Speaker 1: This is mesters in business with very renaults on Bloomberg Radio.
Speaker 1: This week on the podcast, I have an extra special guest.
Speaker 1: His name is Dan Chung and he has been with
Speaker 1: Algier Asset Management since where he started out in the
Speaker 1: e commerce and technology sector as an analyst before eventually
Speaker 1: becoming president, chief Investment Officer, and then CEO. UH. Dan
Speaker 1: Chung has been uh running that firm for quite a
Speaker 1: while with quite a tremendous track record. The firm has
Speaker 1: dollars in assets. In addition to the CEO and c
Speaker 1: i O rolls, he also runs a couple of different
Speaker 1: portfolios to a great acclaim. Um Alger is you know,
Speaker 1: best known as founded by Fred Alger. We talk a
Speaker 1: little bit about various mentors as well as what the
Speaker 1: firm's experience was in nine eleven and what they've done
Speaker 1: after that in terms of the room philanthropy. UH, they're
Speaker 1: a fairly unique growth firm that focuses on UM tech, healthcare,
Speaker 1: variety of other things, specifically growth companies, and we go
Speaker 1: over how they're managing through uh what is both a
Speaker 1: challenging but target rich period with great opportunities. UH. So,
Speaker 1: with no further ado, my interview with Alger Managements Dan Chung.
Speaker 1: This is Masters in Business with very Renaults on Bloomberg Radio.
Speaker 1: My extra special guest this week is Dan Chung. He
Speaker 1: is the Chief Investment Officer and Chief Executive Officer at
Speaker 1: Alger Management, which runs over thirty five billion dollars in assets.
Speaker 1: He's been c i O since two thousand and one.
Speaker 1: He earned his j d from Harvard in eight seven,
Speaker 1: got a master's in law from n YU before going
Speaker 1: to Clark for the Honorable Justice Anthony Kennedy at the
Speaker 1: Supreme Court of the United States. He is also portfolio
Speaker 1: manager for multiple funds and strategies, including the four and
Speaker 1: a half billion dollar Alger Spectra Funds. H Dan Chung,
Speaker 1: Welcome to Bloomberg Than. So, I've been looking forward to
Speaker 1: having this conversation with you for a while, and I
Speaker 1: have to start by asking you had a storybook legal career.
Speaker 1: What happened? What made you say, Yeah, the hell with
Speaker 1: Harvard in the Supreme Court, I'm gonna switch gears and
Speaker 1: try something totally now. Yeah, it was. It was a
Speaker 1: storybook career, and uh, if I had a another opportunity,
Speaker 1: I probably would have tested out what the legal world
Speaker 1: would have been like, but and where where where many
Speaker 1: of my friends still are today? Um, including Justice Selena Kagan?
Speaker 1: Were you a colleague of We co Clark together and
Speaker 1: we went to law school together, and we served on
Speaker 1: the Larvae together. And she's an amazing person. So it's
Speaker 1: very weird to have a friend who becomes a Supreme
Speaker 1: col Right, that's kind of interesting. Do you guys ever
Speaker 1: stay in touch? Do you have a chat? You know?
Speaker 1: I was just getting to the point in my career
Speaker 1: where I wanted to sort of give back to the
Speaker 1: Harvard Law School. At the time, she was the dean,
Speaker 1: so she talked about a story career. She was the dean,
Speaker 1: and so that the last time I I saw her
Speaker 1: on a one on one situation, it was like, you know,
Speaker 1: talking about let's do something law and business and and
Speaker 1: my whole issue was that lawyers um are uh, you know,
Speaker 1: the vast majority of them are consulting in some way
Speaker 1: for businesses and they don't understand the business at all,
Speaker 1: and and it reduces the quality of the work. And
Speaker 1: she was she was very into it, um and um.
Speaker 1: And then I don't know, a couple of months later,
Speaker 1: she's nominated for the Supreme Court. So that's all over.
Speaker 1: So she saved you writing a check. Yeah that's true. Yeah, yeah, yeah,
Speaker 1: I save the money. So you end up at Simpson Thatcher,
Speaker 1: which was known for international law and and corporate law
Speaker 1: and litigation. Right, what were you doing for them? And
Speaker 1: then how did that end up transferring over to finance? Right? So, Um,
Speaker 1: my parents are both academics and knew absolutely nothing about
Speaker 1: Wall Street and only a little bit about business generally. I,
Speaker 1: on the other hand, was always interested in it, probably
Speaker 1: not in a very educated way, but probably from like
Speaker 1: things like the movies. Um, I did grow up in
Speaker 1: the Silicon Valley and so, but my Silicon Valley was
Speaker 1: Hewlett Packard, not undergraduate Stanford, undergraduate Stanford. So there was
Speaker 1: an interest I had there in in the business in
Speaker 1: Wall Street and and frankly in New York, you know,
Speaker 1: and like the Frank Sinmetris song, you know, if you
Speaker 1: can make it here, you can make it anywhere. And
Speaker 1: so I wanted I wanted to In some ways, I
Speaker 1: was more driven by the idea, come to New York,
Speaker 1: work at a top notch law firm. That will be
Speaker 1: a way to learn about business as well as you
Speaker 1: know business law. UM. And essentially along the way, I
Speaker 1: realized I loved the clients who were UM making deals
Speaker 1: complicated financial investments. Uh, you know, using you know numbers,
Speaker 1: accounting analysis fundamental as well as accounting analysis to figure out,
Speaker 1: you know, what's the what's the right paris to pay
Speaker 1: for something and you know, UM and UM. But I
Speaker 1: was just I was, as a lawyer, just an observer
Speaker 1: on the You're not making any decisions really, And so
Speaker 1: at some point I realized I thought I would be
Speaker 1: more interested in that, and I thought I would be
Speaker 1: good at it. So I so I started to call
Speaker 1: around Wall Street to try to get a job on
Speaker 1: Wall Street basically. And what was that process like? Well, UM,
Speaker 1: it started off extremely well in that the first person
Speaker 1: I told was a client UM. And it was like,
Speaker 1: I don't know what their title was. UM, certainly a VP,
Speaker 1: not an m D, I believe, but you're not the
Speaker 1: head of the group. UM. But it was the Financial
Speaker 1: Derivatives and Complex financial Instruments group UM Merrill Lynch. So
Speaker 1: I always think very fondly, Mary Lynch. They're a big
Speaker 1: client of ours. Thank you, Meryl UM and the associate.
Speaker 1: You know, we've been working on something in the associate.
Speaker 1: I told the associate, we've become friendly and and he said,
Speaker 1: if you're leaving Simpson, I am sure my boss would
Speaker 1: want to talk to you, probably give you a job.
Speaker 1: I said, okay, great, So so I go down and
Speaker 1: meet his boss and UM, he says, like, I loved
Speaker 1: working with you. You know, Uh, my dad was a
Speaker 1: math professor. So he actually said something to the effective,
Speaker 1: you're one of the few lawyers who seemed to actually
Speaker 1: understand and like the math that we're doing here that's
Speaker 1: around the options and derivatives, and I, you know, and
Speaker 1: uh basically gave me a job offer. Um before I
Speaker 1: left his office, and he said it's a standing offer
Speaker 1: Staya Sampson if you want, but anytime you want to leave,
Speaker 1: you've got an offer here for our group Merrill Lynch
Speaker 1: and UM. So so that that's a confidence booster right
Speaker 1: So here. Then I started looking around. So was it
Speaker 1: the pre existing math skills that translated to finance or
Speaker 1: was it some of the legal training and experience that
Speaker 1: that helps you once you started having a career in investing. Um,
Speaker 1: I would say the math skills, it's more about a
Speaker 1: numbers sense, seeing patterns in numbers, liking statistics, understanding probabilities,
Speaker 1: and again I mentioned my father again, but he was
Speaker 1: actually a professor of probability theory, so which I think
Speaker 1: is much more important for investors than the bulk of
Speaker 1: what you're gonna learn in the CFA exam. Yes, I mean,
Speaker 1: investing is basically first recognizing that nobody knows anything about
Speaker 1: the future. Anybody who tells you they're predicting the future,
Speaker 1: you know, it sounds like they're so confident that they're
Speaker 1: going to be right. It's like you know they're selling something.
Speaker 1: They're selling you something. So the only way really do
Speaker 1: pro at least from my perspective and algers, is where
Speaker 1: the probabilities of a bearer case, the base case, a
Speaker 1: bowl case. You know what's the black Swan event, and
Speaker 1: you know what works and what doesn't work? What are
Speaker 1: the values you know? And and and the stock market
Speaker 1: obviously is is I mean, it is the greatest real
Speaker 1: world probability machine, right, I mean, the price of of
Speaker 1: any asset in the stock market is essentially the combined
Speaker 1: probabilities of everybody bullish, bearish, neutral, ignorant, highly informed insiders outsiders.
Speaker 1: What is that worth? And it changes because things happen
Speaker 1: and people change their minds a little bit, sometimes too
Speaker 1: much and sometimes not enough right, And and that I
Speaker 1: think has always been, Um, I've always been I think
Speaker 1: very good numbers since I didn't had to prove it Alger.
Speaker 1: You know, I thought I had good numbers since I
Speaker 1: think I think, uh, I think I proved it an Alger.
Speaker 1: But the law, I don't want to underestimate the law
Speaker 1: did it did help me a lot, I think, um one,
Speaker 1: I like complex situations because I know that a lot
Speaker 1: of people don't or they just don't want to take
Speaker 1: the time to dig into them. And so as a
Speaker 1: fundamental investing shop, getting into the details, getting into the
Speaker 1: complex situations is sometimes where you get the most opportunity
Speaker 1: because of that. And then on the flip side, running
Speaker 1: the business. Lawyers are are very disciplined, organized, detail, deadline oriented,
Speaker 1: all of which is pretty good um for a career,
Speaker 1: but it's it's especially good if you're trying to run
Speaker 1: a business. So, so, how did you end up at Algae?
Speaker 1: You join in? Was that your first job in finance
Speaker 1: out of Simpson Thatcher first job in finance? Um? And
Speaker 1: uh I ended up there because uh I so I've
Speaker 1: gotten a couple offers um on walls rate. I had
Speaker 1: the Mary Lynch one, I had another. I hadn't gotten
Speaker 1: another off for UM, and I thought, you know, I
Speaker 1: don't really know any serious Wall Street you know, um,
Speaker 1: senior mentor types. So I should I should try to
Speaker 1: find one to ask their advice, like where should I go?
Speaker 1: And at the time, the only one that I knew
Speaker 1: was my uh father in law, my my, my just
Speaker 1: my Fred Alger had just become my father in law. June.
