1 00:00:13,600 --> 00:00:16,680 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,760 --> 00:00:20,200 Speaker 1: Markets podcast. I'm Sarah plant Zach reporter on the Cross 3 00:00:20,200 --> 00:00:22,880 Speaker 1: Asset Team, and I'm Mike Reagan, a senior editor on 4 00:00:22,920 --> 00:00:25,040 Speaker 1: the Markets Team. This week on the show, in a 5 00:00:25,120 --> 00:00:29,520 Speaker 1: world dominated by factor investing in passive strategies, we often 6 00:00:29,600 --> 00:00:32,400 Speaker 1: hear about the quote unquote death of the stock picker, 7 00:00:32,800 --> 00:00:35,320 Speaker 1: but is it actually true. We talked to a fund 8 00:00:35,360 --> 00:00:38,640 Speaker 1: manager who ranked in the top one percentile of his 9 00:00:38,760 --> 00:00:42,479 Speaker 1: category and also, after years of underperformance, is the value 10 00:00:42,479 --> 00:00:45,479 Speaker 1: factor dead? And Sarah, before we start, I want to 11 00:00:45,520 --> 00:00:47,400 Speaker 1: give a shout out to some of the listeners out 12 00:00:47,400 --> 00:00:50,239 Speaker 1: there who have been providing valuable content for the for 13 00:00:50,280 --> 00:00:55,720 Speaker 1: the program. Our longtime listener that character Twiggy Sunday on Twitter, 14 00:00:55,800 --> 00:00:59,920 Speaker 1: He's contributed something for the Craziest Thing of the Week segment. 15 00:01:00,720 --> 00:01:03,680 Speaker 1: He also predicted that I would win the Craziest Thing. 16 00:01:03,960 --> 00:01:07,280 Speaker 1: I think I missed that part of his the show 17 00:01:07,959 --> 00:01:10,679 Speaker 1: that once again I will win. And you know that brilliant, 18 00:01:10,720 --> 00:01:14,360 Speaker 1: You're brilliant, twig The listeners have confidence, uh in my 19 00:01:14,400 --> 00:01:17,920 Speaker 1: ability to clearly it doesn't matter that I'm the sole 20 00:01:18,000 --> 00:01:22,120 Speaker 1: judge of it. Also, but also Ellie Panamy, we really 21 00:01:22,160 --> 00:01:27,160 Speaker 1: thank you for your amazing contributions to our Crazy Things ideas, 22 00:01:27,200 --> 00:01:32,240 Speaker 1: and we will eventually get one of your favorite guests 23 00:01:32,240 --> 00:01:34,759 Speaker 1: back on the show. We will, we will. H Ellie 24 00:01:34,880 --> 00:01:37,720 Speaker 1: or Eli or whatever his fake Twitter name is. H 25 00:01:37,880 --> 00:01:40,280 Speaker 1: decided that the craziest thing he saw in markets would 26 00:01:40,319 --> 00:01:43,440 Speaker 1: be like thirty year old picture of our colleague Chris 27 00:01:43,560 --> 00:01:46,440 Speaker 1: Nag which, now I gonna say two listeners out there, 28 00:01:46,600 --> 00:01:50,640 Speaker 1: if you're thinking about tweeting us embarrassing pictures of our colleagues, 29 00:01:50,720 --> 00:01:53,640 Speaker 1: just take a minute, think twice about it, and then 30 00:01:53,680 --> 00:01:56,400 Speaker 1: absolutely go ahead and tweet them directly to us. And 31 00:01:56,400 --> 00:01:58,960 Speaker 1: there's also probably a better chance that if you were 32 00:01:59,000 --> 00:02:00,760 Speaker 1: to ask us a question or share a crazy thing, 33 00:02:00,880 --> 00:02:04,720 Speaker 1: that will actually use your absolutely and sorry, remember, listeners 34 00:02:04,760 --> 00:02:08,280 Speaker 1: can actually appear on the show if they call our 35 00:02:08,360 --> 00:02:12,120 Speaker 1: special what Goes Up hotline whose number I chronically forget, 36 00:02:12,200 --> 00:02:13,920 Speaker 1: so hopefully you have it handy. I have it handy 37 00:02:13,960 --> 00:02:17,000 Speaker 1: as always. It's six or six three two four three 38 00:02:17,240 --> 00:02:19,720 Speaker 1: for nine zero, So feel free to give us a call, 39 00:02:19,760 --> 00:02:21,640 Speaker 1: and if you do, we may even play your message 40 00:02:21,680 --> 00:02:24,080 Speaker 1: on the show. But let's get right to it, and 41 00:02:24,320 --> 00:02:26,800 Speaker 1: as you alluded to, we have a guest. UH and 42 00:02:26,880 --> 00:02:29,680 Speaker 1: full disclosure. UH, this guy is actually a good friend 43 00:02:29,720 --> 00:02:31,760 Speaker 1: of mine. But that's not why he's on the show. 44 00:02:31,760 --> 00:02:34,520 Speaker 1: He's on the show because he has the reputation of 45 00:02:34,760 --> 00:02:37,360 Speaker 1: pretty much a rock star, I would say as a 46 00:02:37,400 --> 00:02:41,600 Speaker 1: stock picker, as you said he would he loves this, 47 00:02:41,880 --> 00:02:43,760 Speaker 1: he likes what he hears. But he was the head 48 00:02:43,760 --> 00:02:47,480 Speaker 1: of the small cap team at JP Morgan Asset Management. 49 00:02:47,680 --> 00:02:51,040 Speaker 1: UH for a while. The small cap equity fund under 50 00:02:51,120 --> 00:02:54,440 Speaker 1: his leadership, as you said, Top one per Cent won 51 00:02:54,480 --> 00:02:58,480 Speaker 1: the Lipper Award in two thousand and thirteen for the 52 00:02:58,520 --> 00:03:01,600 Speaker 1: best fund over ten years. UH in the small cap category. 53 00:03:01,840 --> 00:03:04,480 Speaker 1: Two thousand and nine, it won the same award UH 54 00:03:04,520 --> 00:03:08,200 Speaker 1: and small Caps for best fund over five years. And sorry, 55 00:03:08,240 --> 00:03:10,480 Speaker 1: this is a guy whose brain I've been picking for 56 00:03:10,800 --> 00:03:14,519 Speaker 1: years because we're both residents of the brainy borough of 57 00:03:14,639 --> 00:03:18,800 Speaker 1: my touching. And typically my questions are like, Hey, what 58 00:03:18,840 --> 00:03:20,640 Speaker 1: do you think of the market? Is it overvalued? How 59 00:03:20,639 --> 00:03:22,320 Speaker 1: about bond yields? Are they going to go too high? 60 00:03:22,320 --> 00:03:24,720 Speaker 1: What about growth versus value? Hey do you like small Catholic? 61 00:03:24,760 --> 00:03:27,560 Speaker 1: You're asking me the wrong questions and his answer will 62 00:03:27,560 --> 00:03:30,120 Speaker 1: always be Mike, I'm trying to coach my kids basketball 63 00:03:30,120 --> 00:03:31,440 Speaker 1: team here will you? Will you leave me a lot? 64 00:03:31,960 --> 00:03:33,839 Speaker 1: But finally I'm excited that we can get him down 65 00:03:33,880 --> 00:03:38,800 Speaker 1: to sit down and talk about his process of picking stocks. 