Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly
Speaker 1: Markets podcast. I'm Sarah plant Zach reporter on the Cross
Speaker 1: Asset Team, and I'm Mike Reagan, a senior editor on
Speaker 1: the Markets Team. This week on the show, in a
Speaker 1: world dominated by factor investing in passive strategies, we often
Speaker 1: hear about the quote unquote death of the stock picker,
Speaker 1: but is it actually true. We talked to a fund
Speaker 1: manager who ranked in the top one percentile of his
Speaker 1: category and also, after years of underperformance, is the value
Speaker 1: factor dead? And Sarah, before we start, I want to
Speaker 1: give a shout out to some of the listeners out
Speaker 1: there who have been providing valuable content for the for
Speaker 1: the program. Our longtime listener that character Twiggy Sunday on Twitter,
Speaker 1: He's contributed something for the Craziest Thing of the Week segment.
Speaker 1: He also predicted that I would win the Craziest Thing.
Speaker 1: I think I missed that part of his the show
Speaker 1: that once again I will win. And you know that brilliant,
Speaker 1: You're brilliant, twig The listeners have confidence, uh in my
Speaker 1: ability to clearly it doesn't matter that I'm the sole
Speaker 1: judge of it. Also, but also Ellie Panamy, we really
Speaker 1: thank you for your amazing contributions to our Crazy Things ideas,
Speaker 1: and we will eventually get one of your favorite guests
Speaker 1: back on the show. We will, we will. H Ellie
Speaker 1: or Eli or whatever his fake Twitter name is. H
Speaker 1: decided that the craziest thing he saw in markets would
Speaker 1: be like thirty year old picture of our colleague Chris
Speaker 1: Nag which, now I gonna say two listeners out there,
Speaker 1: if you're thinking about tweeting us embarrassing pictures of our colleagues,
Speaker 1: just take a minute, think twice about it, and then
Speaker 1: absolutely go ahead and tweet them directly to us. And
Speaker 1: there's also probably a better chance that if you were
Speaker 1: to ask us a question or share a crazy thing,
Speaker 1: that will actually use your absolutely and sorry, remember, listeners
Speaker 1: can actually appear on the show if they call our
Speaker 1: special what Goes Up hotline whose number I chronically forget,
Speaker 1: so hopefully you have it handy. I have it handy
Speaker 1: as always. It's six or six three two four three
Speaker 1: for nine zero, So feel free to give us a call,
Speaker 1: and if you do, we may even play your message
Speaker 1: on the show. But let's get right to it, and
Speaker 1: as you alluded to, we have a guest. UH and
Speaker 1: full disclosure. UH, this guy is actually a good friend
Speaker 1: of mine. But that's not why he's on the show.
Speaker 1: He's on the show because he has the reputation of
Speaker 1: pretty much a rock star, I would say as a
Speaker 1: stock picker, as you said he would he loves this,
Speaker 1: he likes what he hears. But he was the head
Speaker 1: of the small cap team at JP Morgan Asset Management.
Speaker 1: UH for a while. The small cap equity fund under
Speaker 1: his leadership, as you said, Top one per Cent won
Speaker 1: the Lipper Award in two thousand and thirteen for the
Speaker 1: best fund over ten years. UH in the small cap category.
Speaker 1: Two thousand and nine, it won the same award UH
Speaker 1: and small Caps for best fund over five years. And sorry,
Speaker 1: this is a guy whose brain I've been picking for
Speaker 1: years because we're both residents of the brainy borough of
Speaker 1: my touching. And typically my questions are like, Hey, what
Speaker 1: do you think of the market? Is it overvalued? How
Speaker 1: about bond yields? Are they going to go too high?
Speaker 1: What about growth versus value? Hey do you like small Catholic?
Speaker 1: You're asking me the wrong questions and his answer will
Speaker 1: always be Mike, I'm trying to coach my kids basketball
Speaker 1: team here will you? Will you leave me a lot?
Speaker 1: But finally I'm excited that we can get him down
Speaker 1: to sit down and talk about his process of picking stocks.
