WEBVTT - Samantha McLemore on Longevity Risk Management 0:00:00.080 --> 0:00:06.080 M This is Mesters in Business with Very Renaults on 0:00:06.240 --> 0:00:10.880 Bluebird Radio. This week on the podcast, I have an 0:00:10.880 --> 0:00:14.800 extra special guest. Her name is Samantha McLamore and she 0:00:15.160 --> 0:00:19.200 is a portfolio manager at Miller Value Partners where she 0:00:19.480 --> 0:00:25.000 co manages the Opportunity Trust Fund with famed investor Bill Miller. 0:00:25.480 --> 0:00:29.440 She is taking over the Opportunity Trust Fund from Bill 0:00:30.200 --> 0:00:32.960 over the next couple of months. That's the transition, uh, 0:00:33.320 --> 0:00:38.240 they created. And this is really quite a fascinating conversation. 0:00:38.280 --> 0:00:42.480 If you're at all interested in value investing, stock selection, 0:00:43.040 --> 0:00:49.600 portfolio construction, and what the difference between modern value investing 0:00:50.200 --> 0:00:55.880 and the sort of Ben Graham historical value investing is. Uh, 0:00:55.920 --> 0:01:00.520 You're gonna find this conversation to be absolutely fascinating. The 0:01:00.640 --> 0:01:04.679 fund has put up spectacular numbers and it's not all Bill, 0:01:04.800 --> 0:01:08.520 because she also runs the funds with Patient Capital Management, 0:01:08.560 --> 0:01:12.000 which is the institutional entity she owns and that works 0:01:12.040 --> 0:01:15.280 closely with Miller Value Partners, and her numbers have been 0:01:15.800 --> 0:01:19.960 quite spectacular. I'm just gonna say, with no further ado, 0:01:20.640 --> 0:01:27.280 my conversation with Samantha McLemore. This is Mesters in Business 0:01:27.280 --> 0:01:33.039 with Very Renaults on Bloomberg Radio. My extra special guest 0:01:33.080 --> 0:01:37.880 this week is Samantha McLamore. She is with Miller Value Partners, 0:01:37.920 --> 0:01:42.560 where she co manages the Opportunity Trust Funds with Bill Miller. 0:01:42.680 --> 0:01:47.760 She is also the founder and CEO of Patient Capital Management. 0:01:48.400 --> 0:01:51.480 She was named to Baltimore's forty under forty by the 0:01:51.480 --> 0:01:57.280 Baltimore Business Journal. Samantha McLemore, Welcome to Bloomberg Verry. Thank 0:01:57.320 --> 0:01:59.520 you so much. I'm so excited to be here. I'm 0:01:59.560 --> 0:02:02.200 a big fan of your podcast and I'm honored to 0:02:02.240 --> 0:02:05.600 be a guest. Well, well, it's my pleasure. We've had 0:02:05.680 --> 0:02:09.440 your partner, Bill Bill Miller on twice and he is 0:02:10.160 --> 0:02:14.400 always a fascinating conversation. Let's talk a little bit about 0:02:14.400 --> 0:02:16.600 how you met Bill. Tell us about how you got 0:02:16.639 --> 0:02:20.000 into the financial services industry. I think it's quite an 0:02:20.040 --> 0:02:23.600 interesting story. Yeah, you know, I always like to say 0:02:23.600 --> 0:02:26.640 that I want the job lotteries. So, um, Bill and 0:02:26.680 --> 0:02:31.280 I went to the same undergraduate school, Washington and Lee University. UM. 0:02:31.320 --> 0:02:34.000 I was graduating after the tech bubble birth. I thought 0:02:34.000 --> 0:02:35.840 I was going to go into investment banking. I was 0:02:35.880 --> 0:02:39.160 ready to do those all nighters live in New York City. 0:02:39.360 --> 0:02:41.840 I was really more interested in investment management, and I 0:02:41.880 --> 0:02:43.840 was a member of the investment club at the school. 0:02:44.440 --> 0:02:46.760 And Bill happened to come back the fall of my 0:02:46.840 --> 0:02:50.440 senior year in two thousand one to speak to the 0:02:50.480 --> 0:02:53.480 student body and attend some presentations of the investment club. 0:02:53.560 --> 0:02:57.200 So I met him then and UM I ended up 0:02:57.240 --> 0:03:00.320 asking him if I could send him my resume, UM 0:03:00.320 --> 0:03:02.840 and low and behold. UM. I got a job as 0:03:02.840 --> 0:03:06.200 a junior analysts with Bill straight out of college. I 0:03:06.240 --> 0:03:07.600 thought I was going to be there for a couple 0:03:07.600 --> 0:03:09.880 of years and go get my m b a UM, 0:03:10.040 --> 0:03:12.360 but I've worked with him for for twenty years now. 0:03:12.800 --> 0:03:15.480 How many people in your graduating class are still working 0:03:15.480 --> 0:03:17.600 at the first gig they got right out of scho 0:03:19.040 --> 0:03:21.120 That's a great question that I don't have the answer to, 0:03:21.280 --> 0:03:23.840 but but I know it's not many. It's not got 0:03:23.919 --> 0:03:26.880 to be very few. So so you started in the 0:03:26.960 --> 0:03:31.360 early two thousands, and you had quite a baptism of fire. UM. 0:03:31.520 --> 0:03:36.720 The flagship value trust funds in UM two thousand and 0:03:36.760 --> 0:03:41.240 eight fell about the Opportunity Trust Fund, UH fell even 0:03:41.360 --> 0:03:46.640 worse about tell us about that experience during the Great 0:03:46.640 --> 0:03:50.600 Financial Crisis, and what did you learn from that? Just 0:03:50.840 --> 0:03:54.440 a couple of years of mayhem. Yeah, that was It 0:03:54.520 --> 0:03:58.320 was definitely a you know, a terrible and painful experience, 0:03:58.400 --> 0:04:01.400 but it was it was one of the us learning 0:04:01.760 --> 0:04:05.000 moments and and uh you know, a chance for improvement 0:04:05.080 --> 0:04:08.640 and growth. And I think that often moments of pain, 0:04:09.120 --> 0:04:12.560 you know, create that opportunity for uh, you know, for growth, 0:04:12.720 --> 0:04:17.200 and so lots of lessons came out of that. I mean, certainly, 0:04:17.200 --> 0:04:21.159 if I reflect back on my career, probably living through that, 0:04:21.800 --> 0:04:24.920 you know, with hindsight, it was one of the most 0:04:24.960 --> 0:04:29.840 instructive and helpful uh you know things you know for 0:04:29.880 --> 0:04:32.240 me to do as an investor, and I got to 0:04:32.279 --> 0:04:35.760 do it, uh, you know, in a shielded way with Bill, 0:04:35.839 --> 0:04:39.520 you know, underneath build wing. But um, you know, we 0:04:39.680 --> 0:04:42.919 came out of that with with so many lessons about 0:04:43.400 --> 0:04:48.520 ways we could you know, improve our approach, and um, 0:04:48.560 --> 0:04:50.920 you know, I remember, you know, one of the benefits 0:04:50.960 --> 0:04:53.560 of working beside Bill is is I have all these 0:04:53.600 --> 0:04:56.880 memories of you know, these pivotal moments and these lessons 0:04:56.920 --> 0:05:00.240 from these pivotal moments. And I remember, you know, getting 0:05:00.240 --> 0:05:02.880 at a restaurant in New York with Bill and a 0:05:02.920 --> 0:05:06.360 couple of other fabulous investors in the fall of two 0:05:06.400 --> 0:05:10.760 thousand eight, and they were, you know, discussing how terrible 0:05:11.320 --> 0:05:14.880 the environment was and the risks. And I remember saying, 0:05:15.480 --> 0:05:17.719 you know, as a as a true value investor, and 0:05:17.760 --> 0:05:19.719 prices are down, and I was saying, but isn't this 0:05:19.800 --> 0:05:23.360 one of the great you know, buying opportunities. I remember 0:05:23.360 --> 0:05:25.800 them looking at me wide ied, you know, sort of 0:05:26.320 --> 0:05:30.200 um surprise, and with hindsight over the very long term, 0:05:30.200 --> 0:05:33.919 it was. But I probably didn't appreciate to the appropriate 0:05:34.120 --> 0:05:37.360 extent the nerror term, you know, survival risks, and and 0:05:37.400 --> 0:05:39.800 Bill has talked a lot about, you know, one of 0:05:39.800 --> 0:05:42.440 the keys to success in this business is being able 0:05:42.480 --> 0:05:44.880 to survive over the long term, because that's really difficult 0:05:44.880 --> 0:05:48.400 to do, to survive, you know, in different environments. But 0:05:48.600 --> 0:05:50.479 you know, there were there were so many lessons that 0:05:50.480 --> 0:05:53.240 came out of that. And one of our favorite quotes 0:05:53.320 --> 0:05:56.880 that we talked about a lot is Sir John Templeton's bowl. 0:05:56.920 --> 0:06:00.160 Markets are born on pessimism, grow on skepticism, which are 0:06:00.160 --> 0:06:03.560 on optimism, and die in euphoria. So really this bull 0:06:03.640 --> 0:06:05.680 market that we're still in today, I think, which is 0:06:05.720 --> 0:06:08.000 one of the strongest bull markets, and you know, you've 0:06:08.000 --> 0:06:12.360 compounded it. The SMP has compounded it close almost nineteen 0:06:12.800 --> 0:06:15.479 per years since then, which is nearly two times the 0:06:15.520 --> 0:06:20.159 longer term average. And uh, the amount of pessimism that 0:06:20.320 --> 0:06:23.720 this bull market was born on was you know, probably 0:06:23.760 --> 0:06:27.719 a once in a lifetime extreme and so um and 0:06:27.800 --> 0:06:29.920 it was it was a terrible environment. But we learned 0:06:29.920 --> 0:06:32.880 a lot of lessons about distinguishing between different types of 0:06:32.920 --> 0:06:34.960 crises and when do you play offense and when do 0:06:35.000 --> 0:06:39.479 you play the friends? And uh, you know, how how 0:06:39.520 --> 0:06:45.440 do you recognized risk signals? A lot of people, um, 0:06:45.480 --> 0:06:48.680 you know, use price to tell them about risks. So 0:06:49.000 --> 0:06:52.320 you know, many great investors I know of in the 0:06:52.400 --> 0:06:56.160 financial crisis put in you know, stop losses um into 0:06:56.160 --> 0:06:58.680 their process after that, which means the price is telling 0:06:58.680 --> 0:07:02.280 you about the risk. But um, you know, when we 0:07:02.320 --> 0:07:06.159 did an exhaustive review of our performance, I think what 0:07:06.320 --> 0:07:08.080 came out of that, you know, after that was after 0:07:08.120 --> 0:07:13.800 the financial crisis, after was really using finances or fundamentals 0:07:14.080 --> 0:07:17.800 more as a risk signal. And so to avoid those 0:07:17.840 --> 0:07:20.520 big losers or perennial losers. And so those can be 0:07:20.560 --> 0:07:23.040 the classic value traps where our company looks cheap, but 0:07:23.080 --> 0:07:26.400 it's not because it keeps you know, UM degrading over 0:07:26.480 --> 0:07:30.520 time or you know, in the financial crisis, many of 0:07:30.560 --> 0:07:34.440 those names looked cheap, but also they weren't because you know, 0:07:34.520 --> 0:07:38.640 the pressures you know, built and the what appeared to 0:07:38.680 --> 0:07:42.320 be the earnings power wasn't. There was extremely delayed. And 0:07:42.400 --> 0:07:45.120 so you know, that was you know, a way that 0:07:45.160 --> 0:07:49.240 we changed and adapted coming out of the financial crisis 0:07:49.280 --> 0:07:52.679 to be more sensitive to UM and change our reaction 0:07:52.720 --> 0:07:56.200 function a little bit to uh, you know, sell more 0:07:56.240 --> 0:08:00.480 if the fundamentals keep disappointing us rather than oh that's 0:08:00.480 --> 0:08:03.000 now more than price then and will buy more. Well, 0:08:03.040 --> 0:08:05.720 clearly you learn the lessons because when I look at 0:08:05.760 --> 0:08:09.960 the Opportunity Trust Fund that you co manage with Bill 0:08:10.000 --> 0:08:14.040 over the past five years or so, uh, it's averaged 0:08:14.240 --> 0:08:19.960 about percent a year, and that's outperformed. It's it's peers. 0:08:20.000 --> 0:08:23.440 So that's a that's pretty impressive, especially when you consider, 0:08:23.880 --> 0:08:26.160 you know, it's a nearly three billion dollar fund. This 0:08:26.240 --> 0:08:30.200 is not a microcap fund. It's a decent size. To 0:08:30.440 --> 0:08:36.000 what do you credit uh that run about performance? Yeah, 0:08:36.000 --> 0:08:38.480 and you know, I think that that's a great question. 