1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Masters in Business with Verry Ridholts on Bloomberg Radio. 2 00:00:07,600 --> 00:00:11,560 Speaker 1: This week on the podcast, I have an extra special guest. 3 00:00:12,119 --> 00:00:15,200 Speaker 1: You may not know his name, but you probably should 4 00:00:15,800 --> 00:00:19,320 Speaker 1: given the stellar track record he's managed to put together 5 00:00:19,800 --> 00:00:23,160 Speaker 1: over the past twenty or so years. Dennis Lynch is 6 00:00:23,239 --> 00:00:26,560 Speaker 1: head of Counterpoint Global. That is sort of a group, 7 00:00:26,720 --> 00:00:30,520 Speaker 1: a firm within a firm at Morgan Stanley Investment Management. Uh. 8 00:00:30,560 --> 00:00:32,600 Speaker 1: They run a ton of money, about a hundred thirty 9 00:00:32,600 --> 00:00:36,960 Speaker 1: billion dollars and their track record, especially this year, has 10 00:00:37,000 --> 00:00:41,159 Speaker 1: been pretty The Noodles the Growth Fund is up eight 11 00:00:42,120 --> 00:00:45,760 Speaker 1: Discovery is up about a hundred percent. Their worst performers 12 00:00:45,800 --> 00:00:52,360 Speaker 1: advantage it's only up fift. They run very interesting concentrated portfolios. 13 00:00:52,840 --> 00:00:57,520 Speaker 1: Their entire approach is somewhat unique. They're not um like 14 00:00:57,720 --> 00:01:01,120 Speaker 1: very many people. Uh. Maybe Will dan Hof for Bill 15 00:01:01,160 --> 00:01:05,319 Speaker 1: Miller run a similar style of investment management. To give 16 00:01:05,360 --> 00:01:09,280 Speaker 1: you an idea of how outside the box this group thinks. Uh. 17 00:01:09,319 --> 00:01:12,279 Speaker 1: They recently, by recently a year ago, they hired Michael 18 00:01:12,280 --> 00:01:14,920 Speaker 1: Mobison to be the head of their research just for 19 00:01:14,959 --> 00:01:17,480 Speaker 1: the group. Mike has been on the show a couple 20 00:01:17,480 --> 00:01:20,199 Speaker 1: of times, and I just love the way he thinks, 21 00:01:20,240 --> 00:01:24,360 Speaker 1: and any group that brings someone like him in obviously 22 00:01:24,560 --> 00:01:29,240 Speaker 1: is not your traditional Wall Street stock picking um fund managers. 23 00:01:29,880 --> 00:01:33,240 Speaker 1: I found this conversation to be absolutely fascinating if you're 24 00:01:33,280 --> 00:01:36,440 Speaker 1: all interested in how to build a portfolio, how to 25 00:01:36,520 --> 00:01:41,200 Speaker 1: select stocks bottom up, why the buckets we use and 26 00:01:41,280 --> 00:01:45,120 Speaker 1: phrases like small cap or value or growth can be 27 00:01:45,480 --> 00:01:50,640 Speaker 1: so constraining and really harmful to performance. I believe you're 28 00:01:50,640 --> 00:01:54,120 Speaker 1: gonna find this conversation to be absolutely fascinating. So, with 29 00:01:54,160 --> 00:01:58,400 Speaker 1: no further ado, my conversation with Counterpoint Global at Morgan 30 00:01:58,520 --> 00:02:05,320 Speaker 1: Stanley's Dennis Inch. This is Master's in Business with Barry 31 00:02:05,400 --> 00:02:10,160 Speaker 1: Ridholts on Bloomberg Radio. My special guest this week is 32 00:02:10,200 --> 00:02:14,480 Speaker 1: Dennis Lynch. He is the head of Counterpoint Global at 33 00:02:14,520 --> 00:02:19,600 Speaker 1: Morgan Stanley Investing Management. Running about forty four billion dollars, 34 00:02:20,000 --> 00:02:26,600 Speaker 1: he has five separate funds. His group is responsible for advantage, growth, insight, discovery, 35 00:02:26,720 --> 00:02:31,120 Speaker 1: and inception, the largest of which is about fifteen billion 36 00:02:31,160 --> 00:02:36,640 Speaker 1: dollars and year to date is up about Dennis Lynch, 37 00:02:37,120 --> 00:02:41,880 Speaker 1: Welcome to Bloomberg, Barry, thanks for having me. So let's 38 00:02:41,960 --> 00:02:45,520 Speaker 1: talk a little bit about Counterpoint Global. Everybody knows the 39 00:02:45,600 --> 00:02:50,359 Speaker 1: name Morgan Stanley, but not everybody knows the name Counterpoint Global. 40 00:02:51,120 --> 00:02:54,680 Speaker 1: What is the thinking behind a company within a company. 41 00:02:54,800 --> 00:02:56,799 Speaker 1: I mean, I've been at Morgan Stanley, I think over 42 00:02:56,840 --> 00:02:59,160 Speaker 1: twenty years and ever since the habit it would an 43 00:02:59,200 --> 00:03:03,240 Speaker 1: investment manage meant they've followed the philosophy of trying to 44 00:03:03,320 --> 00:03:05,840 Speaker 1: make sure they have a diverse group of thinkers and 45 00:03:05,919 --> 00:03:09,040 Speaker 1: small decision making teams. And I think that's a really 46 00:03:09,080 --> 00:03:12,200 Speaker 1: healthy environment for trying to to do the hardest, one 47 00:03:12,240 --> 00:03:14,639 Speaker 1: of the harder things out there, which is pete the market. 48 00:03:15,440 --> 00:03:17,960 Speaker 1: So it's been a great environment for that. And in 49 00:03:18,000 --> 00:03:21,080 Speaker 1: that context we've been able to build Counterpoint Global our 50 00:03:21,160 --> 00:03:24,840 Speaker 1: group over the course really in a strong manner over 51 00:03:24,840 --> 00:03:28,360 Speaker 1: the last sixteen years, with with the great resources we 52 00:03:28,400 --> 00:03:31,280 Speaker 1: also get from Morgan Stanley generally. So I think it's 53 00:03:31,280 --> 00:03:33,880 Speaker 1: been a good combination of a good, big, big term 54 00:03:33,919 --> 00:03:37,920 Speaker 1: philosophy from Morgan Stanley and and then allowing Counterpoint Global 55 00:03:37,920 --> 00:03:40,600 Speaker 1: and the key members of the team to be very 56 00:03:40,720 --> 00:03:45,240 Speaker 1: entrepreneurial in that context. So not to read too much 57 00:03:45,240 --> 00:03:48,200 Speaker 1: into what you're saying, but you're giving me the impression 58 00:03:48,840 --> 00:03:51,560 Speaker 1: that this is a model within Morgan Stanley, and there 59 00:03:51,600 --> 00:03:56,760 Speaker 1: are a number of small entrepreneurial teams within investment management. 60 00:03:56,840 --> 00:04:00,040 Speaker 1: Is that right? Yes, that's been the model, and I 61 00:04:00,040 --> 00:04:02,400 Speaker 1: think it's really healthy. I think there's been some good 62 00:04:02,400 --> 00:04:05,480 Speaker 1: research that shows that, you know, strong decision making, particularly 63 00:04:05,480 --> 00:04:10,000 Speaker 1: on the investment committee side of things, tends to occur 64 00:04:10,080 --> 00:04:13,720 Speaker 1: when you're dealing with small groups of teams as opposed 65 00:04:13,720 --> 00:04:17,919 Speaker 1: to kind of large bureaucracies. So I count five different 66 00:04:17,960 --> 00:04:23,600 Speaker 1: funds that Counterpoint Global is running, Advantage, Growth, Insight, Discovery, 67 00:04:23,760 --> 00:04:27,839 Speaker 1: and Inception. Are these all run as a group or 68 00:04:27,880 --> 00:04:30,839 Speaker 1: are there different managers for each? How do you guys 69 00:04:30,839 --> 00:04:34,360 Speaker 1: structure this amongst yourselves? So believe it or not. Actually, 70 00:04:34,560 --> 00:04:40,000 Speaker 1: UM Counterpoint Global in its totality is about nineteen products globally, 71 00:04:40,880 --> 00:04:43,919 Speaker 1: which includes the portfolio management team in New York that 72 00:04:44,000 --> 00:04:47,800 Speaker 1: I had, as well as the portfolio management team in 73 00:04:47,880 --> 00:04:51,000 Speaker 1: Asia which my partner and co c i O Christian 74 00:04:51,080 --> 00:04:54,479 Speaker 1: Hugh runs UM. And so in total we have nineteen 75 00:04:54,480 --> 00:04:59,720 Speaker 1: products currently the hundred thirty billion in assets and UM 76 00:05:00,120 --> 00:05:03,040 Speaker 1: we probably own about two companies those globally. So despite 77 00:05:03,080 --> 00:05:05,200 Speaker 1: the fact that sounds like a large number of products, 78 00:05:05,520 --> 00:05:09,159 Speaker 1: we're very concentrated in each product and we're very picky 79 00:05:09,160 --> 00:05:11,760 Speaker 1: about what we invest in. So it is a pretty 80 00:05:11,800 --> 00:05:16,480 Speaker 1: small group of companies when you think globally. We basically, uh, 81 00:05:16,520 --> 00:05:19,600 Speaker 1: you know, we run We have two lead managers in 82 00:05:19,880 --> 00:05:23,800 Speaker 1: two different locations, and the portfolios are kind of informed 83 00:05:23,800 --> 00:05:27,800 Speaker 1: by the insights of the entire team, and we go 84 00:05:27,880 --> 00:05:29,479 Speaker 1: through the process kind of at the end of the 85 00:05:29,520 --> 00:05:32,080 Speaker 1: process to figure out what to go. We're based on 86 00:05:32,400 --> 00:05:35,760 Speaker 1: how big a company is, where it's domiciled, etcetera. In 87 00:05:35,800 --> 00:05:39,279 Speaker 1: other words, you identify a company you want to own 88 00:05:39,560 --> 00:05:43,320 Speaker 1: and then figure out afterwards which funds, which product is 89 00:05:43,360 --> 00:05:48,000 Speaker 1: the right fit for it. Yes, huh. That's very different 90 00:05:48,040 --> 00:05:51,160 Speaker 1: than the typical mutual funds. Yeah, and I think it's 91 00:05:51,200 --> 00:05:53,359 Speaker 1: a big different when I think about Counterpoint Global and 92 00:05:53,360 --> 00:05:56,760 Speaker 1: how we're different. It is one of our big differences. 93 00:05:56,800 --> 00:05:58,520 Speaker 1: You know. The people on our team aren't what we 94 00:05:58,560 --> 00:06:01,320 Speaker 1: call investors. They show up or wake up each day 95 00:06:01,760 --> 00:06:04,680 Speaker 1: looking for the best ideas in their areas of expertise, 96 00:06:04,760 --> 00:06:07,280 Speaker 1: but they're not trying to find the best large cap 97 00:06:07,279 --> 00:06:10,320 Speaker 1: growth healthcare companies. So if you're Jason Young is a 98 00:06:10,360 --> 00:06:13,760 Speaker 1: world class health investor on the team, that's not how 99 00:06:13,760 --> 00:06:16,360 Speaker 1: you're approaching your time spent in your day to day 100 00:06:16,720 --> 00:06:19,400 Speaker 1: you're looking for great ideas within healthcare, and it just 101 00:06:19,440 --> 00:06:24,120 Speaker 1: so happens given that we have US products, international global products, 102 00:06:24,200 --> 00:06:27,480 Speaker 1: and ones that focus on different market caps and different 103 00:06:27,520 --> 00:06:30,159 Speaker 1: parts of the overall products set, we have a we 104 00:06:30,200 --> 00:06:32,200 Speaker 1: have a home for your idea and so I think 105 00:06:32,200 --> 00:06:35,119 Speaker 1: it is is one of the things that differentiates the team. 106 00:06:35,360 --> 00:06:37,720 Speaker 1: So you went from being an analyst to being a 107 00:06:37,800 --> 00:06:43,400 Speaker 1: portfolio manager. How challenging is it to go from analyzing 108 00:06:43,400 --> 00:06:47,479 Speaker 1: a business to building an investment portfolio? What what was 109 00:06:47,520 --> 00:06:49,440 Speaker 1: that transition? Like? Well, I think, you know, there are 110 00:06:49,440 --> 00:06:51,560 Speaker 1: a lot of different personalities out there, and I think 111 00:06:51,560 --> 00:06:54,560 Speaker 1: it really depends on the person. You know. Actually, one 112 00:06:54,600 --> 00:06:56,400 Speaker 1: thing we try to do from time to time every 113 00:06:56,440 --> 00:06:59,760 Speaker 1: few years is the personality assistance for people on the team, 114 00:06:59,839 --> 00:07:02,280 Speaker 1: just to promote a little bit of self awareness. It's 115 00:07:02,279 --> 00:07:05,160 Speaker 1: always good to get get another view of kind of 116 00:07:05,200 --> 00:07:07,760 Speaker 1: how you're hardwired, especially in times like this where we're 117 00:07:07,800 --> 00:07:11,440 Speaker 1: having extreme volatility. It's kind of nice and to remember 118 00:07:11,520 --> 00:07:14,680 Speaker 1: that sometimes you're hardwired to react a certain way under 119 00:07:14,760 --> 00:07:17,520 Speaker 1: durest and maybe that self awareness helps you make you 120 00:07:17,640 --> 00:07:20,560 Speaker 1: more high quality decisions. But I guess in our case 121 00:07:20,680 --> 00:07:23,400 Speaker 1: or in my case, um I've always you know, while 122 00:07:23,440 --> 00:07:26,520 Speaker 1: I love details, and I certainly can be very detail 123 00:07:26,560 --> 00:07:29,520 Speaker 1: oriented at times, I also love learning about a lot 124 00:07:29,520 --> 00:07:31,560 Speaker 1: of things. You know. I went to a liberal arts college, 125 00:07:31,600 --> 00:07:34,800 Speaker 1: and so I have I really do enjoy the extra 126 00:07:34,840 --> 00:07:37,840 Speaker 1: perspective of learning about a lot of different industries and sectors. 127 00:07:37,840 --> 00:07:41,240 Speaker 1: So going from an expert or an analyst in one 128 00:07:41,280 --> 00:07:45,040 Speaker 1: area to being an investor more broadly, I think kind 129 00:07:45,040 --> 00:07:47,920 Speaker 1: of fit my personality specifically. But what we try to 130 00:07:47,960 --> 00:07:50,840 Speaker 1: do on the team is is, you know, attract really 131 00:07:51,360 --> 00:07:54,520 Speaker 1: unique people and then based on their personalities or end 132 00:07:54,560 --> 00:07:57,240 Speaker 1: their passions, sort of let's enable them to do what 133 00:07:57,280 --> 00:07:59,040 Speaker 1: they do well. And so we've got all sorts of 134 00:07:59,080 --> 00:08:02,840 Speaker 1: different types of doing playing different roles. In my case, 135 00:08:02,920 --> 00:08:06,600 Speaker 1: I think given my uh a love for learning about 136 00:08:06,600 --> 00:08:09,760 Speaker 1: a lot of things, the transition probably made more sense 137 00:08:09,760 --> 00:08:12,560 Speaker 1: and was easier than for someone else. So I have 138 00:08:12,840 --> 00:08:17,000 Speaker 1: read a lot about personality testing, and there seems to 139 00:08:17,040 --> 00:08:21,400 Speaker 1: be two groups of thoughts on it. One is there's 140 00:08:21,440 --> 00:08:26,160 Speaker 1: a lot of down and dirty, kind of oversimplified tests 141 00:08:26,200 --> 00:08:29,760 Speaker 1: and they're of no value whatsoever. And there's another group 142 00:08:29,800 --> 00:08:32,880 Speaker 1: of thinking that says, hey, if you ask the right 143 00:08:33,000 --> 00:08:36,920 Speaker 1: questions and you really dive deep enough, you can find 144 00:08:36,960 --> 00:08:40,640 Speaker 1: things out about how people think, how they behave, and 145 00:08:40,720 --> 00:08:45,080 Speaker 1: what type they fall into. So I'm gonna assume you 146 00:08:45,120 --> 00:08:49,400 Speaker 1: guys aren't doing anything um down and dirty. You're really 147 00:08:49,480 --> 00:08:54,320 Speaker 1: doing a serious dive into that sort of profiling of 148 00:08:54,840 --> 00:08:59,880 Speaker 1: various researchers and managers in the group we are. But 149 00:09:00,080 --> 00:09:03,719 Speaker 1: you know, here's the thing about anything like this personality tests, UM, 150 00:09:04,320 --> 00:09:06,959 Speaker 1: this sort of topic UM. You know, and we have 151 00:09:07,080 --> 00:09:08,959 Speaker 1: got a great diversity of thinking on a team here. 152 00:09:09,040 --> 00:09:11,600 Speaker 1: Some people think it isn't very useful, and some people 153 00:09:11,640 --> 00:09:15,520 Speaker 1: find it extraordinarily extraordinarily useful. I look at it as 154 00:09:15,559 --> 00:09:18,080 Speaker 1: a as a low cost way of getting the team 155 00:09:18,080 --> 00:09:21,640 Speaker 1: together in one place and spending time as a larger 156 00:09:21,720 --> 00:09:24,959 Speaker 1: unit where we can you know, hopefully you know, bond 157 00:09:25,080 --> 00:09:28,080 Speaker 1: and and share share a day where we're sometimes you've 158 00:09:28,080 --> 00:09:30,520 Speaker 1: been making fun of each other for our differences. UM. 159 00:09:30,840 --> 00:09:32,880 Speaker 1: But I think that it's the worst case for my 160 00:09:33,000 --> 00:09:37,480 Speaker 1: vantage point. It helps the team uh culture. But you know, 161 00:09:37,480 --> 00:09:39,400 Speaker 1: we have some people think this is very useful and 162 00:09:39,440 --> 00:09:41,839 Speaker 1: some people think it's useless. And I get both sides 163 00:09:41,880 --> 00:09:44,520 Speaker 1: of that. You know, I actually used to think it 164 00:09:44,559 --> 00:09:47,760 Speaker 1: was useless earlier in my life, and as I started 165 00:09:47,760 --> 00:09:49,640 Speaker 1: to explore it, I found there there there to be 166 00:09:49,679 --> 00:09:53,040 Speaker 1: some utility. So it really depends on the person. It's 167 00:09:53,080 --> 00:09:55,200 Speaker 1: it's it's why we do it every few years. It's 168 00:09:55,200 --> 00:09:57,440 Speaker 1: the worst case, it's a it's a cultural bonding thing, 169 00:09:57,480 --> 00:10:01,559 Speaker 1: and best case, maybe people gain a little extrac off awareness. Huh. 170 00:10:01,720 --> 00:10:05,160 Speaker 1: Quite quite interesting. I find myself about halfway in the 171 00:10:05,200 --> 00:10:08,800 Speaker 1: process that you already went through, going from poo pooing 172 00:10:08,840 --> 00:10:12,400 Speaker 1: it too. All right, maybe it's worth exploring and who 173 00:10:12,440 --> 00:10:14,720 Speaker 1: knows what what will come out of it. I was 174 00:10:14,800 --> 00:10:17,520 Speaker 1: very disappointed when I initially took the Myers Briggs a 175 00:10:17,520 --> 00:10:20,120 Speaker 1: long time ago, to find that I wasn't so unique 176 00:10:20,120 --> 00:10:23,080 Speaker 1: after all. It was a lot more accurate than I 177 00:10:23,120 --> 00:10:25,800 Speaker 1: expected to be. So that's what got me kind of 178 00:10:26,000 --> 00:10:29,959 Speaker 1: moving in that direction. But reminds me of my favorite 179 00:10:29,960 --> 00:10:34,280 Speaker 1: scene in Money Python's Life of Brian. We're all individuals, 180 00:10:34,320 --> 00:10:40,160 Speaker 1: everybody chance together, We're all different. It's pretty hilarious. It's awesome. 181 00:10:41,160 --> 00:10:46,960 Speaker 1: So let's talk a little bit about growth investing in Obviously, 182 00:10:47,400 --> 00:10:52,880 Speaker 1: the stay at home trade has been enormously profitable. Um, 183 00:10:52,920 --> 00:10:55,600 Speaker 1: you're one of your biggest funds has is up almost 184 00:10:55,640 --> 00:10:59,720 Speaker 1: a year to date. Uh, some of these stay at 185 00:10:59,720 --> 00:11:04,640 Speaker 1: home aims like Shopify and Zoom and Tulio. Were these 186 00:11:04,720 --> 00:11:10,200 Speaker 1: in your portfolio pre covid or did you guys recognize, Hey, 187 00:11:10,240 --> 00:11:14,400 Speaker 1: this is gonna be a long working remote scenario and 188 00:11:14,440 --> 00:11:17,320 Speaker 1: we want to load up on the names that would 189 00:11:17,400 --> 00:11:20,520 Speaker 1: benefit from that. Uh. These for the for the very 190 00:11:20,520 --> 00:11:24,120 Speaker 1: most part, these are all holdings going into and they 191 00:11:24,120 --> 00:11:27,280 Speaker 1: were usually our performance at any given period time. It's 192 00:11:27,280 --> 00:11:30,920 Speaker 1: more function of decisions we made a year or several 193 00:11:31,000 --> 00:11:34,560 Speaker 1: years prior than it is kind of the moment sort 194 00:11:34,559 --> 00:11:37,520 Speaker 1: of in the moment reaction to what's happening and obviously 195 00:11:38,240 --> 00:11:42,679 Speaker 1: being an exceptional time. UM. So we did all these 196 00:11:42,679 --> 00:11:46,720 Speaker 1: stocks that you're mentioning prior to UM. That was actually 197 00:11:46,760 --> 00:11:49,439 Speaker 1: a transition we made maybe a few years back. If 198 00:11:49,440 --> 00:11:51,360 Speaker 1: you look maybe eight or ten years ago, you might 199 00:11:51,400 --> 00:11:55,480 Speaker 1: have seen in our portfolio is a large, large stakes 200 00:11:55,520 --> 00:11:59,840 Speaker 1: and companies like Amazon and Apple and Google and Facebook, 201 00:11:59,840 --> 00:12:02,640 Speaker 1: and a few years back we were looking at the 202 00:12:02,640 --> 00:12:05,160 Speaker 1: opportunity set and I think, you know, all good invest 203 00:12:05,200 --> 00:12:08,280 Speaker 1: things opportunities have driven. We thought there were some really 204 00:12:08,320 --> 00:12:11,320 Speaker 1: interesting young companies in some of the areas that have 205 00:12:11,400 --> 00:12:15,040 Speaker 1: benefited more recently, not just from COVID, but from secular growth. 206 00:12:15,640 --> 00:12:17,840 Speaker 1: And so what I would say is we added things 207 00:12:17,880 --> 00:12:21,720 Speaker 1: like some softwares of service and e commerce companies you know, 208 00:12:21,760 --> 00:12:25,640 Speaker 1: two or three years ago, all of which fortunately benefited 209 00:12:25,679 --> 00:12:27,840 Speaker 1: this year. And what I'd say there is, I think 210 00:12:28,000 --> 00:12:31,400 Speaker 1: many of these companies offer you know, time and cost 211 00:12:31,440 --> 00:12:35,120 Speaker 1: efficiencies to their customers or their clients. And you know, 212 00:12:35,200 --> 00:12:37,680 Speaker 1: at the time of general generally, in the time of crisis, 213 00:12:37,720 --> 00:12:41,240 Speaker 1: you're going to see a more likelihood of faster adoption 214 00:12:41,400 --> 00:12:43,719 Speaker 1: or people sort of looking more at the world from 215 00:12:43,720 --> 00:12:46,679 Speaker 1: a blank sheet of paper standpoint, and more likely to 216 00:12:46,720 --> 00:12:50,280 Speaker 1: do things that are different and change their behavior. In addition, 217 00:12:50,800 --> 00:12:52,679 Speaker 1: so I think that's generally true, but you know, from 218 00:12:52,679 --> 00:12:56,320 Speaker 1: a luck standpoint. In addition, I think we were for 219 00:12:56,679 --> 00:13:00,120 Speaker 1: relatively fortunate a tough time for everybody that some the 220 00:13:00,200 --> 00:13:05,320 Speaker 1: specific needs that a pandemic required, like delivery and staying 221 00:13:05,320 --> 00:13:08,880 Speaker 1: at home and UH and working and streaming from home, 222 00:13:09,360 --> 00:13:11,719 Speaker 1: you know, certainly did were extra benefits that you know, 223 00:13:12,600 --> 00:13:16,240 Speaker 1: much more luc driven than it was I think us 224 00:13:16,280 --> 00:13:19,319 Speaker 1: reacting quickly to the environment or anything like that. So 225 00:13:19,360 --> 00:13:23,880 Speaker 1: that raises an interesting question how much of these spectacular 226 00:13:23,960 --> 00:13:29,760 Speaker 1: gains for this group of companies. Is future growth being 227 00:13:29,800 --> 00:13:33,880 Speaker 1: pulled forward to and how much is a permanent shift 228 00:13:34,640 --> 00:13:38,160 Speaker 1: in the dynamic? Well, I think there's definitely some evidence 229 00:13:38,200 --> 00:13:41,560 Speaker 1: of a few things. There's some evidence you've seen some 230 00:13:41,679 --> 00:13:44,280 Speaker 1: of the fundamentals pulled forward for some of those companies, 231 00:13:44,320 --> 00:13:49,080 Speaker 1: i e. Growth, faster growth than expected coming into this period. 232 00:13:49,559 --> 00:13:52,280 Speaker 1: But as you're alluding to, you've also seen pretty dramatic 233 00:13:53,120 --> 00:13:56,240 Speaker 1: outperformance of the companies in relation to the rest of 234 00:13:56,240 --> 00:13:58,360 Speaker 1: the market. So I think it's a combination of both 235 00:13:58,800 --> 00:14:02,480 Speaker 1: forward UH fundamentals being pulled forward as well as potentially 236 00:14:02,760 --> 00:14:07,080 Speaker 1: UH to a degree, future returns also being pulled forward UM. 237 00:14:07,280 --> 00:14:10,720 Speaker 1: And so yeah, it's it's not we we still really 238 00:14:10,760 --> 00:14:14,480 Speaker 1: like the portfolios today from a fundamental standpoint, but when 239 00:14:14,520 --> 00:14:18,080 Speaker 1: you think about perspective returns from here, uh, you know, 240 00:14:18,160 --> 00:14:21,120 Speaker 1: we're not as we're not expecting the high returns we've 241 00:14:21,160 --> 00:14:24,600 Speaker 1: seen over the last ten to twenty years. That counterpoint global. 242 00:14:25,080 --> 00:14:27,280 Speaker 1: But I think that's really true of all asset classes 243 00:14:27,400 --> 00:14:30,240 Speaker 1: with interest rates where they are, and especially real interest 244 00:14:30,320 --> 00:14:34,080 Speaker 1: rates were possibly negative. It doesn't there aren't That doesn't 245 00:14:34,080 --> 00:14:36,480 Speaker 1: seem to be a whole lot of great places to 246 00:14:37,080 --> 00:14:40,840 Speaker 1: find new incremental investments so we're mostly happy staying the course, 247 00:14:41,400 --> 00:14:44,880 Speaker 1: but we recognize by pulling some of those fundamentals end 248 00:14:45,240 --> 00:14:50,240 Speaker 1: valuation expanding in the near term, you're not likely to see, 249 00:14:50,480 --> 00:14:54,280 Speaker 1: you know, the return profiles we've been able to achieve historically. 250 00:14:54,760 --> 00:14:59,760 Speaker 1: We're recording this the day after the big fiser vaccine 251 00:15:00,040 --> 00:15:05,680 Speaker 1: news came out effectiveness in a large study, and the 252 00:15:05,760 --> 00:15:10,040 Speaker 1: market action was value stocks I think had their best 253 00:15:10,120 --> 00:15:14,040 Speaker 1: day in uh at least five years. Tech didn't do 254 00:15:14,160 --> 00:15:17,560 Speaker 1: nearly as well. Do we think this trade is going 255 00:15:17,600 --> 00:15:21,640 Speaker 1: to be changing on a permanent basis or is this 256 00:15:21,800 --> 00:15:25,440 Speaker 1: just a little bit of digestion as to what everybody 257 00:15:25,640 --> 00:15:30,640 Speaker 1: thought was eventually going to come, namely some sort of vaccine, 258 00:15:30,760 --> 00:15:33,920 Speaker 1: some sort of return to normalcy. Yeah. I think you know, 259 00:15:33,960 --> 00:15:36,840 Speaker 1: if you're a trader and you're really focused on, you know, 260 00:15:36,920 --> 00:15:38,960 Speaker 1: the next few months or the next few weeks, or 261 00:15:39,000 --> 00:15:43,120 Speaker 1: of shorter time arisings, then I think you're very, very 262 00:15:43,160 --> 00:15:45,600 Speaker 1: interested in this kind of question, and you might be 263 00:15:45,640 --> 00:15:48,920 Speaker 1: looking at market activity as a barometer for whether or 264 00:15:48,960 --> 00:15:51,640 Speaker 1: not there's been a really dramatic there's certainly been a 265 00:15:51,720 --> 00:15:55,000 Speaker 1: very dramatic short term impact to that news, whether or 266 00:15:55,040 --> 00:15:58,280 Speaker 1: not that sustained itself. You know, it's very hard to predict, 267 00:15:58,320 --> 00:16:01,320 Speaker 1: and certainly we don't We don't have a strong view 268 00:16:01,360 --> 00:16:04,440 Speaker 1: as to whether that will continue or not in the 269 00:16:04,560 --> 00:16:07,520 Speaker 1: very short term. I think it's great news in general. 270 00:16:07,920 --> 00:16:10,360 Speaker 1: I think the economy is going to be a lot 271 00:16:10,480 --> 00:16:12,680 Speaker 1: bigger five to seven years from now, the sooner we 272 00:16:12,720 --> 00:16:15,520 Speaker 1: get out of this uh. And you know, it's hard 273 00:16:15,560 --> 00:16:18,560 Speaker 1: to sustain an economy through his fiscal stimulus and other 274 00:16:18,640 --> 00:16:22,240 Speaker 1: means UM. And that's not good for anybody, including the 275 00:16:22,320 --> 00:16:24,880 Speaker 1: companies that have done you know, the small group of 276 00:16:24,920 --> 00:16:27,480 Speaker 1: companies that have done really well this year. So I 277 00:16:27,520 --> 00:16:30,240 Speaker 1: look at as a positive development. Having said that, it's 278 00:16:30,280 --> 00:16:34,640 Speaker 1: also there's also a lot of unknowns and uncertainty. I think, um, 279 00:16:34,680 --> 00:16:37,680 Speaker 1: you know, how fast we can get any any sort 280 00:16:37,680 --> 00:16:43,320 Speaker 1: of functional vaccine um distributed and implemented. Uh, there are 281 00:16:43,440 --> 00:16:45,720 Speaker 1: you know, other things that can also still still go 282 00:16:45,840 --> 00:16:49,200 Speaker 1: wrong in terms of mutations of the virus, etcetera. So 283 00:16:49,280 --> 00:16:52,360 Speaker 1: this is still a time of uncertainty. Usually when you 284 00:16:52,400 --> 00:16:55,440 Speaker 1: see the sort of dramatic change and things, it's just 285 00:16:55,720 --> 00:16:57,840 Speaker 1: what it does tell you is that how people might 286 00:16:57,880 --> 00:17:00,680 Speaker 1: have been positioned in the short term are trying to 287 00:17:00,720 --> 00:17:04,760 Speaker 1: make short term profits and so obviously this suggests that 288 00:17:04,880 --> 00:17:08,800 Speaker 1: some people were you know, there's there's these stocks have 289 00:17:08,920 --> 00:17:12,199 Speaker 1: become popular in the short term, and that um, you know, 290 00:17:12,400 --> 00:17:15,439 Speaker 1: the people that need to protect their short term gains 291 00:17:15,720 --> 00:17:18,760 Speaker 1: were think in terms of those smaller increments of time 292 00:17:19,320 --> 00:17:21,520 Speaker 1: are going to you know, have have a problem. You know, 293 00:17:21,560 --> 00:17:23,520 Speaker 1: I think even at the end of last year, for example, 294 00:17:24,000 --> 00:17:25,760 Speaker 1: you know, our stocks weren't doing to some of the 295 00:17:25,800 --> 00:17:27,919 Speaker 1: stocks have done so well this year, We're doing terribly 296 00:17:27,960 --> 00:17:31,119 Speaker 1: in relation to the market in the fourth quarter, and 297 00:17:31,160 --> 00:17:33,600 Speaker 1: when we didn't do as badly in the initial draw 298 00:17:33,680 --> 00:17:39,680 Speaker 1: down um posts the COVID occurring, let's say in March April. 