WEBVTT - Jim Chanos Talks Short-Selling and Speculative Market 0:00:02.440 --> 0:00:12.960 Bloomberg Audio Studios, podcasts, radio news. 0:00:13.360 --> 0:00:15.760 For years, the Federal reserves policy of lower rates for 0:00:15.840 --> 0:00:19.279 longer helped fuel a bullmarket in stocks, and even now 0:00:19.360 --> 0:00:22.239 after the Fed's rate high campaign to fight inflation, the 0:00:22.239 --> 0:00:25.600 bullmarket keeps on running. It's all raising questions about the 0:00:25.600 --> 0:00:28.880 future of short selling. So here now to share his perspective, 0:00:28.920 --> 0:00:32.519 I'm pleased to say, is legendary short seller Jim Chainos, President, 0:00:32.560 --> 0:00:36.080 managing partner and founder of Chinos and Company. Jim, great 0:00:36.120 --> 0:00:36.959 to see you here in. 0:00:36.920 --> 0:00:39.080 New York with us, Thanks for having me. You look 0:00:39.080 --> 0:00:40.000 at the number. 0:00:39.720 --> 0:00:42.760 Of short buys hedge funds as tracked by HFR, and 0:00:42.880 --> 0:00:47.560 it's fallen dramatically from fifty something to fourteen now fifty 0:00:47.640 --> 0:00:50.440 something in twenty eight and fourteen in about twenty twenty three, 0:00:50.520 --> 0:00:53.560 twenty twenty four. How much does the rate environment overall 0:00:53.600 --> 0:00:55.880 contribute to the shrinking universe of short selling funds? 0:00:55.920 --> 0:00:56.320 Do you think? 0:00:56.760 --> 0:00:59.600 I think the rate environment is probly the first or 0:00:59.640 --> 0:01:03.880 second derivative. I mean, it's really the ongoing persistence of 0:01:03.920 --> 0:01:07.520 the bull market, which has now been fifteen years, and 0:01:07.560 --> 0:01:10.760 we saw something similar Scarlet in the late nineties, or 0:01:11.160 --> 0:01:16.280 the number of short short biased funds by nineteen ninety 0:01:16.360 --> 0:01:19.480 nine and two thousand really had dwindled to a handful 0:01:20.520 --> 0:01:22.400 and people just got exasperated. 0:01:23.240 --> 0:01:24.880 And that was right before. 0:01:25.280 --> 0:01:28.280 There was really ten years from ninety nine to nine 0:01:28.360 --> 0:01:31.960 of just fantastic returns on the short side and two 0:01:32.040 --> 0:01:35.480 bear markets, of course, but I think that really it's 0:01:35.680 --> 0:01:39.880 the length of time beyond just FED policy, although FED 0:01:39.920 --> 0:01:41.800 policy certainly had a lot to do with it in 0:01:41.840 --> 0:01:42.759 the last ten years. 0:01:43.080 --> 0:01:44.720 Now, I introduced Chinos in company. 0:01:44.840 --> 0:01:47.360 It's now a family office and advisory instead of a 0:01:47.360 --> 0:01:50.200 hedgepoint firm. Right you are investing in the market, though, 0:01:50.200 --> 0:01:52.240 I'm curious how you're investing in the market right now. 0:01:52.400 --> 0:01:56.000 Well, and we're advising clients. Look, this is the I 0:01:56.120 --> 0:02:01.280 just advised a client on a putbas its strategy this afternoon, 0:02:01.520 --> 0:02:05.120 and right now, what we're seeing in the universe of 0:02:05.160 --> 0:02:08.240 companies we follow is probably as attractive at time as 0:02:08.280 --> 0:02:10.880 it was in first half of twenty twenty one. And 0:02:10.919 --> 0:02:13.680 I've said publicly that twenty twenty one was the most 0:02:13.680 --> 0:02:16.520 stucket of market I've ever seen in my forty years 0:02:16.520 --> 0:02:20.760 of forty five years of investing, and we're getting back 0:02:20.800 --> 0:02:23.160 to that. Not quite there, but it's close. And you've 0:02:23.160 --> 0:02:26.240 seen it with things like the meme stocks again and 0:02:26.480 --> 0:02:28.960 my god, we're still we're starting to price backs again. 0:02:29.440 --> 0:02:32.400 And noticed that three billion of SPACs price. 