02:37,600 --> 00:02:41,720 Speaker 1: was on my way to law school and I met 38 00:02:41,800 --> 00:02:47,079 Speaker 1: a gentleman through my father, who decided that he wanted 39 00:02:47,120 --> 00:02:52,840 Speaker 1: to bring somebody into his shop who didn't know anything 40 00:02:52,960 --> 00:02:55,680 Speaker 1: because he's he quoted it at the time. He was 41 00:02:55,720 --> 00:03:00,160 Speaker 1: tired of unlearning NBAS and he put me up in 42 00:03:00,200 --> 00:03:02,800 Speaker 1: his office, pushed a desk right up next to his 43 00:03:03,520 --> 00:03:06,200 Speaker 1: and said, you're going to see what we know, how 44 00:03:06,240 --> 00:03:08,040 Speaker 1: this works, and what we do. And he did every 45 00:03:08,040 --> 00:03:11,440 Speaker 1: time we called a company. He had the Manethond with him, 46 00:03:11,800 --> 00:03:13,880 Speaker 1: and I learned, you know, early on. But the industry 47 00:03:13,880 --> 00:03:16,840 Speaker 1: that I focused on to the greatest degree in the 48 00:03:16,919 --> 00:03:19,880 Speaker 1: in my earliest years in the mid eighties, you know, 49 00:03:19,919 --> 00:03:23,079 Speaker 1: where it was the bank and thrift industry, when there 50 00:03:23,120 --> 00:03:26,120 Speaker 1: were you know, almost tripled the number of banks and 51 00:03:26,160 --> 00:03:29,400 Speaker 1: thrifts the United States, and there was a massive assolidation 52 00:03:29,440 --> 00:03:32,320 Speaker 1: trend that that he identified that was likely to occur, 53 00:03:32,360 --> 00:03:35,560 Speaker 1: which of course did occur. And he had me spending 54 00:03:35,560 --> 00:03:38,120 Speaker 1: a lot of time, you know, analyzing these companies and 55 00:03:38,280 --> 00:03:43,280 Speaker 1: inputting you know, hundreds of banks and thrifts into d base, 56 00:03:43,640 --> 00:03:46,240 Speaker 1: something we don't really use today anymore. And spent a 57 00:03:46,280 --> 00:03:48,320 Speaker 1: lot of time analyzing this businesses. And then I just 58 00:03:48,320 --> 00:03:51,160 Speaker 1: took it from there and and continued you need that breath, 59 00:03:51,560 --> 00:03:54,200 Speaker 1: and spent a lot of time looking, you know, at 60 00:03:54,320 --> 00:03:57,360 Speaker 1: different parts of the capital structure as well to stressed 61 00:03:57,440 --> 00:04:01,840 Speaker 1: that and stressed that. In addition, so you mentioned d base, 62 00:04:02,560 --> 00:04:05,640 Speaker 1: how different were the tools that you used in the 63 00:04:05,720 --> 00:04:11,000 Speaker 1: nineteen eighties and the techniques that were mainstays in financial 64 00:04:11,760 --> 00:04:17,440 Speaker 1: analysis then versus today. How radically has the world of 65 00:04:18,400 --> 00:04:22,240 Speaker 1: analytical research changed? Well, I think that the the I 66 00:04:22,279 --> 00:04:25,240 Speaker 1: don't know that the process is any different, but the 67 00:04:25,240 --> 00:04:28,560 Speaker 1: tools that you can use to to get the information 68 00:04:28,640 --> 00:04:32,159 Speaker 1: that one needs to make a robust decision, you know, 69 00:04:32,320 --> 00:04:35,080 Speaker 1: are are better. I mean, it's just it's just easier, 70 00:04:35,520 --> 00:04:37,599 Speaker 1: you know, to get that information, which makes the world, 71 00:04:37,800 --> 00:04:40,720 Speaker 1: you know, candidly more competitive today than it was was 72 00:04:40,760 --> 00:04:43,600 Speaker 1: back then. Not only is there more money slashing around 73 00:04:43,600 --> 00:04:47,200 Speaker 1: the system system, not only are there more people doing it, 74 00:04:47,520 --> 00:04:49,480 Speaker 1: you know, but they can get that information a lot 75 00:04:49,520 --> 00:04:52,680 Speaker 1: more easily. I mean, back then I had to get 76 00:04:52,680 --> 00:04:56,200 Speaker 1: on the phone and call a company and call them 77 00:04:56,240 --> 00:04:59,359 Speaker 1: for local information, to get the the the phone number 78 00:04:59,400 --> 00:05:03,760 Speaker 1: of the headquarters or whatever company's headquarters it was, and 79 00:05:04,040 --> 00:05:06,440 Speaker 1: try and get in contact with investor relations, if there 80 00:05:06,480 --> 00:05:09,360 Speaker 1: even was an invest in relations department. More often than not, 81 00:05:09,520 --> 00:05:10,839 Speaker 1: I was just trying to get in a hold of 82 00:05:10,880 --> 00:05:13,520 Speaker 1: the somebody in the finance department to get them to 83 00:05:13,560 --> 00:05:17,560 Speaker 1: send me an andy report and to to seek information 84 00:05:18,120 --> 00:05:22,839 Speaker 1: on the competition, to seek information as relates to industry data. 85 00:05:22,960 --> 00:05:25,920 Speaker 1: You know, it was just all much much harder to 86 00:05:26,200 --> 00:05:29,159 Speaker 1: come by it. It required a lot more grount work 87 00:05:29,200 --> 00:05:32,320 Speaker 1: just to get information. Now that information is available your 88 00:05:32,320 --> 00:05:36,640 Speaker 1: fingertip fingertips, you know, on the web. And in addition, 89 00:05:37,200 --> 00:05:40,880 Speaker 1: you you have so many great resources that exist today 90 00:05:40,960 --> 00:05:44,320 Speaker 1: for people looking at businesses. The world's become much smaller. 91 00:05:44,960 --> 00:05:50,080 Speaker 1: You have podcasts like this, You've got Value Investors Club, 92 00:05:50,360 --> 00:05:55,920 Speaker 1: vic et cetera. Interesting, So you're working as an analyst 93 00:05:56,160 --> 00:06:01,000 Speaker 1: covering everything generally. How did you decide to become a 94 00:06:01,040 --> 00:06:06,479 Speaker 1: portfolio manager? And what was that transition? Like? I think 95 00:06:06,880 --> 00:06:10,200 Speaker 1: that that's a great question because I think that everybody 96 00:06:10,400 --> 00:06:15,720 Speaker 1: who is reasonably good at this and is confident in 97 00:06:15,760 --> 00:06:19,200 Speaker 1: their capabilities it, at some point they want to to 98 00:06:19,680 --> 00:06:23,360 Speaker 1: reach out and and touch the money themselves. List that, 99 00:06:23,640 --> 00:06:27,000 Speaker 1: I mean, somebody else make that an investment decision. So 100 00:06:27,040 --> 00:06:29,800 Speaker 1: it started out with my my personal account inside of 101 00:06:29,800 --> 00:06:33,200 Speaker 1: the firm and investing that and you know, finding some 102 00:06:33,520 --> 00:06:37,640 Speaker 1: you know failure early to realize you know, my miss 103 00:06:37,760 --> 00:06:40,360 Speaker 1: you know, what not to do. And then as I 104 00:06:40,400 --> 00:06:44,120 Speaker 1: got better over time, I thought that that it was 105 00:06:44,279 --> 00:06:46,400 Speaker 1: might be something that I want to do in terms 106 00:06:46,400 --> 00:06:49,560 Speaker 1: of manage and entire portfolio. As it began to really 107 00:06:49,640 --> 00:06:53,200 Speaker 1: develop a philosophy as to how I'd like to to 108 00:06:53,400 --> 00:06:57,800 Speaker 1: manage money, and I was very fortunate to have a 109 00:06:57,920 --> 00:07:01,760 Speaker 1: mentor who helped pushed me in that direction and became 110 00:07:01,800 --> 00:07:06,240 Speaker 1: one of my my early investors. Really intriguing. So you 111 00:07:06,400 --> 00:07:11,080 Speaker 1: founded Crescent Management. How did you launch this business? How 112 00:07:11,080 --> 00:07:12,520 Speaker 1: did you get it off the ground, Where did you 113 00:07:12,600 --> 00:07:15,560 Speaker 1: find clients? And what did the business look like in 114 00:07:15,600 --> 00:07:20,360 Speaker 1: those early years when we started this, it was I 115 00:07:20,600 --> 00:07:22,360 Speaker 1: had a partner at the time who both of us 116 00:07:22,360 --> 00:07:25,040 Speaker 1: had worked for. Our mentor's name was James Nathan was 117 00:07:25,120 --> 00:07:31,800 Speaker 1: by Jeff Nathan, and he he you know, basically arranged 118 00:07:31,880 --> 00:07:36,080 Speaker 1: marriage where he decided that we'd be better off building 119 00:07:36,080 --> 00:07:38,400 Speaker 1: our own business, and it was an opportunity for us. 120 00:07:38,880 --> 00:07:42,600 Speaker 1: He allowed us to do that while we remained, as 121 00:07:43,160 --> 00:07:45,960 Speaker 1: you know, consultative analysts for once of a better description 122 00:07:46,040 --> 00:07:48,760 Speaker 1: with his firm. So he could you know, have his 123 00:07:48,920 --> 00:07:50,640 Speaker 1: cake and need it too, if you will. So it 124 00:07:50,680 --> 00:07:54,600 Speaker 1: was it was mutually beneficial and early clients really came 125 00:07:54,640 --> 00:07:57,840 Speaker 1: from his relationships. He could put us in business and 126 00:07:57,920 --> 00:08:00,440 Speaker 1: I owed that, you know, all to him. We we 127 00:08:00,520 --> 00:08:03,280 Speaker 1: didn't really have. We didn't have I mean, at that 128 00:08:03,320 --> 00:08:06,800 Speaker 1: point in time, we you know, we launched with maybe 129 00:08:06,800 --> 00:08:08,280 Speaker 1: it was I have to go back and think about 130 00:08:08,320 --> 00:08:10,600 Speaker 1: many millions it was, but maybe it was ten million 131 00:08:10,600 --> 00:08:14,000 Speaker 1: dollars in total between the separate accounts and and and 132 00:08:14,040 --> 00:08:16,800 Speaker 1: the mutual fund. And it gradually grew from there. When 133 00:08:16,800 --> 00:08:19,640 Speaker 1: you launched, was it all equity, was it equity fist 134 00:08:19,680 --> 00:08:24,080 Speaker 1: income or was it unconstrained and you know, including alternatives 135 00:08:24,080 --> 00:08:29,360 Speaker 1: and non publicly traded options, it was it was unconstrained 136 00:08:29,360 --> 00:08:31,920 Speaker 1: within the public security markets. So they did not include 137 00:08:31,920 --> 00:08:35,520 Speaker 1: anything that was in the private sector, whether it be 138 00:08:35,559 --> 00:08:38,720 Speaker 1: private credit or the odd private equity investment that we 139 00:08:38,840 --> 00:08:42,600 Speaker 1: might make today. Uh, and today we would continue to 140 00:08:42,640 --> 00:08:46,880 Speaker 1: be largely public security investors. But philosophically, at that point 141 00:08:46,920 --> 00:08:51,320 Speaker 1: in time, I liked the idea that I was able 142 00:08:51,360 --> 00:08:57,480 Speaker 1: to invest money in a way that could deliver high 143 00:08:57,559 --> 00:08:59,920 Speaker 1: risk ADJI becturies. I believe they could deliver high risk 144 00:09:00,080 --> 00:09:03,320 Speaker 1: just it returns to my client based by investing across 145 00:09:03,320 --> 00:09:07,120 Speaker 1: the capital structure. We had come out of the you know, 146 00:09:07,240 --> 00:09:10,680 Speaker 1: the was coming out of the recession at that point, 147 00:09:10,679 --> 00:09:13,080 Speaker 1: in time and the Drexel Burnham blow up, and there 148 00:09:13,160 --> 00:09:17,000 Speaker 1: was lots of opportunity in junk bond land, and I 149 00:09:17,160 --> 00:09:20,719 Speaker 1: learned that I could get a way to return in 150 00:09:20,800 --> 00:09:23,160 Speaker 1: the debt markets that was as good as the equity 151 00:09:23,200 --> 00:09:26,840 Speaker 1: markets with with with more downside protection, and I could 152 00:09:26,920 --> 00:09:29,520 Speaker 1: use that as a tool in my portfolio. And if 153 00:09:29,559 --> 00:09:32,680 Speaker 1: I could do that, I felt that are my clients 154 00:09:32,760 --> 00:09:39,240 Speaker 1: would would benefit because the portfolio could deliver higher risk 155 00:09:39,400 --> 00:09:42,560 Speaker 1: just to returns. And volatility is a is a measure 156 00:09:42,640 --> 00:09:45,880 Speaker 1: of risk is I think a bit silly, and because 157 00:09:46,240 --> 00:09:48,760 Speaker 1: it's just things can move around a lot, and the 158 00:09:48,840 --> 00:09:52,560 Speaker 1: temperature outside today in Los Angeles does nothing, doesn't reflect 159 00:09:52,640 --> 00:09:54,960 Speaker 1: what the temperature might be tomorrow. It's just gonna it's 160 00:09:55,000 --> 00:09:58,679 Speaker 1: gonna move around. So when it comes to investing, though, 161 00:09:58,720 --> 00:10:01,480 Speaker 1: in the average person, this goes for many professional investors, 162 00:10:01,880 --> 00:10:05,679 Speaker 1: I think of volatility does weigh on on them, and 163 00:10:05,760 --> 00:10:08,480 Speaker 1: it does precipitate action. Stocks to go up a lot, 164 00:10:08,559 --> 00:10:10,439 Speaker 1: they need to get in. They stocks to go down 165 00:10:10,440 --> 00:10:12,360 Speaker 1: a lot, people will panic out. And this is I'm 166 00:10:12,360 --> 00:10:15,200 Speaker 1: not making a universal statement, but it's it's all too 167 00:10:15,280 --> 00:10:19,560 Speaker 1: often true. And I found in dealing with individual clients 168 00:10:19,600 --> 00:10:24,400 Speaker 1: a very It was very much true. And I felt 169 00:10:24,480 --> 00:10:29,199 Speaker 1: that managing a product that could mute that which which 170 00:10:29,320 --> 00:10:31,079 Speaker 1: was not the goal, It was just the byproduct of 171 00:10:31,200 --> 00:10:35,160 Speaker 1: my of my process was was something that that could 172 00:10:35,240 --> 00:10:40,440 Speaker 1: be a reasonable business. And clearly it became a reasonable business. 173 00:10:40,800 --> 00:10:44,679 Speaker 1: When did Crescent become part of f p A and 174 00:10:44,800 --> 00:10:50,679 Speaker 1: what was that transition? Like that was in and the 175 00:10:50,800 --> 00:10:57,120 Speaker 1: transition was was actually a very difficult transition for for 176 00:10:57,440 --> 00:11:02,320 Speaker 1: tragic reasons. I um my partner and I split up. 177 00:11:02,400 --> 00:11:04,559 Speaker 1: He took separate accounts and I took the mut of 178 00:11:04,640 --> 00:11:08,120 Speaker 1: fun and we brought the assets over two for Specific Advisors. 179 00:11:08,160 --> 00:11:10,599 Speaker 1: I realized that I didn't want to deal with the 180 00:11:11,320 --> 00:11:13,280 Speaker 1: back office. I didn't wanted to deal with the marketing. 