299 00:17:40,040 --> 00:17:41,600 Speaker 1: I think part of that had to do with, you know, 300 00:17:41,680 --> 00:17:43,320 Speaker 1: some of the people that are short term orions that 301 00:17:43,400 --> 00:17:46,160 Speaker 1: didn't own our stocks at that point because their relative 302 00:17:46,200 --> 00:17:48,280 Speaker 1: momentum was pretty terrible at the end of last year. 303 00:17:48,359 --> 00:17:50,720 Speaker 1: So this is not the fun part of being a 304 00:17:50,720 --> 00:17:53,680 Speaker 1: long term investor, because you know, we're we're all human 305 00:17:53,880 --> 00:17:57,960 Speaker 1: and you're gonna experience these kinds of times. But how 306 00:17:58,040 --> 00:18:01,399 Speaker 1: we think about the decision making, how we're you know, 307 00:18:01,480 --> 00:18:03,600 Speaker 1: kind of making our choices, it's more of a three 308 00:18:03,600 --> 00:18:07,240 Speaker 1: to five year thing, and it requires being being able 309 00:18:07,240 --> 00:18:09,720 Speaker 1: to zoom out from time to time and recognize that 310 00:18:09,760 --> 00:18:11,720 Speaker 1: the rest of the market's going to focus on short 311 00:18:11,840 --> 00:18:16,760 Speaker 1: term reactions, sometimes more than you'd like. So so let's 312 00:18:16,760 --> 00:18:20,760 Speaker 1: briefly discuss that short term reaction. Back in February and March, 313 00:18:21,359 --> 00:18:23,680 Speaker 1: in a very short period of time, I want to say, 314 00:18:23,720 --> 00:18:27,240 Speaker 1: five or six weeks, the SMP five hundred was down thirty. 315 00:18:28,720 --> 00:18:33,480 Speaker 1: You're running some pretty high, high beta names and a 316 00:18:33,520 --> 00:18:37,480 Speaker 1: lot of volatility. How do you manage around a draw 317 00:18:37,560 --> 00:18:41,480 Speaker 1: down like that? Is it merely you know, the cost 318 00:18:41,520 --> 00:18:43,719 Speaker 1: of admission if you're going to own some of these 319 00:18:44,240 --> 00:18:47,960 Speaker 1: um high flying names. That's pretty interesting, right because you 320 00:18:48,400 --> 00:18:50,760 Speaker 1: as you as you use the word beta, which is 321 00:18:50,760 --> 00:18:54,840 Speaker 1: obviously the modern portfolio you know, proxy for risk. And 322 00:18:55,400 --> 00:18:57,600 Speaker 1: one would have guessed that if, if, if you're you 323 00:18:57,720 --> 00:19:01,520 Speaker 1: had a higher than average beta profile in your portfolio, 324 00:19:01,640 --> 00:19:03,560 Speaker 1: that if the market was going to have the drawdown 325 00:19:03,640 --> 00:19:06,159 Speaker 1: it did earlier in the year, that these stocks or 326 00:19:06,200 --> 00:19:08,840 Speaker 1: those stocks would do worse, and it actually wanted up 327 00:19:08,880 --> 00:19:10,960 Speaker 1: being the opposite, which is pretty amazing. But I think 328 00:19:11,080 --> 00:19:14,560 Speaker 1: what shows you is the limitations of quantifying risk in 329 00:19:14,640 --> 00:19:17,320 Speaker 1: that way or really, you know something we love quantifying 330 00:19:17,359 --> 00:19:20,040 Speaker 1: things right, but sometimes it really only tells us so 331 00:19:20,160 --> 00:19:23,400 Speaker 1: much and we can kind of overly that oversimplification can 332 00:19:23,480 --> 00:19:26,800 Speaker 1: lead to overconfidence. So uh, meanwhile, now you have the 333 00:19:26,840 --> 00:19:29,800 Speaker 1: opposite happening, where um, you know, you have good news 334 00:19:29,800 --> 00:19:34,200 Speaker 1: and these companies going going near the direction at least temporarily. 335 00:19:34,280 --> 00:19:37,720 Speaker 1: So um, you know, I guess how we think about 336 00:19:37,840 --> 00:19:41,520 Speaker 1: drawhounds are? You know? They are part of investing in general. 337 00:19:42,000 --> 00:19:44,040 Speaker 1: No matter what you do, you're going to have. Any 338 00:19:44,080 --> 00:19:48,240 Speaker 1: successful investment over time that's publicly traded usually has some 339 00:19:48,320 --> 00:19:50,639 Speaker 1: draw down period, and we've lived through so many of 340 00:19:50,680 --> 00:19:53,640 Speaker 1: them over the last few decades. I mean, I can 341 00:19:53,760 --> 00:19:57,960 Speaker 1: remember vividly having a large position in Facebook after they 342 00:19:57,960 --> 00:20:01,920 Speaker 1: had come public and having this dot go down at 343 00:20:01,920 --> 00:20:04,720 Speaker 1: a time when I believe the market was up pretty significantly, 344 00:20:05,400 --> 00:20:08,440 Speaker 1: and that was a very challenging time. And the way 345 00:20:08,480 --> 00:20:11,760 Speaker 1: we think about risk generally is not really beta. It's 346 00:20:11,800 --> 00:20:15,680 Speaker 1: more about company specific fundamentals and exposures, and we're trying 347 00:20:15,720 --> 00:20:18,520 Speaker 1: to make sure we build a portfolio that has you know, um, 348 00:20:18,680 --> 00:20:21,000 Speaker 1: exposure to all parts of the economy. So it's not 349 00:20:21,119 --> 00:20:24,760 Speaker 1: one big bet, but from time to time on a 350 00:20:24,800 --> 00:20:29,479 Speaker 1: company specific basis and even sometimes on a short term 351 00:20:29,560 --> 00:20:32,440 Speaker 1: correlated basis. With a group of companies, you can have 352 00:20:32,720 --> 00:20:34,760 Speaker 1: these drawn outs and there, and they're painful. And I 353 00:20:34,760 --> 00:20:37,399 Speaker 1: think it's why Warren Buffetto says, you know, it's not 354 00:20:37,440 --> 00:20:40,080 Speaker 1: really about how smart you are investing, it's more about 355 00:20:40,119 --> 00:20:43,200 Speaker 1: your temperament. This is these are the time frames where 356 00:20:43,240 --> 00:20:46,720 Speaker 1: you kind of learn a lot about a team and um, 357 00:20:47,000 --> 00:20:48,919 Speaker 1: you know, whether they can handle that, and also your 358 00:20:48,960 --> 00:20:51,800 Speaker 1: clients and there has to be a nice, uh you know, 359 00:20:51,840 --> 00:20:55,040 Speaker 1: hopefully symbiotic relationship where your clients understand that that's a 360 00:20:55,080 --> 00:20:57,520 Speaker 1: part of the equation that you're going to experience them 361 00:20:57,560 --> 00:20:59,720 Speaker 1: from time to time. So while we would love to 362 00:20:59,800 --> 00:21:03,080 Speaker 1: have with them, um, at the same time, I think 363 00:21:03,080 --> 00:21:05,800 Speaker 1: it is a part of any any successful investment in 364 00:21:05,800 --> 00:21:08,199 Speaker 1: the public market that you're going to have these kind 365 00:21:08,240 --> 00:21:11,320 Speaker 1: of really dramatic swings. And the way we think about 366 00:21:11,480 --> 00:21:14,639 Speaker 1: is not really trying to figure out things like beta 367 00:21:15,119 --> 00:21:19,240 Speaker 1: or whether some companies are currently correlating that because that 368 00:21:19,359 --> 00:21:22,840 Speaker 1: maybe don't have real fundamental correlation long term. We think 369 00:21:22,880 --> 00:21:25,879 Speaker 1: about it more on a company specific level and making 370 00:21:25,920 --> 00:21:29,800 Speaker 1: sure we believe in those companies, the people running them, 371 00:21:29,920 --> 00:21:31,880 Speaker 1: the skin in the game of the people running them 372 00:21:32,000 --> 00:21:35,159 Speaker 1: hopefully there's a lot often mostly in our case, a 373 00:21:35,200 --> 00:21:38,800 Speaker 1: lot of equity ownership of the management teams. And then 374 00:21:38,840 --> 00:21:42,239 Speaker 1: just thinking first principles are we are we betting on 375 00:21:42,240 --> 00:21:44,440 Speaker 1: one big thing or not? And sometimes everyone else thinks 376 00:21:44,440 --> 00:21:47,720 Speaker 1: you're betting on one thing. But my guess is when 377 00:21:47,720 --> 00:21:49,800 Speaker 1: we look back in five years, many of the companies 378 00:21:49,800 --> 00:21:52,639 Speaker 1: that are being grouped and some of these artificial classifications 379 00:21:52,720 --> 00:21:56,280 Speaker 1: like work from home or or you know, fang or 380 00:21:56,359 --> 00:21:58,560 Speaker 1: you know the four horsemen, these types of things that 381 00:21:58,640 --> 00:22:01,280 Speaker 1: you know are used from time a time to discuss markets. 382 00:22:01,760 --> 00:22:04,240 Speaker 1: If you look later on, you know, five, three or 383 00:22:04,240 --> 00:22:06,800 Speaker 1: five ten years later, often the outcomes are very different 384 00:22:06,800 --> 00:22:09,880 Speaker 1: on the company's specific level. And part of our job 385 00:22:10,000 --> 00:22:12,120 Speaker 1: is to be able to communicate that with our clients 386 00:22:12,240 --> 00:22:15,160 Speaker 1: when we live through periods like this. So last question 387 00:22:15,400 --> 00:22:20,520 Speaker 1: in this area you mentioned not everything can be quantified. 388 00:22:21,080 --> 00:22:23,760 Speaker 1: How much of the success of these portfolios of the 389 00:22:23,800 --> 00:22:28,320 Speaker 1: past few years is driven by quantitative analytics and how 390 00:22:28,400 --> 00:22:33,680 Speaker 1: much of it is more qualitative insights into the potential 391 00:22:33,840 --> 00:22:39,120 Speaker 1: of the underlying business. You know, definitely I put most 392 00:22:39,119 --> 00:22:42,960 Speaker 1: of it in that second category, which is, you know, certainly, 393 00:22:43,240 --> 00:22:45,199 Speaker 1: so much of our time is spent on numbers in 394 00:22:45,200 --> 00:22:48,000 Speaker 1: the industry when we do our research, um. But at 395 00:22:48,000 --> 00:22:49,879 Speaker 1: the end of the day, I think that this is 396 00:22:49,920 --> 00:22:53,159 Speaker 1: more of an insight business and creative business and and 397 00:22:53,280 --> 00:22:56,320 Speaker 1: looking at the world differently or looking at an idea 398 00:22:56,400 --> 00:22:58,399 Speaker 1: differently than the rest of the world and try and 399 00:22:58,520 --> 00:23:01,320 Speaker 1: understand what that is as part of the process. So 400 00:23:01,359 --> 00:23:04,560 Speaker 1: I think we're much more qualitatively driven. That doesn't mean 401 00:23:04,560 --> 00:23:07,280 Speaker 1: we're anti quant you know. I think a good cult 402 00:23:07,359 --> 00:23:12,359 Speaker 1: investment culture is constantly thinking about you know, um alternatives 403 00:23:12,400 --> 00:23:15,439 Speaker 1: and not being closed minded, but being open. Uh. I 404 00:23:15,520 --> 00:23:19,960 Speaker 1: do think generally the problem with quantitative or algorithmic or 405 00:23:20,000 --> 00:23:23,920 Speaker 1: you know, kind of very specific rule fund based investing 406 00:23:24,040 --> 00:23:27,840 Speaker 1: is that the markets are complex, adaptive systems that change 407 00:23:27,880 --> 00:23:31,159 Speaker 1: over time. So the idea that while it's appealing at 408 00:23:31,200 --> 00:23:33,600 Speaker 1: a human and emotional level, that there might be some 409 00:23:33,720 --> 00:23:37,359 Speaker 1: secret formula that always works or works for extended period 410 00:23:37,359 --> 00:23:41,200 Speaker 1: of time. I I generally think that's a bad thought, 411 00:23:41,400 --> 00:23:44,600 Speaker 1: given that, like the markets today are so different even 412 00:23:44,640 --> 00:23:46,560 Speaker 1: than they were three to five years ago in terms 413 00:23:46,600 --> 00:23:48,879 Speaker 1: of the level of passive investing or the number of 414 00:23:48,880 --> 00:23:51,800 Speaker 1: hedge funds, where the types of companies in the markets 415 00:23:51,800 --> 00:23:54,480 Speaker 1: that comprise the markets, you know, so it's very hard 416 00:23:54,520 --> 00:23:57,520 Speaker 1: to think in those terms. It doesn't mean quantitatives can't 417 00:23:57,520 --> 00:23:59,640 Speaker 1: be a useful tool in some ways, maybe in helping 418 00:23:59,720 --> 00:24:02,439 Speaker 1: us can doct our research, but generally we're set up 419 00:24:02,480 --> 00:24:05,520 Speaker 1: more in the judgment business and the qualitative assessment business. 420 00:24:06,000 --> 00:24:08,920 Speaker 1: And I think that that, given the nature of markets, 421 00:24:08,960 --> 00:24:12,320 Speaker 1: that you have to have that as part of your DNA. So, Dennis, 422 00:24:12,359 --> 00:24:15,960 Speaker 1: let's talk a little bit about being an active manager 423 00:24:16,160 --> 00:24:21,800 Speaker 1: and being a manager that's running a concentrated portfolio. It's 424 00:24:21,840 --> 00:24:25,480 Speaker 1: been pretty tough for active managers the past decade. How 425 00:24:25,520 --> 00:24:29,720 Speaker 1: have you been able to stand out um from from 426 00:24:29,800 --> 00:24:33,119 Speaker 1: the move to towards passive. Well, I think, you know, 427 00:24:33,160 --> 00:24:36,400 Speaker 1: if you think about the investment industry, it's it's it's become, 428 00:24:36,520 --> 00:24:40,399 Speaker 1: over time, maybe as a mature industry, very compartmentalized, and 429 00:24:40,440 --> 00:24:44,120 Speaker 1: so most people have a very specific area that they're 430 00:24:44,119 --> 00:24:48,200 Speaker 1: focused on, maybe it's small cap growth or international large 431 00:24:48,200 --> 00:24:51,439 Speaker 1: cap value. So I think to some degree that's a 432 00:24:51,480 --> 00:24:55,080 Speaker 1: bit of a trap, and people get Lewis perspective in 433 00:24:55,160 --> 00:24:58,560 Speaker 1: being so compartmentalized in their knowledge. So I think one 434 00:24:58,560 --> 00:25:01,040 Speaker 1: thing we've done, and we talked about this upfront, is 435 00:25:01,080 --> 00:25:03,439 Speaker 1: as a team. We're structured in a way that the 436 00:25:03,480 --> 00:25:06,560 Speaker 1: investors you know, spend their time looking for great ideas, 437 00:25:06,600 --> 00:25:09,160 Speaker 1: regardless of those that at the end objective of those 438 00:25:09,240 --> 00:25:13,040 Speaker 1: kinds of compartments. And I think that that additional perspective 439 00:25:13,119 --> 00:25:17,000 Speaker 1: is valuable and useful when we look at the opportunity set. 440 00:25:17,000 --> 00:25:19,719 Speaker 1: It gives us a different perspectives. The fact that you know, 441 00:25:19,920 --> 00:25:23,600 Speaker 1: Sam Shinani, who's a world class and internet investor, can 442 00:25:23,600 --> 00:25:27,040 Speaker 1: look at small cap companies that could disrupt large cap companies, 443 00:25:27,080 --> 00:25:30,560 Speaker 1: are large cap or non US companies that can hurt 444 00:25:30,600 --> 00:25:33,240 Speaker 1: the small cap companies. I think it's something that not 445 00:25:33,359 --> 00:25:36,200 Speaker 1: all teams share and I think is a huge competitive 446 00:25:36,240 --> 00:25:39,719 Speaker 1: advantage from a structural standpoint. I think also, you know, 447 00:25:39,800 --> 00:25:42,400 Speaker 1: we look at great I think really good investing over 448 00:25:42,440 --> 00:25:45,359 Speaker 1: a long period of time is opportunities set driven. And 449 00:25:45,400 --> 00:25:48,320 Speaker 1: that's how we kind of define ourselves. UM. We don't 450 00:25:48,320 --> 00:25:50,560 Speaker 1: think in terms of that sort of the value growth 451 00:25:50,600 --> 00:25:54,560 Speaker 1: and some of the sort of the standard snowmenclature. UM 452 00:25:55,200 --> 00:25:59,080 Speaker 1: because because as we said before, the markets continue to evolve. 