0:08:38.520 --> 0:08:41.800 I mean, I think one, I fully believe that we 0:08:41.880 --> 0:08:45.320 have a process that's you know, demonstrated results for now, 0:08:45.440 --> 0:08:47.839 you know, for Bill for you know, over forty years, 0:08:47.840 --> 0:08:50.720 and I've worked with him for twenty, so I have 0:08:50.800 --> 0:08:53.920 a lot of confidence in our approach. But I also 0:08:53.960 --> 0:08:57.880 think that, um, you know, the markets go through these 0:08:58.040 --> 0:09:01.719 broad you know cycles, these longer term cycles. So when 0:09:01.720 --> 0:09:03.800 I got into the business, you know, before I got 0:09:03.840 --> 0:09:05.400 into business, when I was in college, we had this 0:09:05.440 --> 0:09:09.040 big text bubble and valuations got extreme. And then that 0:09:09.120 --> 0:09:11.680 first and I I joined Bill in two thousands two 0:09:12.160 --> 0:09:14.640 nearly at the lows of that tech bubble. Then we 0:09:14.679 --> 0:09:17.600 had this big bull market that was driven by global 0:09:17.640 --> 0:09:21.400 cyclicals and the emergence of China, um, you know, and 0:09:21.440 --> 0:09:23.680 the growth there. And then we had the housing bubble 0:09:23.679 --> 0:09:26.880 in the financial crisis, and then we had, you know, 0:09:26.920 --> 0:09:31.720 as I mentioned, this extreme period of you know, pessimism 0:09:31.840 --> 0:09:35.080 and what I think of is post traumatic stress disorder, 0:09:35.320 --> 0:09:38.400 you know, that resulted from the severity of the losses 0:09:38.400 --> 0:09:42.120 in the financial crisis. And in that environment, you know, 0:09:42.200 --> 0:09:48.120 post the financial crisis, you know, investors broadly really valued, um, 0:09:48.160 --> 0:09:54.040 not losing money over making money, so they prioritized minimizing 0:09:54.120 --> 0:10:01.360 volatility over earning returns. So that's the perfect environment earn returns, 0:10:01.400 --> 0:10:04.080 you know, to to behave uh, you know, in the 0:10:04.120 --> 0:10:06.560 opposite way. And and on the other hand, when people 0:10:06.600 --> 0:10:09.440 are chasing for returns and there's a lot of euphoria, 0:10:09.520 --> 0:10:12.800 that's when it makes sense to to you know, to 0:10:12.960 --> 0:10:18.280 really prioritize lower volatility. So I think, you know, coming 0:10:18.320 --> 0:10:22.600 off the financial crisis, I think we have capitalized on 0:10:23.200 --> 0:10:28.640 opportunities when when we believed, uh, there was high perceived risk, 0:10:29.160 --> 0:10:33.839 but actual risk, real risk was much lower. And um, 0:10:33.880 --> 0:10:36.319 I think that that's been a very profitable strategy. And 0:10:36.360 --> 0:10:39.840 a good example of that is you know, home builders 0:10:39.960 --> 0:10:43.440 and banks and so you know, those companies obviously were 0:10:43.520 --> 0:10:48.240 hit the hardest and hurt the most in the financial crisis. Um, 0:10:48.280 --> 0:10:51.560 but they made some of the biggest fundamental changes to 0:10:51.720 --> 0:10:54.160 their balance sheets and how they operate. Coming out of 0:10:54.160 --> 0:10:57.280 the financial crisis, for the fundamental picture was really much different. 0:10:57.920 --> 0:11:00.720 And uh, you know in two thousand oven at the 0:11:00.840 --> 0:11:03.920 end of that year, Um, you know, those names all 0:11:03.960 --> 0:11:06.480 traded down. Uh. You know, there's a lot of fear 0:11:06.520 --> 0:11:10.360 about Europe breaking up and the year Zone debt crisis. 0:11:10.960 --> 0:11:13.440 And at the same time, the fundamentals for the home 0:11:13.440 --> 0:11:16.640 builders were you know, improving for the very first time, 0:11:16.880 --> 0:11:19.480 and so it was a stark, stark disconnect and and 0:11:19.520 --> 0:11:22.760 they've all, you know, outperformed the market nicely over the 0:11:22.800 --> 0:11:27.280 past decade, even though it's been a challenging environment for 0:11:27.280 --> 0:11:32.040 for value stocks or for UM stocks that weren't high growth. 0:11:32.679 --> 0:11:34.880 So I think that that's helped us. And I think 0:11:35.160 --> 0:11:38.640 remaining focused on the long term and the long term opportunities. 0:11:38.679 --> 0:11:42.200 We talk a lot about time arbitrage and UM the 0:11:42.280 --> 0:11:46.440 ability to stay focused on the long term. And you know, 0:11:46.640 --> 0:11:49.440 we tend to hold names at least three to five years, 0:11:49.480 --> 0:11:52.040 but some names will own you know, Amazon we've owned 0:11:52.040 --> 0:11:55.199 for decades. So when when you say time arbitrage, are 0:11:55.240 --> 0:11:59.319 you referring to some people with a shorter time horizon 0:12:00.040 --> 0:12:03.400 giving into volatility and selling and you using the volatilities 0:12:03.400 --> 0:12:07.200 and opportunity to buy the dip. Yes, I think that's 0:12:07.200 --> 0:12:10.280 exactly right. So I think, UM, so again, if we 0:12:10.440 --> 0:12:13.920 if we are focused on, you know, what is the 0:12:13.960 --> 0:12:17.200 business worth and what does it look like in five years, 0:12:17.720 --> 0:12:21.200 then a lot of times the near term, Uh, there's 0:12:21.200 --> 0:12:23.160 a lot of noise in the near terms. That matters 0:12:23.200 --> 0:12:25.960 a lot less. If you can remain focused on that 0:12:26.040 --> 0:12:28.480 and I think at the aggregate market level, you can 0:12:28.679 --> 0:12:32.200 think about that really well. I mean, people react to 0:12:32.559 --> 0:12:35.480 you know, five percent pullbacks are very common. Ten percent 0:12:35.520 --> 0:12:38.280 pullbacks are pretty common. A lot of people sell on 0:12:38.320 --> 0:12:41.480 those moves, which, really, if you can remain long term, 0:12:41.600 --> 0:12:43.360 that doesn't make a lot of sense. I think the 0:12:43.400 --> 0:12:47.160 markets you know, up a little over half of all days, 0:12:47.559 --> 0:12:50.360 it's up seventy five percent a year of years, one 0:12:50.440 --> 0:12:53.319 year period it's up you know, eighty seven and a 0:12:53.320 --> 0:12:58.000 half percent of five year periods, of ten year periods, 0:12:58.000 --> 0:13:00.920 and a percent of twenty year periods. So why would 0:13:00.920 --> 0:13:04.760 you react to these normal market gyrations? Again, if you 0:13:04.880 --> 0:13:07.360 have a long term time horizon and you can remain 0:13:07.640 --> 0:13:10.120 you know, focused on that, your odds of making money, 0:13:10.679 --> 0:13:13.040 you know, and staying in the market are very high. 0:13:13.120 --> 0:13:15.600 So we we try to think about, you know, as 0:13:15.679 --> 0:13:18.800 we think about risk like real impairments to capital, or 0:13:18.800 --> 0:13:22.680 as I think about opportunities. Now, maybe an example is UM, 0:13:22.720 --> 0:13:26.320 you know, I think there's you know, great value and 0:13:26.360 --> 0:13:29.880 a great opportunity and um some of the airlines and 0:13:30.200 --> 0:13:33.680 we own Norwegian Cruise Line, and so when we're thinking 0:13:33.720 --> 0:13:36.559 about what does that business model look like and what's 0:13:36.559 --> 0:13:39.280 this earning power, with this cash generation, with his growth 0:13:39.320 --> 0:13:44.560 potential you know, over five years. Then shorter term moves, 0:13:44.559 --> 0:13:48.320 whether it's Amy Cron popping up and cancelations in the 0:13:48.360 --> 0:13:50.960 near terms, they just matter a lot less unless you 0:13:51.040 --> 0:13:54.240 believe that they're going to be continuing for you know, 0:13:54.280 --> 0:13:58.800 a much longer duration, really really interesting. And you're taking 0:13:58.880 --> 0:14:04.200 over from Bill the full management of the Opportunity Trust fund, 0:14:04.280 --> 0:14:08.280 is that right, That's correct. We just announced a succession 0:14:08.679 --> 0:14:14.120 and transition plans, so nothing is changing in the short term. 0:14:14.120 --> 0:14:18.559 But I will assume responsibility for management of the Opportunity Trust, 0:14:19.040 --> 0:14:20.560 you know, once Bill goes off at the end of 0:14:20.560 --> 0:14:23.600 the year, and you know, I will assume management of 0:14:23.680 --> 0:14:26.800 the team and UM. You know that will be done 0:14:26.800 --> 0:14:30.040 through Patient Capital, which you mentioned that I started in early. 0:14:30.920 --> 0:14:35.520 Bill is a minority UM owner and investor and Patient. 0:14:35.800 --> 0:14:38.800 He's you know, a great mentor of mine, and I 0:14:38.920 --> 0:14:41.240 joke with him that, you know, I've worked with him 0:14:41.240 --> 0:14:43.880 for twenty years now and I intend to work with 0:14:43.960 --> 0:14:46.720 him for twenty more. And so I Bill and I 0:14:46.720 --> 0:14:49.480 will keep I will keep talking to Bill about markets 0:14:49.520 --> 0:14:52.040 and about companies, you know, for as long as I can. 0:14:52.200 --> 0:14:56.800 But the formal responsibilities and structure will change as we 0:14:56.840 --> 0:15:01.000 execute this. And could you explain the relationship between Patient 0:15:01.120 --> 0:15:05.080 Capital and Miller Value. I know Bill owns a piece 0:15:05.120 --> 0:15:10.240 of Patient Capital, and Patient Capital does work for Miller Value, 0:15:10.280 --> 0:15:18.160 but to the outside world it's a little complex and confusing. Yes. So, um, So, first, 0:15:18.320 --> 0:15:20.120 you know, I've worked with Bill and we were at 0:15:20.160 --> 0:15:23.080 leg Mason and then split off from the rest of 0:15:23.080 --> 0:15:28.200 our group and Miller Value Partners became independent, and so 0:15:28.320 --> 0:15:31.280 I'm still an employee and a co manager with Bill 0:15:31.640 --> 0:15:37.880 at Miller Value Partners. Um. I launched Patient in and 0:15:38.040 --> 0:15:41.400 the drivers for that were you know, there were a 0:15:41.440 --> 0:15:46.840 few one Um, when Bill you know, launched Miller Value 0:15:46.920 --> 0:15:49.480 or we split off, he would he would always describe 0:15:49.480 --> 0:15:52.280 it as a family office and he would welcome like 0:15:52.440 --> 0:15:55.480 minded investors. He'd been at leg Mason for many years, 0:15:55.840 --> 0:15:58.520 built a big business, you know, managed a big team. 0:15:58.520 --> 0:16:01.760 He wasn't interested, um in doing that anymore. You know, 0:16:01.840 --> 0:16:05.920 I'm younger. I wanted to prove myself. I was interested 0:16:05.960 --> 0:16:11.080 in in building a business and growing something. I also, 0:16:11.160 --> 0:16:14.720 you know, so we had a retail business primarily. You know, 0:16:14.840 --> 0:16:17.280 all of our assets were in you know, the mutual 0:16:17.280 --> 0:16:20.520 fund and our overseas, uh you know, fun, and we 0:16:20.520 --> 0:16:23.200 didn't really have an institutional business. We did back in 0:16:23.280 --> 0:16:25.840 the leg Mason days, but we we hadn't. And again, 0:16:25.840 --> 0:16:27.720 Bill was an interest in growing a business. So I 0:16:27.840 --> 0:16:31.080 saw an opportunity, um, you know, to build a business. 0:16:31.120 --> 0:16:34.280 And there was also you know demand for women and 0:16:34.360 --> 0:16:40.280 minority um owned uh you know, investment opportunities. So I 0:16:40.320 --> 0:16:43.600 saw that opportunity as well. I was also interested in 0:16:43.720 --> 0:16:48.760 growing the team and um and again you know, to me, 0:16:48.960 --> 0:16:53.120 the mission is extremely important. And I love this idea 0:16:53.240 --> 0:16:56.600 of you know, the partners first and clients first approach. 0:16:56.680 --> 0:16:59.800 And Charlie Ellis talked a lot about you know, per 0:17:00.200 --> 0:17:04.879 distinguishing between the profession versus the business and how you know, 0:17:04.960 --> 0:17:09.439 investment investment managers should operate more as a profession in 0:17:09.440 --> 0:17:11.679 other words, doing what's best for the client, rather than 0:17:11.720 --> 0:17:13.919 as a business doing what's best for the business. So 0:17:14.000 --> 0:17:16.960 the idea of building a business around that. And also 0:17:17.160 --> 0:17:20.960 you know the importance of role models and and um, 0:17:21.000 --> 0:17:24.640 you know, I'd love to help provide more women role 0:17:24.680 --> 0:17:27.440 models for young girls out there. I have two daughters. 0:17:27.480 --> 0:17:30.880 You know, the more people they see like them, uh, 0:17:30.920 --> 0:17:32.800 you know, doing a job I think the more they 0:17:32.800 --> 0:17:35.880 can see themselves doing it, them and others like them. 0:17:36.160 --> 0:17:38.920 And so I set this up, and you know, I 0:17:39.080 --> 0:17:41.960 hired a few employees. We were co operating, We have 0:17:42.080 --> 0:17:46.840 co operated, so really it's the same team at both 0:17:47.000 --> 0:17:51.200 and on the portfolio management side, I view us as 0:17:51.760 --> 0:17:55.600 operating as one team, one philosophy, one process, and so 0:17:55.760 --> 0:17:59.680 we're just doing the work of, um, you know, finding 0:18:00.280 --> 0:18:03.520 investment opportunities that we think are really attractive and then 0:18:04.240 --> 0:18:07.080 um if if if I think they're attractive, they going patient. 