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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast, I have another extra special guest,

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Speaker 2: Christine Philpotts of Acial Investments, has specialized in emerging markets

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Speaker 2: and frontier markets for most of her career. She has

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Speaker 2: been around the world, and if you name a hotspot

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Speaker 2: investing place, she's been there. South America, Asia, Africa, Sub

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Speaker 2: Saharan Africa, and Middle East, as well as Southeast Asia

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Speaker 2: and Asia. She's a boots on the ground type of

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Speaker 2: investor who focuses and specializes in emerging market value. What

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Speaker 2: makes that style of investing so interesting and different is

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Speaker 2: simply market inefficiencies. You know, the US markets are so

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Speaker 2: efficient large cap tech stocks, it's really hard to have

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Speaker 2: an edge in that space. But when you look at

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Speaker 2: emerging markets and when you look at value, the opportunity

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Speaker 2: for alpha is much much greater than it is in

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Speaker 2: traditional large cap growth stocks in the US, and a

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Speaker 2: lot of managers in that space actually beat their benchmark.

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Speaker 2: You can't say the same for US large cap stocks.

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Speaker 2: I thought this conversation was really informative and fascinating, and

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Speaker 2: I think you will also with no further ado aurial investments.

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Speaker 2: Christine Philpotts, thank you for having me. So that's a

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Speaker 2: really fascinating background. I'm curious. I didn't even talk about

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Speaker 2: the grass roots business fun. We'll get to where you

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Speaker 2: work at JP Morgan. But economics bachelors from Columbia, NBA

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Speaker 2: from Harvard. Was finance and investing always part of the plan.

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Speaker 3: The quick answer is no, So I pretty much tripped

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Speaker 3: into finance when I was in middle school. In high school,

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Speaker 3: I wanted to be a concert pianist. So actually, oh really, yeah,

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Speaker 3: So I spent probably ninety percent of my time outside

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Speaker 3: of school on the piano, practicating and playing at concerts. Wow,

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Speaker 3: And essentially decided to pivot from that original plan because

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Speaker 3: it became clear to me as I got older that

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Speaker 3: to really make a living as a concert pianist, you

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Speaker 3: need to be the top one percent in the world.

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Speaker 2: And I was good. That might not be my name

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Speaker 2: point one point.

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Speaker 3: One exactly, And so I was told that I was

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Speaker 3: very good. But that's a pretty high bar.

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Speaker 2: So do you still play?

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Speaker 3: I don't, actually, but my kids are taking piano lessons,

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Speaker 3: so I'm being inspired to kind of restart. So then

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Speaker 3: I decided to explore other options, but finance was not

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Speaker 3: one of them because I just had no exposure to

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Speaker 3: finance whatsoever. And so the way it came across finance

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Speaker 3: is when I was in high school, I was applying

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Speaker 3: for scholarships for college and I came across the Thomas

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Speaker 3: Kila Breck Smart Start Scholarship that was run by Chase Bank.

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Speaker 3: So it's a program that selects New York City high

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Speaker 3: school students who are going to university in New York City,

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Speaker 3: and it offers a four year, full tuition paid scholarship

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Speaker 3: to college as well as a paid internship full time

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Speaker 3: during the summer part time during.

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Speaker 4: The school year.

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Speaker 2: Wow.

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Speaker 3: So I came across that opportunity, I applied and I

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Speaker 3: was lucky enough to get it. And then I said, Okay,

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Speaker 3: now I need to figure out what finance is actually

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Speaker 3: all about. And luckily, as I started my internship when

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Speaker 3: I was eighteen, over the years, you know, throughout college,

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Speaker 3: I learned more and more about the different areas of

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Speaker 3: the bank and became really intrigued with investment management specifically.

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Speaker 3: But if it was not for that program, I may

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Speaker 3: not be in this industry.

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Speaker 2: Huh. Really, interesting, and I noticed in your background you

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Speaker 2: spend some part of your undergraduate playing around in the

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Speaker 2: psychology department. Tell us a little bit about the thinking there.

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Speaker 4: Yeah, that's right.

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Speaker 3: So I decided to become an economics major and a

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Speaker 3: psychology minor. I always had this interest and just understanding

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Speaker 3: how people think and what drives just people's reactions, emotions, behaviors.

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Speaker 3: That was just always a side interest of mine, and

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Speaker 3: in particular as a psychology minor, I had an opportunity

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Speaker 3: to work with a Columbia professor on an independent study

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Speaker 3: specifically focused on cognitive psychology, and I found that sub

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Speaker 3: segment really interesting because we did studies on kind of

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Speaker 3: decision making biases, human biases like loss, aversion and other

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Speaker 3: biases that impact otherwise what should be rational decisions and

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Speaker 3: make them less than rational. And so doing that in college,

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Speaker 3: that independent study really opened my mind up to what

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Speaker 3: eventually I learned to be the behavioral economics and finance area.