0:02:32.520 --> 0:02:34.600 Does that give you ajata? Particularly the run up we 0:02:34.600 --> 0:02:36.639 saw on Gamesop? And yeah, I means facts are somehow 0:02:36.639 --> 0:02:37.480 trying to call their way up. 0:02:38.000 --> 0:02:40.320 People have always said, well, what about the FED? 0:02:41.160 --> 0:02:44.239 Per your first question? And I always said, we'll give 0:02:44.240 --> 0:02:46.320 Wall Street enough time. The FED is not the only 0:02:46.360 --> 0:02:48.840 one with the printing press. Wall Street does a pretty 0:02:48.840 --> 0:02:52.320 good job at issuing pieces of paper when people really 0:02:52.360 --> 0:02:52.760 want them. 0:02:53.000 --> 0:02:54.600 I mean, how do you sort of navigate and you 0:02:54.600 --> 0:02:57.760 talk about advising folks, you're advising people on a public market, 0:02:57.760 --> 0:02:59.760 public equity market at least right now that is a 0:03:00.200 --> 0:03:02.320 high at least on the SMP, on the NASAC. A 0:03:02.360 --> 0:03:05.040 lot of people would look at historical valuations and say, 0:03:05.240 --> 0:03:06.480 we're stretched here. 0:03:06.760 --> 0:03:08.720 What is the advice you give in that situation? 0:03:09.080 --> 0:03:12.160 Well, since really the mid nineties, we ran our business 0:03:12.320 --> 0:03:15.280 where we were long equity markets, we were long indices 0:03:15.440 --> 0:03:18.760 and then short our names. And I still think that 0:03:18.800 --> 0:03:21.280 makes a lot of sense. And where the stock market 0:03:21.280 --> 0:03:23.800 is going, I have no idea. I started my firm 0:03:23.800 --> 0:03:26.160 back in nineteen eighty five, that dial was thirteen hundred, 0:03:26.240 --> 0:03:27.320 So that. 0:03:28.040 --> 0:03:29.320 Should tell you something about timing. 0:03:30.120 --> 0:03:33.160 But the fact of the matter is is that with 0:03:33.320 --> 0:03:36.520 the exception of the far right group of companies on 0:03:36.560 --> 0:03:40.440 the bell curve, most companies underperformed the stock market over 0:03:40.480 --> 0:03:45.080 time or failed. It's the nvidios or the teslas or 0:03:45.120 --> 0:03:48.040 whatever on that far right end that go up quite 0:03:48.040 --> 0:03:52.640 a lot that give you your returns. So the strategy 0:03:52.640 --> 0:03:56.760 of being long equity markets broadly and short idiosyncratic names 0:03:56.840 --> 0:03:59.360 I still think makes a lot of sense. And then finally, 0:03:59.400 --> 0:04:02.000 insurance is really cheap right now. I mean, you know, 0:04:02.080 --> 0:04:04.840 people insure their homes, they ensure their cars, they ensure 0:04:04.840 --> 0:04:08.040 their loved ones. It's pretty cheap right now to insure 0:04:08.040 --> 0:04:08.800 a portfolio. 0:04:09.360 --> 0:04:10.360 Is AI in a bubble? 0:04:11.240 --> 0:04:12.120 I have no idea. 0:04:13.000 --> 0:04:14.080 You know, you lived through bubbles. 0:04:14.600 --> 0:04:15.520 I go af through bubbles. 0:04:15.760 --> 0:04:19.080 I'll make one observation as it relates to AI. So 0:04:19.160 --> 0:04:22.320 if you go back and look at the US economy 0:04:22.680 --> 0:04:25.560 in the immediate post Internet age, and I think we 0:04:25.600 --> 0:04:27.960 can all agree the Internet changed our lives in a 0:04:28.200 --> 0:04:34.080 major way. From nineteen ninety eight to seven, the US 0:04:34.160 --> 0:04:40.680 economy grew at three percent real annually. From nineteen eighty 0:04:40.720 --> 0:04:43.640 eight to nineteen ninety seven, the ten years prior to 0:04:43.720 --> 0:04:46.680 really the advent of the Internet to the public, the 0:04:46.720 --> 0:04:50.400 economy grew by three percent annually. The internet had no 0:04:50.520 --> 0:04:53.320 impact on growth. Now it had a lot of impact 0:04:53.800 --> 0:04:56.720 on individual companies. Getting back to my point, right, there 0:04:56.720 --> 