66 00:03:38,960 --> 00:03:42,120 Speaker 1: He since left JP Morgan and started his own separate 67 00:03:42,120 --> 00:03:45,840 Speaker 1: account business. It's called Byron Place Capital Management. I encourage 68 00:03:45,880 --> 00:03:47,800 Speaker 1: you to google it and check him out. His name 69 00:03:47,920 --> 00:03:50,560 Speaker 1: is Glenn Garotsky. Glenn, welcome to the show. Thanks for 70 00:03:50,560 --> 00:03:54,920 Speaker 1: having me. This is great to talk to people. Yeah, 71 00:03:54,960 --> 00:03:57,200 Speaker 1: Glenn's been hold up in his office stocks. He doesn't 72 00:03:57,280 --> 00:04:01,560 Speaker 1: he doesn't get to see people too Offen Daylight and 73 00:04:01,640 --> 00:04:04,560 Speaker 1: also joining the show this week, He's we welcome him 74 00:04:04,600 --> 00:04:07,640 Speaker 1: back to the show. He's a guy who wrote for 75 00:04:07,720 --> 00:04:11,280 Speaker 1: a newspaper for a long time that many listeners probably saw. 76 00:04:11,320 --> 00:04:14,480 Speaker 1: It's the one with the very odd colored pages. I 77 00:04:14,520 --> 00:04:18,920 Speaker 1: think Salmon Salmon the official name the Financial Times. It 78 00:04:18,920 --> 00:04:21,279 Speaker 1: looks like it was printed on paper that was made 79 00:04:21,279 --> 00:04:23,520 Speaker 1: from trees that only grow, like in a Doctor Seuss 80 00:04:23,560 --> 00:04:27,760 Speaker 1: book or something. But I had a great analogy. I 81 00:04:27,839 --> 00:04:32,000 Speaker 1: haven't visited London and seen all how many Delhi newspapers 82 00:04:32,040 --> 00:04:34,320 Speaker 1: are stole in business even today in London, It's got 83 00:04:34,320 --> 00:04:36,800 Speaker 1: to be like three hundred I think so. At least 84 00:04:36,839 --> 00:04:38,760 Speaker 1: the color allows it to stand out on the on 85 00:04:38,800 --> 00:04:41,640 Speaker 1: the news stand, so I think that was a brilliant strategy. 86 00:04:41,760 --> 00:04:45,520 Speaker 1: It's been it's been pink since eighteen so it wasn't 87 00:04:45,560 --> 00:04:48,960 Speaker 1: your idea. It was not. It wasn't around then. The 88 00:04:49,000 --> 00:04:52,240 Speaker 1: most complaints the Financial Times ever had in one day 89 00:04:52,240 --> 00:04:56,240 Speaker 1: while I worked there was on the centenary of When 90 00:04:56,279 --> 00:04:59,919 Speaker 1: We Went Pink, when it was printed on white paper 91 00:05:00,160 --> 00:05:04,560 Speaker 1: to emphasize how pink it normally looked, and so all 92 00:05:04,600 --> 00:05:08,159 Speaker 1: these people from the city of London, you reading it 93 00:05:08,200 --> 00:05:13,320 Speaker 1: for the shape, prices and stuff, freaked. It was almost 94 00:05:13,320 --> 00:05:19,239 Speaker 1: impossible to the switchboard actually collapsed on various occasions. People 95 00:05:19,279 --> 00:05:23,960 Speaker 1: were horrified that come out on white paper. This is 96 00:05:23,960 --> 00:05:26,240 Speaker 1: a true story. Indeed, I just told you that was 97 00:05:26,320 --> 00:05:28,640 Speaker 1: it was. It was really, It was really impossible to 98 00:05:28,640 --> 00:05:32,760 Speaker 1: get anything done that day. Anyway. That writer's name is 99 00:05:32,839 --> 00:05:35,480 Speaker 1: John Author's that voice you just heard. And now he's 100 00:05:35,520 --> 00:05:37,479 Speaker 1: no longer writing on the pink paper. He's writing on 101 00:05:37,520 --> 00:05:41,200 Speaker 1: that brilliant amber and black of the of the Bloomberg terminals. 102 00:05:42,360 --> 00:05:48,480 Speaker 1: Orange fancy. It's a much not pink and orange amber. 103 00:05:50,120 --> 00:05:52,520 Speaker 1: But Glenn, let's let's start with you because you know, 104 00:05:52,560 --> 00:05:55,800 Speaker 1: as Sarah alluded to, uh, I feel like the whole 105 00:05:55,839 --> 00:06:02,479 Speaker 1: factor investing and and Passive's has has really just taken 106 00:06:02,600 --> 00:06:08,040 Speaker 1: over the investing landscape. However, you've still manage you're still 107 00:06:08,080 --> 00:06:11,840 Speaker 1: managing year to year to pick stocks that beat the market. Um, 108 00:06:12,560 --> 00:06:15,000 Speaker 1: so walk us through your your process. I know you 109 00:06:15,400 --> 00:06:18,640 Speaker 1: start with a screen of stocks, uh, and your current 110 00:06:18,680 --> 00:06:21,479 Speaker 1: strategy is all caps, so you'll you have some stocks 111 00:06:22,720 --> 00:06:26,120 Speaker 1: million in market cap to up to Facebook and up 112 00:06:26,120 --> 00:06:28,560 Speaker 1: to Microsoft. Yeah, up at one point four trillion down 113 00:06:28,600 --> 00:06:31,840 Speaker 1: to a hundred million in market cap. So and happy 114 00:06:31,839 --> 00:06:35,200 Speaker 1: to have Microsoft and the portfolio, I guess for sure. 115 00:06:35,240 --> 00:06:38,640 Speaker 1: I mean that that's really where the market has been rewarding, 116 00:06:39,040 --> 00:06:41,680 Speaker 1: you know, sustainable cash flow, and that's really but what's 117 00:06:41,680 --> 00:06:44,080 Speaker 1: been working in this market, in this whole economic recovery 118 00:06:44,120 --> 00:06:46,440 Speaker 1: that's you know, eleven years into the making right now. 119 00:06:46,920 --> 00:06:49,800 Speaker 1: But there's a lot of value in small cap so 120 00:06:50,040 --> 00:06:54,400 Speaker 1: and it's under you know, undercovered, and that creates a 121 00:06:54,440 --> 00:06:57,279 Speaker 1: lot of opportunity for guys like me who you know, 122 00:06:57,400 --> 00:07:00,640 Speaker 1: feel very comfortable meeting with these companies and talking to 123 00:07:00,680 --> 00:07:03,920 Speaker 1: these management teams and understanding their businesses. Having in all 124 00:07:04,000 --> 00:07:07,440 Speaker 1: caps strategy to me, sounds uh intimidating, just because it's 125 00:07:07,440 --> 00:07:09,840 Speaker 1: such a big universe. So walk us through, Like, I know, 126 00:07:09,880 --> 00:07:12,120 Speaker 1: you run some screens, what sort of price to free 127 00:07:12,120 --> 00:07:14,720 Speaker 1: cash flow? What's what's your process for sort of narrowing 128 00:07:14,720 --> 00:07:17,160 Speaker 1: down this massive universe. So, first of if, I started 129 00:07:17,200 --> 00:07:19,640 Speaker 1: as a microcap analyst, so I looked at companies less 130 00:07:19,640 --> 00:07:22,800 Speaker 1: than a couple hundred million in equity market capitalization, and 131 00:07:22,840 --> 00:07:26,239 Speaker 1: then I moved to small cap and mid caps, and 132 00:07:26,720 --> 00:07:28,720 Speaker 1: to me, I just wanted to look at more companies. 