WEBVTT - Martial Law Declared in South Korea

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<v Speaker 2>A headline earlier with South Korea declares marshall law. However,

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<v Speaker 2>lawmakers have now voted to request the lifting of the

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<v Speaker 2>marshal law. The president says that marshal law those necessary

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<v Speaker 2>because of political deadlock over the budget. It's confusing, it's

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<v Speaker 2>moving the FX market. We want to get more for

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<v Speaker 2>you joining us now as Dan Daniel ten Kate joining us,

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<v Speaker 2>he's Asia ecogov Executive Editor, Economic Government Executive Editor. Hey Dan,

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<v Speaker 2>can you just help us understand the last twelve hours.

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<v Speaker 3>Yeah, I mean we're still trying to figure it out.

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<v Speaker 3>But essentially the President kind of stunned the nation with

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<v Speaker 3>this late night power grab where he declared martial law

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<v Speaker 3>for the first time in decades and careers a long

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<v Speaker 3>history of that and essentially banned all political activity, banned parliament, etc.

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<v Speaker 3>Claiming there were North Korea sympathizers that he had to

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<v Speaker 3>take down. In reality, he lost the parliament election in April,

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<v Speaker 3>and ever since then he hasn't had a majority in Parliament,

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<v Speaker 3>and the opposition party is doing what opposition parties do

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<v Speaker 3>around the world, which is, you know, try and block

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<v Speaker 3>his initiatives and push their own initiatives through. So he's

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<v Speaker 3>had a bit of divided government there. It sort of

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<v Speaker 3>came to a head with a vote on the budget.

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<v Speaker 3>They were demanding different things and then he just pulled

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<v Speaker 3>this move which even his own party is condemning at

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<v Speaker 3>the moment. So you had opposition and lawmakers race to Parliament.

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<v Speaker 3>They voted to ask him to withdraw the requests from

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<v Speaker 3>martial law. According to the constitution, that means he must

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<v Speaker 3>comply with the request. There is some legal ambiguity now

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<v Speaker 3>that they're trying to work through. We haven't heard from

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<v Speaker 3>him since parliament voted, so we're not sure if he'll comply.

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<v Speaker 3>But people are coming on the streets. There was some

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<v Speaker 3>clashes with police. Overall fairly calm on the streets that

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<v Speaker 3>we could see right now. But the big question now

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<v Speaker 3>is whether he'll comply and drop this whole thing.

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<v Speaker 4>I have to ask the question, Danielle, but who has

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<v Speaker 4>the support of the armed forces of South Korea.

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<v Speaker 3>Well, that's a big question right now. You know, it's

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<v Speaker 3>unclear if the army is going to back him to

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<v Speaker 3>the extent if you get mass protests, are they going

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<v Speaker 3>to you know, started shooting in the streets or something

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<v Speaker 3>like that. I mean, that's that's a big question. And

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<v Speaker 3>we've seen in Asia a couple other places where the

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<v Speaker 3>army has refused to do that. This year. Bangladesh in particular,

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<v Speaker 3>was was one. It doesn't appear like it's coming to

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<v Speaker 3>that yet. Well, we'll have to see with the next

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<v Speaker 3>and a few hours in days spring, but that that's

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<v Speaker 3>an open question.

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<v Speaker 2>So I guess okay, let's just pretend that the president says, okay,

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<v Speaker 2>you guys are repealing martial law. Fine, then what happens

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<v Speaker 2>because we're still clearly at a standstill, and clearly this

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<v Speaker 2>is a big negotiating tactic that the president was using

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<v Speaker 2>to get his agenda passed. So then what happens if

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<v Speaker 2>the government is in paralysis? What gives.

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<v Speaker 3>Well, I mean they were, they were negotiating about it,

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<v Speaker 3>so you know, his his his view of paralysis and

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<v Speaker 3>and what's actually taking place on the ground. There are

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<v Speaker 3>two different things it looks. So you know, there's already

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<v Speaker 3>people calling for him to be impeached after this. His

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<v Speaker 3>own ruling party is condemning his move. He's very unpopular anyway,

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<v Speaker 3>so you know, it's very likely we could see support

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<v Speaker 3>and tun and he could be impeached and turn out

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<v Speaker 3>of office that way. That looks the way it's going,

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<v Speaker 3>unless the army worked to back him and he worked

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<v Speaker 3>to kind of bend the constitution, which you know, so

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<v Speaker 3>far we haven't seen that. We're pariously on the brink

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<v Speaker 3>of that.

