WEBVTT - JETSANITY: How a Obscure Airline ETF Became an Overnight Sensation

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<v Speaker 1>Welcome to trillions. I'm Joel Weber and I'm Eric bel

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<v Speaker 1>Tunis Eric, I've lost track of time. Has it been

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<v Speaker 1>two months? Three months? What day of the week is that?

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<v Speaker 1>I don't even know? It's Tuesday. I know this because

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<v Speaker 1>I'm actually going away for a couple of days on Thursday.

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<v Speaker 1>So now I've got back into some degree of a calendar. Oh,

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<v Speaker 1>you've got like a countdown. You're you're going to travel somewhere. Yeah, man,

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<v Speaker 1>I'm I'm I'm I'm risking it. My dad lives in

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<v Speaker 1>the Panhandle of Florida, Miramar Beach. They opened the beaches

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<v Speaker 1>there a couple of weeks ago. He's lives by himself.

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<v Speaker 1>He's been going crazy. So I'm gonna bring my oldest son.

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<v Speaker 1>We're gonna fly down on on tickets that were a

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<v Speaker 1>third of the normal cost and then use that extra

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<v Speaker 1>budget to you know, eat like kings down there, go

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<v Speaker 1>to the beach. It's gonna be nice and hot and warm.

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<v Speaker 1>To be careful when we, you know, leave the house

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<v Speaker 1>through the you know, the airport and the airplane. But

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<v Speaker 1>we have masks, and you're braver than I am, my friend,

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<v Speaker 1>So you're going to the beach. And you're taking a

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<v Speaker 1>flight to Florida, which brings us to the theme of

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<v Speaker 1>this episode of Trains. Um, we're gonna speak with Frank Holmes,

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<v Speaker 1>the CEO of the E t F Jets, which I'm

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<v Speaker 1>really excited about because this E t F right now,

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<v Speaker 1>Eric's just there seems to be a ton of interest

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<v Speaker 1>in it, right yeah, you know, Um, I'm calling it

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<v Speaker 1>Jet Sanity because it reminds me of Lynn Sanity. Remember

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<v Speaker 1>that little point guard Asian point guard from like two

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<v Speaker 1>thousand twelve who came off the bench and like schooled

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<v Speaker 1>Kobe Bryant and like took over New York City for

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<v Speaker 1>about two months. This is yeah, this is the same thing,

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<v Speaker 1>except for an E T F. Let me give you

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<v Speaker 1>some numbers on jets. Jets went like years with a

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<v Speaker 1>flow here and there over the course of a year.

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<v Speaker 1>Then it goes down like right during the crisis. Since

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<v Speaker 1>it went down, it's attracted a lot of people looking

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<v Speaker 1>to play a rebound. But here's the stats that I'm

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<v Speaker 1>just so blown away by. It's taken in flows for

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<v Speaker 1>forty eight forty nine straight days, which is unheard of.

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<v Speaker 1>Vanguard does that on occasion, and that's Vanguard. This is

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<v Speaker 1>a theme et F. It's also taken in six and

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<v Speaker 1>sixty three million. This fund had maybe twenty million UM

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<v Speaker 1>three months ago, and so we compared it to other

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<v Speaker 1>theme ETFs when they quote caught fire like Robo, m

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<v Speaker 1>J and Hack, and those did nothing. They couldn't even

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<v Speaker 1>touch this amount of intensity in terms of a theme

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<v Speaker 1>ETF sort of like capturing the moment. So there's that,

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<v Speaker 1>and then there's the issue of all the people buying it.

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<v Speaker 1>A lot of them are likely retail investors who are

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<v Speaker 1>taken the other side of a trade for more and Buffett.

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<v Speaker 1>So you've got this David and Goliath trade going on,

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<v Speaker 1>Buffetts selling airlines, and you've got a lot of retails

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<v Speaker 1>saying no, it's to go up. And who will win

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<v Speaker 1>we don't know, but it's fascinating story. So I'm looking

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<v Speaker 1>at the Jets share price and it's basically been flat

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<v Speaker 1>until early February, and then all of a sudden it

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<v Speaker 1>starts to come down, and by March it has plunged

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<v Speaker 1>from about just around thirty dollars UM in the middle

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<v Speaker 1>of February to about twelve dollars in mid March. It's

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<v Speaker 1>sort of recovered and then has kind of come back

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<v Speaker 1>down and now it's aid about twelve dollars. That is

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<v Speaker 1>an epic, epic change, this time on trillions. Jet Sanity, Frank,

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<v Speaker 1>welcome to trillions. I gotta ask you, this has been

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<v Speaker 1>um clearly a weird stretch in the history of the world.