181 00:11:13,320 --> 00:11:17,199 Speaker 1: I just wanted to focus on investing and all the 182 00:11:17,720 --> 00:11:20,319 Speaker 1: nuts and bolts of the business side of things. I 183 00:11:20,400 --> 00:11:25,199 Speaker 1: wanted to leave to and organization that could have my 184 00:11:25,320 --> 00:11:27,760 Speaker 1: back if you will, and and and provide that peace 185 00:11:27,800 --> 00:11:32,120 Speaker 1: of mind that I can just focus. And so I 186 00:11:32,320 --> 00:11:35,520 Speaker 1: joined for Specific Advisors and I was friends with I 187 00:11:35,600 --> 00:11:38,439 Speaker 1: had there were these this investment group that I was 188 00:11:38,559 --> 00:11:41,280 Speaker 1: part of at the time through my again my mentor 189 00:11:41,480 --> 00:11:44,440 Speaker 1: that were guys who were older guys I mean younger 190 00:11:44,440 --> 00:11:47,199 Speaker 1: than I am now, who would sit down and and 191 00:11:47,360 --> 00:11:51,760 Speaker 1: talk about businesses, investments every every couple of months, and 192 00:11:51,800 --> 00:11:53,760 Speaker 1: they get together for a dinner and you have to 193 00:11:53,800 --> 00:11:56,079 Speaker 1: bring your best idea and you chat about it, and 194 00:11:56,200 --> 00:11:57,839 Speaker 1: they let me come and be a fly on the 195 00:11:57,840 --> 00:11:59,839 Speaker 1: wall because I clearly had nothing to add at that 196 00:12:00,000 --> 00:12:04,160 Speaker 1: one in time. And one of those gentlemen was Bob Rodriguez, 197 00:12:04,200 --> 00:12:07,719 Speaker 1: who was portfolio manager at First Specific Advisors at the time, 198 00:12:07,760 --> 00:12:11,280 Speaker 1: and we became friendly and I sought out, sought him 199 00:12:11,320 --> 00:12:15,079 Speaker 1: out and others regularly to to bounce ideas off of 200 00:12:15,800 --> 00:12:20,040 Speaker 1: and compare notes and different businesses, and and Bob knew 201 00:12:20,040 --> 00:12:23,199 Speaker 1: I was looking to find a home and he was 202 00:12:23,360 --> 00:12:26,640 Speaker 1: kind enough to to allow me in her discussions the 203 00:12:26,640 --> 00:12:29,200 Speaker 1: First Specific Advisors, which was run by George Michlus at 204 00:12:29,200 --> 00:12:32,840 Speaker 1: the time, who was a well known investor and featured 205 00:12:32,880 --> 00:12:36,040 Speaker 1: in John Train's book The Money Masters that volume one. 206 00:12:36,800 --> 00:12:39,360 Speaker 1: And I spent a lot of time with George, who 207 00:12:39,400 --> 00:12:42,720 Speaker 1: I knew perfectly through mutual friends, and it just seemed 208 00:12:42,720 --> 00:12:48,000 Speaker 1: like a very very good fit. And I came into 209 00:12:48,679 --> 00:12:53,000 Speaker 1: ft A and ninety six midn and and the early 210 00:12:53,120 --> 00:12:55,800 Speaker 1: ninety six and ten days after I joined George Michlus 211 00:12:55,880 --> 00:12:58,160 Speaker 1: was scheduled at dinner at my home that night and 212 00:12:58,360 --> 00:13:02,360 Speaker 1: went cycling first and and uh had a bike accident 213 00:13:02,520 --> 00:13:06,760 Speaker 1: and died. That is tragic and really just robbed you 214 00:13:06,800 --> 00:13:09,679 Speaker 1: of the ability to work with him for all those 215 00:13:09,760 --> 00:13:13,800 Speaker 1: future years. So so it really kind of shows you 216 00:13:13,920 --> 00:13:17,320 Speaker 1: just how random life can be. And and it ties 217 00:13:17,400 --> 00:13:20,360 Speaker 1: into the question I was about to ask you, which 218 00:13:20,480 --> 00:13:24,920 Speaker 1: is you've had one of the longest tenures in the 219 00:13:25,040 --> 00:13:29,480 Speaker 1: mutual fund business. You've been running the FPA Cresting Funds 220 00:13:29,520 --> 00:13:36,600 Speaker 1: since its inception. What is the secret to this longevity? Oh, 221 00:13:36,679 --> 00:13:39,719 Speaker 1: I thank you. You have to enjoy what you do 222 00:13:40,280 --> 00:13:43,679 Speaker 1: first and foremost, and and I do. I mean if 223 00:13:43,720 --> 00:13:46,360 Speaker 1: I people ask me when I'm going to retire, and 224 00:13:47,080 --> 00:13:49,360 Speaker 1: I have no plans to do that because I enjoy 225 00:13:49,480 --> 00:13:53,720 Speaker 1: coming to the office every day. I enjoy reading about businesses. 226 00:13:53,760 --> 00:13:55,760 Speaker 1: I enjoy learning. I mean, this is a You're in 227 00:13:55,840 --> 00:13:58,040 Speaker 1: a constant state of learning. The world is so different 228 00:13:58,080 --> 00:14:01,679 Speaker 1: today than it was in the company and industries you 229 00:14:01,760 --> 00:14:04,679 Speaker 1: know have have have evolved, and it forces you to 230 00:14:05,160 --> 00:14:10,880 Speaker 1: to continue to to study and you you never perfect this. 231 00:14:11,160 --> 00:14:15,079 Speaker 1: It's it's a it's a constant process of self improvement. 232 00:14:15,600 --> 00:14:18,319 Speaker 1: And I've as I look around me, and I think 233 00:14:18,360 --> 00:14:21,040 Speaker 1: that's what keeps me young. And so I've really have 234 00:14:21,280 --> 00:14:24,200 Speaker 1: no intention of stopping this in anytime since. So that's 235 00:14:24,440 --> 00:14:26,520 Speaker 1: I think the first, you know, key to that longevity. 236 00:14:26,960 --> 00:14:28,840 Speaker 1: And I think second is just that we happen to 237 00:14:29,160 --> 00:14:31,960 Speaker 1: create a product that that, for better or worse, is 238 00:14:32,040 --> 00:14:34,200 Speaker 1: different than the typical product. I mean, sometimes we will 239 00:14:34,240 --> 00:14:36,760 Speaker 1: look like the typical mutual fund. We will we will 240 00:14:36,800 --> 00:14:39,920 Speaker 1: look very ordinary, you know, for sometimes longer periods of time, 241 00:14:39,960 --> 00:14:42,440 Speaker 1: because there isn't a lot of opportunity and and say 242 00:14:42,480 --> 00:14:44,320 Speaker 1: that in the debt market says there hasn't been over 243 00:14:44,360 --> 00:14:46,680 Speaker 1: the last number of years because we've not been interested 244 00:14:46,720 --> 00:14:51,000 Speaker 1: in and buying high old bond without the without the 245 00:14:51,080 --> 00:14:53,120 Speaker 1: high part of the yield, because there hasn't been much yield. 246 00:14:53,880 --> 00:14:55,960 Speaker 1: So we end up with just more inequities than we 247 00:14:56,040 --> 00:15:01,560 Speaker 1: have have historically. And so but we do have that opportunity, 248 00:15:01,600 --> 00:15:04,880 Speaker 1: that flexibility to to operate with great breath, whether or 249 00:15:04,920 --> 00:15:08,200 Speaker 1: not we we take advantage of it at all points 250 00:15:08,240 --> 00:15:11,440 Speaker 1: in time or not, it's that opportunity does exist. I 251 00:15:11,520 --> 00:15:13,520 Speaker 1: think that makes us a little bit different than than 252 00:15:13,680 --> 00:15:16,400 Speaker 1: the typical one. And it doesn't make us the right 253 00:15:16,640 --> 00:15:20,400 Speaker 1: investment for for everyone, but we we've kind of come 254 00:15:20,440 --> 00:15:23,080 Speaker 1: in each day, myself and my my partners in the 255 00:15:23,160 --> 00:15:24,960 Speaker 1: fund now because one of the things that's also allowed 256 00:15:25,000 --> 00:15:27,880 Speaker 1: me this longevity is to to have terrific partners in 257 00:15:27,920 --> 00:15:33,760 Speaker 1: Brian Selmo and Mark Landecker, who are wonderful partners, and 258 00:15:33,840 --> 00:15:37,440 Speaker 1: wonderful analysts and wonderful portfolio managers and and thoughtful and 259 00:15:37,560 --> 00:15:40,360 Speaker 1: kind people with lots of integrity who make it fun 260 00:15:40,480 --> 00:15:43,440 Speaker 1: to to come in each day. And so having that 261 00:15:43,640 --> 00:15:46,800 Speaker 1: kind of support around you, along with our analyst team 262 00:15:46,840 --> 00:15:51,280 Speaker 1: and support of of of the organization for specific advisors, 263 00:15:51,800 --> 00:15:55,840 Speaker 1: makes it, you know, makes it makes it enjoyable. Let's 264 00:15:55,880 --> 00:15:58,880 Speaker 1: talk a little bit about what it was like managing 265 00:15:58,920 --> 00:16:02,080 Speaker 1: all those assets in the midst of the worst pandemic 266 00:16:02,160 --> 00:16:06,760 Speaker 1: in a century. UM heading into the end of you 267 00:16:06,840 --> 00:16:11,240 Speaker 1: were running more than a third cash in the funds. 268 00:16:11,640 --> 00:16:16,400 Speaker 1: What was the thinking then, Well, we've always managed a 269 00:16:16,520 --> 00:16:18,920 Speaker 1: fair amount of cash in the in the in the portfolio, 270 00:16:19,320 --> 00:16:24,280 Speaker 1: and that takes pretty high it is. It was certainly 271 00:16:24,320 --> 00:16:27,760 Speaker 1: above average, and it wasn't that we we identified the 272 00:16:28,760 --> 00:16:31,640 Speaker 1: a recession is about to come as a result of 273 00:16:31,720 --> 00:16:34,120 Speaker 1: a of a pandemic in the world would would literally 274 00:16:34,240 --> 00:16:38,560 Speaker 1: stop in many in many industries. But it was really 275 00:16:39,080 --> 00:16:43,480 Speaker 1: more a function of you know, cash being a byproduct 276 00:16:43,520 --> 00:16:46,600 Speaker 1: of our investment products process. If we find an investment 277 00:16:46,680 --> 00:16:49,600 Speaker 1: we like, we buy it. If not, cash ens up 278 00:16:49,640 --> 00:16:52,720 Speaker 1: as a residual. And we were more comfortable only more 279 00:16:52,800 --> 00:16:55,000 Speaker 1: cash in the past than we are today because at 280 00:16:55,040 --> 00:16:57,520 Speaker 1: a point in time cash yielded five percent back into 281 00:16:57,960 --> 00:17:01,760 Speaker 1: the early two thousands and mid doos, and we have 282 00:17:01,880 --> 00:17:05,840 Speaker 1: more concerned today being that that inflation might be perspectively 283 00:17:05,960 --> 00:17:08,600 Speaker 1: higher given the amount of depth that's pennisuing, the amount 284 00:17:08,640 --> 00:17:10,920 Speaker 1: of paper money that's been printed and cast would be 285 00:17:11,000 --> 00:17:13,480 Speaker 1: worth a lot less in an inflation or environment. So 286 00:17:13,560 --> 00:17:16,760 Speaker 1: when we came into this recession and in in into 287 00:17:16,840 --> 00:17:21,160 Speaker 1: the pandemic in early two thousand, we had that cash 288 00:17:21,240 --> 00:17:23,560 Speaker 1: game just as a by product of that, and we 289 00:17:23,680 --> 00:17:26,720 Speaker 1: thought we were actually more protected with the cash we were, 290 00:17:26,800 --> 00:17:30,119 Speaker 1: But the investment part of the portfolio, you know, was 291 00:17:30,320 --> 00:17:32,360 Speaker 1: you know, it was kind of lye hit pretty hard 292 00:17:32,440 --> 00:17:38,480 Speaker 1: by the by the pandemic, that right, yeah, the but 293 00:17:38,680 --> 00:17:40,520 Speaker 1: it was it was it was some of the businesses 294 00:17:40,600 --> 00:17:43,720 Speaker 1: that we owned were people you know throughout you know, 295 00:17:43,840 --> 00:17:46,320 Speaker 1: for dead for for a period of time. We owned 296 00:17:46,359 --> 00:17:49,400 Speaker 1: companies like like A I G. That started the year 297 00:17:49,480 --> 00:17:53,119 Speaker 1: at around fifty and at the end of two going 298 00:17:53,160 --> 00:17:57,320 Speaker 1: into twenty, it peaked mid fifties and an intra day 299 00:17:57,560 --> 00:18:00,119 Speaker 1: in the in the third fourth week of March when 300 00:18:00,119 --> 00:18:02,800 Speaker 1: it's twenty, it was trading down at you know, under 301 00:18:02,840 --> 00:18:06,840 Speaker 1: seventeen dollars a share with book value, you know, being up, 302 00:18:06,960 --> 00:18:09,080 Speaker 1: you know, closer to where the price was at the 303 00:18:09,119 --> 00:18:12,000 Speaker 1: beginning of the year, So huge, huge discount, and people 304 00:18:12,080 --> 00:18:15,800 Speaker 1: believed that, you know, the the company was clearly on 305 00:18:15,880 --> 00:18:19,399 Speaker 1: its way out, you know of existence, and you know, 306 00:18:19,480 --> 00:18:22,080 Speaker 1: we didn't believe that, and you know, we had took 307 00:18:22,119 --> 00:18:25,280 Speaker 1: the opportunity to to increase our position. But it was 308 00:18:25,320 --> 00:18:29,280 Speaker 1: still I mean it admittedly discomfiting at that point in time, 309 00:18:29,359 --> 00:18:31,600 Speaker 1: not only for us because who likes to see their 310 00:18:31,760 --> 00:18:34,239 Speaker 1: their stocks dropped up and dropped that much, but um 311 00:18:34,280 --> 00:18:37,200 Speaker 1: it certainly for our for our investor base. But the 312 00:18:37,320 --> 00:18:41,400 Speaker 1: end of the day, we we understood that that many 313 00:18:41,480 --> 00:18:42,680 Speaker 1: of these business we all it was just it was 314 00:18:42,720 --> 00:18:44,760 Speaker 1: just a blip. It was the price at a point 315 00:18:44,760 --> 00:18:47,360 Speaker 1: in time with fear you know hitting you know, hitting 316 00:18:47,400 --> 00:18:50,600 Speaker 1: the market, and it wasn't the that these businesses weren't 317 00:18:50,600 --> 00:18:52,080 Speaker 1: going to do well once we got through to the 318 00:18:52,160 --> 00:18:55,520 Speaker 1: other side, and business is like a I G. You know, 319 00:18:55,600 --> 00:18:58,639 Speaker 1: we're going to be fine, and it's it's it's businesses 320 00:18:58,800 --> 00:19:01,919 Speaker 1: like like Mary I. Businesses truly stopped. And we were 321 00:19:01,960 --> 00:19:05,680 Speaker 1: buying you know, Marriott as as the stock was coming down, 322 00:19:06,320 --> 00:19:08,320 Speaker 1: and you know, you buy a stock at eighty and 323 00:19:08,400 --> 00:19:10,800 Speaker 1: then it goes you know, it goes into the sixties. 