0:18:07.160 --> 0:18:09.080 And then Bill and I are having the conversation on 0:18:09.080 --> 0:18:12.000 the opportunity side, and so there's a co decision maker 0:18:12.440 --> 0:18:15.840 making function there. So really it's I see it as 0:18:15.880 --> 0:18:19.240 a streamline process of you know, all the same work, 0:18:19.680 --> 0:18:22.840 you know, and then will distinguish at the decision making 0:18:22.920 --> 0:18:25.840 level between where things go. But this also created a 0:18:25.840 --> 0:18:30.000 structure that allowed the transition to happen quite smoothly, because 0:18:30.440 --> 0:18:33.159 you know, we can just assume again we have to 0:18:33.240 --> 0:18:35.359 go through the process and get the approvals, but we 0:18:35.400 --> 0:18:39.600 can assume and transfer over uh you know, the fun 0:18:39.720 --> 0:18:42.399 contracts and the employees and and really do it in 0:18:42.400 --> 0:18:46.840 a seamless stable way. So let's talk a little bit 0:18:46.880 --> 0:18:51.199 about value investing the way Bill Miller, and I'm going 0:18:51.240 --> 0:18:55.720 to assume you by extension, look at value. Isn't the 0:18:55.880 --> 0:19:01.880 traditional Benjamin Graham classic value? Is that a fair statement? 0:19:01.920 --> 0:19:04.920 And if it is, explain why? Well, I would say, 0:19:04.920 --> 0:19:07.480 we still have a you know, a lot in common 0:19:07.600 --> 0:19:12.520 with uh, you know Ben Graham's classic value model. I mean, 0:19:12.560 --> 0:19:15.160 I had The Intelligent Investor is one of my favorite books. 0:19:15.160 --> 0:19:16.960 I have a doggyeared I have it sitting on my 0:19:17.280 --> 0:19:19.600 bookshelf right next to my desk. I refer to it. 0:19:20.080 --> 0:19:23.639 And so there's many things about that classic approach that 0:19:23.720 --> 0:19:27.040 I think are similar. Um. So, you know, he talks 0:19:27.080 --> 0:19:30.840 a lot about distinguishing between price and value, so prices, 0:19:30.880 --> 0:19:34.000 what you pay, value is what you get, um, making 0:19:34.000 --> 0:19:39.200 that distinction, doing you know, careful company analysis to understand, 0:19:39.800 --> 0:19:42.560 you know, what the value of the businesses. He talked 0:19:42.600 --> 0:19:47.280 a lot about market behavior and how fluctuating prices to 0:19:47.320 --> 0:19:51.000 create opportunities for investors to take advantage of, you know, 0:19:51.080 --> 0:19:55.920 the behavioral extremes of greed and fear that the market, uh, 0:19:55.920 --> 0:19:59.920 you know undergoes. And so there's a lot that's very 0:20:00.119 --> 0:20:03.199 very similar. I would say, you know, really what's different. 0:20:03.200 --> 0:20:06.359 And I would characterize it as an evolution. And it 0:20:06.400 --> 0:20:09.600 didn't really start with us, because you know Warren Buffett, 0:20:09.600 --> 0:20:13.200 who's a student of Ben Graham Um. Again, he used 0:20:13.200 --> 0:20:16.600 to do the cigar but sort of investing, and then 0:20:17.000 --> 0:20:20.320 you know, he really evolved his approach and talks about 0:20:20.840 --> 0:20:22.840 you know, he'd met rather buy a wonderful business at 0:20:22.840 --> 0:20:26.399 a fair price than a fair business at a wonderful price. 0:20:26.680 --> 0:20:29.960 And so the idea of extending out that time horizon 0:20:30.000 --> 0:20:34.280 and compounding again, you know, I think that's directionally the stuff. 0:20:34.359 --> 0:20:38.760 And then maybe Bill certainly was criticized in the late 0:20:38.840 --> 0:20:42.160 nineties early two thousand's, I don't know when it stopped, 0:20:42.200 --> 0:20:45.040 but for not being a true value investor, for investing 0:20:45.040 --> 0:20:48.760 in names like A. O. L. And Dell and Amazon, 0:20:49.280 --> 0:20:53.720 these names that appeared, you know, very high multiple. But 0:20:53.800 --> 0:20:56.359 when I joined Bill, I think one of the things 0:20:56.400 --> 0:20:59.760 that struck me the most because again, when when I 0:21:00.000 --> 0:21:04.399 reviewed UM, we bonded over very classic value. That was 0:21:04.480 --> 0:21:09.520 my natural orientation, and so we shared that. But what 0:21:09.640 --> 0:21:12.320 I didn't appreciate much and and you know I remember 0:21:12.359 --> 0:21:15.840 Bill talking about listen, you know, during this time when 0:21:15.880 --> 0:21:18.879 he was criticized, he was like, no one knows what 0:21:19.000 --> 0:21:21.400 the best values in the market are today. We just 0:21:21.480 --> 0:21:23.439 don't know because it depends on the future, and we 0:21:23.440 --> 0:21:25.800 don't know the future. But we do know, and we 0:21:25.840 --> 0:21:29.280 can look back over a long term, over say ten years, 0:21:29.359 --> 0:21:31.680 and say, what were the best values ten years ago, 0:21:31.720 --> 0:21:33.840 because you can see what has done the best, and 0:21:33.880 --> 0:21:36.399 so we actually know what that is. And when we 0:21:36.440 --> 0:21:39.240 look at that, the best values in the market are 0:21:39.320 --> 0:21:44.840 always you know those names that can you know drive, uh, 0:21:44.880 --> 0:21:48.280 you know, profitable growth and free cash flow growth and 0:21:48.680 --> 0:21:52.080 business value growth the best. So they tend to be 0:21:52.480 --> 0:21:55.280 you know, in the in the short term, they appear 0:21:55.359 --> 0:21:59.760 to be higher you know, multiple businesses because um, you know, 0:21:59.800 --> 0:22:02.920 they're prospects, are you know, the most attractive? And so 0:22:03.000 --> 0:22:07.359 he said, why would you engineer a process that explicitly 0:22:07.600 --> 0:22:11.479 excludes what you know are the best values in the market. 0:22:11.840 --> 0:22:14.840 And that doesn't make a lot of sense to me. Uh, 0:22:14.880 --> 0:22:17.760 That's what he said, and I agree with that wholeheartedly. 0:22:18.000 --> 0:22:22.040 And so what we attempt to do is, um, be 0:22:22.160 --> 0:22:25.760 open minded to looking for what might be the best 0:22:25.800 --> 0:22:28.840 opportunities over you know, truly a long term basis. And 0:22:28.880 --> 0:22:32.320 I think Ben Graham would talk about those as more speculative. 0:22:32.680 --> 0:22:36.439 And again, if if those beginning expectations are higher and 0:22:36.440 --> 0:22:41.439 you're more dependent on truly long term fundamentals UM, you know, 0:22:41.480 --> 0:22:43.480 there was a higher perceiver risk there, and there's probably 0:22:43.520 --> 0:22:46.159 there is a higher real risk there too, I would agree, 0:22:46.200 --> 0:22:49.320 because the percentage of companies that actually can go on 0:22:49.359 --> 0:22:52.159 to execute that UM is low, and the number of 0:22:52.200 --> 0:22:55.440 companies who are priced to you know, achieve those sort 0:22:55.480 --> 0:22:58.320 of outcomes are much higher than the companies that actually do. 0:22:58.880 --> 0:23:01.760 But you know, Will has always been open minded. We 0:23:01.840 --> 0:23:06.479 are open minded about trying to identify and invest, you know, 0:23:06.560 --> 0:23:10.160 over the long term, and opportunities like that really interesting. 0:23:10.320 --> 0:23:14.800 So I want to delve a little more into how 0:23:14.880 --> 0:23:21.119 you guys define value because you mentioned Amazon before. Most 0:23:21.520 --> 0:23:25.720 investors think of Amazon as a growth stock, in part 0:23:26.000 --> 0:23:29.560 because it's grown so much and in part because it's 0:23:29.600 --> 0:23:36.119 got such a technology um aspect to it, although arguably 0:23:36.760 --> 0:23:39.840 the bulk of their revenues come from just being a retailer, 0:23:39.920 --> 0:23:44.160 albeit one that has a rather substantial online presence. How 0:23:44.200 --> 0:23:48.399 do you define Amazon as a value stock over the 0:23:48.400 --> 0:23:51.840 past twenty years? Well, I guess back to the story. 0:23:51.880 --> 0:23:54.239 What we know is Amazon, What was one of the 0:23:54.240 --> 0:23:58.320 best you know, most undervalued stocks twenty years ago, because 0:23:58.320 --> 0:24:00.919 we can look at how it's done since. So it 0:24:00.960 --> 0:24:04.600 didn't appear that way on the near term fundamentals at 0:24:04.600 --> 0:24:07.640 the time. You know, near term I guess metrics, accounting 0:24:07.640 --> 0:24:10.359 metrics at the time, but we know with hindsight that 0:24:10.480 --> 0:24:13.720 it was. And so when we talk about how we 0:24:14.080 --> 0:24:16.840 define value or what we see as value, you know, 0:24:16.920 --> 0:24:19.960 we use the standard textbook definition. So the value of 0:24:19.960 --> 0:24:22.919 any investment is the present value of the future free cashloads. 0:24:23.280 --> 0:24:25.880 And no one really disagrees with it. It's about how 0:24:25.920 --> 0:24:30.159 do you identify or calculate those and we do scenario analysis. 0:24:30.200 --> 0:24:33.439 But you know, I think many times, you know, the 0:24:33.520 --> 0:24:37.239 simplification of dividing the world between growth and value it is, 0:24:37.600 --> 0:24:40.840 you know, it is an oversimplification. And you know, Buffett 0:24:40.880 --> 0:24:45.040 talks about growth being an input in the value equation, 0:24:45.160 --> 0:24:50.040 and that's absolutely entirely true because it is a you know, again, 0:24:50.080 --> 0:24:52.240 if a company can earn above its cost of capital, 0:24:52.800 --> 0:24:55.920 you know, growth will be the most important value driver 0:24:56.480 --> 0:25:01.800 and um and so again we Amazon still may look 0:25:02.119 --> 0:25:06.760 expensive on current metrics, but we're always again we're focused 0:25:06.800 --> 0:25:09.560 on the long term for our companies. We're doing at 0:25:09.600 --> 0:25:13.000 least ten year discount of cash hole models. And Amazon 0:25:13.119 --> 0:25:15.879 has we believe, you know, some of the best, if 0:25:15.920 --> 0:25:18.680 not the best, competitive advantages in the market. It still 0:25:18.680 --> 0:25:21.320 has great growth potential. Uh you know, it has a 0:25:21.400 --> 0:25:24.440 number of different has the retail business, as logistics business, 0:25:24.520 --> 0:25:28.520 has AWS, it's it's investing in new areas like healthcare. 0:25:29.000 --> 0:25:31.840 And so when we look at it, we think, you know, 0:25:31.880 --> 0:25:35.080 if you just even if you just mark to market there, 0:25:35.640 --> 0:25:40.760 you know cloud business, the AWS and their advertising business, 0:25:40.800 --> 0:25:44.280 you're getting the retail business for you know, pretty close 0:25:44.280 --> 0:25:47.640 to free right now. And again, they've just gone through 0:25:47.640 --> 0:25:52.359 an investment cycle. Um and Amazon typically doesn't hasn't historically 0:25:52.400 --> 0:25:54.439 traded well when it's gone through one of those, but 0:25:54.560 --> 0:25:57.400 coming out the other side, it's normally done much better 0:25:57.440 --> 0:25:59.800 and it's about to drive significant pre cash flow. But 0:26:00.000 --> 0:26:04.840 we're always trying to think carefully about the business and uh, 0:26:04.880 --> 0:26:08.159 you know, it's ability to drive that long term pre 0:26:08.320 --> 0:26:10.920 cash flow and how that compares to what's embedded in 0:26:10.960 --> 0:26:14.280 the current stock price. So here's a question I always 0:26:14.359 --> 0:26:17.440 wrestle with and I speak to my c f A buddies, 0:26:17.760 --> 0:26:21.120 and I'm never satisfied with the answers I get when 0:26:21.200 --> 0:26:25.240 you have a company like Amazon enter Jeff Bezos retires, 0:26:25.840 --> 0:26:29.600 or Apple and they lose Steve Jobs, how do you 0:26:29.880 --> 0:26:33.560 figure that into your calculus as to what the company 0:26:33.640 --> 0:26:37.240 looks like going forward. It's pretty clear both of those 0:26:37.359 --> 0:26:41.359 former c e o s were enormously influential on the 0:26:41.400 --> 0:26:45.679 success of the companies. How do you calculate the loss 0:26:45.720 --> 0:26:50.200 of such significant executives. Yeah, no, that's a great question. 