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<v Speaker 1>And you know you happen to be sort of like

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<v Speaker 1>lying in a cockpit of a plane that your business

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<v Speaker 1>model has been really disrupted. Here when did you get

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<v Speaker 1>a sense of how bad this might get? Well, you know,

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<v Speaker 1>I started this at this jet c t F five

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<v Speaker 1>years ago and that was almost where the where I

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<v Speaker 1>launched it with a flow started coming in massively and

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<v Speaker 1>it went nowhere. We went to a hundred millions shortly

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<v Speaker 1>right after we launched it, and then it went nowhere, sideways,

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<v Speaker 1>up and down. And it's interesting because you mentioned hack.

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<v Speaker 1>You know, Hack didn't really grow until Sony was hacked

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<v Speaker 1>and all of a sudden it woke up. And the

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<v Speaker 1>same thing happens with with the airline ETF. And we've

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<v Speaker 1>been doing webcasts now four times a year to r

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<v Speaker 1>A S only and family offices across the nation. We've

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<v Speaker 1>done about twenty of them over the past five years,

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<v Speaker 1>and it seems that this audience and specially heads funds

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<v Speaker 1>that play the airline industry, came into it. We know

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<v Speaker 1>that we've had a lot of small heads funds that

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<v Speaker 1>will go along the e t F to short the

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<v Speaker 1>stocks they don't like in the airline industry, and they

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<v Speaker 1>play it this way as they're sort of a pear's trade.

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<v Speaker 1>But it really accelerated as the fun fell. It's just

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<v Speaker 1>like hack. Hack had to get solely to get hacked

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<v Speaker 1>to all of a sudden being become aware, and that's

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<v Speaker 1>it took place here. When we analyze thematic e t

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<v Speaker 1>F s, we always say they need a shiny object

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<v Speaker 1>moment to get going, and you're right. Hack was the

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<v Speaker 1>sony hack. But the thing was that boosted cybersecurity stocks.

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<v Speaker 1>Same thing with Robo and MJ it was when they

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<v Speaker 1>went up. This is the rare case where the shiny

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<v Speaker 1>object was in the decline. And I'm guessing it's the

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<v Speaker 1>pe ratio. I think at one point the pe of

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<v Speaker 1>jets was like four or five. I think I looked

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<v Speaker 1>one time the only thing lower was Nigeria and the

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<v Speaker 1>coal industry. How much of the people are retail bottom callers?

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<v Speaker 1>They do you find versus sort of the hedge funds

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<v Speaker 1>at the beginning was predominantly heads funds that came in.

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<v Speaker 1>That's what we've we've found, uh, And what we would

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<v Speaker 1>hear from them is that they've done this research of

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<v Speaker 1>how long did it take for the airline industry to

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<v Speaker 1>rebound after the tech bubble after nine eleven, after Stars

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<v Speaker 1>after two thousand and eight nine That trough to peak,

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<v Speaker 1>Uh took from eight months to eighteen months, and was

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<v Speaker 1>from eight to a hundred percent return on your money.

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<v Speaker 1>And they were the first coming in looking for that bounce.

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<v Speaker 1>So I gotta ask because when you know, the last

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<v Speaker 1>time something that's significant really happened to the airline industry

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<v Speaker 1>was September eleventh, So here we are almost twenty years later.