453 00:25:59,240 --> 00:26:03,080 Speaker 1: It's a complex adaptive system, so that the behaviors and 454 00:26:03,200 --> 00:26:05,880 Speaker 1: ideas you had twenty years ago might no longer be 455 00:26:06,320 --> 00:26:09,080 Speaker 1: kind of leading to success today. And when I think 456 00:26:09,080 --> 00:26:11,359 Speaker 1: about my own career, I went to Columbia Business School, 457 00:26:12,119 --> 00:26:15,000 Speaker 1: and I was got the chance to learn a lot 458 00:26:15,040 --> 00:26:17,200 Speaker 1: about things like return to invest the capital and free 459 00:26:17,200 --> 00:26:19,679 Speaker 1: cash flow yield. This is back, you know, back in 460 00:26:19,760 --> 00:26:22,040 Speaker 1: nineteen to late ninety nineties, and when I got into 461 00:26:22,040 --> 00:26:24,280 Speaker 1: the investment industry, I was surprised how little people who 462 00:26:24,320 --> 00:26:27,199 Speaker 1: were focused on those metrics. This is probably around the 463 00:26:27,200 --> 00:26:30,560 Speaker 1: time when Joel Greenblatt wrote wrote a book like things 464 00:26:30,560 --> 00:26:32,560 Speaker 1: called a Little Book that Beats the Market about those 465 00:26:32,640 --> 00:26:35,240 Speaker 1: kind of variables are O, I C and free cash flow. 466 00:26:35,280 --> 00:26:38,560 Speaker 1: And I think for quite some time, being more focused 467 00:26:38,560 --> 00:26:41,600 Speaker 1: on that than sort of say earnings and P multiples 468 00:26:41,920 --> 00:26:44,639 Speaker 1: was sort of an interesting way of of looking at 469 00:26:44,920 --> 00:26:48,320 Speaker 1: the opportunities in the market differently than other people. When 470 00:26:48,320 --> 00:26:50,439 Speaker 1: I then, you know, when I think about of our 471 00:26:50,480 --> 00:26:54,320 Speaker 1: experience halfway through the twenty years, having some success with 472 00:26:54,400 --> 00:26:58,680 Speaker 1: companies like Amazon and Facebook before they had reported earnings, um, 473 00:26:58,760 --> 00:27:00,919 Speaker 1: you know, I led us to tontinue to be opening 474 00:27:00,920 --> 00:27:03,840 Speaker 1: the idea that you know, investings through the income statement 475 00:27:03,880 --> 00:27:06,760 Speaker 1: can be a good idea. And more recently, I think 476 00:27:06,840 --> 00:27:10,800 Speaker 1: there's a little more recognition that investing today on the 477 00:27:10,800 --> 00:27:14,480 Speaker 1: corporate level is happening more from a into things like 478 00:27:14,480 --> 00:27:17,760 Speaker 1: an intangil assets relative to tangible assets, and so that 479 00:27:17,880 --> 00:27:20,480 Speaker 1: can lead to things like lack of earnings, but not 480 00:27:20,600 --> 00:27:24,160 Speaker 1: necessarily bad decision making at the corporate level or something 481 00:27:24,200 --> 00:27:27,920 Speaker 1: bad about the business. So that openness and and and 482 00:27:28,040 --> 00:27:30,680 Speaker 1: a willingness to look at the different opportunities out there 483 00:27:31,400 --> 00:27:33,600 Speaker 1: also has let us more recently some of the companies 484 00:27:33,640 --> 00:27:37,480 Speaker 1: that have succeeded more recently UM. So I think overall 485 00:27:37,480 --> 00:27:40,560 Speaker 1: the team as an open mindset UM, but also we're 486 00:27:40,600 --> 00:27:43,600 Speaker 1: constantly trying to understand where the best ideas are today 487 00:27:43,600 --> 00:27:46,520 Speaker 1: in the market's given the fact we have a global mandate. 488 00:27:46,960 --> 00:27:49,600 Speaker 1: And I think it's the perspective plus that openness that 489 00:27:49,960 --> 00:27:53,600 Speaker 1: hopefully leads to an environment where we can succeed. So 490 00:27:53,720 --> 00:27:56,560 Speaker 1: you you're echoing some of the thoughts I've heard from 491 00:27:56,600 --> 00:28:00,720 Speaker 1: people like Will dan Off at Fidelity, or Bill Miller 492 00:28:01,359 --> 00:28:04,360 Speaker 1: formerly of Like Mason now with his own shop, as 493 00:28:04,359 --> 00:28:08,199 Speaker 1: well as Joel Greenblatt who have said, if you're just 494 00:28:08,400 --> 00:28:12,200 Speaker 1: looking at PE ratios, you're missing a lot of the pictures. 495 00:28:12,960 --> 00:28:17,960 Speaker 1: Is that something UM that has evolved over the past 496 00:28:17,960 --> 00:28:21,680 Speaker 1: twenty years have there been a group of people who 497 00:28:21,720 --> 00:28:25,320 Speaker 1: recognize that and basically profited from it while a lot 498 00:28:25,359 --> 00:28:28,240 Speaker 1: of people were stuck in the old dynamic or or 499 00:28:28,359 --> 00:28:31,720 Speaker 1: my overstating that, well, I definitely think to an extent 500 00:28:31,800 --> 00:28:34,719 Speaker 1: that is true that, um, you know, if you define 501 00:28:34,760 --> 00:28:38,200 Speaker 1: yourself so narrowly in any business, but in particular in 502 00:28:38,200 --> 00:28:40,640 Speaker 1: this business, as you know, a low pe investor or 503 00:28:40,760 --> 00:28:44,320 Speaker 1: high pe investor, or a low price and sales, or 504 00:28:44,400 --> 00:28:46,680 Speaker 1: if you if you sort of identified too much as 505 00:28:46,720 --> 00:28:50,320 Speaker 1: one variable and you're not open to thinking about how 506 00:28:51,040 --> 00:28:56,000 Speaker 1: the actual economic circumstances in reality might affect those variables. 507 00:28:56,200 --> 00:29:00,320 Speaker 1: And and I intangible capital being more valuable and those 508 00:29:00,360 --> 00:29:03,440 Speaker 1: investments than they have been historically and more important and 509 00:29:03,440 --> 00:29:06,240 Speaker 1: more necessary than I think it's just important enough to 510 00:29:06,320 --> 00:29:09,920 Speaker 1: anchor on. I can't you know, buy something because of 511 00:29:10,000 --> 00:29:14,040 Speaker 1: one variable. I mean the reality is uh, real life 512 00:29:14,080 --> 00:29:16,120 Speaker 1: is more complex than that. And looking at a lot 513 00:29:16,160 --> 00:29:19,400 Speaker 1: of different vantage points I think can help you understand 514 00:29:19,400 --> 00:29:22,800 Speaker 1: the situation more fully. And in this case, um, I 515 00:29:22,840 --> 00:29:26,680 Speaker 1: think what you're saying has some validity because sometimes people 516 00:29:26,840 --> 00:29:29,280 Speaker 1: just to keep k it's it's easy. We all got 517 00:29:29,280 --> 00:29:31,080 Speaker 1: to get through our days, and it's a lot easier 518 00:29:31,120 --> 00:29:33,600 Speaker 1: to live with rules of thumb or that either you 519 00:29:33,640 --> 00:29:36,240 Speaker 1: identify with the tribe or you identify with an approach 520 00:29:36,280 --> 00:29:38,440 Speaker 1: and and just stick to that, and it is to 521 00:29:38,520 --> 00:29:40,880 Speaker 1: kind of I think, try to think beyond some of 522 00:29:40,920 --> 00:29:43,640 Speaker 1: those things and explore the ideas that might be the 523 00:29:43,720 --> 00:29:49,040 Speaker 1: drivers behind them. So we've mostly been discussing the factors 524 00:29:49,120 --> 00:29:53,960 Speaker 1: and decision making behind selecting a stock, but a number 525 00:29:54,000 --> 00:29:58,960 Speaker 1: of studies have discovered that the bigger challenges identifying when 526 00:29:59,000 --> 00:30:02,080 Speaker 1: to sell a stock. That seems to be where all 527 00:30:02,120 --> 00:30:04,200 Speaker 1: the profits are made, and it also seems to be 528 00:30:04,280 --> 00:30:07,640 Speaker 1: where all the mistakes are made. How do you determine 529 00:30:07,800 --> 00:30:12,360 Speaker 1: when to sell something that's been in your portfolio either 530 00:30:12,440 --> 00:30:15,040 Speaker 1: for a short time and it looks like you're wrong, 531 00:30:15,240 --> 00:30:18,200 Speaker 1: or for a longer time and it's gone as far 532 00:30:18,240 --> 00:30:20,440 Speaker 1: as you might think it might go. Well, yeah, there's 533 00:30:20,440 --> 00:30:23,120 Speaker 1: several reasons will sell. I mean the first that comes 534 00:30:23,120 --> 00:30:27,040 Speaker 1: to mind is diversification. Sometimes part of the portfolio just 535 00:30:27,040 --> 00:30:29,560 Speaker 1: gets too big, and that we need to think about 536 00:30:29,600 --> 00:30:32,560 Speaker 1: that to some degree on an now I'm talking primarily 537 00:30:32,560 --> 00:30:35,960 Speaker 1: on an individual company specific name basis that we don't 538 00:30:36,000 --> 00:30:38,760 Speaker 1: want to have too much exposure to one idea at 539 00:30:38,760 --> 00:30:41,880 Speaker 1: some point, no matter how strong it's been. UM. That 540 00:30:42,040 --> 00:30:44,800 Speaker 1: then we also might sell because we think the risk 541 00:30:44,880 --> 00:30:47,480 Speaker 1: reward is no longer as compelling as other ideas that 542 00:30:47,520 --> 00:30:50,320 Speaker 1: we're looking at. So that would be under the evaluation 543 00:30:50,800 --> 00:30:56,400 Speaker 1: UM bucket of selling. UM. There, I think it's important 544 00:30:56,120 --> 00:30:59,240 Speaker 1: to an important distinction. Like you you mentioned earlier around 545 00:30:59,640 --> 00:31:01,960 Speaker 1: you know, ease and such. You know what we're really 546 00:31:01,960 --> 00:31:04,920 Speaker 1: looking at when I say evaluation is what's the market 547 00:31:04,920 --> 00:31:07,360 Speaker 1: cap today and based on our analysis over the next 548 00:31:07,400 --> 00:31:09,440 Speaker 1: five and ten years, where can the market cap be? 549 00:31:10,160 --> 00:31:13,720 Speaker 1: Not necessarily un multiple UM, because I think people sort 550 00:31:13,720 --> 00:31:15,880 Speaker 1: of conflate that day. When you hear the word valuation, 551 00:31:15,920 --> 00:31:18,520 Speaker 1: it usually means what someone really means is a short 552 00:31:18,600 --> 00:31:22,240 Speaker 1: term multiple. And again that's a simplification. It's not really 553 00:31:22,600 --> 00:31:25,240 Speaker 1: giving you a full picture of the potential of a company. 554 00:31:25,600 --> 00:31:28,800 Speaker 1: In my mind, UM, And finally we'll sell because the 555 00:31:28,800 --> 00:31:32,360 Speaker 1: thesis changes, right so that we're we're constantly focused on 556 00:31:32,440 --> 00:31:35,720 Speaker 1: competitive the competitive landscape that our companies are operating in 557 00:31:36,200 --> 00:31:39,160 Speaker 1: and monitoring that you know, every second of the day, 558 00:31:39,280 --> 00:31:41,600 Speaker 1: and from time to time, you know, threats will emerge 559 00:31:41,640 --> 00:31:44,360 Speaker 1: for our companies that are competitive and it might be 560 00:31:44,520 --> 00:31:48,040 Speaker 1: from a company that's disruptive and young, and then most 561 00:31:48,080 --> 00:31:49,840 Speaker 1: people aren't following it, or it could be from an 562 00:31:49,880 --> 00:31:52,640 Speaker 1: existing company trying to follow some sort of bumbling type 563 00:31:52,640 --> 00:31:57,320 Speaker 1: of approach. UM, but we will closely watch how that's changing. 564 00:31:57,360 --> 00:31:59,880 Speaker 1: And that might be a variable that hasn't shown up 565 00:32:00,000 --> 00:32:04,400 Speaker 1: at in the company's u results, but that we're starting 566 00:32:04,400 --> 00:32:07,200 Speaker 1: to anticipate that the uniqueness of the company and their 567 00:32:07,200 --> 00:32:10,280 Speaker 1: competitive bantages. And what we thought was let's talk a 568 00:32:10,320 --> 00:32:16,080 Speaker 1: little bit about how you construct portfolios and what they 569 00:32:16,120 --> 00:32:18,440 Speaker 1: look like. And and one of the first questions I 570 00:32:18,480 --> 00:32:25,360 Speaker 1: have to ask is you have fairly concentrated portfolios. How 571 00:32:25,440 --> 00:32:29,120 Speaker 1: do you know what's too concentrated? How do you figure 572 00:32:29,160 --> 00:32:33,560 Speaker 1: out how to size various positions? Sure, well, look, I 573 00:32:33,600 --> 00:32:36,680 Speaker 1: think there are only so many great ideas globally, right, 574 00:32:36,720 --> 00:32:40,240 Speaker 1: and so I think UM and as I've mentioned, you know, 575 00:32:40,280 --> 00:32:43,480 Speaker 1: we're opportunities at driven. So you're right, today we're fairly 576 00:32:43,520 --> 00:32:47,120 Speaker 1: concentrated in relation to what you might expect generally within 577 00:32:47,160 --> 00:32:51,120 Speaker 1: the mutual fund industry. UM. But right now, or at 578 00:32:51,200 --> 00:32:53,240 Speaker 1: least in the last few years, we thought there were 579 00:32:53,280 --> 00:32:56,200 Speaker 1: just a unique group of companies that warranted taking a 580 00:32:56,280 --> 00:33:01,160 Speaker 1: larger position and maybe slightly more concentration given our conviction 581 00:33:01,360 --> 00:33:04,160 Speaker 1: in their competitive advantage and the opportunity that they have 582 00:33:04,200 --> 00:33:07,240 Speaker 1: in front of them. UM. I also think though, that 583 00:33:07,320 --> 00:33:09,600 Speaker 1: it's it's bad to be dogmatic, and you can have 584 00:33:09,640 --> 00:33:12,560 Speaker 1: another environment or an opportunity set where you want to 585 00:33:12,560 --> 00:33:15,400 Speaker 1: own some more names. The word more names make the cut, 586 00:33:15,520 --> 00:33:18,560 Speaker 1: and that might affect the waitings that you are gonna 587 00:33:19,240 --> 00:33:22,040 Speaker 1: allocate to all the names that you currently already own 588 00:33:22,160 --> 00:33:25,360 Speaker 1: or want to continue to own. So we generally, though, 589 00:33:25,440 --> 00:33:27,920 Speaker 1: are going to be more active and different than the 590 00:33:27,920 --> 00:33:30,640 Speaker 1: market by our DNA. And I think a big part 591 00:33:30,640 --> 00:33:33,600 Speaker 1: of our culture is a willingness to be different. It's, 592 00:33:33,680 --> 00:33:35,760 Speaker 1: you know, you don't want to just be a contrarian 593 00:33:35,800 --> 00:33:38,600 Speaker 1: in life, As I think Jeff Bezos has said, it's 594 00:33:39,320 --> 00:33:42,040 Speaker 1: you know, being a contrarian is usually wrong, but when 595 00:33:42,160 --> 00:33:44,200 Speaker 1: you know, but but the big ideas and the big 596 00:33:44,280 --> 00:33:46,720 Speaker 1: kind of gains in life occur when you are willing 597 00:33:46,760 --> 00:33:48,960 Speaker 1: to be a little bit outside or away from the 598 00:33:48,960 --> 00:33:51,680 Speaker 1: crowd or against the crowd, and you have to have 599 00:33:52,160 --> 00:33:54,280 Speaker 1: that in your DNA. But in terms of our general 600 00:33:54,320 --> 00:33:57,920 Speaker 1: thought around sizing, generally, when we have a core position 601 00:33:57,960 --> 00:34:00,200 Speaker 1: that we think really fits all of our criteria, Uh, 602 00:34:00,760 --> 00:34:02,200 Speaker 1: you know, it's usually going to be a tune a 603 00:34:02,200 --> 00:34:04,120 Speaker 1: half or three and a half percent of the portfolio 604 00:34:04,200 --> 00:34:08,719 Speaker 1: type of allocation of costs initially. Um occasionally we'll have 605 00:34:08,840 --> 00:34:12,439 Speaker 1: ideas that are a little more speculative but have maybe 606 00:34:12,520 --> 00:34:16,040 Speaker 1: some binary components done. Things like biotech might fit there, 607 00:34:17,520 --> 00:34:20,840 Speaker 1: or there's some limitation, but the upsides significant enough for 608 00:34:20,880 --> 00:34:23,440 Speaker 1: us to want it to make a small allocation. In 609 00:34:23,440 --> 00:34:25,680 Speaker 1: that case, we'll own things that even in the in 610 00:34:25,760 --> 00:34:28,120 Speaker 1: the small small as like a fifty basis point increment, 611 00:34:28,520 --> 00:34:30,200 Speaker 1: because you know, what I would call that is, you know, 612 00:34:30,239 --> 00:34:33,760 Speaker 1: betting small to win big, where you're you're not risking much, 613 00:34:33,920 --> 00:34:35,640 Speaker 1: but it is still it's kind of worth it in 614 00:34:35,640 --> 00:34:38,640 Speaker 1: the context of the overall portfolio because the upside is 615 00:34:38,640 --> 00:34:41,320 Speaker 1: so great and you know, I think more broadly away 616 00:34:41,440 --> 00:34:44,400 Speaker 1: from even the funds we managed, like you know, somebody 617 00:34:44,480 --> 00:34:47,920 Speaker 1: might put bitcoin into that category. You know, as a 618 00:34:47,960 --> 00:34:50,600 Speaker 1: personal investment, you know amount that you're willing to sort 619 00:34:50,640 --> 00:34:52,880 Speaker 1: of take a risk that this is going to zero, 620 00:34:52,960 --> 00:34:56,040 Speaker 1: but you're opening up your overall portfoiliy of some big 621 00:34:56,120 --> 00:35:00,319 Speaker 1: upside potential and maybe even potential that can help you know, 622 00:35:00,400 --> 00:35:03,040 Speaker 1: at a time of crisis. You know, it's something that's 623 00:35:03,040 --> 00:35:06,239 Speaker 1: anti fragile or that can benefit from disorder while the 624 00:35:06,280 --> 00:35:08,560 Speaker 1: rest of your portfolio is going down is always appealing. 