Speaker 1: I married his daughter, Alexandra, my wife today. Uh. Still,
Speaker 1: I can't believe it's been twenty nine years. Um. So
Speaker 1: I hadn't really met him much, UM, but I knew
Speaker 1: he was on Wall Street, and I knew that he
Speaker 1: did investing, and so I figured, this is a great
Speaker 1: guy to ask, um, I must know the whole landscape.
Speaker 1: And uh, I'll never forget that I didn't know him
Speaker 1: really very well. You know, it's sort of like, h
Speaker 1: of course we were engaged. So I met him in
Speaker 1: some really kind of formal dinner with his his wife
Speaker 1: and you know, I'm my son in law. I have
Speaker 1: to admit I didn't ask him permission to marry his daughter.
Speaker 1: I was she isn't that kind of woman, and I'm
Speaker 1: I'm not. I wasn't that kind of guy. I sort
Speaker 1: of regret that maybe I should have done it. Now, Um,
Speaker 1: her kids are doing that now again, you know, but
Speaker 1: I'm more like a seventies kid, because seventies kids didn't
Speaker 1: ask permissions for their parents. Um. Anyway, so you speak
Speaker 1: to him, so I say, yeah, I say, I'm thinking,
Speaker 1: I'm thinking I'm thinking of leaving the law firm. And
Speaker 1: I had these offers on Wall Street and like your advice,
Speaker 1: and um, he basically begins to tell me how bad
Speaker 1: both of the offers I have are and how neither
Speaker 1: of the firms that I'm talking about are particularly good. Now, um,
Speaker 1: he stops there, but I would say less than a
Speaker 1: week later, maybe two weeks later, he calls me and says,
Speaker 1: you know what you gotta really do is come down
Speaker 1: to my office and consider joining Alger. It took him
Speaker 1: two weeks to come around. Well, I think he was
Speaker 1: giving me like a little week. Just let it sink in.
Speaker 1: You know, look, he is a he is who he is,
Speaker 1: not just a founder, but it was a master businessman
Speaker 1: because he's pretty good at let's just say, the m
Speaker 1: word of managing people has another word that's a little
Speaker 1: bit motivating. Well, some people say manipulating. Um, you know,
Speaker 1: uh and I think he understood that I didn't know
Speaker 1: much and uh that his you know. So anyway, that
Speaker 1: turns out to be an insightful play on his part. Well,
Speaker 1: because not only do you join Alger, you'd be eventually
Speaker 1: become president, then you become c I O, and then
Speaker 1: you become CEO. So clearly he saw potential in you
Speaker 1: to take over his his work. I'm gonna be you know,
Speaker 1: just really really candid. I mean, his daughters all laugh
Speaker 1: about it because they said what they knew was that
Speaker 1: he had long longed for a successor that was in
Speaker 1: the family, his daughters at all past you know, I'm
Speaker 1: not interested um and and uh uh uh that as
Speaker 1: soon as I said this thing, he had no interest
Speaker 1: in actually advising me in any accurate, objective sense. It
Speaker 1: was a campaign to get me on board, using you know,
Speaker 1: a very wildly and very intelligent um sixty plus years
Speaker 1: of experience against a pretty naive, you know, thirty year old.
Speaker 1: Well it seemed to have worked out. It worked worked
Speaker 1: out absolutely. Let's talk a little bit about algiers investment philosophy.
Speaker 1: I like this description discovering companies undergoing positive dynamic change,
Speaker 1: which immediately raises the question how do you identify these companies?
Speaker 1: Is this quantifiable? How much of this is less definable
Speaker 1: and squishy and qualitative? Uh? What is positive dynamic change? So? UM,
Speaker 1: this is our our investment philosophy. It's what the firm
Speaker 1: was founded on in nineteen four. UM. It's also what
Speaker 1: we're recognized for as essentially creating the growth style of investing. UM.
Speaker 1: So what does it mean? UM? It's first a recognition
Speaker 1: UM that UH changes all around us and in our industries. UM,
Speaker 1: in our customers and the competitors and the competitive pressures
Speaker 1: UM in an industry are basically always about adapting to change. UM.
Speaker 1: So what we recognize in our philosophy is the opportunities
Speaker 1: for investors, in particular fundamental investors are where the change
Speaker 1: is the greatest. And the reason for that is because
Speaker 1: where the change is the greatest, for example, and what
Speaker 1: has driven revenue growth or profits or you know, customer demand,
Speaker 1: you know where the change is the greatest in those
Speaker 1: those those key drivers and others for an industry, it's
Speaker 1: where the opportunity for new winners to be created, you know,
Speaker 1: for old winners potentially to continue, but if they don't adapt,
Speaker 1: but potentially become losers. So the pressure to change wherever
Speaker 1: that's the greatest is always of extreme interest to us.
Speaker 1: And what we recognize UM within an industry is there's
Speaker 1: two areas where the change or the pressure to change
Speaker 1: is though is the greatest, and one is where is
Speaker 1: the highest new growth in an industry. If you look
Speaker 1: at any industry and ask what's the highest fastest growing
Speaker 1: new product or service, that is a kind of change, right,
Speaker 1: and that's inherently innovation, changing preferences by consumers or maybe
Speaker 1: a changing costs um. But whatever is growing the fastest
Speaker 1: UM is a huge challenge because you can either be
Speaker 1: a leader and innovator and capture that high growth, or
Speaker 1: you can be the company that's selling the product that
Speaker 1: is getting cannibalized. Right, it's growing, is growing, was once
Speaker 1: growing perhaps, but it's now growing slower and slower and slower.
Speaker 1: So if you think about the high growth UM, a
Speaker 1: great example I like to use is the music industry
Speaker 1: as a transition from record to tape, from tape to
Speaker 1: UH cassette, cassette to c D, c D to digital.
Speaker 1: Each one of those technology transitions, at the beginning of it,
Speaker 1: the new media is always the fastest growing. I mean, yes,
Speaker 1: it's starting from zero, but but also in each one
Speaker 1: of those we can see it's ultimately completely eaten up
Speaker 1: the past technology. And so if you're a company selling
Speaker 1: records music, or you're selling the electronics that play music
Speaker 1: um or a producer of it, you know, you have
Speaker 1: to be aware that the transitions there are important for
Speaker 1: your company to adjust too. And we can think of
Speaker 1: a lot of leading companies from say the eighties, which
Speaker 1: I you know, I grew up in loving music and
Speaker 1: going to college and but Tower Records uh hmv Records, uh,
Speaker 1: Sony with the Walkman um uh. You know that today
Speaker 1: either went out of business or are no longer leaders
Speaker 1: in you know, streaming digital music UM, which is really
Speaker 1: dominated essentially by Apple uh, Spotify and a few others
Speaker 1: as you know. UM. So we know that high growth
Speaker 1: is one area where the change is extreme and the
Speaker 1: opportunity to identify as fundamentally as investors, who are the leaders,
Speaker 1: who are the ones driving that change? Is it going
Speaker 1: to be durable? And of course you know, the examples
Speaker 1: are countless um retail it's uh, first you had department stores,
Speaker 1: then you had the big box retailers, and then you
Speaker 1: had Amazon come along and end it all, and now
Speaker 1: it's all e commerce, and well you know, and so
Speaker 1: so important to be basically be in the right position there. Um.
Speaker 1: But the other part of our philosophy again it's about
Speaker 1: change and where is the pressure to change. Well, interestingly,
Speaker 1: it's what we call life cycle change. So that's often
Speaker 1: at the other end of the spectrum, it's industries in decline,
Speaker 1: companies really struggling to and in decline negative dynamic change. Well, um,
Speaker 1: for our hedge fund, absolutely interested in the negative dynamic,
Speaker 1: meaning you could both go along with absolutely um on alongside.
Speaker 1: We're looking for the positive dynamic change. So the industries
Speaker 1: are companies with potentially new management, new innovation, restructuring, or
Speaker 1: just new opportunities that can re accelerate and reinvigorate their
Speaker 1: companies into a new growth phase. And again often companies
Speaker 1: like these sometimes their turnarounds. Sometimes it's just industries shifting. Um,
Speaker 1: they offer great investment opportunities because again, the the key
Speaker 1: inside about change is where is where change is happening,
Speaker 1: and if it's extreme, it often translates into worry, fear
Speaker 1: in the investors, and it often trans that often translates
Speaker 1: into undervaluation. Right, missed up missing an opportunity because instead
Speaker 1: of sort of leaning in to the situation, investors flee
Speaker 1: to what they think is safety. R So, so let's
Speaker 1: talk about that, because what you've been describing is a
Speaker 1: fundamental change at a company level, either with a product
Speaker 1: or service um that that's penetrating a new market, finding
Speaker 1: new consumer acceptance. How do you contextualize what's been going
Speaker 1: on in this market since sometime towards the back half
Speaker 1: of where all those fast growing, high flying tech stocks
Speaker 1: have been taken out to the wood shed. And it's
Speaker 1: not that anything fundamental has changed in these companies or
Speaker 1: their prospects. But maybe it's inflation or a new interest
Speaker 1: rate regime or the end of the pandemic. But something
Speaker 1: in macro environment is changing and causing investors to revalue
Speaker 1: these How do you look at that sort of cyclical
Speaker 1: change relative to what you've been describing as a fundamental element.
Speaker 1: Uh So, this is probably one of the most dynamic periods.
Speaker 1: Uh you know, we have really ever seen in thirty years.
Speaker 1: And uh, when I say the period, I actually want
Speaker 1: to go back into pre COVID. If you think about
Speaker 1: what we have seen in our country and across the
Speaker 1: world and in the markets pre COVID right, political change,
Speaker 1: COVID right, a global pandemic hasn't been seen in basically
Speaker 1: hundred years, right, special influence hundred years, literally hundred years,
Speaker 1: and there's no modern market back then. So this is
Speaker 1: completely different COVID forcing um and a global experiment in logistics, healthcare,
Speaker 1: e commerce, deliver vere um, remote work um and also
Speaker 1: lifestyles you know um um uh that we haven't seen
Speaker 1: and now yes, we're to me, we're still in the
Speaker 1: same period. Um. Now we're in the coming out yeah,
Speaker 1: where COVID is is ending in one way or the other.
Speaker 1: Economies are still trying to recover from it. Supply chains
Speaker 1: were tangled up before. We're barely recovering. And now, of
Speaker 1: course we've been hit by Ukrainian Russian war and uh China. Uh,
Speaker 1: they're really in their COVID crisis right now because of
Speaker 1: the way they managed to delay it through zero COVID policy. Right. Um,
Speaker 1: So there are an incredible number of things happening in
Speaker 1: this period. UM, that are are very challenging, and certainly
Speaker 1: are in the sense that algia likes UM. But yet
Speaker 1: it is, of course the challenge dynamic and changing right
Speaker 1: now to the near term UH market action clearly, UM Yes,
Speaker 1: interest rates and inflation caused by supply chain shortages exacerbated
Speaker 1: by Russian Ukrainian War, and then also the concerns about
Speaker 1: what's happening in China, because I remember China's economy going
Speaker 1: into a deep percession. It's never really had a deep percession.
Speaker 1: In the last twenty it has been a growth driver,
Speaker 1: UM and a and a huge growth driver at that,
Speaker 1: a huge growth driver on the march on an incremental
Speaker 1: basis across the globe, it's probably been half of the
Speaker 1: growth of global GDP growth. Half of it has probably
Speaker 1: been attributable to China's growth over the last twenty years.
Speaker 1: I'm not an economist, but I I bet that's a
Speaker 1: very good guess, because you know, Europe has been fairly stagnant,
Speaker 1: and uh, you're not seeing a lot in Africa. South
Speaker 1: America has its own problem, and we've been we've been
Speaker 1: a good contributor. But but you know, uh so so
Speaker 1: I think what we're seeing here is um concerns of course,
Speaker 1: that the inflation is not going to be transitory, uh,
Speaker 1: that the Russian Ukrainian War has changed things around the
Speaker 1: energy commodities complex um, and that a twenty thirty year
Speaker 1: process of globalization is actually unwinding into more localization, more
Speaker 1: on shoring, and even of course trade war conflict, which
Speaker 1: of course that didn't start with the Russian War, you know,
Speaker 1: started actually um with the U. S and China, Right,
Speaker 1: But now it's going to be potentially even more disruptive
Speaker 1: because how are the sanctions against Russia going to play
Speaker 1: out over the following years, Because it does appear it
Speaker 1: will be years, not nothing. It's going to be resolved
Speaker 1: very quickly here, right, I Mean, we could hope that
Speaker 1: it's resolved in months, but so far we're seeing no
Speaker 1: indication that that this is anything but a long haul.
Speaker 1: I could still cross our fingers and hope before ends
Speaker 1: the war ends, but that's just a lot of wishful
Speaker 1: thinking on my part, right, Well, I think so. So
Speaker 1: your question was how do you invest in what's going
Speaker 1: on with growth stocks? And the key for Algin our
Speaker 1: process it is a fundamental research process driven by over
Speaker 1: fifty UH animal supportfolio managers looking at every sector and
Speaker 1: across the globe. What we first look at is UM
Speaker 1: industries and trends. UM. You know what will be enhanced
Speaker 1: by the current environment, what will be hurt by it.
Speaker 1: UM High energy costs, high commodity costs, high labor costs
Speaker 1: will put a lot of pressure on efficiency. UM driving
Speaker 1: efficiency is usually technology, software and robotics. For manufacturing industries,
Speaker 1: UM efficiency might include remote work may get even more
Speaker 1: entrenched because saving on the commute, right if you're if
Speaker 1: you're only going to work three days a week instead
Speaker 1: of five, the two days of savings for a lot
Speaker 1: of a lot of consumer or is where they're driving
Speaker 1: to work is actually quite significant. And and all the
Speaker 1: studies have shown that businesses are getting actually more labor
Speaker 1: out of people who are working remotely. Right, So, so
Speaker 1: we're always looking for is the technologies, the services, the
Speaker 1: products that increase efficiency that benefit from the trends that
Speaker 1: we think are durable. There are some trends that of
Speaker 1: course cyclical, but others are more durable. UM. What's durable
Speaker 1: in our view UM E commerce, um AI, machine learning.
Speaker 1: I think we all we always believed in renewables, solar,
Speaker 1: wind and energy efficiency generally, very clearly in a high
Speaker 1: oil and natural gas price environment, that's going to be
Speaker 1: even more in demand than it was. UM. Consumer lifestyles,
Speaker 1: that's harder to predict. UM. I think we're clearly going
Speaker 1: to have uh significant portion of our population as well
Speaker 1: as those across the world, are going to feel a
Speaker 1: lot of pain because of higher and energy food prices. However,
Speaker 1: we should also note that the upper sixty of Americans
Speaker 1: are actually UM going to be able to weather this
Speaker 1: quite easily. Food and energy costs are not significant in
Speaker 1: particular the upper UM, it's not really a significant part
Speaker 1: or a fact. The middle band, there's some effect, but
Speaker 1: actually they're doing quite well. You know, we entered this
Speaker 1: period UM partially because of COVID with consumer savings at
Speaker 1: record levels. Businesses UM lots of lots of deferred capex,
Speaker 1: and therefore financial situation in corporation is quite strong. Um.
Speaker 1: You know. The only thing that that concerns me about
Speaker 1: the consumer mostly is UM higher interest rates affecting the
Speaker 1: value of their homes, which clearly is going to be
Speaker 1: uh you know, a negative wealth effect for for a
Speaker 1: lot of consumers. Of course, a lot of us had
Speaker 1: seen a wealth effect that we never really expected nor needed.
Speaker 1: And so some of that's probably gonna online, right that
Speaker 1: that giant boom in home prices. If if we roll
Speaker 1: ten or the back, it's really not not the worst
Speaker 1: thing in the world. That's that's right, quite interesting. So,
Speaker 1: so let's talk about a couple of different sectors that
Speaker 1: you mentioned. On on the one hand, we're seeing stores
Speaker 1: like home Depot do pretty well. On the other hands,
Speaker 1: UM stores like Walmart and Target have had you know,
Speaker 1: the worst UM drop post earnings since seven What do
Speaker 1: you make of this environment where even within a sector
Speaker 1: like retail, you have to slice the market very finely,
Speaker 1: very thin to separate the winners from the losers. So
Speaker 1: I would say, in in the consumer landscape, you know,
Speaker 1: the combination of a couple of things, it's really pretty negative.
Speaker 1: And it's reflected in the results of like Walmart and Target.
Speaker 1: And and why we're generally actually not UM we're not
Speaker 1: really they very much invested in retail or in consumer goods.
Speaker 1: UM one is high labor costs and high inflation, uh,
Speaker 1: matched up against not so easy for some of these
Speaker 1: companies to pass that through to the consumer. With higher prices, right,
Speaker 1: especially when many like Walmart and Target customers are feeling
Speaker 1: pressure from higher energy and food UM. And also and
Speaker 1: very important to remember, many of those companies of Walmarts
Speaker 1: and Targets, they UM were able to stay open during COVID.
Speaker 1: They benefited from remote work, stay at home people not
Speaker 1: going to restaurants, eating at home more. Uh, they benefited
Speaker 1: from being open when other retailers had to close, like
Speaker 1: department stores, and so they saw a lot of them
Speaker 1: saw strong growth in demand for you know, apparel, home goods, furnishings,
Speaker 1: that kind of stuff, sporting goods, and and Walmart and
Speaker 1: Target in many ways were beneficiaries of COVID relative to
Speaker 1: other other retail UM. So right now, we think in
Speaker 1: the consumer sector, uh, and we've had this actually sort
Speaker 1: of trend for a belief in a trend for a
Speaker 1: long time, which is that over time, the demographics of
Speaker 1: the U S consumer particular, it's a trend towards experiences
Speaker 1: over things, and that's definitely pre pandemic. UM. The pandemic
Speaker 1: seem to have temporarily reversed it when everybody's stuck at
Speaker 1: home getting deliveries exactly exactly right, and so I think
Speaker 1: in the consumer you know, there are still things that
Speaker 1: UM in that experiences category that have not yet recovered
Speaker 1: from COVID's effects. Live entertainment, travel, UM are are great
Speaker 1: experiences restaurant industry to many respects. Hotel industry. Obviously there's
Speaker 1: a travel related UM, but it's a little bit far
Speaker 1: and few between because if you look at the stock
Speaker 1: market of the dominant part of the consumer error is
Speaker 1: really goods, you know, many of which did fairly well
Speaker 1: during COVID. UM. Now, you know, I think we're still
Speaker 1: leaning into companies like UM, Amazon, which obviously was a
Speaker 1: COVID beneficiary. UM. But Amazon is much more than just
Speaker 1: a store. Now AWS Web Services is you know, the
Speaker 1: leading cloud services provider. UH. The transition to the cloud
Speaker 1: is a major uh RE platforming of business processes from
Speaker 1: you know, running running computers and storage and network equipment
Speaker 1: on in Europe office to letting a public cloud provider
Speaker 1: do it for you. And Amazon is a winner there
Speaker 1: and UM. I think it's UM you know, important to
Speaker 1: note how significant that business is to Amazon because it's
Speaker 1: much higher margin than the retail business UM, and they
Speaker 1: are the dominant leader there and it's still growing very
Speaker 1: very fast growing over right now. So so you mentioned
Speaker 1: AI and so off wearing robotics UM in that same space,
Speaker 1: I gotta think Microsoft is a credible competitor. I think
Speaker 1: they're what is it Azure is the second biggest cloud
Speaker 1: provider after Amazon. UM. What else is catching your eye
Speaker 1: in areas like AI, in and robotics right, so, you know,
Speaker 1: I think a lot of the leading growth companies, many
Speaker 1: of which have come down significantly, um you know in
Speaker 1: the last six months, UM in software like Microsoft, Adobe,
Speaker 1: but also for example in stomach connectors like a m
Speaker 1: D or again going to software service now dated dog. Uh.
Speaker 1: I think many of these UH companies have come into
Speaker 1: In the case of the bigger, larger cap ones, I
Speaker 1: think they're absolutely attractive in terms of the evaluation now
Speaker 1: and um the need for what Microsoft provides cloud services
Speaker 1: of course, enterprise computing, UH you know, their own linked in.
Speaker 1: I mean, this is an incredibly well capitalized company. It's
Speaker 1: hard to believe Microsoft and it's scale, it it's growing
Speaker 1: revenue six um. You know, the pe right now is
Speaker 1: below that of companies like UM. You know in the
Speaker 1: staples sector, I think is one of the most overvalued.
Speaker 1: I mean staples. You've got a lot of leading staple
Speaker 1: companies are twenty six to thirty times PE. Most of
Speaker 1: them struggle to grow revenues more than five So I
Speaker 1: think a lot of the leading tech companies are are
Speaker 1: attractive and continue to play into a lot of the trends. Um.
Speaker 1: Digital transformation again, this is you know, businesses. This seems
Speaker 1: to happen about once every ten to fifteen years. Um.
Speaker 1: You know, it happened in the nineties with the move
Speaker 1: to the internet, but then there wasn't a lot of
Speaker 1: tools yet for digital business. Right, what is digital business?
Speaker 1: This is instead of paper documents, it's digital documents. Right.
Speaker 1: By the way, both of us work in firms that
Speaker 1: live and die in the cloud, and yet the two
Speaker 1: of us have papers spread out all over the desk.
Speaker 1: Are we just are we just the old school old timers?
Speaker 1: Or is there still is this still just a is
Speaker 1: this a generational thing? Are are the people who are
Speaker 1: the millennials who are twenty thirty years younger than us
Speaker 1: stuff like this doesn't happen? Or because I don't see
Speaker 1: anybody doing this on a tablet all that easily. I
Speaker 1: think you're actually absolutely right, because I tried to do
Speaker 1: it on tablet, and I realized there's no way you
Speaker 1: can see me here. I I've got one, two, three, four,
Speaker 1: I got seven pieces of documents that I can easily
Speaker 1: just you know, my hand is a pretty My hand
Speaker 1: is better than the man. My hand so far has
Speaker 1: not crashed on me ever, that's right or frozen, and
Speaker 1: I can reach out and you know, one piece of
Speaker 1: paper I have. You know, So let me ask you
Speaker 1: about another sector. You guys are fairly focused on health
Speaker 1: sciences and and given what took place with m r
Speaker 1: n A and companies like Fires from Maderna, this obviously
Speaker 1: is going to be a giant sector with the aging
Speaker 1: of the population, oncology, advancements, lifespan and extension. What are
Speaker 1: you looking at in the healthcare space and in the
Speaker 1: health science of space. Yeah, this is a great question.
Speaker 1: I'm glad glad you brought it up, because healthcare is
Speaker 1: one of our favorite spaces, and I think it's a
Speaker 1: very good example of a sector that has actually opportunities
Speaker 1: both on the high growth innovation end, but also um
Speaker 1: great companies um that are great free cash flow a
Speaker 1: stable businesses and probably improving in their prospects. So we
Speaker 1: we like quite a bit across the health care spectrum
Speaker 1: and from pharma and biotech, medtech as well as healthcare
Speaker 1: services and even health tax software. UM. You know, healthcare
Speaker 1: is UH of course not economically sensitive UM, but is
Speaker 1: driven of course by major trends and demographics. As you mentioned,
Speaker 1: is one of the big ones. But I would say
Speaker 1: within healthcare UM two major trends that are occurring right now,
Speaker 1: and one that more of a market phenomenal. So the
Speaker 1: market phenomenon is simply that a lot of the leading
Speaker 1: pharma UH and biotech companies household names UM looks severely
Speaker 1: undervalued relative to their profitability. And while their growth is
Speaker 1: more modest, it's certainly competitive with say the staples that
Speaker 1: I mentioned earlier. Right Meanwhile, some of them are coming
Speaker 1: out of like patent expiations in periods where they were
Speaker 1: challenged to growth with new products UM. And so we think,
Speaker 1: you know, might in our life cycle change theory sort
Speaker 1: of accelerate their growth going forward. UM. So these are
Speaker 1: leading companies like abv or one of our most interesting
Speaker 1: ones right now is is Bayer UM the big German
Speaker 1: boring company UM UM wise Bear interesting, Bear bought Monsanto
Speaker 1: almost at the very peak of the last agricultural fertilizer
Speaker 1: cycle and then also inherited the roundup litigation, which is
Speaker 1: costed about a decade. As a result, has became extremely
Speaker 1: undervalued and hated. UM. But they are coming out of
Speaker 1: you know, the round up litigation. They have sort of
Speaker 1: ring fenced what the liabilities were they preserved for them.
Speaker 1: Their litigation will continue, but the you know, the unknown
Speaker 1: factor there is rapidly diminishing. Meanwhile, first of all, they
Speaker 1: should be created. They're not a bad farma company, including
Speaker 1: some aspects like Beyer and you know, like a Johnson
Speaker 1: and Johnson, but they do also have innovation there. But finally,
Speaker 1: also and yes, very much driven by the commodities that
Speaker 1: problem that we're seeing now, the Monsanto business UM, you know,
Speaker 1: looks poised, poised, like a lot of agricultural businesses to
Speaker 1: actually um accelerate tremendously in the next few years as
Speaker 1: as commodity prices go up. So so there's a lot
Speaker 1: of examples in big PHARMAM. But I want to note
Speaker 1: there's also a lot of opportunity on the high growth
Speaker 1: side of of healthcare. Because in health care, how are
Speaker 1: we how are we meeting the need for healthcare as
Speaker 1: with an aging population. A lot of it is better technology,
Speaker 1: better software, uh, and better services, better delivery of services.
Speaker 1: We all know that the health care system is pretty
Speaker 1: pretty inefficient. Um. It's also one of the slower adopters
Speaker 1: in particular things like cloud software, digital um uh you know,
Speaker 1: um business processes. Are we ever going to see the
Speaker 1: health care sector come up with some form of uniform
Speaker 1: standards for healthcare records? You would think there's a massive
Speaker 1: opportunity there. Nobody seems to have come up with a
Speaker 1: way to to to create a standard thing so that
Speaker 1: your doctor, your hospital, your radiologists, your whatever, um, your
Speaker 1: pharmacy can all easily access the same data as directed
Speaker 1: when needed. It just seems like the record keeping and
Speaker 1: the all the specifics and I'm dealing with um my
Speaker 1: mom is eighty six trying to move her records from Florida,
Speaker 1: New York. It was just a nightmare. And it feels
Speaker 1: like it's you're back in the nineties seventies. What do
Speaker 1: you mean I have to submit a fat request. It's
Speaker 1: two thousand and twenty two. Just email this. They don't
Speaker 1: do email. UM. It's going to get better, And I
Speaker 1: think you and I are too old to benefit and
Speaker 1: your mother and my mother are way too Why because
Speaker 1: some of their records are old and they're in old systems,
Speaker 1: buried in US and doctors in a file cabinet of
Speaker 1: a doctor who retired, right, So so they're lost in
Speaker 1: kind of lost. Yeah, and so they'll do the test again. Yeah. No,
Speaker 1: I mean a lot of the efficiency and healthcare is
Speaker 1: is going to be more. There's going to be some there,
Speaker 1: but it's always gonna be a messy process. I think
Speaker 1: it's getting better though, But a lot of things we're
Speaker 1: like robotic surgery, So, um, what companies do you look
Speaker 1: at in that space? Intuitive Surgical as the leader in
Speaker 1: that space? Um, and some of some of the things
Speaker 1: I've read in that space are really quite astonishing. What
Speaker 1: what is the advances that have taken what used to
Speaker 1: be somewhat risky so injuries or somewhat complicated surgeries and
Speaker 1: turn them into fairly routine procedures. Is that a fair statement?
Speaker 1: I think it's No. I think it's absolutely amazing what
Speaker 1: med tech has done for all kinds of so. I mean,
Speaker 1: think about hip knee replacements that are just routinely done now,
Speaker 1: it's so successful UM uh CARDI heart valve replacement UM,
Speaker 1: minimally invasive no no more, you know, no more, not
Speaker 1: not needing open, not cracking you open anymore. Obviously massively
Speaker 1: improved results and lowered cost. UM and frankly, you know
Speaker 1: the UH important to note the UH with COVID, the
Speaker 1: development of the vaccines. You know, the rapidity with which
Speaker 1: the m R and A technology was proven out by
Speaker 1: both fiser Um and Maderna and others. UM. And I
Speaker 1: think we can look forward to sort of, UM, you know,
Speaker 1: increased use of that technology to solve other other diseases.
Speaker 1: So UM really really fascinated stuff. So what other sectors
Speaker 1: besides software, robotics, UM, healthcare are are really standing out
Speaker 1: as offering a lot of potential for positive dynamic change. UH.
Speaker 1: So let's see, we talked about tech, talked about healthcare.
Speaker 1: I'm trying to sort out I think AI big data. Well,
Speaker 1: so I guess what I what I would say is, look,
Speaker 1: the markets are highly uncertain, we aren't, you know, with
Speaker 1: the interest rates and inflation the way they're going. UM.
Speaker 1: I think our portfolios at Algiele we're positioning a little
Speaker 1: bit more UMU diversified than perhaps we have been UH
Speaker 1: in the past few years. UM. And the example so
Speaker 1: so you're so there isn't any one sector I think
Speaker 1: I would say that, you know, next most important, but
Speaker 1: I would note that for example, energy and renewables, I
Speaker 1: think given you know, high energy prices now, it's it's
Speaker 1: absolutely UM important as an investor to have a part
Speaker 1: of your portfolio exposed to UH the opportunity in solar
Speaker 1: in particular. UM. Who do you like in that space
Speaker 1: or wind or any other world. It's mostly it's mostly
Speaker 1: providers of solar UM electronics inverters UM so not necessarily
Speaker 1: the panel makers, but not the panel makers, which is
Speaker 1: almost mostly Chinese. And there's actually some issues around you know,
Speaker 1: import export UM. Well, there's ongoing litigation, right, circumventtion. It's
Speaker 1: called circumvention. There's a lawsuit about this, whether importers of
Speaker 1: solar panels circumvented um UH tariffs, tariffs, UM. But you know,
Speaker 1: it's a good it's a good example that controversy is important.
Speaker 1: But I view that as relatively short term. The big
Speaker 1: picture trend shouldn't be forgotten. If we are going to
Speaker 1: be living in eight dllar oil and natural gas is
Speaker 1: no longer going to be two dollars or less. Right,
Speaker 1: there's gonna be five dollars UM uh the and and
Speaker 1: I believe yes this these prices could recede by the
Speaker 1: end of the year, particularly get slower economic growth and
Speaker 1: a better resolution of the Ukraine Russian situation. But nevertheless,
Speaker 1: I don't think we're going back to two dollar and
Speaker 1: thirty dollar oil. I think we're you know, pre COVID,
Speaker 1: we were in the sixty dollar oil arrange. And I
Speaker 1: think there's a lot of reasons why UM Europe having
Speaker 1: to move away from reliance on Russian gas will maintain
Speaker 1: higher prices for gas and oil UM globally. I think
Speaker 1: that's I think, you know, there will be negative effects
Speaker 1: to that, but you know, we're looking for the positive
Speaker 1: dynamic change it and it to me it is clearly
Speaker 1: from renewables, and so the longer term growth there is
Speaker 1: only more likely to be durable solar, wind, hydro, many
Speaker 1: things will be UM beneficiaries. Frankly, in the industrial space,
Speaker 1: it's harder to talk about any particular company because there's
Speaker 1: no pure play, but many of the industrials that do
Speaker 1: electrical equipment, pumps or are other kind of mechanical equipment.
Speaker 1: You know, I do have significant exposure to the electrical
Speaker 1: grid right, or natural gas transmission or old school oil
Speaker 1: and gas refining and drilling, right, all of which is
Speaker 1: going to in my view, pick up an activity. So
Speaker 1: I think the energy sector is one place where you
Speaker 1: want to have some exposure. You want to think about,
Speaker 1: for example, electric vehicles. They are clearly a rising trend.
Speaker 1: TESLA is obviously the leader. There are now newer players.
Speaker 1: But I'll note within the industrials and materials complex there
Speaker 1: are some very interesting plays within lithium batteries UM and
Speaker 1: companies that supply critical components in substrates for the you know,
Speaker 1: the electric vehicle battery UM of not only the car
Speaker 1: actually I should say, but storage storage for the sub
Speaker 1: units for UH that that's been an ongoing issue is
Speaker 1: how do you store energy from a wind farm or
Speaker 1: a solar farm UH so that it's accessible when there's
Speaker 1: no wind and no sun. And so in the theme
Speaker 1: of this disversification that I want to know, like financials,
Speaker 1: we are also you know, currently interested in UM what
Speaker 1: are the opportunities within financials UM. The biggest change for
Speaker 1: financials for US where we have long been very minimally exposed.
Speaker 1: Is we are looking at a steepening yield curve? Right,
Speaker 1: interest rates have risen off the off the zero essentially
Speaker 1: UM and if we get a steepening yield curve, uh,
Speaker 1: that is generally good for bank earnings UM. Potentially for
Speaker 1: the earnings of credit card companies UM. The offset of
Speaker 1: courses will will the higher rates and inflation recession? Will
Speaker 1: that end up in defaults on loans and slower credit
Speaker 1: card growth and spending? Now, I think we're right now
Speaker 1: trying to be balanced there. But uh, if you think
Speaker 1: about UM, desire for experiences, UM, travel, you think about
Speaker 1: American consumer is actually entering this cycle now in very
Speaker 1: good financial shape, and in particular, you think about the
Speaker 1: upper forty or six spending on travel. What do we
Speaker 1: pull out? We pull out the American Express card a
Speaker 1: lot of us. So, uh, you know, we like, you know,
Speaker 1: we like. I think could be wrong, you know, he
Speaker 1: procession could hit all that spending. But again I think
Speaker 1: in the interest of a diversified portfolio, I think, um,
Speaker 1: you know, there are interesting opportunities within financial So that's
Speaker 1: one example. Others are there are growthier banks that have
Speaker 1: been hit pretty hard. Recently, many of them are now
Speaker 1: trading as m as if they were sort of um,
Speaker 1: you know, like just any regular bank. The ones that
Speaker 1: we like are the ones who have been innovative within
Speaker 1: banking uh names uh. Silicon Valley Bank has long been
Speaker 1: a leader in the Silicon Valley. Obviously all that their
Speaker 1: tech customers stocks are down, so people are taking their
Speaker 1: stock down, but actually as bankers doing well, they do
Speaker 1: well when as long as as long as a Silicon
Speaker 1: Valley doesn't go bankrupt as a whole, you know, the
Speaker 1: fact that some company stocks are dump or down doesn't
Speaker 1: actually do anything for them. In fact, if anything, the
Speaker 1: potential for dealmaking increases, which they are often the banker.
Speaker 1: So um, and I should note that they did an
Speaker 1: extremely savvy acquisition of healthcare franchise a few years ago,
Speaker 1: one of the leading investment banking banking healthcare franchises. And again,
Speaker 1: as a noted, healthcare is a very active area. You know,
Speaker 1: we should note that not only is it not economically sensitive,
Speaker 1: but healthcare because of the COVID crisis, has received a
Speaker 1: huge boost in funding, recognition, and interest in investment for
Speaker 1: the future, not just for preventing the next COVID pandemic,
Speaker 1: but also for UM, you know, how can we improve
Speaker 1: the telling medicine? You know, how can we improve outcomes?
Speaker 1: UM in the health care system. It's it's uh, it's
Speaker 1: been a big challenge of the healthcare system. But I
Speaker 1: guess appropriately they're getting rewarded by a lot of interesting
Speaker 1: in investing in that to improve it. Right, So, but there,
Speaker 1: but there Again, going back to financial there's a lot
Speaker 1: of banking. There's a lot of banking opportunity in that.
Speaker 1: Let's let's talk a little bit about those different strategies UM,
Speaker 1: the ALGA thirty five, the dynamic return fund, dynamic opportunities,
Speaker 1: capital appreciation spectro. We talked about health sciences earlier. Tell
Speaker 1: us a little bit about these different strategies. What is
Speaker 1: the goal of all these different approaches to investing so
Speaker 1: as growth specialists, UM, you know, all of these strategies
Speaker 1: reflect basically different market caps and market cap ranges, with
Speaker 1: the exception of the health care fund and dynamic opportunities.
Speaker 1: Dynamic opportunities is a hedge fund, uh so, uh long
Speaker 1: short UM and a health care fund obviously sector fund.
Speaker 1: What about thirty five and the dynamic return or capital
Speaker 1: appreciation five? Uh so UM ALGE thirty five is actually
Speaker 1: very special to us. UM. There's a fund and it's
Speaker 1: also one of our first e t F s Alge
Speaker 1: thirty five e t F, which we launched actually in
Speaker 1: just last year. UM. It's named actually in memory and
Speaker 1: honor of the thirty five colleagues we lost on September eleven, UM,
Speaker 1: and we are donating a part of amagement fees to
Speaker 1: charities UH either in their memory or that we or
Speaker 1: the firm support today in their memory. UM. But the
Speaker 1: thirty five is UM meant to reflect the best ideas
Speaker 1: across all of algiers, so regardless of market cap, regardless
Speaker 1: of whether it's US or international, best ideas focused fund
Speaker 1: UM and UH. So that's the ALGA thirty five idea.
Speaker 1: UM Capital Appreciation is a large cap strategy UM UH
Speaker 1: Spectra is an all cap strategy. Both of those are
Speaker 1: really very much US oriented, although they can invest in
Speaker 1: international or foreign stocks UM and then find dynamic return.
Speaker 1: Dynamic return is UM a hedge fund UM and so
Speaker 1: it's our it's our private version of of a hedge fund. UH.
Speaker 1: We also have a forty a mutual fund called Dynamic
Speaker 1: Opportunities Hedge Fund, but only only um, the dynamic opportunity
Speaker 1: can go long and short. Is that right? No? Actually,
Speaker 1: um so um dynamic return, dynamic opportunity. And actually Spectra
Speaker 1: does a little bit of shorting. Spectra can do ten
Speaker 1: up to ten percent short. Is that really just as
Speaker 1: a hedge or or why uh at ten percent shorting,
Speaker 1: we can't really hedge you know, the larger portfolio. So
Speaker 1: actually the idea of the ten percent short for Spectra
Speaker 1: is generate returns by identifying the as you said earlier,
Speaker 1: negative dynamic change. The companies that are going to be Amazon,
Speaker 1: the companies that are being disrupted by trends in their industry,
Speaker 1: the companies that are being mismanaged. Um so interesting, tell
Speaker 1: us a little bit about the E t F experience.
Speaker 1: Your your history is as a mutual fund and hedge
Speaker 1: fund shop. What's it been like playing in those waters?
Speaker 1: So it's it's new and uh uh you know we
Speaker 1: I think you know the major theme at Algers as
Speaker 1: growth specialists. We want to be um, you know, offering
Speaker 1: our services investment services in whatever format uh context you know,
Speaker 1: the clients want them and and in particular, you know,
Speaker 1: keeping up with what lowers costs, increases transparency, for for
Speaker 1: the clients and E t fs actively E t F
Speaker 1: s are UM you know, the first opportunity to do
Speaker 1: that for an active manager. You know, we're not interested
Speaker 1: in offering passive index E t F s UM and
Speaker 1: so it's been it's been interesting. UM you know, they're
Speaker 1: they're both just barely a year old and uh still small.
Speaker 1: But we see a lot of interests UM from in
Speaker 1: particular UM uh financial advisors on larger platforms who um
Speaker 1: you know who have clients who are interested in in
Speaker 1: uh you know, the E t F format. And that's
Speaker 1: a concentrated portfolio of h of thirty five names rus
Speaker 1: every style. So we also have a forty two I'm
Speaker 1: not on that. That's round by Amy Jang, who's our
Speaker 1: small cap MidCap specialist. I was gonna say not not
Speaker 1: UM so that particularly alger forty MidCap and small caps
Speaker 1: not all cap correct. So so Cathy Wood recently said
Speaker 1: we're nearing deep value territory for a lot of growth stocks.
Speaker 1: I'm not getting the same sense from you that you
Speaker 1: think we're heading into deep value for growth given how
Speaker 1: diversified and um broad your focus is looking at everything
Speaker 1: from finance to energy to staples to to what have you?
Speaker 1: What are your thoughts on on where we are in
Speaker 1: this cycle? Um? And how inexpensive have growth stocks become?
Speaker 1: So I sort of have three answers. One is I
Speaker 1: think leading growth names like so the larger cap names
Speaker 1: have gotten uh to evaluations where historically and relative to
Speaker 1: the market, they are very attractive. UM. The higher growth
Speaker 1: names some that have been hit the hardest. UM, these
Speaker 1: are a little trickier. UM. You know many of these
Speaker 1: are cloud computing names, UH, cybersecurity names. UM. You know,
Speaker 1: part of the new generation of digital business enterprise software. UM.
Speaker 1: They have very high growth rates. You know. We should
Speaker 1: note that in this entire decline, we've now had two quarters,
Speaker 1: the fourth quarter of twenty one and the first court
Speaker 1: at twenty two. They've been to much all done. And
Speaker 1: these most by large over of the companies. UM, they're
Speaker 1: hitting their numbers. UM. Uh and uh you know growing
Speaker 1: at rates over seventy percent. UM. I mean I'm looking
Speaker 1: at you know a list of holdings that we have. UM. Yes,
Speaker 1: they are still UM expensive on near term multiples. UM.
Speaker 1: Some of them, of course are only just now ramping
Speaker 1: and profitability. So the pe multiples are essentially not not meaningful. Um,
Speaker 1: but that is the wrong way to look at higher
Speaker 1: growth names. Companies that are growing seventy percent, say this year.
Speaker 1: Uh uh, you know, are likely to be probably growing
Speaker 1: in our in our view for the next few years.
Speaker 1: So you have to be able to look out and
Speaker 1: value them on that future. So that's where I was
Speaker 1: going to go. I want to ask you, given this
Speaker 1: pullback and some of the high is growth names have
Speaker 1: gotten cut in half or worse, is this is this
Speaker 1: a target rich environment for a growth stock picker. I
Speaker 1: think I think it's definitely a target rich environment. We're
Speaker 1: increasingly getting excited about the opportunity to build larger positions
Speaker 1: in these high growth names. UM. But in our experience,
Speaker 1: and it's pretty extensive since nineteen sixty four and mind
Speaker 1: personally since nine. UM, you can overshoot to the downside
Speaker 1: for sure, because and we're seeing that now. We're seeing
Speaker 1: days where percent of the stocks are down, you know,
Speaker 1: where nothing is up. Well, we're recording this on a
Speaker 1: day that is going to end up being one of
Speaker 1: those days. Umm. I'm just looking up at the screen
Speaker 1: and I see, uh, lots of red. We're down about
Speaker 1: two and a half three UM. But that raises an
Speaker 1: interesting question. I've heard a number of growth investors say, hey,
Speaker 1: we've had a huge period of out performance in the
Speaker 1: growth space, and therefore we should discount of future returns
Speaker 1: and expect a lower UM rate of growth going forward.
Speaker 1: On the one hand, you're saying, there are a lot
Speaker 1: of really interesting companies that have really seen their prices
Speaker 1: come down, but I'm not hearing that you expect to
Speaker 1: see growth rates to disappear completely. Tell describe how you
Speaker 1: consider forward expected returns from here. So as a fundamental
Speaker 1: UM investment team bottoms up fundamental right, So we have
Speaker 1: UM sector experts, analysts and portfolio management, the extensive experience
Speaker 1: across every sector. UM. You know, our healthcare sector head
Speaker 1: is actually a doctor, a PhD and an m b.
Speaker 1: A is all three degrees. Most agreed person I think
Speaker 1: we I've ever seen UM except for maybe one of
Speaker 1: my pm pms who also has a PhD and a
Speaker 1: bunch of other degrees in patents UM. So what we're
Speaker 1: looking at is the trends, right, the big economic the
Speaker 1: big business trends that the big societal trends that are
Speaker 1: growing regardless of yes, near term economic cycles. So one
Speaker 1: thing that many people, um, you know did experience was
Speaker 1: in O eight oh nine e commerce continue to grow
Speaker 1: right through the recession, and that was a crushing recession,
Speaker 1: right right through it, double digits, even as the department
Speaker 1: stores were falling apart. What we're trying to identify now,
Speaker 1: fundamental bottom up stock pickers is what are the companies
Speaker 1: that are in the right trends They're gonna grow regardless.
Speaker 1: So rising rates, inflation, maybe even recession next year, all
Speaker 1: those are short term concerns. You're looking out beyond exactly,
Speaker 1: and we know from our experience as investors that if
Speaker 1: we're not quite there, we're getting close to. Um, you
Speaker 1: need two things. Yes, I want to see better valuations
Speaker 1: and we're seeing them, but I also want to see timing.
Speaker 1: I want to see some fundamental changes in the market
Speaker 1: that says the sentiment is shifting, because um, you know,
Speaker 1: the nature investing is is yes, it's quantitative and qualitative. Um.
Speaker 1: Right now, you know clearly the negative narrative is overwhelming
Speaker 1: and it's natural a lot of investors are I earlier
Speaker 1: said how many things have changed, and there's so much
Speaker 1: change going on and a lot of it seems negative.
Speaker 1: But um, you know, when I look at at this
Speaker 1: list of high growers that were sort of on our
Speaker 1: shopping list, and most of them we were owning. The
Speaker 1: question is at what time do we think it's better
Speaker 1: to upsize them. I mean, you know, we're talking about
Speaker 1: companies that are for example, leading software company and healthcare
Speaker 1: technology helping manage regulatory risk, clinical trials, data storage safety,
Speaker 1: UM a vertically dominant company within an industry. We're talking
Speaker 1: about cybersecurity. Now we should you know, we should note
Speaker 1: that the company they're going over very high pe but
Speaker 1: we're looking at like six plus earnings growth because it's
Speaker 1: going from a little to more. UM cybersecurity. I've been
Speaker 1: surprised that we haven't seen a major cybersecurity tech as
Speaker 1: part of the Russia Ukraine conflict. But we'll see. We
Speaker 1: know that they're happening. Maybe the good thing is that
Speaker 1: we haven't experienced it because we're getting great defense from
Speaker 1: some of the new generation of cybersecurity companies that are
Speaker 1: you know, defending us literally UM and UM. So, so
Speaker 1: that's the part where I think, you know, being more diversified,
Speaker 1: looking for the opportunity to cross sectors. So so, for example,
Speaker 1: I mentioned financial services earlier. One thing to know is
Speaker 1: financial services and technology are almost acting like hedges to
Speaker 1: each other. When tech is up, financials are down. When
Speaker 1: financials are up, tech is down. And that again has
Speaker 1: a lot to do with with interest rates. UM sure,
Speaker 1: so UM, I think, Uh, you know, we're still looking
Speaker 1: at at uh what are the fundamental opportunities to buy
Speaker 1: the best growth companies that will grow right through this UM.
Speaker 1: But we're also cognizant that in the near term a
Speaker 1: lot of uncertainty. Nobody, no, nobody, nobody really knows what
Speaker 1: will happen right, so to say the very least. So.
Speaker 1: So before I get to my favorite questions, there were
Speaker 1: a couple of things I wanted to touch base with
Speaker 1: you about, uh, involving both Alger and involving some of
Speaker 1: your philanthropic UM activities. UH. Starting with you mentioned the
Speaker 1: Alger thirty five. Um, you guys also fund something we
Speaker 1: remember nine eleven and I've been pretty active in in
Speaker 1: September eleventh philanthropy. Tell us a little bit about what
Speaker 1: you do, um, and the basis of that. So yeah,
Speaker 1: I mean September eleven, again, we lost thirty five people,
Speaker 1: in concluding David Alger, who was who was my boss.
Speaker 1: He was the CEO and CEO of Algrin Elite Performent,
Speaker 1: just like I am today. Um and uh, so I
Speaker 1: took over the firm um and led the rebuilding of
Speaker 1: the firm after nine eleven. And of course the first
Speaker 1: thing we dealt with was really the families who had
Speaker 1: lost someone. Um. And these were I mean, this is
Speaker 1: just an amazing generation of people. And uh, you know,
Speaker 1: in all I think that I think I remember even
Speaker 1: in the darkest times, and it's importful. Is really good
Speaker 1: people far outnumber bad people. You know, we seem some
Speaker 1: horrible shootings over the weekend, right, but um, I could
Speaker 1: not believe some of the families that we saw after
Speaker 1: nine eleven. Um, they lost you know, their only son,
Speaker 1: their daughter, and they are heartbroken, but they are actually
Speaker 1: also wanting to help. And many of them the first
Speaker 1: thing they did was create charities in their kids memories
Speaker 1: or in their husband's memory. Many many husbands were lost,
Speaker 1: and and and moms and everything and and we just
Speaker 1: we is you know, our mission has to be support
Speaker 1: these families and uh and part of that is to
Speaker 1: support them in the memory of their lost ones. So
Speaker 1: the charitable efforts uh since then, I mean obviously just
Speaker 1: uh multiplied by magnitudes. We continue to support essentially every
Speaker 1: charity that is UH an Altro thirty five as well
Speaker 1: as many more. And I think you know, UM a
Speaker 1: few years UM, you know, after an eleven, I sort
Speaker 1: of formalized it with the creation of the employee Committee.
Speaker 1: We call it the Candlelight Committee, you know, so employees
Speaker 1: run that. And I think the the two things I
Speaker 1: request that they do and we still focus on, is
Speaker 1: UM we're trying to make an impact in our community
Speaker 1: where we can so helping more locally rather than say, globally. Secondly,
Speaker 1: we're trying to recognize and support charities where we're not
Speaker 1: just giving money, we're giving of our time or our
Speaker 1: talent or in some ways doing something uh that UM
Speaker 1: maybe helps trigger in frankly, in our own individual you know,
Speaker 1: out myself and the Alter Alter employees, you know, our
Speaker 1: appreciation for how lucky we are, because you know, there's
Speaker 1: nothing like doing something, whether it's planning trees or habitat
Speaker 1: for humanity and helping build a home for someone, or
Speaker 1: UM going to h Harlem Educational Fund and seeing kids
Speaker 1: who didn't have the economic opportunities you know, and education
Speaker 1: that we had, right. So I always believe that seeing
Speaker 1: that it is good for a person UM appreciate makes
Speaker 1: them appreciate the world around them, but also how lucky
Speaker 1: they we generally are, UM. And so it's it's you know,
Speaker 1: they always say that the person who give gets the
Speaker 1: most from giving is often the person who's supposed to
Speaker 1: be the is you know, is the giver. Yeah, I
Speaker 1: get more back, you know than that I'm really giving. UM. So,
Speaker 1: so that's it. And then the final thing is, you know,
Speaker 1: we we do support some arts and things like that,
Speaker 1: but it's the arts that are more community based, smaller UM.
Speaker 1: You know, I love the big institutions, but you know,
Speaker 1: I don't believe that they we make as much an
Speaker 1: impact there as we do as if we support more
Speaker 1: you know, community based, smaller local organization. The other thing
Speaker 1: I had to ask you about which really stood out
Speaker 1: when I was doing my research was Algrews is really
Speaker 1: kind of unique in terms of your portfolio managers are
Speaker 1: either women or minorities. That that's astounding compared to the
Speaker 1: rest of finance. Tell us a little bit about how
Speaker 1: that developed. Is that relatively recent? When when did those
Speaker 1: numbers tick up to such a you know that that's
Speaker 1: just nothing like what we've seen in the rest of finance.
Speaker 1: So it comes from two things, UM, that are very
Speaker 1: very ingrained in our culture and old and maybe one
Speaker 1: that's newer. The two old things are UM. The firm
Speaker 1: has always had UM, a meritacratic um culture UM and
Speaker 1: a belief that, uh, if you followed our investment process
Speaker 1: and philosophy UM, that uh, you know, anyone who was
Speaker 1: hard working, smart and and of course motivated could become
Speaker 1: a great investor in a particular part of a great
Speaker 1: investing team. We always believe in the team more than
Speaker 1: say a single individual. So we've had a robust training
Speaker 1: program that has gone on for decades and is really
Speaker 1: widely recognized. And uh many of our leading pms are
Speaker 1: are actually from that program, as as I was when
Speaker 1: I when I changed careers. UM. The amocratic part, you know,
Speaker 1: is about UM recognizing and I think our clients benefit
Speaker 1: directly from it that as a boutique investment firm UM,
Speaker 1: you know, specializing in growth, UM, we need to be
Speaker 1: significantly better than our competition, many of whom are much larger,
Speaker 1: or they're part of a big bank or at least
Speaker 1: they're part of an asset manager that has trillions of dollars, right,
Speaker 1: doesn't many different. We need to be much better in
Speaker 1: our specialty than the competition. And the way you're gonna
Speaker 1: get that is if you recognize and promote within your
Speaker 1: organization the people who simply deliver the best results with
Speaker 1: you know, without much regard to anything else UM, and
Speaker 1: that has that has long resulted in what you see today.
Speaker 1: I think today we are also, of course more aware
Speaker 1: and making sure that as we recruit, as we mentor
Speaker 1: UM and as we promote that we're that we're you know,
Speaker 1: we're recognizing UM people that way. But we've always had
Speaker 1: a very diverse UM leadership. The firm has always been
Speaker 1: very mimocratic and UH and we've always had a culture
Speaker 1: of of of of of people uh sort of coming
Speaker 1: from different industries and wanting to prove themselves. And often
Speaker 1: those people who who come from different industries are the
Speaker 1: ones who sort of UM, you know, re really passionately
Speaker 1: get into the stock market. We have. You know, one
Speaker 1: of the biggest changes I'd say in the last thirty
Speaker 1: years in my career is the industry has become more professional,
Speaker 1: like in the nineties, there weren't investment management programs at
Speaker 1: business schools or and certainly the undergrad undergraduate was completely
Speaker 1: uninterested in what we did. Half the trading desks didn't
Speaker 1: have college degrees. There you go, and so in some
Speaker 1: ways it was it was nice because the people who
Speaker 1: found their way to the industry in a bit like me.
Speaker 1: You know, we had no formal training. We weren't going
Speaker 1: there because it was a major or something that we
Speaker 1: were going there because somehow we had found it and
Speaker 1: we had fallen in love with it. Today, of course,
Speaker 1: you know, it's very different. You've got undergraduates that are
Speaker 1: taking investing courses and that's all well and good, but
Speaker 1: high school courses are now offered. Yeah, and well, I'm
Speaker 1: much in favor of education. There's not there's nothing that
Speaker 1: there's nothing that replaces passion and drive. You know, you
Speaker 1: don't you don't need to be a rocket scientist to
Speaker 1: to do well in our industry. Doesn't hurt, doesn't hurt.
Speaker 1: And we have we have at least one person who
Speaker 1: might might actually be a rocket scientist. But I have
Speaker 1: a doctor who's definitely so I know, I only have
Speaker 1: you for a few more minutes let me jump to
Speaker 1: our favorite questions that we asked all of our guests,
Speaker 1: starting with tell us, what kept you entertained during lockdown?
Speaker 1: What have you been streaming or listening to? Um m hmm, Amazon, Netflix, what, whatever? Okay,
Speaker 1: I mean it's it's it's uh and you can say
Speaker 1: you don't have Yeah, I love TV movie, Yeah I will.
Speaker 1: I will pretty much watch any science fiction junk you
Speaker 1: put in front of me. Okay, so you're talking to
Speaker 1: the right guy. I'm watching. Let's let's tick through your
Speaker 1: favorites and well the way season three of the Boys
Speaker 1: looking forward to that, that's a good one. But I'll
Speaker 1: give you a one that I'm like, I'm not sure
Speaker 1: why I'm still watching it, but it's because there's eight
Speaker 1: seasons of it. So so I'm like, in my mind,
Speaker 1: this is actually a bit of a researcher mind, right,
Speaker 1: If there's eight seasons, some audience must somebody like I
Speaker 1: want to understand why, even though I so I'm the
Speaker 1: expanse I love these I finished no spoilers, but what's
Speaker 1: so fascinating is how many different storylines and set ups
Speaker 1: are in that Because it began in a specific way
Speaker 1: and changed to something else before it. But you asked
Speaker 1: what I was watching, I actually not far into don't
Speaker 1: really like it. What I really liked, Yeah, I really
Speaker 1: liked um by the Vikings and the Last Kingdom. That's
Speaker 1: very interesting. If you're a sci fi junkie, it's a
Speaker 1: Game of Thrones light right. If you're a sci fi junkie,
Speaker 1: I'm going to give you a couple of things that
Speaker 1: you will really like, and one is just two seasons
Speaker 1: could be the best thing I've seen all of down.
Speaker 1: I also have to say New Girl. I think I
Speaker 1: love that. She's hilarious. Have you watched Altered Carbon? Have
Speaker 1: you seen that? I watched like two seasons. I've kind
Speaker 1: of it's done. Two seasons. That's all. Well, there may
Speaker 1: be a third coming, but so far it's only two seasons,
Speaker 1: or at least the last on my loaded. Um, I
Speaker 1: think that was Netflix. I don't. I don't remember um.
Speaker 1: And then I'm gonna go off on a little Tan
Speaker 1: which was also really good though, go ahead, Italian Mafia series.
Speaker 1: What's it called? Roma? I haven't seen that? That was
Speaker 1: a movie? Also Roma? Yeah? That that one that The
Speaker 1: movie is a great movie, great movie, very very nice
Speaker 1: portrait of whatever but Roma I think, yeah, it's called
Speaker 1: roma Is. It's like, um, it's a little bit like Narcos,
Speaker 1: except that in Italy. And I love Italy, so so
Speaker 1: you see it's shot in Italy, it's I guess it's
Speaker 1: Italian and translated. So I love a lot of these
Speaker 1: UM shows that are there's this, this, this ridiculous one
Speaker 1: from Denmark. It's about a prime minister or um. There's
Speaker 1: a lot of foreign you know TV that's now being
Speaker 1: you know, dubbed or whatever in English that I find
Speaker 1: kind of quite interesting because it's my agent, which is
Speaker 1: a great fabulous And the thing that a lot of
Speaker 1: people don't realize is the people playing French actors are
Speaker 1: actually famous French actors in France. We just don't know them.
Speaker 1: They're the one in Spain where they're all about the
Speaker 1: murder mystery brother dies in Spain somehow sister from England,
Speaker 1: you know, goes to it to try to find but
Speaker 1: you know, you know, I realized that there is a
Speaker 1: theme here. I love travel UM. I think a lot
Speaker 1: of these shows are during COVID. We're a nice way
Speaker 1: to sort of see and remember the name of the
Speaker 1: show where there's a cop in Japan whose brothers in
Speaker 1: the Yukuza who disappears and he has to come and
Speaker 1: chase him down, trying to move Chicago and London. I'm
Speaker 1: joining a blank on the name. Same like that, probably
Speaker 1: same same concept is what you're talking about in Spain,
Speaker 1: where it's some of it's subtitled and it was really
Speaker 1: we haven't watched as kingdom, haven't watched the last I
Speaker 1: seriously recommend watching that, Okay, I'll put that on. What
Speaker 1: it's about is England before England, when it's five different
Speaker 1: kingdoms and Vikings are raiding England, and it's kind of
Speaker 1: like the English have to unite into a country if
Speaker 1: they're going to fend off the Vikings who have the
Speaker 1: awesome warriors, and the Vikings are basically trying to figure
Speaker 1: out what we like raiding But is this really a
Speaker 1: sustainable lifestyle? You know? So my my wife and I like,
Speaker 1: I'll watch a show that she wants to watch, the
Speaker 1: watch show I want to watch, and that's how compromise
Speaker 1: the show. Similar to that where maybe it's a few
Speaker 1: hundred years, it's fifteen hundreds. Is rain R E I
Speaker 1: G N, which is the United It's France, it's England.
Speaker 1: It's Scotland. It's just post Viking but before the Enlightenment,
Speaker 1: and the Vatican is very involved and it's not quite
Speaker 1: as um era accurate as the Crown was, but it's
Speaker 1: still you know, entertaining what goes on in the court
Speaker 1: politics and the various um wars between different uh different crowns,
Speaker 1: and sounds like it's a few hundred years after the
Speaker 1: Last Kingdom. I thought, I'll put Last Kingdom on my list,
Speaker 1: um and there's a bunch of others. I'll send you
Speaker 1: the name of that other show if I can, if
Speaker 1: I can dig that up. I don't listen to podcasts,
Speaker 1: um I. I don't think they're gonna catch on. I
Speaker 1: can't think. I do listen to in the car my
Speaker 1: wife when I pick those in to Howard Stern. But still, yeah,
Speaker 1: he's hilarious. Sometimes that that's was not going to be
Speaker 1: my first guest. Well, I have to credit her. She
Speaker 1: she sort of rediscovered it. Okay, to be fair, he's
Speaker 1: become an amazing interview that's it. So yes, a lot
Speaker 1: of it is nonsense and you know it's funny, but
Speaker 1: we have sometimes like no, but the interviews that he's
Speaker 1: done of rock stars. He's incredibly good at that. Well
Speaker 1: and all I wanted for forty years he better be.
Speaker 1: And and there's a there's a there's a there's a
Speaker 1: show where we we actually replayed the show Cuple times
Speaker 1: because it's just too funny, where you know, he asks
Speaker 1: viewers to call him, what are the three greatest rock
Speaker 1: bands of all time? And you know, a music teacher
Speaker 1: calls in and on on that music teacher's list is
Speaker 1: Rush and Um, all right, and he doesn't have like
Speaker 1: the Beatles, and Howard Stern riffs on this for like
Speaker 1: two hours. I mean, by the end of it, you're just,
Speaker 1: you know, you're feeling sorry for this guy. Um. There's
Speaker 1: an argument over who is number three, but I think
Speaker 1: we can all agree that numbers one and you and
Speaker 1: I are comparable beats Stones. And then you know, number
Speaker 1: three you can rotate, but it's not Rush three. You
Speaker 1: can't be rushed, right. I don't even know if Rush
Speaker 1: makes it mean right because he got you led Zeppelin.
Speaker 1: Well you want to start, Who's um, yes, Pink Floyd,
Speaker 1: Um you start, you start just working your way down.