0:05:01.360 were big, big winners and big big losers. And I 0:05:01.400 --> 0:05:04.000 suspect if AI is going to be as transformational as 0:05:04.040 --> 0:05:05.719 people think it is, and I have no idea whether 0:05:05.760 --> 0:05:06.400 it will be or not. 0:05:07.920 --> 0:05:09.680 They'll be big winners and they'll be big Okay. 0:05:09.680 --> 0:05:11.160 I just want to follow up on that though, too. 0:05:11.160 --> 0:05:12.919 And this kind of leads back to the question with 0:05:12.960 --> 0:05:17.640 Scarlett's started off with about the connection between macroeconomic conditions 0:05:18.040 --> 0:05:20.200 and our markets today, and there does seem to be 0:05:20.240 --> 0:05:21.000 a disconnect. 0:05:21.080 --> 0:05:25.360 Yeah, I wouldn't disagree with that, and I think there 0:05:25.400 --> 0:05:28.640 is a much more specuative nature of this market. 0:05:29.040 --> 0:05:30.280 And we started to. 0:05:30.240 --> 0:05:34.000 See it in late twenty nineteen when commission rates cut 0:05:34.080 --> 0:05:37.280 to zero and retail began to come back in the 0:05:37.320 --> 0:05:39.200 market in a big way in ways they hadn't been 0:05:39.240 --> 0:05:41.880 in prior to that. They've been investing in ETFs or 0:05:42.839 --> 0:05:45.000 mutual funds or what have you, and we began to 0:05:45.000 --> 0:05:49.440 see pre pandemic speculation and individual names really pick up. 0:05:49.480 --> 0:05:52.400 And then of course post pandemic it took off and 0:05:52.440 --> 0:05:54.400 we're still you can see it in option volumes and 0:05:54.440 --> 0:05:57.159 a lot of other sort of quantitative measures that the 0:05:57.200 --> 0:05:58.840 public is in this stock market in. 0:05:58.800 --> 0:05:59.320 A big way. 0:06:00.680 --> 0:06:04.560 That really then means that you have to change your 0:06:04.640 --> 0:06:07.720 risk parameters, change the size of your short bets if 0:06:07.760 --> 0:06:10.599 you will, and be mindful of the game stops and 0:06:10.640 --> 0:06:14.680 those kinds of things. On the other hand, generally they 0:06:14.800 --> 0:06:20.120 chase momentum and sometimes quite frankly, silly stories, and if 0:06:20.120 --> 0:06:21.960 you want to be investing, you don't want to be 0:06:22.120 --> 0:06:22.479 doing that. 0:06:23.080 --> 0:06:25.480 If you were looking at the AI story, and I 0:06:25.480 --> 0:06:27.839 guess you can't say it's a bubble, but it's spread 0:06:27.880 --> 0:06:30.680 out in lots of different parts. Right, Utilities have been up, 0:06:30.680 --> 0:06:32.560 power has been up, your hardware coming up, You've got 0:06:32.600 --> 0:06:35.800 software like it's like the tentacles are moving out. How 0:06:35.839 --> 0:06:37.479 do you think about something like that, like, how do 0:06:37.520 --> 0:06:38.960 you well, we look for. 0:06:38.960 --> 0:06:42.279 I mean, when we look for companies in our world 0:06:42.440 --> 0:06:46.240 that have gotten the benefit of an AI kiss but 0:06:46.360 --> 0:06:49.039 are actually going to lose because of AI. So we've 0:06:49.080 --> 0:06:53.200 been publicly short the data centers, the legacy data centers, 0:06:53.560 --> 0:06:57.640 because they literally are not designed for AI chips. They 0:06:57.680 --> 0:07:01.400 have to basically be retooled completely, and all of the 0:07:01.440 --> 0:07:04.480 infrastructure and hardware in a data center an old one 0:07:04.880 --> 0:07:07.960 is not compatible with the new chips. So people if 0:07:08.040 --> 0:07:10.680 did the stocks up thinking their AI place, they're actually 0:07:10.720 --> 0:07:13.880 losers from AI. And it gets back to the winners 0:07:13.880 --> 0:07:14.720 and losers. 0:07:14.360 --> 0:07:17.520 Thing we mentioned spack companies a little bit earlier. 