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<v Speaker 4>My gosh, all right, Daniel, thank you so much for

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<v Speaker 4>your reporting.

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<v Speaker 5>Really appreciate it.

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<v Speaker 4>Daniel ten Kate he is Asia Economic and Government Executive

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<v Speaker 4>editor for Bloomberg News.

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<v Speaker 5>He is based in Hong Kong.

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<v Speaker 4>For those of you that have a terminal, Top go

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<v Speaker 4>and you kind of get t live and boy, this

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<v Speaker 4>top Live blog is kind of that's where we're getting

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<v Speaker 4>all information, real up to date information from reporters on

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<v Speaker 4>the ground in that part of the world here, so

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<v Speaker 4>we will certainly keep you off the time date on that.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 2>All right, let's get the market. Then take here with

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<v Speaker 2>Nancy Tangler, CEO and CIO of Laffler Tangler Laffer Tangler Investments. Nancy,

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<v Speaker 2>I keep reading about how there's so much money in stocks.

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<v Speaker 2>We're still in a US exceptionalism kind of situation, but

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<v Speaker 2>no one wants to pull the trigger and like sell

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<v Speaker 2>and go somewhere else. What are you guys doing?

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<v Speaker 6>Yeah, well, we still like the US best best house

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<v Speaker 6>on the block in terms of earning's growth, in terms

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<v Speaker 6>of productivity, in terms of technological innovation, and the valuations

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<v Speaker 6>despite all the handwringing, are not super out of line.

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<v Speaker 6>I mean, you've got look at the equal weighted pees

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<v Speaker 6>eighteen times forward earnings. Historically it's average seventeen and a half.

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<v Speaker 6>So we keep going back to our analogy, which we've

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<v Speaker 6>been taking about for almost two years, which is this market,

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<v Speaker 6>this economy is analogous to the nineteen nineties, and we

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<v Speaker 6>see so many similarities. I mean, no analogy is perfect, right,

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<v Speaker 6>but we see so many analogies that line up, and

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<v Speaker 6>that was a time when you had, you know, an

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<v Speaker 6>inverted yield curve of labor shortage, geopolitical tension, you know

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<v Speaker 6>a number of the things that we have today as

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<v Speaker 6>well as high interest rates ten years between five and

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<v Speaker 6>eight percent, fed funds rate above five percent, yet you

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<v Speaker 6>had robust stock returns coexisting with that. So we still

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<v Speaker 6>think you want to be long this market for some time.

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<v Speaker 6>And you know, Europe has dramatically underperformed. The rest of

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<v Speaker 6>world has dramatically underperformed for the last twenty years, and

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<v Speaker 6>I think a lot of that has to do with technology.

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<v Speaker 5>So what is your technology call?

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<v Speaker 1>Here?

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<v Speaker 5>These days? We still like it.

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<v Speaker 6>I mean, you know, I think the MAG seven is

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<v Speaker 6>the MAG seven. But we are still exposed to the

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<v Speaker 6>chip sector and we have been we had been shifting

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<v Speaker 6>to software, so we still like a number of those names.

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<v Speaker 6>Largest holding reports tomorrow which is Oracle, but we own

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<v Speaker 6>Service now Microsoft, we own some Adobe, so we're in

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<v Speaker 6>the space and we think that continues to be where

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<v Speaker 6>you want to be.

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<v Speaker 2>What do you do with the super popular AI plays,

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<v Speaker 2>like like in Nvidia, if you didn't own it, actually

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<v Speaker 2>do you own it? And if you didn't know what

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<v Speaker 2>would do? Okay, would you add or do you just

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<v Speaker 2>kind of put it in there and say, all right,

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<v Speaker 2>you're good, I'm going to go look elsewhere.

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<v Speaker 6>It's such a great question because if you're trained like

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<v Speaker 6>I was as a value investor, you're always waiting for

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<v Speaker 6>the pullback. But if you go back and look at Amazon,

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<v Speaker 6>for example, since IPO in May of ninety seven May fifteenth,

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<v Speaker 6>it's up two hundred and seventy thousand percent. So when

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<v Speaker 6>was it too late to get involved with Amazon? We

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<v Speaker 6>added Nvidia in the summer during the tech the summer

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<v Speaker 6>tech swound, so we missed, you know, a big chunk

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<v Speaker 6>of it. But I think, like Tesla, these are stocks

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<v Speaker 6>that are driving in. You can go back and look

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<v Speaker 6>at Walmart. I mean that stock outperformed for many, many years,

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<v Speaker 6>and so I think this again is where you want

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<v Speaker 6>to be. We owned the and still own the poor

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<v Speaker 6>man's Nvidia, which is Broadcom in our twelve Best Ideas portfolio,

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<v Speaker 6>along with Service now, Microsoft and some of the names

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<v Speaker 6>I already mentioned.

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<v Speaker 4>You mentioned the chip Space have had Intel in the news.

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<v Speaker 4>With mister Gelsinger, we now blim we're reporting that he

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<v Speaker 4>was forced out by the board here. What's your take

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<v Speaker 4>on Intel, because we all grew up with Intel as

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<v Speaker 4>being a leader.

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<v Speaker 5>Now obviously they are not. Can they get the mojo

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<v Speaker 5>back at all?

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<v Speaker 6>Do you think, Paul, I'm not optimistic. I think go

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<v Speaker 6>back to Xerox, who developed the mouse but did not

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<v Speaker 6>commercialize it. So Microsoft and Apple commercialized it and then

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<v Speaker 6>they lost their innovative edge. I think Intel is so

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<v Speaker 6>far behind at this point. We sold it about three

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<v Speaker 6>years ago because it was clear to me that he

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<v Speaker 6>didn't have the leadership chops to turn the thing around. Instead,

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<v Speaker 6>he went to Washington with his in hand and got

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<v Speaker 6>you attempted to get money, which he did. But now

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<v Speaker 6>you've got to deliver and the foundry business is losing money.

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<v Speaker 6>But the money from Washington is contingent on having a

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<v Speaker 6>foundry business. It wasn't just Pat, I mean, Bob Swan

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<v Speaker 6>ran the company sort of as a placeholder for a

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<v Speaker 6>couple three years, and there was a time when we

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<v Speaker 6>used to joke that AMD existed simply to ensure that

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<v Speaker 6>Microsoft didn't have a monopoly. And look how that has

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<v Speaker 6>shifted with the right leadership. So I think in a

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<v Speaker 6>bull market there are much better places to be and

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<v Speaker 6>you're not even getting paid to wait via the dividend

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<v Speaker 6>any longer.

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<v Speaker 2>So that's sort of your call on tech. You mentioned

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<v Speaker 2>Walmart a couple of times. What other stocks are on

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<v Speaker 2>your radar right now?

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<v Speaker 5>We like a lot.

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<v Speaker 6>We're overweight industrial and industrials and consumer discretionary, and our

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<v Speaker 6>theme is old economy companies that have pivoted to the

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<v Speaker 6>right technologies.

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<v Speaker 7>So in.

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<v Speaker 6>I'm sorry, in industrials, think of Quantus Services, which is

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<v Speaker 6>PWR and Emerson Electric. Those are names that we own,

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<v Speaker 6>along with a number of the fence names. But that's

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<v Speaker 6>that's where we're focused in that space. In consumer discretionary,

0:10:05.679 --> 0:10:09.080
<v Speaker 6>we like, you know, some of the usual suspects, but

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<v Speaker 6>included in that is home Depot and Chipotle, which are

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<v Speaker 6>both in our twelve Best Ideas portfolio, as well as Amazon,

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<v Speaker 6>which is in our twelve Best Ideas portfolio.

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<v Speaker 4>Did you guys change your investment outlook approach the day

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<v Speaker 4>after the election last month?

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<v Speaker 5>Did anything change?

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<v Speaker 7>No?