625 00:35:08,600 --> 00:35:10,560 Speaker 1: So the bottom line is, you know, we have our 626 00:35:10,600 --> 00:35:13,200 Speaker 1: core position size. As I mentioned, we think a little 627 00:35:13,239 --> 00:35:18,200 Speaker 1: bit about speculative value and speculation um and binary outcomes 628 00:35:18,239 --> 00:35:21,319 Speaker 1: and manage that risk by with sizing the port of 629 00:35:21,360 --> 00:35:24,000 Speaker 1: those ideas properly. I think there really aren't any bad 630 00:35:24,040 --> 00:35:27,200 Speaker 1: ideas in life. I mean, obviously you could probably you 631 00:35:27,239 --> 00:35:29,080 Speaker 1: could probably come up with a really bad idea, but 632 00:35:29,160 --> 00:35:32,479 Speaker 1: just it's really about sizing. You know, if you bet, 633 00:35:33,360 --> 00:35:36,000 Speaker 1: you bet one penny out of a dollar, you know 634 00:35:36,560 --> 00:35:38,719 Speaker 1: you really can only lose. You really haven't lost much 635 00:35:38,719 --> 00:35:42,279 Speaker 1: if you lose. So it's really about sizing, not you know, 636 00:35:42,360 --> 00:35:44,920 Speaker 1: And sizing is a function of our conviction and the 637 00:35:45,000 --> 00:35:48,680 Speaker 1: quality idea, right And and obviously anytime you have an 638 00:35:48,719 --> 00:35:54,160 Speaker 1: opportunity for really asymmetrical risk reward bed you can do 639 00:35:54,200 --> 00:35:57,480 Speaker 1: that with one yes, And it really depends on you 640 00:35:57,600 --> 00:36:00,319 Speaker 1: and personality. Right. Some people might think once a sense 641 00:36:00,400 --> 00:36:03,000 Speaker 1: too much or not enough. And for us, at least 642 00:36:03,360 --> 00:36:06,200 Speaker 1: for our farms, that's that's usually more of a fifty 643 00:36:06,239 --> 00:36:10,160 Speaker 1: cents out of a dollar fifty basis points. Gotcha. So, 644 00:36:10,160 --> 00:36:13,920 Speaker 1: so you mentioned Jeff Bezos and Amazon dot Com, But 645 00:36:14,000 --> 00:36:17,799 Speaker 1: I'm curious about your process. How what brings you to 646 00:36:17,920 --> 00:36:23,319 Speaker 1: names like Amazon and Shopify and Slack and Zoom and moderner. 647 00:36:23,880 --> 00:36:28,840 Speaker 1: Not specifically the work from home theme, but what was 648 00:36:28,960 --> 00:36:33,680 Speaker 1: the pre approach that led you to these companies? Is 649 00:36:33,719 --> 00:36:36,720 Speaker 1: it growth? Is it is a growth at a reasonable price? 650 00:36:37,120 --> 00:36:42,160 Speaker 1: Is it um the unique winner? Take all companies with 651 00:36:42,239 --> 00:36:45,359 Speaker 1: a moat around their business? What what's the thinking that 652 00:36:45,480 --> 00:36:48,359 Speaker 1: leads you here? I mean, those are some actually good, good, 653 00:36:48,560 --> 00:36:51,239 Speaker 1: good stabs at it. I think our ideas tend to 654 00:36:51,239 --> 00:36:54,120 Speaker 1: emerge from all the all the activities of the people 655 00:36:54,160 --> 00:36:56,080 Speaker 1: on the team. We've been lucky to have people on 656 00:36:56,080 --> 00:36:59,000 Speaker 1: the team for you know, I think I think we've 657 00:36:59,000 --> 00:37:01,839 Speaker 1: had very little turnover over the last sixteen years. So 658 00:37:02,120 --> 00:37:04,200 Speaker 1: we're proud of that. And part of the benefit of 659 00:37:04,200 --> 00:37:06,000 Speaker 1: them being in one place for a long period of 660 00:37:06,000 --> 00:37:09,280 Speaker 1: time as they get developed really stable and contact networks 661 00:37:09,280 --> 00:37:13,400 Speaker 1: with an industry, companies, corporate world, the investment world, etcetera. 662 00:37:13,480 --> 00:37:15,839 Speaker 1: So we always have ideas. They tend to emerge from 663 00:37:15,880 --> 00:37:19,239 Speaker 1: our research and our daily activities. But You're right where 664 00:37:19,239 --> 00:37:21,640 Speaker 1: there are certain things we're looking for. It's not from 665 00:37:21,680 --> 00:37:24,360 Speaker 1: screening for high growth rates or something of that nature. 666 00:37:24,880 --> 00:37:29,440 Speaker 1: It's more certain characteristics jump out at us, like inside ownership. 667 00:37:29,560 --> 00:37:31,840 Speaker 1: Like a lot of these cases that you just mentioned, 668 00:37:31,880 --> 00:37:34,799 Speaker 1: or at least many of them, you have. You know, 669 00:37:34,960 --> 00:37:38,240 Speaker 1: the founder or the person in charge has a large 670 00:37:38,280 --> 00:37:41,000 Speaker 1: equity stake, a lot of skin in the game. So 671 00:37:41,239 --> 00:37:43,720 Speaker 1: that's always really interesting to us when you have somebody 672 00:37:43,719 --> 00:37:47,600 Speaker 1: who's not just you know, um in the CEO and 673 00:37:47,600 --> 00:37:51,200 Speaker 1: and managing a business, but really someone who acts like 674 00:37:51,239 --> 00:37:55,080 Speaker 1: an owner. Similarly, for us, you know, our team has 675 00:37:55,120 --> 00:37:57,719 Speaker 1: a lot of ownership of our products. I mentioned you know, 676 00:37:57,760 --> 00:38:01,080 Speaker 1: we have a large, large number of products across the platform. 677 00:38:01,120 --> 00:38:03,439 Speaker 1: I have to personally have money and every one of them. 678 00:38:03,640 --> 00:38:05,440 Speaker 1: I don't think you should start a product unless you 679 00:38:05,440 --> 00:38:07,239 Speaker 1: think it can succeed in or you're willing to put 680 00:38:07,280 --> 00:38:10,400 Speaker 1: direct investment in. In addition, I think what's great is 681 00:38:10,400 --> 00:38:15,600 Speaker 1: Morgan Stanley, through it's deferred compensation program, UH forces you, 682 00:38:15,800 --> 00:38:17,360 Speaker 1: whether you like it or not, or to put at 683 00:38:17,440 --> 00:38:21,719 Speaker 1: least you're deferred pay into the products you manage. Our 684 00:38:21,719 --> 00:38:24,960 Speaker 1: team tends to put over so for me, you know, 685 00:38:25,040 --> 00:38:27,520 Speaker 1: we're putting our skin in the game every day in 686 00:38:27,560 --> 00:38:30,360 Speaker 1: the products we're managing for our clients at Counterpoint Global, 687 00:38:30,640 --> 00:38:33,080 Speaker 1: and we're looking for companies that do the same thing 688 00:38:33,480 --> 00:38:37,480 Speaker 1: that our owner operators, not just people that are caretakers 689 00:38:37,480 --> 00:38:40,680 Speaker 1: of something that's already been built, and not not to 690 00:38:40,760 --> 00:38:43,879 Speaker 1: disparage some of those situations, but I think the more 691 00:38:43,920 --> 00:38:47,840 Speaker 1: interesting component is trying to find that identify cultures that 692 00:38:47,880 --> 00:38:51,200 Speaker 1: act like owners like we do. And I think that 693 00:38:51,200 --> 00:38:54,200 Speaker 1: that's really appealing. And when you can combine that with 694 00:38:54,560 --> 00:38:58,320 Speaker 1: high growth potential and big you know, addressable market's, obviously 695 00:38:58,360 --> 00:39:02,080 Speaker 1: that's even more appealing. So much of your process sounds 696 00:39:02,200 --> 00:39:08,880 Speaker 1: very much bottoms up stock picking, fundamental analysis of different companies, businesses. 697 00:39:09,520 --> 00:39:12,080 Speaker 1: How much do you pay attention to what's going on 698 00:39:12,680 --> 00:39:15,120 Speaker 1: in the world top down? I don't get the sense 699 00:39:15,200 --> 00:39:20,719 Speaker 1: that you're hanging on every FED release or every uh, 700 00:39:21,120 --> 00:39:25,440 Speaker 1: you know, macro economic release like I s M or 701 00:39:26,400 --> 00:39:31,879 Speaker 1: um international deficit or do you guys factor top down 702 00:39:31,920 --> 00:39:37,040 Speaker 1: into your process very much? So? UM, Yeah, we're mostly 703 00:39:37,080 --> 00:39:39,799 Speaker 1: focused at what people would call bottom ups and making 704 00:39:39,840 --> 00:39:43,440 Speaker 1: company specific investments. UM. Because few things that come to 705 00:39:43,480 --> 00:39:45,400 Speaker 1: mind when you ask that question. I mean one is 706 00:39:45,880 --> 00:39:48,280 Speaker 1: I think I'd be remiss and anybody would be interested 707 00:39:48,400 --> 00:39:51,160 Speaker 1: for all asset classes in general. But the fact that 708 00:39:51,200 --> 00:39:53,880 Speaker 1: we've had a tail in behind the you know, a 709 00:39:53,880 --> 00:39:56,719 Speaker 1: lot of pretty much every asset class over the last 710 00:39:56,760 --> 00:39:59,200 Speaker 1: thirty years with interest rates kind of going from where 711 00:39:59,239 --> 00:40:02,080 Speaker 1: they hadn't been to they are today. And that's partly 712 00:40:02,120 --> 00:40:05,200 Speaker 1: something that sort of lifts all acts classes to some 713 00:40:05,280 --> 00:40:10,120 Speaker 1: degree and probably does help companies on the margin. More intellectually, 714 00:40:10,120 --> 00:40:11,960 Speaker 1: you can understand that if you did that have high 715 00:40:12,000 --> 00:40:14,200 Speaker 1: growth in the future and where the values on the 716 00:40:14,239 --> 00:40:17,680 Speaker 1: come as opposed to something that's like right today current currently, 717 00:40:17,719 --> 00:40:19,200 Speaker 1: there is some something that might be more of a 718 00:40:19,239 --> 00:40:23,160 Speaker 1: hard asset. So I think interest rates obviously matter. The 719 00:40:23,200 --> 00:40:25,600 Speaker 1: problem is we don't know what they're gonna do, you know, 720 00:40:25,680 --> 00:40:28,799 Speaker 1: and so um, you know, are they going to go up? 721 00:40:28,800 --> 00:40:31,000 Speaker 1: Are they going to go down? And if they do, 722 00:40:31,040 --> 00:40:34,560 Speaker 1: you know why. We don't know what circumstances might lead 723 00:40:34,560 --> 00:40:36,520 Speaker 1: to that those things happening, or why the stas might 724 00:40:36,560 --> 00:40:40,160 Speaker 1: do what it does. So I think given that we 725 00:40:40,480 --> 00:40:42,680 Speaker 1: know our mindset is that's some of that's so unknowable, 726 00:40:42,719 --> 00:40:45,320 Speaker 1: that's better to focus on specifics that you can control. 727 00:40:46,080 --> 00:40:48,520 Speaker 1: UM and in the process. When we look at our 728 00:40:48,560 --> 00:40:50,960 Speaker 1: companies and play around with the sensitivities of what they 729 00:40:50,960 --> 00:40:53,720 Speaker 1: could be worth, we obviously need to cost the capital. 730 00:40:53,760 --> 00:40:55,800 Speaker 1: We need an alternative to look at, and that includes 731 00:40:55,880 --> 00:40:59,719 Speaker 1: other companies and asset classes, including the rest free rate um. 732 00:40:59,719 --> 00:41:02,279 Speaker 1: We've try it over time to not give a whole 733 00:41:02,320 --> 00:41:05,120 Speaker 1: lot of benefit to the fact that interest rates are 734 00:41:05,160 --> 00:41:08,240 Speaker 1: as low as they are today, and generally we don't. 735 00:41:08,280 --> 00:41:10,360 Speaker 1: But you know, when I play around the sensitivity is 736 00:41:10,360 --> 00:41:13,359 Speaker 1: of values the companies, it is a consideration because it's 737 00:41:13,400 --> 00:41:15,520 Speaker 1: also possible to stay where they are. So it's a 738 00:41:15,520 --> 00:41:17,759 Speaker 1: probably a long winded way of saying, you know, we're 739 00:41:17,800 --> 00:41:21,279 Speaker 1: not that focused on the macro. It does matter in 740 00:41:21,280 --> 00:41:25,160 Speaker 1: the sense that things like interest rates represent fundamental alternatives 741 00:41:25,200 --> 00:41:28,359 Speaker 1: and cost of capital, and they the consideration and how 742 00:41:28,400 --> 00:41:30,840 Speaker 1: you think about company valuation, whether you like it or not, 743 00:41:32,000 --> 00:41:34,359 Speaker 1: having a strong view about what's going to happen in 744 00:41:34,400 --> 00:41:37,600 Speaker 1: those uh to those variables. Though I think it's some 745 00:41:37,640 --> 00:41:39,759 Speaker 1: people might do that, well, it's not a part of 746 00:41:39,760 --> 00:41:42,840 Speaker 1: our DNA, and I think that the only problem with 747 00:41:42,880 --> 00:41:46,000 Speaker 1: that thought process is that you know, if if you 748 00:41:46,000 --> 00:41:47,959 Speaker 1: think interest rates are going up and you're gonna build 749 00:41:47,960 --> 00:41:50,680 Speaker 1: a portfolio around that thought. If you're wrong, you've got 750 00:41:50,680 --> 00:41:52,799 Speaker 1: to change your whole portfolio. And what we try to 751 00:41:52,800 --> 00:41:56,879 Speaker 1: do is collect unique companies that have exposure to many 752 00:41:56,920 --> 00:41:59,960 Speaker 1: different end markets. Ultimately that can be hopefully a lot bigger, 753 00:42:00,000 --> 00:42:03,280 Speaker 1: and the market caps are today in excess of hopefully 754 00:42:03,320 --> 00:42:06,200 Speaker 1: the alternatives and let some of the rest of that 755 00:42:06,280 --> 00:42:10,239 Speaker 1: all play outs. And really, you know, it's control what 756 00:42:10,360 --> 00:42:13,719 Speaker 1: you can control. And it just fits the way we 757 00:42:13,760 --> 00:42:17,080 Speaker 1: think about the world, which is more individual judgments as 758 00:42:17,120 --> 00:42:20,640 Speaker 1: opposed to kind of larger It takes on asset classes 759 00:42:20,640 --> 00:42:23,120 Speaker 1: and things of that nature, which I think aren't that 760 00:42:23,280 --> 00:42:25,839 Speaker 1: use to us or not that useful. If you tell 761 00:42:25,840 --> 00:42:28,960 Speaker 1: me the markets over valued and aggregate, it doesn't help 762 00:42:29,000 --> 00:42:31,279 Speaker 1: me make a decision about the one company I'm looking at. 763 00:42:31,320 --> 00:42:34,399 Speaker 1: It might be really undervalued, right It actually might hurt 764 00:42:34,440 --> 00:42:36,759 Speaker 1: you to think the markets over value ten years ago. 765 00:42:37,200 --> 00:42:39,040 Speaker 1: And so you know, I think the markets over value 766 00:42:39,120 --> 00:42:40,719 Speaker 1: right now. So I'm not going to buy Amazon, even 767 00:42:40,719 --> 00:42:44,000 Speaker 1: though I'm interested. So if anything, sometimes I think the 768 00:42:44,040 --> 00:42:48,319 Speaker 1: discourse and the industry around these aggregate notions of you know, 769 00:42:48,440 --> 00:42:50,880 Speaker 1: high cost mutual funds are bad, or you know, the 770 00:42:50,920 --> 00:42:55,120 Speaker 1: markets over valued, or like in hindsight, those things are 771 00:42:55,120 --> 00:42:58,319 Speaker 1: always obvious, but it almost hurts your ability to make 772 00:42:58,320 --> 00:43:02,320 Speaker 1: individual decisions. So again, we're really focused on the individual 773 00:43:02,360 --> 00:43:07,319 Speaker 1: company decisions. Quite quite interesting. So as long as we're 774 00:43:07,719 --> 00:43:13,480 Speaker 1: discussing decision making and the thought process behind the selection, 775 00:43:13,800 --> 00:43:17,239 Speaker 1: let's talk about someone you brought in recently to be 776 00:43:17,280 --> 00:43:21,880 Speaker 1: the head of concilient Research at Counterpoint Global, Michael Mobison. 