WEBVTT - Blue Owl Capital Co-CEO Marc Lipschultz Talks Market Climate

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Blue Al Capital co CEO Mark Lipschaltz joins us alongside

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<v Speaker 2>our very own Chanellegue Basic Mark. I look at the

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<v Speaker 2>shares and it's down today. As I mentioned, they're also

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<v Speaker 2>down about twenty two percent so far this year. Investors

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<v Speaker 2>are clearly nervous with all the uncertainty over the economy,

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<v Speaker 2>over tariffs, over policy, if there's a recession. The concern

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<v Speaker 2>here is about the exposure that private credit funds have.

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<v Speaker 2>How do you prepare investors for the kind of markdown

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<v Speaker 2>set you may need to take if we do get

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<v Speaker 2>that kind of downturn.

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<v Speaker 3>Great to be here today, and actually great to be

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<v Speaker 3>here during a time of uncertainty, candidly, because our business

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<v Speaker 3>at Blue Owl is built exactly for this environment. Look,

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<v Speaker 3>I won't pretend to understand how stocks trade on a

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<v Speaker 3>day to day basis, month to month basis. I'm thankful

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<v Speaker 3>in the mornings that I work in the private market

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<v Speaker 3>where I can focus on making the right long term

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<v Speaker 3>decisions for both BLUA as a company and for our investor.

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<v Speaker 3>Things are going really well. And this is the thing

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<v Speaker 3>about uncertainty. Our business business, all our lines, all our products,

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<v Speaker 3>we're built around downside protection, predictability and stability, private credit,

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<v Speaker 3>real assets with long term leases, with investment grade credit

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<v Speaker 3>worthy counterparties.

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<v Speaker 1>These are businesses that were built for this environment.

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<v Speaker 3>This is actually where we outperform even more. Now there's

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<v Speaker 3>a baby in a bath water for now and on fact,

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<v Speaker 3>if you look at the old stocks.

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<v Speaker 1>They've traded literally as they're tethered together.

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<v Speaker 3>If you watch what's happened for the year to date,

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<v Speaker 3>it's just this whole group movement. And I think, well,

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<v Speaker 3>understand that shorthand behavior in the marketplace.

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<v Speaker 1>But actually this is exactly.

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<v Speaker 3>Where the Blue Hole model, both our investment products, but

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<v Speaker 3>probably even more importantly, our stock is totally different. We

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<v Speaker 3>don't have any carry we have fee income, we have

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<v Speaker 3>permanent capital, so we actually have a business that is

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<v Speaker 3>continuing to thrive. You have people coming on here right

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<v Speaker 3>every day talking about, hey, they need to withdraw their

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<v Speaker 3>guidance for the year.

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<v Speaker 1>We're coming on here saying buiness is really good. Carry on.

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<v Speaker 4>Wait, the phenomenon is so strange, right because you have

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<v Speaker 4>the Nasdaq one hundred only down about five percent this year, but.

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<v Speaker 1>Blue Owl areas Apollo all.

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<v Speaker 4>Down much more than that what is it that the

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<v Speaker 4>market is seeing in the big alternative asset managers that

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<v Speaker 4>they're not even seeing in the big tech stocks.

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<v Speaker 3>Yeah, and I fear the answer might be, what is

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<v Speaker 3>it the market's not seeing. I think they're not understanding

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<v Speaker 3>the durability and the difference that Blue All, for example,

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<v Speaker 3>is now two hundred and seventy five billion dollars Roughly.

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<v Speaker 3>We're a diversified business, but again still our business model

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<v Speaker 3>is actually higher growth and more stable, more predictable than

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<v Speaker 3>some of the best tech companies.

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<v Speaker 1>And so I'm not sure. I think there.

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<v Speaker 3>Probably is a reality that we're still a small segment

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<v Speaker 3>of the world and there's still a tendency in times

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<v Speaker 3>of fear to sort of like act first and refine later.

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<v Speaker 3>But those who take the time to focus on the

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<v Speaker 3>Blue All stock are going to recognize great dividend yield,

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<v Speaker 3>a very predictable, high growth business. Again, feed driven, it's

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<v Speaker 3>not about carry, it's not about transaction fees.

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<v Speaker 1>We're marching on.

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<v Speaker 2>So your second biggest business is real assets, and that

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<v Speaker 2>includes real estate as well as data centers. Meta says

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<v Speaker 2>constructing these data centers is costing more. That's what we

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<v Speaker 2>heard from them. From yesterday's earnings. What are you seeing?

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<v Speaker 3>Yeah, so the data center business is one of our

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<v Speaker 3>best business's highest growth businesses. In point of fact, we

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<v Speaker 3>just closed our third data center fund at the seven

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<v Speaker 3>billion dollar hardcap, nearly double our prior fund. If we

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<v Speaker 3>think about that in this environment, we just doubled that

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<v Speaker 3>fund size nearly.

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<v Speaker 1>It's because it works.

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<v Speaker 3>And in fact that fund is probably sixty percent already committed,

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<v Speaker 3>and the vast preponderance of that is to people like

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<v Speaker 3>Microsoft and Amazon. I mean, this is this is why

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<v Speaker 3>I say this is like a fantastic opportunity set for us. So,

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<v Speaker 3>you know, data centers absolutely when you have supply demand

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<v Speaker 3>and balances, and right now there is clearly a whole

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<v Speaker 3>lot more demand than there is available supply, particularly when

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<v Speaker 3>married to the technical expertise required.