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Speaker 3: But I didn't even know what it was called or

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Speaker 3: that that was an area back then. So the interestect

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Speaker 3: of psychology and economics became really interesting.

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Speaker 2: Very much.

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Speaker 1: So.

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Speaker 2: The fascinating thing is when I was in college, even

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Speaker 2: when I was in grad school, there really wasn't an

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Speaker 2: need such thing as behavioral finance, but it was pretty

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Speaker 2: clear economics had a fundamental flaw, like the base concept

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Speaker 2: of humans as rational, profit maximizing decision makers. Hey, that

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Speaker 2: doesn't seem to be what happens in the real world.

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Speaker 2: I think they've kind of squared that circle. Now, do

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Speaker 2: you get to use any of your the work of

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Speaker 2: behavioral economics in your day job?

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Speaker 4: Absolutely so.

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Speaker 3: As an investor, we constantly need to be aware of

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Speaker 3: our own human biases because we're humans, so we are

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Speaker 3: prone to the risk of making irrational decisions as well.

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Speaker 3: But it's also really interesting to think about how these

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Speaker 3: biases at the market level really creates interesting opportunities. Right,

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Speaker 3: it's because of these biases that we have inefficiencies in

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Speaker 3: the market that we can then exploit as active investors.

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Speaker 3: So if the markets were perfectly rational, arguably there'd be

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Speaker 3: no opportunities. So it's just interesting to think about again,

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Speaker 3: as an investment or, how do you handicap your own biases?

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Speaker 4: And we do that through several ways.

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Speaker 3: For example, we use some quantitative tools and approaches to

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Speaker 3: help offset those natural biases, but also thinking about at

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Speaker 3: the market level as a whole. I was thinking about

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Speaker 3: the aggregate market participants, how we can exploit some of

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Speaker 3: those biases to generate.

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Speaker 2: Offham really really interesting. To round out your background, you

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Speaker 2: spend time at Alliance Spernstein, JP, Morgan Asset Management, and

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Speaker 2: Morgan Stanley. Were you at Morgan right heading into the

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Speaker 2: financial crisis? Is that right?

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Speaker 3: I was, yes, So that was a very fascinating experience.

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Speaker 3: So I participated in an MBA fellowship program at Morgan Stanley.

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Speaker 3: So when I resigned from JP Morgan to pursue my

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Speaker 3: MBA at Harvard, I applied to and got accepted into

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Speaker 3: Morgan Stanley's NBA Fellowship within the Investment Bank. So that

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Speaker 3: involved two years full tuition paid for business school as

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Speaker 3: well as a summer internship within the investment bank. And

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Speaker 3: so I'm an investor through and through, but I thought

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Speaker 3: it was an interesting opportunity to look at the other

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Speaker 3: side of the house and to join the cell side

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Speaker 3: and kind of see how the other side operates, you know,

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Speaker 3: from the inside. And so I decided to join the

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Speaker 3: Capital Markets group, and specifically I was part of the

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Speaker 3: Convertible Debt group, which was interesting because I actually started

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Speaker 3: my career at Jpmortonesset Management in the high yield and

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Speaker 3: investment grade credit research team, and then I moved on

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Speaker 3: to the equities team afterwards. So it was kind of

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Speaker 3: an interesting way to combine my debt and my equities experience.

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Speaker 3: And I did a lot of options math, which I

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Speaker 3: that was interesting and I just learned a tremendous amount.

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Speaker 3: But summer of two thousand and eight, as you can imagine,

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Speaker 3: was a really interesting time, particularly for the convertible bond desk,

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Speaker 3: because we were the busiest desk as other parts of

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Speaker 3: the market were close literally shutting down. The convertible debt

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Speaker 3: market was one of the last ones to remain open

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Speaker 3: before September two thousand and eight, and so that's we

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Speaker 3: ended up. I ended up working on about a billion

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Speaker 3: dollars worth of new issues, so I actually got a

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Speaker 3: chance to work on a lot of new convertible debt

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Speaker 3: deals before that window closed. So it was just a

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Speaker 3: really interesting timing and learning experience.

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Speaker 2: I have a vivid recollection of the summer of eight

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Speaker 2: and I remember saying to one of the traders I

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Speaker 2: was working with, I just kind of channeled Robert Duval

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Speaker 2: from apocalypse now, where he turns to Martin Sheen and says,

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Speaker 2: you know, son, someday this war is going to be over.

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Speaker 2: And uh, because you were in the middle of just

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Speaker 2: the craziest market experience you can have, and I wanted

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Speaker 2: people to just remember what's going on now because this

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Speaker 2: ain't ever happening again in your lifetime. And uh, like

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Speaker 2: I assume you had a very similar experience at Morgan Stanley.