324 00:19:11,160 --> 00:19:14,679 Speaker 1: You know, it's not the again, the most comfortable thing 325 00:19:14,760 --> 00:19:17,680 Speaker 1: to watch happen. But we're very confident that as we 326 00:19:17,760 --> 00:19:21,080 Speaker 1: got through the pandemic, people once again would would travel, 327 00:19:21,160 --> 00:19:23,400 Speaker 1: they would get on airplanes, they would go to hotels 328 00:19:23,520 --> 00:19:27,240 Speaker 1: and and a company like Marriott, you know that is 329 00:19:27,960 --> 00:19:29,880 Speaker 1: you know, more asset light than you know, some other 330 00:19:29,920 --> 00:19:33,080 Speaker 1: hotel businesses would would perform, you know, quite well. So, 331 00:19:33,560 --> 00:19:36,560 Speaker 1: you know, buying something at at sixty I'm sorry, at eighty, 332 00:19:37,000 --> 00:19:39,480 Speaker 1: you know, as it as it dropped down, as it 333 00:19:39,560 --> 00:19:45,120 Speaker 1: dropped down, um in another from there. You know, again, 334 00:19:45,160 --> 00:19:47,640 Speaker 1: as I said, it was discomforting. But at the same time, 335 00:19:47,720 --> 00:19:49,440 Speaker 1: you look where it is today, where it's a hundred 336 00:19:49,440 --> 00:19:53,680 Speaker 1: and forty plus. We clearly weren't wrong, but it took 337 00:19:53,720 --> 00:19:55,560 Speaker 1: a market at that point in time, as it took 338 00:19:55,600 --> 00:19:57,920 Speaker 1: a lot of those businesses down down with it. So 339 00:19:58,040 --> 00:20:00,800 Speaker 1: we took advantage of the opportunity it is at that 340 00:20:00,880 --> 00:20:04,200 Speaker 1: point in time and increased our invested exposure by about 341 00:20:04,560 --> 00:20:07,160 Speaker 1: ten percentage points and pulled down some of that cash 342 00:20:07,240 --> 00:20:10,280 Speaker 1: you were referencing. So I don't want listeners to think 343 00:20:10,400 --> 00:20:14,280 Speaker 1: this is hindsight bias or you know, after the fact, 344 00:20:15,040 --> 00:20:20,359 Speaker 1: re reinventing history. March there was an article in the 345 00:20:20,400 --> 00:20:23,639 Speaker 1: New York Times by Jeff Sohmer Uh and remember this 346 00:20:23,880 --> 00:20:27,359 Speaker 1: is deep into the collapse, about a week before the 347 00:20:27,480 --> 00:20:33,240 Speaker 1: market bottomed, and he described getting a note from you 348 00:20:34,200 --> 00:20:38,560 Speaker 1: saying you had begun to start buying stocks and felt 349 00:20:38,640 --> 00:20:41,439 Speaker 1: that if even if markets fell further, you were going 350 00:20:41,480 --> 00:20:44,399 Speaker 1: to continue to buy because you thought things had suddenly 351 00:20:44,480 --> 00:20:47,960 Speaker 1: become very attractive price wise, and that you said you 352 00:20:48,040 --> 00:20:51,960 Speaker 1: were acting rationally and not bravely. Um, and you're looking 353 00:20:52,000 --> 00:20:54,439 Speaker 1: at five to seven years. Tell us a little bit 354 00:20:54,520 --> 00:20:59,520 Speaker 1: about the reaction to that Times column about you buying 355 00:20:59,800 --> 00:21:03,200 Speaker 1: right into the teeth of the collapse. Reaction from whom, Barry, 356 00:21:03,400 --> 00:21:07,320 Speaker 1: from whoever, from investors, from you know, any I found 357 00:21:07,359 --> 00:21:12,520 Speaker 1: any time I see someone go against the dominant trends 358 00:21:13,119 --> 00:21:17,719 Speaker 1: stake out a contrarian point. The general pushback is ranges 359 00:21:17,800 --> 00:21:20,160 Speaker 1: from this guy is an idiot to this guy's crazy. 360 00:21:20,640 --> 00:21:23,200 Speaker 1: Were you getting sort of hey, what are you doing? 361 00:21:23,359 --> 00:21:26,239 Speaker 1: From clients? We got, we got the spectrum, We got 362 00:21:26,320 --> 00:21:29,440 Speaker 1: both right. I mean, but you've been doing this long 363 00:21:29,560 --> 00:21:32,119 Speaker 1: enough and your track record is good enough that one 364 00:21:32,200 --> 00:21:35,920 Speaker 1: would hope longstanding clients would say, I don't know, but 365 00:21:36,000 --> 00:21:37,600 Speaker 1: I'm going to give you the benefit of the doubt 366 00:21:37,760 --> 00:21:40,159 Speaker 1: because you've been right before. What what was the what 367 00:21:40,359 --> 00:21:44,440 Speaker 1: was the pushback? Like the the pushback from some people 368 00:21:44,640 --> 00:21:47,719 Speaker 1: was your your portfolio took a mark We didn't expect 369 00:21:47,800 --> 00:21:50,639 Speaker 1: it to take a mark um like it has, and 370 00:21:50,840 --> 00:21:53,840 Speaker 1: so we're gonna go and, uh, give our money to 371 00:21:53,920 --> 00:21:57,320 Speaker 1: somebody else. That was respect from some On the other hand, 372 00:21:57,359 --> 00:22:01,280 Speaker 1: we had those investors who increase their their capital commitment, 373 00:22:01,359 --> 00:22:05,680 Speaker 1: you know, to us and and decided that what we 374 00:22:05,760 --> 00:22:07,520 Speaker 1: were doing was the right thing because they did by 375 00:22:07,760 --> 00:22:10,280 Speaker 1: into the argument you just made that, Hey, with these 376 00:22:10,320 --> 00:22:12,640 Speaker 1: guys have been doing this a long time. They've lived 377 00:22:12,680 --> 00:22:15,040 Speaker 1: through various cycles. They lived through the Internet bubble, they 378 00:22:15,080 --> 00:22:17,720 Speaker 1: lived through the the you know, junk bond, you know, 379 00:22:18,040 --> 00:22:20,520 Speaker 1: blow ups in in in in the early two thousand's 380 00:22:20,520 --> 00:22:22,480 Speaker 1: when when the world comes were there and we're able 381 00:22:22,520 --> 00:22:25,360 Speaker 1: to take advantage. They lived through the Great Financial Crisis 382 00:22:25,520 --> 00:22:28,320 Speaker 1: and and they these guys know what they're doing. I'd 383 00:22:28,400 --> 00:22:31,400 Speaker 1: rather them do it then then you know, somebody else. 384 00:22:31,880 --> 00:22:34,080 Speaker 1: And so we did have you know, fortunately those people 385 00:22:34,119 --> 00:22:36,560 Speaker 1: as well. On the other hand, there was more of 386 00:22:36,600 --> 00:22:38,840 Speaker 1: the former admitted lay than a lotter. You know, people 387 00:22:39,160 --> 00:22:41,000 Speaker 1: send to vote with their feet. And this goes back 388 00:22:41,040 --> 00:22:43,800 Speaker 1: to that volatility argument that people get, you know, get 389 00:22:44,000 --> 00:22:46,320 Speaker 1: a little panicked at these points in times, and we 390 00:22:47,520 --> 00:22:51,159 Speaker 1: just tried to be thoughtful and act rationally. And the 391 00:22:51,240 --> 00:22:53,200 Speaker 1: end of the day, if we do the right thing, 392 00:22:53,920 --> 00:22:55,920 Speaker 1: the business will take care of itself. Whether it will 393 00:22:55,920 --> 00:22:59,080 Speaker 1: be you know, whether we're smaller or were larger, it's 394 00:22:59,080 --> 00:23:01,119 Speaker 1: not going to change what we do every day when 395 00:23:01,160 --> 00:23:02,720 Speaker 1: we come in here. It's not gonna do and it's 396 00:23:02,720 --> 00:23:05,400 Speaker 1: not going to change our lives. So it's very important 397 00:23:05,440 --> 00:23:07,720 Speaker 1: for us to always be mindful of what the world 398 00:23:07,800 --> 00:23:10,920 Speaker 1: will look like five to seven years, you know, down 399 00:23:10,960 --> 00:23:15,000 Speaker 1: the road, and make sure that we we have analyzed 400 00:23:15,040 --> 00:23:17,280 Speaker 1: the businesses that we own or the assets were buying 401 00:23:17,560 --> 00:23:20,320 Speaker 1: the bonds that were buying you know, well, such that 402 00:23:20,480 --> 00:23:23,159 Speaker 1: we have invested with some kind of margin of safety, 403 00:23:23,200 --> 00:23:26,879 Speaker 1: and we've tried to anticipate you know, downside. I mean downside, 404 00:23:27,200 --> 00:23:29,439 Speaker 1: not just mark to market some might occur, wage are 405 00:23:29,520 --> 00:23:32,480 Speaker 1: far less important. But but really considering what the absolute 406 00:23:32,520 --> 00:23:34,479 Speaker 1: downside is, what is that you know, what could really 407 00:23:34,520 --> 00:23:37,680 Speaker 1: happen that could create a permanent impairment of capital. So 408 00:23:37,840 --> 00:23:41,320 Speaker 1: before we get granular and really dive into what you 409 00:23:41,440 --> 00:23:44,480 Speaker 1: were buying, I want to ask you what made you 410 00:23:44,640 --> 00:23:48,320 Speaker 1: realize that the sell off in was a short term 411 00:23:48,400 --> 00:23:51,480 Speaker 1: sell off and not the start of a more serious, 412 00:23:51,760 --> 00:23:55,159 Speaker 1: longer term bear market. Was it valuation? Was it a 413 00:23:55,280 --> 00:23:58,600 Speaker 1: variety of factors? You obviously had the right answer. What 414 00:23:58,800 --> 00:24:01,560 Speaker 1: was the thinking behind it? Oh? I didn't know. I mean, 415 00:24:01,600 --> 00:24:03,760 Speaker 1: I mean, you know, just full disclosure. We had no 416 00:24:03,800 --> 00:24:07,960 Speaker 1: idea it's gonna be shorter long. I mean, we I 417 00:24:08,119 --> 00:24:10,359 Speaker 1: came to that article you're referencing in the New York Times. 418 00:24:10,640 --> 00:24:13,040 Speaker 1: Was was you know, as you stated, you know, like 419 00:24:13,080 --> 00:24:14,680 Speaker 1: we're thinking about where the world's gonna be down the 420 00:24:14,720 --> 00:24:16,359 Speaker 1: road five to seven years. I didn't know how long 421 00:24:16,440 --> 00:24:19,680 Speaker 1: is it was gonna last? But if I invest trying 422 00:24:19,720 --> 00:24:21,920 Speaker 1: to anticipate what's going to happen in the next you know, 423 00:24:21,960 --> 00:24:24,160 Speaker 1: a few months, six months, year, or whatever the case 424 00:24:24,240 --> 00:24:27,639 Speaker 1: may be. It's just it's gonna take my eye arm, 425 00:24:27,720 --> 00:24:29,639 Speaker 1: you know, my off the ball, our team's eye off 426 00:24:29,680 --> 00:24:33,399 Speaker 1: the ball, and not allow us to to to buy 427 00:24:33,480 --> 00:24:36,040 Speaker 1: things that otherwise might buy we'd always find some reason 428 00:24:36,160 --> 00:24:39,080 Speaker 1: that that it might be a little bit cheaper. So 429 00:24:39,440 --> 00:24:43,040 Speaker 1: so let me get specific, then, Um, since you were 430 00:24:43,119 --> 00:24:47,000 Speaker 1: thinking five to seven years, what did you accumulate at 431 00:24:47,040 --> 00:24:48,920 Speaker 1: the end of that first quarter in the beginning of 432 00:24:48,960 --> 00:24:53,040 Speaker 1: the second quarter, what what specific sectors or stops. You know, 433 00:24:53,160 --> 00:24:55,080 Speaker 1: we bought a number of businesses in the in the 434 00:24:55,200 --> 00:24:59,520 Speaker 1: travel industry and including you know, Bookings, dot Com and Marriott. 435 00:25:00,000 --> 00:25:03,520 Speaker 1: We bought businesses that were impacted you know by you know, 436 00:25:03,680 --> 00:25:06,639 Speaker 1: you know directly, you know, by COVID. We added to 437 00:25:07,080 --> 00:25:10,480 Speaker 1: some of our financial services businesses you know, you know, 438 00:25:10,560 --> 00:25:13,440 Speaker 1: a I G give us an example that we felt 439 00:25:13,520 --> 00:25:15,800 Speaker 1: that would certainly get through you to the other side. 440 00:25:16,280 --> 00:25:20,280 Speaker 1: And we added you know, businesses that that uh, you 441 00:25:20,359 --> 00:25:23,400 Speaker 1: know last year that where where people were capitulating because 442 00:25:23,400 --> 00:25:26,320 Speaker 1: the consumer is gonna be weak. Businesses like like richemonts 443 00:25:26,840 --> 00:25:30,520 Speaker 1: Um you know, for example. And then we we also 444 00:25:30,720 --> 00:25:34,800 Speaker 1: took advantage of other businesses that were less cyclical, uh, 445 00:25:35,000 --> 00:25:40,440 Speaker 1: that that had the the opportunity to to perform well 446 00:25:40,560 --> 00:25:43,399 Speaker 1: regardless of what, you know, what the economy you know, 447 00:25:43,600 --> 00:25:49,280 Speaker 1: was doing. But but we're just we're being negatively impacted, 448 00:25:49,640 --> 00:25:51,520 Speaker 1: you know, by the market when they were throwing the 449 00:25:52,080 --> 00:25:54,720 Speaker 1: baby out with the bathwater as well. So we own 450 00:25:54,760 --> 00:25:58,920 Speaker 1: in the portfolio and their positions is that that you know, 451 00:25:59,080 --> 00:26:02,800 Speaker 1: grew within the portfolio while we were when the market 452 00:26:02,880 --> 00:26:06,800 Speaker 1: was going down, companies like Facebook and Alphabet etcetera. And 453 00:26:06,920 --> 00:26:08,840 Speaker 1: I know you like to run with a little bit 454 00:26:08,880 --> 00:26:12,879 Speaker 1: of cash in the portfolio. Did you ever fully deploy 455 00:26:13,040 --> 00:26:16,200 Speaker 1: that capital? Did you become fully invested? No? We we 456 00:26:16,400 --> 00:26:18,360 Speaker 1: we didn't. We put the cap We we took ten 457 00:26:18,440 --> 00:26:20,280 Speaker 1: points that you know, the capitol and put that to 458 00:26:20,359 --> 00:26:22,760 Speaker 1: work and and the market rallied you know from there, 459 00:26:23,359 --> 00:26:27,400 Speaker 1: and uh, we didn't you know, put it all to work. 460 00:26:27,560 --> 00:26:29,439 Speaker 1: You know, in hindsight, obviously you know you were one 461 00:26:29,520 --> 00:26:31,520 Speaker 1: wishes they had, but you know, we didn't know how 462 00:26:31,560 --> 00:26:34,200 Speaker 1: long that opportunities and exists. We wanted to make sure 463 00:26:34,200 --> 00:26:36,560 Speaker 1: we continue the ability to buy down, no doubt about it. 464 00:26:36,680 --> 00:26:39,760 Speaker 1: What else were you doing to manage the portfolio through 465 00:26:39,840 --> 00:26:44,040 Speaker 1: the course of the pandemic, meaning how are you approaching 466 00:26:44,880 --> 00:26:51,240 Speaker 1: dealing with clients, dealing with buying opportunities, considering risk? How 467 00:26:51,359 --> 00:26:55,200 Speaker 1: did the pandemic affect the way you thought about running 468 00:26:55,240 --> 00:26:58,600 Speaker 1: the funds. We had lots of conversations, you know about 469 00:26:58,720 --> 00:27:02,560 Speaker 1: this and and internally amongst my partners and probably the 470 00:27:02,720 --> 00:27:05,920 Speaker 1: most grounded of the three of us. I would give 471 00:27:05,960 --> 00:27:09,359 Speaker 1: a hat tip to my partner Mark Landecker, who really 472 00:27:09,920 --> 00:27:12,520 Speaker 1: was the most centered of us, because I'm not gonna 473 00:27:13,280 --> 00:27:16,480 Speaker 1: tell you that it wasn't disconcerting watching you know, these 474 00:27:16,760 --> 00:27:19,280 Speaker 1: the stock prices dropped, you know, as I did, even 475 00:27:19,640 --> 00:27:25,080 Speaker 1: after having lived through you know, multiple multiple downturns, and 476 00:27:25,640 --> 00:27:29,119 Speaker 1: we they left, you know, more of the speaking of 477 00:27:29,200 --> 00:27:35,080 Speaker 1: clients to me, which you know I had the history 478 00:27:35,160 --> 00:27:38,320 Speaker 1: with them and allowed them to to do a greater 479 00:27:38,440 --> 00:27:42,560 Speaker 1: degree focus more on on on the portfolio and not 480 00:27:42,760 --> 00:27:49,080 Speaker 1: have the static from from having clients whisper in your ear. 481 00:27:49,280 --> 00:27:52,080 Speaker 1: You know, you're the portfolio is going down. I'm scared. 