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<v Speaker 1>Airlines clearly came back after that. UM, you had a

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<v Speaker 1>lot of institutional investors, including really noteworthy ones like the

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<v Speaker 1>Warren Buffets of the world after the financial crisis, who

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<v Speaker 1>came in and and you know, doubled down and made

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<v Speaker 1>a ton of money. But like the outlook for airlines

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<v Speaker 1>right now, like we could just be looking at a

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<v Speaker 1>lot of video conferences going forward and business travel that

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<v Speaker 1>never comes back. What's your outlook for the airline industry

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<v Speaker 1>from where you're sitting. So what is different is that

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<v Speaker 1>the Beltway agencies and party what they like to call

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<v Speaker 1>it sometimes and the and the administration are very cognizant

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<v Speaker 1>uh being slow to support the airline industry. The FA

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<v Speaker 1>came out and said one in fifteen jobs are related

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<v Speaker 1>to the airline industry. So it has a huge multiplying

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<v Speaker 1>effect in his crucial for the hotels are turned around.

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<v Speaker 1>Right now in Vegas, there's two hundred thousand empty rooms,

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<v Speaker 1>three thousand people have lost their jobs. Uh, something's got

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<v Speaker 1>to come back to get this multiplying effect of the economy.

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<v Speaker 1>So there's a much greater focus on revising the airline

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<v Speaker 1>industry based on previous studies. So that's the big game

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<v Speaker 1>changer here. And you saw from the cares Act how

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<v Speaker 1>fast they responded, even when the negotiations were quick, get

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<v Speaker 1>the money in maintained and get this industry turned around.

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<v Speaker 1>So I think that that's very positive, a constructive. The

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<v Speaker 1>other thing that's really interesting for me is is the

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<v Speaker 1>t s A publishes every day how many people they

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<v Speaker 1>for the four airports they tracked, UH people they've screened,

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<v Speaker 1>and that bottomed in April, we were almost doubled a

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<v Speaker 1>number of people flying every day, and and there's new

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<v Speaker 1>indicators coming out. And the other thing we've noticed is

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<v Speaker 1>Google trends, so looking for people looking for hotels and

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<v Speaker 1>looking for travel. That's picked up, and it's really searched

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<v Speaker 1>in Asia, which is sort of bottomed first. And I

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<v Speaker 1>think as we come back into this economy, we're going

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<v Speaker 1>to see more and more searches and and the sentiment,

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<v Speaker 1>the quant funds that you sentiment indicators are looking at

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<v Speaker 1>these two factors and they're plowing into it. That's what

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<v Speaker 1>we hear and what we see. Well, what's interesting to me.

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<v Speaker 1>You look at the holdings of this just so people listening, No,

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<v Speaker 1>it's in it. It's pretty obvious. Southwest Airlines, American Airlines,

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<v Speaker 1>Delta Airlines, United Airlines. Then you get down to things

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<v Speaker 1>like Spirit Airlines, um Quantas, So it's global, but it's

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<v Speaker 1>not just a market cap waited plane vanilla or just

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<v Speaker 1>simplistic uh construction. There's a couple of wirings in the

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<v Speaker 1>design of this e t F talk about how the

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<v Speaker 1>actual process works to put these holdings in there. Although

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<v Speaker 1>they seem obvious, it might not be exactly what people think. Right, Well,

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<v Speaker 1>thank you for that opportunity, because there was thousands of

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<v Speaker 1>hours put into this UH and to understand it is

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<v Speaker 1>it um. What we looked at is that there's lots

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<v Speaker 1>of bull of Zilian currencies and they can really be

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<v Speaker 1>a big drag or head wind or tail winds your performance.

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<v Speaker 1>So when we created this, we said, okay, what are

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<v Speaker 1>the most five most important factors. And each night it

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<v Speaker 1>would take eight hours ago and test a factor. And

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<v Speaker 1>then we tested on two systems. We tested on fact

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<v Speaker 1>Set and we tested on Bloomberg to go back over

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<v Speaker 1>ten years of data that see the robustness of which

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<v Speaker 1>factor is UH deals well with rise economy, following economy, kruptcies, etcetera.

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<v Speaker 1>So we distilled them down to five key factors. And

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<v Speaker 1>then we took a look at waitings and we found

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<v Speaker 1>that the four big guys that is American Airlines, Delta, H, Southwest,

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<v Speaker 1>and United they capture about eighty of the traffic UH.

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<v Speaker 1>And so the portfolio because of limitations of legatory limitations,

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<v Speaker 1>we said, have we maximized that? And we have four names.

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<v Speaker 1>Those names twelve percent each and each quarter we re

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<v Speaker 1>calibrate those. So that's forty eight percent of the portfolio

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<v Speaker 1>is really capturing the bulk of domestic travel. Now, when

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<v Speaker 1>we went to foreign names and went outside of that

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<v Speaker 1>like uh IS, we went one for twenty names, and

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<v Speaker 1>that mitigated this currency volatility and allows us to catch

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<v Speaker 1>those stocks that have the best factors like highest castle

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<v Speaker 1>returns to investor capital growth and revue last quarter or

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<v Speaker 1>four quarters gulth and castle last quo four quarters UH

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<v Speaker 1>and other factors they look at for traffic flow of

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<v Speaker 1>the humory passenger seats, who have et cetera UH, and

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<v Speaker 1>in between there in between those twenty names we have

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<v Speaker 1>that are foreign and the four big names, we have

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<v Speaker 1>a small group of names that are that are airports.

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<v Speaker 1>They can be airports, they can be Boeing Airbus UH,

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<v Speaker 1>they can be manufacturers, and that's where Hawaiian Airlines, Messa Airlines,

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<v Speaker 1>Spirit all these other sort of smaller airlines would show up.

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<v Speaker 1>But it's more of a consolidated name of those are

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<v Speaker 1>the most attractive, and each quarter we kicked them out

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<v Speaker 1>and we bring them in if they don't have the

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<v Speaker 1>highest cash board returns on invest in capital, if they're

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<v Speaker 1>not showing revue growing. So it's a dynamic approach each

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<v Speaker 1>quarter except for the big four names. So can you

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<v Speaker 1>walk us through sort of what happened this last rebalance,

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<v Speaker 1>because obviously that's in the middle of all of this,

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<v Speaker 1>like what what basically what opportunities did you guys see

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<v Speaker 1>and how did you really allocate things? Then give you

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<v Speaker 1>a really interesting part was that it was nine months

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<v Speaker 1>ago that Boeing was kicked out. Uh, and then all

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<v Speaker 1>the problems started coming. And you can see that showing

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<v Speaker 1>up in this this sort of quant approach quantum they

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<v Speaker 1>call it plunt of mentals, a combination of a quant

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<v Speaker 1>approach of factors and fundamental analysis um. And and so

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<v Speaker 1>we we see that rotation, and we see that we

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<v Speaker 1>own Messa populated. Then you have Hawaiian Airlines populated, Alaska populated.

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<v Speaker 1>How this quarter will take place? Uh, the March numbers

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<v Speaker 1>as they're slowly coming in. For the smaller names, we

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<v Speaker 1>don't have them all. All the financials are not published

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<v Speaker 1>to be able to give you how that change is

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<v Speaker 1>gonna happen this quarter. But there will be rotations, and

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<v Speaker 1>probably some of the biggest rotations will take outside of

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<v Speaker 1>the US where we have the twenty names. Remember this

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<v Speaker 1>is a this is a portfolio thirty three names, four

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<v Speaker 1>or forty eight percent and twenty or one. So it's

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<v Speaker 1>a very compressed portfolio. And our bogie is to beat

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<v Speaker 1>the New York Stock has change Global Airline Index. And

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<v Speaker 1>that's what we've done with this model, uh since we

0:13:46.360 --> 0:13:52.000
<v Speaker 1>launched it. And you know, let's obviously diversifying. You you

0:13:52.080 --> 0:13:54.240
<v Speaker 1>limit your upside, but you limit your downside, right, And

0:13:54.240 --> 0:13:57.320
<v Speaker 1>I think that's part of what people are interested in

0:13:57.360 --> 0:14:00.040
<v Speaker 1>when they buy an ETF over a single stock of

0:14:00.160 --> 0:14:03.199
<v Speaker 1>to do research on every single company UM. One question

0:14:03.240 --> 0:14:05.320
<v Speaker 1>I had just going back to the outlook on airlines,

0:14:05.400 --> 0:14:08.400
<v Speaker 1>is the price to earnings ratio on this is currently

0:14:08.480 --> 0:14:13.760
<v Speaker 1>nine and the price to earnings UM ratio for the

0:14:14.000 --> 0:14:19.880
<v Speaker 1>S and P is four. Right, the airlines do do they?

0:14:20.040 --> 0:14:23.480
<v Speaker 1>Do they need to even rebound fully, like let's say

0:14:23.520 --> 0:14:27.360
<v Speaker 1>they rebound halfway or six of the way. How much

0:14:27.600 --> 0:14:32.800
<v Speaker 1>could that validate the bottom calling or will therell be

0:14:32.880 --> 0:14:36.720
<v Speaker 1>bankruptcies which will take down the winners? How does that

0:14:36.720 --> 0:14:39.280
<v Speaker 1>play out if say we go to fifty or six

0:14:39.720 --> 0:14:44.480
<v Speaker 1>in the next two years not a hundred. I think

0:14:44.520 --> 0:14:48.080
<v Speaker 1>that the difference is is that there's such a focus

0:14:48.200 --> 0:14:52.480
<v Speaker 1>by the government both politicians and the agencies to get

0:14:52.520 --> 0:14:57.479
<v Speaker 1>this industry turned around for job creation and the multiplying

0:14:57.480 --> 0:15:00.640
<v Speaker 1>effect from jobs from the airline industry. I've never seen

0:15:00.680 --> 0:15:04.200
<v Speaker 1>it before to this degree. Um, so I think you're

0:15:04.200 --> 0:15:07.840
<v Speaker 1>going to get a higher bet, higher percentage of survivors.

0:15:08.360 --> 0:15:12.160
<v Speaker 1>One that's really that's sort of that the dust was Avianca.

0:15:12.720 --> 0:15:17.600
<v Speaker 1>Arianca uh will hurt United because of debt lendings and

0:15:18.240 --> 0:15:22.480
<v Speaker 1>clone dusting. But really Avianca couldn't get government support because

0:15:22.480 --> 0:15:26.680
<v Speaker 1>after they restructured their company over fifteen years ago, um,

0:15:26.840 --> 0:15:29.800
<v Speaker 1>they moved at the Panama So the government of Columbia

0:15:29.920 --> 0:15:34.920
<v Speaker 1>wasn't going to support them because they don't pay corporate taxes.

0:15:34.920 --> 0:15:37.520
<v Speaker 1>Everything's went through Panama, and that was the case that

0:15:37.560 --> 0:15:40.440
<v Speaker 1>it couldn't get government support. But that's not here. Here

0:15:40.440 --> 0:15:43.320
<v Speaker 1>we've got to menace government support. And the same thing

0:15:43.640 --> 0:15:46.600
<v Speaker 1>is in Europe. And the other part that you're seeing

0:15:46.600 --> 0:15:49.040
<v Speaker 1>here is like today, I believe the said starts buying

0:15:50.880 --> 0:15:55.920
<v Speaker 1>corporate bond ets, so they're trying to create a stability.

0:15:56.320 --> 0:15:59.320
<v Speaker 1>They're trying to get those rates down because what's happened

0:16:00.040 --> 0:16:02.480
<v Speaker 1>in that market you don't really see like the tip

0:16:02.520 --> 0:16:05.320
<v Speaker 1>of the iceberg. Oh, the ten year government bonds down

0:16:05.320 --> 0:16:09.760
<v Speaker 1>to sixty basis points. Money is cheap, Actually it's not. Um.

0:16:09.880 --> 0:16:14.520
<v Speaker 1>The cost of mezzanine funding shot from about a four

0:16:14.560 --> 0:16:19.840
<v Speaker 1>percent role to eight to eleven percent role. Every heads

0:16:19.880 --> 0:16:22.440
<v Speaker 1>fund that's in that space, every special lender in that

0:16:22.520 --> 0:16:26.320
<v Speaker 1>space automatic, it's just ratchet it up with all these covenants.

0:16:26.360 --> 0:16:30.320
<v Speaker 1>For two year money is eight percent, it's not thirty

0:16:30.360 --> 0:16:33.720
<v Speaker 1>basis points. And so the government I think is coming

0:16:33.720 --> 0:16:37.280
<v Speaker 1>in to try to stabilize corporate lending by buying these

0:16:37.320 --> 0:16:41.640
<v Speaker 1>A T s. That's very beneficial to the airline industry. Also.

0:16:43.360 --> 0:16:45.400
<v Speaker 1>So let me let me ask a slightly different way

0:16:45.440 --> 0:16:47.800
<v Speaker 1>than what do you think the worst case scenario might

0:16:47.840 --> 0:16:52.000
<v Speaker 1>be for jets? Are you thinking okay? So engage in

0:16:52.040 --> 0:16:56.240
<v Speaker 1>the bounce. The bounce has historically been from eight to

0:16:56.280 --> 0:17:00.440
<v Speaker 1>a hundred and so if you're embarrassed, really, Barris, we

0:17:00.480 --> 0:17:01.920
<v Speaker 1>think it is going to be a short lived one.

0:17:02.400 --> 0:17:07.240
<v Speaker 1>Or are you then you're gonna get sun from the lows? Uh?

0:17:07.359 --> 0:17:09.720
<v Speaker 1>If they do tork it up that year from now,

0:17:09.880 --> 0:17:14.639
<v Speaker 1>we could see doubles. You've you've you mentioned how hedge

0:17:14.640 --> 0:17:17.640
<v Speaker 1>funds were in early and looking at holders, I can

0:17:17.640 --> 0:17:20.400
<v Speaker 1>see that it was like there's a Canner Fitzgerald position

0:17:20.520 --> 0:17:24.440
<v Speaker 1>and invest Net Asset Management uh ubs is in their

0:17:24.560 --> 0:17:29.359
<v Speaker 1>degreen capital management. Those are you know, people who tend

0:17:29.400 --> 0:17:31.479
<v Speaker 1>to know what they're doing when they're getting in here,

0:17:31.520 --> 0:17:34.720
<v Speaker 1>and you know, can stomach volatility. Eric also points out

0:17:34.760 --> 0:17:37.880
<v Speaker 1>that number of robin Hood investors over the last two

0:17:37.920 --> 0:17:43.280
<v Speaker 1>months went from three hundred to twenty thousand. That's pretty significant,

0:17:43.960 --> 0:17:46.560
<v Speaker 1>wondering what it's like to suddenly have that many retail

0:17:46.600 --> 0:17:52.480
<v Speaker 1>investors show up well, as I think it would take

0:17:52.520 --> 0:17:55.359
<v Speaker 1>a look at an ecosystem and you've got to have

0:17:55.720 --> 0:17:59.680
<v Speaker 1>minnows with the tunas and these sharks and there's whales.

0:18:00.080 --> 0:18:03.320
<v Speaker 1>You need a complete ecosystem and uh and it's so

0:18:03.359 --> 0:18:05.560
<v Speaker 1>good to see that you have a bunch of minnows

0:18:05.600 --> 0:18:10.000
<v Speaker 1>because it does create a real dynamic market so that

0:18:10.040 --> 0:18:12.760
<v Speaker 1>you can see the volume trades millions of shares a day.

0:18:13.080 --> 0:18:17.560
<v Speaker 1>So I'm really thrilled about that UM and I think

0:18:17.600 --> 0:18:21.520
<v Speaker 1>that will continue. And I think that the idea that

0:18:21.600 --> 0:18:24.520
<v Speaker 1>more and these younger investors that are coming in through

0:18:24.600 --> 0:18:28.120
<v Speaker 1>Robin they're much more quick to take a look at

0:18:28.600 --> 0:18:30.480
<v Speaker 1>is the t S a data that comes with every

0:18:30.560 --> 0:18:34.720
<v Speaker 1>day tracking that putting moving averages on that data, or

0:18:34.720 --> 0:18:37.439
<v Speaker 1>look at Google trends, uh to all of a sudden

0:18:37.560 --> 0:18:40.240
<v Speaker 1>go along and trade in and out around those positions.

0:18:40.280 --> 0:18:43.480
<v Speaker 1>So I think it's great because it will attract bigger

0:18:43.520 --> 0:18:47.560
<v Speaker 1>institution money. I spend a lot of time tracking the

0:18:47.560 --> 0:18:50.280
<v Speaker 1>E T F industry, the winners and losers. To me,

0:18:50.320 --> 0:18:52.960
<v Speaker 1>it reminds me of Silicon Valley. Um, there's a lot

0:18:52.960 --> 0:18:56.000
<v Speaker 1>of innovation and but a lot of failure. Just talk

0:18:56.080 --> 0:18:58.800
<v Speaker 1>about take us into what it's just like to have

0:18:58.880 --> 0:19:02.479
<v Speaker 1>a hit, um, especially when it looked like, you know,

0:19:02.520 --> 0:19:05.720
<v Speaker 1>you go months and months with your literally an oblivion. Yeah.

0:19:05.840 --> 0:19:07.760
<v Speaker 1>I looked at it. It's like you're bobbing along and

0:19:07.800 --> 0:19:11.679
<v Speaker 1>it's averaging dollars a share, and then all of a sudden,

0:19:11.680 --> 0:19:14.840
<v Speaker 1>you know, you know, you have the pandemic hit. Yeah.

0:19:14.880 --> 0:19:17.199
<v Speaker 1>And once you get this kind of liquidity, even if

0:19:17.240 --> 0:19:19.240
<v Speaker 1>it goes up and some people take profits in your

0:19:19.240 --> 0:19:23.320
<v Speaker 1>assets maybe go down to three million, you've now become

0:19:23.960 --> 0:19:26.240
<v Speaker 1>the go to airline spots. So you're you've kind of

0:19:26.280 --> 0:19:30.160
<v Speaker 1>made it. But just talk about that catching fire. What's

0:19:30.160 --> 0:19:34.439
<v Speaker 1>that like to see inflows every day after months and

0:19:34.480 --> 0:19:36.480
<v Speaker 1>months where you saw maybe one day of inflows in

0:19:36.520 --> 0:19:39.400
<v Speaker 1>like a year and a half. Oh, it's a wonderful

0:19:39.440 --> 0:19:43.159
<v Speaker 1>feeling because I'm not have that elation since back in

0:19:43.200 --> 0:19:46.320
<v Speaker 1>two thousand and six, where we were getting fifty million

0:19:46.359 --> 0:19:49.880
<v Speaker 1>a day into our gold neutral funds. I went out

0:19:50.400 --> 0:19:52.240
<v Speaker 1>and say, okay, I've got to get into the ETS.

0:19:52.359 --> 0:19:55.240
<v Speaker 1>I have to get out of mutual funds, have to diversify.

0:19:55.400 --> 0:19:59.000
<v Speaker 1>And I picked an industry because I noticed Eric that

0:19:59.200 --> 0:20:03.160
<v Speaker 1>my flights were all of a sudden limited by you know,

0:20:03.320 --> 0:20:06.720
<v Speaker 1>five years ago, actually starting with ten years ago, the

0:20:06.840 --> 0:20:09.680
<v Speaker 1>options to fly had dropped, the cost of a ticket

0:20:09.680 --> 0:20:12.480
<v Speaker 1>went up. So I said, how do I make money

0:20:12.480 --> 0:20:14.159
<v Speaker 1>with this and launch a product? And there was no

0:20:14.200 --> 0:20:19.359
<v Speaker 1>other airline ETS, so launching it and and nurturing it along,

0:20:19.720 --> 0:20:21.840
<v Speaker 1>you know, it was. It was lots of love and

0:20:21.920 --> 0:20:25.399
<v Speaker 1>nurturing it because knowing uh, it took a couple of

0:20:25.440 --> 0:20:27.639
<v Speaker 1>years and all of a sudden, buffet starts recognizing the

0:20:27.680 --> 0:20:31.960
<v Speaker 1>high returns of investor capital. I think that the economy turns,

0:20:32.160 --> 0:20:34.840
<v Speaker 1>he comes back in. That's what I think it will

0:20:34.880 --> 0:20:38.960
<v Speaker 1>be the game changer. So much of UM the airline's

0:20:39.400 --> 0:20:42.640
<v Speaker 1>profitability has been rooted in sort of the business class

0:20:42.760 --> 0:20:47.879
<v Speaker 1>or first crap class traveler. If that uh segment doesn't

0:20:47.920 --> 0:20:51.679
<v Speaker 1>come back for a long time potentially because you know,

0:20:51.760 --> 0:20:54.000
<v Speaker 1>companies say, you know what, no more flying, you can

0:20:54.040 --> 0:20:56.800
<v Speaker 1>just do video conferencing. What does that mean for the

0:20:56.840 --> 0:21:00.600
<v Speaker 1>airline industry? Well, that would be tragic for the airline

0:21:00.600 --> 0:21:04.040
<v Speaker 1>indust is no doubt. But we we see the first

0:21:04.080 --> 0:21:07.359
<v Speaker 1>catering is the business. Business people can't wait to go

0:21:07.520 --> 0:21:10.359
<v Speaker 1>and sell and tell and you yell the products and sales.

0:21:10.440 --> 0:21:13.359
<v Speaker 1>You need to have sales. That's what drives revenue. And

0:21:13.880 --> 0:21:18.280
<v Speaker 1>human interaction is so important for that. And the Southwest airlines, Uh,

0:21:18.760 --> 0:21:22.680
<v Speaker 1>they see that something more, you know, more than a

0:21:22.800 --> 0:21:27.040
<v Speaker 1>third of their further passages or business, but sevent their

0:21:27.080 --> 0:21:30.400
<v Speaker 1>profits that have higher margins business. And we've we talked

0:21:30.400 --> 0:21:34.399
<v Speaker 1>about Warren Buffett earlier. What advice, Well, what would you

0:21:34.440 --> 0:21:39.400
<v Speaker 1>tell him if you could tell him anything right now? Oh,

0:21:39.760 --> 0:21:44.159
<v Speaker 1>I look up to this idol. I would just to

0:21:44.400 --> 0:21:46.520
<v Speaker 1>share with them that things will turn. He always talks

0:21:46.520 --> 0:21:50.919
<v Speaker 1>about betting on America UM and he's worried about ten

0:21:51.000 --> 0:21:54.440
<v Speaker 1>billion dollars. Then just go and plunk it down and

0:21:54.480 --> 0:21:57.760
<v Speaker 1>give lots of capital. Southwest it's it's by far, you know,

0:21:57.840 --> 0:22:00.159
<v Speaker 1>one of the best run airlines along with doubts up.

0:22:00.440 --> 0:22:03.080
<v Speaker 1>When you look at all these types of metrics, UM,

0:22:03.760 --> 0:22:07.080
<v Speaker 1>take them out. This is really fascinating. And you know,

0:22:07.200 --> 0:22:11.840
<v Speaker 1>congratulations on your against the odds hit product. UM. You

0:22:11.920 --> 0:22:14.840
<v Speaker 1>know it's only about one in every twenty or thirty

0:22:14.920 --> 0:22:18.080
<v Speaker 1>them ETFs gets to where you are with you know,

0:22:18.440 --> 0:22:21.320
<v Speaker 1>over a hundred couple hundred million, UM, but yours is

0:22:21.359 --> 0:22:24.560
<v Speaker 1>special because of the intensity. Again, it's reminds me of

0:22:24.720 --> 0:22:28.359
<v Speaker 1>it's the theme ETF equivalent of insanity. Frank, Frank Holmes,

0:22:28.440 --> 0:22:31.280
<v Speaker 1>thanks for joining us on Trillions. Thank you for the

0:22:31.320 --> 0:22:37.000
<v Speaker 1>opportunity sharing my story. Thanks for listening to Trillions. Until

0:22:37.080 --> 0:22:39.080
<v Speaker 1>next time. You can find us on the Bloomberg terminal,

0:22:39.359 --> 0:22:43.560
<v Speaker 1>Bloomberg dot com, Apple Podcast, Spotify, or wherever else you'd

0:22:43.560 --> 0:22:45.760
<v Speaker 1>like to listen. We'd love to hear from you. We're

0:22:45.800 --> 0:22:50.199
<v Speaker 1>on Twitter, I'm at Joel Weber Show, He's at Eric Baltunas,

0:22:50.520 --> 0:22:54.159
<v Speaker 1>and you can find Frank Holmes at Bulldog Holmes and

0:22:54.320 --> 0:22:59.199
<v Speaker 1>also at us Funds. This episode of Trillions was produced

0:22:59.200 --> 0:23:02.680
<v Speaker 1>by Magnus Hendrick. Francesca Levy is the head of Bloomberg

0:23:02.760 --> 0:23:03.840
<v Speaker 1>Podcast by