133 00:07:28,760 --> 00:07:33,120 Speaker 1: I never wanted to limit myself, so I've always was 134 00:07:33,160 --> 00:07:35,560 Speaker 1: itching to do all caps and look at everything under 135 00:07:35,600 --> 00:07:38,680 Speaker 1: the sun. So um, you know, because my I'm I 136 00:07:38,800 --> 00:07:40,880 Speaker 1: look at myself as a business analyst first, and the 137 00:07:40,960 --> 00:07:45,160 Speaker 1: securities analysts analysts that ultimately is an equity analyst and 138 00:07:45,160 --> 00:07:48,000 Speaker 1: trying to decipher what a business is worth and what 139 00:07:48,040 --> 00:07:50,920 Speaker 1: the equity of that business is worth. So the way 140 00:07:51,040 --> 00:07:55,240 Speaker 1: I start is, you know, my my rule of investing 141 00:07:55,240 --> 00:07:59,080 Speaker 1: that supersedes everything and I never forget is that when 142 00:07:59,120 --> 00:08:01,560 Speaker 1: I'm buying a style, I'm buying an equity ownership stake 143 00:08:01,600 --> 00:08:04,000 Speaker 1: in a business. And I never forget that rule. So 144 00:08:04,040 --> 00:08:06,160 Speaker 1: I'm always looking to invest in companies that have a 145 00:08:06,160 --> 00:08:09,800 Speaker 1: sustainable competitive advantage, that are run by management teams who 146 00:08:09,840 --> 00:08:11,720 Speaker 1: have a track record of success and are good stewarts 147 00:08:11,720 --> 00:08:14,120 Speaker 1: of capital. And you want to buy these businesses in 148 00:08:14,200 --> 00:08:16,679 Speaker 1: the stock market at a discount to their intrinsic values, 149 00:08:16,720 --> 00:08:19,800 Speaker 1: so when they're undervalued. So it's all about looking for 150 00:08:19,880 --> 00:08:24,080 Speaker 1: good businesses that are run by competent people and buying 151 00:08:24,120 --> 00:08:27,680 Speaker 1: them at the right price. And you know again, you know, 152 00:08:27,760 --> 00:08:29,440 Speaker 1: so in the US stock market, you know, let's just 153 00:08:29,480 --> 00:08:31,560 Speaker 1: take the Russell three thousand if there's you know, there's 154 00:08:31,600 --> 00:08:35,720 Speaker 1: more than three thousand stocks. But um, I do run screens. 155 00:08:35,760 --> 00:08:39,520 Speaker 1: I try to. I mean, um kind of a financial 156 00:08:39,559 --> 00:08:41,760 Speaker 1: nerd and a business nerd, and I like to look 157 00:08:41,800 --> 00:08:43,960 Speaker 1: at everything under the sun and look at as many 158 00:08:44,000 --> 00:08:46,760 Speaker 1: business as I as I can. And but I have 159 00:08:46,840 --> 00:08:49,840 Speaker 1: to run screens just to focus my you know, where 160 00:08:49,840 --> 00:08:53,559 Speaker 1: I need to focus. So I do run static screens 161 00:08:53,559 --> 00:08:55,240 Speaker 1: that like you said that, like let's say a price 162 00:08:55,280 --> 00:08:58,280 Speaker 1: to free cash flows screen or that are that are 163 00:08:58,360 --> 00:09:01,000 Speaker 1: valuation sensitive, but they tend have to change much. So 164 00:09:01,080 --> 00:09:04,680 Speaker 1: I look for what I call inflection points screens where 165 00:09:05,480 --> 00:09:08,840 Speaker 1: I'll look for businesses where there maybe there's insider buying, 166 00:09:09,440 --> 00:09:13,240 Speaker 1: or there's a management change, or there's you know, a 167 00:09:13,320 --> 00:09:18,839 Speaker 1: company is doing a spinoff or change in operating momentum. 168 00:09:19,000 --> 00:09:22,120 Speaker 1: Those are the screens that generate kind of something interesting 169 00:09:22,160 --> 00:09:24,800 Speaker 1: because a lot of these times catalyst some type of 170 00:09:24,880 --> 00:09:26,800 Speaker 1: catalyst to make me take a second look at a 171 00:09:26,840 --> 00:09:28,560 Speaker 1: business I've might you know, I've been doing this for 172 00:09:29,080 --> 00:09:31,800 Speaker 1: you know, fifteen twenty years that you know, so to 173 00:09:31,920 --> 00:09:34,400 Speaker 1: make me look at a business again a second time. 174 00:09:34,600 --> 00:09:36,800 Speaker 1: And like I said, you know, your stock picks are 175 00:09:36,840 --> 00:09:40,079 Speaker 1: are handily beating the market. Uh so, so the strategy, 176 00:09:40,400 --> 00:09:43,160 Speaker 1: uh the inception was in like early two thousand and sixteen, 177 00:09:43,240 --> 00:09:46,880 Speaker 1: right February sixteen sixteen, and so the equity your equity 178 00:09:46,920 --> 00:09:50,400 Speaker 1: picks are up a thirty percent since then, smps up. 179 00:09:51,240 --> 00:09:54,000 Speaker 1: But the unusual thing about your strategy, at least one 180 00:09:54,000 --> 00:09:57,079 Speaker 1: of the ones you run, is you don't go all in. 181 00:09:57,360 --> 00:10:01,360 Speaker 1: You like to keep a really healthy cash balance as 182 00:10:01,440 --> 00:10:06,240 Speaker 1: much as say forty UM. So what you end up 183 00:10:06,280 --> 00:10:09,319 Speaker 1: with is very good risk adjusted returns a sharp ratio 184 00:10:09,360 --> 00:10:13,760 Speaker 1: of like one point six um, but very conservative. So 185 00:10:13,840 --> 00:10:17,480 Speaker 1: walk us through kind of how you uh manage cash 186 00:10:17,559 --> 00:10:20,040 Speaker 1: because you know you'll flex between as much as fifty 187 00:10:20,040 --> 00:10:22,640 Speaker 1: percent cash at some points, kind of waiting for the dip. 188 00:10:22,720 --> 00:10:25,480 Speaker 1: Is it as simple as that. Uh? Yeah. Unfortunately people 189 00:10:25,480 --> 00:10:27,520 Speaker 1: may look at it and say, I've I've been wrong, right, 190 00:10:28,480 --> 00:10:33,720 Speaker 1: I've had a high cash percentage. It's up over right now. Uh. 191 00:10:33,960 --> 00:10:37,000 Speaker 1: The reality is, when I first started this, so you know, 192 00:10:37,000 --> 00:10:39,160 Speaker 1: I worked at JP Morgan Asset Management for a long 193 00:10:39,200 --> 00:10:42,240 Speaker 1: time and I ran mutual funds there, and this was 194 00:10:43,040 --> 00:10:46,160 Speaker 1: in the beginning. This was kind of a glorified family office, 195 00:10:46,640 --> 00:10:48,480 Speaker 1: and I was managing my own money, and I wanted 196 00:10:48,600 --> 00:10:51,719 Speaker 1: to manage it the way I thought was the right 197 00:10:51,760 --> 00:10:54,360 Speaker 1: way to manage money, where you're not always say, hey, 198 00:10:54,400 --> 00:10:55,920 Speaker 1: you need to be in equities, you need you know, 199 00:10:55,960 --> 00:10:59,560 Speaker 1: you know. So I wanted to have good risk adjustive returns. 