777 00:43:22,360 --> 00:43:26,319 Speaker 1: How significant is that role and how closely do you 778 00:43:26,360 --> 00:43:29,640 Speaker 1: work with him? Look, we've known Michael for a long time. 779 00:43:30,080 --> 00:43:32,120 Speaker 1: He's in fact, when I was at business school, I 780 00:43:32,160 --> 00:43:34,760 Speaker 1: was exposed to some of his great content and great 781 00:43:34,840 --> 00:43:39,759 Speaker 1: you know thinking um uh at Columbia, and uh, you know, 782 00:43:39,760 --> 00:43:42,600 Speaker 1: we've always respected a lot of what he has to offer. 783 00:43:42,760 --> 00:43:44,880 Speaker 1: And uh, you know, in fact, when he was on 784 00:43:44,920 --> 00:43:46,959 Speaker 1: the South Side, he would he would kind of guest 785 00:43:46,960 --> 00:43:49,120 Speaker 1: star in our in our team meetings at least a 786 00:43:49,120 --> 00:43:50,839 Speaker 1: few times a year because he wanted to know what 787 00:43:50,920 --> 00:43:53,839 Speaker 1: was kind of going on in his mind. And and 788 00:43:53,840 --> 00:43:56,680 Speaker 1: and I think reading Michael's research and being a part 789 00:43:56,760 --> 00:43:59,360 Speaker 1: of it now it's kind of like eating your Reati's 790 00:43:59,400 --> 00:44:03,440 Speaker 1: it really how you know, you prepare for making good decisions, 791 00:44:03,480 --> 00:44:06,800 Speaker 1: you know, and and thinking and thinking about thinking and 792 00:44:06,800 --> 00:44:09,239 Speaker 1: and I think that that there's a lot of utility there. 793 00:44:09,520 --> 00:44:12,360 Speaker 1: Um when I think back over time. For as an example, actually, 794 00:44:12,960 --> 00:44:14,720 Speaker 1: you know, I think when Michael was at like Mason 795 00:44:14,800 --> 00:44:18,960 Speaker 1: with Bill Miller, they had Bill had particularly was had 796 00:44:18,960 --> 00:44:21,560 Speaker 1: a pieces about Amazon which wound up being you know, 797 00:44:21,680 --> 00:44:23,560 Speaker 1: one of the only things that matters over the last 798 00:44:23,560 --> 00:44:26,840 Speaker 1: twenty years and equity markets, and they had this whole 799 00:44:27,000 --> 00:44:31,719 Speaker 1: concept around how Amazon was being looked at as or 800 00:44:31,800 --> 00:44:34,960 Speaker 1: kind of misclassified. People were looking as a retailer and 801 00:44:35,000 --> 00:44:37,839 Speaker 1: it was really a logistics company. And Michael, I think 802 00:44:37,840 --> 00:44:40,640 Speaker 1: you should talk about that is you know, um, you know, 803 00:44:40,680 --> 00:44:45,560 Speaker 1: misclassification or looking at um, you know, circumstances versus attributes. 804 00:44:45,640 --> 00:44:47,560 Speaker 1: You know, there's sort of the mistakes we make as 805 00:44:47,640 --> 00:44:49,719 Speaker 1: as decision makers. We got to put something into a 806 00:44:49,760 --> 00:44:52,640 Speaker 1: bucket in order to compare it to things. But sometimes 807 00:44:52,640 --> 00:44:55,680 Speaker 1: that initial decisions wrong and when it is, that can 808 00:44:55,760 --> 00:44:59,040 Speaker 1: lead to this a pretty big misperception. So this is 809 00:44:59,040 --> 00:45:01,040 Speaker 1: the kind of stuff that you know, Michael's about. It 810 00:45:01,040 --> 00:45:04,560 Speaker 1: really fits the intellectual curiosity, which is a big part 811 00:45:04,560 --> 00:45:06,400 Speaker 1: of that. You know, the team and a lot of 812 00:45:06,400 --> 00:45:09,560 Speaker 1: people talk about intellectual curiosity and talent development. I think 813 00:45:09,880 --> 00:45:12,480 Speaker 1: bringing Michael in just is a real natural thing for 814 00:45:12,560 --> 00:45:15,880 Speaker 1: us to do given what we're about. And already you know, 815 00:45:16,000 --> 00:45:19,040 Speaker 1: it's you know, a year into it, we're seeing great benefits. 816 00:45:19,080 --> 00:45:21,160 Speaker 1: You know, Mike's Michael is also a great coach for 817 00:45:21,400 --> 00:45:25,040 Speaker 1: people or earlier in their careers um to to just 818 00:45:25,160 --> 00:45:28,440 Speaker 1: become not just good analysts, but good thinkers and decision makers. 819 00:45:28,800 --> 00:45:31,360 Speaker 1: And he's rebooted our our book club. We've had some 820 00:45:31,400 --> 00:45:35,560 Speaker 1: great authors in so it's knowing the team DNA and 821 00:45:35,920 --> 00:45:37,640 Speaker 1: what Michael does. It's a very it was a very 822 00:45:37,719 --> 00:45:39,800 Speaker 1: natural thing. We were happy to have the opportunity to 823 00:45:39,880 --> 00:45:44,120 Speaker 1: do it. And concerning research is basically the idea that 824 00:45:44,400 --> 00:45:47,000 Speaker 1: you know, exploring ideas not just in the day to 825 00:45:47,080 --> 00:45:50,319 Speaker 1: day financial world, but in other domains can lead you 826 00:45:50,400 --> 00:45:54,120 Speaker 1: to you know, maybe coming up with good decision models 827 00:45:54,400 --> 00:45:57,360 Speaker 1: or rules of some or help you think differently about 828 00:45:57,400 --> 00:45:59,479 Speaker 1: some of the things that are occurring in the financial world. 829 00:45:59,560 --> 00:46:02,040 Speaker 1: And you know, Michael had a long history doing that. 830 00:46:02,120 --> 00:46:06,120 Speaker 1: First first Boston and so and he called his piece Concilient, 831 00:46:06,200 --> 00:46:08,879 Speaker 1: the Concilian Observer. So we just said, well, why don't 832 00:46:08,880 --> 00:46:11,279 Speaker 1: we just reboot that because it was so great, and 833 00:46:11,760 --> 00:46:14,400 Speaker 1: so we hope to continue to benefit from his insights 834 00:46:14,400 --> 00:46:18,040 Speaker 1: and share them with people in the community as well. Yeah, 835 00:46:18,080 --> 00:46:20,120 Speaker 1: that that was definitely a good hire and I see 836 00:46:20,200 --> 00:46:23,399 Speaker 1: him as a very good fit into what you guys do. 837 00:46:23,560 --> 00:46:27,359 Speaker 1: You you mentioned Bill Miller. Bill Miller has brought up 838 00:46:27,480 --> 00:46:30,600 Speaker 1: what he sees as a problem in part of the 839 00:46:30,640 --> 00:46:35,200 Speaker 1: active world of investing, and it's what he describes as 840 00:46:35,280 --> 00:46:38,840 Speaker 1: closet index ers and low active share. I think his 841 00:46:38,920 --> 00:46:42,160 Speaker 1: active share is pretty much in the nineties. I'm gonna 842 00:46:42,200 --> 00:46:46,120 Speaker 1: guess your active share across the big funds are gonna 843 00:46:46,120 --> 00:46:48,480 Speaker 1: be pretty close, right. You don't really seem to look 844 00:46:48,560 --> 00:46:52,359 Speaker 1: very much like any of the indexes out there. Yeah, 845 00:46:52,400 --> 00:46:54,520 Speaker 1: we have a wide range of products, but you're we're 846 00:46:54,520 --> 00:46:56,440 Speaker 1: in the eighties and some of the nineties, So it 847 00:46:56,480 --> 00:46:58,480 Speaker 1: just depends on each one. And then part of that 848 00:46:58,640 --> 00:47:01,160 Speaker 1: really is about the ben smarks. Some of them are 849 00:47:01,200 --> 00:47:04,080 Speaker 1: super concentrated, so that can affect those metrics. But yeah, 850 00:47:04,120 --> 00:47:07,680 Speaker 1: we're we're we're at the extreme similarly to what you 851 00:47:07,840 --> 00:47:12,720 Speaker 1: just characterized. Yeah, and we really haven't spent much time 852 00:47:13,280 --> 00:47:17,080 Speaker 1: delving into valuations, and I want to ask you a 853 00:47:17,239 --> 00:47:22,680 Speaker 1: very big picture question. We've seen valuations creep up not 854 00:47:22,880 --> 00:47:26,399 Speaker 1: just over the past thirty years of falling interest rate, 855 00:47:27,080 --> 00:47:30,839 Speaker 1: but over the past go back to World War Two. 856 00:47:31,320 --> 00:47:35,200 Speaker 1: Valuations have continued to rise since then. How much of 857 00:47:35,280 --> 00:47:41,319 Speaker 1: this has been a significant undervaluation of the economies of 858 00:47:41,360 --> 00:47:46,000 Speaker 1: scale of technology and how digital can grow with far 859 00:47:46,120 --> 00:47:50,640 Speaker 1: less needed capital and labor. Yeah, I think it's a 860 00:47:50,680 --> 00:47:52,840 Speaker 1: good point. You know, we talked earlier about how markets 861 00:47:52,880 --> 00:47:55,000 Speaker 1: can change over time, and that's why rules of some 862 00:47:55,160 --> 00:47:58,399 Speaker 1: are you know, sometimes useful for a periods of time, 863 00:47:58,440 --> 00:48:01,839 Speaker 1: but how they know often and can become actually, they 864 00:48:01,840 --> 00:48:04,600 Speaker 1: can become a problem, right, they can becomes just like expertise, 865 00:48:04,719 --> 00:48:07,720 Speaker 1: it's useful and when the world is not changing too quickly, 866 00:48:08,160 --> 00:48:10,680 Speaker 1: but if there is a change over time, expertise can 867 00:48:10,719 --> 00:48:14,840 Speaker 1: become a real problem. You know, you suddenly a you know, 868 00:48:15,040 --> 00:48:17,319 Speaker 1: I have to jettis in your way of thinking and 869 00:48:17,400 --> 00:48:20,360 Speaker 1: learn new things, and most people are often hesitant to 870 00:48:20,400 --> 00:48:24,040 Speaker 1: do that. I think the constituencies in the market today 871 00:48:24,040 --> 00:48:27,319 Speaker 1: and you know, meaning the earnings or the cash flow 872 00:48:27,360 --> 00:48:31,600 Speaker 1: that sort of backs up ultimately the valuation of what's 873 00:48:31,600 --> 00:48:33,400 Speaker 1: called the market. Even though I don't love talking in 874 00:48:33,480 --> 00:48:37,399 Speaker 1: aggregate frankly, but there's no question that it's driven more 875 00:48:37,520 --> 00:48:41,359 Speaker 1: from a more of a capital light UM vantage point 876 00:48:41,360 --> 00:48:43,719 Speaker 1: than maybe when you look back over time and the 877 00:48:43,800 --> 00:48:47,400 Speaker 1: history of markets and there are times when railroads and 878 00:48:47,680 --> 00:48:50,880 Speaker 1: you know, so certainly today's market is very different and 879 00:48:50,960 --> 00:48:53,240 Speaker 1: the earnings of it, maybe the quality of those earnings 880 00:48:53,320 --> 00:48:55,680 Speaker 1: might be different, and they're puts in takes. To be fair, 881 00:48:55,840 --> 00:48:58,200 Speaker 1: I don't want it could be a very long discussion, 882 00:48:58,239 --> 00:49:01,960 Speaker 1: but I think that, you know, I think that is 883 00:49:01,960 --> 00:49:05,759 Speaker 1: a very I think this full concept that of tangible 884 00:49:05,880 --> 00:49:09,160 Speaker 1: versus intangible UM and Michael has actually written about that 885 00:49:09,239 --> 00:49:11,640 Speaker 1: a bit and was fairly focused on as we speak, 886 00:49:11,640 --> 00:49:16,920 Speaker 1: Michael Mogson is something that um, most people haven't appreciated 887 00:49:17,080 --> 00:49:21,680 Speaker 1: enough probably um uh that you know, earnings UM and 888 00:49:21,680 --> 00:49:24,880 Speaker 1: in the way companies make investments have had changed and 889 00:49:24,920 --> 00:49:27,840 Speaker 1: that has that definitely affects some of these rules of 890 00:49:27,920 --> 00:49:30,399 Speaker 1: thumb that maybe people have thought about for many years. So, 891 00:49:31,320 --> 00:49:33,640 Speaker 1: you know, again, the last thing I'll stay here though, 892 00:49:33,760 --> 00:49:37,000 Speaker 1: I'm reacting to the question which is really kind of 893 00:49:37,040 --> 00:49:39,120 Speaker 1: about the market, and I think you always have to 894 00:49:39,160 --> 00:49:42,800 Speaker 1: be a little careful about market aggregate discussion because again, 895 00:49:43,280 --> 00:49:45,840 Speaker 1: our DNA and what we're focused on is company investing 896 00:49:46,080 --> 00:49:49,680 Speaker 1: and finding those unique situations. And if you get too 897 00:49:50,320 --> 00:49:52,400 Speaker 1: if you spend too much of your time on on 898 00:49:52,440 --> 00:49:57,120 Speaker 1: the aggregation of trends, where the aggregate trends and predicting 899 00:49:57,160 --> 00:49:59,839 Speaker 1: them and discussing them, I think it's a little bit 900 00:50:00,000 --> 00:50:02,239 Speaker 1: gets you off track, at least from what it does 901 00:50:02,320 --> 00:50:05,080 Speaker 1: for us, from what our what our core mission is 902 00:50:06,440 --> 00:50:11,440 Speaker 1: quite quite interesting. So you mentioned the aggregate. Let's let's 903 00:50:11,480 --> 00:50:15,080 Speaker 1: get a little more granular and drilled down into at 904 00:50:15,160 --> 00:50:21,080 Speaker 1: least those five funds. I love the names of these Advantage, Growth, Insight, discovering, 905 00:50:21,680 --> 00:50:25,800 Speaker 1: and inception. I mean kudos to whoever was putting putting 906 00:50:26,520 --> 00:50:30,120 Speaker 1: those titles together. Um, they ranged. The smallest one is 907 00:50:30,160 --> 00:50:33,280 Speaker 1: about half a billion, the biggest one is almost fifteen billion, 908 00:50:33,880 --> 00:50:37,839 Speaker 1: and they've all done super well this year. Advantage up 909 00:50:37,840 --> 00:50:42,000 Speaker 1: more than fifty percent, growth up over eight Inside is 910 00:50:42,040 --> 00:50:48,600 Speaker 1: almost eighty eight percent, Discovery