0:07:17.520 --> 0:07:20.240 I'm wondering if you were trading around the elections at all, 0:07:21.280 --> 0:07:23.920 what my aid Donald Trump victory in November, for instance, 0:07:24.040 --> 0:07:26.679 mean for regulation and would that, as a result, perhaps 0:07:26.760 --> 0:07:31.000 create more opportunities to be short companies because you know, 0:07:31.040 --> 0:07:33.880 with the regulatory heat taken off, companies can do all 0:07:33.960 --> 0:07:36.160 kinds of things and speculative fever goes up. 0:07:36.360 --> 0:07:39.240 Yeah, I mean it's hard to bet, basically if unless 0:07:39.280 --> 0:07:42.240 you know who's going to win. Yeah, it seems like 0:07:42.240 --> 0:07:43.880 I still think it's gonna be a pretty close election. 0:07:45.080 --> 0:07:49.920 And obviously there's certain areas that each party would would 0:07:50.640 --> 0:07:55.080 emphasize and de emphasize. Again, some areas that were already 0:07:55.160 --> 0:07:58.600 negative on, like solar would probably lose under Donald Trump. 0:07:59.560 --> 0:08:06.160 But but it's hard to know exactly, particularly if the 0:08:06.200 --> 0:08:08.360 polls are right that it's still a pretty tight election. 0:08:08.560 --> 0:08:10.600 Yeah, and of course he's a booster for all kinds 0:08:10.640 --> 0:08:12.920 of companies, including his own spack. 0:08:13.200 --> 0:08:13.920 You've been very. 0:08:13.800 --> 0:08:18.800 Vocal about how irrational retail day traders are, how much 0:08:18.840 --> 0:08:23.200 kind of charismatic influencer like Roaring Kitty aka deep fing 0:08:23.280 --> 0:08:25.720 Value and you know what's his actual name, Keith Gill, 0:08:25.960 --> 0:08:29.720 and an army of day traders keep this GameStop dream alive. 0:08:29.880 --> 0:08:31.480 I mean from where you sit and look at it, 0:08:31.520 --> 0:08:33.200 at some point it comes crashing down, does it not? 0:08:33.360 --> 0:08:35.240 Well, it already has. I mean, so if you look 0:08:35.280 --> 0:08:35.559 at the. 0:08:35.559 --> 0:08:37.280 Meme, there's little blips here and there. 0:08:37.400 --> 0:08:41.040 Yeah, But if you look at the memestock class of 0:08:41.080 --> 0:08:45.720 twenty twenty one, which was GameStop AMC, B, BEF and beyond, 0:08:46.000 --> 0:08:48.480 you know a number of others. I mean, with the 0:08:48.559 --> 0:08:52.439 exception of game Stop, they are all down ninety ninety 0:08:52.480 --> 0:08:57.559 five ninety nine percent. It was a disaster for retail investors, 0:08:57.640 --> 0:09:01.400 quite frankly, and so I think that that it gets 0:09:01.440 --> 0:09:04.000 to my point that you don't want to be chasing 0:09:04.040 --> 0:09:06.800 this stuff if there's no fundamentals behind it, and I 0:09:06.840 --> 0:09:10.240 have no position in game Stop, but people are still 0:09:10.800 --> 0:09:14.440 valuing that company. If we're going to value business at 0:09:14.720 --> 0:09:16.960 three times, it's cash, and even though it's raised all 0:09:16.960 --> 0:09:19.480 this cash, it's got about nine dollars of sharing cash 0:09:19.559 --> 0:09:22.000 right now per share. I think the stock's at twenty 0:09:22.080 --> 0:09:24.920 five or twenty six or twenty seven, And so you 0:09:25.040 --> 0:09:28.840 have to believe the business has something or there's option 0:09:29.040 --> 0:09:32.520 value to the cash, which is what people believe that 0:09:33.040 --> 0:09:35.480 Ryan Colm to be able to do something that's really 0:09:35.480 --> 0:09:37.640 hard to do when you're paying three dollars for a 0:09:37.679 --> 0:09:41.360 dollar of cash. And again, so you're chasing the future, 0:09:41.360 --> 0:09:44.680 you're chasing the story. In bull markets, the future gets 0:09:44.720 --> 0:09:47.880 a premium. In bear markets, reality gets a discount. 