200 00:10:59,640 --> 00:11:03,520 Speaker 1: And the reality is, I hate to lose money. I mean, 201 00:11:03,679 --> 00:11:06,240 Speaker 1: but I also understand that you have to take risk 202 00:11:06,280 --> 00:11:08,959 Speaker 1: in order to make money. But I love the idea 203 00:11:09,440 --> 00:11:13,000 Speaker 1: of having capital there that's there when the opportunity arises. 204 00:11:13,400 --> 00:11:16,360 Speaker 1: And you know, I look at the portfolio from the 205 00:11:16,360 --> 00:11:19,280 Speaker 1: bottom up, each stock on its own merit and its 206 00:11:19,280 --> 00:11:20,840 Speaker 1: own risk reward, and I look at it from the 207 00:11:20,840 --> 00:11:23,320 Speaker 1: top down is to you know, is it a good time? 208 00:11:23,320 --> 00:11:26,000 Speaker 1: But I mean really comes from the bottom up, and 209 00:11:26,480 --> 00:11:29,679 Speaker 1: I want to have that cash available to all. Right, 210 00:11:29,760 --> 00:11:32,520 Speaker 1: now is a great time to buy businesses are on sale. 211 00:11:32,880 --> 00:11:35,080 Speaker 1: I mean, I don't see that right now, you know. 212 00:11:35,320 --> 00:11:37,640 Speaker 1: I mean you could go back in February six team 213 00:11:37,679 --> 00:11:40,920 Speaker 1: was a great time. Unfortunately, the market came back so 214 00:11:41,040 --> 00:11:43,720 Speaker 1: fast right there, and I didn't get all that cash 215 00:11:43,760 --> 00:11:47,280 Speaker 1: to work. Uh, but I'm happy if if the market 216 00:11:47,360 --> 00:11:48,760 Speaker 1: is gonna be up twenty. I used to have this 217 00:11:48,800 --> 00:11:51,920 Speaker 1: dilemma when I worked at on a mutual fund and 218 00:11:51,960 --> 00:11:53,480 Speaker 1: there was a small cap mutual fund. It was like 219 00:11:53,520 --> 00:11:55,600 Speaker 1: and I'd have this argument with my analysts team all 220 00:11:55,600 --> 00:11:58,559 Speaker 1: the time, and it was like, Okay, the market's up 221 00:12:00,000 --> 00:12:05,960 Speaker 1: and you're up. You know, not good for my career necessarily, right, 222 00:12:05,960 --> 00:12:09,480 Speaker 1: I'm not generating alpha or the markets up? Are the 223 00:12:09,520 --> 00:12:14,560 Speaker 1: markets down and I'm down? I look like a hero 224 00:12:14,800 --> 00:12:18,080 Speaker 1: from a relative perspective. That never sat right with me, right, Like, 225 00:12:18,440 --> 00:12:20,280 Speaker 1: you know, I don't like to lose money, right, I mean, 226 00:12:20,480 --> 00:12:23,440 Speaker 1: but you know, in the financial crisis, I look like 227 00:12:23,480 --> 00:12:25,880 Speaker 1: a hero even though I lost. You know, I don't 228 00:12:25,880 --> 00:12:28,280 Speaker 1: know what the numbers were, but I lost or something. 229 00:12:28,320 --> 00:12:31,440 Speaker 1: I look better relative to everybody else and you know 230 00:12:31,840 --> 00:12:34,480 Speaker 1: the reality is I hated the idea of playing this 231 00:12:34,600 --> 00:12:38,560 Speaker 1: relative game always so, so it's certainly been hard to 232 00:12:38,559 --> 00:12:40,560 Speaker 1: find an opportunity to put money to work. Even this 233 00:12:40,600 --> 00:12:42,439 Speaker 1: past week you have the SMP, the NADS at the 234 00:12:42,480 --> 00:12:45,600 Speaker 1: Dow all hitting fresh record highs. John, I want to 235 00:12:45,600 --> 00:12:47,960 Speaker 1: come to you because this is all in the phase. Uh. 236 00:12:48,040 --> 00:12:51,720 Speaker 1: We have a spreading coronavirus. Um. Ubs was out saying 237 00:12:51,760 --> 00:12:54,360 Speaker 1: that the most compelling bowl case right now is that 238 00:12:54,400 --> 00:12:58,800 Speaker 1: there is no credible bear case at the moment. What 239 00:12:58,880 --> 00:13:02,120 Speaker 1: do you say to align like that that? Because I've 240 00:13:02,120 --> 00:13:03,400 Speaker 1: heard it a couple of times this week. The market 241 00:13:03,480 --> 00:13:05,400 Speaker 1: keeps going up because there's no reason to be bearish, 242 00:13:05,480 --> 00:13:07,839 Speaker 1: even when I think a couple of people would argue 243 00:13:07,960 --> 00:13:14,120 Speaker 1: against that. Huh. I can think of a few reasons 244 00:13:16,880 --> 00:13:19,800 Speaker 1: at that being said, I've been very good at coming 245 00:13:19,840 --> 00:13:22,360 Speaker 1: up with reasons to be bearish for the last ten years, 246 00:13:23,960 --> 00:13:28,240 Speaker 1: and they all seemed like really good, elegant, uh, you know, 247 00:13:28,440 --> 00:13:33,360 Speaker 1: logical points, and they weren't totally right. Um. Coronavirus could 248 00:13:33,400 --> 00:13:39,240 Speaker 1: yet really mess things up, um. And it's not necessarily 249 00:13:39,240 --> 00:13:41,719 Speaker 1: it doesn't need to be the second Black Death. It 250 00:13:41,800 --> 00:13:45,360 Speaker 1: doesn't need to be Spanish flu. It just needs to 251 00:13:45,520 --> 00:13:49,680 Speaker 1: close down Chinese industry for long enough to put out 252 00:13:50,160 --> 00:13:54,360 Speaker 1: people's calculations, people's expectations that they have been relying on. 253 00:13:54,800 --> 00:14:01,160 Speaker 1: In particular, given the parlace state of Europe. You the Yeah, 254 00:14:01,440 --> 00:14:03,440 Speaker 1: there is no country in the world that is more 255 00:14:03,559 --> 00:14:08,920 Speaker 1: exposed to China amazingly than Germany. In many ways, Germany's 256 00:14:08,960 --> 00:14:13,640 Speaker 1: manufacturing is in has been showing serious signs of decline. 