is Inception is what are 911 00:50:48,640 --> 00:50:54,040 Speaker 1: the differences of these five UM funds? Is that US 912 00:50:54,200 --> 00:50:57,800 Speaker 1: versus overseas? Is its small versus large? Or are those 913 00:50:57,840 --> 00:51:03,920 Speaker 1: buckets just not relevant? Oh no, so you know, um, ultimately, 914 00:51:04,040 --> 00:51:06,799 Speaker 1: so it's a great question because I talked about how 915 00:51:06,800 --> 00:51:09,239 Speaker 1: the team, you know, I think a differentiated for us 916 00:51:09,320 --> 00:51:12,360 Speaker 1: is that we're investors first, and this sort of category 917 00:51:12,440 --> 00:51:14,440 Speaker 1: stuff happens at the end of the process. And I 918 00:51:14,480 --> 00:51:17,279 Speaker 1: think most of the industry is start off with a 919 00:51:17,360 --> 00:51:19,960 Speaker 1: product or a category and build a team around it, 920 00:51:20,000 --> 00:51:22,000 Speaker 1: and obviously their strength and a week could be strength 921 00:51:22,000 --> 00:51:24,520 Speaker 1: and weaknesses to both those strategies. I think in a 922 00:51:24,560 --> 00:51:27,319 Speaker 1: world where most people are compartmentalized, it's better to have 923 00:51:27,520 --> 00:51:30,520 Speaker 1: some perspective because you're you're kind of going against the 924 00:51:30,520 --> 00:51:32,799 Speaker 1: grain and maybe picking up things that that they that 925 00:51:32,920 --> 00:51:36,440 Speaker 1: they can't um. In terms of these individual products, inception 926 00:51:37,160 --> 00:51:39,759 Speaker 1: is our small cap product. And so ultimately, when we 927 00:51:39,760 --> 00:51:42,360 Speaker 1: find companies that have market caps in the range of 928 00:51:42,400 --> 00:51:45,560 Speaker 1: the general of the Russell one thousand growth small cap arena, 929 00:51:45,960 --> 00:51:48,520 Speaker 1: that's the home for which we can take with which 930 00:51:48,560 --> 00:51:51,080 Speaker 1: we can take advantage of. Hopefully those those insights are 931 00:51:51,120 --> 00:51:56,239 Speaker 1: ideas discoveries really more of a mid cap growth strategy 932 00:51:56,560 --> 00:51:59,160 Speaker 1: UM in the sense of the market cap range. And 933 00:51:59,160 --> 00:52:01,000 Speaker 1: by the way, both are us and the ones we're 934 00:52:01,000 --> 00:52:04,239 Speaker 1: discussing here all us as well et centric. And then 935 00:52:04,280 --> 00:52:08,080 Speaker 1: where large cap is where growth sorry excuse me, growth 936 00:52:08,200 --> 00:52:11,960 Speaker 1: is a large cap growth strategy by market cap, and 937 00:52:11,960 --> 00:52:15,160 Speaker 1: and so is advantage. But the only difference there is 938 00:52:15,280 --> 00:52:17,960 Speaker 1: that we do too we have two different constraints. Growth 939 00:52:18,040 --> 00:52:21,040 Speaker 1: can own whatever it wants in terms of opportunities set 940 00:52:21,360 --> 00:52:24,640 Speaker 1: whereas advantage from a competitive advantage standpoint, when we look 941 00:52:24,680 --> 00:52:27,640 Speaker 1: at why a company is unique, like is it network 942 00:52:27,680 --> 00:52:31,040 Speaker 1: effect or scale or switching costs or brand or you 943 00:52:31,080 --> 00:52:34,759 Speaker 1: know these the designations we look at there we stay 944 00:52:34,800 --> 00:52:40,480 Speaker 1: away from intellectual property driven UM, technology driven competitive advantages 945 00:52:40,840 --> 00:52:43,200 Speaker 1: in advantage and we we tend to own companies a 946 00:52:43,239 --> 00:52:45,800 Speaker 1: little bit later in their life, not in the early 947 00:52:45,800 --> 00:52:48,520 Speaker 1: part of their life cycle. So it's a different variation 948 00:52:48,800 --> 00:52:53,120 Speaker 1: for that product of of our large cap growth thinking UM. 949 00:52:53,200 --> 00:52:54,920 Speaker 1: But at the end of the day, and as you 950 00:52:54,960 --> 00:52:56,719 Speaker 1: say with the names, I mean the names were really 951 00:52:57,360 --> 00:52:59,080 Speaker 1: what we want to do is not be the large 952 00:52:59,080 --> 00:53:02,520 Speaker 1: cap growth fund or small cap growth fund. I think 953 00:53:02,600 --> 00:53:05,840 Speaker 1: great investing is. You know, you have to define yourself 954 00:53:05,880 --> 00:53:09,720 Speaker 1: to a degree, but if you limit yourself through these designations, 955 00:53:10,239 --> 00:53:12,879 Speaker 1: you're doing a disservice the people that have allocaded your money. 956 00:53:12,880 --> 00:53:14,919 Speaker 1: Because you know, if I take a real big step 957 00:53:14,960 --> 00:53:18,439 Speaker 1: back and about the industry, you know, the real goal 958 00:53:18,520 --> 00:53:20,759 Speaker 1: is to beat the an alternative, and the alternative is 959 00:53:20,800 --> 00:53:24,200 Speaker 1: really probably the SMP five hundred. And you know, if 960 00:53:24,239 --> 00:53:26,560 Speaker 1: you're really good at doing is part of that world 961 00:53:26,600 --> 00:53:29,400 Speaker 1: that still doesn't beat the SMP five hundred. And you 962 00:53:29,440 --> 00:53:32,080 Speaker 1: haven't given yourself enough flexibility to do that, then at 963 00:53:32,080 --> 00:53:34,520 Speaker 1: some point your asset class is not that useful or 964 00:53:34,600 --> 00:53:37,600 Speaker 1: might be considered you know, uh, null and void or 965 00:53:37,640 --> 00:53:40,759 Speaker 1: not not worth pursuing. So what we try to do 966 00:53:40,840 --> 00:53:45,360 Speaker 1: is name the funds um in ways that are indicative 967 00:53:45,400 --> 00:53:48,960 Speaker 1: of the team culture but also aren't in the half tendencies. 968 00:53:49,000 --> 00:53:51,400 Speaker 1: Like I said, these buckets at the end of the process, 969 00:53:51,440 --> 00:53:57,600 Speaker 1: the conventional consultant thinking, but where there's still more flexibility 970 00:53:57,680 --> 00:53:59,759 Speaker 1: in running inception than there is if I call this 971 00:54:00,000 --> 00:54:03,120 Speaker 1: we called small cap grows because there are more constraints 972 00:54:03,800 --> 00:54:07,279 Speaker 1: with that naming from a forty Act legal standpoint. And 973 00:54:07,320 --> 00:54:09,880 Speaker 1: so leave yourself flexible, be who you I didn't know 974 00:54:09,920 --> 00:54:11,279 Speaker 1: who you are in this business, but you've got to 975 00:54:11,360 --> 00:54:16,080 Speaker 1: leave enough flexibility to evolve. And I think that's hopefully 976 00:54:16,160 --> 00:54:18,759 Speaker 1: something culture we've been able to achieve. But part of 977 00:54:18,760 --> 00:54:20,680 Speaker 1: that is even what you know the name of your 978 00:54:20,719 --> 00:54:23,239 Speaker 1: funds or even the name of your team. So counterpoint 979 00:54:23,280 --> 00:54:26,960 Speaker 1: global the idea behind counterpoints simply there's two actually two meanings. 980 00:54:26,960 --> 00:54:30,840 Speaker 1: One is counterpoint is often used thought of as the 981 00:54:30,880 --> 00:54:33,880 Speaker 1: other side of the argument, you know, and so it 982 00:54:33,960 --> 00:54:37,440 Speaker 1: connotes that willingness to be different, not always contrarian, because 983 00:54:37,480 --> 00:54:39,319 Speaker 1: that I think that you're very wrong, but you have 984 00:54:39,400 --> 00:54:41,160 Speaker 1: to be willing to stick your neck out in order 985 00:54:41,200 --> 00:54:44,200 Speaker 1: to succeed. That's from time to time. So that's that's 986 00:54:44,239 --> 00:54:46,360 Speaker 1: the symbols in there. But the other meaning in music 987 00:54:46,480 --> 00:54:49,359 Speaker 1: is counterpoint. Well, counterpoint in music is when you take 988 00:54:49,480 --> 00:54:53,160 Speaker 1: unique melodies or voices and when you get that are 989 00:54:53,239 --> 00:54:55,680 Speaker 1: sound great on their own, but when you layer them together, 990 00:54:56,200 --> 00:54:59,280 Speaker 1: you get, you know, a situation where the the outcome, 991 00:54:59,360 --> 00:55:01,640 Speaker 1: the output of better than the some of the parts. 992 00:55:01,640 --> 00:55:04,480 Speaker 1: So like in a musical, and usually each character has 993 00:55:04,520 --> 00:55:07,799 Speaker 1: its own theme, and at some point at the end 994 00:55:07,800 --> 00:55:10,520 Speaker 1: of the first act or or the final act, those 995 00:55:10,560 --> 00:55:14,480 Speaker 1: themes kind of intermit mingle musically at some point and 996 00:55:14,520 --> 00:55:16,640 Speaker 1: you're kind of like wow, the audience feel like wow, 997 00:55:16,640 --> 00:55:20,399 Speaker 1: that's amazing um or like you know, she's leaving home 998 00:55:20,440 --> 00:55:23,480 Speaker 1: by the Beatles, or I've got a feeling by the Beatles. 999 00:55:23,480 --> 00:55:27,640 Speaker 1: These are cases where they're multiple melodies happening that stand alone, 1000 00:55:27,719 --> 00:55:30,000 Speaker 1: but so hopefully from a team standpoint that whether it's 1001 00:55:30,000 --> 00:55:33,279 Speaker 1: our ideas that we can put into different products where 1002 00:55:33,280 --> 00:55:35,600 Speaker 1: they fit, or whether it's the people or the way 1003 00:55:35,640 --> 00:55:39,160 Speaker 1: we can combine our products, hopefully there's a benefit of counterpoint, 1004 00:55:39,239 --> 00:55:43,720 Speaker 1: which is creating something that exceeds to some of the parts. Huh, 1005 00:55:43,920 --> 00:55:47,319 Speaker 1: quite quite fascinating. I know I only have you for 1006 00:55:47,360 --> 00:55:50,520 Speaker 1: a certain limited amount of time, so I want to 1007 00:55:50,640 --> 00:55:53,680 Speaker 1: jump to my favorite questions that I asked all of 1008 00:55:53,680 --> 00:55:56,920 Speaker 1: our guests and see what see what's going on in 1009 00:55:56,920 --> 00:56:00,359 Speaker 1: your life these days. Let's start out with streaming. Tell 1010 00:56:00,440 --> 00:56:03,920 Speaker 1: us what you're watching either on Netflix or Amazon or 1011 00:56:03,960 --> 00:56:06,879 Speaker 1: anything you happen to be listening to on podcast. What's 1012 00:56:06,960 --> 00:56:13,920 Speaker 1: keeping you entertained during this period of work from home? Um, 1013 00:56:14,040 --> 00:56:16,680 Speaker 1: the series I just finished and I blew right through it. 1014 00:56:16,719 --> 00:56:19,120 Speaker 1: I thought it was not super well known, I think, 1015 00:56:19,160 --> 00:56:22,360 Speaker 1: but might have flown under the radars. It's called Halt 1016 00:56:22,400 --> 00:56:26,239 Speaker 1: and Catch Fire and it's available on Netflix, and it's 1017 00:56:26,320 --> 00:56:31,000 Speaker 1: kind of like a Madman version of the gaming world, 1018 00:56:31,000 --> 00:56:34,880 Speaker 1: the video gaming world in the eighties, and how that 1019 00:56:34,880 --> 00:56:37,800 Speaker 1: that environment went from the eighties and what was happening 1020 00:56:37,800 --> 00:56:40,560 Speaker 1: with you know, the ataris of the world and and 1021 00:56:40,560 --> 00:56:44,400 Speaker 1: and all the early Pecs and uh and then and 1022 00:56:44,440 --> 00:56:46,919 Speaker 1: then the evolution of that up until sort of the 1023 00:56:46,920 --> 00:56:50,960 Speaker 1: the advent of the Internet, and you follow these characters 1024 00:56:51,239 --> 00:56:54,680 Speaker 1: um through that journey. So it's really interesting to watch 1025 00:56:54,880 --> 00:56:57,200 Speaker 1: the progression, you know. It's I think it's really well 1026 00:56:57,280 --> 00:56:59,879 Speaker 1: done from an entertainment standpoint, but it also happens to fit, 1027 00:57:00,440 --> 00:57:03,520 Speaker 1: you know, things were interested in in terms of how 1028 00:57:03,560 --> 00:57:07,000 Speaker 1: technologies evolved over time. My wife and I are also 1029 00:57:07,120 --> 00:57:11,759 Speaker 1: enjoying Ted Lasso on Apple Plus so good. I just 1030 00:57:11,880 --> 00:57:14,120 Speaker 1: I just read it was renewed for a second season, 1031 00:57:14,280 --> 00:57:18,480 Speaker 1: which I'm thrilled to be good. It's awesome. It's funny 1032 00:57:18,520 --> 00:57:21,880 Speaker 1: you mentioned mad Men. I missed that when the first 1033 00:57:21,920 --> 00:57:24,160 Speaker 1: time it went around, and my wife and I had 1034 00:57:24,400 --> 00:57:28,520 Speaker 1: just started streaming it a few weeks ago, and I 1035 00:57:28,560 --> 00:57:32,400 Speaker 1: had to find someone who lived through that year to say, hey, 1036 00:57:32,480 --> 00:57:37,080 Speaker 1: how hyperbolic and exaggerated is this? And the consensus seems 1037 00:57:37,120 --> 00:57:39,200 Speaker 1: to be, no, that's pretty much how it was like, 1038 00:57:39,600 --> 00:57:43,440 Speaker 1: which is kind of shocking. It's literally a different universe, 1039 00:57:43,480 --> 00:57:46,120 Speaker 1: you know, than than where we are today. But now 1040 00:57:46,400 --> 00:57:49,200 Speaker 1: we enjoyed mad Men too. It's it's a there's some 1041 00:57:49,240 --> 00:57:52,120 Speaker 1: really great stuff in there. Tell us about some of 1042 00:57:52,160 --> 00:57:58,080 Speaker 1: your early mentors who helped to shape your career, well, 1043 00:57:58,120 --> 00:58:01,080 Speaker 1: you know, I was, I mean very lucky. Um. You know, 1044 00:58:01,120 --> 00:58:04,880 Speaker 1: my dad has always been a great influence. Um, he 1045 00:58:05,320 --> 00:58:07,680 Speaker 1: was an investor as well. He has had his own 1046 00:58:07,680 --> 00:58:10,920 Speaker 1: firm for many years. But just and what we do 1047 00:58:11,040 --> 00:58:12,680 Speaker 1: is very different than what he did back then, and 1048 00:58:12,720 --> 00:58:15,880 Speaker 1: partly that his opportunities that driven. But really my dad 1049 00:58:15,960 --> 00:58:17,720 Speaker 1: was has always been a really great role model in 1050 00:58:17,800 --> 00:58:21,080 Speaker 1: terms of how he handled himself and how he you know, 1051 00:58:21,120 --> 00:58:23,920 Speaker 1: it's very thoughtful and he finds you know, he's really 1052 00:58:23,960 --> 00:58:26,400 Speaker 1: able to find the positives and other people, which has 1053 00:58:26,400 --> 00:58:30,040 Speaker 1: really been valuable for me. Um, you know in my 1054 00:58:30,120 --> 00:58:34,800 Speaker 1: life in terms of specifically in investing as well. Certainly 1055 00:58:34,800 --> 00:58:36,480 Speaker 1: helped me there as well. But that when I think 1056 00:58:36,520 --> 00:58:39,560 Speaker 1: more specifically to my career, Um, you know, I took 1057 00:58:39,560 --> 00:58:42,600 Speaker 1: a class at Columbia Business School with a guy named 1058 00:58:42,640 --> 00:58:46,000 Speaker 1: John Griffin who used to be the president Tiger the 1059 00:58:46,040 --> 00:58:49,160 Speaker 1: hedge fund and had his own head fund, Blue Ridge Capital, 1060 00:58:49,240 --> 00:58:51,200 Speaker 1: for a long time. And you know, if you take 1061 00:58:51,320 --> 00:58:53,040 Speaker 1: and happened to me in his first class, which is 1062 00:58:53,120 --> 00:58:55,920 Speaker 1: very lucky that he taught. First class he taught and 1063 00:58:55,960 --> 