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<v Speaker 6>We anticipated, I mean as much as you could. And

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<v Speaker 6>you know, I always tell our clients because we've got

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<v Speaker 6>on both sides of the spectrum, right, don't invest your

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<v Speaker 6>politics by great companies that you can own for a lifetime.

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<v Speaker 6>So we've been kind of shifting in the summer during

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<v Speaker 6>the second summer tech swoon in a two years in

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<v Speaker 6>a row, and then broadening out over the last year.

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<v Speaker 6>And I think, you know, we run a clean energy

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<v Speaker 6>infrastructure strategy, but we had it with oil. So I

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<v Speaker 6>think there's there's a you know, it's a little cynical

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<v Speaker 6>that you need that bridge. And so I think there

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<v Speaker 6>are a lot of ways to make money no matter

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<v Speaker 6>who's in office, and so that that's been our.

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<v Speaker 2>Focus for consumer discretionary in particular. Do tariffs raise your

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<v Speaker 2>eyebrows at all?

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<v Speaker 6>I think, Alex, I think it's mostly rhetoric. I mean,

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<v Speaker 6>I know that he uses this as a negotiating tactic.

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<v Speaker 6>We know that from last administration. Could it be problematic?

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<v Speaker 6>I mean, I think the costs just get passed along

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<v Speaker 6>to the consumer, so that has its own implications for inflation.

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<v Speaker 6>But I just don't I just don't see this president

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<v Speaker 6>is so this elect president elect is so focused on

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<v Speaker 6>the markets. I don't think there are going to be

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<v Speaker 6>policies that are designed to cause problems for US companies.

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<v Speaker 6>So that's speculation.

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<v Speaker 4>Folks on the East coast, This is what some folks

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<v Speaker 4>on East coast do they winter in Florida and they

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<v Speaker 4>summer you know, in New Hampton's or.

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<v Speaker 5>Something like nor If you're on't a west, Oh yeah,

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<v Speaker 5>you summer Lake Tahoe and winter in Lake Scottsdale. That's

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<v Speaker 5>how it's done.

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<v Speaker 2>Out o It doesn't it get cold in Scottsdale?

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<v Speaker 6>Yeah, does a little bit.

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<v Speaker 2>But what has cold mean? It doesn't mean this.

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<v Speaker 6>It means, oh, it's forty five degrees outside. I better

0:12:05.000 --> 0:12:06.880
<v Speaker 6>put on another down jacket over my.

0:12:06.880 --> 0:12:08.800
<v Speaker 5>Downvest because you're like fifteen minutes.

0:12:08.840 --> 0:12:12.479
<v Speaker 6>You're wrecked for every other climate when you live in Scottsdale.

0:12:12.520 --> 0:12:14.360
<v Speaker 2>Yeah, yeah, Scotstdale. Isn't it like? You know, you start

0:12:14.400 --> 0:12:15.880
<v Speaker 2>out the morning in a thirty degrees and then it

0:12:15.880 --> 0:12:17.800
<v Speaker 2>gets to be eighty and then it goes back to fifty.

0:12:17.880 --> 0:12:21.160
<v Speaker 2>I can't it's too much. You know, as a woman,

0:12:21.200 --> 0:12:23.040
<v Speaker 2>you already carry a big person. It's heavy, and now

0:12:23.080 --> 0:12:26.120
<v Speaker 2>you got to carry layers, layers, that's what it's too hard.

0:12:26.559 --> 0:12:28.439
<v Speaker 4>Nancy, thank you so much for joining us here in

0:12:28.480 --> 0:12:31.520
<v Speaker 4>our studio. Nancy Tangler, she's the CEOP and she's investment

0:12:31.559 --> 0:12:36.240
<v Speaker 4>officer Laffert Tangler Investments again coming in from the West

0:12:36.600 --> 0:12:39.440
<v Speaker 4>to bring us some of her thoughts on you're.