257 00:14:14,480 --> 00:14:18,600 Speaker 1: And then after that you call it craziest. Apparently it's 258 00:14:18,679 --> 00:14:20,600 Speaker 1: very charming that I refer to it as the maddest 259 00:14:21,040 --> 00:14:25,800 Speaker 1: and that I see in the markets. Um. Anyway, don't 260 00:14:26,280 --> 00:14:28,640 Speaker 1: if you if you look at if you look at 261 00:14:29,040 --> 00:14:36,680 Speaker 1: the US market, canes bringing British greater. My aid said 262 00:14:36,720 --> 00:14:39,520 Speaker 1: that the market, the markets can stay irrational longer than 263 00:14:39,560 --> 00:14:43,120 Speaker 1: you can stay solvent, which is very true. Uh. And 264 00:14:43,560 --> 00:14:47,080 Speaker 1: markets can be overpriced and they can still get more overpriced, 265 00:14:47,080 --> 00:14:50,640 Speaker 1: So you should never try to time the market based 266 00:14:50,920 --> 00:14:56,880 Speaker 1: on valuation. That said, price to sales is not um 267 00:14:57,240 --> 00:15:02,240 Speaker 1: it's one of the simplest, most straightforward, least manipulable numbers 268 00:15:02,440 --> 00:15:05,520 Speaker 1: out there. And on a price to sales basis, the 269 00:15:05,640 --> 00:15:08,880 Speaker 1: SMP has actually caught up with the top in two thousands. 270 00:15:10,040 --> 00:15:12,600 Speaker 1: This isn't We don't have to have arguments about Schiller's cape, 271 00:15:12,640 --> 00:15:15,000 Speaker 1: which is actually nowhere near as expensive as it was 272 00:15:15,480 --> 00:15:19,880 Speaker 1: in two thousands. Um. This is a good, straightforward indicator 273 00:15:19,920 --> 00:15:23,960 Speaker 1: that suggests that, unless it doesn't even require the economy 274 00:15:24,000 --> 00:15:27,480 Speaker 1: to slow down, if American companies get a little less 275 00:15:27,520 --> 00:15:34,480 Speaker 1: good at absolutely squeezing every last inch of every cent 276 00:15:34,560 --> 00:15:38,320 Speaker 1: of profit out of their sales, they are going to 277 00:15:38,360 --> 00:15:44,440 Speaker 1: look terribly overpriced. Um. So there were a few reasons 278 00:15:44,480 --> 00:15:51,720 Speaker 1: to be buried there, right. And oh and Bernie, I 279 00:15:51,720 --> 00:15:54,320 Speaker 1: mean Larry David. Just I can't do a Larry David 280 00:15:54,840 --> 00:16:01,480 Speaker 1: level impersonation of Bernie. It's only a few months. For 281 00:16:01,560 --> 00:16:08,120 Speaker 1: some reason, for some reason, people took Elizabeth Warren very seriously. Uh. 282 00:16:08,240 --> 00:16:11,640 Speaker 1: And so when we had the season of people announcing 283 00:16:11,640 --> 00:16:16,360 Speaker 1: their previews for which, like Christmas, comes earlier every year, 284 00:16:16,360 --> 00:16:22,880 Speaker 1: so it was before Thanksgiving, people were terrified of her. Um. 285 00:16:22,960 --> 00:16:27,080 Speaker 1: She doesn't call herself a socialist, she calls herself a capitalist. 286 00:16:27,880 --> 00:16:32,720 Speaker 1: Bernie is now looking stronger than Elizabeth Warren ever did. 287 00:16:33,480 --> 00:16:37,400 Speaker 1: And he calls himself a socialist, which is not market friendly. 288 00:16:38,000 --> 00:16:57,200 Speaker 1: It's markets to capitalist. Let's get into some of these 289 00:16:57,280 --> 00:17:00,560 Speaker 1: names in your protafolio because I love looking at uh 290 00:17:01,040 --> 00:17:04,960 Speaker 1: different managers portfolios and oftentime you're like, wait, you sure 291 00:17:05,000 --> 00:17:06,240 Speaker 1: that you look at it and you're like, you're sure 292 00:17:06,240 --> 00:17:09,159 Speaker 1: this isn't an index fund. You do not make mistake 293 00:17:09,640 --> 00:17:11,520 Speaker 1: with Glenn's picks, which is what I love. You know, 294 00:17:11,520 --> 00:17:13,639 Speaker 1: I'm gonna skip over sort of the you know, the 295 00:17:13,680 --> 00:17:16,680 Speaker 1: Microsoft United Health and I'm gonna quiz maybe we'll quiz 296 00:17:16,720 --> 00:17:20,080 Speaker 1: authors on a fees heard of some of these same 297 00:17:20,080 --> 00:17:23,440 Speaker 1: waiting as Facebook one point seven percent habit restaurants. Okay, 298 00:17:23,440 --> 00:17:25,560 Speaker 1: all right, so they just they just got bought by 299 00:17:25,600 --> 00:17:32,200 Speaker 1: Young Brands. Okay, so uh they're in a very very 300 00:17:32,240 --> 00:17:37,400 Speaker 1: big way. Uh but what what Yeah, so the same 301 00:17:37,440 --> 00:17:40,840 Speaker 1: thing is called young Brands. So I first saw them 302 00:17:40,880 --> 00:17:43,159 Speaker 1: in November four team when the I p oed and 303 00:17:43,240 --> 00:17:45,400 Speaker 1: it kind of was at the same time Shake Shack 304 00:17:45,520 --> 00:17:48,359 Speaker 1: came public. And they're these guys are a strong a 305 00:17:48,359 --> 00:17:52,119 Speaker 1: competitor in California to there in Santa Barbara, California and 306 00:17:52,160 --> 00:17:57,240 Speaker 1: compete with um uh in Halburger of course, who's the 307 00:17:57,280 --> 00:18:00,320 Speaker 1: dominant player there. And and they have you know, I 308 00:18:00,400 --> 00:18:03,000 Speaker 1: knew the CEO. His name's Rust Bendl. He ran this 309 00:18:03,160 --> 00:18:05,640 Speaker 1: company called Mimi's Cafe. When they were private, I met 310 00:18:05,680 --> 00:18:09,359 Speaker 1: with them, and so they came public. They had great 311 00:18:09,440 --> 00:18:13,240 Speaker 1: unit of economics. It's they fifty burger. But what what 312 00:18:13,320 --> 00:18:17,160 Speaker 1: they do. Everything's fresh, high quality food. What they do 313 00:18:17,359 --> 00:18:21,919 Speaker 1: differently is they they're kind of more so they'll have 314 00:18:22,119 --> 00:18:25,879 Speaker 1: a good female presence. They they'll have good seared ahi 315 00:18:25,960 --> 00:18:31,800 Speaker 1: tuna and salads, and so it was a differentiated concept. 316 00:18:33,040 --> 00:18:35,399 Speaker 1: And so the stock took off, and you know, an 317 00:18:35,440 --> 00:18:37,240 Speaker 1: I p oed in the mid teens and went up 318 00:18:37,240 --> 00:18:39,240 Speaker 1: like just like shake Shack when everybody wanted their own 319 00:18:39,280 --> 00:18:42,160 Speaker 1: restaurant stocks. Uh, And a lot of these companies came 320 00:18:42,200 --> 00:18:46,000 Speaker 1: public and it went, you know, went into the forties. 