0:26:50.240 --> 0:26:53.440 I'll probably disappoint you with my own my answer too. So, 0:26:53.960 --> 0:26:56.960 um so, I think probably the reason you're disappointed is 0:26:57.000 --> 0:26:59.040 I don't think it's easy to calculate, you know, the 0:26:59.040 --> 0:27:02.919 impact of that. Uh, it's not easy to quantify. I 0:27:02.960 --> 0:27:06.520 think in both those cases, you know, Steve Jobs and 0:27:06.640 --> 0:27:11.040 Jeff Bezos, we know that they were critical to driving 0:27:11.560 --> 0:27:15.479 you know, the innovation that those companies produced. Um. Apple 0:27:15.520 --> 0:27:19.320 has gone on to do extraordinarily well, uh, you know 0:27:19.600 --> 0:27:22.439 post Steve Jobs, which was questioned, you know, for a 0:27:22.440 --> 0:27:25.480 long time after the death, despite the fact that many 0:27:25.520 --> 0:27:29.160 would argue they haven't come out with, you know, any new, 0:27:29.240 --> 0:27:32.480 big innovation. They've driven it all on the existing base 0:27:32.600 --> 0:27:35.679 of business. And so again, I think you can also 0:27:35.760 --> 0:27:38.480 think through an Amazon again, I think we like to 0:27:38.520 --> 0:27:40.600 think about and I know you've had Michael Mogison on here, 0:27:40.600 --> 0:27:43.320 and I worked with Michael, and he's wonderful, and you know, 0:27:43.440 --> 0:27:45.960 he talked a lot about and just came out with 0:27:46.040 --> 0:27:49.359 his expectations investing that his new version of the book 0:27:49.760 --> 0:27:54.160 and and our approach, you know, is created from his process. 0:27:54.240 --> 0:27:56.840 And so we think a lot about what is embedded 0:27:56.840 --> 0:27:58.920 in the current stock price. And so sometimes it makes 0:27:58.920 --> 0:28:01.240 it easier to think through issues like that because if 0:28:01.240 --> 0:28:04.480 we believe that Amazon, you're not even paying for the 0:28:04.520 --> 0:28:07.320 retail business at the current crisis, then you're not paying 0:28:07.359 --> 0:28:12.000 for any of the you know, later innovation that maybe 0:28:12.040 --> 0:28:15.159 would be more at risk without Jeff. Again, I know 0:28:15.280 --> 0:28:18.640 that Amazon believes, and Jeff believes, and the folks there 0:28:18.680 --> 0:28:21.520 believe that what makes one of the things that makes 0:28:21.560 --> 0:28:26.400 Amazon special is they've created a machine that can produce 0:28:26.520 --> 0:28:31.320 innovations and upscale and so Jeff really was very explicit 0:28:31.359 --> 0:28:36.440 about creating processes and structures to do that. Now it 0:28:36.640 --> 0:28:39.440 will have to see whether they pull that off, you know, 0:28:39.760 --> 0:28:42.640 if he's less involved, and that's that's no one knows 0:28:42.640 --> 0:28:45.240 the future. We don't know, but we don't think we 0:28:45.280 --> 0:28:48.000 don't think that needs to happen, uh, you know, for 0:28:48.040 --> 0:28:50.880 the stock to still be attractive, given the total addressable 0:28:50.920 --> 0:28:54.560 markets of their proven businesses where they're already you know, 0:28:54.760 --> 0:28:59.400 very far along and um and so again, it is 0:28:59.400 --> 0:29:02.880 a difficult questions to answer. I think I don't necessarily 0:29:02.920 --> 0:29:06.400 think you always need to answer it. So let me 0:29:06.520 --> 0:29:10.120 ask you, um a different question that might be more 0:29:10.160 --> 0:29:14.280 in your sweet spot, which is, you know, it appears 0:29:14.680 --> 0:29:19.320 to someone like me that Bill Miller and yourself have 0:29:19.560 --> 0:29:24.480 a somewhat different approach to value investing that puts a 0:29:24.600 --> 0:29:29.800 heavier weight on future growth prospects. But it also appears 0:29:29.840 --> 0:29:34.320 that lots and lots of quote unquote traditional value investors 0:29:35.000 --> 0:29:39.040 are still approaching that methodology the way it was taught 0:29:39.040 --> 0:29:42.200 in the nineteen fifties. Why do you think so many 0:29:42.240 --> 0:29:47.320 people are stuck with you know, the classic version of this, 0:29:47.600 --> 0:29:53.080 where perhaps they're missing companies like Amazon for you guys, 0:29:53.200 --> 0:29:56.080 or you mentioned Warren Buffett, one of the biggest investors 0:29:56.080 --> 0:29:59.640 in Apple over the past couple of decades. Why have 0:29:59.760 --> 0:30:03.680 p people been so slow to adjust? Yeah, that's a 0:30:03.680 --> 0:30:07.120 great question. I mean, I think that most investors that 0:30:07.160 --> 0:30:10.800 have survived and exist today have evolved and now you 0:30:10.920 --> 0:30:13.400 see in value portfolios a lot of these names like 0:30:13.480 --> 0:30:17.600 Google and Facebook and Amazon. So what you don't see 0:30:17.600 --> 0:30:20.120 and where we might be a little bit different is 0:30:20.520 --> 0:30:23.520 again if you go you know, down the spectrum of 0:30:24.240 --> 0:30:28.920 companies earlier in their life cycle, where it's less proven 0:30:29.440 --> 0:30:32.160 what the business model is or what the you know, 0:30:32.280 --> 0:30:35.560 earnings potential can be. We are willing to look at 0:30:36.120 --> 0:30:39.000 names like that, and I think you know, many value 0:30:39.040 --> 0:30:43.320 investors aren't comfortable with that. UM I think you know 0:30:43.400 --> 0:30:46.560 Warren Buffett for a long time. You know, he talked 0:30:46.600 --> 0:30:49.440 a lot about your circle of competence and making sure 0:30:49.480 --> 0:30:52.720 you define what your circle of competence is, and and 0:30:52.840 --> 0:30:56.440 he didn't believe that he you know, technology was within 0:30:56.600 --> 0:31:00.400 his circle of competence. I think one thing that allowed 0:31:00.440 --> 0:31:04.080 Bill to make investments in there's technology companies in the 0:31:04.160 --> 0:31:07.600 late nineties was his relationship with the Santa Fe Institute, 0:31:07.720 --> 0:31:11.000 which he talks a lot about and they do, um, 0:31:11.040 --> 0:31:15.480 you know, research on complex adoptive systems and you know, 0:31:15.600 --> 0:31:19.080 broad cross sectional research and the work of Brian Arthur 0:31:19.840 --> 0:31:23.160 who has studied complexity economics and he wrote, you know, 0:31:23.280 --> 0:31:27.480 increasing returns and past dependence and you know he wrote 0:31:27.480 --> 0:31:30.480 the book on that, and he allowed Bill to realize, 0:31:31.000 --> 0:31:35.440 you know, early in the nineties that while technologies changed quickly, 0:31:35.520 --> 0:31:38.840 and that was always buffetts concern is these companies can 0:31:38.880 --> 0:31:41.320 earn you know, great returns for a very short term, 0:31:41.960 --> 0:31:44.600 uh for the very short term, but then they're disrupted 0:31:44.760 --> 0:31:49.080 because you know, some new technology comes along. And Brian's 0:31:49.120 --> 0:31:54.280 work showed that while the technologies change um quickly, technology 0:31:54.320 --> 0:31:58.040 market share actually doesn't. And so, you know, the biggest 0:31:58.080 --> 0:32:02.440 monopolies in history have have been based on technology, whether 0:32:02.520 --> 0:32:05.600 it's you know, A T and T or Microsoft. And 0:32:05.680 --> 0:32:09.840 now there's all the um, you know, consternation and hearings 0:32:09.880 --> 0:32:13.120 on the current big technology companies. So there is lock 0:32:13.200 --> 0:32:16.160 in and past dependence that makes uh, you know, the 0:32:16.200 --> 0:32:19.360 stability of those earnings much better than it would appear 0:32:19.360 --> 0:32:23.120 if you're looking at you know, the individual products products, 0:32:23.160 --> 0:32:25.600 and I think the reason you know, people aren't more 0:32:25.600 --> 0:32:30.400 comfortable going you know, for the earlier stage companies um 0:32:30.400 --> 0:32:34.120 and then Graham talks a lot about you know, companies 0:32:34.160 --> 0:32:38.640 that are uh you know, loved or where the valuation 0:32:38.920 --> 0:32:43.080 just depends on uncertain prospects far in the future, them 0:32:43.160 --> 0:32:46.400 being much more speculative and we know that you know, 0:32:46.880 --> 0:32:49.400 growth is growth rate are not linear, so there can 0:32:49.440 --> 0:32:52.320 be higher volatility in those names. And we also know 0:32:52.440 --> 0:32:56.600 that um again, the companies that are able to be 0:32:56.680 --> 0:33:00.440 successful and drive that growth drive the market returns. UM. 0:33:00.480 --> 0:33:03.800 So it's you know, there's some work out of you know, 0:33:03.840 --> 0:33:08.760 the air Arizona State professor UM who showed that the 0:33:08.920 --> 0:33:12.080 entire wealth creation since I think the nineteen twenties has 0:33:12.160 --> 0:33:15.240 depended has been driven by four percent of companies. So 0:33:15.680 --> 0:33:18.920 it's really a very narrow set that creates all of 0:33:19.000 --> 0:33:21.800 the wealth. And what that means is most companies that 0:33:22.040 --> 0:33:24.760 aren't able to do that and um so there are 0:33:24.760 --> 0:33:27.760 many companies that are priced to do that and don't, 0:33:28.080 --> 0:33:30.960 and so there can be higher volatility. Amazon, you know, 0:33:31.200 --> 0:33:34.400 lost of its value after the tech bubble burst, Bill 0:33:34.440 --> 0:33:37.120 bought it all the way down. UM. So even if 0:33:37.160 --> 0:33:41.560 you could identify it, identify an opportunity, having the stomach 0:33:41.600 --> 0:33:44.640 to hold it and to add to it um and 0:33:44.640 --> 0:33:48.040 and and you know, retain it in the portfolio for 0:33:48.520 --> 0:33:51.640 as long as it takes to you know, capture the 0:33:51.680 --> 0:33:54.640 returns is pretty difficult and it's pretty hard to do. 0:33:54.880 --> 0:33:57.680 And so I think that that's why more people don't 0:33:57.680 --> 0:34:01.720 do it huh really quite fast and they So we 0:34:01.720 --> 0:34:04.920 were talking earlier about how you don't really fall neatly 0:34:05.120 --> 0:34:08.760 into any buckets, and the same as true for Bill Miller. 0:34:08.840 --> 0:34:12.920 But when I look at your specific portfolio, some of 0:34:12.920 --> 0:34:17.080 these names are are definitely outside of the traditional value 0:34:17.200 --> 0:34:24.400 universe matterport Capital one, Ali Baba, Gray Scale, Bitcoin Trust. 0:34:24.480 --> 0:34:28.560 I mean that is not your typical free cash flow uh, 0:34:28.719 --> 0:34:31.680 deep value stock. Tell us what it's like to be 0:34:32.239 --> 0:34:35.400 free from the shackles of the morning Star style box. 0:34:35.880 --> 0:34:39.520 I I think it's a huge advantage. UM, So we 0:34:39.640 --> 0:34:43.160 can we can look broadly for what we believe are 0:34:43.200 --> 0:34:46.840 the best opportunities, which I think definitely helps us construct 0:34:46.880 --> 0:34:50.200 portfolios that we think have the most potential. When you 0:34:50.239 --> 0:34:54.000 when you start putting in constraints, um, obviously that hinders 0:34:54.000 --> 0:34:59.040 your ability to optimize because they hurt your flexibility. So 0:34:59.239 --> 0:35:02.080 you know, Bill I mentioned earlier, talks a lot about 0:35:02.560 --> 0:35:05.440 how difficult it is to survive in this business, and 0:35:05.920 --> 0:35:09.840 he outperformed in the late nineties during the tech bubble 0:35:09.920 --> 0:35:12.840 and then also in the early two thousand's, you know, 0:35:12.920 --> 0:35:17.040 when the tech bubble burst, and um, what enabled him 0:35:17.040 --> 0:35:19.719 to do that with his ability to shift between so 0:35:19.920 --> 0:35:24.040 called style boxes. He had tech investments, uh you know 0:35:24.120 --> 0:35:26.120 in the late nineties that helped. They were the only 0:35:26.160 --> 0:35:28.960 thing that outperformed, so you had to have them to outperform. 