0:12:39.360 --> 0:12:43.600
<v Speaker 1>Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays

0:12:43.640 --> 0:12:46.160
<v Speaker 1>at ten am Eastern on Apple card Playing and Broyd

0:12:46.200 --> 0:12:49.240
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:12:49.320 --> 0:12:52.480
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:12:54.240 --> 0:12:56.520
<v Speaker 2>Joining us now in studio is Sarah Samuels, head of

0:12:56.600 --> 0:13:01.360
<v Speaker 2>Investment Manager Research over at n EPC. She's a partner

0:13:01.440 --> 0:13:03.959
<v Speaker 2>over there and oversees the firm's forty five person investment

0:13:04.040 --> 0:13:07.920
<v Speaker 2>manager selection team across private equity, private debt, private real estate,

0:13:08.000 --> 0:13:11.720
<v Speaker 2>real assets, hedge funds, and public markets. Sarah, it's great

0:13:11.720 --> 0:13:13.280
<v Speaker 2>to have you in studio. Thank you for joining us.

0:13:13.400 --> 0:13:15.360
<v Speaker 7>Thank you very much. It's a pleasure to see you again.

0:13:15.480 --> 0:13:17.400
<v Speaker 2>You too, So little see public markets side for a

0:13:17.440 --> 0:13:19.120
<v Speaker 2>sec because we get plenty of guys with their calls

0:13:19.120 --> 0:13:21.599
<v Speaker 2>blah blah blah. Let's talk about the private market. What

0:13:21.679 --> 0:13:23.679
<v Speaker 2>do you think is going to the hotspots are going

0:13:23.720 --> 0:13:24.439
<v Speaker 2>to be for next year?

0:13:24.840 --> 0:13:27.480
<v Speaker 7>Well, you know, just to set the stage for what's

0:13:27.559 --> 0:13:32.199
<v Speaker 7>on limited partners minds, institutional investors' minds today. They're really

0:13:32.400 --> 0:13:35.760
<v Speaker 7>not seeing the distribution activity that they typically have, so

0:13:36.160 --> 0:13:38.600
<v Speaker 7>distribution to paid in capital is not coming back at

0:13:38.600 --> 0:13:40.880
<v Speaker 7>the pace that they had modeled out, and what that

0:13:41.000 --> 0:13:43.280
<v Speaker 7>means is that there are fewer dollars to commit to

0:13:43.559 --> 0:13:46.920
<v Speaker 7>future funds because it's an equation, it's a closed loop system.

0:13:46.960 --> 0:13:50.480
<v Speaker 7>There isn't unlimited capital. And so we're really hoping that

0:13:50.640 --> 0:13:54.880
<v Speaker 7>we see deal activity and distributions and transaction activity begin

0:13:55.040 --> 0:13:57.240
<v Speaker 7>to pick up in twenty twenty five, and I think

0:13:57.280 --> 0:14:00.800
<v Speaker 7>that it will. We are seeing lower interest rate, which

0:14:00.880 --> 0:14:05.000
<v Speaker 7>helps with the deal economics. We are seeing better valuations,

0:14:05.360 --> 0:14:09.320
<v Speaker 7>and you know, we may see some simulative policy and.

0:14:09.400 --> 0:14:12.600
<v Speaker 4>It looks like from a I guess just maybe from

0:14:12.640 --> 0:14:17.160
<v Speaker 4>a tax perspective, there may be some easier tax treatment

0:14:17.200 --> 0:14:19.480
<v Speaker 4>for some of these gains that some of the limited

0:14:19.480 --> 0:14:19.960
<v Speaker 4>partners have.

0:14:20.560 --> 0:14:24.520
<v Speaker 5>Do you expect this new administration to foster more deal flow?

0:14:24.560 --> 0:14:26.560
<v Speaker 4>We have seen some reporting on that, do you, guys,

0:14:26.680 --> 0:14:29.920
<v Speaker 4>from your perspective, expectancy increase deal flow, whether it's IPOs,

0:14:29.920 --> 0:14:32.280
<v Speaker 4>whether it's and a emdeon.

0:14:32.880 --> 0:14:34.880
<v Speaker 7>Yes. So there are a number of ways that these

0:14:34.960 --> 0:14:38.840
<v Speaker 7>things can happen, that these deals can can actually be executed.

0:14:38.920 --> 0:14:41.520
<v Speaker 7>There's obviously the IPO market which is open today but

0:14:41.680 --> 0:14:44.760
<v Speaker 7>not being tapped broadly because buyers and sellers are not

0:14:45.080 --> 0:14:49.600
<v Speaker 7>the meeting in the middle on price. There are strategic investments,

0:14:49.760 --> 0:14:52.920
<v Speaker 7>so selling to corporations, and we are still seeing a

0:14:53.000 --> 0:14:55.280
<v Speaker 7>lot of that. And then there's sponsored a sponsor, which

0:14:55.360 --> 0:14:57.840
<v Speaker 7>is a private markets firm buying something from another private

0:14:57.880 --> 0:15:01.240
<v Speaker 7>markets firm. And so if we see the more favorable

0:15:01.280 --> 0:15:05.800
<v Speaker 7>tax treatment, if we see lower interest rates, more easy

0:15:05.880 --> 0:15:11.240
<v Speaker 7>antitrust stances as well as regulatory then I think that

0:15:11.360 --> 0:15:13.760
<v Speaker 7>it could be quite a bit easier for smaller companies

0:15:13.800 --> 0:15:18.120
<v Speaker 7>in particular, to either go public or to grow their earnings.

0:15:18.320 --> 0:15:20.640
<v Speaker 2>So typically when I talk to someone in private equity,

0:15:20.680 --> 0:15:22.320
<v Speaker 2>they're like, oh, well, you know it's a vintage, so

0:15:22.400 --> 0:15:23.920
<v Speaker 2>it's a long term, right, So you're gonna give us

0:15:23.920 --> 0:15:25.440
<v Speaker 2>money now, you don't get it back for ten years.

0:15:25.560 --> 0:15:27.640
<v Speaker 2>Like it's fine, Like everything will sort itself out in

0:15:27.680 --> 0:15:29.680
<v Speaker 2>ten years. And then we get to today and then

0:15:30.360 --> 0:15:32.160
<v Speaker 2>I want my money back. It's been ten years and

0:15:32.200 --> 0:15:35.560
<v Speaker 2>it's hard to get that cash back. Does that interrupt

0:15:35.680 --> 0:15:39.120
<v Speaker 2>the popularity of private equity or even a private credit

0:15:39.200 --> 0:15:41.800
<v Speaker 2>at this point, or are these things that are just managed.

0:15:41.840 --> 0:15:43.800
<v Speaker 7>It's a great question. There's a lot to it, So

0:15:43.960 --> 0:15:47.040
<v Speaker 7>it doesn't interrupt the popularity because there is still a

0:15:47.120 --> 0:15:50.800
<v Speaker 7>pretty meaningful premium for private market investments over public markets,

0:15:51.080 --> 0:15:53.760
<v Speaker 7>and public markets alone are not going to get institutions

0:15:53.840 --> 0:15:56.360
<v Speaker 7>to where they need to be. Many institutions haven't expect

0:15:56.400 --> 0:15:59.400
<v Speaker 7>a return of six seven eight percent nomenal, and we're expecting,

0:15:59.760 --> 0:16:03.680
<v Speaker 7>you know, mid single digit returns for US equities, for example,

0:16:03.720 --> 0:16:06.360
<v Speaker 7>over the next ten years, whereas in the private markets,

0:16:06.400 --> 0:16:08.359
<v Speaker 7>we're expecting double digit returns.

0:16:09.280 --> 0:16:12.560
<v Speaker 2>Double digit like ten eleven, twelve percent, or like more

0:16:12.600 --> 0:16:14.040
<v Speaker 2>than that. Orpends on the area.

0:16:14.200 --> 0:16:16.240
<v Speaker 7>So for something like private debt, and there are a

0:16:16.440 --> 0:16:19.880
<v Speaker 7>variety of different flavors in there. There's subordinated capital, there's

0:16:20.360 --> 0:16:23.720
<v Speaker 7>you know, direct lending, which is a lower returning asset today,

0:16:23.760 --> 0:16:26.000
<v Speaker 7>there's a lot of capital in there, there's distress, and

0:16:26.040 --> 0:16:28.440
<v Speaker 7>then there's opportunistic which we're really excited about. And that's

0:16:28.480 --> 0:16:31.560
<v Speaker 7>a catch all term for really creative financing solutions. So

0:16:31.680 --> 0:16:34.880
<v Speaker 7>that's either providing so being a liquidity provider is what

0:16:35.120 --> 0:16:37.880
<v Speaker 7>we are most excited about, both in this year, in

0:16:37.960 --> 0:16:40.840
<v Speaker 7>twenty twenty four and next year. That could be providing

0:16:40.880 --> 0:16:44.040
<v Speaker 7>creative financing solutions for GPS to get capital back to LPs.