321 00:18:46,040 --> 00:18:47,760 Speaker 1: I watched it. I was intrigued by the concept of 322 00:18:47,760 --> 00:18:50,879 Speaker 1: the valuation was ridiculous. And then as the restaurant stocks 323 00:18:50,880 --> 00:18:52,639 Speaker 1: went out of favor, it collapsed. I mean it was 324 00:18:52,680 --> 00:18:57,119 Speaker 1: in the single digits. They were still executing, and it got, 325 00:18:57,359 --> 00:19:00,400 Speaker 1: you know, close to replacement value on a you know, 326 00:19:00,600 --> 00:19:03,320 Speaker 1: a business that generates you know, their their union economics 327 00:19:03,320 --> 00:19:07,080 Speaker 1: are returns on invested capital. So it got really attractive 328 00:19:07,080 --> 00:19:10,879 Speaker 1: to me, and I started to take a position and ultimately. 329 00:19:11,359 --> 00:19:12,840 Speaker 1: You know, I was hoping for a higher price than 330 00:19:12,880 --> 00:19:14,359 Speaker 1: what they got taken out for. I was hoping this 331 00:19:14,359 --> 00:19:16,480 Speaker 1: would get into the twenties, but it got taken out 332 00:19:16,520 --> 00:19:20,199 Speaker 1: at fourteen by young brands. One more before we get 333 00:19:20,240 --> 00:19:21,800 Speaker 1: to the craziest things. I think this one would be 334 00:19:21,800 --> 00:19:24,480 Speaker 1: interest to our listeners who are are actually in the 335 00:19:24,480 --> 00:19:29,080 Speaker 1: money management business. Diamond Hill Investment Group. Uh one point 336 00:19:29,160 --> 00:19:31,760 Speaker 1: three waiting and your portfolio is never more than like 337 00:19:31,840 --> 00:19:35,960 Speaker 1: thirty stocks, right usually, yeah, it's right now, right now, 338 00:19:35,960 --> 00:19:39,680 Speaker 1: I'm at twenty. But tell us about Diamond Hill Investment Group, 339 00:19:39,720 --> 00:19:42,920 Speaker 1: because I mean, I feel like asset management firms are 340 00:19:43,080 --> 00:19:46,720 Speaker 1: somewhat uh radioactive to a lot of investors these days. 341 00:19:46,720 --> 00:19:49,760 Speaker 1: The the active managers. What do you see about this stock? Right? 342 00:19:49,800 --> 00:19:53,320 Speaker 1: Nobody wants to own active managers right now? So Diamond Hill. 343 00:19:53,359 --> 00:19:58,440 Speaker 1: They're in Columbus, Ohio, mostly equities, uh, large cap value. 344 00:19:58,720 --> 00:20:03,440 Speaker 1: You know. Um, I followed them for a long time. Uh. 345 00:20:03,640 --> 00:20:05,800 Speaker 1: We owned it actually in our small cap portfolios when 346 00:20:05,840 --> 00:20:08,600 Speaker 1: I was at JP Morgan. It got really expensive. They've 347 00:20:08,640 --> 00:20:10,600 Speaker 1: done very very well, and it's twenty two billion in 348 00:20:10,640 --> 00:20:16,600 Speaker 1: assets under management now. Uh, And it got really cheap, right, 349 00:20:16,640 --> 00:20:18,120 Speaker 1: And I took a second look at it. I saw 350 00:20:18,440 --> 00:20:23,159 Speaker 1: they hired a new CEO, Heather Brilliant from morning Star UM, 351 00:20:23,280 --> 00:20:26,840 Speaker 1: and there was insider buying, and I took a look, 352 00:20:26,840 --> 00:20:30,520 Speaker 1: and I'm like, it's six points seven times enterprise value 353 00:20:30,520 --> 00:20:33,560 Speaker 1: to notepad. Now, I've run an investment management business. This 354 00:20:33,640 --> 00:20:38,040 Speaker 1: is a really good, well run company that's an active manager. 355 00:20:38,080 --> 00:20:40,200 Speaker 1: But it's not like they're charging egregious fees. The average 356 00:20:40,200 --> 00:20:42,919 Speaker 1: fee sixty basis points. Uh. They have a long term 357 00:20:43,000 --> 00:20:45,760 Speaker 1: track record. I would love telling this business if I 358 00:20:45,760 --> 00:20:47,720 Speaker 1: if this was in the private markets and I could 359 00:20:47,760 --> 00:20:50,240 Speaker 1: buy it for seven times, you know, and they have 360 00:20:50,280 --> 00:20:53,320 Speaker 1: a pristine balance sheet, I'd own it all day and 361 00:20:53,359 --> 00:20:55,600 Speaker 1: just waited out. Now, I don't know what's that's That's 362 00:20:55,640 --> 00:20:58,919 Speaker 1: the beauty of the stock market. There's this volatility, and 363 00:20:59,119 --> 00:21:00,760 Speaker 1: you know, if you have an idea of what you 364 00:21:00,800 --> 00:21:04,439 Speaker 1: think of business is worth. Um, there's a lot of opportunity. 365 00:21:04,520 --> 00:21:06,760 Speaker 1: And you just waited out. For those who've been waiting 366 00:21:06,760 --> 00:21:10,200 Speaker 1: around lists for the craziest thing we saw in markets, 367 00:21:10,640 --> 00:21:13,680 Speaker 1: it's time for your payoff, Sarah. I'm not as confident 368 00:21:13,680 --> 00:21:15,359 Speaker 1: as I usually am in mine. You were in confident 369 00:21:15,480 --> 00:21:17,240 Speaker 1: last week either, Yeah, I don't think. I think I 370 00:21:17,240 --> 00:21:20,800 Speaker 1: still won though, didn't I Because you say that, I 371 00:21:20,840 --> 00:21:23,239 Speaker 1: think if there was a popular vote here, I'm not 372 00:21:23,280 --> 00:21:26,560 Speaker 1: sure that. You right, do I get one vote or 373 00:21:27,520 --> 00:21:32,040 Speaker 1: I mean you you get a supervoter? Yeah? All right, 374 00:21:32,160 --> 00:21:35,119 Speaker 1: let's let's start with that character, Twiggy Sunday, who the 375 00:21:35,160 --> 00:21:37,720 Speaker 1: craziest thing he saw in markets this week? I think 376 00:21:37,760 --> 00:21:41,760 Speaker 1: John Author's as a British Red Sox fan, you'll appreciate 377 00:21:41,800 --> 00:21:46,080 Speaker 1: that he noticed that Keith Richards gave up smoking, and 378 00:21:46,119 --> 00:21:49,359 Speaker 1: he he thought that might have some market implications. In fact, 379 00:21:49,400 --> 00:21:51,520 Speaker 1: I looked, I look at al Tree's share price. It's 380 00:21:51,520 --> 00:21:54,199 Speaker 1: down like double digits since the middle of January. So 381 00:21:54,200 --> 00:21:58,240 Speaker 1: I think I think Twiggy might I might one this week. Yeah, 382 00:21:58,600 --> 00:22:01,199 Speaker 1: so that that's a good one. But I'll start with 383 00:22:01,240 --> 00:22:03,600 Speaker 1: mine because I'm not I'm not as proud as of 384 00:22:03,680 --> 00:22:05,240 Speaker 1: this one. But I saw a story, I think it 385 00:22:05,280 --> 00:22:10,200 Speaker 1: was CBS. Someone sold a single parking space. So we're 386 00:22:10,200 --> 00:22:13,359 Speaker 1: talking about the real estate, the parking space real estate 387 00:22:13,400 --> 00:22:17,480 Speaker 1: market in San Francisco. Uh, Clenn, what would you pay 388 00:22:17,480 --> 00:22:19,399 Speaker 1: for a parking space in a touch in New Jersey? 