0:35:29.560 --> 0:35:31.800 But then and I think it's one of the greatest 0:35:31.840 --> 0:35:35.160 calls in the history of the business. He uh you know, 0:35:35.480 --> 0:35:38.480 in early two thousand thought it was game over and 0:35:38.840 --> 0:35:42.160 massively took down his holdings in those sort of names 0:35:42.200 --> 0:35:45.680 and so um you know, took the more classic value 0:35:46.200 --> 0:35:48.479 names up, which is what did well when the tech 0:35:48.520 --> 0:35:51.560 bubble burst. So again having you know, if he if 0:35:51.600 --> 0:35:53.799 he had been constrained in one or the other of 0:35:53.880 --> 0:35:57.560 growth or value, that wouldn't have been possible because it 0:35:57.600 --> 0:36:00.799 was so segmented. What what did well? So I think 0:36:00.880 --> 0:36:05.600 that having that flexibility is critical to you know, generating 0:36:05.640 --> 0:36:08.480 long term returns. It it can hurt your ability to 0:36:08.600 --> 0:36:13.520 grow assets because you know, the institutional marketplace is you know, 0:36:13.760 --> 0:36:18.440 set up and structured in a way, um that you 0:36:18.480 --> 0:36:21.160 can be precluded if if you operate like that. But 0:36:21.280 --> 0:36:24.600 that's okay because you know, I think we'd rather produced 0:36:24.600 --> 0:36:28.680 excellent returns for fewer clients than mediocre returns for many. 0:36:29.000 --> 0:36:32.200 So style boxes matter at least if you're looking for 0:36:32.840 --> 0:36:36.400 institutional clients. Yeah, I mean, I think Warren Buffett. You know, 0:36:36.480 --> 0:36:40.040 he talks about, you know, the keys are what he 0:36:40.120 --> 0:36:43.719 thinks is are the keys to being a great investor, 0:36:44.040 --> 0:36:52.800 and um, he talks about emotional emotional stability, UM, independent thinking, 0:36:52.960 --> 0:36:57.799 and a keen understanding of institutional and individual behavior. So 0:36:58.000 --> 0:37:00.120 i Q doesn't make it up on that list. But 0:37:00.640 --> 0:37:03.120 you know, the reason behavior is is so important is 0:37:03.160 --> 0:37:07.680 because again, uh, you know, there are structures and constraints 0:37:07.719 --> 0:37:11.400 that pop up that create certain opportunities. Again, the markets 0:37:11.400 --> 0:37:14.239 are very efficient and so it's very difficult to outperformed, 0:37:14.280 --> 0:37:17.279 so there has to be some reason, you know, or 0:37:17.360 --> 0:37:20.160 something that's existing that you know creates an opportunity and 0:37:20.160 --> 0:37:22.359 makes the market wrong. And those aren't easy to come by. 0:37:22.560 --> 0:37:25.800 So again, if people are defaulting to a certain behavior 0:37:25.840 --> 0:37:29.160 that might be suboptimal from a return perspective, that uh, 0:37:29.200 --> 0:37:32.040 you know that doing the opposite might be what helps 0:37:32.080 --> 0:37:36.440 you burn returns. So how much do you and build 0:37:36.520 --> 0:37:40.719 together buy into the Peter Lynch philosophy of by what 0:37:40.880 --> 0:37:43.400 you know? It seems like a lot of the companies 0:37:43.440 --> 0:37:46.959 that you're an investor in, you guys have a very 0:37:47.080 --> 0:37:51.960 deep pool of um familiarity with and over and above 0:37:52.000 --> 0:37:56.720 what we traditionally think of as a basic research return. 0:37:57.440 --> 0:38:00.640 Do you buy into the Lynch philosophy? Well, any great 0:38:00.680 --> 0:38:04.239 investor who's done really well and and earned returns. I 0:38:04.280 --> 0:38:06.799 try to learn whatever I can from them, and the 0:38:06.840 --> 0:38:10.680 same It's true a Bill and so certainly I've studied 0:38:10.719 --> 0:38:14.040 Peter and UM. And I think that if you have 0:38:14.160 --> 0:38:17.239 an intimate experience with a product or a company, you 0:38:17.280 --> 0:38:20.000 can understand it, you know, in a you know, in 0:38:20.040 --> 0:38:23.960 a more in depth way. And so uh that might 0:38:24.200 --> 0:38:27.600 you know, when when we bought Peleton, for instance, UM, 0:38:27.640 --> 0:38:31.719 I had that idea because um of my personal experience 0:38:31.960 --> 0:38:35.320 with Peloton, and my husband had asked for a Peloton 0:38:35.440 --> 0:38:38.000 for Christmas, and I said, are you kidding me? I'm 0:38:38.040 --> 0:38:41.120 a value investor. Do you know how much those bike's costs? 0:38:42.080 --> 0:38:43.680 But you know, I was trying to beat such a 0:38:43.760 --> 0:38:46.480 nice life, So I got him the Peloton And this 0:38:46.520 --> 0:38:49.160 is before it came public, and I ended up you know, 0:38:49.200 --> 0:38:52.360 I wasn't a big spin or bike person, but I 0:38:52.440 --> 0:38:54.680 ended up using it so much more than I would 0:38:54.680 --> 0:38:57.560 have ever expected, and they had broader programming and I 0:38:57.640 --> 0:38:59.680 loved it. And I didn't really go to the gym 0:38:59.719 --> 0:39:03.880 anym war and uh so when it came public, you know, 0:39:03.920 --> 0:39:05.560 we wanted to do the work on it and see 0:39:05.560 --> 0:39:08.399 what the valuation was on it. And again I thought 0:39:08.400 --> 0:39:12.479 it was highly misunderstood. Um you know at that time. 0:39:12.560 --> 0:39:15.080 It's you know again, I think people started to understand 0:39:15.080 --> 0:39:18.359 it better in the UM in the financial crisis when 0:39:18.440 --> 0:39:21.279 they were such a huge beneficiary and we exited because 0:39:21.280 --> 0:39:23.440 we thought it became fully priced. But I still think 0:39:23.440 --> 0:39:26.839 it's misunderstood because some of those same old criticisms about 0:39:26.880 --> 0:39:30.160 it being a Scottish hardware company are now you know, 0:39:30.200 --> 0:39:33.600 back in vogue after its decline. But certainly, you know, 0:39:33.719 --> 0:39:38.080 if living in the world and coming across things, um 0:39:38.239 --> 0:39:41.040 I I definitely believe that that can be a source 0:39:41.080 --> 0:39:45.320 of both you know, better understanding and advantage and also 0:39:45.480 --> 0:39:49.240 you know, idea generation. So that raises an interesting question. 0:39:49.880 --> 0:39:53.880 You're both stock pickers at hard but obviously the macro 0:39:54.239 --> 0:39:57.920 landscape makes an impact, as we learned during the pandemic 0:39:57.960 --> 0:40:01.640 and lockdown. How much do you think about what's going 0:40:01.680 --> 0:40:06.239 on in the macro world. Does that affect how you 0:40:06.239 --> 0:40:10.920 construct your portfolio, doesn't affect stock selection or is it 0:40:11.000 --> 0:40:12.879 just one of those things that you have to grit 0:40:12.920 --> 0:40:15.920 your teeth and deal with. Well. I think Bill is 0:40:15.960 --> 0:40:19.080 one of the best macro spinkers that I've ever encountered, 0:40:19.239 --> 0:40:21.360 and so I've been fortunate to learn from him. I 0:40:21.440 --> 0:40:24.520 remember when I joined him and sitting in our first 0:40:24.520 --> 0:40:27.399 research meetings and going home and feeling like I had 0:40:27.480 --> 0:40:29.840 drank from a fire hose because it was such a 0:40:29.960 --> 0:40:33.480 learning curve that I had not really been exposed to. 0:40:33.880 --> 0:40:40.160 So we certainly expend effort trying to understand the environment 0:40:40.239 --> 0:40:42.920 that we're operating in, and you know that that can 0:40:42.960 --> 0:40:45.279 take significant time and trying to think about it. We 0:40:45.400 --> 0:40:51.080 do construct portfolios and selected investments on a bottoms up basis. Uh, 0:40:51.120 --> 0:40:53.320 you know, we do scenario analysis, so we're trying to 0:40:53.400 --> 0:40:55.480 understand the value of businesses in a range of SCE 0:40:55.560 --> 0:40:59.640 areas because we don't know the future. But obviously, you know, 0:41:00.280 --> 0:41:05.160 the environment can interact critically with the fundamentals of businesses, 0:41:05.239 --> 0:41:08.160 so you have to try to understand, you know, the 0:41:08.280 --> 0:41:12.960 environment in which you're operating. So so we definitely do that. Interesting. Um, 0:41:13.040 --> 0:41:16.600 you mentioned how efficient the markets have become. How do 0:41:16.640 --> 0:41:20.560 you look at the shift from active to passive. Is 0:41:20.600 --> 0:41:25.320 that changing markets? Does that affect the way you think about, um, 0:41:25.360 --> 0:41:28.880 how quickly information gets built into price. Yeah, that's a 0:41:28.880 --> 0:41:32.960 great question, and it's definitely uh, you know, a big 0:41:33.000 --> 0:41:37.680 secular trend that we expect to continue. Um so I 0:41:37.800 --> 0:41:41.440 haven't and we haven't seen data or evidence to support 0:41:41.600 --> 0:41:45.960 that it's made the markets less efficient yet, although you know, 0:41:46.000 --> 0:41:48.560 there's a lot of speculation that it will at some point, 0:41:48.640 --> 0:41:51.400 and you would think it would at some point. I know, 0:41:51.640 --> 0:41:53.520 you know, I know some folks at Santa Fe are 0:41:53.560 --> 0:41:58.040 now uh studying whether there's any evidence that you're you know, 0:41:58.200 --> 0:42:01.840 seeing that. Um, you know, I guess we have seen 0:42:02.239 --> 0:42:05.600 certain market structure issues that I think do lead to 0:42:06.360 --> 0:42:11.120 some you know, inefficiencies and whether it's uh we talked 0:42:11.120 --> 0:42:14.359 about time arbitrage, show the market becoming so short term 0:42:14.440 --> 0:42:20.000 focus that it creates some inefficiencies on longer time horizons, 0:42:20.239 --> 0:42:23.960 or you know, with all the ets that have popped 0:42:24.040 --> 0:42:26.480 up and now you know, back in the days when 0:42:26.520 --> 0:42:30.000 Bill built the business, you know, there were financial advisors 0:42:30.000 --> 0:42:33.120 and their number one job what they did was they 0:42:33.160 --> 0:42:37.560 selected stocks and now that's hardly ever the case. They're uh, 0:42:37.600 --> 0:42:41.560 you know, allocators and there you know, allocating capital between 0:42:41.800 --> 0:42:44.600 different opportunities, and they use ets so we can see 0:42:44.600 --> 0:42:48.360 from time to time. Again, just the homogenization where stocks 0:42:48.360 --> 0:42:50.640 will move together as a group in the short term, 0:42:50.680 --> 0:42:53.239 irrespective of fundamentals. I think over the long term the 0:42:53.280 --> 0:42:56.279 market can sort that out, but in the short term 0:42:56.360 --> 0:42:59.760 it may not. You know, there might be some micro structure, 0:43:00.239 --> 0:43:03.440 you know, inefficiencies there. Again, I haven't seen data to 0:43:03.520 --> 0:43:07.480 actually support that. It's it's more just observing, uh, you know, 0:43:07.520 --> 0:43:12.400 the behavior. So people love to talk about stocks, but 0:43:12.560 --> 0:43:16.600 we rarely hear people talk about portfolio management, which is 0:43:16.640 --> 0:43:21.239 a very different skill. How do you figure out how 0:43:21.280 --> 0:43:24.719 to spread your bets out across different sectors and and 0:43:24.840 --> 0:43:28.480 how to size different positions. Yeah, I think it's a 0:43:28.520 --> 0:43:31.760 great question. You're right, people don't focus on it enough 0:43:31.840 --> 0:43:35.000 for a lot um. I again, I feel so fortunate 0:43:35.080 --> 0:43:38.680 to have learned from Bill on this. Uh. You know, 0:43:38.760 --> 0:43:40.839 I'm not sure if you're familiar with Novous, but they 0:43:40.880 --> 0:43:44.719 study managers and actually look at, you know, where their 0:43:44.840 --> 0:43:47.640 edges or where they have a competitive advantage. And when 0:43:47.640 --> 0:43:49.879 they looked at you know, the history of the fun 0:43:49.960 --> 0:43:54.000 and the history of Bill, Uh, they actually identified sizing 0:43:54.280 --> 0:43:57.960 as a strength and you know, an advantage and something 0:43:58.080 --> 0:44:01.319 that uh you know, generated returns. So I've been very 0:44:01.360 --> 0:44:04.200 fortunate to learn from him on this. I think, you know, 0:44:04.239 --> 0:44:09.279 the overall objective is to uh, you know, size positions 0:44:09.440 --> 0:44:14.120 relative to risk adjusted returns and so um you know, 0:44:14.160 --> 0:44:17.919 so our typical starting position size is anywhere from two 0:44:17.960 --> 0:44:21.240 to two and a half percent. But again if it's 0:44:20.960 --> 0:44:24.319 we could have a one percent position if it's higher risk. 0:44:24.440 --> 0:44:27.719 But you know, if it's a binary biotech where you know, 0:44:27.760 --> 0:44:29.320 I might lose all its money or it's going to 0:44:29.400 --> 0:44:32.759 go up a lot. Again, I think you know I've 0:44:32.760 --> 0:44:35.839 occurred Dennis Lynch, you know, talking about you know, there's 0:44:35.840 --> 0:44:38.200 a place in the portfolio for investments like that. You 0:44:38.239 --> 0:44:41.600 just have to size them uh correctly and then you know, 0:44:41.680 --> 0:44:45.000 we can go larger if we have high conviction um 0:44:45.040 --> 0:44:47.640 in in a name and really you know, we might 0:44:47.640 --> 0:44:50.640 start at three. But what we try to do is 0:44:50.719 --> 0:44:54.399 let our winners run and again you know, we'll let 0:44:54.480 --> 0:44:57.840 names get to a large you know, percentage of the 0:44:57.920 --> 0:45:02.040 portfolio again if they work. And one of the behavioral 0:45:02.760 --> 0:45:06.799 uh flaws that people tend to do is you know, 0:45:06.920 --> 0:45:10.600 sell their winners and to their losers. So we explicitly 0:45:10.640 --> 0:45:13.920 try to you know, counteract that and let our winners 0:45:14.000 --> 0:45:16.359 run and so we can have you know, more concentrated 0:45:16.400 --> 0:45:19.719 positions at the at the top of the portfolio, you 0:45:19.760 --> 0:45:22.279 know from that. Yeah, Bill has talked about in the 0:45:22.320 --> 0:45:26.400 past that if you're gonna just hug the benchmark and 0:45:26.480 --> 0:45:31.799 have nothing but one percent positions, you're you're less of 0:45:31.840 --> 0:45:36.840 an active manager than you are a closet indexer, which 0:45:37.800 --> 0:45:41.480 I assume implies that you guys build a little bit 0:45:41.520 --> 0:45:45.960 more of a concentrated portfolio. Yeah, that's exactly right. We um. 0:45:46.000 --> 0:45:48.759 You know, the academics have written about this concept of 0:45:48.880 --> 0:45:52.839 active share. So you know, they've quantified how different does 0:45:52.920 --> 0:45:57.080 your portfolio look from the benchmark and we have very 0:45:57.160 --> 0:46:00.320 high active share. Uh, you know, the academic re search 0:46:00.719 --> 0:46:04.640 suggests that, uh, you know that funds with high active 0:46:04.640 --> 0:46:06.640 share tend to do better. And that's for exactly the 0:46:06.640 --> 0:46:09.520 reason that you just mentioned that Bill talks about, which 0:46:09.560 --> 0:46:13.040 is if you're a closet indexer and your portfolio looks 0:46:13.080 --> 0:46:14.799 a lot like the benchmark, but then you just have 0:46:14.920 --> 0:46:18.400 higher fees, then that's the recipe for very consistent underperformance 0:46:18.480 --> 0:46:22.239 that compounds over time. And so we're very benchmark agnostic, 0:46:22.360 --> 0:46:25.759 and we're constructing portfolios, you know, from the bottoms up, 0:46:25.840 --> 0:46:29.320 and we're finding names and ideas that we think are attractive, 0:46:29.360 --> 0:46:32.399 and we're not paying a lot of attention to, uh, 0:46:32.440 --> 0:46:34.440 you know, whether they're in the benchmark or what their 0:46:34.440 --> 0:46:37.280 weight is in the benchmark. Again, are we have return 0:46:37.320 --> 0:46:39.839 objectives and we're trying to meet our return objectives over 0:46:39.880 --> 0:46:43.000 the long term. And obviously we do think about, you know, 0:46:43.080 --> 0:46:45.400 what kind of returns we think are possible, you know, 0:46:45.600 --> 0:46:49.000 for the market overall, because that's uh, you know, that's 0:46:49.000 --> 0:46:51.520 our bogey, that's what we want to be um. But 0:46:51.520 --> 0:46:55.799 but when we're constructing portfolios, we are concentrated and uh, 0:46:55.840 --> 0:46:58.680 you know, we have we're looking very different from the benchmark. 0:46:59.120 --> 0:47:02.960 So the other port folio construction question is the flip 0:47:03.000 --> 0:47:06.000 side of what to buy, which is how do you 0:47:06.040 --> 0:47:09.360 know when to sell something? Is is there anything in 0:47:09.400 --> 0:47:13.600 particular you look at, Um, it doesn't appear you guys 0:47:13.680 --> 0:47:18.680 use stop losses because both you and Bill and the 0:47:18.719 --> 0:47:22.600 fund have a history of being comfortable buying on the 0:47:22.640 --> 0:47:26.080 way down when a stock gets repriced and you mentioned 0:47:26.120 --> 0:47:28.759 Amazon as an example, how do you know when to 0:47:29.480 --> 0:47:33.240 fish or cut bait. Yeah, that's a great question. And UM, 0:47:33.280 --> 0:47:36.759 and I wish more people would do work on uh, 0:47:37.080 --> 0:47:41.760 you know, sell discipline and and and how to really 0:47:42.239 --> 0:47:44.840 improve that because you know, there's a lot of literature 0:47:45.040 --> 0:47:48.479 and and managers in general are you know, very good 0:47:48.560 --> 0:47:51.080 or much better on the buy side. And I think 0:47:51.080 --> 0:47:54.080 there's just a lot less focus on the sell side. 0:47:54.160 --> 0:47:56.600 And and some of our biggest mistakes again have been 0:47:57.280 --> 0:47:59.799 selling too early, really some of these big winners. And 0:47:59.840 --> 0:48:02.000 we filled Apple. We did quite well an Apple, but 0:48:02.000 --> 0:48:05.440 we filled it way too early. And so UM again, 0:48:05.480 --> 0:48:09.480 I think it's an area where the evidence indicates the 0:48:09.480 --> 0:48:13.719 scenario where UM most managers, all managers can improve. But 0:48:13.800 --> 0:48:16.440 when we sell something, we usually think about selling it 0:48:16.480 --> 0:48:20.040 in three scenarios. One, it reaches our assostsment of what 0:48:20.160 --> 0:48:22.920 the company is worth, so it becomes you know, fairly valued, 0:48:22.960 --> 0:48:24.880 and we don't think that we can earn access or 0:48:24.960 --> 0:48:31.320 turns um too, we conclude that we're wrong. And so again, 0:48:31.360 --> 0:48:35.319 if there's something about our investment case that we come 0:48:35.360 --> 0:48:39.160 to no longer believe, or again we talked about fundamentals 0:48:39.160 --> 0:48:43.839 continuous continuously disappointing us. UM, if we conclude were wrong 0:48:43.880 --> 0:48:46.920 for any reason that would be a reason to sell 0:48:47.320 --> 0:48:51.399 or you know, the third UM scenario is we find 0:48:51.440 --> 0:48:54.959 a better investment opportunity. So you know, we're always doing 0:48:55.000 --> 0:48:57.160 work on new names that if we come across something 0:48:57.680 --> 0:49:00.000 that we think is even more attractive, you know, we'll 0:49:00.040 --> 0:49:02.360 sell a name to fund you know, a new idea, 0:49:03.120 --> 0:49:08.160 really really interesting. So so we keep dancing around UM 0:49:08.440 --> 0:49:12.560 big kept tech. And one of the risk factors for that, 0:49:12.719 --> 0:49:14.840 or at least some people think it's a risk factor, 0:49:15.680 --> 0:49:19.839 is UM regulatory risk and the concept that you know, 0:49:20.320 --> 0:49:23.319 an Amazon on Facebook, of Google and Apple could get 0:49:23.360 --> 0:49:26.879 broken up. What are your thoughts on either regulatory risk 0:49:27.120 --> 0:49:33.520 or forcing what have become technological conglomerates to be broken 0:49:33.600 --> 0:49:36.319 up into their component pieces. Yeah, I think it's a 0:49:36.360 --> 0:49:40.560 great question. I mean, certainly there's a lot of regulatory 0:49:40.640 --> 0:49:44.960 and attention on these names, and so, uh, you know 0:49:45.040 --> 0:49:48.080 that risk exists. I will say, you know, even back 0:49:48.520 --> 0:49:51.760 I remember back at UM in our leg Mason Capital 0:49:51.800 --> 0:49:54.879 Management days in two thousand and eight, our analysts who 0:49:54.960 --> 0:49:59.480 covered Google recommended selling it because of regulatory risks. So 0:49:59.600 --> 0:50:01.960 this because it's not new, it's been around a long time, 0:50:02.200 --> 0:50:06.040 and the reason we haven't seen actual actions is because 0:50:06.080 --> 0:50:09.280 it's very complex and it's not easy to figure out 0:50:09.600 --> 0:50:14.960 what the right regulations should be. So um. So again, 0:50:15.120 --> 0:50:18.719 you know, I would expect, you know, something, but whether 0:50:18.719 --> 0:50:21.440 it's material to these businesses, and it is an entirely 0:50:21.480 --> 0:50:26.560 different story. I would be surprised to see a breakup. Um. 0:50:26.560 --> 0:50:29.279 But if we were to see breakups again, I think 0:50:29.640 --> 0:50:32.520 for the businesses we own, we think, uh, you know, 0:50:32.760 --> 0:50:36.600 that would actually highlight you know, more of the embedded 0:50:36.680 --> 0:50:40.000 value and and it would you know, actually help some 0:50:40.080 --> 0:50:43.120 of the stocks. So we talked earlier about Amazon and 0:50:43.120 --> 0:50:45.960 how we believe, uh, you know, the current market prices 0:50:46.000 --> 0:50:49.319 are uh, you know, basically valuing that retail piece at 0:50:49.440 --> 0:50:51.799 post to zero. And so again, if you were to 0:50:51.840 --> 0:50:55.759 break off aws from the retail business, obviously they you know, 0:50:55.840 --> 0:50:58.640 they benefit each other, so there would be some negative 0:50:58.680 --> 0:51:02.280 impact there. But I think the value realization of breaking 0:51:02.280 --> 0:51:05.719 those businesses apart, uh you know, you could wind up 0:51:05.760 --> 0:51:09.520 actually doing well, at least in the short term, doing better, 0:51:10.040 --> 0:51:13.360 you know, from the stock perspective. Um. But again I think, 0:51:13.640 --> 0:51:16.839 you know, I would be surprised to see breakups. It's 0:51:16.880 --> 0:51:20.440 not at all clear you know, how that would happen. 0:51:20.640 --> 0:51:24.680 And um, again, maybe maybe it could happen at sometime 0:51:24.719 --> 0:51:26.640 in the future, but in the near term, I think 0:51:26.680 --> 0:51:30.160 that's unlikely. Huh. Really kind of interesting. Since we're talking 0:51:30.160 --> 0:51:34.080 about tech, let's talk about the rise of intangibles, things 0:51:34.080 --> 0:51:37.680 like patents, algorithms, copyrights. What do you think this has 0:51:37.760 --> 0:51:41.399 done to the valuations that are out there and how 0:51:41.400 --> 0:51:45.759 does this play into the sort of squishy line that's 0:51:45.800 --> 0:51:52.120 developed between value growth at a reasonable price and pure growth. Yeah, 0:51:52.120 --> 0:51:53.719 I think it's a great question, and you had the 0:51:53.719 --> 0:51:57.400 expert on this, Michael On, on your podcast. But you know, 0:51:57.440 --> 0:51:59.960 what we know is this has definitely been an area 0:52:00.000 --> 0:52:03.680 of growth, and you know, it matters from a value perspective, 0:52:03.920 --> 0:52:08.120 and again, people are getting better at sorting through it. 0:52:08.160 --> 0:52:10.799 But I think we're really early, you know, in that. 0:52:11.040 --> 0:52:14.920 And so again, you know, some trends that we know exists, 0:52:14.960 --> 0:52:19.120 as you know, just broadly, returns on capital of you know, 0:52:19.239 --> 0:52:23.080 US companies have risen over time, and you know, uh, 0:52:23.120 --> 0:52:27.120 you know, lower return pieces of businesses have moved offshore 0:52:27.400 --> 0:52:31.279 and you know what state here is higher return businesses. 0:52:32.200 --> 0:52:35.120 Um So that will impact valuations and a lot of 0:52:35.120 --> 0:52:38.560 people again, you know, don't make adjustments when thinking about 0:52:38.880 --> 0:52:43.279 valuations relatives to history. And certainly, I think what we 0:52:43.360 --> 0:52:46.960 always try to do if we're doing companies specific analysis 0:52:47.080 --> 0:52:51.520 is think very carefully through the economics of the business. 0:52:51.560 --> 0:52:53.880 And so you know, if you're doing if you're a 0:52:53.960 --> 0:52:58.799 quant fund and you're just doing uh you know, accounting metrics, again, 0:52:58.840 --> 0:53:01.279 that's pretty problematic. You're looking at price to book and 0:53:01.320 --> 0:53:04.040 you're not adjusting for that. Um you know, I know that, 0:53:04.400 --> 0:53:06.719 you know, some of the better quants have started doing it, 0:53:06.760 --> 0:53:10.400 and the signals have improved once they make those adjustments. 0:53:11.280 --> 0:53:14.680 Um So, so it's certainly important to understand what that 0:53:14.760 --> 0:53:16.799 looks like. I think when we're looking at some of 0:53:16.800 --> 0:53:22.080 these earlier stage uh you know companies where again you 0:53:22.160 --> 0:53:25.759 can't see from the near term uh you know numbers, 0:53:25.800 --> 0:53:28.600 what the potential is that the business. Again, we try 0:53:28.680 --> 0:53:32.600 to think through carefully, uh you know, what our actual 0:53:32.680 --> 0:53:35.839 costs to support the current business, what our investments because 0:53:35.840 --> 0:53:37.560 again a lot of those investments are running through the 0:53:37.560 --> 0:53:40.320 income statement now and not you know, they're not capital 0:53:40.360 --> 0:53:43.840 investments that are just running through the cash flist statement. 0:53:43.960 --> 0:53:46.480 So again, if you really want to understand the business, 0:53:46.520 --> 0:53:49.320 you have to attempt to you know, break those things 0:53:49.320 --> 0:53:52.319 out and think about them carefully, and it can be 0:53:52.400 --> 0:53:55.160 challenging given disclosures, and we try to do that and 0:53:55.200 --> 0:53:57.560 we try to talk to our companies about what that 0:53:57.600 --> 0:54:02.000 looks like really kind of intrigue. So so you guys 0:54:02.040 --> 0:54:05.440 have done well over the course of the past decade, 0:54:05.960 --> 0:54:09.680 but that decade was very much a challenge for the 0:54:09.800 --> 0:54:14.120 more traditional approach to value. Why do you think this 0:54:14.239 --> 0:54:19.520 is uh? And and are the traditional buckets of value 0:54:19.600 --> 0:54:23.799 no longer no longer worthwhile? Well, I think it's a 0:54:23.840 --> 0:54:27.840 really interesting question. I think that there are two main reasons. 0:54:28.000 --> 0:54:31.640 One is, I think, you know, we observed that these markets, 0:54:31.680 --> 0:54:35.200 that markets go through these long cycles and and we 0:54:35.280 --> 0:54:38.040 talked about that earlier sort of the long cycles that 0:54:38.080 --> 0:54:41.640 we've gone through, and you know, the two thousands, it 0:54:41.800 --> 0:54:45.120 was you know, value lead, and it was global cyclicals, 0:54:45.160 --> 0:54:47.440 and it was material stocks, and it was energy stocks 0:54:47.480 --> 0:54:50.399 on the back of China's growth, So it had this long, 0:54:50.480 --> 0:54:54.839 prolonged period about performance and um again, it drew in 0:54:54.880 --> 0:54:59.480 a lot of capital to those companies, to those investment styles, 0:55:00.200 --> 0:55:02.880 and you know, that's reversed over the course of the 0:55:02.920 --> 0:55:05.840 past decade as again we've sort of had you know, 0:55:05.880 --> 0:55:09.520 the second reason, as you know, so again expectations rose, 0:55:09.719 --> 0:55:12.960 and so that makes a more challenging starting point, and 0:55:13.000 --> 0:55:15.400 so you know it's just natural to see some reversal. 0:55:15.960 --> 0:55:21.720 But then we've had this massive period of disruption, and um, 0:55:21.760 --> 0:55:25.799 you know, it's interesting to think back. I've been so 0:55:25.960 --> 0:55:29.799 fortunate to work with Bill and to uh you know, 0:55:30.000 --> 0:55:33.040 have him as a mentor and to have these moments 0:55:33.080 --> 0:55:36.279 that I remember and I remember. So I joined him 0:55:36.280 --> 0:55:40.120 in two thousand two, and in two thousand three, uh 0:55:40.160 --> 0:55:42.800 you know, he had a big investment conference in Las Vegas, 0:55:42.800 --> 0:55:45.520 and Jeff Bezos came to speak at it, and he 0:55:45.680 --> 0:55:51.280 gave his uh washing machine talk, and he talked about how, 0:55:51.520 --> 0:55:54.640 you know, the Internet at that time in the early 0:55:54.680 --> 0:55:58.440 two thousand's was that uh you know, was He likened 0:55:58.480 --> 0:56:01.920 it to the early days fire to electricity, and he 0:56:02.000 --> 0:56:06.160 talked about the nineteen o a hurly washing machine, and 0:56:06.239 --> 0:56:09.319 he said it was this giant machine that was outside, 0:56:09.360 --> 0:56:11.560 so you had to go outside to use it. They 0:56:11.560 --> 0:56:14.839 didn't have electricity, they didn't have electrical outlets. You had 0:56:14.880 --> 0:56:16.960 to plug it in. You had to unscrew your light 0:56:17.040 --> 0:56:20.360 bulb and plug it in to your light socket. Um, 0:56:20.400 --> 0:56:22.960 it didn't have an on off switch. It was giant. 0:56:23.160 --> 0:56:26.839 It was dangerous because you couldn't turn it off and 0:56:26.960 --> 0:56:29.239 so it had injuries. It was really difficult to use. 0:56:29.640 --> 0:56:31.920 And he likened where we were at the Internet at 0:56:31.960 --> 0:56:34.799 that time, uh, you know, to that, and he said, 0:56:34.840 --> 0:56:37.680 we're so early here and things are difficult to use. 0:56:37.719 --> 0:56:41.040 And he talked about DSL and wireless networks and how 0:56:41.120 --> 0:56:44.919 challenging it was, and um, it was notable at the time, 0:56:44.920 --> 0:56:47.640 but it's even more notable in hindsight now that you've 0:56:47.680 --> 0:56:50.520 seen things like what happened with a WS or with 0:56:50.600 --> 0:56:54.800 iPhones and how much easier you know, the technology has 0:56:55.120 --> 0:56:57.560 uh you know, gotten to use and how embedded it 0:56:57.640 --> 0:57:00.480 is in our daily life. So over the past decade, 0:57:01.040 --> 0:57:04.200 you know, really the infrastructure was fully built out in 0:57:04.239 --> 0:57:07.880 a way and you know AWS and cloud uh you 0:57:07.920 --> 0:57:10.520 know was built out that it allowed this you know, 0:57:10.680 --> 0:57:12.920 massive period of innovation and you know there was a 0:57:12.960 --> 0:57:15.520 lot of capital that was you know, going into to 0:57:15.680 --> 0:57:19.240 venture funds. So you've had this massive you know, innovation 0:57:19.320 --> 0:57:22.560 disruption cycle. And so I think you know a lot 0:57:22.600 --> 0:57:27.800 of value investing depends on you know, current earnings being 0:57:27.840 --> 0:57:30.960 stable because you're you're looking at discounts on on what 0:57:31.040 --> 0:57:34.520 companies are currently doing. So if there's some heightened risk 0:57:34.560 --> 0:57:38.400 of disruption, uh, you know, that makes that approach you know, 0:57:38.560 --> 0:57:41.439 more challenging. And so you know, I think you've had 0:57:41.960 --> 0:57:44.600 you know, some of both of those things going on, 0:57:44.920 --> 0:57:48.800 where it's a natural market cycle that's reversed what we 0:57:48.800 --> 0:57:52.120 saw in the previous decade, and you know there's been 0:57:52.160 --> 0:57:55.160 some you know headwinds I think to uh, you know 0:57:55.320 --> 0:57:59.880 value companies or you know companies that might be you know, 0:58:00.240 --> 0:58:03.960 getting more disrupted by some of these new companies that 0:58:04.000 --> 0:58:08.919 are coming along. Really interesting. So my last two questions 0:58:09.040 --> 0:58:12.120 for you before we get to our favorite questions. The 0:58:12.280 --> 0:58:17.160 first is you've been putting out what more traditional managers 0:58:17.160 --> 0:58:20.720 would call their quarterly fun letter, but but you've kind 0:58:20.720 --> 0:58:24.120 of been doing it online in a blog format. UM 0:58:24.280 --> 0:58:26.840 tell us about that experience. What sort of feedback do 0:58:26.880 --> 0:58:31.080 you get on on those quarterly posts that you've been doing. 0:58:31.600 --> 0:58:33.680 I mean, I think we get you know, I can 0:58:33.760 --> 0:58:36.040 take no credit for this. I would have to you know, 0:58:36.120 --> 0:58:39.560 give credit to you know, our marketing UM lead because 0:58:39.600 --> 0:58:43.240 she was a big proponent of the blog. So we 0:58:43.320 --> 0:58:45.880 all write for the blog and we get I think 0:58:45.880 --> 0:58:49.600 it's a great way to communicate with our shareholders are 0:58:49.680 --> 0:58:52.480 people who are you know, interested in what we're doing. 0:58:53.040 --> 0:58:56.720 And again, I think our our approach is different and differentiated, 0:58:56.920 --> 0:58:59.800 and so, uh, you know, we want people to under 0:59:00.080 --> 0:59:03.760 stand what we're doing. We want them to understand we 0:59:03.840 --> 0:59:06.920 sometimes have volatility. We want people to understand that coming 0:59:06.920 --> 0:59:09.360 in and then when we go through those periods, we 0:59:09.400 --> 0:59:12.120 want them to understand, you know, how we're thinking about 0:59:12.160 --> 0:59:14.800 the opportunities that and those are oftentimes the best best 0:59:14.840 --> 0:59:17.920 times to buy. And so it's important to have that communications. 0:59:18.000 --> 0:59:20.800 So again, I think it's been you know, it's been 0:59:20.920 --> 0:59:24.920 very positive overall to to have that. And and my 0:59:25.040 --> 0:59:28.720 final regular question is a little bit of a curveball. 0:59:29.320 --> 0:59:34.920 Tell us about the vermont In. Uh. Yes, So the 0:59:35.080 --> 0:59:40.600 vermont In is an in that I purchased in twenty eleven. Um. 0:59:40.720 --> 0:59:43.280 I grew up in Vermont and so my family all 0:59:43.320 --> 0:59:47.200 lives there. So uh, you know, at that time, again, 0:59:47.520 --> 0:59:52.120 we were just you know, the first inklings of emergence, uh, 0:59:52.160 --> 0:59:55.160 you know, an improvement in housing and housing overall. We 0:59:55.240 --> 0:59:57.600 had invested in a lot of housing stocks. You know, 0:59:57.680 --> 1:00:01.880 I had had my first child, you know, right before that, UM, 1:00:02.000 --> 1:00:05.480 and you know my I think my father had told 1:00:05.520 --> 1:00:07.960 me about this in that was for sale, and I 1:00:08.000 --> 1:00:10.439 said to my husband, let's let's go to the foreclosure action. 1:00:10.720 --> 1:00:12.480 Sort of a sign of our times. I've always had 1:00:12.520 --> 1:00:17.600 an entrepreneurial interest. I didn't actually expect to, uh, you know, 1:00:17.680 --> 1:00:19.960 purchase the in going in that I did do work 1:00:20.000 --> 1:00:23.200 on what I thought it was worth and um. And 1:00:23.240 --> 1:00:26.080 so we got there and you know, there was someone 1:00:26.160 --> 1:00:28.760 made the first bid, and then I made the second bid, 1:00:28.840 --> 1:00:30.080 and then I was like, I'm not going to do 1:00:30.120 --> 1:00:33.680 that again, but it was sold sold to you and 1:00:33.760 --> 1:00:37.240 so um, so we had to figure out again. I 1:00:37.280 --> 1:00:39.040 think that was in October, and we had to figure 1:00:39.040 --> 1:00:42.840 out how to get the in open again. We wanted 1:00:42.840 --> 1:00:44.720 to get it open because the busy season there and 1:00:44.840 --> 1:00:47.600 Vermont is you know, starts in December, so we wanted 1:00:47.600 --> 1:00:50.280 to get it open by December. And it had some issues. 1:00:51.040 --> 1:00:55.480 Um and so my brother in law actually ran the in. 1:00:55.800 --> 1:00:58.240 I made every mistake you could possibly make as a 1:00:58.560 --> 1:01:01.959 you know, small business owner, Austin tee owner going into 1:01:02.000 --> 1:01:05.320 business with family. I learned from great lessons from that experience. 1:01:05.360 --> 1:01:07.760 We got it turned around and then I sold it 1:01:07.800 --> 1:01:10.479 a few years later, I realized I I will stick 1:01:10.520 --> 1:01:14.040 to the markets where I can you know, sit here 1:01:14.040 --> 1:01:18.480 and read and learn. And uh, you know, Bill likes 1:01:18.520 --> 1:01:20.800 to joke about when he got how he got in 1:01:20.800 --> 1:01:22.960 the business was he was mowing the lawn all day 1:01:23.000 --> 1:01:25.000 and he earned a quarter and he asked that his 1:01:25.120 --> 1:01:28.400 dad what the stock picks were and um, or what 1:01:28.440 --> 1:01:30.480 the stock prices in the newspaper were, and he said 1:01:30.480 --> 1:01:31.840 those are stocks. And he's like, you mean you can 1:01:31.920 --> 1:01:33.840 make money and not do anything. You can just sit 1:01:33.880 --> 1:01:37.240 there and um He's like, that's the job for me. 1:01:37.680 --> 1:01:39.680 And he didn't. He says he didn't learn so much later, 1:01:39.760 --> 1:01:42.120 just how much work you have to do. But the 1:01:42.240 --> 1:01:44.760 kind of work of reading and talking to companies and 1:01:45.240 --> 1:01:48.160 you know, doing finish the model, doing financial modeling that 1:01:48.200 --> 1:01:50.840 suits me much better than running it. In So it 1:01:50.880 --> 1:01:53.520 was it was a great experience. We we did, uh, 1:01:53.560 --> 1:01:55.439 you know, well on it. But I will not own 1:01:55.480 --> 1:01:59.560 any more. And so let's jump to our favorite questions 1:01:59.600 --> 1:02:03.440 that we ask all of our guests, starting with tell 1:02:03.520 --> 1:02:05.920 us what you're streaming these days? Give us your favorite 1:02:06.320 --> 1:02:10.360 Netflix or Amazon, Brime or anything that's been keeping you 1:02:10.640 --> 1:02:14.560 entertained during lockdown. Yeah, so that's a great question. I 1:02:14.640 --> 1:02:18.800 might have the most disappointing answer for you because, uh, 1:02:18.840 --> 1:02:21.920 you know, my third child was born in eighteen and 1:02:21.960 --> 1:02:24.480 then I launched patient in twenty twenty, so I I 1:02:24.600 --> 1:02:29.040 have not you know, had time or focused on streaming 1:02:29.080 --> 1:02:33.160 anything actually until um just the past few weeks. We 1:02:33.320 --> 1:02:35.720 had some sickness to go through our house over the holiday. 1:02:35.760 --> 1:02:38.800 Unfortunately not COVID, but it was a COVID scare. But um, 1:02:38.840 --> 1:02:42.360 so we did we did do some uh you know binging. 1:02:42.520 --> 1:02:45.800 It wasn't anything new. Um My kids are you know, 1:02:45.880 --> 1:02:48.800 really into Survivor. So we watched you know, the most 1:02:48.840 --> 1:02:52.760 recent uh Survivor as a family, and then we watched 1:02:53.240 --> 1:02:57.240 some We also watched some of the old Seinfeld episodes 1:02:57.360 --> 1:03:01.840 and I hadn't watched those in gosh so many years, 1:03:01.920 --> 1:03:04.280 and they were you know, they were just as funny 1:03:04.320 --> 1:03:06.640 and they were great and they were so entertaining, and 1:03:06.880 --> 1:03:09.800 um my kids thought that they were funny. So those 1:03:09.840 --> 1:03:12.760 are the only things I've watched lately. But I, you know, 1:03:12.800 --> 1:03:16.880 both were enjoyable. I'm surprised how well Seinfeld has held 1:03:16.960 --> 1:03:21.280 up over the years. Other other sitcoms, um don't seem 1:03:21.360 --> 1:03:25.360 to have aged as gracefully. So, so my next surprise 1:03:25.520 --> 1:03:28.640 to still find it as entertaining. I didn't think I would, 1:03:28.640 --> 1:03:32.320 but it was funny, it was really funny. It's uh 1:03:32.800 --> 1:03:34.680 and and at the time I thought it was kind 1:03:34.680 --> 1:03:38.480 of an acerbic show until you start watching carb your 1:03:38.560 --> 1:03:41.880 enthusiasm and then you really see what sort of acid 1:03:42.040 --> 1:03:45.960 humor is like. Um. Normally now I ask who your 1:03:46.160 --> 1:03:50.600 mentors are, but I kind of have a sneaking suspicion 1:03:50.640 --> 1:03:53.640 I know the answer to that question. You definitely know 1:03:53.800 --> 1:03:57.080 the top. You know the top mentor. I mean, Dell 1:03:57.440 --> 1:04:00.640 is my number one. I'm so for I have so 1:04:00.720 --> 1:04:04.440 much gratitude to have learned from him, and and just 1:04:04.920 --> 1:04:06.800 he's not just a great mentor, and I've learned the 1:04:07.000 --> 1:04:09.880 craft of investing, but I also learned I think he's 1:04:09.920 --> 1:04:13.440 an intellectual giant and um and I really thought he 1:04:13.480 --> 1:04:16.120 taught me how to take better and and he's also 1:04:16.160 --> 1:04:19.200 a great friend and so um so I just feel 1:04:19.240 --> 1:04:21.320 so fortunate to have shared this journey. And he's been 1:04:21.360 --> 1:04:25.200 so generous with his time with me, and so he's 1:04:25.200 --> 1:04:27.680 he definitely is right up there at the top of 1:04:27.720 --> 1:04:31.200 the list. Quite quite interesting. Tell us about some of 1:04:31.200 --> 1:04:34.640 your favorite books and what are you reading right now? Yes, 1:04:34.760 --> 1:04:37.280 so I am so bad at favorite And when I 1:04:37.280 --> 1:04:39.640 saw this question, I really tried to think. I'm I 1:04:39.680 --> 1:04:42.000 have lots of books I like, but you know what, 1:04:42.280 --> 1:04:44.600 how can you choose just one as a favorite. So 1:04:44.640 --> 1:04:46.800 I guess when I was thinking through, what are some 1:04:46.880 --> 1:04:50.840 of my favorite business type books? Uh, The Psychology of 1:04:50.880 --> 1:04:55.000 Money by Morgan households wonderful and as soon as my 1:04:55.080 --> 1:04:57.000 kids my oldest is time but I finished he's old 1:04:57.080 --> 1:04:59.200 enough to you know, which might be within the next 1:04:59.280 --> 1:05:01.320 year or two, I'm going to have them read that 1:05:01.360 --> 1:05:05.120 book to understand how to think about money. Um, you know, 1:05:05.200 --> 1:05:08.000 Rich or Wise Are Happier by William Green is excellent. 1:05:08.080 --> 1:05:10.840 And I love books that cover, you know, great investors 1:05:10.840 --> 1:05:13.720 and how they think. Um, you know, I think the 1:05:13.760 --> 1:05:18.080 Halo Effect by Phil Rosen'swag is a classic and it 1:05:18.120 --> 1:05:20.680 talks about you know, Bill likes to say that the 1:05:20.760 --> 1:05:24.400 story follows the price and um, and so I think 1:05:24.400 --> 1:05:27.120 that that's true and that happens. He talks about, you know, 1:05:27.160 --> 1:05:30.040 when there's been some uh, you know, company that's done 1:05:30.040 --> 1:05:32.840 really well, people write about all the reasons why. But 1:05:33.360 --> 1:05:36.920 again it's not a very scientific study. Um, you know, 1:05:36.920 --> 1:05:39.880 Annie Dix Thinking and best. You know. Outside of that, 1:05:40.120 --> 1:05:42.160 you know, one book that really struck me and I 1:05:42.200 --> 1:05:46.520 really liked a lot, uh Chema Chendren, who's a Buddhist monk. 1:05:46.560 --> 1:05:50.680 Her book Thanks Fall Apart, All Apart, which I also like, uh, 1:05:50.720 --> 1:05:53.200 you know, the fictional book by Kinna hb By the 1:05:53.240 --> 1:05:54.800 same name, but this is a different one. And that 1:05:54.840 --> 1:05:59.760 book really talks about, uh, you know, moving towards your 1:05:59.760 --> 1:06:02.360 pain and being with your pain. And I think it's 1:06:02.360 --> 1:06:05.640 important from just a life perspective in terms of uh, 1:06:05.640 --> 1:06:07.760 you know, again those are growth opportunities, but from an 1:06:07.760 --> 1:06:10.840 investment perspective, there's a lot of parallels in terms of, 1:06:11.360 --> 1:06:14.240 you know, how do you execute on the process that 1:06:14.920 --> 1:06:17.200 you know delivers the best return when sometimes you know 1:06:17.240 --> 1:06:20.280 it can be emotionally painful, and how do you you know, 1:06:20.400 --> 1:06:23.120 deal with that? And I guess, you know, this is 1:06:23.160 --> 1:06:26.240 a very long winded answer, but what I'm reading now, 1:06:26.560 --> 1:06:29.960 what I just finished, was the Book of Hope by 1:06:30.080 --> 1:06:35.280 Jane Goodall and Douglas Abrahams, which was great and you know, 1:06:35.320 --> 1:06:38.840 there's such rates of you know, depression and anxiety now 1:06:38.920 --> 1:06:41.880 and that book was you know, all about you know, 1:06:42.160 --> 1:06:44.919 hope and why we should be hopeful and the indomitable 1:06:45.000 --> 1:06:48.320 human spirit. So that was really good. I've been reading 1:06:48.320 --> 1:06:51.080 some books on leadership given the transition, so I read 1:06:51.080 --> 1:06:57.960 Cole and Tells autobiography. We just read Principles by Ray Dalio. UM. 1:06:58.040 --> 1:07:00.480 So you know, there's a few others that in reading. 1:07:00.480 --> 1:07:03.000 But that's you know, that's a that's the tasting. That's 1:07:03.000 --> 1:07:06.520 a handful. That is let let me let me ask 1:07:06.520 --> 1:07:12.000 you things fall apart. The novel is by a Shiba, 1:07:12.160 --> 1:07:20.360 Is that right? And the nonfiction is by Pemma Yet 1:07:20.520 --> 1:07:24.560 children got it really interesting? Um, that's a that's quite 1:07:24.560 --> 1:07:27.920 a great list on I'm impressed. Uh at the breath 1:07:27.960 --> 1:07:31.520 of what what you're reading? Um? Our last two questions, 1:07:31.560 --> 1:07:35.320 starting with what sort of advice would you give to 1:07:35.560 --> 1:07:39.400 a recent college grad who was interested either in a 1:07:39.480 --> 1:07:43.360 career in finance or a career as a portfolio manager. 1:07:43.680 --> 1:07:45.880 I think, you know, if you love learning and you 1:07:46.000 --> 1:07:50.480 love competing, there's almost no better skill than investment in finance. 1:07:50.560 --> 1:07:54.080 It's just it's so interesting. You learn new things every day, 1:07:54.280 --> 1:07:56.720 and you can compete, and you need to compete at 1:07:56.720 --> 1:08:00.439 the at the highest levels, and you you her die 1:08:00.480 --> 1:08:03.440 by your result, which is both amazing because you know, 1:08:03.440 --> 1:08:06.840 it's a true meritocracy, but it's also very high pressure 1:08:07.160 --> 1:08:10.800 because it's not easy to be successful. And so if 1:08:10.840 --> 1:08:13.160 people are interested in that and that sounds like a 1:08:13.200 --> 1:08:17.200 fit with you know, their general demeanor and what they like, 1:08:17.920 --> 1:08:20.960 my advice would be, you know, just get your foot 1:08:20.960 --> 1:08:24.880 in the door. However you can. I remember people telling me, um, 1:08:24.920 --> 1:08:27.720 you can never get an investment job, you know, right 1:08:27.720 --> 1:08:29.600 out of college, which I listened to them, and I 1:08:29.680 --> 1:08:32.599 ended up getting really lucky because you know, Bill happened 1:08:32.600 --> 1:08:35.840 to come. But I didn't try other than meet Bill 1:08:35.920 --> 1:08:39.000 and send in my resume. So I think, like, you 1:08:39.040 --> 1:08:41.800 can try, and you know, don't ever tell let people 1:08:41.840 --> 1:08:45.280 tell you you can't accomplish something. We just hired, you know, 1:08:45.880 --> 1:08:49.000 you know, a couple of months ago, a wonderful junior analyst. 1:08:49.080 --> 1:08:52.639 He's extremely passionate, he has the right attitude. I'm willing 1:08:52.680 --> 1:08:55.439 to do whatever it takes. Uh, you know, how can 1:08:55.479 --> 1:08:57.320 I help you? How can I add value if you 1:08:57.360 --> 1:09:00.960 really have that you know sort of attitude and uh, 1:09:01.000 --> 1:09:04.400 you know, survey the landscape broadly and our passionate and 1:09:04.439 --> 1:09:06.519 our self taught. You know, I think you have a 1:09:06.560 --> 1:09:10.720 good shot at you know, finding an opportunity interesting And 1:09:10.760 --> 1:09:15.559 our final question, what do you know about the world 1:09:15.640 --> 1:09:19.840 of investing in portfolio management today? You wish you knew 1:09:20.520 --> 1:09:24.280 twenty or so years ago? Yeah, that's a great question. Um, 1:09:24.360 --> 1:09:26.519 you know, anything I knew about the future would have 1:09:26.520 --> 1:09:29.960 been super helpful. Um, you know, like because you could 1:09:30.120 --> 1:09:32.960 use that to earn repairings where it was housing bubble 1:09:33.040 --> 1:09:36.200 or financial crisis or uh, you know the sick local 1:09:36.280 --> 1:09:39.280 boom innovation boom pandemic. I would I would have loved 1:09:39.479 --> 1:09:41.800 to know anything about it. I mean, I guess if 1:09:41.840 --> 1:09:44.559 we step back and think about when I entered the business, 1:09:45.000 --> 1:09:48.720 what are you know some you know, broader, more timeless 1:09:49.360 --> 1:09:52.040 lessons that I didn't know then that I wish I had, 1:09:52.560 --> 1:09:54.600 you know, So I again, I think I mentioned I 1:09:54.720 --> 1:09:59.800 was very classic value to start. That was my approach. Um, 1:10:00.120 --> 1:10:05.080 I didn't understand you know, the you know, the nuances 1:10:05.160 --> 1:10:07.840 of returns on capital and the importance of those and 1:10:08.200 --> 1:10:10.559 you know how to earn returns. Are you know the 1:10:10.600 --> 1:10:14.200 importance of those to driving returns and the differences between 1:10:14.800 --> 1:10:17.479 buying a you know, fair business that a you know, 1:10:17.840 --> 1:10:20.160 at a wonderful price versus a wonderful business at a 1:10:20.160 --> 1:10:24.120 fair price, you know, and growth. Unfortunately, I started working 1:10:24.120 --> 1:10:27.280 with a great mentors and I was able to learn 1:10:27.320 --> 1:10:29.920 all of that. But those are things, you know, I 1:10:29.960 --> 1:10:33.320 think that are critical as you think about investing. That again, 1:10:33.360 --> 1:10:36.719 I didn't understand well when I first got into the business. 1:10:37.439 --> 1:10:40.120 Thank you Samantha for being so generous with your time. 1:10:40.240 --> 1:10:44.280 We have been speaking with Samantha McLemore, portfolio manager at 1:10:44.360 --> 1:10:49.040 Miller Value Partners. If you enjoy this conversation, well, be 1:10:49.120 --> 1:10:52.080 sure and check out any of our hundreds of prior 1:10:52.200 --> 1:10:56.560 such discussions. You can find those at iTunes, Spotify, Bloomberg, 1:10:56.880 --> 1:11:00.799 wherever you get your podcast from. We love your comments, 1:11:00.800 --> 1:11:04.080 feedback and suggestions. You can write to us using the 1:11:04.160 --> 1:11:08.479 email address m ib podcast at Bloomberg dot net. Sign 1:11:08.560 --> 1:11:12.200 up from my daily reading list at Ridholtz dot com. 1:11:12.280 --> 1:11:15.040 Follow me on Twitter at Rid Halts. I would be 1:11:15.120 --> 1:11:17.680 remiss if I did not thank the crack team that 1:11:17.800 --> 1:11:22.520 helps put these conversations together each week. Marks and Ascalchie 1:11:22.720 --> 1:11:27.480 is my audio engineer. Michael Batnick is my head of research. 1:11:27.880 --> 1:11:31.559 Attica val Broun is our project manager. Harris World is 1:11:31.600 --> 1:11:35.960 our producer. I'm Barryhaltz. You're listening to our ministers in 1:11:36.040 --> 1:11:37.960 business on Bloomberg Radio