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Speaker 1: Welcome a trillions. I'm Joel Webber and I'm Eric belchunis

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Speaker 1: Eric happy last days the summer? You're remote, I'm remote.

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Speaker 1: Let's do this together one more time, remote.

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Speaker 2: One last hurrah before the cold bucket of water of

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Speaker 2: return to office sets in.

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Speaker 1: You've got a new team member who is yes.

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Speaker 2: So believe it or not. We hired a mutual fund analyst,

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Speaker 2: which when I posted on LinkedIn that we're looking for this,

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Speaker 2: this guy replied with, this is like Elon Musk looking

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Speaker 2: for an internal combustible engine designer. Like what are you

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Speaker 2: talking about, right, because everybody kind of knows me as

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Speaker 2: ETF and passive and I read about Vanguard a lot

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Speaker 2: like why would you do this? But we noticed when

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Speaker 2: we covered mutual funds and notes, because sometimes we do,

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Speaker 2: the readership was really good because a lot of terminal

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Speaker 2: users are these mutual fund companies, and the sort of

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Speaker 2: horse race between them who's winning, who's leasing, really played

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Speaker 2: well on the terminal and it was still twenty six

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Speaker 2: trillion dollars in mutual funds. And there's a lot of

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Speaker 2: good active managers, even though the majority of them tend

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Speaker 2: to not beat the benchmark, And so we just thought

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Speaker 2: we should cover this and also add a counterweight to

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Speaker 2: their team's sort of bias towards passive and ETFs, And

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Speaker 2: so we hired David Cohene, who joined us a couple

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Speaker 2: months ago and has been kicking butt right off the bat,

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Speaker 2: writing a lot of notes, and this week he had

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Speaker 2: one that crushed it. It got the equivalent of like

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Speaker 2: a three run Homer in sort of readership terms for US,

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Speaker 2: and so I thought we should just go with some

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Speaker 2: of his interesting finds because there's been a couple of

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Speaker 2: notes he's written that I've just just been really surprising

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Speaker 2: to me and interesting, and I thought we should, you know,

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Speaker 2: dive into some of those.

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Speaker 1: Can't wait to explore this with David Cohne, who is

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Speaker 1: a mutual fund analyst with Bloomberg Intelligence, this time on

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Speaker 1: Trillian's five Interesting Finds from the Mutual fund world. David,

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Speaker 1: Welcome to Trillions.

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Speaker 3: Thank you for having me.

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Speaker 1: Okay, so, how do you feel about ETF We got

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Speaker 1: to start there.

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Speaker 3: I mean, they have their purpose more of an active guy,

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Speaker 3: So I like mutual funds and active ETFs, but you know,

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Speaker 3: there's a lot of areas of the market where many

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Speaker 3: managers struggle. So ETF serve a great purpose and a

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Speaker 3: lot of portfolios.

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Speaker 1: Do mutual funds still exist?

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Speaker 3: Yeah, yeah, there's a ton of assets. You think of

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Speaker 3: all the defined benefit plans for one k's, there's just

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Speaker 3: they're all mutual fund assets. A lot of it's still

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Speaker 3: actively managed, so they still have their place.

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Speaker 1: Okay, So you wrote a recent note that really did

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Speaker 1: crush it on the Bloomberg terminalized Eric mentioned, and it's

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Speaker 1: about QQQ, which we actually the last episode of Trillions

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Speaker 1: was all about how QQQ is this wildly successful ETF

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Speaker 1: and yet makes no money for Invesco, its owner. You

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Speaker 1: actually almost one up dust. What did you discover in

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Speaker 1: this note?

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Speaker 3: Well, I mean, if you look at the QQQ, it's beaten,

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Speaker 3: you know, the major market indexes. You look at some

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Speaker 3: of the other ETFs like SPY and VTI, and it's

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Speaker 3: just destroyed those over the last fifteen years. And it's

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Speaker 3: also been destroying just about every single mutual fund. But

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Speaker 3: there's been about a handful of mutual funds that have

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Speaker 3: been able to outperform the QQQ, basically by taking more risk,

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Speaker 3: whether that's concentrated bets or investing in lower quality companies.

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Speaker 1: Okay, So talk to us about this mutual fund of note.

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Speaker 3: Well, the big one is the Baron Partners Fund, managed

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Speaker 3: by Ron and Michael barn This fund's been around for

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Speaker 3: a while. It's actually outperformed the QQQ over five, ten

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Speaker 3: and fifteen years. It's fifteen year annualized return to seventeen

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Speaker 3: point eight, which is pretty good. And the thing with

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Speaker 3: this fund is it's extremely concentrated. It only held about

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Speaker 3: twenty stocks as of June thirtieth, with a allocation of

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Speaker 3: about forty point five percent to Tesla, which is pretty

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Speaker 3: huge for a mutual fund. You know, none of the

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Speaker 3: big company's, big mutual fund families typically allow their funds

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Speaker 3: to be this non diversified. And it's really kind of

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Speaker 3: written Tesla the last few years to outperformance.

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Speaker 2: Yeah, this is so interesting, Joel, because David's looking through

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Speaker 2: thousands of funds. This isn't even just growth managers. Anybody

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Speaker 2: beat the cues. And as we said last week, the

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Speaker 2: cues can be bought for twenty basis points and now

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Speaker 2: fifteen there's a mini me cues that does the same

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Speaker 2: thing for fifteen basis points. And think about that one

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Speaker 2: soul fund and what did that fund do? It got crazy.

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Speaker 2: I mean, we've been talking on the team lately about

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Speaker 2: how in order to beat the cues, you have to

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Speaker 2: kind of forget your CFA, you have to forget everything

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Speaker 2: you learned and just go wild. I'd even think the

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Speaker 2: Baron Fund, that the one that beat it, went even

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Speaker 2: you know, more wild than Kathy would, because Kathy would

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Speaker 2: in her portfolio, she has Tesla, and she Tesla obviously,

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Speaker 2: but when Tesla has a nice run, she'll sell it

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Speaker 2: to keep the waiting at ten percent or eleven percent,

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Speaker 2: so she's always profit taking. This guy just let it run.

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Speaker 2: And so he let this one stock run, which denominated

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Speaker 2: the portfolio, and it really gave him the juice, and

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Speaker 2: so he just got crazier than the cues. And I

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Speaker 2: just think this is a really I don't know if

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Speaker 2: ironic or a conundrum, which is that all these managers

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Speaker 2: go to schools, they take all the tests, they have

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Speaker 2: the numbers, and they see these highly these stocks with

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Speaker 2: just really high valuations. They're expensive, and their CFA brains

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Speaker 2: are like, there's no way this can keep going up.

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Speaker 2: I've got to invest in something that's cheaper, and that

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Speaker 2: just hasn't worked. Now it's some of it you can

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Speaker 2: beat this spy that way, but the CUES is like

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Speaker 2: just full of momentum and just the juggernaut I compared

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Speaker 2: to a locomotive train, And it's just interesting. And so

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Speaker 2: I think when when Dave wrote that no this week

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Speaker 2: that only one manager beat the mighty Cues, I think

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Speaker 2: a lot of our clients were like, yeah, I wonder

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Speaker 2: who it was, because I know I didn't. And so

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Speaker 2: it's just interesting and this could all change. The CUES

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Speaker 2: is a you know, has a high valuation, right, a

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Speaker 2: high average pe ratio. So if there's a move to

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Speaker 2: value that's long term, these people could outperform the cues

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Speaker 2: in mass. I'm not saying it can't happen, but the

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Speaker 2: last fifteen years it's really just been almost impossible to beat.

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Speaker 1: So Dave. Obviously the knock on active is always that

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Speaker 1: you might be able to beat something, but by the

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Speaker 1: time you account for fees, maybe not so much. What's

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Speaker 1: the fees look like for the fund that they've been

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Speaker 1: able to crush the cues like this.

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Speaker 3: It's not terrible. It is still a little bit higher

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Speaker 3: than I mean, obviously it's a lot higher than the

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Speaker 3: typical ETF. So an investor is basically willing to pay

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Speaker 3: a fee to outperform the cues, which is the case here,

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Speaker 3: and you know, willing to take that risk that comes

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Speaker 3: with it.

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Speaker 2: I mean, you know, and this is how you can

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Speaker 2: tell daves from the mutual fund world. One point six

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Speaker 2: nine percent. That's that's at that's a lot higher. But

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Speaker 2: for a mutual fund, it's not that bad. It's within

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Speaker 2: the range of normalcy. But for an ETF one point

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Speaker 2: sixty nine would be like, you know, a million dollars.

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Speaker 2: I mean again, qqq M, which is tracks then has

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Speaker 2: that one hundred is fifteen basis points, and a lot

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Speaker 2: of the you know, vanguard funds are under five. It's interesting, though,

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Speaker 2: this fund has seven billions, so it clearly has gotten

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Speaker 2: some interest. Seven billion is a pretty big size for

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Speaker 2: an active mutual fund, and it's taken in some money,

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Speaker 2: about half a billion over say the past five years.

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Speaker 2: But that's not a ton of money considering this performance.

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Speaker 2: So a lot of that seven billion roll came from

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Speaker 2: just the performance. So even though this mutual fund had

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Speaker 2: had such a nice run, it was the only one

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Speaker 2: to beat the cues, it barely got rewarded with flows.

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Speaker 2: Whereas Kathy would which she had her run got rewarded

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Speaker 2: big time. So you have to wonder if Baron wasn't

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Speaker 2: an ETF rapper, maybe it would have gotten more attention.

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Speaker 2: You know. Is this part of this sort of difficulty

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Speaker 2: of mutual funds having to overcome their vehicle so that

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Speaker 2: even if there is one that's really dynamic, maybe some

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Speaker 2: people don't even give it a look anymore. I don't know.

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Speaker 2: It's just an interesting case study for a lot of reasons.

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Speaker 1: Day when you dissected the portfolio, we talked about the concentration.

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Speaker 1: What else stood out to you about how they were

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Speaker 1: able to achieve this?

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Speaker 3: I mean one thing, you know, in addition to the Tesla,

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Speaker 3: it's kind of funny. I noticed that they have an

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Speaker 3: eight point three percent allocation to SpaceX and then just

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Speaker 3: a below one percent allocation to X holding, so they

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Speaker 3: seem to be a fan of Elon. It's kind of noteworthy,

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Speaker 3: you know. I mean, the Tesla's really been growing the

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Speaker 3: last three years or so. They've held it longer than that.

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Speaker 3: But the thing that's interesting is they continue to take

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Speaker 3: concentrated picks. So if you go back ten years, it's

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Speaker 3: a different company that has a huge allocation and so

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Speaker 3: they're really just making big bets on companies and you know,

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Speaker 3: keeping this really really concentrated portfolio.

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Speaker 2: They have some other stocks in here that people probably know,

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Speaker 2: like Hyatt MSCI, which is an index company, Veil Resorts,

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Speaker 2: Charles Schwab fact Set, which is a Bloomberg competitor, but

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Speaker 2: not all big weights. So those are two three percent

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Speaker 2: of the portfolio. Like you said, half the fund is

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Speaker 2: basically Elon. I mean, they might as well call it

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Speaker 2: the Elon Musk fan Club fund.

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Speaker 3: This this isn't This fund doesn't have to It's kind

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Speaker 3: of a I wouldn't say, go anywhere fund, but it's

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Speaker 3: not you know, a large cap. It kind of can

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Speaker 3: invest in any companies it wants, basically, So I think

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Speaker 3: that's a benefit. It's not really put into one little

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Speaker 3: category that it must be one specific benchmark. It kind

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Speaker 3: of just invest in what they want and it's worked

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Speaker 3: for them so far.

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Speaker 1: Interesting to get that SpaceX exposure to you like, that's

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Speaker 1: not we wouldn't see that in a ETF easily. I

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Speaker 1: don't think, Eric right.

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Speaker 2: No, I have to look at this, but I believe it.

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Speaker 2: David could correct me. Mutual funds can dabble in private

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Speaker 2: equity a little bit. They can't go full on. I

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Speaker 2: forget the percentage, but like, there are definitely some Fidelity

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Speaker 2: funds that have a little bit of private equity in there,

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Speaker 2: like little doses.

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Speaker 3: Yeah, no, they their mutual funds can hold private companies.

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Speaker 3: Just the interesting thing is every mutual fund will value

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Speaker 3: their private companies differently, so they'll place a different value

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Speaker 3: than than a different mutual fund will place on the

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Speaker 3: same company. So it kind of is hard if you're

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Speaker 3: looking at their holding to determine the exact value. So

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Speaker 3: you kind of just have to go with what they say.

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Speaker 3: But they seem to be a big fan of Elon

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Speaker 3: and they're they're going with it right now.

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Speaker 1: Okay, so we mentioned Fidelity briefly there. I also want

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Speaker 1: to bring that in because you had some interesting research

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Speaker 1: about how fidelities active equity managers have performed. How have

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Speaker 1: they been doing.

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Speaker 2: They've been doing pretty well.

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Speaker 3: I do want to mention first though, that actually over

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Speaker 3: five years, there were two Fidelity funds that outperform the

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Speaker 3: QQQ Fidelity Series Growth Opportunity or Growth Company and Fidelity

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Speaker 3: Advisor Growth Opportunities. And so those those two funds were

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Speaker 3: able to perform over five years. But if you're looking

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Speaker 3: at all fidelities active equity managers, we did a study

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Speaker 3: and it looked like about approximately fifty percent have outperformed

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Speaker 3: their benchmarks. And that's taken in into account sector funds

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Speaker 3: against their primary benchmarks, which are which is the S

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Speaker 3: and P five hundred. But then actually when you remove

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Speaker 3: the sector funds, their active managers do even better. And

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Speaker 3: so they're they're doing pretty well for themselves. And you know,

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Speaker 3: it's a big company, and you know, they've got a

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Speaker 3: great program where they train analysts from the ground up

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Speaker 3: that eventually become their PMS, and so a lot of

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Speaker 3: them are doing well. And one thing I did notice

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Speaker 3: with a lot of the growth stocks, they had a

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Speaker 3: lot of exposure to Navidia and in fact, I think

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Speaker 3: they were the third largest holder of Navidio, which is

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Speaker 3: I covered in a different note, which is really driven

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Speaker 3: a lot of their gains this year.

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Speaker 2: Again, latching onto a juggernaut stock seems to be key

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Speaker 2: for pms at least in this era, versus finding like

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Speaker 2: a value play. Yeah, you're right. They're the third biggest

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Speaker 2: holder after Vanguard and black Rock and bigger than State Streets.

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Speaker 2: So they definitely overweight. The other thing about Fidelity, it's interesting.

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Speaker 2: Obviously they have this famous name for active, but they

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Speaker 2: haven't done a ton in the ETF world, and you

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Speaker 2: know they're active mutual funds. Some see inflows, some see outflows,

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Speaker 2: but where they get most of their flows these days

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Speaker 2: is in their index mutual funds, which now have over

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Speaker 2: a trillion dollars roll. If Fidelity converted all of its

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Speaker 2: index mutual funds into ETFs, they'd be bigger than State

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Speaker 2: Street in terms of assets. So they have a lot

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Speaker 2: going on. They're just they're a private company. You don't

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Speaker 2: hear a ton about them anymore, but I think we're

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Speaker 2: gonna hear big things. I think they're gonna try to

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Speaker 2: take some of what David found, these managers who are

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Speaker 2: bucking the trend. If you have over half being their benchmarks,

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Speaker 2: that's way better than the average, because the average about

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Speaker 2: a third. They're probably going to try to figure out

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Speaker 2: how to move that that brain power and that ip

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Speaker 2: into the ETF rapper. I think we're going to see

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Speaker 2: that happen over the next ten years from Fidelity and

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Speaker 2: many other companies. But Fidelity, with that track record, it

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Speaker 2: should help them a lot. I think their price point,

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Speaker 2: how they where they put the expense issio will matter.

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Speaker 2: But overall, if you can perform that consistently, you're going

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Speaker 2: to get looks.

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Speaker 1: Okay. So the irony here is obviously you've written a

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Speaker 1: book about Jack Bogel and what Jack Bogel did at Vanguard.

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Speaker 1: Fidelity not known for indexes or anything touching passive. So

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Speaker 1: so what stands out to you, Eric about how Fidelity

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Speaker 1: has found some success here.

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Speaker 2: I mean, honestly, Bogel relished this, he loved Fidelity used

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Speaker 2: to basically, you know, dump on passive back in the day.

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Speaker 2: I think I think they're the ones who say, would

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Speaker 2: you pay for an average surgeon if you were having

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Speaker 2: heart surgery? You know, an indexes like average. And there

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Speaker 2: was a lot of pushback on what Bogel was doing

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Speaker 2: back in the day, but Fidelity kind of came around

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Speaker 2: to their credit. They swallowed their pride and launched a

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Speaker 2: series of low cost index funds. And now when Fidelity

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Speaker 2: puts out a press release, they say, every single one

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Speaker 2: of our index funds is cheaper than the Vanguard equivalent,

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Speaker 2: and they are a lot of them are zero to

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Speaker 2: one to two basis points but Bogel loved this because

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Speaker 2: he wanted to change the whole game, not just how

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Speaker 2: Vanguard gets successful. So he would be happy that Fidelity

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Speaker 2: is seeing so much success in the low cost index

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Speaker 2: funds that they put out. But I think what blows

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Speaker 2: me away is that trillion dollars. That is a ton

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Speaker 2: of money that no one talks about because it's in

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Speaker 2: the mutual fund rapper. Again, if Fidelity was an ETF,

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Speaker 2: if all those index mutual funds were ETFs, Fidelity be

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Speaker 2: the talk of the town. David, speaking of fees, one

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Speaker 2: other note you did that we sort of collaborated on

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Speaker 2: to a degree, was you looked at flows and mutual

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Speaker 2: funds based on expense ratio buckets, just to see if

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Speaker 2: there was a connection between that, because you know what's

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Speaker 2: more important now if you're active, your performance or your fee,

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Speaker 2: And just tell me what you found when you look

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Speaker 2: at that.

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Speaker 3: So I separated mutual funds into three feed buckets under

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Speaker 3: forty basis points, between forty and eighty basis points, and

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Speaker 3: over eighty basis points. And similar to findings that Eric

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Speaker 3: and the rest of our team have found on the

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Speaker 3: ETF side, if you look at mutual funds under forty

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Speaker 3: basis points, they're seeing better flows than the rest of

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Speaker 3: you know, than the rest of their counterparts or peers.

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Speaker 3: So on the equity side, it's more of less outflows.

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Speaker 3: So equity mutual funds are still seeing significant outflows, but

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Speaker 3: once you drop down to below forty basis points, the

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Speaker 3: outflows is considerably less than the other two buckets. On

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Speaker 3: the fixed income side, it was actually seeing a lot

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Speaker 3: more inflows. So fixed income mutual fun low with under

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Speaker 3: forty basis points are seeing a ton of flows compared

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Speaker 3: but once you go over forty or even over eighty,

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Speaker 3: it's disastrous on both the equity and the fixed income side.

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Speaker 2: And so this completely is intugual with what we've done

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Speaker 2: on the ETF side. Research wise, active ETFs are finally

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Speaker 2: having their day. It took them ten years, but it

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Speaker 2: wasn't until they got cheap and forty basis points appears

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Speaker 2: to be some kind of a magic number for advisors

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Speaker 2: because ninety five percent of the flows into active ETFs,

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Speaker 2: which are massive these days, is into ETFs under forty

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Speaker 2: BIPs that are active. It's so only and they only

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Speaker 2: make up twenty five percent of the products. So think

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Speaker 2: about that that's punching way above its weight. It's very clear.

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Speaker 2: My theory on all this, and we've gone I thought

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Speaker 2: about this heavily and it's kind of our equals MC

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Speaker 2: squared is you have to now beta adjust your fees

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Speaker 2: if you're active. So what do I mean by that beta?

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Speaker 2: Which is just owning the whole market? And an index

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Speaker 2: fund is free. So if you own a lot of beta,

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Speaker 2: like I'm talking Apple, Microsoft, if that's the top of

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Speaker 2: your portfolio and you're beta heavy, you have to lower

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Speaker 2: your fee because an advisor's like, well I can get

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Speaker 2: most of that for free, Now why am I going

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Speaker 2: to pay you one percent? So as you have a

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Speaker 2: fund a manager that's close to the index, if they

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Speaker 2: come down and fee and that way they sort of

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Speaker 2: beta adjust their fees. I think that in advisors like, well, okay,

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Speaker 2: you're just charging me for the active And that's why

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Speaker 2: we say you have to be either cheap or shiny

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Speaker 2: if you're active. If you want to charge seventy one

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Speaker 2: hundred basis points, you've got to be baron funds or arc.

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Speaker 2: You got to go hog wild and swing for the

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Speaker 2: fences like Babe Ruth and there, because there you can

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Speaker 2: actually double or triple the S and P and not

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Speaker 2: just beat up by two three percent. But if you're

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Speaker 2: one of these managers looking for a little bit of

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Speaker 2: excess return beyond the benchmark, I just think that beta

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Speaker 2: being free is such a massive innovation that Bogel and

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Speaker 2: Vanguard brought along over the last forty years. You have

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Speaker 2: to adjust to that, and I think the mutual funds

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Speaker 2: show it, and the ETFs really show it.