389 00:22:19,960 --> 00:22:23,399 Speaker 1: I pay fifty five a month on the touching Parking 390 00:22:23,440 --> 00:22:30,040 Speaker 1: Authority actually the treasurer of the So you hear in 391 00:22:30,040 --> 00:22:33,760 Speaker 1: San Francisco, what would you pay in services? I have? 392 00:22:34,000 --> 00:22:37,600 Speaker 1: I've seen the articles eight hundreds to own a parking 393 00:22:37,600 --> 00:22:43,400 Speaker 1: space and month. I think that's just no way more. Yeah, 394 00:22:43,880 --> 00:22:46,679 Speaker 1: but John Arthur's what would you pay for it to 395 00:22:46,800 --> 00:22:49,679 Speaker 1: have a car in San Francisco? Okay? So much to 396 00:22:49,720 --> 00:22:52,800 Speaker 1: avoid having to drive in San Francisco negative negative interest, 397 00:22:53,520 --> 00:22:59,040 Speaker 1: negative hundred grand for parking space in San Francisco. How 398 00:22:59,119 --> 00:23:01,600 Speaker 1: much could you buy? Is there anywhere within the city 399 00:23:01,600 --> 00:23:03,840 Speaker 1: of San Francisco you could buy a studio apartment for 400 00:23:03,840 --> 00:23:08,360 Speaker 1: a hundred grand? Absolutely not? Right, absolutely not. Maybe it's 401 00:23:08,359 --> 00:23:13,080 Speaker 1: not totally a relative basis. Maybe it's not totally completely 402 00:23:13,119 --> 00:23:16,440 Speaker 1: clinically insane. Right, And the way people live in San Francisco, 403 00:23:16,480 --> 00:23:18,040 Speaker 1: they might just pull a van up in that space 404 00:23:18,040 --> 00:23:22,320 Speaker 1: and live there. You know, it happens, it happens. Yeah, alright, Sarah, 405 00:23:22,400 --> 00:23:25,640 Speaker 1: can you top a hundred thousand dollar parking space? Um? 406 00:23:25,640 --> 00:23:29,240 Speaker 1: Maybe not. But there was a great story by our 407 00:23:29,320 --> 00:23:31,760 Speaker 1: hedge fund reporters here at Bloomberg, and the headline was 408 00:23:31,800 --> 00:23:34,439 Speaker 1: five hedge fund heads made more than one billion dollars 409 00:23:34,480 --> 00:23:36,520 Speaker 1: each last year But the part that I really found 410 00:23:36,520 --> 00:23:39,320 Speaker 1: interest interesting was that if you look at the returns 411 00:23:39,359 --> 00:23:43,040 Speaker 1: of their funds last year, three of the five all 412 00:23:43,280 --> 00:23:47,080 Speaker 1: lagged the S and P five hundred by at least 413 00:23:47,080 --> 00:23:49,959 Speaker 1: ten percent, essentially. So the idea that you can make 414 00:23:50,000 --> 00:23:53,280 Speaker 1: a billion dollars and you don't you don't have to 415 00:23:53,320 --> 00:23:56,200 Speaker 1: do to the two is more powerful than the twenty. 416 00:23:56,440 --> 00:24:00,080 Speaker 1: And I guess all right, Clennon, I know I to 417 00:24:00,160 --> 00:24:04,000 Speaker 1: about our craziest thing. I hope you can't prepare it. 418 00:24:04,520 --> 00:24:07,240 Speaker 1: I know you're a Philadelphia seventy Sixers and we have 419 00:24:07,280 --> 00:24:09,920 Speaker 1: a Celtics fan here too. I see the red sox 420 00:24:09,960 --> 00:24:14,200 Speaker 1: around John's neck. So well, I'm gonna touch on somebody 421 00:24:14,240 --> 00:24:17,680 Speaker 1: that you both know. Uh. The Sixers big offseason signing 422 00:24:17,800 --> 00:24:21,520 Speaker 1: Al Horford, who's one of the most underrated NBA players 423 00:24:21,560 --> 00:24:24,200 Speaker 1: for a long long time, right, but you know he's 424 00:24:24,320 --> 00:24:27,960 Speaker 1: real value investor. Thirty three years old, Sixers paid are 425 00:24:27,960 --> 00:24:31,560 Speaker 1: paying him twenty eight million dollars a year. The Sixers 426 00:24:31,560 --> 00:24:34,280 Speaker 1: have underperformed a little bit this year, They've just made 427 00:24:34,320 --> 00:24:37,359 Speaker 1: him the backup center. This week, as I was I 428 00:24:37,400 --> 00:24:39,960 Speaker 1: was watching the Sixers Clippers game, which is Sixers one, 429 00:24:40,240 --> 00:24:44,040 Speaker 1: and I'm a Sixers fan too. Full disclosure. Uh, that 430 00:24:44,240 --> 00:24:48,000 Speaker 1: to me was ridiculous, twenty eight million dollars for a 431 00:24:48,000 --> 00:24:49,800 Speaker 1: backup center. And then I have one more, which is 432 00:24:49,840 --> 00:24:53,240 Speaker 1: my nerdy this is more nerdy finance guy. Alright, I 433 00:24:53,320 --> 00:24:56,560 Speaker 1: own Apple full disclosure. Okay, I've owned it for a 434 00:24:56,800 --> 00:24:59,800 Speaker 1: for a long time. And the value, you know, what's 435 00:24:59,840 --> 00:25:03,119 Speaker 1: in interesting. So it's earning season right now. So Apple 436 00:25:03,160 --> 00:25:07,720 Speaker 1: reported their fiscal Q one that ends at twelve thirty one. 437 00:25:07,840 --> 00:25:10,560 Speaker 1: So I was on their conference call doing my work. 438 00:25:10,600 --> 00:25:14,679 Speaker 1: I notebooks, right, yeah, and I was looking at the 439 00:25:14,800 --> 00:25:18,760 Speaker 1: numbers compared to two years ago. And so Apple, this 440 00:25:18,880 --> 00:25:22,040 Speaker 1: just shows what interest rates have done, and there's perception. 441 00:25:22,080 --> 00:25:24,320 Speaker 1: Apple's business has probably gotten better from two years ago 442 00:25:24,640 --> 00:25:27,480 Speaker 1: from a perception standpoint, now that air pods are doing 443 00:25:27,680 --> 00:25:29,960 Speaker 1: pretty well and they have more of a service business, 444 00:25:30,000 --> 00:25:31,920 Speaker 1: so you could argue their business models a little better. 