Speaker 1: Bruce Springsteen. I'm just thinking about It's funny because when
Speaker 1: you go digital, you lose the visual visual cues used
Speaker 1: to get which look, how how many albums I had
Speaker 1: under um the Rolling Stones that's like eight inches of
Speaker 1: vinyl versus all right, it's a half an inch of
Speaker 1: Van Morrison and a half inch of credence. But um
Speaker 1: and the Doors are like two albums. So how do
Speaker 1: you anyway, let's um, let's keep working a way through
Speaker 1: these questions before they kick us out of the studio. UM,
Speaker 1: tell us about your early mentors who helped shape your career. Uh,
Speaker 1: you know, that's an interesting one. And um, obviously Fred
Speaker 1: Alger has to be one of those clothes. Well he
Speaker 1: was Fred and David Fred Fred retired in so you
Speaker 1: were overlapped a year after a year after I joined.
Speaker 1: He had completed his task. He found you when he
Speaker 1: was able to tell. But David Alder absolutely and you
Speaker 1: know really um uh Ron Tataro and see like who
Speaker 1: um Um I worked for Ron. He was an analyst
Speaker 1: when I worked for him as as his junior. Um
Speaker 1: he then became a portfolio manager. And see like who
Speaker 1: um was a leading tech analyst who became a portfolio manager.
Speaker 1: Both of them, well, actually all three of them died
Speaker 1: on nine eleven. Um, they were, um, so you know,
Speaker 1: I'll be frank. I mean, I I was a little
Speaker 1: um I was. It took for a long time to
Speaker 1: get me to come to them because I did not
Speaker 1: like the idea of going to be the son in law,
Speaker 1: you know. And uh, he did show me some stuff.
Speaker 1: I met these people. Um and then one of the
Speaker 1: things he showed me about the meritocracies and we managed
Speaker 1: like individual analyst performance very rigorously. And he said, like
Speaker 1: this was posted like on the Bolleton board, the fact
Speaker 1: that your son in law, it doesn't matter. So I said, like,
Speaker 1: he said, like you're gonna have a year where you're
Speaker 1: you're not on the bolton board, and then you're not
Speaker 1: gonna be on the bulletin board. And if you don't
Speaker 1: look good on the bull on borge, you'll know. And
Speaker 1: I said I will leave. He said you won't have to,
Speaker 1: And I said, I'm gonna leave if I'm not any
Speaker 1: good at this, you know. So I actually did go
Speaker 1: in thinking I'll take the training and then I'll probably
Speaker 1: go need to go somewhere else to get like my
Speaker 1: sense of um, you know that I'm not just you know,
Speaker 1: some guy, but um, uh, those guys ron and see
Speaker 1: lie Uh, they treat treating me like everybody else in
Speaker 1: both the good and bad ways. So did David. Uh,
Speaker 1: David probably a little. I mean David once actually told
Speaker 1: me he was a little harder on me than anybody
Speaker 1: else because he had to be um, which included like
Speaker 1: yelling at me in public and stuff like that. I mean,
Speaker 1: he was he was a very colorful guy, but he
Speaker 1: did he did have a um. He did like to
Speaker 1: yell when you made a mistake. Um. But he would
Speaker 1: also stand up in front of five people and said,
Speaker 1: that's the best technolist on the street right there. That's fantastic. Yeah. Um.
Speaker 1: So those those are my business mentors for sure. So
Speaker 1: so let's talk about everybody's favorite question. Tell us some
Speaker 1: of your favorite books and what you're reading right now. Oh. Um,
Speaker 1: I was an English major in college. I should have
Speaker 1: said I did do a lot of reading during I
Speaker 1: didn't just watch Netflix and a Game of Thrones. Um,
Speaker 1: I did a lot of reading. Um. Right now, I
Speaker 1: am reading The Committed, which is the second book after
Speaker 1: The Sympathizer by a Vietnamese author whose name I can't
Speaker 1: quite remember. I finished reading a book given to me
Speaker 1: by my brilliant daughter, UM, who is going to a
Speaker 1: PhD in English literature, Um, Um, by an author named
Speaker 1: Ocean Vong. Yes, there's an Asian American theme going on here,
Speaker 1: although that's unusual for me. Actually, Um I UM, I
Speaker 1: am reading a book on environmentalism. Actually I cannot remember
Speaker 1: the name. It was sent to me by somebody at
Speaker 1: Stanford University. Um. It's about, you know, um, what we
Speaker 1: need to do to to be make a more sustainable
Speaker 1: world and and how difficult it would be, but why
Speaker 1: we should do it anyway? Uh uh And I wish
Speaker 1: I could remember the name. But the committed is that
Speaker 1: viet Than Gillian? Yes, yes, Google to the Rescue. Yeah,
Speaker 1: and uh, what's the name of the what's the finished
Speaker 1: reading a book called American Dirt American? Yeah, that's an
Speaker 1: interesting book. I think I had the name right. It's
Speaker 1: about um takes place in Mexico, Um, Janine Cummins, Um,
Speaker 1: it's a it's a it's a story of a woman
Speaker 1: who has to flee um her country because of drug
Speaker 1: you know, drug trafficking and just it's like the journey
Speaker 1: to America from that perspective, and it's it's a pretty
Speaker 1: amazing novel. I think quite quite interesting. What sort of
Speaker 1: advice would you give to a recent college grad interested
Speaker 1: in a career in gross stocks or investing? Um, do
Speaker 1: not go on robin hood and just trade stocks. Uh Uh.
Speaker 1: I would say, you want to try to start your career.
Speaker 1: This is important at a place with a disciplined investment philosophy. Uh.
Speaker 1: This is not a place an industry where I think,
Speaker 1: you know, going with the startup or the kind of
Speaker 1: small shop is necessarily a good place. I I do
Speaker 1: think a lot of the value that the larger firms
Speaker 1: bringing and I'll just large enough. Um. You know is
Speaker 1: that we do have an investment process in philosophy um,
Speaker 1: and so we will train you in it and it
Speaker 1: may not fit you ideally, but you'll have a good,
Speaker 1: clear foundation for whatever you do later. The second thing
Speaker 1: actually I would tell you is I know that you're
Speaker 1: you're you know, the the tech the tech world, e
Speaker 1: commics world suggests you've got a job hop a lot.
Speaker 1: That's the way in our business. I think it's actually
Speaker 1: exact opposite, because seeing wherever you go, if it's a
Speaker 1: good place with a discipline process, you to see it
Speaker 1: through a full cycle. You know if you go to
Speaker 1: a firm for two years and then go to another,
Speaker 1: you know, a growth shop for two years and a
Speaker 1: value shop for two years, and then a macro shop
Speaker 1: for two years. I know that some would see people say, oh,
Speaker 1: you've learned a lot there. I would say, no, you haven't,
Speaker 1: because what you really need to do is see how
Speaker 1: growth works through a full cycle, how value works through
Speaker 1: a full cycle, or how macro does if you if
Speaker 1: you job hop like that, you can become very articulate
Speaker 1: on the surface. But our business is that really tough one.
Speaker 1: I mean it's as tough as competitive professional sports because
Speaker 1: the number gets put up our our just worse. We
Speaker 1: get a number every day. Even professional athletes don't play
Speaker 1: every day, We get a number every day and um,
Speaker 1: and then they add up to weeks, months, quarters, years,
Speaker 1: and um and and and Frankly, you can have a
Speaker 1: fifty plus year record like Alger and then have a
Speaker 1: horrible six months and you know you're like, wow, uh,
Speaker 1: did we get out? Did we get out too far
Speaker 1: over our skis? Um? I don't think we did. But
Speaker 1: you know, it's a challenging and so you need to
Speaker 1: know the details and the depth and you need to
Speaker 1: do that consistently through a period of time that matters
Speaker 1: for our business. Otherwise you're going to be superficial in
Speaker 1: shallow and you might find yourself floating around too much
Speaker 1: longer than you ever thought you would. And our final question,
Speaker 1: what do you know about the world of investing today
Speaker 1: that you wish you knew when you were first starting
Speaker 1: out back in UM? I think that I was so
Speaker 1: focused on what was put in front of me, which
Speaker 1: was technology UM, that I didn't really learn much about
Speaker 1: other sectors or other styles of investing. Now, being that
Speaker 1: I was an alger UM my boss and everybody around
Speaker 1: me did not we learn about value investing. And I'm
Speaker 1: okay with that part, right, but I I think I
Speaker 1: I wish I had learned war and listen more to
Speaker 1: what the healthcare guys were saying about health care investing
Speaker 1: and and frankly that there wasn't that forum at at work.
Speaker 1: And maybe I'm thinking now maybe it still isn't like that,
Speaker 1: and maybe I should help create one. I try, but
Speaker 1: I realize a lot of times, you know, if you're
Speaker 1: the tech guy, you just tune in for the tech
Speaker 1: and when the person starts talking health care, you tune
Speaker 1: out so cross sector experience and knowledge months. And I
Speaker 1: think that as I think because when you see what
Speaker 1: works in your sectors. You know, my my key sector
Speaker 1: was techn e commerce, which I lead for Algier in
Speaker 1: the nineties. Um, what you see what works there? Um,
Speaker 1: and then you don't realize, well, does it work in
Speaker 1: another sector? Um? You know, maybe it will and maybe
Speaker 1: it doesn't. That's very important learning when you are a
Speaker 1: portfolio manager or as I am really trying to make
Speaker 1: sure that my analysts are better analysts, because I think
Speaker 1: if you learn what doesn't doesn't work in their sectors,
Speaker 1: you know how they work as well. I think it
Speaker 1: will come back in some way and help you understand
Speaker 1: your own sector better. And now that I'm I guess
Speaker 1: I'm at the level that I'm at. I know this
Speaker 1: because often when I'm doing training sessions or discussions with
Speaker 1: the younger end of our analysts, I can see how
Speaker 1: they've kind of myopically focused on a very set of
Speaker 1: narrow metrics or very set way than an industry works.
Speaker 1: They've self bulcanized and they yes and they yes, And
Speaker 1: that's the professionalization of our industry over the last thirty years, right, Um,
Speaker 1: and so so they're not only unaware of how things
Speaker 1: might work in other sectors, they can get completely blindsided
Speaker 1: when say, a business model or a practice in one
Speaker 1: sector jumps over into another sector. That's that's the risk
Speaker 1: of specialization, when you become a half inch wide and
Speaker 1: a mile deep because it's so specific and so detailed.
Speaker 1: So if I can ask you a question that sends
Speaker 1: you back to the office and say, hey, maybe we
Speaker 1: have to make some changes, well that's a that's a
Speaker 1: good question. Yeah, really interesting. Dan. Thank you for being
Speaker 1: so generous with your time. We have been speaking with
Speaker 1: Dan Chung. He is the CEO and ce IO of
Speaker 1: Algier Asset Management. If you enjoy this conversation, be sure
Speaker 1: and check out any of our previous four hundred UH interviews.
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