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Speaker 2: It had to be just bonkers.

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Speaker 4: Yeah.

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Speaker 3: It was just literally there were headlines coming out on

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Speaker 3: a daily basis.

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Speaker 2: Tick by tick, every minute.

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Speaker 4: It was.

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Speaker 2: It was it seemed like every every time you turn

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Speaker 2: around there was some other insane news and it just

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Speaker 2: built and built.

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Speaker 4: Snowballed absolutely.

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Speaker 3: And so by the time I got back to Harvard

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Speaker 3: in September eight, right, I mean, obviously the Lehman collapse occurred,

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Speaker 3: and really just the bottom fell out, and we're all

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Speaker 3: kind of looking at each other saying, well, on the

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Speaker 3: one hand, I guess it's good that we're in school

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Speaker 3: as opposed to, you know, being on the street and

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Speaker 3: having just been laid off. But I vividly remember later

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Speaker 3: that year the dean of Harvard Business School indicating to

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Speaker 3: us that comparing us the class that graduated during the

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Speaker 3: Great Depression, and his message was basically like, they turned

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Speaker 3: out just fine eventually over time. And we were like, okay,

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Speaker 3: well this puts it into perspective.

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Speaker 2: Well thanks for the cheerful, you know, halftime speech to

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Speaker 2: get everybody enthusiastic. Hey, just think about it, the folks

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Speaker 2: and the Great Depression, they turned out just fun. Yeah,

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Speaker 2: oh my god, let's talk a little bit about International

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Speaker 2: Finance Corporation. Tell us about the fund that you help

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Speaker 2: them establish.

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Speaker 4: Yeah.

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Speaker 3: So I graduated from HBS in summer of two thousand

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Speaker 3: and nine, and I was fortunate enough to join the

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Speaker 3: Grassroots Business Fund, which had been a division of the

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Speaker 3: International Finance Corporation and literally spun out first half of

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Speaker 3: two thousand and eight. So what was really unique about

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Speaker 3: that is is one of the few funds that actually

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Speaker 3: had a fresh pool of capital to deploy.

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Speaker 2: Aw so they weren't dealing with legacy things that were

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Speaker 2: upside down.

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Speaker 3: No, they were able to enter a pretty compelling time

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Speaker 3: in terms of having fresh capital to deploy. And so

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Speaker 3: that fund's focus is on businesses, small and medium sized,

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Speaker 3: privately held companies that not only have good growth prospects

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Speaker 3: and could generate healthy financial returns, but that are also

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Speaker 3: providing economic opportunities to the base of the economic pyramid,

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Speaker 3: so providing affordab goods and services to customers, incorporating individuals

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Speaker 3: in supply chains and productive manners. So it was an

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Speaker 3: impact oriented private equity private credit fund.

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Speaker 2: And where was that focus? What geography did they focus in?

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Speaker 3: So the focus was on emerging markets more specifically Sub

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Speaker 3: Saharan Africa, Latin America, India, and Southeast Asia.

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Speaker 2: So are you traveling all of the world to kick

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Speaker 2: tires of these private companies or what's that like?

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Speaker 4: Yeah?

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Speaker 3: Absolutely, So during my time there, I was probably employee

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Speaker 3: number four or five. So I joined soon after the

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Speaker 3: spin out to help really establish our investment processes as

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Speaker 3: an independent entity, provide the game plan for where we're

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Speaker 3: going to invest, and ultimately help recruit other investment professionals

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Speaker 3: as we were building out the team, and ultimately investigate

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Speaker 3: deals and structure deals and invest in portfolio companies. So

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Speaker 3: my original focus was Sub Saharan Africa. I did spend

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Speaker 3: a summer between JP Morgan and HPS in Kenya with

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Speaker 3: a microfinance organization, so I had some experience in Africa

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Speaker 3: that was able to leverage for this role. And so

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Speaker 3: to answer your question, I spent probably three to four

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Speaker 3: months out of the year on the ground. So I

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Speaker 3: was based in DC as a member of the management team,

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Speaker 3: but I would go for a month at a time,

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Speaker 3: really working with the entrepreneurs that we had invested in,

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Speaker 3: looking at diligence, working with partners, kicking the tires, as

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Speaker 3: you said, which really provided a great experience to understand

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Speaker 3: emerging markets on the ground and a lot of the nuances,

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Speaker 3: particularly for smaller and medium sized companies.

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Speaker 2: And give us the timeframe. What years were you doing this,

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Speaker 2: because I want to put you a text of what

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Speaker 2: was going on in the US at the time.

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Speaker 3: Yeah, So I joined in August two thousand and nine,

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Speaker 3: and I loved to join Layin Spernstein in late twenty twelve.