0:16:44.200 --> 0:16:46.800
<v Speaker 7>It could be being a lender to real estate, you know,

0:16:47.080 --> 0:16:50.920
<v Speaker 7>with real estate debt through private debt, or by investing

0:16:51.120 --> 0:16:54.160
<v Speaker 7>in secondaries and providing liquidity to GPS and LPs alike.

0:16:54.480 --> 0:16:57.560
<v Speaker 4>Are you surprised we haven't had more IPO activity in

0:16:57.600 --> 0:16:59.280
<v Speaker 4>twenty twenty four and the S and p's of twenty

0:16:59.320 --> 0:17:01.080
<v Speaker 4>five percent back in the day, I would have been

0:17:01.120 --> 0:17:02.000
<v Speaker 4>ripping companies.

0:17:01.760 --> 0:17:03.120
<v Speaker 5>Out of look into the marketplaces.

0:17:03.640 --> 0:17:06.600
<v Speaker 4>I mean, we get a ten percent move in the market,

0:17:06.760 --> 0:17:09.520
<v Speaker 4>we're on the phone straight for thirty six hours calling everybody.

0:17:09.800 --> 0:17:14.040
<v Speaker 7>So I have IPO activity has honestly not historically been

0:17:14.160 --> 0:17:17.320
<v Speaker 7>the line's share of exits, so but it is very

0:17:17.400 --> 0:17:19.800
<v Speaker 7>important and it is open. So I think it's really

0:17:19.840 --> 0:17:23.439
<v Speaker 7>interesting that we haven't seen more companies price and go public.

0:17:24.280 --> 0:17:27.480
<v Speaker 7>Many cases, especially in venture capital, the last round financing

0:17:27.760 --> 0:17:31.399
<v Speaker 7>is the valu valuation methodology that is used, and that

0:17:31.520 --> 0:17:35.160
<v Speaker 7>last round of financing won't reset until they price another round,

0:17:35.480 --> 0:17:37.800
<v Speaker 7>and so we are seeing lots of companies that are

0:17:37.840 --> 0:17:41.560
<v Speaker 7>held at valuations that are not actually reasonable and there

0:17:41.600 --> 0:17:42.720
<v Speaker 7>will need to be a reconing.

0:17:43.560 --> 0:17:46.960
<v Speaker 2>Where in say, private credit is the most interesting, and

0:17:47.040 --> 0:17:49.440
<v Speaker 2>how do you look at it? Is it like industry

0:17:49.560 --> 0:17:53.240
<v Speaker 2>based is in how do you break it down into buckets?

0:17:53.560 --> 0:17:57.160
<v Speaker 7>Yeah, so we are looking at things like distressed debt,

0:17:57.200 --> 0:18:00.520
<v Speaker 7>which is really looking to take advantage of the type

0:18:00.560 --> 0:18:03.600
<v Speaker 7>of financially not necessarily like sector based right now. Well,

0:18:03.680 --> 0:18:05.800
<v Speaker 7>and then we're also you know, pretty interested in as

0:18:05.920 --> 0:18:12.199
<v Speaker 7>a backed lending, so abl investing, and so there are

0:18:12.440 --> 0:18:14.080
<v Speaker 7>there are a number of other areas and ways to

0:18:14.119 --> 0:18:17.119
<v Speaker 7>play this, but I would say that direct blending is

0:18:17.560 --> 0:18:20.640
<v Speaker 7>becoming more and more mainstream and less of a premium there.

0:18:21.280 --> 0:18:24.440
<v Speaker 4>When I got to the board at a large university,

0:18:24.480 --> 0:18:26.480
<v Speaker 4>I was shocked to see how much is allocated to

0:18:26.520 --> 0:18:30.320
<v Speaker 4>private getting in private alternatives broadly defined, not the ten

0:18:30.359 --> 0:18:33.360
<v Speaker 4>to fifteen percent that I grew up with, forty yes

0:18:33.640 --> 0:18:34.000
<v Speaker 4>and more.

0:18:34.240 --> 0:18:36.199
<v Speaker 7>And I've been in that set. I've worked at an

0:18:36.280 --> 0:18:37.520
<v Speaker 7>endowment and like, so.

0:18:37.680 --> 0:18:39.920
<v Speaker 5>In twenty twenty two comes along twenty twenty three, I'm like,

0:18:40.080 --> 0:18:40.880
<v Speaker 5>we're the marks down.

0:18:40.960 --> 0:18:41.160
<v Speaker 3>Kids.

0:18:41.760 --> 0:18:42.720
<v Speaker 5>Didn't get a mark down.

0:18:43.280 --> 0:18:46.200
<v Speaker 4>It's such a scam that private business they don't mark

0:18:46.680 --> 0:18:48.600
<v Speaker 4>That's why I'm so shocked that they allocate so.

0:18:48.720 --> 0:18:49.200
<v Speaker 5>Much to that.

0:18:49.800 --> 0:18:54.160
<v Speaker 4>Is that A Are you surprised that universities have taken

0:18:54.200 --> 0:18:55.560
<v Speaker 4>such an aggressive.

0:18:55.280 --> 0:18:57.240
<v Speaker 5>View of their portfolios of really its alternatives.

0:18:57.600 --> 0:19:01.360
<v Speaker 7>I'm not surprised. As I mentioned earlier, the return premium

0:19:01.560 --> 0:19:04.600
<v Speaker 7>is there over public markets. You do need a chief

0:19:04.640 --> 0:19:07.960
<v Speaker 7>investment officer mindset when you're allocating capital to private equity.

0:19:08.200 --> 0:19:09.600
<v Speaker 7>So you don't want to lock up your capital in

0:19:09.760 --> 0:19:11.960
<v Speaker 7>just any investment. You want to make sure that you're

0:19:12.000 --> 0:19:13.840
<v Speaker 7>being paid to lock up your capital, and you can

0:19:13.920 --> 0:19:16.600
<v Speaker 7>do that looking at public market equivalents or other measures.

0:19:17.440 --> 0:19:21.880
<v Speaker 7>And you know, these universities and public pensions for that matter,

0:19:21.920 --> 0:19:24.440
<v Speaker 7>have pretty lofty return targets and they need to get there.

0:19:24.640 --> 0:19:26.080
<v Speaker 7>The thing to look at is how much of the

0:19:26.080 --> 0:19:29.000
<v Speaker 7>operating budget is the institution supporting? Is it thirty forty

0:19:29.080 --> 0:19:31.399
<v Speaker 7>fifty percent? And if it is, then be really careful

0:19:31.440 --> 0:19:33.680
<v Speaker 7>with your liquidity guardrails. And that's something that we do

0:19:33.760 --> 0:19:36.080
<v Speaker 7>for our clients at ANYPC. It's a number of simple

0:19:36.160 --> 0:19:38.639
<v Speaker 7>but very powerful metrics. Understand if we get out over

0:19:38.720 --> 0:19:40.680
<v Speaker 7>our skis, and if we had those in place prior

0:19:40.760 --> 0:19:42.680
<v Speaker 7>to two thousand and eight, a lot of heartache would

0:19:42.680 --> 0:19:43.280
<v Speaker 7>have been avoided.

0:19:44.119 --> 0:19:46.640
<v Speaker 2>That's really interesting, Hey, Sarah, really great stuff. I really

0:19:46.680 --> 0:19:48.720
<v Speaker 2>appreciate you. How you coming in, Sarah Samuels. We will

0:19:48.760 --> 0:19:51.400
<v Speaker 2>definitely be seeing you soon joining us from an EPC.

0:19:51.640 --> 0:19:52.640
<v Speaker 2>Thank you so very much.

0:19:53.040 --> 0:19:57.640
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on apples, potter Pie,

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