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<v Speaker 1>To build that supply. So we're one of very few

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<v Speaker 1>people in the world.

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<v Speaker 3>We have a thousand people in our operations area to

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<v Speaker 3>design and then be able to operate the body that

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<v Speaker 3>surrounds that AI brain.

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<v Speaker 4>So not only are you seeing data center demand really

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<v Speaker 4>hold up from the big hyperscalers, you are also financing

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<v Speaker 4>Stargates first data center in Abilene. This is that big

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<v Speaker 4>fancy SoftBank OpenAI Oracle initiative to bring more activity back

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<v Speaker 4>to the US. Are you involved in financing any other

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<v Speaker 4>Stargate projects and what's the promise of the initiative.

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<v Speaker 3>Well, we're very excited about being in this initial partnership

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<v Speaker 3>with Stargate build in their premiere project.

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<v Speaker 1>In fact, our team was just down there. It's quite

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<v Speaker 1>a sight to see the scale of.

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<v Speaker 3>This enterprise and the partners The power of that partnership

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<v Speaker 3>is really exciting. So, look, we're happy to be right

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<v Speaker 3>at the ground floor, and I anticipate and hope will

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<v Speaker 3>be a very important partner to Stargate going forward. Look,

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<v Speaker 3>when you look at data centers, you know sort of

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<v Speaker 3>think of a spot. We tend to be there because

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<v Speaker 3>we have really one of the premier capabilities to both

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<v Speaker 3>provide capital in the form as designed, Stargate is more

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<v Speaker 3>of a traditional triple net real estate structure. When we

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<v Speaker 3>think about some of the Microsoft projects those are data

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<v Speaker 3>center they're a little bit different in terms of the

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<v Speaker 3>exact gives and takes, but the end state is the same.

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<v Speaker 3>You end up with an extremely long term commitment from

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<v Speaker 3>some of the best credits in the world at really

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<v Speaker 3>attractive from our point of view, rates with built in escalators.

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<v Speaker 1>What fixed income security has a coupon that goes up

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<v Speaker 1>every year for decades?

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<v Speaker 4>I want to go somewhere else in the credit market

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<v Speaker 4>is now kind of back to the business you were

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<v Speaker 4>first really known for here because there are some really

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<v Speaker 4>interesting things happening in the market. Some would say some

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<v Speaker 4>funky things happening in the market. Well, for example, you

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<v Speaker 4>saw some of your rivals of Parlow in Carlisle by

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<v Speaker 4>the first SRT tied to private debt BDCs. And I

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<v Speaker 4>wanted to ask you in particular about this because now

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<v Speaker 4>you're looking at package loans that are being sold in

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<v Speaker 4>tranches off to private credit firms. Again, what's going on here?

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<v Speaker 4>I mean this does call back a little bit to

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<v Speaker 4>what we saw pre crisis from the banks, does it not?

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<v Speaker 4>In terms of CDO and CDO square. Do you think

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<v Speaker 4>that maybe too much is being packaged at this point?

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<v Speaker 3>So there, look is a funky world right now. So

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<v Speaker 3>I'm sure there are some funky things going on at

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<v Speaker 3>Blue Owl.

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<v Speaker 1>We stick to our knitting. That's our business has.

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<v Speaker 3>Been built around doing a few things really really well.

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<v Speaker 3>We're not off trying to turn an in liquid asset

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<v Speaker 3>into a liquid ASSEID.

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<v Speaker 1>We've talked about that.

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<v Speaker 3>We're not trying to go and find new ways to

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<v Speaker 3>buy a secondary product.

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<v Speaker 1>We have a massive origination engine. We go out and

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<v Speaker 1>we find great companies with great backers.

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<v Speaker 3>And we provide them long term solutions and we get

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<v Speaker 3>paid for that and we get a great credit agreement.

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<v Speaker 3>And that's what we do in credit and that's why

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<v Speaker 3>today we still are running since inception at a thirteen

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<v Speaker 3>basis point and realized loss rate. We focus on a

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<v Speaker 3>core set and by the way, our average company is

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<v Speaker 3>two hundred and fifty million dollars in even mark How.

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<v Speaker 4>Much are you stepping in now? There is clearly some

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<v Speaker 4>trouble under the surface. You are seeing companies based for structuring.

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<v Speaker 4>Is Blue Owl going to step in in a much

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<v Speaker 4>bigger way as we see more of these come to market.

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<v Speaker 1>Yes, we are here.

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<v Speaker 3>We we have a lot of capital, We are a

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<v Speaker 3>reliable partner for people and at the end of the day,

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<v Speaker 3>what we've built is a one stop stop, one stop

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<v Speaker 3>shop solutions provider, whether you're a peebacked company or another

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<v Speaker 3>public or private enterprise. So absolutely we are very front

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<v Speaker 3>foot in and thankfully we don't have current problems that

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<v Speaker 3>are distracting us, and that's endemic to a lot of

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<v Speaker 3>Oltz firms, so we can be very much on our

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<v Speaker 3>front foot, all.

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<v Speaker 2>Right, Mark, really appreciate your joining us today. Mark Clipscholtz

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<v Speaker 2>is Coco Blue l Capital