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Speaker 1: Okay, Dave, you got another note where you looked at

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Speaker 1: fact a factor, particularly quality and the stock picking in

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Speaker 1: small caps. Would you would you learn there?

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Speaker 3: Well, it's actually interesting because a lot of the funds

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Speaker 3: I noticed that did upperform the QQQ. They took on

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Speaker 3: a lot more risk. But this is actually on the

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Speaker 3: opposite side. This is a as you know, most small

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Speaker 3: caps are underperforming large caps for a big part of

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Speaker 3: the year, and but this fund, that's the Ker Small

356
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Speaker 3: Cap Fund, they have a quality factor type approach where

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Speaker 3: they're looking for reality quality type companies and so they've

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Speaker 3: been able to do that keep their risks down and outperform.

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Speaker 3: But one thing I do want to mention about this fund,

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Speaker 3: like Barons, it's a concentrated fund. It just instead of

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Speaker 3: the high flyers. This is much more of a you know,

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Speaker 3: better for companies that would be considered part of the

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Speaker 3: quality factor, great balance sheet, it's just really good companies.

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Speaker 3: But they're basically making massive bets on a few companies.

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Speaker 1: I'm sensing a theme here like concentration and quality.

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Speaker 3: Yeah, it's you know, definitely concentration does work, but I

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Speaker 3: actually wrote another note that it doesn't always work. It

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Speaker 3: really depends on the manager. If a manager has skill

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Speaker 3: and they know what they're doing, and they really pick

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Speaker 3: great stocks, concentration can do great things. But if you're

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Speaker 3: just concentrating a portfolio just for the sake of it,

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Speaker 3: it brings on a lot of risk and a lot

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Speaker 3: of loss, and a lot of mutual funds of it

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Speaker 3: that are just concentrated and really don't have the best

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Speaker 3: teams are really faltering.

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Speaker 2: Yeah, Joe, when I said, Earl, you got to be

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Speaker 2: cheap or shiny. If you're cheap, it's almost less performance sensitive.

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Speaker 2: Like you could be a low cost stock picker who

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Speaker 2: charges like DFA or Vantis or JP Morgan who charges

380
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Speaker 2: like twenty five basis points to invest in small cat

381
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Speaker 2: value and just the fee alone, you'll get some interest,

382
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Speaker 2: but if your high fee and high concentration it's not enough,

383
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Speaker 2: you then have to perform. So I think ARC is

384
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Speaker 2: a great example. Some thematic ETFs are good examples of that,

385
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Speaker 2: and this kar is a good example. Also. I think

386
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Speaker 2: that in the small cap space that's an interesting spot

387
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Speaker 2: for active because if you look at the number of

388
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Speaker 2: analysts that cover like certain large cap stocks like Amazon,

389
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Speaker 2: it's in like the fifties, right, And then you get

390
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Speaker 2: down to small caps, some stocks aren't covered at all

391
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Speaker 2: or barely, so there's probably more opportunity for someone to

392
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Speaker 2: find something novel. Right. There's less information on all these

393
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Speaker 2: companies that everybody knows, so I'm not totally surprised that

394
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Speaker 2: this manager found a niche down here. But again, this

395
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Speaker 2: is why David was hired, was to sort of dig

396
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Speaker 2: into all these managers. Again, there's almost double as many

397
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Speaker 2: mutual funds as ETFs, you know, and to find some

398
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Speaker 2: of the diamonds in the rough. And I think this

399
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Speaker 2: is a good example speaking of diamonds in the rough

400
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Speaker 2: and finding exotic species. This last one is a good

401
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Speaker 2: just a great one to end on. When David showed

402
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Speaker 2: me this fund, I never heard of it. I was like, WTF,

403
00:21:08,520 --> 00:21:10,800
Speaker 2: I can't say the whole thing, so let's give the acronym.

404
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Speaker 2: And I never seen anything like this. I'll just introduce

405
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Speaker 2: it as that and say, David, talk to me about.

406
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Speaker 3: Fairholme Film is one of the more interesting funds I've

407
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Speaker 3: ever seen in all the years I've covered mutual funds.

408
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Speaker 3: This fund has a or according to our data, a

409
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Speaker 3: ninety one percent allocation to a real estate company called

410
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Speaker 3: Saint Joe. And so this is just a this is

411
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Speaker 3: extreme concentration. It makes Baron Funds look like a you know,

412
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Speaker 3: portfolio of five hundred stocks. I mean, it's just and

413
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Speaker 3: you know, I originally thought this made it not qualify

414
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Speaker 3: as a regulated investment company just due to tax issues,

415
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Speaker 3: and you know whether they could claim that, but apparently

416
00:21:58,520 --> 00:22:01,159
Speaker 3: the there's a threshold of about twenty five percent that

417
00:22:01,200 --> 00:22:04,879
Speaker 3: you can't go above. But apparently that's during purchases. So

418
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Speaker 3: if your purchase is under the twenty five percent and

419
00:22:07,840 --> 00:22:11,399
Speaker 3: then you let that stock grow continuously, it can go

420
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Speaker 3: up to ninety percent or so, it can go up

421
00:22:13,960 --> 00:22:16,439
Speaker 3: to one hundred percent if you wanted to. It's just

422
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Speaker 3: not very traditional. I'd say it's definitely out of the ordinary.

423
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Speaker 3: But I mean they posted a return of thirty one

424
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Speaker 3: point three percent last month, which is pretty ridiculous, pretty impressive.

425
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Speaker 3: But with a fun like this, you're going to have

426
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Speaker 3: extreme risk as well, and you know they're likely not

427
00:22:34,960 --> 00:22:37,280
Speaker 3: going to perform like that every month. It's going to

428
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Speaker 3: go back and forth. And I think if you own this,

429
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Speaker 3: you really need to not pay attention to it. You

430
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Speaker 3: need to kind of look at it over the long term.

431
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Speaker 3: It kind of just let it sit there, or else

432
00:22:47,520 --> 00:22:50,040
Speaker 3: you're going to have a heart attack. Wait, what is

433
00:22:50,080 --> 00:22:53,120
Speaker 3: that holding though it's well, the main stock right now

434
00:22:53,160 --> 00:22:56,040
Speaker 3: is a real estate company called Saint Joe that's really benefiting,

435
00:22:56,600 --> 00:22:58,680
Speaker 3: you know, due to real estate prices in Florida.

436
00:22:59,560 --> 00:23:03,959
Speaker 2: Hold on, Joel, this is very important. It's not just Florida.

437
00:23:04,080 --> 00:23:07,160
Speaker 2: It's the Panhandle, where as you know, my dad lives

438
00:23:07,160 --> 00:23:08,919
Speaker 2: and I visit all the time and tell you I'm

439
00:23:08,960 --> 00:23:13,080
Speaker 2: going to live someday because it's so beautiful, emerald green water,

440
00:23:13,800 --> 00:23:16,840
Speaker 2: white sands that are so fine to the foot, it's clean,

441
00:23:17,680 --> 00:23:21,679
Speaker 2: there's no taxes, and so this manager, it's almost as

442
00:23:21,720 --> 00:23:23,679
Speaker 2: if he used this stock to buy a bunch of

443
00:23:23,760 --> 00:23:26,119
Speaker 2: land in a place in America. He thinks he's going

444
00:23:26,200 --> 00:23:28,360
Speaker 2: to go up because even the manager's like, I want

445
00:23:28,359 --> 00:23:30,280
Speaker 2: to move there and drive a golf cart around every day.

446
00:23:30,400 --> 00:23:31,720
Speaker 2: And I'm like, oh my god, this guy has the

447
00:23:31,760 --> 00:23:34,439
Speaker 2: same life vision as me, so I can relate to.

448
00:23:34,520 --> 00:23:39,760
Speaker 2: This is just this amazing, long, long game trade to

449
00:23:39,880 --> 00:23:42,560
Speaker 2: own land in Florida through a mutual fund that owns

450
00:23:42,560 --> 00:23:44,200
Speaker 2: one stock. It's just so bizarre.

451
00:23:44,440 --> 00:23:48,720
Speaker 1: We've gone almost five years or so without Eric talking

452
00:23:48,800 --> 00:23:51,280
Speaker 1: his book, and then he finally broke down and talked

453
00:23:51,320 --> 00:23:51,760
Speaker 1: his book.

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00:23:52,720 --> 00:23:55,679
Speaker 2: So Joel. While the Fair Home Fund, even with everything

455
00:23:55,720 --> 00:23:57,880
Speaker 2: we just said, while it did not beat the QQQ,

456
00:23:58,080 --> 00:24:01,159
Speaker 2: obviously only Baron did that, it was up almost as

457
00:24:01,200 --> 00:24:03,080
Speaker 2: much as the cues over the past five years, and

458
00:24:03,200 --> 00:24:05,560
Speaker 2: obviously beat the S and P by a lot. But

459
00:24:05,600 --> 00:24:07,800
Speaker 2: what's interesting is if you look at this fund in

460
00:24:07,840 --> 00:24:10,639
Speaker 2: its peer group, it's beat nine to nine percent of

461
00:24:10,680 --> 00:24:13,119
Speaker 2: its peers pretty much five to three one year and

462
00:24:13,320 --> 00:24:17,960
Speaker 2: year to date. Again, it's very rare to see a fund,

463
00:24:18,440 --> 00:24:21,200
Speaker 2: you know, register in the high nineties like this, so Joel,

464
00:24:21,280 --> 00:24:22,920
Speaker 2: I think the lesson here in a lot of these

465
00:24:22,960 --> 00:24:25,399
Speaker 2: funds today is if you want to be at the

466
00:24:25,400 --> 00:24:28,199
Speaker 2: top of the heap and be able to charge a

467
00:24:28,240 --> 00:24:32,119
Speaker 2: decent fee. You know, as Prince says, let's go crazy,

468
00:24:32,119 --> 00:24:33,000
Speaker 2: you got to get wild.

469
00:24:33,960 --> 00:24:38,359
Speaker 1: Yeah, sure, I'll take that. David. I got to ask,

470
00:24:38,440 --> 00:24:42,919
Speaker 1: if we've got as much exposure to Florida Panhandle, what

471
00:24:43,080 --> 00:24:44,520
Speaker 1: else does he have in the portfolio?

472
00:24:45,480 --> 00:24:50,280
Speaker 3: Only a few other stocks. Enterprise Products Partners, Commercial Metal

473
00:24:50,320 --> 00:24:56,000
Speaker 3: Company is actually a Fidelity Treasury fund. It's also part

474
00:24:56,000 --> 00:24:58,960
Speaker 3: of the portfolio. But these are all very He's also

475
00:24:59,000 --> 00:25:00,800
Speaker 3: got Treasury bills in there as well, but these are

476
00:25:00,800 --> 00:25:04,120
Speaker 3: all tiny allocations. It's just really long.

477
00:25:05,320 --> 00:25:09,280
Speaker 1: Yeah, long Panhandle. All right, Dave, we got one more

478
00:25:09,400 --> 00:25:12,680
Speaker 1: question for you. It's a it's a it's a great

479
00:25:12,720 --> 00:25:16,240
Speaker 1: finale question. We ask many a guest on Trillions, which is,

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00:25:16,680 --> 00:25:21,840
Speaker 1: what is your favorite et F ticker? Favorite et F Yeah, ticker.

481
00:25:21,920 --> 00:25:25,119
Speaker 3: Oh that's a good question.

482
00:25:25,440 --> 00:25:27,880
Speaker 1: I know, I know. This is like I'm bringing I'm

483
00:25:27,880 --> 00:25:28,640
Speaker 1: bringing you the heater.

484
00:25:32,280 --> 00:25:35,359
Speaker 3: I would just say vt I because I want to

485
00:25:35,359 --> 00:25:36,280
Speaker 3: grab the whole market.

486
00:25:36,800 --> 00:25:43,320
Speaker 1: Yeah, all right, bullets, Yeah a good, all good, All right, Dave,

487
00:25:43,320 --> 00:25:45,439
Speaker 1: thanks for joining us on Trillions. Well, thanks for having me,

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00:25:49,680 --> 00:25:52,080
Speaker 1: Thanks for listening to Trillions. Until next time, you can

489
00:25:52,080 --> 00:25:56,280
Speaker 1: find us on the Bloomberg terminal. Bloomberg dot com, Apple Podcasts, Spotify,

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00:25:56,720 --> 00:25:59,359
Speaker 1: or wherever else you like to listen. We'd love to

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00:25:59,400 --> 00:26:02,480
Speaker 1: hear from you. We're on X, I'm at Joel Webber Show,

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00:26:02,800 --> 00:26:07,000
Speaker 1: He's at Eric Baltunas. Trillions is produced by Magnus Hendrickson.

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00:26:07,960 --> 00:26:11,879
Speaker 1: Sage Bauman is the head of Bloomberg podcast Bye.