0:09:48.240 --> 0:09:50.560 Well, when we talk about that premium, particularly when it 0:09:50.559 --> 0:09:52.320 comes a game Stop in some of those meeting socks, 0:09:52.360 --> 0:09:54.760 let's talk about the other potentially on the other side 0:09:54.800 --> 0:09:56.920 of that trade, which is sort of the short positions. 0:09:56.920 --> 0:09:59.000 We saw that in twenty twenty one, where at the 0:09:59.000 --> 0:10:00.560 short interest went through the room. If we're not seeing 0:10:00.600 --> 0:10:03.600 that necessarily as aggressively this time the opposite. But yeah, 0:10:03.600 --> 0:10:05.120 but part of that reason is because there aren't a 0:10:05.120 --> 0:10:06.840 lot of folks like you doing this anymore. 0:10:06.880 --> 0:10:08.200 A lot of those folks got scared off. 0:10:08.200 --> 0:10:10.040 Obviously we know happened to gay block in and a 0:10:10.080 --> 0:10:12.280 little bit earlier we were just talking about Andrew Left 0:10:12.280 --> 0:10:14.000 who had a short position in Game Stop, but even 0:10:14.000 --> 0:10:14.719 he closed that out. 0:10:14.960 --> 0:10:15.200 Yeah. 0:10:15.280 --> 0:10:19.319 Well again, when you just look at the numbers, overall, 0:10:19.320 --> 0:10:21.959 short interest is down, as you allude to. But take 0:10:21.960 --> 0:10:23.960 a look at Game Stoff again, just to use this example. 0:10:24.320 --> 0:10:28.000 So a week or so ago, ten days ago, short 0:10:28.040 --> 0:10:31.040 interest was twenty two percent of the outstanding or of 0:10:31.080 --> 0:10:35.000 the float. Today it's eleven percent. A. The short interest 0:10:35.040 --> 0:10:38.439 went down. B. They issued a lot of shares, getting 0:10:38.480 --> 0:10:42.720 back to my point about issuance, so the supply increased 0:10:43.440 --> 0:10:44.280 and not a share. 0:10:44.720 --> 0:10:46.679 So now it's not a short story anymore. The shorts 0:10:46.679 --> 0:10:47.320 aren't trapped. 0:10:47.880 --> 0:10:50.760 In January of twenty twenty one, I think the short 0:10:50.760 --> 0:10:52.960 interest was one hundred and forty percent of out standing. 0:10:53.080 --> 0:10:56.040 Yeah, and now it's eleven. It's a big difference. 0:10:56.120 --> 0:10:57.760 Okay, so maybe that's not a target. 0:10:57.800 --> 0:11:00.760 Is there sort of a market or more important, appetite 0:11:01.120 --> 0:11:03.439 for that sort of short seller's playbook a playbook that 0:11:03.480 --> 0:11:06.040 you made famous and it just doesn't seem like there 0:11:06.040 --> 0:11:08.480 are sort of new channels is coming around the corner 0:11:08.720 --> 0:11:09.720 in this space anymore. 0:11:09.760 --> 0:11:10.640 How do you feel about that? 0:11:11.120 --> 0:11:14.720 I don't know, you know, af for forty five years. 0:11:15.280 --> 0:11:16.480 I don't wish that on anyone. 0:11:16.600 --> 0:11:19.960 Maybe people want to aspire to that, right, Like, are 0:11:19.960 --> 0:11:21.040 there players in the market. 0:11:21.160 --> 0:11:23.560 There's some really good there's some really good people on 0:11:23.600 --> 0:11:25.640 the short side out there that are doing great work. 0:11:25.679 --> 0:11:28.400 And the folks at Hindenburg I'm a big fan of 0:11:28.440 --> 0:11:31.560 and others, and you know, we never did the short 0:11:31.600 --> 0:11:36.080 activist model, but the work they're doing is is I think, 0:11:36.320 --> 0:11:39.080 you know, the fundamental work, which is what I look 0:11:39.120 --> 0:11:42.520 at when I look at people's work, is really first rate. 0:11:42.840 --> 0:11:45.439 And so it's out there. And I've called this the 0:11:45.520 --> 0:11:48.600 golden age of frauds. So there's just so many companies, 0:11:49.280 --> 0:11:52.560 so many companies now that are playing games that are 0:11:52.640 --> 0:11:54.520 that are trying and take advantage of investors. 0:11:54.520 --> 0:11:55.840 So we need short sellers. 