482 00:27:52,520 --> 00:27:54,080 Speaker 1: You know, what are we going to do? What are 483 00:27:54,119 --> 00:27:55,480 Speaker 1: you going to do? What am I going to do? 484 00:27:56,080 --> 00:28:00,720 Speaker 1: It it insulates them from hearing the this reactions of 485 00:28:00,760 --> 00:28:03,639 Speaker 1: the investors, and so I took more of that on 486 00:28:03,800 --> 00:28:07,159 Speaker 1: on the front line. And because you have to to 487 00:28:07,520 --> 00:28:09,600 Speaker 1: be a good investor, you really do have to have, 488 00:28:09,800 --> 00:28:12,960 Speaker 1: as we discussed, that longer term focus and and find 489 00:28:13,040 --> 00:28:16,760 Speaker 1: ways to to minimize the static in your life. And 490 00:28:16,880 --> 00:28:19,639 Speaker 1: so that's that's how we operated together. You know, the 491 00:28:19,720 --> 00:28:23,640 Speaker 1: three of us really intriguing. So given the big run 492 00:28:23,760 --> 00:28:27,600 Speaker 1: up from from before the drop from February, we're up 493 00:28:27,600 --> 00:28:33,480 Speaker 1: about from the Nader, We're up about se Are you 494 00:28:33,640 --> 00:28:37,679 Speaker 1: still as fully invested as you were last year? How 495 00:28:37,760 --> 00:28:42,720 Speaker 1: are you looking at the markets today after after this recovery. Well, 496 00:28:42,800 --> 00:28:45,440 Speaker 1: there's no question that things have gotten price here. But 497 00:28:46,000 --> 00:28:47,840 Speaker 1: every time you put coupital to work, kept to ask 498 00:28:47,920 --> 00:28:50,680 Speaker 1: yourself or even maintain your exposure. You know, what's like 499 00:28:50,760 --> 00:28:52,400 Speaker 1: could have happen over the next five to seven years 500 00:28:52,400 --> 00:28:54,640 Speaker 1: of these businesses, of these assets that we own and 501 00:28:55,240 --> 00:29:01,160 Speaker 1: are thought process is continues to always be focused on 502 00:29:01,360 --> 00:29:05,240 Speaker 1: on looking out down the road. And if one starts 503 00:29:05,320 --> 00:29:08,240 Speaker 1: with that, yeah we have we we then have to 504 00:29:08,400 --> 00:29:10,760 Speaker 1: end with what is the alternative Today's where are we 505 00:29:10,960 --> 00:29:13,800 Speaker 1: end up? Including what if you bonds don't offer much 506 00:29:13,840 --> 00:29:17,200 Speaker 1: of an alternative, and you're not getting any kind of 507 00:29:17,760 --> 00:29:19,719 Speaker 1: you know, yield there we kind of think about as 508 00:29:19,760 --> 00:29:23,520 Speaker 1: more as return free risk. Uh, the high yield part 509 00:29:23,560 --> 00:29:25,840 Speaker 1: of the market, or the investment grade part of the 510 00:29:25,880 --> 00:29:29,680 Speaker 1: corporate debt market just isn't isn't attractive, and you know, 511 00:29:29,760 --> 00:29:31,480 Speaker 1: we wish it was. We took between a little bit 512 00:29:31,520 --> 00:29:34,080 Speaker 1: of capital work, you know, in the space last year, 513 00:29:34,160 --> 00:29:36,480 Speaker 1: but the opportunity to exists you know, for very long 514 00:29:36,600 --> 00:29:38,600 Speaker 1: and and so much of that corporate debt is not 515 00:29:38,680 --> 00:29:44,520 Speaker 1: only lower yielding, but it's also also um relatively. We 516 00:29:44,720 --> 00:29:46,840 Speaker 1: covenant to to a lot of that debt of debt, 517 00:29:47,360 --> 00:29:52,240 Speaker 1: so more of the leverage tilts towards the to the 518 00:29:52,320 --> 00:29:56,280 Speaker 1: borrower and away from the lender. And so we don't 519 00:29:56,320 --> 00:29:58,760 Speaker 1: we look today in that same situation because yields are 520 00:29:58,800 --> 00:30:02,040 Speaker 1: lower still, and it begs the question, and I think 521 00:30:02,040 --> 00:30:04,280 Speaker 1: that's a fair question, why we would you be as invested, 522 00:30:04,360 --> 00:30:07,640 Speaker 1: were slightly less invested, in fairness, But that's more noise 523 00:30:07,680 --> 00:30:09,680 Speaker 1: in the portfolio, you know, than we were you know, 524 00:30:09,840 --> 00:30:14,560 Speaker 1: last year this time. But why do we stay invested? 525 00:30:14,600 --> 00:30:17,760 Speaker 1: Because again, the alternative isn't great and we think that 526 00:30:17,840 --> 00:30:20,320 Speaker 1: we're going to get good rates of return over the 527 00:30:20,440 --> 00:30:23,760 Speaker 1: next number of years. You know, from this portfolio of 528 00:30:23,840 --> 00:30:26,160 Speaker 1: assets that we own. That doesn't mean that they're not 529 00:30:26,280 --> 00:30:28,959 Speaker 1: going to stocks aren't going to trade down in the interim. 530 00:30:29,040 --> 00:30:31,080 Speaker 1: They very well might. But when we look at the 531 00:30:31,120 --> 00:30:35,520 Speaker 1: way the government has has has printed you know, money, 532 00:30:35,560 --> 00:30:38,800 Speaker 1: governments or sovereigns have printed money, and you know, and 533 00:30:38,920 --> 00:30:40,760 Speaker 1: and as I pointed out earlier, just the amount of 534 00:30:40,840 --> 00:30:43,640 Speaker 1: depth that's been created, we just think that you know, 535 00:30:43,800 --> 00:30:46,400 Speaker 1: you could be you could talk towards an environment where 536 00:30:47,280 --> 00:30:49,960 Speaker 1: it's more inflationary and rates can remain lower for longer 537 00:30:50,120 --> 00:30:53,680 Speaker 1: because the government imperative is to keep them as low 538 00:30:53,760 --> 00:30:56,440 Speaker 1: as as that interest expense as low as it can be, 539 00:30:56,600 --> 00:30:59,440 Speaker 1: which means keeping rates as low as possible. At any 540 00:30:59,480 --> 00:31:02,320 Speaker 1: point in time. You know, the system can you know, 541 00:31:02,560 --> 00:31:06,280 Speaker 1: governments can lose control of it. But we consider what 542 00:31:06,360 --> 00:31:09,800 Speaker 1: the alternatives are. Stocks still make more sense. Now we 543 00:31:10,000 --> 00:31:14,120 Speaker 1: are finding more opportunities outside the United States, and we 544 00:31:14,280 --> 00:31:18,280 Speaker 1: think that there's better opportunity and businesses that are domiciled, 545 00:31:19,360 --> 00:31:22,760 Speaker 1: you know, on for foreign surres. And so our portfolio 546 00:31:23,200 --> 00:31:26,400 Speaker 1: of equities has tilted in the last couple of years 547 00:31:26,520 --> 00:31:30,080 Speaker 1: more overseas than it has been or has ever been 548 00:31:30,160 --> 00:31:33,520 Speaker 1: historically in the position size of about doubled for a 549 00:31:33,600 --> 00:31:36,160 Speaker 1: few years back for for that which we've on outside 550 00:31:36,160 --> 00:31:39,120 Speaker 1: of the US, and and now percent of our portfolio 551 00:31:39,760 --> 00:31:43,560 Speaker 1: is domiciled elsewhere. Let's talk a little bit about that 552 00:31:43,720 --> 00:31:47,960 Speaker 1: Crescent Funds. It has been ranked as the best risk 553 00:31:48,040 --> 00:31:52,440 Speaker 1: adjusted returns of all allocation mutual funds with at least 554 00:31:52,520 --> 00:31:57,600 Speaker 1: a billion dollars in assets under management among those managed 555 00:31:57,880 --> 00:32:02,080 Speaker 1: by the same manager since inception, which I would imagine 556 00:32:02,400 --> 00:32:06,360 Speaker 1: is a fairly exclusive club. Are you familiar all with 557 00:32:06,520 --> 00:32:10,680 Speaker 1: who else is similarly situated to you in terms of 558 00:32:11,480 --> 00:32:15,320 Speaker 1: running a fund since inception and actually running a billion 559 00:32:15,440 --> 00:32:19,920 Speaker 1: or more dollars? I'm not. Actually, I don't really pay 560 00:32:19,960 --> 00:32:23,280 Speaker 1: a lot of attention to to that. So so I 561 00:32:23,360 --> 00:32:28,120 Speaker 1: want to go over the funds objectives, which is to quote, 562 00:32:28,680 --> 00:32:32,440 Speaker 1: generate equity like returns over the long term while taking 563 00:32:32,680 --> 00:32:38,160 Speaker 1: less risk than the market and avoiding permanent impairment of capital. Hey, 564 00:32:38,400 --> 00:32:41,680 Speaker 1: everybody wants to do this. You're one of the few 565 00:32:41,800 --> 00:32:47,360 Speaker 1: who actually have. Tell us how you manage to accomplish that. Well, 566 00:32:47,440 --> 00:32:50,520 Speaker 1: we invest across the capital structure with this goal of 567 00:32:50,600 --> 00:32:54,800 Speaker 1: delivering attractive risk of just returns on stock stress and distress, 568 00:32:54,880 --> 00:32:59,200 Speaker 1: corporate bonds and private credit, occasional preferred stock, etcetera. When 569 00:32:59,240 --> 00:33:01,280 Speaker 1: it comes to stock, X will own both the more 570 00:33:01,360 --> 00:33:04,480 Speaker 1: commercial and the evergreens. That is, they you know, a commercial, 571 00:33:04,560 --> 00:33:07,440 Speaker 1: call them the dollar bills trig into discounts. And those 572 00:33:07,520 --> 00:33:10,400 Speaker 1: companies whose businesses should you know, on the other hand, 573 00:33:10,480 --> 00:33:13,520 Speaker 1: that are more evergreen, that businesses should be solidly better 574 00:33:13,600 --> 00:33:16,880 Speaker 1: at decade from now. It's really a function of price 575 00:33:16,960 --> 00:33:19,400 Speaker 1: and risk reward that will dictate which direction we go 576 00:33:20,160 --> 00:33:23,880 Speaker 1: uh for these evergreens versus these more commercial opportunities. But 577 00:33:24,040 --> 00:33:25,880 Speaker 1: we try every day to try to know the better 578 00:33:25,960 --> 00:33:28,320 Speaker 1: businesses in the world and own them. Should the average 579 00:33:28,320 --> 00:33:30,280 Speaker 1: trade down for one reason or another, we'll be there 580 00:33:30,320 --> 00:33:32,880 Speaker 1: too to pick them up. And what we also own 581 00:33:32,920 --> 00:33:35,440 Speaker 1: these lesser quality but still growing businesses if their stock 582 00:33:35,520 --> 00:33:40,520 Speaker 1: prices offer attractive upside relative to the downside. And then 583 00:33:40,640 --> 00:33:43,520 Speaker 1: you know, we have our dead investments where we all 584 00:33:43,560 --> 00:33:46,400 Speaker 1: we care about is getting our principle backing maturity, but 585 00:33:47,160 --> 00:33:49,720 Speaker 1: you know, also generated in equity return along the way 586 00:33:50,720 --> 00:33:54,240 Speaker 1: that really speaks, you know, to more to our philosophy. 587 00:33:54,280 --> 00:33:56,400 Speaker 1: And then and then our our process is guided by 588 00:33:56,840 --> 00:34:00,600 Speaker 1: by thoughtful research of the underlying opportunity as we as 589 00:34:00,640 --> 00:34:03,960 Speaker 1: we really try to ascertain the value of the business 590 00:34:04,040 --> 00:34:06,239 Speaker 1: or the asset. And that's kind of by a lot 591 00:34:06,320 --> 00:34:10,800 Speaker 1: of reading, many conversations with the management competitors, industry experts 592 00:34:10,840 --> 00:34:13,080 Speaker 1: and so forth. And then you know, we'll go about 593 00:34:13,120 --> 00:34:15,960 Speaker 1: and build our our financial models. And our models don't 594 00:34:16,320 --> 00:34:18,920 Speaker 1: you know, suggest what you know, what might happen in 595 00:34:19,040 --> 00:34:23,320 Speaker 1: the coming quarter or even in two thousand two, but 596 00:34:23,719 --> 00:34:25,800 Speaker 1: over the next few years. We want to have a 597 00:34:25,880 --> 00:34:28,080 Speaker 1: view as to what the business might look like in 598 00:34:28,160 --> 00:34:31,000 Speaker 1: a low base and high case, and we want the 599 00:34:31,440 --> 00:34:35,319 Speaker 1: investment in that business, that equity to to that we're 600 00:34:35,320 --> 00:34:38,200 Speaker 1: gonna be buying in that business to be attractive in 601 00:34:38,239 --> 00:34:41,080 Speaker 1: the base case and have that upside optionality on the 602 00:34:41,200 --> 00:34:43,600 Speaker 1: in the high case and and not you know, get 603 00:34:43,680 --> 00:34:45,640 Speaker 1: too badly in the low case. So we really try 604 00:34:45,680 --> 00:34:48,840 Speaker 1: and create these these these boundaries, these governors as we 605 00:34:48,920 --> 00:34:51,200 Speaker 1: look at each of the individual investments in the portfolio. 606 00:34:51,960 --> 00:34:55,640 Speaker 1: So I'm trying to figure out how to describe your 607 00:34:55,880 --> 00:34:59,959 Speaker 1: style of investing, and it's it's pretty challenging. I'm looking 608 00:35:00,000 --> 00:35:02,239 Speaker 1: and some of the holdings in in your top ten. 609 00:35:02,840 --> 00:35:06,080 Speaker 1: So you have Alphabet and Facebook on the one hand, 610 00:35:06,120 --> 00:35:07,880 Speaker 1: but on the other hand you mentioned a I G 611 00:35:08,719 --> 00:35:11,759 Speaker 1: and City Group. Is this value as this growth. It's 612 00:35:11,800 --> 00:35:15,359 Speaker 1: it's pretty hard to put you into a style box. Yeah, 613 00:35:15,400 --> 00:35:19,640 Speaker 1: I think that there's a problem with style boxes because 614 00:35:19,800 --> 00:35:22,840 Speaker 1: the we don't make a great distinction between growth and value. 615 00:35:23,120 --> 00:35:25,560 Speaker 1: Show me the growth investor that argues what they bought 616 00:35:25,640 --> 00:35:28,160 Speaker 1: is in a value. But but then also you can 617 00:35:28,200 --> 00:35:30,920 Speaker 1: just stick a company that trades it forty times earnings, 618 00:35:31,040 --> 00:35:32,640 Speaker 1: but if it's growing thirty percent a year for the 619 00:35:32,680 --> 00:35:35,160 Speaker 1: next five years and into that five year period, it's 620 00:35:35,200 --> 00:35:38,040 Speaker 1: with trading ten eleven times earnings and there about. So 621 00:35:38,239 --> 00:35:41,160 Speaker 1: to us, value investing is just to invest with an 622 00:35:41,200 --> 00:35:44,000 Speaker 1: appropriate margin of safety, buying a business or an asset 623 00:35:44,080 --> 00:35:46,759 Speaker 1: at a discount. In the past that that margin of 624 00:35:46,840 --> 00:35:49,880 Speaker 1: safety might have meant protection you came from the balance 625 00:35:49,880 --> 00:35:52,080 Speaker 1: sheet and the more in the most traditional Graham and 626 00:35:52,160 --> 00:35:54,399 Speaker 1: Dotty and you know kind of definition you know, buying 627 00:35:54,440 --> 00:35:57,560 Speaker 1: blow book value, blow net networking capital. You know, the 628 00:35:57,600 --> 00:35:59,960 Speaker 1: business might have not earning assets, it could be monetized, 629 00:36:00,400 --> 00:36:03,799 Speaker 1: et cetera. Today it you know, for us more luckly 630 00:36:03,840 --> 00:36:06,160 Speaker 1: means the protection you know that that has to come 631 00:36:06,239 --> 00:36:09,640 Speaker 1: from the quality of the business. You can get sucked 632 00:36:09,680 --> 00:36:13,240 Speaker 1: into what you think is a margin of safety because 633 00:36:13,440 --> 00:36:15,480 Speaker 1: the you've got these you know, what appears to be 634 00:36:15,480 --> 00:36:17,520 Speaker 1: a strong wood bay, You've got you know, hidden assets, 635 00:36:17,600 --> 00:36:19,640 Speaker 1: but the business isn't good at the end of the day, 636 00:36:20,400 --> 00:36:22,920 Speaker 1: the you're you're you're probably gonna have a challenge, I 637 00:36:22,920 --> 00:36:24,480 Speaker 1: mean takes here as an example, there are a lot 638 00:36:24,520 --> 00:36:27,399 Speaker 1: of value investors who owned it believing that management could 639 00:36:27,440 --> 00:36:30,280 Speaker 1: turn the business around, but if not, they were protected 640 00:36:30,280 --> 00:36:32,440 Speaker 1: by lots of great real estate as well some powerful 641 00:36:32,480 --> 00:36:35,520 Speaker 1: brands like ken More Incraftment. However, as we now know, 642 00:36:35,719 --> 00:36:39,480 Speaker 1: management wasn't successful and much of their great asset base 643 00:36:39,640 --> 00:36:42,160 Speaker 1: was mortgage or sold off. With that count what was 644 00:36:42,200 --> 00:36:45,200 Speaker 1: then reinvested back in the business. And then you know 645 00:36:45,440 --> 00:36:47,920 Speaker 1: when it's the time that it came to a point 646 00:36:47,960 --> 00:36:51,000 Speaker 1: in time where people realized ex posts that that they 647 00:36:51,040 --> 00:36:54,279 Speaker 1: were they were burning the timber from the house. So 648 00:36:55,160 --> 00:36:58,319 Speaker 1: to us in a traditional value investments, you know are 649 00:36:58,840 --> 00:37:02,279 Speaker 1: are you know, often mediocostolical businesses that were temporary out 650 00:37:02,320 --> 00:37:05,439 Speaker 1: of favor and offered to message the opportunity to return 651 00:37:05,520 --> 00:37:09,400 Speaker 1: to more normal own earnings. But many of those businesses 652 00:37:09,560 --> 00:37:13,000 Speaker 1: have been disrupted by new technologies and and didn't offer 653 00:37:13,040 --> 00:37:16,560 Speaker 1: the margin of safety they once did. So we're very 654 00:37:16,680 --> 00:37:19,320 Speaker 1: mindful of whatever we own, it really does have to 655 00:37:19,360 --> 00:37:21,839 Speaker 1: be growing, doesn't have to have have go go growth. 656 00:37:21,920 --> 00:37:24,920 Speaker 1: We own a couple of cement companies that are global 657 00:37:25,000 --> 00:37:27,360 Speaker 1: franchises that that we think cements are going to be 658 00:37:27,400 --> 00:37:30,640 Speaker 1: here for a long long time. Now. They're not you know, 659 00:37:30,760 --> 00:37:34,120 Speaker 1: go go growth businesses, certainly, but you know, those are 660 00:37:34,160 --> 00:37:37,080 Speaker 1: businesses that we think that that offered attractive risk of 661 00:37:37,160 --> 00:37:39,359 Speaker 1: just returns over the over the next number of years. 662 00:37:39,880 --> 00:37:42,359 Speaker 1: And you mentioned you know, Google and Facebook, but even 663 00:37:42,440 --> 00:37:45,319 Speaker 1: those investments were initiated at points in time when there 664 00:37:45,400 --> 00:37:48,040 Speaker 1: was bad news surrounding them. Google back in two thousand 665 00:37:48,080 --> 00:37:51,719 Speaker 1: and eleven, when there was feared that they're advertising you know, 666 00:37:51,840 --> 00:37:54,440 Speaker 1: business was going to be impaired, which is bulk of 667 00:37:54,480 --> 00:37:57,160 Speaker 1: the revenues, because we impaired because of a recession as 668 00:37:57,200 --> 00:38:00,120 Speaker 1: the world was beginning to unwine, as as as what 669 00:38:00,320 --> 00:38:03,320 Speaker 1: was happening in Cyprus was infecting you know, Europe, in Greece, 670 00:38:03,560 --> 00:38:06,200 Speaker 1: you know the rest of Europe. Uh and UM the 671 00:38:06,239 --> 00:38:09,080 Speaker 1: stock traded and the stock traded down. Facebook traded down 672 00:38:09,400 --> 00:38:12,480 Speaker 1: a few years back because of the Cambridge analytical scandal 673 00:38:12,640 --> 00:38:17,160 Speaker 1: and people were worried about about it. It's business prospects 674 00:38:17,440 --> 00:38:20,160 Speaker 1: and it's not about it, you know, entry into into 675 00:38:20,239 --> 00:38:24,520 Speaker 1: two very good you know, businesses that we've owned ever since. 676 00:38:25,000 --> 00:38:28,439 Speaker 1: So you mentioned you buy some non public distress debt. 677 00:38:29,000 --> 00:38:34,319 Speaker 1: Are you purchasing anything on the non public side of equities? 678 00:38:35,120 --> 00:38:38,920 Speaker 1: So yes, we do. We do own um some privates 679 00:38:38,960 --> 00:38:42,720 Speaker 1: in the portfolio, but they're very small because we're public 680 00:38:42,760 --> 00:38:46,520 Speaker 1: fund and we're responsible for returning capital to our investors 681 00:38:46,560 --> 00:38:48,880 Speaker 1: when they when they wanted back. But on occasion, we 682 00:38:48,960 --> 00:38:54,239 Speaker 1: make investments in certain private investments opportunities, um you know, 683 00:38:54,360 --> 00:38:57,920 Speaker 1: Epic Games is an example. We also have various private 684 00:38:58,000 --> 00:39:02,040 Speaker 1: credit UH in the positions in the portfolio that we've 685 00:39:02,120 --> 00:39:04,160 Speaker 1: made over the years. In the last decade, we've put 686 00:39:04,520 --> 00:39:06,960 Speaker 1: you know, eight hundred million or so out you know 687 00:39:07,160 --> 00:39:10,279 Speaker 1: in UH in private credit that have delivered returns of 688 00:39:10,560 --> 00:39:13,920 Speaker 1: you know, give or take to the fund. And these 689 00:39:13,960 --> 00:39:18,400 Speaker 1: are secured first lean asset based loans that you know, 690 00:39:19,239 --> 00:39:21,439 Speaker 1: are something different than not a lot of mutual funds. 691 00:39:21,520 --> 00:39:23,759 Speaker 1: Do Again, I don't want to suggest that this is 692 00:39:24,520 --> 00:39:27,239 Speaker 1: that these are the engines in the portfolio. These are 693 00:39:27,640 --> 00:39:30,399 Speaker 1: our investments that that end up on the periphery again 694 00:39:30,480 --> 00:39:33,160 Speaker 1: because of the of their i liquid nature and and 695 00:39:33,280 --> 00:39:35,600 Speaker 1: the fact that we are a public fund. So last 696 00:39:35,680 --> 00:39:39,719 Speaker 1: question about the funds. You're located in Los Angeles. A 697 00:39:39,880 --> 00:39:43,920 Speaker 1: lot of what you're covering seems to originate on the 698 00:39:43,960 --> 00:39:47,520 Speaker 1: East Coast, in New York or in Silicon Valley. How 699 00:39:47,680 --> 00:39:53,320 Speaker 1: does being located in l A affects your worldview? I've 700 00:39:53,360 --> 00:39:56,280 Speaker 1: never really thought about l A affecting my my world 701 00:39:56,400 --> 00:39:59,839 Speaker 1: view until you just ask that question. I do think 702 00:40:00,040 --> 00:40:02,640 Speaker 1: at you know, just in general, the world has gotten 703 00:40:03,080 --> 00:40:07,719 Speaker 1: has gotten smaller because of the information it's available your 704 00:40:07,719 --> 00:40:10,279 Speaker 1: finger and tips, so, you know, across the internet. Uh, 705 00:40:10,560 --> 00:40:13,279 Speaker 1: and that certainly has made it easier. But living in 706 00:40:13,400 --> 00:40:17,440 Speaker 1: Los Angeles, I don't know has affected my my world 707 00:40:17,520 --> 00:40:20,080 Speaker 1: view too to any great degree. I don't know if 708 00:40:20,080 --> 00:40:22,440 Speaker 1: I would think differently if I was, you know, living 709 00:40:22,480 --> 00:40:25,719 Speaker 1: in Chicago or New York. I haven't really thought about 710 00:40:25,719 --> 00:40:27,799 Speaker 1: it bearer to be honest, of how that's my view 711 00:40:27,800 --> 00:40:30,200 Speaker 1: has been impacted by living here. Hey, that's a fair answer. 712 00:40:30,719 --> 00:40:34,200 Speaker 1: I'm just trying to get a sense of your philosophy 713 00:40:34,320 --> 00:40:38,640 Speaker 1: and and how where you're situated might somehow filter into it. 714 00:40:39,200 --> 00:40:42,640 Speaker 1: So we talked a little bit about fixed income and 715 00:40:42,960 --> 00:40:46,040 Speaker 1: especially in the high yield world where you're taking a 716 00:40:46,120 --> 00:40:49,040 Speaker 1: lot of risk for almost no reward. What do you 717 00:40:49,160 --> 00:40:51,880 Speaker 1: think about the state of inflation here that seems to 718 00:40:51,960 --> 00:40:55,040 Speaker 1: have been a giant topic the past couple of months. 719 00:40:55,320 --> 00:41:00,120 Speaker 1: Does this affect the way you invest i noticed you 720 00:41:00,200 --> 00:41:04,000 Speaker 1: guys don't really make much of inflation forecast. What's the 721 00:41:04,080 --> 00:41:09,440 Speaker 1: impact of inflation on your thought process? We think that 722 00:41:10,440 --> 00:41:16,480 Speaker 1: with the way the stewards of of of of capital 723 00:41:16,840 --> 00:41:21,279 Speaker 1: at the sovereign level have been acting in the last 724 00:41:21,440 --> 00:41:23,600 Speaker 1: number of years, really took great degree since the Great 725 00:41:23,640 --> 00:41:27,879 Speaker 1: Financial Crisis, there is there is this financial alchemy that's 726 00:41:27,880 --> 00:41:32,680 Speaker 1: going on that people hope that that that the academics 727 00:41:32,719 --> 00:41:34,759 Speaker 1: that have it all figured out, that they're going to 728 00:41:34,880 --> 00:41:38,600 Speaker 1: get engineer this soft landing and and and be able 729 00:41:38,640 --> 00:41:44,000 Speaker 1: to control the inflation in a way that and drive 730 00:41:44,080 --> 00:41:48,080 Speaker 1: growth at the same time. That is going to all 731 00:41:48,360 --> 00:41:53,120 Speaker 1: end perfectly, And it thinks tend not to be quite 732 00:41:53,600 --> 00:41:56,440 Speaker 1: so perfect out there in the world, and and the 733 00:41:57,280 --> 00:41:59,759 Speaker 1: we've learned to expect the unexpected, and we don't know 734 00:42:00,040 --> 00:42:02,879 Speaker 1: what is going to happen. We don't know whether they'll 735 00:42:02,920 --> 00:42:05,560 Speaker 1: be inflation or how much inflation there might end up being. 736 00:42:05,640 --> 00:42:09,360 Speaker 1: We think that there's reasonable prospects of it, you know, certainly, 737 00:42:09,840 --> 00:42:12,760 Speaker 1: but you might there be a deflationary path to inflation. 738 00:42:13,080 --> 00:42:14,640 Speaker 1: That could be the way we get there. Where the 739 00:42:15,040 --> 00:42:19,040 Speaker 1: where the knee jerk responses to continue to to print more, 740 00:42:19,160 --> 00:42:22,640 Speaker 1: borrow more, and in stimulate, stimulate with a with a 741 00:42:22,719 --> 00:42:27,480 Speaker 1: wanton disregard for for the future ramifications of what it 742 00:42:27,560 --> 00:42:30,640 Speaker 1: might mean to feed our currencies, you know, or or 743 00:42:31,000 --> 00:42:34,560 Speaker 1: or the economies, or or inflation down the road. But 744 00:42:34,880 --> 00:42:38,120 Speaker 1: looking for that near term bump as these policy makers 745 00:42:38,160 --> 00:42:42,520 Speaker 1: and academics are really thinking about what's happening right now, 746 00:42:42,719 --> 00:42:45,160 Speaker 1: is they as they seek to be re elected or reappointed. 747 00:42:45,640 --> 00:42:48,480 Speaker 1: So we don't know what's going to happen, but we 748 00:42:48,680 --> 00:42:52,440 Speaker 1: create a range of outcomes, and we think that as 749 00:42:52,520 --> 00:42:56,520 Speaker 1: we look at them, it's more appropriate to be more 750 00:42:56,640 --> 00:42:59,760 Speaker 1: invested than not if you're looking out where the world's 751 00:42:59,800 --> 00:43:02,840 Speaker 1: going to be, you know, five ten years since. So 752 00:43:03,280 --> 00:43:08,520 Speaker 1: that raises really interesting issue. You refer to the response 753 00:43:08,640 --> 00:43:12,480 Speaker 1: from the fiscal response from governments and the monetary response 754 00:43:12,560 --> 00:43:16,400 Speaker 1: from central banks. Are they in the process of changing 755 00:43:17,080 --> 00:43:19,520 Speaker 1: what bear markets are gonna look like going forward. And 756 00:43:19,600 --> 00:43:22,800 Speaker 1: what I mean by that is, have investors learned to 757 00:43:23,000 --> 00:43:29,880 Speaker 1: anticipate fiscal and monetary stimulus. I think the world is 758 00:43:29,960 --> 00:43:34,040 Speaker 1: certainly trying to do that. We hear at first specific advisors. No, 759 00:43:34,160 --> 00:43:38,759 Speaker 1: we can't anticipate. We just try and create a portfolio 760 00:43:39,120 --> 00:43:44,239 Speaker 1: that's robust to multiple outcomes, that doesn't go too hard 761 00:43:44,280 --> 00:43:47,640 Speaker 1: one direction or another, believing that that we really have 762 00:43:47,719 --> 00:43:51,520 Speaker 1: the capability of identifying what the macro environment will look 763 00:43:51,520 --> 00:43:55,200 Speaker 1: a look like perspectively, there's just way too many moving parts. 764 00:43:55,560 --> 00:43:56,880 Speaker 1: And if you put me in a room with the 765 00:43:57,400 --> 00:43:59,879 Speaker 1: with with John Maynard Keynes, I'm gonna, you know, come 766 00:44:00,000 --> 00:44:02,520 Speaker 1: out of you know Kinsian economists, right, I'm gonna be 767 00:44:02,520 --> 00:44:04,480 Speaker 1: a believer, you know, same with you To put me 768 00:44:04,520 --> 00:44:06,920 Speaker 1: in there with a monitorist the supply side or you 769 00:44:06,960 --> 00:44:09,840 Speaker 1: know who or whatever, it's just there's these guys have 770 00:44:09,960 --> 00:44:12,600 Speaker 1: all the arguments down and and I'm just not, you know, 771 00:44:12,760 --> 00:44:16,120 Speaker 1: well versed enough, and I don't believe that that anybody 772 00:44:16,200 --> 00:44:18,200 Speaker 1: really has that capability. And in fact, if you were 773 00:44:18,280 --> 00:44:22,080 Speaker 1: to go back and and look at at the projections 774 00:44:22,160 --> 00:44:26,239 Speaker 1: made by economists for just the coming year for what 775 00:44:26,480 --> 00:44:32,240 Speaker 1: GDP was going to be. They're they're rarely rights. Somebody 776 00:44:32,280 --> 00:44:35,000 Speaker 1: gets it right, but nobody's right consistently, and sometimes they're 777 00:44:35,160 --> 00:44:39,320 Speaker 1: they're wildly wrong. And you look at at people like 778 00:44:39,440 --> 00:44:42,640 Speaker 1: Alan Greenspan, who didn't think that we were, you know, 779 00:44:43,000 --> 00:44:45,120 Speaker 1: in a recession in the early you know, in the 780 00:44:45,200 --> 00:44:48,440 Speaker 1: early part of the those you know, or or Bernankey this, 781 00:44:48,960 --> 00:44:52,279 Speaker 1: they didn't expect the great financial quss. These things weren't anticipated, 782 00:44:53,000 --> 00:44:57,480 Speaker 1: and so we don't hang our hat on on listening 783 00:44:57,480 --> 00:45:03,320 Speaker 1: to them or trying to anticipate what might be a 784 00:45:03,440 --> 00:45:05,960 Speaker 1: lot of things might be, more things might be than 785 00:45:06,040 --> 00:45:07,960 Speaker 1: will be. And so we just try and put our 786 00:45:08,000 --> 00:45:10,680 Speaker 1: heads down and and believe that that you know what 787 00:45:11,200 --> 00:45:13,960 Speaker 1: down down the road that you know, Google is still 788 00:45:13,960 --> 00:45:16,359 Speaker 1: gonna be a good business. And we're not paying even 789 00:45:16,400 --> 00:45:18,960 Speaker 1: today at current prices that you know, if you adjust 790 00:45:19,040 --> 00:45:21,640 Speaker 1: for the cash you you you adjust for their non 791 00:45:21,760 --> 00:45:26,080 Speaker 1: earning assets, their moonshots, and and the stock is not 792 00:45:26,600 --> 00:45:28,680 Speaker 1: so horribly expensive. It certainly isn't as cheap as it 793 00:45:28,840 --> 00:45:31,880 Speaker 1: was on an adjusted basis. We bought it back in eleven. 794 00:45:32,200 --> 00:45:37,040 Speaker 1: It was in the early early low rather teams multiple 795 00:45:37,560 --> 00:45:41,200 Speaker 1: adjusted earnings, but these are companies where comfortable owning you 796 00:45:41,280 --> 00:45:44,480 Speaker 1: know through this. So that's kind of interesting. What what 797 00:45:44,680 --> 00:45:50,640 Speaker 1: other investment opportunities today are you excited about? You mentioned overseas, 798 00:45:50,840 --> 00:45:54,680 Speaker 1: Is that x US developed? Is that emerging markets? What 799 00:45:54,920 --> 00:45:58,920 Speaker 1: is catching your eye in the present environment? You know, 800 00:45:59,000 --> 00:46:01,880 Speaker 1: we we it it's more it's more developed economies. Of 801 00:46:01,920 --> 00:46:05,040 Speaker 1: there's some emerging markets in and it's not any one 802 00:46:05,160 --> 00:46:08,960 Speaker 1: company or one industry you know specifically, there's just uh, 803 00:46:09,600 --> 00:46:12,359 Speaker 1: there's a host of different you know businesses that we own, 804 00:46:12,480 --> 00:46:15,000 Speaker 1: you know outside the United States. There's some businesses that 805 00:46:15,120 --> 00:46:18,120 Speaker 1: we own you know inside the US that are less 806 00:46:18,160 --> 00:46:22,359 Speaker 1: economically sensitive as well that that that make their way 807 00:46:22,400 --> 00:46:26,760 Speaker 1: into into the portfolio that are again give an example 808 00:46:26,800 --> 00:46:29,320 Speaker 1: of a more commercial opportunity. We've owned for you know 809 00:46:29,400 --> 00:46:33,040 Speaker 1: since last year. Um and it didn't go down because 810 00:46:33,080 --> 00:46:37,440 Speaker 1: of the pandemic. It went down for for idiosyncratic reasons. 811 00:46:37,560 --> 00:46:40,320 Speaker 1: It's a I don't want any time I mentioned idea, 812 00:46:40,320 --> 00:46:42,440 Speaker 1: I don't want it to suggest this is like our 813 00:46:42,520 --> 00:46:44,520 Speaker 1: favorite idea or the only idea. This is just to 814 00:46:44,600 --> 00:46:48,000 Speaker 1: be meant to be emblematic of of of of philosophy 815 00:46:48,040 --> 00:46:50,799 Speaker 1: and process. But we own you know, first Energy which 816 00:46:50,880 --> 00:46:55,640 Speaker 1: is a pure play regulated transmission distribution utility with one 817 00:46:55,640 --> 00:46:58,239 Speaker 1: of the largest networks in the US, I mean six 818 00:46:58,360 --> 00:47:01,640 Speaker 1: million customers across five stay. It's you know, starting Ohio 819 00:47:01,680 --> 00:47:04,279 Speaker 1: and kind of moving east towards the mid Atlantic. Now 820 00:47:04,320 --> 00:47:07,759 Speaker 1: it's core utility business is better than average, which means 821 00:47:07,800 --> 00:47:10,719 Speaker 1: which does you know you can be determined as a 822 00:47:11,000 --> 00:47:14,560 Speaker 1: higher than average you know r OE, it's got um 823 00:47:15,239 --> 00:47:18,040 Speaker 1: more regulated transmission distribution stance is rather than the more 824 00:47:18,160 --> 00:47:22,480 Speaker 1: risky business of non regulated independent power production. And for 825 00:47:22,560 --> 00:47:25,520 Speaker 1: the most part they're in regulatorily friendly states with lower 826 00:47:25,600 --> 00:47:30,759 Speaker 1: than average competition. So we also you know, looking like 827 00:47:30,840 --> 00:47:33,440 Speaker 1: the utility industry just just as an idea, just as 828 00:47:33,520 --> 00:47:35,759 Speaker 1: a as a construct, because we think there should be 829 00:47:36,080 --> 00:47:41,360 Speaker 1: underlying demand for increased transmission and grid modernization over the 830 00:47:41,440 --> 00:47:44,960 Speaker 1: next number of years. So but you know, the utility 831 00:47:44,960 --> 00:47:49,680 Speaker 1: industry is is you know, the index trades about times earning, 832 00:47:49,840 --> 00:47:52,960 Speaker 1: you know thereabouts. But this company, you know, last year, 833 00:47:53,160 --> 00:47:56,360 Speaker 1: you know, they have got some bad news and Q 834 00:47:58,000 --> 00:47:59,680 Speaker 1: you know, First Energy got caught up in a brimary 835 00:47:59,719 --> 00:48:04,120 Speaker 1: scan that alleged you know, illegal campaign contributions following around 836 00:48:04,160 --> 00:48:06,879 Speaker 1: sixty million dollars to the former Ohio Speaker of the House, 837 00:48:07,320 --> 00:48:10,520 Speaker 1: in the hopes of passing a bill that provided some 838 00:48:10,719 --> 00:48:13,600 Speaker 1: you know, subsidies for nuclear business. You know that isn't 839 00:48:13,719 --> 00:48:16,520 Speaker 1: if they don't even own anymore. And as a result, 840 00:48:16,920 --> 00:48:19,200 Speaker 1: you know, you know what, you know, how the government 841 00:48:19,320 --> 00:48:22,560 Speaker 1: might or in the regulators might come at them. It 842 00:48:23,000 --> 00:48:26,359 Speaker 1: causes stock to drop by almost half from the February high, 843 00:48:26,800 --> 00:48:30,560 Speaker 1: and that cleaned off about thirteen billion dollars of market value. 844 00:48:31,360 --> 00:48:33,960 Speaker 1: And if you were to adjust it for the declining 845 00:48:34,040 --> 00:48:36,359 Speaker 1: utility index because that had gone down, you know at 846 00:48:36,360 --> 00:48:38,920 Speaker 1: that point of about eight percent as well along with 847 00:48:39,200 --> 00:48:44,200 Speaker 1: the the um you know, coming down with the pandemic, 848 00:48:44,600 --> 00:48:47,000 Speaker 1: that would just basically means about ten to eleven billion 849 00:48:47,040 --> 00:48:51,400 Speaker 1: dollars of value you know, was taken out adjusted for 850 00:48:51,440 --> 00:48:54,400 Speaker 1: the decline in those utility indicries. And so we are 851 00:48:54,480 --> 00:48:57,160 Speaker 1: workers really centered on two things like one, how good 852 00:48:57,280 --> 00:49:00,279 Speaker 1: is the business and to you know, what what the 853 00:49:00,320 --> 00:49:04,520 Speaker 1: penalties be. And so we the work that we did, 854 00:49:04,719 --> 00:49:08,960 Speaker 1: you know, on the business and common conversations with competitors, 855 00:49:09,000 --> 00:49:11,799 Speaker 1: industry experts and utility unless give us a comfort level 856 00:49:11,880 --> 00:49:14,600 Speaker 1: that the business was advertising as good as we thought 857 00:49:14,640 --> 00:49:18,760 Speaker 1: it was. And that with respect to the the fine 858 00:49:18,920 --> 00:49:20,600 Speaker 1: that was likely to occur, we felt it would end 859 00:49:20,680 --> 00:49:23,880 Speaker 1: up being manageable. So there are federal sentencing guidelines that 860 00:49:23,920 --> 00:49:27,680 Speaker 1: are fairly you know, formula formulaic, and so we used 861 00:49:27,760 --> 00:49:31,200 Speaker 1: history as a precedent and looking at lots of different 862 00:49:32,360 --> 00:49:34,800 Speaker 1: of fines have been paid in the past, and there's 863 00:49:34,840 --> 00:49:37,400 Speaker 1: a base cave fine, and then there is a a 864 00:49:38,040 --> 00:49:41,200 Speaker 1: culpability multiple that gets attached to that. So we did 865 00:49:41,600 --> 00:49:44,560 Speaker 1: as we triangulated these these other fines and and and 866 00:49:44,680 --> 00:49:47,879 Speaker 1: the multiple kind of looked at that maybe they find 867 00:49:47,960 --> 00:49:50,720 Speaker 1: into being someplace a hundred and fifty to four million dollars. 868 00:49:51,040 --> 00:49:53,280 Speaker 1: I remember I just said that the business and declined 869 00:49:53,480 --> 00:49:56,640 Speaker 1: thirteen billion, maybe ten to eleven billion adjusted, you know, 870 00:49:56,800 --> 00:50:00,319 Speaker 1: relative to futility index. So even in a ast case 871 00:50:00,320 --> 00:50:02,680 Speaker 1: scenario of a billion dollars, it's still, you know, just 872 00:50:02,880 --> 00:50:06,279 Speaker 1: one tenth of what the stock price declined that that 873 00:50:06,360 --> 00:50:10,040 Speaker 1: had been been seen by its shareholders. UM are born 874 00:50:10,400 --> 00:50:14,080 Speaker 1: by its shareholders, and so we felt pretty comfortable UM 875 00:50:14,920 --> 00:50:18,200 Speaker 1: that the adjusting for our base case fines and and 876 00:50:18,320 --> 00:50:20,360 Speaker 1: the stock trading back to a market multiple in the 877 00:50:20,440 --> 00:50:23,320 Speaker 1: next couple of years. Again looking down the road that 878 00:50:23,680 --> 00:50:25,799 Speaker 1: buying the business at eleven times earnings with a five 879 00:50:25,840 --> 00:50:29,640 Speaker 1: percent dividing yield was pretty attractive relative to the the 880 00:50:29,920 --> 00:50:33,360 Speaker 1: utility index that was training at nine twenty times earnings 881 00:50:33,480 --> 00:50:36,720 Speaker 1: with with a just a few percent you know, dividing yields. 882 00:50:36,760 --> 00:50:38,879 Speaker 1: And so as you got through the scandal, we thought 883 00:50:38,920 --> 00:50:41,800 Speaker 1: the stock that was trading in the high twenties, you know, 884 00:50:41,920 --> 00:50:43,759 Speaker 1: could end up being you know, trading in some place 885 00:50:43,840 --> 00:50:46,520 Speaker 1: in the you know, in the low forties to low fifties. 886 00:50:47,040 --> 00:50:49,640 Speaker 1: And what's it looked like today? I mean, the same 887 00:50:49,719 --> 00:50:51,440 Speaker 1: story still applies. Is still in the midst of this. 888 00:50:51,560 --> 00:50:53,640 Speaker 1: The stock price has moved up, you know, from the 889 00:50:54,040 --> 00:50:59,839 Speaker 1: high twenties to the higher thirties, and the the opportunity 890 00:51:00,040 --> 00:51:02,919 Speaker 1: still exists for that same upside. Nothing's really changed there 891 00:51:02,960 --> 00:51:06,640 Speaker 1: in the in the process of of working through the 892 00:51:07,360 --> 00:51:12,120 Speaker 1: you know, the whatever's gonna happen regulatorily or with the fines, 893 00:51:12,239 --> 00:51:14,560 Speaker 1: we just don't know where it stands. You know, today 894 00:51:14,760 --> 00:51:17,759 Speaker 1: we're not going to know two we know, but as 895 00:51:17,800 --> 00:51:20,960 Speaker 1: we looked down the road, we it's going to be settled. 896 00:51:21,160 --> 00:51:23,480 Speaker 1: Just like I argued before that people would travel again, 897 00:51:23,520 --> 00:51:25,719 Speaker 1: people would stay in hotels again, and Marriott, you know, 898 00:51:25,800 --> 00:51:29,279 Speaker 1: would not have an occupancy that was was was going 899 00:51:29,320 --> 00:51:32,080 Speaker 1: to be, you know, close to zero for a period 900 00:51:32,080 --> 00:51:35,840 Speaker 1: of time. You're gonna end up with a more normal environment, 901 00:51:36,160 --> 00:51:38,680 Speaker 1: you know, for First Energy you know, you know, and 902 00:51:38,880 --> 00:51:42,240 Speaker 1: and in all its markets in Ohio, Pennsylvania, you know, etcetera. 903 00:51:42,640 --> 00:51:47,640 Speaker 1: That's really intriguing. So marginal safety clearly a key part 904 00:51:47,719 --> 00:51:54,640 Speaker 1: of your investment approach. I'm gonna assume nothing in change 905 00:51:54,760 --> 00:51:58,680 Speaker 1: that philosophy. So that leads me to the question, what 906 00:51:58,880 --> 00:52:03,359 Speaker 1: is your takeaway him your experience during the pandemic? What's 907 00:52:03,400 --> 00:52:08,359 Speaker 1: the lesson that investors should have learned last year? Investors? 908 00:52:08,520 --> 00:52:10,560 Speaker 1: You know, every time you know they should learn this, 909 00:52:10,680 --> 00:52:13,240 Speaker 1: it says, it's the lat same lesson, right is thinking 910 00:52:13,320 --> 00:52:16,320 Speaker 1: what the world looks like down the road, Not what 911 00:52:16,440 --> 00:52:20,480 Speaker 1: dom I look like in the next six months, three months, 912 00:52:20,960 --> 00:52:23,120 Speaker 1: even a year or two, but what's it like down 913 00:52:23,160 --> 00:52:24,840 Speaker 1: the road. I mean, if you're buying a business, you 914 00:52:24,840 --> 00:52:26,719 Speaker 1: should care about it twice the day you buy it 915 00:52:26,760 --> 00:52:28,640 Speaker 1: in the day you sell it. So if you're not 916 00:52:28,680 --> 00:52:30,839 Speaker 1: going to sell that business for five ten years, why 917 00:52:30,880 --> 00:52:32,399 Speaker 1: do you care if the stock is up or down 918 00:52:32,840 --> 00:52:35,640 Speaker 1: in the next couple No doubt about that. Our last 919 00:52:35,760 --> 00:52:37,680 Speaker 1: question of this segment. I want to throw you a 920 00:52:37,719 --> 00:52:41,040 Speaker 1: little bit of a curve ball. I asked you earlier 921 00:52:41,080 --> 00:52:44,439 Speaker 1: about l A. I was kind of surprised to learn 922 00:52:44,840 --> 00:52:49,399 Speaker 1: your surfer. Tell us a little bit about that hobby. Oh, 923 00:52:49,560 --> 00:52:51,440 Speaker 1: I've got lots of hobbies. I'm you know, I'm a 924 00:52:51,960 --> 00:52:54,080 Speaker 1: I'm a I'm a jack of many trades and master 925 00:52:54,200 --> 00:52:57,640 Speaker 1: of none. I'm I. I enjoy it Like I swam 926 00:52:57,719 --> 00:53:00,759 Speaker 1: competitively through college. I've always enjoyed, you know, the water. 927 00:53:00,880 --> 00:53:03,440 Speaker 1: I enjoy swimming in a pool, enjoy him in the ocean. 928 00:53:03,520 --> 00:53:07,399 Speaker 1: And and I never I used to lifeguard the beach. 929 00:53:07,760 --> 00:53:09,520 Speaker 1: There's a summer job when I was in college, and 930 00:53:10,200 --> 00:53:12,719 Speaker 1: and and learn to surf. And as I said, I'm 931 00:53:12,719 --> 00:53:14,600 Speaker 1: not very good. But it's nothing like being out there 932 00:53:14,640 --> 00:53:17,359 Speaker 1: in the water and a dolphins swimming around you. It's pretty. 933 00:53:17,400 --> 00:53:19,800 Speaker 1: It's pretty peaceful. And to you know, pick up a 934 00:53:19,880 --> 00:53:22,239 Speaker 1: wave and and maybe have a dolphin writing it with you, 935 00:53:22,320 --> 00:53:24,600 Speaker 1: which has happened on just one occasion of my life. 936 00:53:24,640 --> 00:53:27,360 Speaker 1: But I keep trying to trying to repeat that is 937 00:53:27,680 --> 00:53:31,120 Speaker 1: is a pretty um you know, beautiful you know, spiritual experience. 938 00:53:31,160 --> 00:53:33,359 Speaker 1: For me, I find it incredibly peaceful, and I spend 939 00:53:33,400 --> 00:53:36,520 Speaker 1: more time now, you know, um surfing behind a boat, 940 00:53:36,680 --> 00:53:38,800 Speaker 1: you know, and on a lake because I don't have 941 00:53:38,840 --> 00:53:41,719 Speaker 1: to compete for waves. And that's been you know, it's 942 00:53:41,760 --> 00:53:44,399 Speaker 1: just a lot of fun. I don't know if you've 943 00:53:44,440 --> 00:53:48,840 Speaker 1: seen the videos of all the young Great Whites that 944 00:53:49,080 --> 00:53:53,319 Speaker 1: like to go surfing with surfers in a very um, 945 00:53:53,760 --> 00:53:57,680 Speaker 1: non aggressive way. Apparently it's different when they're larger or 946 00:53:57,680 --> 00:54:00,120 Speaker 1: and older, but when they're young, they seem to be 947 00:54:00,200 --> 00:54:02,360 Speaker 1: pretty chill. Some of the videos I've seen on YouTube 948 00:54:02,960 --> 00:54:07,719 Speaker 1: taken from drones are just astonishing. Oh yeah, there they 949 00:54:07,800 --> 00:54:11,080 Speaker 1: really are, and there and they are. It's it's disconcerting, 950 00:54:11,719 --> 00:54:14,080 Speaker 1: you know. And if they I'll all compete in in ocean, 951 00:54:14,320 --> 00:54:16,719 Speaker 1: you know, swim races, uh, you know, once or twice 952 00:54:16,760 --> 00:54:20,239 Speaker 1: a year. And I remember once watching one of those 953 00:54:20,320 --> 00:54:22,759 Speaker 1: drone videos of a Great White kind of underneath the 954 00:54:23,239 --> 00:54:26,839 Speaker 1: underneath the crowd of swimmers, you know, kind of off 955 00:54:26,920 --> 00:54:29,960 Speaker 1: the South Bay her most in Manhattan Beach and a race, 956 00:54:30,080 --> 00:54:32,640 Speaker 1: and I'm I just thought to myself, I'm like that, 957 00:54:33,200 --> 00:54:36,560 Speaker 1: I don't know what I would do myself. I just 958 00:54:36,640 --> 00:54:38,439 Speaker 1: try to push that out of my mind. I don't 959 00:54:38,440 --> 00:54:40,000 Speaker 1: care if it's a big great white or a small 960 00:54:40,080 --> 00:54:42,640 Speaker 1: great white. Berry great white is a great white, I'm 961 00:54:42,640 --> 00:54:45,000 Speaker 1: not gonna be real thrilled to see. I'm gonna i'm 962 00:54:45,040 --> 00:54:47,719 Speaker 1: gonna push back against you on that. If if the 963 00:54:47,800 --> 00:54:50,399 Speaker 1: choice is a big great white or a small great white, 964 00:54:50,760 --> 00:54:53,760 Speaker 1: I'm gonna go with the small, younger one. They really 965 00:54:53,840 --> 00:54:56,920 Speaker 1: seem to be so. By the way, if if people 966 00:54:56,960 --> 00:55:00,520 Speaker 1: are still listening at this point, go to YouTube, Google this. 967 00:55:01,320 --> 00:55:06,040 Speaker 1: It's astonishing. They're not like a hundred yards away, They're 968 00:55:06,160 --> 00:55:09,680 Speaker 1: inches away there. It's almost like their dolphins playing with 969 00:55:09,840 --> 00:55:14,400 Speaker 1: the swimmers and surfers. It's really amazing to see. But 970 00:55:14,640 --> 00:55:17,359 Speaker 1: that said, you know, it's a little frightening if you're 971 00:55:17,360 --> 00:55:20,920 Speaker 1: out there on a regular basis. Barry, I'm gonna go 972 00:55:21,080 --> 00:55:23,839 Speaker 1: on record is saying that I'm not going to spend 973 00:55:23,880 --> 00:55:27,240 Speaker 1: a lot of time determining how big that great white is. Okay, 974 00:55:28,400 --> 00:55:31,239 Speaker 1: that's that's fair enough. Let me um, I know I 975 00:55:31,280 --> 00:55:33,359 Speaker 1: only have you for a certain amount of time. Let 976 00:55:33,400 --> 00:55:36,239 Speaker 1: me jump to some of my favorite questions that we 977 00:55:36,440 --> 00:55:39,760 Speaker 1: ask all of our guests that are not surfing related, 978 00:55:39,960 --> 00:55:43,200 Speaker 1: and and start with tell us what you're streaming these days? 979 00:55:43,320 --> 00:55:46,640 Speaker 1: Give us your favorite Netflix or Amazon Prime or or 980 00:55:46,719 --> 00:55:51,560 Speaker 1: even podcast you're listening to. I don't. I don't actually 981 00:55:51,719 --> 00:55:54,800 Speaker 1: listen to a lot of podcasts. They don't do a 982 00:55:54,920 --> 00:55:56,680 Speaker 1: lot of streaming other than what you know, more more 983 00:55:56,800 --> 00:55:59,560 Speaker 1: entertainment related to streaming. I tend to when I'm in 984 00:55:59,600 --> 00:56:01,920 Speaker 1: the gym working out, and you know, on my stationary 985 00:56:02,000 --> 00:56:04,040 Speaker 1: bike could do a lot of cycling, you know. I 986 00:56:04,200 --> 00:56:06,680 Speaker 1: I tend to, you know, throw on a documentary and 987 00:56:07,560 --> 00:56:10,279 Speaker 1: and something that with subtitles and and just kind of 988 00:56:10,920 --> 00:56:12,680 Speaker 1: I watch it and it could be on a host 989 00:56:12,719 --> 00:56:15,600 Speaker 1: of different topics. I love music and and and frequently 990 00:56:15,640 --> 00:56:18,880 Speaker 1: it ends up being something related related to that. I 991 00:56:18,960 --> 00:56:23,200 Speaker 1: spend more time, you know, you know, reading nonfiction um 992 00:56:23,840 --> 00:56:27,480 Speaker 1: and and try and really drive a lot of throughput 993 00:56:27,560 --> 00:56:29,640 Speaker 1: there to the best of my ability, I said, the 994 00:56:29,680 --> 00:56:31,279 Speaker 1: best of my ability. Of some books just end up 995 00:56:31,320 --> 00:56:33,680 Speaker 1: being a little bit a little bit denser than others. 996 00:56:33,760 --> 00:56:37,759 Speaker 1: And I find myself sometimes, you know, struggling through to 997 00:56:38,239 --> 00:56:40,719 Speaker 1: to get onto the next book. So we're gonna come 998 00:56:40,719 --> 00:56:42,920 Speaker 1: back to books in a minute. But now I want 999 00:56:42,920 --> 00:56:46,520 Speaker 1: to ask you tell us about your mentors who helped 1000 00:56:46,680 --> 00:56:50,520 Speaker 1: shape your career. Well, the one person really, you know, 1001 00:56:50,640 --> 00:56:54,280 Speaker 1: shaped my career, I mentioned earlier is is James Nathan 1002 00:56:54,480 --> 00:56:57,520 Speaker 1: goes by Jeff and he was my my first boss, 1003 00:56:57,600 --> 00:57:00,840 Speaker 1: and he's the one who entered uced me to a 1004 00:57:00,920 --> 00:57:03,920 Speaker 1: lot of people, you know, early on when I was 1005 00:57:04,000 --> 00:57:08,040 Speaker 1: just starting out my early twenties, where I was able 1006 00:57:08,120 --> 00:57:11,360 Speaker 1: to sit down with you know, his good friend, you know, 1007 00:57:11,480 --> 00:57:15,319 Speaker 1: Lee Cooperman and asked him questions and learn from learn 1008 00:57:15,400 --> 00:57:19,080 Speaker 1: from him, and and have him, you know, be at 1009 00:57:19,120 --> 00:57:22,800 Speaker 1: the Tilodine Annual Meeting, introduced Henry Singleton and have dinner 1010 00:57:22,840 --> 00:57:25,720 Speaker 1: with him afterwards, and talked about experience investing in Tilodine 1011 00:57:26,200 --> 00:57:29,800 Speaker 1: you know, back in the day, and that that really 1012 00:57:30,120 --> 00:57:33,960 Speaker 1: was incredibly educational. And then I remember once he he 1013 00:57:34,560 --> 00:57:38,439 Speaker 1: had me, we drove down to Laguna Beach to visit 1014 00:57:38,480 --> 00:57:40,000 Speaker 1: a guy who I had never heard of. I just 1015 00:57:40,080 --> 00:57:44,800 Speaker 1: couldn't google somebody back then. And and again I hadn't 1016 00:57:44,800 --> 00:57:47,320 Speaker 1: been in the business that long at this point in time. 1017 00:57:47,360 --> 00:57:50,360 Speaker 1: And I sit down at the lobby bar of the 1018 00:57:50,680 --> 00:57:53,760 Speaker 1: ritz Ritz Hotel in down in in Laguna Beach and 1019 00:57:53,800 --> 00:57:55,760 Speaker 1: there's a guy who shows up with an ascot and 1020 00:57:55,960 --> 00:57:59,240 Speaker 1: it seemed like Paisley pajama bottoms, and it was it 1021 00:57:59,360 --> 00:58:01,520 Speaker 1: was I've never seen anybody dressed like that, and it 1022 00:58:01,680 --> 00:58:04,080 Speaker 1: was Sir John Templeton, and I was able to have 1023 00:58:04,520 --> 00:58:08,200 Speaker 1: tea with you know, Sir John Templeton and listened to 1024 00:58:08,320 --> 00:58:11,840 Speaker 1: his life experiences and talking about investing and to be 1025 00:58:11,920 --> 00:58:14,840 Speaker 1: thrown into that kind of a world at at a 1026 00:58:15,280 --> 00:58:18,640 Speaker 1: at a very young age, is is um made me 1027 00:58:19,200 --> 00:58:22,880 Speaker 1: incredibly you know, made me recognize its incredibly fortunate to 1028 00:58:22,960 --> 00:58:25,160 Speaker 1: say the very least. I want to circle back to 1029 00:58:25,280 --> 00:58:30,520 Speaker 1: something that you mentioned in in my earlier question, which 1030 00:58:30,640 --> 00:58:33,320 Speaker 1: is you said you tend to listen to music related 1031 00:58:33,560 --> 00:58:37,120 Speaker 1: or watch music related um streaming. You you want to 1032 00:58:37,160 --> 00:58:40,520 Speaker 1: give us any examples. I mean, I'll listen. I'm gonna 1033 00:58:40,520 --> 00:58:42,240 Speaker 1: listen to like I mean, on a podcast, listen to 1034 00:58:42,400 --> 00:58:46,800 Speaker 1: the something called song exploder. So I love I love 1035 00:58:46,880 --> 00:58:50,080 Speaker 1: the I love the the etymology of the song I like. 1036 00:58:50,560 --> 00:58:52,680 Speaker 1: You know, reading the Wall Street Journal, uh, you know 1037 00:58:52,800 --> 00:58:55,280 Speaker 1: column that it really breaks down the forgot what the 1038 00:58:55,640 --> 00:58:59,440 Speaker 1: title of that column is. It comes a typically yeah, um, 1039 00:58:59,520 --> 00:59:03,080 Speaker 1: if you like if you like songsploder, um, have you 1040 00:59:03,320 --> 00:59:07,440 Speaker 1: played with? It's on YouTube something called Polyphonic No, what's that? 1041 00:59:07,960 --> 00:59:12,000 Speaker 1: So it's just a guy who puts videos up discussing 1042 00:59:12,800 --> 00:59:19,760 Speaker 1: sort of the musicology of specific songs and bands and artists, 1043 00:59:19,840 --> 00:59:24,040 Speaker 1: and you might find it kind of fascinating. If you're 1044 00:59:24,040 --> 00:59:28,280 Speaker 1: an all intrigued by why John Bonham of Zeppelin instead 1045 00:59:28,320 --> 00:59:31,080 Speaker 1: of tracking the bass player tracked the lead guitarist and 1046 00:59:31,200 --> 00:59:33,760 Speaker 1: what that did to their music and a whole bunch 1047 00:59:33,800 --> 00:59:38,760 Speaker 1: of other crazy stuff like that, then you're gonna then 1048 00:59:38,800 --> 00:59:41,800 Speaker 1: I'm also incited to being a frustrating surfer. I'm also 1049 00:59:41,800 --> 00:59:45,040 Speaker 1: a frustrated guitarist. Alright, So you're gonna get a You're 1050 00:59:45,040 --> 00:59:47,280 Speaker 1: gonna have a huge kick out of this polyphonic on 1051 00:59:47,400 --> 00:59:52,760 Speaker 1: you on YouTube. So now let's talk about everybody's favorite question. 1052 00:59:53,760 --> 00:59:55,560 Speaker 1: What are your some of your favorite books? What are 1053 00:59:55,560 --> 00:59:59,320 Speaker 1: you reading right now? Well, I have I mentioned the 1054 00:59:59,480 --> 01:00:01,800 Speaker 1: you know times struggling to get through books and and 1055 01:00:01,920 --> 01:00:04,600 Speaker 1: the reason and it says it's fresh in my mind 1056 01:00:04,720 --> 01:00:07,360 Speaker 1: because sitting on my night table and I'm about three 1057 01:00:07,400 --> 01:00:10,680 Speaker 1: carters away through it is is Walter Rysenson's book Gene 1058 01:00:10,760 --> 01:00:14,080 Speaker 1: Editor and Jennifer DOWDNA and it's just it's it's a 1059 01:00:14,120 --> 01:00:16,200 Speaker 1: little bit dense because you really try and as I'm 1060 01:00:16,240 --> 01:00:20,400 Speaker 1: really trying to understand the Yeah, I have a whole 1061 01:00:20,440 --> 01:00:24,040 Speaker 1: list of books that are tied to two healthcare UM 1062 01:00:24,200 --> 01:00:28,880 Speaker 1: and health tech medtech and in the history of of biotech, 1063 01:00:28,920 --> 01:00:30,200 Speaker 1: and I'm just trying to get up again a better 1064 01:00:30,280 --> 01:00:35,040 Speaker 1: understanding of that is an industry. And so I really 1065 01:00:35,200 --> 01:00:38,400 Speaker 1: enjoy reading nonfiction to try and inform my view of 1066 01:00:38,760 --> 01:00:41,320 Speaker 1: the world. So that's one that I'm reading now. But 1067 01:00:41,960 --> 01:00:46,840 Speaker 1: um it's called a Codebreaker. And but I I read 1068 01:00:46,880 --> 01:00:48,840 Speaker 1: a lot of these books that that try and inform 1069 01:00:48,920 --> 01:00:51,880 Speaker 1: my view, and it include like The Outsiders by William 1070 01:00:51,960 --> 01:00:55,680 Speaker 1: Fordbike which is you know, eight you know CEO profiles 1071 01:00:55,800 --> 01:00:58,600 Speaker 1: that include you know, John Malone and Henry Singleton, Tom 1072 01:00:58,680 --> 01:01:00,880 Speaker 1: Murphy of Caps City has warm off it and it 1073 01:01:01,000 --> 01:01:02,960 Speaker 1: really just you know, reading about these people and what 1074 01:01:03,080 --> 01:01:06,520 Speaker 1: they what they've what they accomplished historically in their businesses 1075 01:01:06,600 --> 01:01:08,440 Speaker 1: and helps some form of view as I speak to 1076 01:01:08,520 --> 01:01:11,360 Speaker 1: managements today. I you know, one of my favorite books 1077 01:01:11,400 --> 01:01:13,800 Speaker 1: of all time, it really is run Turnout's Book to 1078 01:01:13,840 --> 01:01:18,000 Speaker 1: War Brooks, because it's an expansive history of of finance 1079 01:01:18,080 --> 01:01:20,720 Speaker 1: and of a couple of world wars and and a 1080 01:01:21,440 --> 01:01:24,120 Speaker 1: a Jewish family that uh, you know made its way 1081 01:01:24,240 --> 01:01:27,680 Speaker 1: from Germany to England to the United States. And I 1082 01:01:27,800 --> 01:01:31,040 Speaker 1: find that you know, incredibly interesting as well. And sometimes 1083 01:01:31,120 --> 01:01:34,040 Speaker 1: you you you you you you read the books or 1084 01:01:34,120 --> 01:01:35,400 Speaker 1: I read the books and I kind of you know, 1085 01:01:35,640 --> 01:01:37,760 Speaker 1: what did I learned? What are my takeaways? And you know, 1086 01:01:37,840 --> 01:01:39,760 Speaker 1: like I read Twilight in the Desert twenty years ago 1087 01:01:39,840 --> 01:01:42,400 Speaker 1: and they had the belief that from reading Matt Simmons 1088 01:01:42,480 --> 01:01:45,080 Speaker 1: book that that that we're going to have a problem 1089 01:01:45,160 --> 01:01:49,440 Speaker 1: with uh of providing energy to the world with with 1090 01:01:51,040 --> 01:01:54,160 Speaker 1: because fossil fuels were harder to come by as it 1091 01:01:54,200 --> 01:01:57,800 Speaker 1: relates to oil specifically, and you know, like clearly that 1092 01:01:57,880 --> 01:01:59,680 Speaker 1: didn't come the past. We you know, a couple of 1093 01:01:59,680 --> 01:02:02,280 Speaker 1: things of happened since and as you have to you know, 1094 01:02:02,400 --> 01:02:04,880 Speaker 1: be willing to to adapt. I mean, we had obviously 1095 01:02:04,960 --> 01:02:07,240 Speaker 1: a big increase in renewables, but you also had the 1096 01:02:07,640 --> 01:02:10,360 Speaker 1: you know, the oil sands and and tight shelp informations 1097 01:02:10,400 --> 01:02:13,120 Speaker 1: that have created a lot more oil out there than 1098 01:02:13,240 --> 01:02:15,760 Speaker 1: than people have expected. Meanwhile, you have falso had the 1099 01:02:16,200 --> 01:02:19,240 Speaker 1: rise of you that we have the rise of electric 1100 01:02:19,360 --> 01:02:21,480 Speaker 1: vehicles and such that that are going to put a 1101 01:02:21,520 --> 01:02:24,680 Speaker 1: crimp in future demand. So if you have to adapt 1102 01:02:24,840 --> 01:02:27,120 Speaker 1: in you know, um to two changes in the world. 1103 01:02:27,160 --> 01:02:30,160 Speaker 1: And spent a lot of time reading about health tech, 1104 01:02:30,840 --> 01:02:33,360 Speaker 1: you know, which includes this at medtech and biotech, because 1105 01:02:33,600 --> 01:02:35,920 Speaker 1: I believe that some of the great businesses you know, 1106 01:02:36,040 --> 01:02:38,000 Speaker 1: unfortunately will be creative the next twenty years. We're going 1107 01:02:38,040 --> 01:02:40,080 Speaker 1: to come out of that. We mapped the human genom 1108 01:02:40,160 --> 01:02:44,000 Speaker 1: twenty years ago, but it was like identifying the parts 1109 01:02:44,080 --> 01:02:46,480 Speaker 1: to a car. For the last couple of decades, we've 1110 01:02:46,800 --> 01:02:49,200 Speaker 1: we've trying to figure out how those and how the 1111 01:02:49,520 --> 01:02:52,920 Speaker 1: parts of the car work individually and and in integrated fashion. 1112 01:02:53,280 --> 01:02:55,920 Speaker 1: And just now we're really beginning to see some of 1113 01:02:55,960 --> 01:02:57,640 Speaker 1: the fruits of that, and we're gonna see a lot 1114 01:02:57,720 --> 01:03:01,880 Speaker 1: more in the future. Really really interesting. What sort of 1115 01:03:01,880 --> 01:03:04,400 Speaker 1: advice would you give to a recent college grad who 1116 01:03:04,560 --> 01:03:09,000 Speaker 1: was interested in pursuing a career in asset management. I 1117 01:03:09,040 --> 01:03:11,400 Speaker 1: I think that I would say the same thing I've 1118 01:03:11,440 --> 01:03:14,280 Speaker 1: I've related earners in terms of having that that longer 1119 01:03:14,440 --> 01:03:18,160 Speaker 1: term view and whatever you do, whatever decision you make, 1120 01:03:19,160 --> 01:03:22,440 Speaker 1: make sure that you're making the decisions with a kind 1121 01:03:22,480 --> 01:03:25,160 Speaker 1: of a five to ten year you know, seven to 1122 01:03:25,240 --> 01:03:28,760 Speaker 1: ten you're rolling you know timeframe. It's going to allow 1123 01:03:28,800 --> 01:03:32,840 Speaker 1: you to make better decisions today. It's going to you know, 1124 01:03:32,880 --> 01:03:37,280 Speaker 1: you're gonna be more willing to absorb some of the 1125 01:03:37,360 --> 01:03:40,600 Speaker 1: bumps in the road, you know today, if you understand that, 1126 01:03:40,920 --> 01:03:42,960 Speaker 1: you're gonna be better off in the future, in the 1127 01:03:43,080 --> 01:03:46,040 Speaker 1: future for it. And I would say in addition, you know, 1128 01:03:46,200 --> 01:03:47,960 Speaker 1: do something you enjoy and make sure you're good at 1129 01:03:48,040 --> 01:03:53,520 Speaker 1: it and work really hard. Um. The the last thing 1130 01:03:53,560 --> 01:03:58,760 Speaker 1: I would probably leave somebody with is is um is 1131 01:03:58,840 --> 01:04:01,680 Speaker 1: do well by doing good. If I think that one 1132 01:04:01,720 --> 01:04:04,400 Speaker 1: of the things we realize, you know today, in in 1133 01:04:04,880 --> 01:04:07,919 Speaker 1: in the world, that it's not an uncomplicated place. There's 1134 01:04:07,920 --> 01:04:11,160 Speaker 1: a lot of people who have who have been mistreated, 1135 01:04:11,280 --> 01:04:13,320 Speaker 1: you know, over the years, and we can we can 1136 01:04:14,040 --> 01:04:15,640 Speaker 1: try and make the world a little bit better. So 1137 01:04:15,720 --> 01:04:17,880 Speaker 1: if you can do that while you're investing, you know, 1138 01:04:18,040 --> 01:04:21,200 Speaker 1: all the better still. And our final question, what do 1139 01:04:21,400 --> 01:04:24,760 Speaker 1: you know about the world of investing today that you 1140 01:04:24,960 --> 01:04:27,880 Speaker 1: wish you knew when you were first getting started back 1141 01:04:28,000 --> 01:04:32,120 Speaker 1: in the nineties. Yeah, I really wish i'd better anticipated 1142 01:04:32,520 --> 01:04:36,480 Speaker 1: the world of disruptive change. The technological innovation that has 1143 01:04:36,520 --> 01:04:39,800 Speaker 1: taken places has up beend to the economics of so 1144 01:04:39,880 --> 01:04:43,720 Speaker 1: many different industries. And whether it be online retail you know, 1145 01:04:43,800 --> 01:04:46,400 Speaker 1: which has changed the economics of brick and mortar retail 1146 01:04:46,800 --> 01:04:50,120 Speaker 1: or streaming video content and video and demand destroying video 1147 01:04:50,200 --> 01:04:54,560 Speaker 1: rental and forever changing movie theaters. Um or single cell 1148 01:04:54,600 --> 01:04:58,800 Speaker 1: genomics that have developed on the back of of having 1149 01:04:58,960 --> 01:05:02,760 Speaker 1: mapped the human gentlemen, creating new therapeutics, you know, outmoding 1150 01:05:02,800 --> 01:05:05,440 Speaker 1: what's been accepted today, to or renewable energy solutions that 1151 01:05:05,520 --> 01:05:09,400 Speaker 1: are gradually displacing fossil fuels. Now we've we've successfully avoided 1152 01:05:09,400 --> 01:05:12,240 Speaker 1: most of the disrupted industries. But that's like growing that. 1153 01:05:12,480 --> 01:05:14,680 Speaker 1: You know that our boat didn't sink, it's not supposed 1154 01:05:14,680 --> 01:05:18,160 Speaker 1: to sink. We would have enhanced our performance. Have we 1155 01:05:18,240 --> 01:05:20,760 Speaker 1: been more willing to pay up at least a multiple 1156 01:05:20,760 --> 01:05:22,520 Speaker 1: turner two to own some of the better businesses in 1157 01:05:22,560 --> 01:05:25,840 Speaker 1: the world whose paradigms are are more winner take all 1158 01:05:25,880 --> 01:05:28,680 Speaker 1: our winner take most. So we didn't buy Amazon. We 1159 01:05:29,040 --> 01:05:31,400 Speaker 1: we thought we were doing pretty good by by not 1160 01:05:31,560 --> 01:05:33,440 Speaker 1: by selling our retail out you know, more than a 1161 01:05:33,520 --> 01:05:38,080 Speaker 1: decade ago. But we just didn't buy you know, Amazon, 1162 01:05:38,120 --> 01:05:39,560 Speaker 1: even though we looked at it. We just didn't look 1163 01:05:39,600 --> 01:05:41,840 Speaker 1: at it closely enough. And that has to solidly go 1164 01:05:41,960 --> 01:05:44,800 Speaker 1: into the mistake bucket. So that's what I wish I 1165 01:05:44,880 --> 01:05:49,560 Speaker 1: knew thirty years ago. Really quite fascinating. Steve, thank you 1166 01:05:49,680 --> 01:05:52,840 Speaker 1: for being so generous with your time. We have been 1167 01:05:52,920 --> 01:05:56,320 Speaker 1: speaking with Steve Remick. He is the managing partner of 1168 01:05:56,440 --> 01:06:00,520 Speaker 1: First Specific Advisors and asset manager running uh over twenty 1169 01:06:00,600 --> 01:06:05,120 Speaker 1: six billion dollars in various assets. If you enjoy this conversation, 1170 01:06:05,280 --> 01:06:08,600 Speaker 1: check out any of our prior four hundred such interviews. 1171 01:06:08,720 --> 01:06:13,880 Speaker 1: You can find those wherever you feed your podcast fix iTunes, Spotify, 1172 01:06:14,680 --> 01:06:19,480 Speaker 1: Google Podcasts, etcetera. We love your comments, feedback and suggestions 1173 01:06:19,640 --> 01:06:23,280 Speaker 1: right to us at m IB podcast at Bloomberg dot net. 1174 01:06:24,000 --> 01:06:26,960 Speaker 1: You can sign up for my daily reading list at 1175 01:06:27,200 --> 01:06:30,640 Speaker 1: Rid Halts dot com. Check out my weekly column at 1176 01:06:30,720 --> 01:06:34,520 Speaker 1: Bloomberg dot com slash Opinion. Follow me on Twitter at 1177 01:06:34,600 --> 01:06:37,040 Speaker 1: Rid Halts. I would be remiss if I did not 1178 01:06:37,200 --> 01:06:40,800 Speaker 1: thank the crack team that helps put these conversations together 1179 01:06:40,960 --> 01:06:45,560 Speaker 1: each week. Tim Harrow is my audio engineer, Latika val 1180 01:06:45,640 --> 01:06:50,120 Speaker 1: Brond is my project manager. Paris Walt is my producer. 1181 01:06:50,400 --> 01:06:54,320 Speaker 1: Michael Batnick is my head of research. I'm Barry Rihlts. 1182 01:06:54,640 --> 01:06:58,280 Speaker 1: You've been listening to Master's in Business on Bloomberg Radio.