445 00:25:32,200 --> 00:25:36,280 Speaker 1: But operating income in this quarter twenty five point five 446 00:25:36,359 --> 00:25:40,840 Speaker 1: six nine billion dollars. Okay, at twelve two years ago 447 00:25:40,960 --> 00:25:46,080 Speaker 1: same time they did twenty six point to seven four 448 00:25:46,320 --> 00:25:49,880 Speaker 1: billion dollars in operating income. More operating income, Apple's operating 449 00:25:49,880 --> 00:25:54,520 Speaker 1: income is down over two years. Enterprise value of Apple 450 00:25:56,359 --> 00:25:59,920 Speaker 1: right now one point three six billion enterprise value back 451 00:26:00,040 --> 00:26:03,080 Speaker 1: then at one point three six trillion. Yeah, sorry, uh, 452 00:26:03,440 --> 00:26:07,639 Speaker 1: enterprise value you know on that quarter after that quarter 453 00:26:07,840 --> 00:26:14,040 Speaker 1: six billion. So the enterprise value has doubled and they're 454 00:26:14,040 --> 00:26:16,120 Speaker 1: making the same amount of money. Now they've done share 455 00:26:16,160 --> 00:26:18,160 Speaker 1: by back and stuff like that, so you can choose 456 00:26:18,200 --> 00:26:22,679 Speaker 1: the EPs and stuff, but even just the yeah, I mean, 457 00:26:23,080 --> 00:26:25,560 Speaker 1: I mean I I look at it from an enterprise 458 00:26:25,600 --> 00:26:27,960 Speaker 1: value and no bad standpoint, so you can take out 459 00:26:27,960 --> 00:26:30,520 Speaker 1: the cash. Yeah, I went from twenty basically doubled their 460 00:26:30,600 --> 00:26:33,520 Speaker 1: multiple y. But Mike, I think we might be crowning 461 00:26:33,520 --> 00:26:35,119 Speaker 1: a new winner. All right, all right, we'll give it 462 00:26:35,160 --> 00:26:38,160 Speaker 1: to well we got to hear. But John will give 463 00:26:38,240 --> 00:26:41,800 Speaker 1: us the maddest thing here. This is, this is something 464 00:26:41,840 --> 00:26:44,120 Speaker 1: I picked up in a in a in a column yesterday. 465 00:26:44,640 --> 00:26:48,200 Speaker 1: I spent years of my life, literally years of my life, 466 00:26:48,280 --> 00:26:50,600 Speaker 1: checking first thing in the morning, what the spread of 467 00:26:50,680 --> 00:26:56,000 Speaker 1: Greek bonus of a German boots was, naturally and amazing 468 00:26:56,119 --> 00:26:59,560 Speaker 1: to relate. We have now got to the points where 469 00:26:59,680 --> 00:27:04,160 Speaker 1: the bread of Greek bonds over German bunts is back 470 00:27:04,240 --> 00:27:08,880 Speaker 1: where it was before the Greek election in October two 471 00:27:08,880 --> 00:27:12,320 Speaker 1: thousand and nine, when the new Prime minister got in, 472 00:27:12,400 --> 00:27:14,639 Speaker 1: he discovered that there was a hole in the accounts 473 00:27:14,680 --> 00:27:18,639 Speaker 1: and that Greece had been understating its deficit. And it's 474 00:27:18,680 --> 00:27:21,840 Speaker 1: when he announced that that the full Eurozone crisis starts. 475 00:27:23,000 --> 00:27:25,680 Speaker 1: And apparently it's safe to go back in the water 476 00:27:25,720 --> 00:27:29,840 Speaker 1: now because at long, long last Greece, the Greek crisis. 477 00:27:29,920 --> 00:27:33,480 Speaker 1: If you believe the bond market is over. That your 478 00:27:33,480 --> 00:27:35,159 Speaker 1: headline on that car and I loved it was it 479 00:27:35,240 --> 00:27:38,640 Speaker 1: was like the European siren deck crisis is over, which 480 00:27:38,680 --> 00:27:41,280 Speaker 1: kind of reminded me of like Bush on the aircraft 481 00:27:41,280 --> 00:27:43,879 Speaker 1: carrier with the mission accomplished banner behind him that so 482 00:27:43,920 --> 00:27:46,600 Speaker 1: hopefully you have better luck with the problem with the 483 00:27:46,600 --> 00:27:50,879 Speaker 1: problem with this is is because that was written I 484 00:27:50,920 --> 00:27:53,600 Speaker 1: was edited by Matthew Brook, who is also British. There's 485 00:27:53,840 --> 00:27:57,480 Speaker 1: so many people assumed that we actually mean what we say. 486 00:27:59,320 --> 00:28:08,480 Speaker 1: We think we're obviously in cheek and um, yes, I've 487 00:28:08,480 --> 00:28:11,920 Speaker 1: had one or two I actually had one or two 488 00:28:13,080 --> 00:28:17,040 Speaker 1: very strange tweets by right wing Italian politicians about this, 489 00:28:18,240 --> 00:28:20,639 Speaker 1: trying to get to the bottom of But but anyway, 490 00:28:20,680 --> 00:28:24,480 Speaker 1: there were there we go. I find the market has 491 00:28:24,520 --> 00:28:28,720 Speaker 1: convinced itself that the entire existential crisis over the euro 492 00:28:29,400 --> 00:28:33,480 Speaker 1: is now over. And as I said at the outset, 493 00:28:33,800 --> 00:28:37,840 Speaker 1: I actually think there are many many it's changed and 494 00:28:37,880 --> 00:28:40,400 Speaker 1: it's now more about the center than the periphery. But 495 00:28:40,560 --> 00:28:43,040 Speaker 1: I would not be too relaxed. Well, you know, the 496 00:28:43,080 --> 00:28:45,400 Speaker 1: euro Zone. The spread is one thing, but just the 497 00:28:45,440 --> 00:28:48,120 Speaker 1: Greek tenure yield loner is like less than one percent. 498 00:28:48,160 --> 00:28:51,160 Speaker 1: If we see Greek yes ten year yields go negative, 499 00:28:52,480 --> 00:28:54,160 Speaker 1: I don't know what I think I'm gonna We need 500 00:28:54,200 --> 00:28:57,320 Speaker 1: to pay to the privilege of lending money to Greece. Yes, 501 00:28:57,520 --> 00:29:01,880 Speaker 1: that would be quite That would be is on the craziest. 502 00:29:02,040 --> 00:29:04,719 Speaker 1: With that said, Glenn and John, thank you so much 503 00:29:04,800 --> 00:29:15,200 Speaker 1: for coming on the show today. Thank you fe what 504 00:29:15,400 --> 00:29:18,000 Speaker 1: goes up. We'll be back next week. Until then, you 505 00:29:18,000 --> 00:29:20,400 Speaker 1: can find us on the Bloomberg Terminal website and app 506 00:29:20,720 --> 00:29:23,239 Speaker 1: or wherever you get your podcasts. We love it if 507 00:29:23,240 --> 00:29:25,040 Speaker 1: you took the time to rate and review the show 508 00:29:25,040 --> 00:29:28,120 Speaker 1: on Apple podcast so more listeners can find us. And 509 00:29:28,240 --> 00:29:30,840 Speaker 1: you can find us on Twitter. Follow me at at 510 00:29:30,880 --> 00:29:34,760 Speaker 1: Sarah Ponzack, Mike is at Reagan Anonymous, John Authors is 511 00:29:34,840 --> 00:29:37,760 Speaker 1: at John Author's and of course you can also follow 512 00:29:37,760 --> 00:29:41,880 Speaker 1: Bloomberg Podcasts. At Podcasts, What Goes Up is produced by 513 00:29:41,920 --> 00:29:45,080 Speaker 1: topur Foreheads. The head of Bloomberg podcast is Frances Phillip. 514 00:29:45,400 --> 00:30:01,000 Speaker 1: Thanks for listening, See you next time. FO