00:58:58,560 Speaker 1: he you know, if you leave his class, and you 1064 00:58:58,640 --> 00:59:02,680 Speaker 1: haven't gotten passionate about investing afterward, then you probably shouldn't 1065 00:59:02,880 --> 00:59:05,360 Speaker 1: be in the field. So John has just had a 1066 00:59:05,400 --> 00:59:08,720 Speaker 1: great way of communicating passion and and and sort of 1067 00:59:09,080 --> 00:59:11,680 Speaker 1: establishing what it takes to to to make it in 1068 00:59:11,720 --> 00:59:13,720 Speaker 1: the business. I think. So that was a really he's 1069 00:59:13,720 --> 00:59:18,040 Speaker 1: been a real valuable person for me. Um. And then 1070 00:59:18,040 --> 00:59:19,000 Speaker 1: you know, there are a lot of people in the 1071 00:59:19,000 --> 00:59:21,840 Speaker 1: industry I admire. We talked about Bill melt Miller and 1072 00:59:21,880 --> 00:59:25,160 Speaker 1: his willingness to be different, um and uh, you talked 1073 00:59:25,160 --> 00:59:28,280 Speaker 1: about well dan Off and who I'm friendly with, and 1074 00:59:28,320 --> 00:59:31,680 Speaker 1: I really you know, I think he's been been unbelievable 1075 00:59:31,880 --> 00:59:33,840 Speaker 1: over the course of his career. It's on the to 1076 00:59:34,400 --> 00:59:37,240 Speaker 1: touch base with him on things. Other people like Ron 1077 00:59:37,280 --> 00:59:39,800 Speaker 1: Baron I admire mostly from far. I think he's been 1078 00:59:40,160 --> 00:59:43,200 Speaker 1: really good at what he does. And Um, Henry ellen 1079 00:59:43,240 --> 00:59:45,880 Speaker 1: Bogg used to be a tro now he runs Durable 1080 00:59:46,080 --> 00:59:50,840 Speaker 1: is another person. Bailey Gifford as a organization. James Anderson 1081 00:59:50,840 --> 00:59:53,960 Speaker 1: has also been great. So sometimes the mentorship happened just 1082 00:59:54,080 --> 00:59:57,560 Speaker 1: by you know, sometimes being friendly with but also in 1083 00:59:57,600 --> 01:00:00,680 Speaker 1: addition just you know, kind of learn think from people 1084 01:00:00,720 --> 01:00:03,520 Speaker 1: from far and some of those people have been influential 1085 01:00:03,560 --> 01:00:08,320 Speaker 1: for me. Quite interesting. Tell us what you're reading, What 1086 01:00:08,400 --> 01:00:10,840 Speaker 1: are some of your all time favorite books, and what 1087 01:00:10,920 --> 01:00:16,360 Speaker 1: are you reading currently? Sure, so my favorite all time 1088 01:00:16,400 --> 01:00:19,760 Speaker 1: book probably might be It's probably The Art of Learning, 1089 01:00:19,800 --> 01:00:24,760 Speaker 1: which is by a guy named Josh Waitskin, who um was, uh, 1090 01:00:24,920 --> 01:00:28,080 Speaker 1: you know, the subject of the movie Searching for Bobby Fisher, 1091 01:00:28,360 --> 01:00:30,640 Speaker 1: which is about the young chess prodigy who might be 1092 01:00:30,680 --> 01:00:32,960 Speaker 1: the next great chess player from the United States, and 1093 01:00:33,440 --> 01:00:36,240 Speaker 1: the books about what it was like to be him 1094 01:00:36,400 --> 01:00:38,360 Speaker 1: during that time frame and his journey as a chess 1095 01:00:38,360 --> 01:00:40,600 Speaker 1: player and eventually went on to be I think the 1096 01:00:40,640 --> 01:00:43,120 Speaker 1: tai Chi push has Champion of the World, which was 1097 01:00:43,160 --> 01:00:46,520 Speaker 1: a whole different domain where he excelled in addition to chess, 1098 01:00:46,560 --> 01:00:49,240 Speaker 1: and um, yeah, but really, I'd say the heart of 1099 01:00:49,240 --> 01:00:52,240 Speaker 1: the book is about this idea of having a growth 1100 01:00:52,280 --> 01:00:55,560 Speaker 1: mindset versus a fixed mindset, the idea that you be 1101 01:00:55,640 --> 01:00:58,000 Speaker 1: willing to fail and try new things and learn from 1102 01:00:58,040 --> 01:01:00,680 Speaker 1: it as opposed to getting to arapped up in your 1103 01:01:00,680 --> 01:01:03,840 Speaker 1: current identity and having that limit your ability to learn 1104 01:01:03,880 --> 01:01:07,280 Speaker 1: as a person. Um. And you know, I certainly know 1105 01:01:07,320 --> 01:01:09,720 Speaker 1: what that's like. I think probably most people if they 1106 01:01:09,760 --> 01:01:13,280 Speaker 1: think about themselves will can find themselves doing a lot 1107 01:01:13,320 --> 01:01:16,240 Speaker 1: of fixed mindset things. So just the concept of trying 1108 01:01:16,280 --> 01:01:18,720 Speaker 1: to trying to be somewhere open to new things and 1109 01:01:18,920 --> 01:01:22,040 Speaker 1: and aerate and at the learning stoff I was really 1110 01:01:22,240 --> 01:01:24,680 Speaker 1: for me. It was actually a really big help to 1111 01:01:24,720 --> 01:01:26,720 Speaker 1: me in my life. And I probably read that about 1112 01:01:26,720 --> 01:01:31,200 Speaker 1: fifteen years back, but I highly recommended UM. We we're 1113 01:01:31,200 --> 01:01:32,959 Speaker 1: currently reading. Frankly, I don't read a lot of books 1114 01:01:33,000 --> 01:01:34,400 Speaker 1: as much as I used to do because there's so 1115 01:01:34,480 --> 01:01:37,280 Speaker 1: much material investment related that I like to read. But 1116 01:01:37,760 --> 01:01:39,280 Speaker 1: you know, we do have a put the book club 1117 01:01:39,280 --> 01:01:43,200 Speaker 1: that Michael rebooted at for our team, Michael Mosison. Uh. 1118 01:01:43,280 --> 01:01:45,400 Speaker 1: This year we just had two people and the first 1119 01:01:45,480 --> 01:01:50,400 Speaker 1: one was guy named Michael Kern's who is the um 1120 01:01:50,560 --> 01:01:53,400 Speaker 1: uh you know, actually is a consultant or sorry adviser 1121 01:01:53,440 --> 01:01:54,920 Speaker 1: for Morgan Stanley. But he wrote a book called The 1122 01:01:54,920 --> 01:01:58,280 Speaker 1: Ethical Algorithm, and it's it's really about the pluses and 1123 01:01:58,320 --> 01:02:01,920 Speaker 1: minuses of algorithm and you know where they can be 1124 01:02:01,960 --> 01:02:05,800 Speaker 1: strong and benefit us, you know, uh in society, and 1125 01:02:05,840 --> 01:02:08,400 Speaker 1: how they can be harmful. And I thought that that's 1126 01:02:08,400 --> 01:02:10,680 Speaker 1: a really that was great framing and good good uh, 1127 01:02:11,320 --> 01:02:13,280 Speaker 1: A good topic for the team. But then you know, 1128 01:02:13,360 --> 01:02:16,040 Speaker 1: we also had David Epstein come in and wrote Range 1129 01:02:16,760 --> 01:02:18,880 Speaker 1: and Range is kind of the other side of the 1130 01:02:18,880 --> 01:02:23,200 Speaker 1: Malcolm Gladwell argument about ten thousand hours equals expertise or mastery. 1131 01:02:23,640 --> 01:02:27,520 Speaker 1: It's more about cases where people don't declare what they're 1132 01:02:27,520 --> 01:02:29,320 Speaker 1: going to do till a little bit later in life, 1133 01:02:29,320 --> 01:02:33,080 Speaker 1: like Roger Federer and tennis as an example, and instead 1134 01:02:33,080 --> 01:02:36,400 Speaker 1: of like the Tiger Woods models, you know, and playing 1135 01:02:36,480 --> 01:02:39,200 Speaker 1: literally playing golf right right out of the crib and 1136 01:02:39,440 --> 01:02:43,960 Speaker 1: really interesting thinking they're around, um, you know the benefits 1137 01:02:43,960 --> 01:02:47,640 Speaker 1: of you know, having broader perspective before you get too narrow, 1138 01:02:47,760 --> 01:02:50,960 Speaker 1: and that resonates us with our team to based on 1139 01:02:51,000 --> 01:02:52,720 Speaker 1: some of the things we've talked about today, just having 1140 01:02:52,760 --> 01:02:56,360 Speaker 1: that being able to cultivate perspective in a world where 1141 01:02:56,360 --> 01:02:59,560 Speaker 1: there's a lot of expertise. Our whole industry is based 1142 01:02:59,600 --> 01:03:02,000 Speaker 1: around that for teeth, so I think often what's missing 1143 01:03:02,120 --> 01:03:05,720 Speaker 1: is you know, being able to connect things between areas 1144 01:03:05,760 --> 01:03:08,720 Speaker 1: of expertise, and hopefully that's one place where set up 1145 01:03:08,720 --> 01:03:13,760 Speaker 1: to do that as a team. Really interesting. What sort 1146 01:03:13,760 --> 01:03:16,800 Speaker 1: of advice would you give to a recent college grad 1147 01:03:16,920 --> 01:03:24,160 Speaker 1: who was interested in a career in asset management. UM. 1148 01:03:24,400 --> 01:03:28,360 Speaker 1: Most actually very similar to what we just talked about 1149 01:03:28,480 --> 01:03:31,520 Speaker 1: previous and the previous question. But you know, most jobs 1150 01:03:31,520 --> 01:03:34,200 Speaker 1: start off, you know, in that sort of expert you know, 1151 01:03:34,240 --> 01:03:37,800 Speaker 1: you're given a very specific task and I think that, um, 1152 01:03:38,000 --> 01:03:40,200 Speaker 1: you know, that's just the nature of how the system 1153 01:03:40,400 --> 01:03:43,800 Speaker 1: is set up. And you follow a sector or an industry. 1154 01:03:43,840 --> 01:03:45,280 Speaker 1: I mean when I was at JP Morgan on the 1155 01:03:45,320 --> 01:03:49,480 Speaker 1: South Side, just got to follow e MP companies, companies 1156 01:03:49,480 --> 01:03:53,120 Speaker 1: that explore produced for energy, energy and oil and gas 1157 01:03:53,160 --> 01:03:56,440 Speaker 1: excuse me. And so you know, it's great to dive 1158 01:03:56,440 --> 01:03:58,400 Speaker 1: in and become an expert, and there's a lot of 1159 01:03:58,440 --> 01:04:01,200 Speaker 1: values like in that learning process. But to degree you 1160 01:04:01,240 --> 01:04:05,560 Speaker 1: can compliment that with broadening your your learning and not 1161 01:04:05,680 --> 01:04:08,560 Speaker 1: just be so narrow when I think there can be 1162 01:04:08,560 --> 01:04:12,400 Speaker 1: benefits to kind of pursuing that. And today in today's world, 1163 01:04:12,480 --> 01:04:15,240 Speaker 1: there's so many sources for for doing that. You know, 1164 01:04:15,440 --> 01:04:18,800 Speaker 1: you can use stuff like Twitter to your advantage, or 1165 01:04:18,880 --> 01:04:20,960 Speaker 1: there's these ways if you want to be a learning machine, 1166 01:04:21,040 --> 01:04:24,360 Speaker 1: you can you can find internet resources that will really 1167 01:04:24,800 --> 01:04:26,760 Speaker 1: throw a lot of interesting stuff at you and hopefully 1168 01:04:26,840 --> 01:04:29,439 Speaker 1: round out your perspective. If you've really been put into 1169 01:04:29,440 --> 01:04:33,400 Speaker 1: a narrow position, So that would be my first instinct. Huh. 1170 01:04:33,600 --> 01:04:37,360 Speaker 1: Quite quite interesting. And our final question, what do you 1171 01:04:37,400 --> 01:04:40,920 Speaker 1: know about the world of investing today that you wish 1172 01:04:40,920 --> 01:04:44,760 Speaker 1: you knew thirty years ago when you were first starting out? 1173 01:04:46,760 --> 01:04:50,240 Speaker 1: Probably every everybody learns in math class or at some 1174 01:04:50,280 --> 01:04:53,160 Speaker 1: point in their life, you know, compound annual growth, you know, 1175 01:04:53,880 --> 01:04:56,520 Speaker 1: and you can see when you're doing it that it's 1176 01:04:56,520 --> 01:04:59,920 Speaker 1: a powerful thing. But I think, you know, as I've got, 1177 01:05:00,360 --> 01:05:03,720 Speaker 1: you know, further on in my life. Uh, you know, 1178 01:05:03,880 --> 01:05:07,080 Speaker 1: and I think we tried to it's certainly professionally, but 1179 01:05:07,120 --> 01:05:09,160 Speaker 1: in many ways in my life try you try to 1180 01:05:09,200 --> 01:05:12,400 Speaker 1: take advantage of those, you know, the developing habits that 1181 01:05:12,400 --> 01:05:14,440 Speaker 1: will lead to good things down the road, and making 1182 01:05:14,800 --> 01:05:17,760 Speaker 1: investments today it I'll benefit you later, like But I 1183 01:05:18,000 --> 01:05:20,200 Speaker 1: would say I wish I had had an even greater 1184 01:05:20,280 --> 01:05:23,440 Speaker 1: appreciation of that earlier in my life. I mean, somebody 1185 01:05:23,480 --> 01:05:27,240 Speaker 1: like Warren Buffetted, the real great investors, I would say, 1186 01:05:27,320 --> 01:05:30,480 Speaker 1: you know, probably really get that very early in life. 1187 01:05:30,480 --> 01:05:33,200 Speaker 1: And he's somebody who's just started young, and that time 1188 01:05:33,280 --> 01:05:36,800 Speaker 1: is such an advantage. So just that just a really great, 1189 01:05:36,880 --> 01:05:40,840 Speaker 1: you know, even better awareness of those that concept in hindsight, Uh, 1190 01:05:41,040 --> 01:05:42,960 Speaker 1: is something that I always try to highlight the younger 1191 01:05:43,000 --> 01:05:46,120 Speaker 1: people because while I knew that a little bit mathematically, 1192 01:05:46,160 --> 01:05:48,680 Speaker 1: I probably didn't didn't focus on how that can really 1193 01:05:48,720 --> 01:05:52,160 Speaker 1: benefit you, whether it's financially or whether it's even habit 1194 01:05:52,240 --> 01:05:54,560 Speaker 1: formation and what it leads to down the road. It 1195 01:05:54,640 --> 01:05:56,720 Speaker 1: might be your health or some skill you want to develop. 1196 01:05:56,800 --> 01:05:59,760 Speaker 1: So so i'd say companding your growth and really taking 1197 01:05:59,760 --> 01:06:03,320 Speaker 1: that to heart and making it part of your your DNA. 1198 01:06:03,560 --> 01:06:05,920 Speaker 1: Thank you, Dennis for being so generous with your time. 1199 01:06:06,120 --> 01:06:09,440 Speaker 1: We have been speaking with Dennis Lynch, head of Morgan 1200 01:06:09,520 --> 01:06:13,560 Speaker 1: Stanley's Counterpoint Global. If you enjoy this conversation, be sure 1201 01:06:13,560 --> 01:06:16,400 Speaker 1: and check out all of our previous such discussions. We 1202 01:06:16,520 --> 01:06:22,080 Speaker 1: have almost four hundred. You can find those at Apple iTunes, Spotify, Stitcher, 1203 01:06:22,400 --> 01:06:26,360 Speaker 1: wherever you feed your podcast fix. We love your comments, 1204 01:06:26,360 --> 01:06:30,800 Speaker 1: feedback in suggestions right to us at m IB podcast 1205 01:06:30,840 --> 01:06:34,320 Speaker 1: at Bloomberg dot net. Give us a review at Apple iTunes. 1206 01:06:35,080 --> 01:06:38,240 Speaker 1: You can sign up for our free daily reads that's 1207 01:06:38,280 --> 01:06:41,760 Speaker 1: at Rid Halts dot com. Check out my weekly column 1208 01:06:41,960 --> 01:06:45,920 Speaker 1: at Bloomberg dot com slash Opinion. Follow me on Twitter 1209 01:06:46,000 --> 01:06:48,840 Speaker 1: at Rit Halts. I would be remiss if I did 1210 01:06:48,840 --> 01:06:52,400 Speaker 1: not thank the team who helps put these conversations together 1211 01:06:52,520 --> 01:06:57,280 Speaker 1: each week. Michael Boyle is my producer slash booker. Maroufle 1212 01:06:57,520 --> 01:07:01,840 Speaker 1: is my audio engineer. Atica Albron is our project manager. 1213 01:07:02,360 --> 01:07:06,280 Speaker 1: Michael Batnick is my head of research. I'm Barry Results. 1214 01:07:06,560 --> 01:07:10,280 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio