Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, plus technology, politics, economics,
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Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Well. Another company on the
Speaker 1: front lines when it comes to the virus is Surgical Solutions.
Speaker 1: Melissa rap is the CEO of Surgical Solutions, and she
Speaker 1: joins us on the phone from Illinois. Alyssa, so great
Speaker 1: to have you here with us. First of all, um,
Speaker 1: how are you doing. What's the situation in Illinois? How
Speaker 1: are your workers doing? Oh? Thanks for having me. We
Speaker 1: actually have our two hundred plus frontline healthcare workers in
Speaker 1: thirty hospitals across nine states, and what we're seeing is
Speaker 1: a lot of probably what you're reporting on. It's obviously
Speaker 1: we're hit the hardest in New York City, where we're
Speaker 1: sole in the eye of the storm, but starting to
Speaker 1: see things a bait in places like Michigan and Tennessee,
Speaker 1: where we're starting to see elective surgeries begin to be
Speaker 1: rescheduled starting in the second half of May. And so
Speaker 1: give us a reality check here, Alyssa, because I feel like,
Speaker 1: you know, we hear from Governor, as we hear from
Speaker 1: the President and the Vice president. The coronavirus task for
Speaker 1: us PPE is you know all that we hear about.
Speaker 1: I mean, I don't think the average person really knew
Speaker 1: what PPE was before. They certainly do. Now, what's the
Speaker 1: reality check on where we are broadly and then more
Speaker 1: specifically if you can in terms of the needs and
Speaker 1: how those needs are being met. So PPE was a
Speaker 1: real issue, and it was as dire as you probably
Speaker 1: reported on as of about a month ago, and in
Speaker 1: some places in this country it is still dire. But
Speaker 1: in our experience, things again there have begun to improve.
Speaker 1: Sourcing has improved. Our frontline team of eight in New
Speaker 1: York City, it was we had to we had to
Speaker 1: import our own PPE for the protection of our own
Speaker 1: people as of a month ago, and now things are
Speaker 1: starting to um callm to a dull roar. Now it's
Speaker 1: a much different issue. There is a desire for elective
Speaker 1: surgeries to be rescheduled. It's not just to have the
Speaker 1: system be up and running, but things that were elective
Speaker 1: can become emergent if they don't get rescheduled. Uh. And
Speaker 1: so we are starting to see places like Tennessee and
Speaker 1: Texas and Western Michigan begin to start putting some elective
Speaker 1: cases back on the calendars. And then the issue is
Speaker 1: in Ppe. The end of the issue for firms like
Speaker 1: Surgical Solutions and others. Others are how quickly do we
Speaker 1: bring back employees who may have been furloughed, How quickly
Speaker 1: do how do we think about the recoveries? Are going
Speaker 1: to be all at once or is it going to
Speaker 1: be more gradual? Well, and I'm curious to what you're
Speaker 1: hearing about patients themselves feeling comfortable about going into hospital
Speaker 1: settings at this point, right because we've been told stay
Speaker 1: home for a good reason. But I do wonder as
Speaker 1: we start to re enter world and go back to
Speaker 1: a normal or as normal as it can be, how
Speaker 1: comfortable folks will be, you know, stepping into you know,
Speaker 1: a hospital or healthcare setting. It's an excellent question, and
Speaker 1: I think it really comes down to the sites of service.
Speaker 1: So the degree to which a hospital can segregate the
Speaker 1: sites of service for COVID patients and non or even
Speaker 1: within a system designates sites as COVID sites and non.
Speaker 1: If you or I were going in for an elective
Speaker 1: procedure like a laproscopy or an endoscopy and we knew
Speaker 1: it were to be outpatient and it was at a
Speaker 1: site that is a designated non COVID site, well we'd
Speaker 1: probably feel okay. But it's the the our ability to
Speaker 1: manage COVID and make sure that that's being managed properly
Speaker 1: and swiftly and excellently, and then we can start bringing
Speaker 1: in healthy patients again for routine procedures. I do wonder,
Speaker 1: and I don't know, Jason, if you think about this.
Speaker 1: I think about this when, you know, taking my daughter
Speaker 1: to see her pediatrician when she was younger, and there
Speaker 1: was a healthy area and the nonhealthy or not. You
Speaker 1: know that the were people were fighting kids, right, And
Speaker 1: so I do wonder if it's just going to be
Speaker 1: that on steroids going forward when it comes to the
Speaker 1: health care community to make everybody feel comfortable about the environment.
Speaker 1: I think. I think there's that approach for patients for sure,
Speaker 1: and then there's a whole other consideration set, which is
Speaker 1: the healthcare worker and the degree to which we can
Speaker 1: get antibody testing in a broadway for all Americans will
Speaker 1: change all of our feelings about quote unquote returning to normal.
Speaker 1: But the degree to which we can have our employees,
Speaker 1: in our frontline, frontline healthcare workers antibody tests so we
Speaker 1: can all walk around with a COVID card. If you
Speaker 1: knew you had the antibodies as a healthcare provider or
Speaker 1: a patient, you would be less trepidacious about going back,
Speaker 1: you know, Alyssa, I do wonder, especially given your background,
Speaker 1: which is is fascinating we and unfortunately don't have time
Speaker 1: to get through all of it. But you know, you
Speaker 1: were the CEO of Bottle Notes, your lecture at Stanford
Speaker 1: and at the Booth School. You understand both the philosophy
Speaker 1: and practice of business. You also, I believe, have done
Speaker 1: some work with the Illinois Housing Authority. So I mean
Speaker 1: and Illinois is a place, and we interviewed the Mayor
Speaker 1: of Chicago recently and just talked about this. The haves
Speaker 1: and the have nots when it comes to this virus
Speaker 1: and so much that's been exposed here. You're seeing this
Speaker 1: through all aspects of your work. What has it taught us?
Speaker 1: What can we do in the short and the mid
Speaker 1: term to maybe mitigate some of the really hard facts
Speaker 1: that we're learning here about who gets what? When I
Speaker 1: think that your point is the right one, which is
Speaker 1: there's a short term crisis to manage, and there's a
Speaker 1: medium term desired outcome to plan for. And Mayor lightfoots
Speaker 1: an extraordinary leader and a friend, and we all need
Speaker 1: to make sure that access to preventative care and access
Speaker 1: to well care for all of our children across Chicago,
Speaker 1: of course, Illinois and the country is addressed on the
Speaker 1: on the backside of COVID as it relates to what's
Speaker 1: being done right now in my backyard is I'm sure
Speaker 1: you've seen, you know, a lot of Papa possibles here
Speaker 1: in another major metropolis are what we have to do
Speaker 1: to make sure there's adequate care for all of our
Speaker 1: impacted um citizens because when you don't have social distancing
Speaker 1: is hard. It's just not that easy, and it requires
Speaker 1: a level of independence and oversight and physical space to
Speaker 1: do it, and that is not evenly distributed amongst our population.
Speaker 1: So that's going to take a medium term, a medium
Speaker 1: term solve. Well. In social distancing essentially is much easier
Speaker 1: for people of means. I think that's just a fact,
Speaker 1: right it. Unfortunately, social distancing is easier when you have space,
Speaker 1: and you can access digital learning through digital technologies, and
Speaker 1: you have space to do your work from home, and
Speaker 1: you don't have to be somewhere to do it, and
Speaker 1: those are all by definition things to socioeconomics. Yet just
Speaker 1: got about thirty seconds, you know, earlier, the New York
Speaker 1: City mayor said that they're going to create their own
Speaker 1: strategic reserve, you know, um, and it's all about I
Speaker 1: feel like we're federal versus states right now? Is that
Speaker 1: what we're going to see states having to do at
Speaker 1: this point? I would like to think we will not
Speaker 1: have to go there. I would like to think we
Speaker 1: can be a coordinated, unified team federally and statewide. But
Speaker 1: it's you know, I think that what we're seeing today
Speaker 1: is that the decision of whether to reopen or not
Speaker 1: is going to ultimately be relegated to the governors, and
Speaker 1: then what's going to be done will not been across
Speaker 1: the country, and how that will ripple effect and will
Speaker 1: will be a resurgence in the fall. Well, time will
Speaker 1: tell alyssa come back, because we would love to talk
Speaker 1: some more with you. As Jason said, your background is
Speaker 1: just so impressive and just crosses so many different areas,
Speaker 1: so hopefully we can get your back. Sine A Lissa Wrap,
Speaker 1: CEO of Surgical Solutions, on the phone from Illinois. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. We throw around the world unprecedented a
Speaker 1: lot these days, Carol, but what's happening in the oil
Speaker 1: patch certainly is that. Let's get into it with Stuart Glickman,
Speaker 1: head of Energy Research over at cf are A Research,
Speaker 1: joining us on the phone from New Jersey. Stuart, great
Speaker 1: to have you with Carol and myself. I know it's
Speaker 1: an incredibly busy time. I guess to start, let's just
Speaker 1: briefly take thirty seconds remind people what we're seeing and
Speaker 1: why it matters so much. Thanks for having me, Jason.
Speaker 1: So what we're seeing is on precedented because we've never
Speaker 1: had the contract for for West Texas Intermediate w t
Speaker 1: I which is the U S benchmark. We've never had
Speaker 1: that contract go negative before. Uh. It seems kind of
Speaker 1: um indecipherable at first glance. Why why that price might
Speaker 1: be negative And what it really reflects is a fairly
Speaker 1: thinly traded contract that was getting close to expiration. Uh,
Speaker 1: and a handful of speculators got burned on it. Um.
Speaker 1: I think a better indication of where things are in
Speaker 1: the oil markets is probably the next contract, the June contract,
Speaker 1: which is also down considerably over the last couple of
Speaker 1: days too. Well, that's what I wanted to go to,
Speaker 1: um stew is that it's not right. Okay, we get
Speaker 1: kind of a guess what happened with the most recent
Speaker 1: you know, the contract that's expiring, but even you know,
Speaker 1: the forward looking contract is under a lot of pressure.
Speaker 1: Tell us what that is. Is it the supply story?
Speaker 1: Is it the lack of demand story? Is it both?
Speaker 1: What is go? You know, we know this sector has
Speaker 1: been deder pressure. What's the big story here? Yeah, Carol,
Speaker 1: It's it's really both. So what you have, on the
Speaker 1: one hand, is you have a plummeting demand. So demand
Speaker 1: that is normally in a steady state around a hundred
Speaker 1: million barrels a day has dropped perhaps by a third
Speaker 1: in a very short period of time. You still have
Speaker 1: a lot of supply making its way to UM. You know,
Speaker 1: not not just the US market, but other markets as well.
Speaker 1: But you have so much supply, and if you're a
Speaker 1: producer and you don't like the price that you're going
Speaker 1: to get at the pump, excuse me from your refiner,
Speaker 1: normally you just throw it into storage, which is a
Speaker 1: viable option so long as you have available storage. And
Speaker 1: I think what the market is telling us is that
Speaker 1: we're getting very worried about hitting an upper limit on storage. Uh,
Speaker 1: and that's why prices are reacting in the way they
Speaker 1: are today. So what does this mean for a typical
Speaker 1: investor who's looking at this, you know, an investor, maybe
Speaker 1: a small investor who's also a consumer, because you know,
Speaker 1: I get all sorts of tweets and text from people
Speaker 1: saying like, well, I guess it's gonna be each Not
Speaker 1: that anybody's going anywhere, But what does it actually like
Speaker 1: play this through the economy beyond the folks who do
Speaker 1: this for a living and sort of trade these futures
Speaker 1: for a living. What does it mean to the everyday
Speaker 1: person for the next three six months, especially amid this pandemic. Yeah, so,
Speaker 1: so the U. S economy is now a net exporting nation. Uh.
Speaker 1: You know, US production, through lots of innovation by small companies,
Speaker 1: has really built out its production potential. And so you know, yes,
Speaker 1: at the pump, if you happen to need to drive somewhere,
Speaker 1: you can fill up for cheap. The problem is that
Speaker 1: the pandemic is disrupting the natural mechanism which would normally
Speaker 1: stimulate more demand. Right and in the meantime, if you
Speaker 1: are tied to the production of crude oil, and there are,
Speaker 1: you know, there's a handful of states where it's a
Speaker 1: really meaningful piece of overall economic activity. You've got Oklahoma,
Speaker 1: New Mexico, Texas, Louisiana, North Dakota, all you know, all
Speaker 1: all that have have all benefited from this from the
Speaker 1: surgeon oil a production in the last ten years. But
Speaker 1: really now we're are kind of taking it in the
Speaker 1: teeth because um, you know, there's just there's just way
Speaker 1: too much supply and not enough demand. So what does
Speaker 1: this mean globally? Like I just think about Saudi Arabia,
Speaker 1: Like I just think this is what I want like
Speaker 1: the bigger pictures do, Like, what does this mean? We
Speaker 1: know they've been struggling, as we've seen oil prices go down.
Speaker 1: This is such a big part of their economy, but
Speaker 1: what's the bigger story here? The bigger story is that
Speaker 1: everyone across the board is struggling. Uh, and there is
Speaker 1: really no place to hide. So I think back about
Speaker 1: a month, six weeks ago April excuse me, March six,
Speaker 1: Russia and Saudi Arabia walked away from the bargaining table
Speaker 1: because they could not agree over one and a half
Speaker 1: million barrels of production cuts. A month later, because of
Speaker 1: this crisis, they agreed to to cut effectively ten million
Speaker 1: barrels off the world market, which is historically massive and
Speaker 1: yet still completely insufficient. And what that tells you is
Speaker 1: that demand has really just fallen off the table. Yeah,
Speaker 1: it's really, I mean, it's it's just remarkable when you
Speaker 1: look at it. I really appreciate that perspective. Thank you
Speaker 1: so much. I feel like this is a story that
Speaker 1: I want to be able to walk out of a
Speaker 1: conversation like that. And I do feel a lot more informed,
Speaker 1: you know, and I think people need to understand it,
Speaker 1: not just from the prospective like whoa, those are big numbers,
Speaker 1: but more how this plays out, as you rightly pointed out, Carol, globally,
Speaker 1: because Saudi obviously has geopolitical uh implications as well. We
Speaker 1: know that to be trued. And I think Jason, it
Speaker 1: was happening anyway, but it's been exacerbated because of this
Speaker 1: crisis and demand has just come to a stop. So
Speaker 1: for sure. Stuart Clickman is the head of Energy Research
Speaker 1: over at cfr A Research, joining us on the phone
Speaker 1: from New Jersey. Smart kay, for sure. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: There are two things we love on this show. One
Speaker 1: data we love numbers. To love being able to explain things.
Speaker 1: It's our training at Bloomberg. We're very much in the
Speaker 1: midst of that, all the way up to our founder.
Speaker 1: The other thing we love on this show Sean Donnon
Speaker 1: just can't get enough of that guy seenior trade reporter
Speaker 1: for Bluemberg. Johnny is on the phone from Washington, d C.
Speaker 1: As is of course the man himself, Joel Webber, editor
Speaker 1: of Bluemberg Business Week. Can I just say this guy's
Speaker 1: just opened up. But I don't know whether that's Sean
Speaker 1: and Joel's power. I don't know as you introduced them,
Speaker 1: but literally thunder and lightning just went crazy. Yeah outside
Speaker 1: my window here alright. So Joel Webber, you I think
Speaker 1: you agree with me. We love data, We love to
Speaker 1: be able to prove things. I think about the Bloomberg
Speaker 1: fifty and the fact that it's got to have a
Speaker 1: number around it. This story is all about numbers, all
Speaker 1: about numbers, um and and you know, I think this
Speaker 1: was um one that really started with Sean as I
Speaker 1: get some thunder in my background as well, really sets
Speaker 1: the table for talking about right totally. But the numbers
Speaker 1: are feeling this time. Why is that, Sean? Well, I
Speaker 1: just you look out there and we look at this great,
Speaker 1: big economy that we've got, and you're trying to reach
Speaker 1: for some data to show you what's happening in there.
Speaker 1: And the reality is you look at the normal economic
Speaker 1: data that we rely on, the non farm payrolls, the
Speaker 1: inflation data, all of that stuff, and it's just not
Speaker 1: telling us what we need to know right now because
Speaker 1: this thing is just moving too fast, and that tells
Speaker 1: us something bigger. Here we have you know, ostensibly the
Speaker 1: biggest economic crisis of our lifetime, and yet the data
Speaker 1: we rely on to measure the economy isn't keeping up well.
Speaker 1: For something new, I love this line in your story.
Speaker 1: Peering into our future might be easier if we knew
Speaker 1: with certainty what happened in our immediate past. I mean
Speaker 1: to get an idea. This is what Jason and I
Speaker 1: talk about so much, and I'm assuming you know Joel
Speaker 1: and your team. It's like, what does life look like
Speaker 1: post COVID nineteen? But unless we can kind of trust
Speaker 1: the data that we're dealing with now, we really don't know,
Speaker 1: right Sean, And we don't have the data yet on
Speaker 1: on our media past, a lot of our media past
Speaker 1: that first quarter GDP, those three months to March. The
Speaker 1: first reading we're going to get of that is April nine.
Speaker 1: The data, you know, the one that we really care about,
Speaker 1: that the second quarter that we're in now, where most
Speaker 1: economists agree the big downturn is happening. We're not going
Speaker 1: to get that until the end of July, all right.
Speaker 1: So this is such a great read in part because
Speaker 1: there are some history lessons in here, some callbacks the
Speaker 1: McNamara fallacy, tell us about that shunk. Right. So, there
Speaker 1: was this grim bit of data that the American military
Speaker 1: operated it really planned the war around in Vietnam for
Speaker 1: for years, and that was body count literally from the
Speaker 1: ground on up. They were reporting the number of enemy
Speaker 1: combatants killed on a daily basis, and commanders back in Washington,
Speaker 1: we're using that to assess how the war was going.
Speaker 1: The problem was is that you've got some really perverse
Speaker 1: and incentives in the system. There where UH commanders on
Speaker 1: the ground whose careers depended on this data. We're inflating
Speaker 1: the data and reporting that back up all the way
Speaker 1: to Robert McNamara, who was then leading the war effort
Speaker 1: in the Kennedy administration, and um he was looking at
Speaker 1: these daily body counts thinking the war was going great
Speaker 1: for years, that the US was winning, when in fact
Speaker 1: it was losing quite heavily on the ground. The McNamara
Speaker 1: fallacy is what came out of that, and that is
Speaker 1: what happens when policymakers in particular, but it could be investors, quants,
Speaker 1: it can be UH politicians, business leaders, CEOs. When they
Speaker 1: have their nose in the data and they ignore what
Speaker 1: is going on in the world around them. And that
Speaker 1: leads to just some really bad choices and some big mistakes.
Speaker 1: And so that's you know, that's the downside of data.
Speaker 1: Right now, we don't have the data we need. At
Speaker 1: the same time, we can all look out into the
Speaker 1: world and know that things are not going well. So
Speaker 1: do we need to think please Well, I was just
Speaker 1: gonna say, you know, like, hey, there, we're not totally
Speaker 1: dreading blind here, and that there are places that you know,
Speaker 1: the Federal Reserve and the GDP now index, Shaun is
Speaker 1: one way that we have attempted that economics has attempted
Speaker 1: to kind of put its puls on the now. But
Speaker 1: even that has its limitations, right, So so what we're
Speaker 1: what we're starting to do now and you're seeing it
Speaker 1: in in a lot of the alternative pieces of data
Speaker 1: that we're all looking at. People were looking at open
Speaker 1: table bookings there for a while, uh at the beginning
Speaker 1: of this crisis, just that collapse uh in in reservations
Speaker 1: through that booking app uh reservations at restaurants that that
Speaker 1: happened in cities as the shutdown orders went through. We've
Speaker 1: been looking at t s A security clearance data to
Speaker 1: show the number of air travelers. We're looking at traffic data,
Speaker 1: electricity usage data, all of that stuff. But all of
Speaker 1: that is is kind of partial. It's not necessarily reliable.
Speaker 1: And while the Federal Reserve and the number of the
Speaker 1: regional sets have put together, uh these efforts to try
Speaker 1: and measure short term GDP and the Atlanta said does this,
Speaker 1: The New York fed is is played with this, The
Speaker 1: Silly set has played with it as well. Um, none
Speaker 1: of those things are really reliable enough to count on yet.
Speaker 1: So we need that data. We're looking for that high
Speaker 1: frequency data, but we don't yet have that magic data
Speaker 1: that we need. What makes me nervous is not having
Speaker 1: that magic data. Is that here we have policymakers trying
Speaker 1: to figure out what's the right steps to take. We're
Speaker 1: gonna be talking with Paul Krugman and get his take
Speaker 1: on this um a little bit later on our broadcast.
Speaker 1: But I do under sean like, if we don't have
Speaker 1: that magic data, might we be taking the wrong policy
Speaker 1: steps right now that will hurt us later on. That's
Speaker 1: absolutely the risk. We really don't yet know where the
Speaker 1: damage is in this economy, the U S economy right now,
Speaker 1: And that means you can't necessarily target the policy response
Speaker 1: to the right areas. And that's something that we're gonna
Speaker 1: be adjusting where that policymakers are going to be adjusting,
Speaker 1: uh or in dealing with a lot in the months
Speaker 1: to come. Well, and it's interesting to Sean, you know,
Speaker 1: you talk about China in your story, which you know
Speaker 1: normally I feel like, in in normal times whatever that
Speaker 1: used to be, you know, we would look at Chinese
Speaker 1: GDP data and things like that be like, well, you
Speaker 1: can't really trust them, but we have these other ways
Speaker 1: to do it. Unfortunately, now literally life and death decisions
Speaker 1: are being made based on data that we have from China,
Speaker 1: which we now know probably isn't reliable, and global leaders,
Speaker 1: central bankers, presidents, heads of state, they're making decisions on
Speaker 1: that data. How worried should we be about China here? Well, yeah,
Speaker 1: China has has has always been a question in terms
Speaker 1: of its data. There's also clearly now there are some
Speaker 1: big questions over how they covered up the data early on,
Speaker 1: in particular in whether they are continuing to cover rope
Speaker 1: the health data. But we also know the Chinese leaders
Speaker 1: have for years had their own ways of adapting to
Speaker 1: bad data and Lee Ka Chang, who's the premier right now.
Speaker 1: Famously about a decade ago, sat down for dinner with
Speaker 1: then Chinese ambassador when he was a provincial leader, and
Speaker 1: he said, look, I don't trust our own GDP number.
Speaker 1: So I look at three things. I look at freight movements,
Speaker 1: I look at bank loans, I look at electricity usage.
Speaker 1: And that tells me what's happening at the Chinese economy.
Speaker 1: Amazing what we're all kind of right now. We're all
Speaker 1: becoming like we're all becoming or hit fun people right,
Speaker 1: Hedge investors looking at you know, different metrics shown Donn
Speaker 1: and we do love you and adore you everybody. It's
Speaker 1: in the magazine online, It's a must reach on Donn
Speaker 1: and Bloomberg News and our thanks to Joe Webber. We
Speaker 1: also endore Appleburgus this week row the journal. Yaw. But
Speaker 1: you let me drive? Oh no, no, no, no, who's
Speaker 1: going to run? Please? I'll do the right vels me.
Speaker 1: I don't want to drive all just drive baby, the
Speaker 1: questions trying. This is the drive to the Globe community. Thanks,
Speaker 1: We'll drying us down on Bloomberg Radio. It is time
Speaker 1: for the Drive to the Clothes with us as Jimmy Quare,
Speaker 1: portfolio manager at the Buffalo Small Camp Fund, joining us
Speaker 1: on the phone from Mission Kansas. Gotta point out that
Speaker 1: fund a top performer, beating just about all of its
Speaker 1: peers over the past five years, returning on average nearly
Speaker 1: eight percent annually. Jamie, good to have you here with
Speaker 1: Jason and myself on Bloomberg. How are you and tell
Speaker 1: us a little bit about what's going on in Kansas?
Speaker 1: I am doing well. Thank you for having me on.
Speaker 1: We're quarantine like everybody else, so a lot of the same.
Speaker 1: And so what do you make from the market of
Speaker 1: the markets sitting there in Kansas? Because you know, we
Speaker 1: I feel like our view is a little bit colored
Speaker 1: by you know, a day to day that is probably
Speaker 1: similar to yours, uh in in broad strokes in terms
Speaker 1: of you know, work from home and all that stuff.
Speaker 1: But you know, being in the epicenter, I do think
Speaker 1: that that changes maybe our our perspective a little bit,
Speaker 1: uh to the negative. As Carol pointed out, you have
Speaker 1: done extremely well by any measure in the markets and
Speaker 1: focusing on on small caps. How do you cut through
Speaker 1: the noise and frond the signal here? Uh? Yeah, well, um, typically,
Speaker 1: you know, we do have the same issues obviously that's
Speaker 1: going on into your Clearly we don't have as bad
Speaker 1: of the cases as you guys are having there, and
Speaker 1: it is a slower pace here in Kansas, thankfully, but
Speaker 1: we do obviously have the same concerns. Um, you know,
Speaker 1: the market volatility that we're seeing. It's just as hard, um.
Speaker 1: You know, as far as how we're kind of handling
Speaker 1: all of this, we have a process that really kind
Speaker 1: of doesn't change despite what's going on in the economy.
Speaker 1: We tend to invest in companies that benefit from long
Speaker 1: term trends, and those trends are going to remain intact
Speaker 1: regardless of what the economy does. But obviously we're having
Speaker 1: to scrub our portfolio and make sure that you know, companies, Uh,
Speaker 1: they will be impacted to a certain extent by a
Speaker 1: weaker consumer and slower economy, and clearly, work from home
Speaker 1: INSA's changing everyone's work environment. Um. But we're really looking for,
Speaker 1: you know, those companies that are positioned well during this
Speaker 1: and hopefully we'll actually come out of this even stronger, uh,
Speaker 1: provided they have a decent opportunity for recovery. Well, Jamie,
Speaker 1: I'm curious about kind of changes you might have made
Speaker 1: then to your portfolio. As I mentioned, your fund has
Speaker 1: done really well consistently. It's not just a one year thing,
Speaker 1: but over the past five years at least based on
Speaker 1: Bloomberg data. So have you made any changes because of
Speaker 1: the situation, because of the virus impact? UM tell us
Speaker 1: about that. Yeah, we've made a few changes, thankfully. Once
Speaker 1: we saw this start to hit, we really took a look,
Speaker 1: especially in certain areas like like consumer UM in terms
Speaker 1: of you know, how hard these companies are gonna be hit,
Speaker 1: and you know what's going to happen to their revenues overall,
Speaker 1: and what can they do to really um, you know,
Speaker 1: pivot a little bit and change what's going on. Certainly
Speaker 1: other sectors like healthcare. You know, if you have a
Speaker 1: left of surgery, those are gonna be in trouble. Uh.
Speaker 1: If you're a tech company and you have a lot
Speaker 1: of small and medium business uh exposure or UM you know,
Speaker 1: you're exposed to to some industries that could be hit harder,
Speaker 1: like travel. You know, we really need to scrub through those.
Speaker 1: We've we've made a few changes here and there. We've
Speaker 1: actually even made some ads so as well, if companies
Speaker 1: that we think that could even benefit from all this overall,
Speaker 1: I clearly need to make sure that these and if
Speaker 1: it's going to be sustainable and not just flash in
Speaker 1: the pan. But uh, you know, you know, you really
Speaker 1: want to find those these that have great management teams
Speaker 1: that can have it well through this. So, Jason, I
Speaker 1: love talking about specific stocks, So give us some names
Speaker 1: that maybe you've been buying into as a result of
Speaker 1: this thesis. Well, I can't really talked about ones that
Speaker 1: we've been buying during the quarter, but I tell you
Speaker 1: someones that we do like and have like coming into
Speaker 1: this that I think I could take advantage. So the
Speaker 1: first one is called love Sack, which is an interesting name,
Speaker 1: but it's one of our smallest companies we have overall.
Speaker 1: It's a hundred and fifty million dollar market cap company.
Speaker 1: Uh so pretty small. They make seatings, so a modular
Speaker 1: sectional couch called the sactional, and uh what's probably best
Speaker 1: to strite as a modern dame being bag called the stack.
Speaker 1: So very innovative products. They sell online as well as
Speaker 1: through showrooms. The company got really just trashed through this.
Speaker 1: They first got hit by the trade war in China,
Speaker 1: had adjust their supply chain, and then they obviously had
Speaker 1: to close all the show rooms through the coronavirus, so
Speaker 1: the stock got completely orphaned. At one point this was
Speaker 1: a forty stock. It traded all the way down to
Speaker 1: four dollars. Uh. And it's a founder led microcap company,
Speaker 1: which you kind of, you know, worry about good decisions
Speaker 1: that manage makes. But these guys have really done just
Speaker 1: an exceptional job conserving cash, cutting expenses, pivoting their advertising
Speaker 1: and their customer sales support to really support online and
Speaker 1: they reported a couple of weeks ago done an excellent
Speaker 1: job here. Um, you know they're starting to see a
Speaker 1: lot more improving trends after a rough couple of weeks. Uh,
Speaker 1: their e commerce business was up over fo. They think
Speaker 1: that they can be cash flow positive here going forward
Speaker 1: and actually think they'll be back to plan here in
Speaker 1: a couple of weeks. So these guys have pivoted grade
Speaker 1: stock still oversold. It is down to tin bucks and
Speaker 1: like I said, it was up at forty. I think
Speaker 1: these guys have a lot more to go. And it
Speaker 1: looks like and it looks like no dead on their
Speaker 1: balance sheet. I mean they're their balance sheet looks pretty cool,
Speaker 1: even with all the stuff that's going on. That's right.
Speaker 1: You know they're not a big company, but you know
Speaker 1: you've got about thirty five million in cash. I think
Speaker 1: they're a survivor, and you know, the survivors, especially consumer
Speaker 1: that can make it through this, they're gonna have a
Speaker 1: lot less competition going forward, and they're gonna be winners.
Speaker 1: I remember hearing about this. The ticker is love L
Speaker 1: O V E. I believe Dave Wilson, our stocks editor,
Speaker 1: had it as his stock of the day a while back,
Speaker 1: and I just remember being uncomfortable hearing Dave Wilson's they
Speaker 1: love sack in any case, Uh banned with B A
Speaker 1: N D as another one. You like, only got about
Speaker 1: forty seconds here, but give us a pitch on that. Yeah.
Speaker 1: So this is a cloud based communications services company. UM.
Speaker 1: They use their software expertise to get enterprise customers to
Speaker 1: carry their voice uh and even more so these days,
Speaker 1: they're messaging over bandwidth network, which they own themselves, so
Speaker 1: they carry voice traffic for a lot of the next
Speaker 1: gen cloud based service providers companies like Ring Central, eight
Speaker 1: by eight, Microsoft, Skuy for business and even UH. They'll
Speaker 1: do some audio for video conferencing companies like Zoom, which,
Speaker 1: as everyone knows right now, is just crushing it. Um.
Speaker 1: So right now, their their customers are all market share gainers. Um.
Speaker 1: They're getting bigger and bigger, more strategic accounts. They've been
Speaker 1: expanding into Europe with a lot of their customers. Uh.
Speaker 1: And like I said, they own their own network. Incremental
Speaker 1: margins here on on incremental revenue, we're going to be
Speaker 1: outstanding and balance sheets in great shape here just to
Speaker 1: confer head into this solid, solid balance sheet, and they're
Speaker 1: looking good going forward. It's time to be a stock picker,
Speaker 1: that is for sure. I love the bottoms up analysis
Speaker 1: all right. Jimmy quay are portfolio manager for Buffalo Funds,
Speaker 1: on the phone from Missions, Kansas. Uh. The Buffalo, I believe,
Speaker 1: refers to the actual like Buffalo. You know where the
Speaker 1: Buffalo roam, not Buffalo Buffalo. Have you seen Buffalo? I have,
Speaker 1: and I've seen your pictures from Colorado. Thanks for listening
Speaker 1: to Bloomberg Business Week. You can subscribe to the podcast
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