0:11:55.480 --> 0:11:55.960 More than ever. 0:11:56.240 --> 0:11:58.160 We need short sellers more than ever. But the government's 0:11:58.160 --> 0:12:01.360 cracking down on all of them. Right This ongoing investigation 0:12:01.440 --> 0:12:04.960 into activist truth sellers has resulted in its first charge. 0:12:05.000 --> 0:12:08.200 I believe ants and funds and ants and advisors. We're 0:12:08.200 --> 0:12:11.680 accused of hiding payments to bearish researchers. This disclosure issue 0:12:11.679 --> 0:12:13.719 really disclosure is but it's something right. 0:12:13.760 --> 0:12:14.600 Yeah, I think. 0:12:14.480 --> 0:12:17.800 That that was the issue and we were never involved 0:12:17.800 --> 0:12:19.240 with that and we were never that was never part 0:12:19.320 --> 0:12:22.920 of our business model. But I think that the issue 0:12:22.960 --> 0:12:25.679 that the government was worried about in the SEC and 0:12:26.520 --> 0:12:32.160 possibly justice was disclosure. Were there people funding these things 0:12:32.200 --> 0:12:35.240 that was not disclosed that should have been I could 0:12:35.320 --> 0:12:39.480 argue that legally, but I think that was really what 0:12:39.520 --> 0:12:41.960 the issue is was where the third party is involved 0:12:41.960 --> 0:12:44.360 in funding this that should have been disclosed or not. 0:12:44.600 --> 0:12:44.800 Yeah. 0:12:44.840 --> 0:12:47.160 It goes back to that idea that there's a lot 0:12:47.200 --> 0:12:51.600 of ways to make money. Short Selling is complicated, it's expensive, 0:12:51.720 --> 0:12:53.840 and it's certainly in a risky way because your downside 0:12:54.120 --> 0:12:54.880 is unlimited. 0:12:55.360 --> 0:12:56.920 You shut down your hedge funds last year. 0:12:57.520 --> 0:12:59.720 Yet, given where we are in this market cycle, you say, 0:13:00.040 --> 0:13:01.880 in the golden age of fraud, this might be a 0:13:01.880 --> 0:13:05.520 good time for short strategies in terms of performance. Do 0:13:05.559 --> 0:13:07.680 you see it getting a little bit easier to raise 0:13:07.679 --> 0:13:09.960 capital from institutional investors. 0:13:10.080 --> 0:13:13.480 It's harder, Yeah, and that's part of why the opportunity 0:13:13.480 --> 0:13:16.880 set is there, nobody wants to do it, and so 0:13:16.960 --> 0:13:20.760 I think that that's what's so interesting. And of course 0:13:20.800 --> 0:13:23.520 you have the growth in the platform companies, the so 0:13:23.600 --> 0:13:26.680 called pod shops, so a lot of short selling is 0:13:26.720 --> 0:13:30.440 done through those vehicles in terms of dollar value. They've 0:13:30.480 --> 0:13:33.080 certainly supplanted the long short world in a major way, 0:13:33.640 --> 0:13:36.720 but with tighter risk models, so we see more volatility 0:13:36.760 --> 0:13:42.640 and sometimes because those platform companies keep short positions small 0:13:43.040 --> 0:13:44.839 and if they move against you a certain. 0:13:44.559 --> 0:13:46.560 Amount, you're out. But bybab the way that works on 0:13:46.559 --> 0:13:47.360 the alongside too. 0:13:47.840 --> 0:13:49.920 But do you think though that long short strategy might 0:13:49.960 --> 0:13:53.559 actually have some value at some point in time? Absolutely, 0:13:53.559 --> 0:13:55.040 because I mean we talk about this idea. I mean, 0:13:55.080 --> 0:13:56.720 you can't have a market that's all long. I mean, 0:13:56.760 --> 0:13:57.920 that doesn't work forever. 0:13:57.720 --> 0:13:58.160 Does it. 0:13:58.400 --> 0:13:58.959 I don't think so. 0:13:59.240 --> 0:14:02.480 Okay, I said, we have forty years of forty years 0:14:02.480 --> 0:14:06.680 of almost that of numbers that kind of proved that wrong. 0:14:06.920 --> 0:14:09.840 Yeah, pretty much, straight up market. 0:14:10.360 --> 0:14:13.319 So I think that that again, as long as you're 0:14:13.320 --> 0:14:16.280 doing your work and don't focus on the short term 0:14:16.400 --> 0:14:19.480 and understand that a dollar is not worth three dollars 0:14:20.240 --> 0:14:22.840 and you shouldn't pay three dollars for it and if 0:14:22.880 --> 0:14:24.600 you can sell it for four dollars, it's maybe not 0:14:24.640 --> 0:14:27.360 a bad trade. I think they'll always be real. 0:14:27.600 --> 0:14:29.960 I was having a conversation with a long short manager 0:14:29.960 --> 0:14:31.800 and she kind of pointed out this idea of, at 0:14:31.880 --> 0:14:35.080 least in her mind, that price transparency or price discovery 0:14:35.200 --> 0:14:37.400 was not as easy as it used to be, so 0:14:37.440 --> 0:14:38.000 that made the. 0:14:37.920 --> 0:14:39.320 Strategy a little bit harder. 0:14:39.640 --> 0:14:42.000 And she pens some of that on the distortions coming 0:14:42.200 --> 0:14:44.960 out of the private markets, the idea that private markets 0:14:45.000 --> 0:14:47.160 have stolen a lot of thunder from public markets. You 0:14:47.160 --> 0:14:50.040 don't necessarily have the same balance or equilibrium in private 0:14:50.040 --> 0:14:52.440 markets in public markets that you had in the past. 0:14:53.560 --> 0:14:54.600 That's an interesting theory. 0:14:55.840 --> 0:14:59.240 I have not considered that private markets would impact the 0:14:59.240 --> 0:15:02.040 short side that way. I mean, I think the private markets, 0:15:02.080 --> 0:15:04.240 the growth in private markets has had a lot more 0:15:04.280 --> 0:15:07.640 to do with capital raising, particularly in the public market arena, 0:15:07.640 --> 0:15:10.680 including long short. You know, I sit on a couple 0:15:10.680 --> 0:15:13.280 of investment committees and we've been doing nothing but redeeming 0:15:13.320 --> 0:15:16.720 hedge funds and giving it to private private equity, private credit, 0:15:17.880 --> 0:15:20.280 And in my own view, I think that's not the 0:15:20.360 --> 0:15:23.320 right thing to be doing right now. I think that 0:15:23.680 --> 0:15:25.880 wherever you see a flood of money. For years and 0:15:25.920 --> 0:15:28.760 years and years, it's been pretty much you're not going 0:15:28.800 --> 0:15:30.760 to get the outsized returns that you had ten or 0:15:30.800 --> 0:15:31.480 twenty years ago. 0:15:31.640 --> 0:15:33.480 And let's circle back to individual stocks. 0:15:33.800 --> 0:15:35.320 Why don't you like solar stocks? 0:15:35.840 --> 0:15:36.880 I don't like solar stocks. 0:15:36.880 --> 0:15:39.240 I don't like the residential solar stocks because the business 0:15:39.240 --> 0:15:42.760 model doesn't work no matter what rates do. The concept 0:15:42.760 --> 0:15:45.760 of putting up panels on someone's roof and then leasing 0:15:45.800 --> 0:15:47.960 it from that company. If you just look at the 0:15:48.040 --> 0:15:50.760 numbers of the companies that are in that business, like 0:15:50.880 --> 0:15:54.520 sun Roun or Sonova or whatever, they're just they bleed 0:15:54.560 --> 0:15:59.120 cash and they use accounting constructs to tell you why 0:15:59.280 --> 0:16:02.680 it's really and meanwhile they're just burning hundreds of millions 0:16:02.720 --> 0:16:04.280 of dollars per quarter and have. 0:16:04.320 --> 0:16:05.920 Been for years and years and years. 0:16:06.400 --> 0:16:09.840 And I think that that that is uh is just 0:16:09.880 --> 0:16:11.120 simply an accounting story. 0:16:11.360 --> 0:16:15.360 What else don't you like? I mean like it's it's 0:16:15.360 --> 0:16:16.920 interesting to get your take because all our thoughts have 0:16:17.000 --> 0:16:17.320 been on a. 0:16:17.320 --> 0:16:19.720 Tear the last last couple of weeks. 0:16:19.800 --> 0:16:22.320 Yeah, yeah, they were actually beating new loads just last month, 0:16:23.720 --> 0:16:27.360 and so they bounced because of the view on rates. 