Speaker 1: He since left JP Morgan and started his own separate
Speaker 1: account business. It's called Byron Place Capital Management. I encourage
Speaker 1: you to google it and check him out. His name
Speaker 1: is Glenn Garotsky. Glenn, welcome to the show. Thanks for
Speaker 1: having me. This is great to talk to people. Yeah,
Speaker 1: Glenn's been hold up in his office stocks. He doesn't
Speaker 1: he doesn't get to see people too Offen Daylight and
Speaker 1: also joining the show this week, He's we welcome him
Speaker 1: back to the show. He's a guy who wrote for
Speaker 1: a newspaper for a long time that many listeners probably saw.
Speaker 1: It's the one with the very odd colored pages. I
Speaker 1: think Salmon Salmon the official name the Financial Times. It
Speaker 1: looks like it was printed on paper that was made
Speaker 1: from trees that only grow, like in a Doctor Seuss
Speaker 1: book or something. But I had a great analogy. I
Speaker 1: haven't visited London and seen all how many Delhi newspapers
Speaker 1: are stole in business even today in London, It's got
Speaker 1: to be like three hundred I think so. At least
Speaker 1: the color allows it to stand out on the on
Speaker 1: the news stand, so I think that was a brilliant strategy.
Speaker 1: It's been it's been pink since eighteen so it wasn't
Speaker 1: your idea. It was not. It wasn't around then. The
Speaker 1: most complaints the Financial Times ever had in one day
Speaker 1: while I worked there was on the centenary of When
Speaker 1: We Went Pink, when it was printed on white paper
Speaker 1: to emphasize how pink it normally looked, and so all
Speaker 1: these people from the city of London, you reading it
Speaker 1: for the shape, prices and stuff, freaked. It was almost
Speaker 1: impossible to the switchboard actually collapsed on various occasions. People
Speaker 1: were horrified that come out on white paper. This is
Speaker 1: a true story. Indeed, I just told you that was
Speaker 1: it was. It was really, It was really impossible to
Speaker 1: get anything done that day. Anyway. That writer's name is
Speaker 1: John Author's that voice you just heard. And now he's
Speaker 1: no longer writing on the pink paper. He's writing on
Speaker 1: that brilliant amber and black of the of the Bloomberg terminals.
Speaker 1: Orange fancy. It's a much not pink and orange amber.
Speaker 1: But Glenn, let's let's start with you because you know,
Speaker 1: as Sarah alluded to, uh, I feel like the whole
Speaker 1: factor investing and and Passive's has has really just taken
Speaker 1: over the investing landscape. However, you've still manage you're still
Speaker 1: managing year to year to pick stocks that beat the market. Um,
Speaker 1: so walk us through your your process. I know you
Speaker 1: start with a screen of stocks, uh, and your current
Speaker 1: strategy is all caps, so you'll you have some stocks
Speaker 1: million in market cap to up to Facebook and up
Speaker 1: to Microsoft. Yeah, up at one point four trillion down
Speaker 1: to a hundred million in market cap. So and happy
Speaker 1: to have Microsoft and the portfolio, I guess for sure.
Speaker 1: I mean that that's really where the market has been rewarding,
Speaker 1: you know, sustainable cash flow, and that's really but what's
Speaker 1: been working in this market, in this whole economic recovery
Speaker 1: that's you know, eleven years into the making right now.
Speaker 1: But there's a lot of value in small cap so
Speaker 1: and it's under you know, undercovered, and that creates a
Speaker 1: lot of opportunity for guys like me who you know,
Speaker 1: feel very comfortable meeting with these companies and talking to
Speaker 1: these management teams and understanding their businesses. Having in all
Speaker 1: caps strategy to me, sounds uh intimidating, just because it's
Speaker 1: such a big universe. So walk us through, Like, I know,
Speaker 1: you run some screens, what sort of price to free
Speaker 1: cash flow? What's what's your process for sort of narrowing
Speaker 1: down this massive universe. So, first of if, I started
Speaker 1: as a microcap analyst, so I looked at companies less
Speaker 1: than a couple hundred million in equity market capitalization, and
Speaker 1: then I moved to small cap and mid caps, and
Speaker 1: to me, I just wanted to look at more companies.
Speaker 1: I never wanted to limit myself, so I've always was
Speaker 1: itching to do all caps and look at everything under
Speaker 1: the sun. So um, you know, because my I'm I
Speaker 1: look at myself as a business analyst first, and the
Speaker 1: securities analysts analysts that ultimately is an equity analyst and
Speaker 1: trying to decipher what a business is worth and what
Speaker 1: the equity of that business is worth. So the way
Speaker 1: I start is, you know, my my rule of investing
Speaker 1: that supersedes everything and I never forget is that when
Speaker 1: I'm buying a style, I'm buying an equity ownership stake
Speaker 1: in a business. And I never forget that rule. So
Speaker 1: I'm always looking to invest in companies that have a
Speaker 1: sustainable competitive advantage, that are run by management teams who
Speaker 1: have a track record of success and are good stewarts
Speaker 1: of capital. And you want to buy these businesses in
Speaker 1: the stock market at a discount to their intrinsic values,
Speaker 1: so when they're undervalued. So it's all about looking for
Speaker 1: good businesses that are run by competent people and buying
Speaker 1: them at the right price. And you know again, you know,
Speaker 1: so in the US stock market, you know, let's just
Speaker 1: take the Russell three thousand if there's you know, there's
Speaker 1: more than three thousand stocks. But um, I do run screens.
Speaker 1: I try to. I mean, um kind of a financial
Speaker 1: nerd and a business nerd, and I like to look
Speaker 1: at everything under the sun and look at as many
Speaker 1: business as I as I can. And but I have
Speaker 1: to run screens just to focus my you know, where
Speaker 1: I need to focus. So I do run static screens
Speaker 1: that like you said that, like let's say a price
Speaker 1: to free cash flows screen or that are that are
Speaker 1: valuation sensitive, but they tend have to change much. So
Speaker 1: I look for what I call inflection points screens where
Speaker 1: I'll look for businesses where there maybe there's insider buying,
Speaker 1: or there's a management change, or there's you know, a
Speaker 1: company is doing a spinoff or change in operating momentum.
Speaker 1: Those are the screens that generate kind of something interesting
Speaker 1: because a lot of these times catalyst some type of
Speaker 1: catalyst to make me take a second look at a
Speaker 1: business I've might you know, I've been doing this for
Speaker 1: you know, fifteen twenty years that you know, so to
Speaker 1: make me look at a business again a second time.
Speaker 1: And like I said, you know, your stock picks are
Speaker 1: are handily beating the market. Uh so, so the strategy,
Speaker 1: uh the inception was in like early two thousand and sixteen,
Speaker 1: right February sixteen sixteen, and so the equity your equity
Speaker 1: picks are up a thirty percent since then, smps up.
Speaker 1: But the unusual thing about your strategy, at least one
Speaker 1: of the ones you run, is you don't go all in.
Speaker 1: You like to keep a really healthy cash balance as
Speaker 1: much as say forty UM. So what you end up
Speaker 1: with is very good risk adjusted returns a sharp ratio
Speaker 1: of like one point six um, but very conservative. So
Speaker 1: walk us through kind of how you uh manage cash
Speaker 1: because you know you'll flex between as much as fifty
Speaker 1: percent cash at some points, kind of waiting for the dip.
Speaker 1: Is it as simple as that. Uh? Yeah. Unfortunately people
Speaker 1: may look at it and say, I've I've been wrong, right,
Speaker 1: I've had a high cash percentage. It's up over right now. Uh.
Speaker 1: The reality is, when I first started this, so you know,
Speaker 1: I worked at JP Morgan Asset Management for a long
Speaker 1: time and I ran mutual funds there, and this was
Speaker 1: in the beginning. This was kind of a glorified family office,
Speaker 1: and I was managing my own money, and I wanted
Speaker 1: to manage it the way I thought was the right
Speaker 1: way to manage money, where you're not always say, hey,
Speaker 1: you need to be in equities, you need you know,
Speaker 1: you know. So I wanted to have good risk adjustive returns.
Speaker 1: And the reality is, I hate to lose money. I mean,
Speaker 1: but I also understand that you have to take risk
Speaker 1: in order to make money. But I love the idea
Speaker 1: of having capital there that's there when the opportunity arises.
Speaker 1: And you know, I look at the portfolio from the
Speaker 1: bottom up, each stock on its own merit and its
Speaker 1: own risk reward, and I look at it from the
Speaker 1: top down is to you know, is it a good time?
Speaker 1: But I mean really comes from the bottom up, and
Speaker 1: I want to have that cash available to all. Right,
Speaker 1: now is a great time to buy businesses are on sale.
Speaker 1: I mean, I don't see that right now, you know.
Speaker 1: I mean you could go back in February six team
Speaker 1: was a great time. Unfortunately, the market came back so
Speaker 1: fast right there, and I didn't get all that cash
Speaker 1: to work. Uh, but I'm happy if if the market
Speaker 1: is gonna be up twenty. I used to have this
Speaker 1: dilemma when I worked at on a mutual fund and
Speaker 1: there was a small cap mutual fund. It was like
Speaker 1: and I'd have this argument with my analysts team all
Speaker 1: the time, and it was like, Okay, the market's up
Speaker 1: and you're up. You know, not good for my career necessarily, right,
Speaker 1: I'm not generating alpha or the markets up? Are the
Speaker 1: markets down and I'm down? I look like a hero
Speaker 1: from a relative perspective. That never sat right with me, right, Like,
Speaker 1: you know, I don't like to lose money, right, I mean,
Speaker 1: but you know, in the financial crisis, I look like
Speaker 1: a hero even though I lost. You know, I don't
Speaker 1: know what the numbers were, but I lost or something.
Speaker 1: I look better relative to everybody else and you know
Speaker 1: the reality is I hated the idea of playing this
Speaker 1: relative game always so, so it's certainly been hard to
Speaker 1: find an opportunity to put money to work. Even this
Speaker 1: past week you have the SMP, the NADS at the
Speaker 1: Dow all hitting fresh record highs. John, I want to
Speaker 1: come to you because this is all in the phase. Uh.
Speaker 1: We have a spreading coronavirus. Um. Ubs was out saying
Speaker 1: that the most compelling bowl case right now is that
Speaker 1: there is no credible bear case at the moment. What
Speaker 1: do you say to align like that that? Because I've
Speaker 1: heard it a couple of times this week. The market
Speaker 1: keeps going up because there's no reason to be bearish,
Speaker 1: even when I think a couple of people would argue
Speaker 1: against that. Huh. I can think of a few reasons
Speaker 1: at that being said, I've been very good at coming
Speaker 1: up with reasons to be bearish for the last ten years,
Speaker 1: and they all seemed like really good, elegant, uh, you know,
Speaker 1: logical points, and they weren't totally right. Um. Coronavirus could
Speaker 1: yet really mess things up, um. And it's not necessarily
Speaker 1: it doesn't need to be the second Black Death. It
Speaker 1: doesn't need to be Spanish flu. It just needs to
Speaker 1: close down Chinese industry for long enough to put out
Speaker 1: people's calculations, people's expectations that they have been relying on.
Speaker 1: In particular, given the parlace state of Europe. You the Yeah,
Speaker 1: there is no country in the world that is more
Speaker 1: exposed to China amazingly than Germany. In many ways, Germany's
Speaker 1: manufacturing is in has been showing serious signs of decline.
Speaker 1: And then after that you call it craziest. Apparently it's
Speaker 1: very charming that I refer to it as the maddest
Speaker 1: and that I see in the markets. Um. Anyway, don't
Speaker 1: if you if you look at if you look at
Speaker 1: the US market, canes bringing British greater. My aid said
Speaker 1: that the market, the markets can stay irrational longer than
Speaker 1: you can stay solvent, which is very true. Uh. And
Speaker 1: markets can be overpriced and they can still get more overpriced,
Speaker 1: So you should never try to time the market based
Speaker 1: on valuation. That said, price to sales is not um
Speaker 1: it's one of the simplest, most straightforward, least manipulable numbers
Speaker 1: out there. And on a price to sales basis, the
Speaker 1: SMP has actually caught up with the top in two thousands.
Speaker 1: This isn't We don't have to have arguments about Schiller's cape,
Speaker 1: which is actually nowhere near as expensive as it was
Speaker 1: in two thousands. Um. This is a good, straightforward indicator
Speaker 1: that suggests that, unless it doesn't even require the economy
Speaker 1: to slow down, if American companies get a little less
Speaker 1: good at absolutely squeezing every last inch of every cent
Speaker 1: of profit out of their sales, they are going to
Speaker 1: look terribly overpriced. Um. So there were a few reasons
Speaker 1: to be buried there, right. And oh and Bernie, I
Speaker 1: mean Larry David. Just I can't do a Larry David
Speaker 1: level impersonation of Bernie. It's only a few months. For
Speaker 1: some reason, for some reason, people took Elizabeth Warren very seriously. Uh.
Speaker 1: And so when we had the season of people announcing
Speaker 1: their previews for which, like Christmas, comes earlier every year,
Speaker 1: so it was before Thanksgiving, people were terrified of her. Um.
Speaker 1: She doesn't call herself a socialist, she calls herself a capitalist.
Speaker 1: Bernie is now looking stronger than Elizabeth Warren ever did.
Speaker 1: And he calls himself a socialist, which is not market friendly.
Speaker 1: It's markets to capitalist. Let's get into some of these
Speaker 1: names in your protafolio because I love looking at uh
Speaker 1: different managers portfolios and oftentime you're like, wait, you sure
Speaker 1: that you look at it and you're like, you're sure
Speaker 1: this isn't an index fund. You do not make mistake
Speaker 1: with Glenn's picks, which is what I love. You know,
Speaker 1: I'm gonna skip over sort of the you know, the
Speaker 1: Microsoft United Health and I'm gonna quiz maybe we'll quiz
Speaker 1: authors on a fees heard of some of these same
Speaker 1: waiting as Facebook one point seven percent habit restaurants. Okay,
Speaker 1: all right, so they just they just got bought by
Speaker 1: Young Brands. Okay, so uh they're in a very very
Speaker 1: big way. Uh but what what Yeah, so the same
Speaker 1: thing is called young Brands. So I first saw them
Speaker 1: in November four team when the I p oed and
Speaker 1: it kind of was at the same time Shake Shack
Speaker 1: came public. And they're these guys are a strong a
Speaker 1: competitor in California to there in Santa Barbara, California and
Speaker 1: compete with um uh in Halburger of course, who's the
Speaker 1: dominant player there. And and they have you know, I
Speaker 1: knew the CEO. His name's Rust Bendl. He ran this
Speaker 1: company called Mimi's Cafe. When they were private, I met
Speaker 1: with them, and so they came public. They had great
Speaker 1: unit of economics. It's they fifty burger. But what what
Speaker 1: they do. Everything's fresh, high quality food. What they do
Speaker 1: differently is they they're kind of more so they'll have
Speaker 1: a good female presence. They they'll have good seared ahi
Speaker 1: tuna and salads, and so it was a differentiated concept.
Speaker 1: And so the stock took off, and you know, an
Speaker 1: I p oed in the mid teens and went up
Speaker 1: like just like shake Shack when everybody wanted their own
Speaker 1: restaurant stocks. Uh, And a lot of these companies came
Speaker 1: public and it went, you know, went into the forties.
Speaker 1: I watched it. I was intrigued by the concept of
Speaker 1: the valuation was ridiculous. And then as the restaurant stocks
Speaker 1: went out of favor, it collapsed. I mean it was
Speaker 1: in the single digits. They were still executing, and it got,
Speaker 1: you know, close to replacement value on a you know,
Speaker 1: a business that generates you know, their their union economics
Speaker 1: are returns on invested capital. So it got really attractive
Speaker 1: to me, and I started to take a position and ultimately.
Speaker 1: You know, I was hoping for a higher price than
Speaker 1: what they got taken out for. I was hoping this
Speaker 1: would get into the twenties, but it got taken out
Speaker 1: at fourteen by young brands. One more before we get
Speaker 1: to the craziest things. I think this one would be
Speaker 1: interest to our listeners who are are actually in the
Speaker 1: money management business. Diamond Hill Investment Group. Uh one point
Speaker 1: three waiting and your portfolio is never more than like
Speaker 1: thirty stocks, right usually, yeah, it's right now, right now,
Speaker 1: I'm at twenty. But tell us about Diamond Hill Investment Group,
Speaker 1: because I mean, I feel like asset management firms are
Speaker 1: somewhat uh radioactive to a lot of investors these days.
Speaker 1: The the active managers. What do you see about this stock? Right?
Speaker 1: Nobody wants to own active managers right now? So Diamond Hill.
Speaker 1: They're in Columbus, Ohio, mostly equities, uh, large cap value.
Speaker 1: You know. Um, I followed them for a long time. Uh.
Speaker 1: We owned it actually in our small cap portfolios when
Speaker 1: I was at JP Morgan. It got really expensive. They've
Speaker 1: done very very well, and it's twenty two billion in
Speaker 1: assets under management now. Uh, And it got really cheap, right,
Speaker 1: And I took a second look at it. I saw
Speaker 1: they hired a new CEO, Heather Brilliant from morning Star UM,
Speaker 1: and there was insider buying, and I took a look,
Speaker 1: and I'm like, it's six points seven times enterprise value
Speaker 1: to notepad. Now, I've run an investment management business. This
Speaker 1: is a really good, well run company that's an active manager.
Speaker 1: But it's not like they're charging egregious fees. The average
Speaker 1: fee sixty basis points. Uh. They have a long term
Speaker 1: track record. I would love telling this business if I
Speaker 1: if this was in the private markets and I could
Speaker 1: buy it for seven times, you know, and they have
Speaker 1: a pristine balance sheet, I'd own it all day and
Speaker 1: just waited out. Now, I don't know what's that's That's
Speaker 1: the beauty of the stock market. There's this volatility, and
Speaker 1: you know, if you have an idea of what you
Speaker 1: think of business is worth. Um, there's a lot of opportunity.
Speaker 1: And you just waited out. For those who've been waiting
Speaker 1: around lists for the craziest thing we saw in markets,
Speaker 1: it's time for your payoff, Sarah. I'm not as confident
Speaker 1: as I usually am in mine. You were in confident
Speaker 1: last week either, Yeah, I don't think. I think I
Speaker 1: still won though, didn't I Because you say that, I
Speaker 1: think if there was a popular vote here, I'm not
Speaker 1: sure that. You right, do I get one vote or
Speaker 1: I mean you you get a supervoter? Yeah? All right,
Speaker 1: let's let's start with that character, Twiggy Sunday, who the
Speaker 1: craziest thing he saw in markets this week? I think
Speaker 1: John Author's as a British Red Sox fan, you'll appreciate
Speaker 1: that he noticed that Keith Richards gave up smoking, and
Speaker 1: he he thought that might have some market implications. In fact,
Speaker 1: I looked, I look at al Tree's share price. It's
Speaker 1: down like double digits since the middle of January. So
Speaker 1: I think I think Twiggy might I might one this week. Yeah,
Speaker 1: so that that's a good one. But I'll start with
Speaker 1: mine because I'm not I'm not as proud as of
Speaker 1: this one. But I saw a story, I think it
Speaker 1: was CBS. Someone sold a single parking space. So we're
Speaker 1: talking about the real estate, the parking space real estate
Speaker 1: market in San Francisco. Uh, Clenn, what would you pay
Speaker 1: for a parking space in a touch in New Jersey?
Speaker 1: I pay fifty five a month on the touching Parking
Speaker 1: Authority actually the treasurer of the So you hear in
Speaker 1: San Francisco, what would you pay in services? I have?
Speaker 1: I've seen the articles eight hundreds to own a parking
Speaker 1: space and month. I think that's just no way more. Yeah,
Speaker 1: but John Arthur's what would you pay for it to
Speaker 1: have a car in San Francisco? Okay? So much to
Speaker 1: avoid having to drive in San Francisco negative negative interest,
Speaker 1: negative hundred grand for parking space in San Francisco. How
Speaker 1: much could you buy? Is there anywhere within the city
Speaker 1: of San Francisco you could buy a studio apartment for
Speaker 1: a hundred grand? Absolutely not? Right, absolutely not. Maybe it's
Speaker 1: not totally a relative basis. Maybe it's not totally completely
Speaker 1: clinically insane. Right, And the way people live in San Francisco,
Speaker 1: they might just pull a van up in that space
Speaker 1: and live there. You know, it happens, it happens. Yeah, alright, Sarah,
Speaker 1: can you top a hundred thousand dollar parking space? Um?
Speaker 1: Maybe not. But there was a great story by our
Speaker 1: hedge fund reporters here at Bloomberg, and the headline was
Speaker 1: five hedge fund heads made more than one billion dollars
Speaker 1: each last year But the part that I really found
Speaker 1: interest interesting was that if you look at the returns
Speaker 1: of their funds last year, three of the five all
Speaker 1: lagged the S and P five hundred by at least
Speaker 1: ten percent, essentially. So the idea that you can make
Speaker 1: a billion dollars and you don't you don't have to
Speaker 1: do to the two is more powerful than the twenty.
Speaker 1: And I guess all right, Clennon, I know I to
Speaker 1: about our craziest thing. I hope you can't prepare it.
Speaker 1: I know you're a Philadelphia seventy Sixers and we have
Speaker 1: a Celtics fan here too. I see the red sox
Speaker 1: around John's neck. So well, I'm gonna touch on somebody
Speaker 1: that you both know. Uh. The Sixers big offseason signing
Speaker 1: Al Horford, who's one of the most underrated NBA players
Speaker 1: for a long long time, right, but you know he's
Speaker 1: real value investor. Thirty three years old, Sixers paid are
Speaker 1: paying him twenty eight million dollars a year. The Sixers
Speaker 1: have underperformed a little bit this year, They've just made
Speaker 1: him the backup center. This week, as I was I
Speaker 1: was watching the Sixers Clippers game, which is Sixers one,
Speaker 1: and I'm a Sixers fan too. Full disclosure. Uh, that
Speaker 1: to me was ridiculous, twenty eight million dollars for a
Speaker 1: backup center. And then I have one more, which is
Speaker 1: my nerdy this is more nerdy finance guy. Alright, I
Speaker 1: own Apple full disclosure. Okay, I've owned it for a
Speaker 1: for a long time. And the value, you know, what's
Speaker 1: in interesting. So it's earning season right now. So Apple
Speaker 1: reported their fiscal Q one that ends at twelve thirty one.
Speaker 1: So I was on their conference call doing my work.
Speaker 1: I notebooks, right, yeah, and I was looking at the
Speaker 1: numbers compared to two years ago. And so Apple, this
Speaker 1: just shows what interest rates have done, and there's perception.
Speaker 1: Apple's business has probably gotten better from two years ago
Speaker 1: from a perception standpoint, now that air pods are doing
Speaker 1: pretty well and they have more of a service business,
Speaker 1: so you could argue their business models a little better.