0:16:28.040 --> 0:16:30.040 Well, we're not going to talk about the Tesla shareholders. 0:16:30.560 --> 0:16:33.840 Yeah, yeah, yeah. 0:16:35.040 --> 0:16:36.080 You're taken away my father. 0:16:36.280 --> 0:16:38.720 I asked you that behind that. 0:16:41.280 --> 0:16:43.760 We don't like the data centers, and haven't We've been 0:16:43.760 --> 0:16:46.040 public on that for for a long long time. I'm 0:16:46.120 --> 0:16:49.760 puzzled by the number of restaurants that are trading at 0:16:49.880 --> 0:16:56.360 absolutely insane valuations in industry that you know ultimately is 0:16:56.520 --> 0:17:02.760 uh is not a secular growth business. You can find 0:17:03.680 --> 0:17:06.800 stocks of fifty times cash flow and one hundred times earnings, 0:17:07.280 --> 0:17:10.480 and there's lots of companies that are kind of mundane 0:17:10.920 --> 0:17:14.560 that have been bought by growth managers, where the returns 0:17:14.600 --> 0:17:17.399 on capital low, that are treading at fifty sixty, seventy 0:17:17.400 --> 0:17:20.720 eighty times earnings, and you can find them. There are 0:17:20.720 --> 0:17:23.359 a lot of them, and so it's a it's a 0:17:23.359 --> 0:17:26.479 pretty target rich environment right now if you're doing fundamental work. 0:17:26.440 --> 0:17:28.920 And I'm sorry, did he answer the question on that flow? 0:17:29.160 --> 0:17:29.320 No? 0:17:30.840 --> 0:17:34.920 Yeah, Well, Tesla is holding into annual general meeting tomorrow, 0:17:35.080 --> 0:17:38.160 and you were famously short Tesla at a time when 0:17:38.200 --> 0:17:39.760 it basically defied gravity. 0:17:39.800 --> 0:17:41.320 We know that shareholders are going to be. 0:17:41.320 --> 0:17:44.840 Voting on Elon Musk's fifty six billion dollar pay package, 0:17:44.880 --> 0:17:46.800 not from this year, not from last year, but from 0:17:46.840 --> 0:17:47.680 a couple of years ago. 0:17:48.200 --> 0:17:50.440 What is that emblematic of? What does that tell you? 0:17:50.920 --> 0:17:54.560 Well, first of all, it might shock some of your viewers, 0:17:54.800 --> 0:17:57.600 but I tweeted out a week ago, I actually think 0:17:57.840 --> 0:18:01.320 that people should vote for the package. Really yeah, I think, 0:18:01.680 --> 0:18:04.879 even though I'm a bear on Tesla, I think a 0:18:04.920 --> 0:18:06.680 deal is a deal, even if it's a bad deal 0:18:07.160 --> 0:18:11.680 and they agreed to it. Now the judge has made 0:18:11.880 --> 0:18:14.480 even if they voted in again, that doesn't mean it 0:18:14.520 --> 0:18:15.000 may happen. 0:18:15.600 --> 0:18:17.800 It may not obviate the ruling. 0:18:18.000 --> 0:18:20.280 But I do think a deal is a deal and 0:18:21.440 --> 0:18:24.359 that if you voted for it, that he should get it. 0:18:24.600 --> 0:18:27.760 Having said that, you know, the value of the package. 0:18:27.359 --> 0:18:29.679 Is in excess of all the retained earnings of the 0:18:29.720 --> 0:18:33.480 company's ever made, even post package. And the one thing 0:18:33.840 --> 0:18:36.600 I mentioned I pointed out today, the one thing I've 0:18:36.640 --> 0:18:38.560 been scratching my head on and going back and looking 0:18:38.600 --> 0:18:40.400 at this package from twenty eighteen. 0:18:42.359 --> 0:18:43.240 Was that the. 0:18:45.680 --> 0:18:49.040 Deal was continued on hitting certain numbers and the stock 0:18:49.080 --> 0:18:50.440 price hitting certain values. 0:18:52.520 --> 0:18:53.639 But what they didn't. 0:18:53.400 --> 0:18:57.399 Do was make each trunch the equity the new Equity 0:18:57.440 --> 0:19:00.920 Award that he got for doing that right price of 0:19:00.960 --> 0:19:04.560 that option at the stock price at that moment. All 0:19:05.560 --> 0:19:08.000 of the equity for all of the tronchas was set 0:19:08.000 --> 0:19:12.040