Speaker 1: But operating income in this quarter twenty five point five
Speaker 1: six nine billion dollars. Okay, at twelve two years ago
Speaker 1: same time they did twenty six point to seven four
Speaker 1: billion dollars in operating income. More operating income, Apple's operating
Speaker 1: income is down over two years. Enterprise value of Apple
Speaker 1: right now one point three six billion enterprise value back
Speaker 1: then at one point three six trillion. Yeah, sorry, uh,
Speaker 1: enterprise value you know on that quarter after that quarter
Speaker 1: six billion. So the enterprise value has doubled and they're
Speaker 1: making the same amount of money. Now they've done share
Speaker 1: by back and stuff like that, so you can choose
Speaker 1: the EPs and stuff, but even just the yeah, I mean,
Speaker 1: I mean I I look at it from an enterprise
Speaker 1: value and no bad standpoint, so you can take out
Speaker 1: the cash. Yeah, I went from twenty basically doubled their
Speaker 1: multiple y. But Mike, I think we might be crowning
Speaker 1: a new winner. All right, all right, we'll give it
Speaker 1: to well we got to hear. But John will give
Speaker 1: us the maddest thing here. This is, this is something
Speaker 1: I picked up in a in a in a column yesterday.
Speaker 1: I spent years of my life, literally years of my life,
Speaker 1: checking first thing in the morning, what the spread of
Speaker 1: Greek bonus of a German boots was, naturally and amazing
Speaker 1: to relate. We have now got to the points where
Speaker 1: the bread of Greek bonds over German bunts is back
Speaker 1: where it was before the Greek election in October two
Speaker 1: thousand and nine, when the new Prime minister got in,
Speaker 1: he discovered that there was a hole in the accounts
Speaker 1: and that Greece had been understating its deficit. And it's
Speaker 1: when he announced that that the full Eurozone crisis starts.
Speaker 1: And apparently it's safe to go back in the water
Speaker 1: now because at long, long last Greece, the Greek crisis.
Speaker 1: If you believe the bond market is over. That your
Speaker 1: headline on that car and I loved it was it
Speaker 1: was like the European siren deck crisis is over, which
Speaker 1: kind of reminded me of like Bush on the aircraft
Speaker 1: carrier with the mission accomplished banner behind him that so
Speaker 1: hopefully you have better luck with the problem with the
Speaker 1: problem with this is is because that was written I
Speaker 1: was edited by Matthew Brook, who is also British. There's
Speaker 1: so many people assumed that we actually mean what we say.
Speaker 1: We think we're obviously in cheek and um, yes, I've
Speaker 1: had one or two I actually had one or two
Speaker 1: very strange tweets by right wing Italian politicians about this,
Speaker 1: trying to get to the bottom of But but anyway,
Speaker 1: there were there we go. I find the market has
Speaker 1: convinced itself that the entire existential crisis over the euro
Speaker 1: is now over. And as I said at the outset,
Speaker 1: I actually think there are many many it's changed and
Speaker 1: it's now more about the center than the periphery. But
Speaker 1: I would not be too relaxed. Well, you know, the
Speaker 1: euro Zone. The spread is one thing, but just the
Speaker 1: Greek tenure yield loner is like less than one percent.
Speaker 1: If we see Greek yes ten year yields go negative,
Speaker 1: I don't know what I think I'm gonna We need
Speaker 1: to pay to the privilege of lending money to Greece. Yes,
Speaker 1: that would be quite That would be is on the craziest.
Speaker 1: With that said, Glenn and John, thank you so much
Speaker 1: for coming on the show today. Thank you fe what
Speaker 1: goes up. We'll be back next week. Until then, you
Speaker 1: can find us on the Bloomberg Terminal website and app
Speaker 1: or wherever you get your podcasts. We love it if
Speaker 1: you took the time to rate and review the show
Speaker 1: on Apple podcast so more listeners can find us. And
Speaker 1: you can find us on Twitter. Follow me at at
Speaker 1: Sarah Ponzack, Mike is at Reagan Anonymous, John Authors is
Speaker 1: at John Author's and of course you can also follow
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Speaker 1: Thanks for listening, See you next time. FO