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Speaker 2: So what were emerging markets like in that post financial

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Speaker 2: crisis period?

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Speaker 3: Well, what was interesting is particularly for the segments of

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Speaker 3: the markets the fund was focused on, which because really

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Speaker 3: smaller mid cap private equity and private credit, they were

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Speaker 3: pretty unaffected by the global financial crisis. Because these are

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Speaker 3: companies and in some cases countries that were never really

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Speaker 3: fully integrated into the global financial system, and so as

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Speaker 3: the global financial markets were in a tailspin, they were

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Speaker 3: actually very resilient, and so we had really attractive opportunities.

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Speaker 3: For example, that was a time period where mobile banking

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Speaker 3: and mobile payments was starting to emerge, So we had

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Speaker 3: a couple of investments in that arena. We had off

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Speaker 3: grid clean energy investments. We had really interesting agribusiness and

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Speaker 3: agroprocessing companies, consumer product companies, so companies that really were

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Speaker 3: targeting the local markets and customer bases and supply chains

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Speaker 3: that just were not at all impacted by the global

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Speaker 3: financial crisis. So to me, that was the definition of

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Speaker 3: uncorrelated asset.

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Speaker 2: Yeah, to say the very least. So it's interesting the

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Speaker 2: theme across all of your work, or most of your

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Speaker 2: work is is emerging markets in frontier markets. What led

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Speaker 2: you to that particular focus.

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Speaker 3: Yeah, So when I was at JP Morgan, I was

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Speaker 3: covering US tech stocs. I was a research associate on

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Speaker 3: the by side, working with senior analysts looking at software

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Speaker 3: the two thousand Yeah, from basically four up until I

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Speaker 3: went to business school, which was seven.

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Speaker 2: So the recovery following the dot com implosion had already

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Speaker 2: begun already started, yes, right, but we hadn't quite run

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Speaker 2: into the bus of oh eight or nine exactly.

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Speaker 3: So basically by the time I mean looking back, I

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Speaker 3: left at the peak of the market. Obviously I didn't

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Speaker 3: perfectly time it, but when I was leaving close I

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Speaker 3: remember my colleagues telling me, well, why are you going

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Speaker 3: to business school? That's going to be a waste of time.

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Speaker 3: I mean, the markets are doing very well. Why why

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Speaker 3: are you doing this to your career? And let alone

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Speaker 3: you're going to Africa to do micro finance, Like, what's

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Speaker 3: going on?

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Speaker 4: They thought? I think they thought I'd a quarter life crisis.

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Speaker 2: So get high sight sair life crisis. I love that, but.

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Speaker 3: Hindsight, it's twenty twenty. But what's interesting is to answer

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Speaker 3: your question about the pivot to emerging markets, what really

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Speaker 3: drew me was a couple of things. So one is

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Speaker 3: the idea of being focused on less efficient part of

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Speaker 3: the capital markets was very compelling. I tend to be

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Speaker 3: the type of person that if everyone's going in, you know,

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Speaker 3: Route one, I want to go into Route two, three

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Speaker 3: and four just to kind of not be with the

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Speaker 3: herd and to see what else is happening that people

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Speaker 3: may be overlooking, and you know, with large cap tech stocks,

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Speaker 3: if the CEOs caught a cold, there'll be twenty cell

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Speaker 3: side notes about the fact that the CEO caught a cold.

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Speaker 3: That's very well covered markets, whereas in emerging markets and

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Speaker 3: pritulian markets like Africa, they were just not really being

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Speaker 3: talked about. And so I was very interested to look

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Speaker 3: behind the hood, see what's happening and be in an

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Speaker 3: arena where I could. I thought I could add more

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Speaker 3: value you and have more of an edge by doing

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Speaker 3: research and areas that other people ignored. From a personal standpoint,

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Speaker 3: my parents are originally from Haiti, so I was born

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Speaker 3: and raised in New York, but I'm first generation, and

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Speaker 3: so there was a lot of conversations around the dinner

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Speaker 3: table around why are poor countries poor? What could be

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Speaker 3: done about it? Talks about economic development and the intersection

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Speaker 3: with you know, political reform and just how that affects

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Speaker 3: developing countries more broadly. And so that was also, from

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Speaker 3: a personal standpoint, a really strong interest of mine that

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Speaker 3: led me to want to pursue emergent markets.

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Speaker 2: So I'm hinting at a question that's going to come

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Speaker 2: a little later, but my general senses. You know, develop

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Speaker 2: mature economies have fairly efficient markets, very hard to generate

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Speaker 2: alpha because markets are so efficient, I'm going to assume

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Speaker 2: the same is not true in either em and especially

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Speaker 2: in frontier markets. Yeah, what do you thought?

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Speaker 3: That's that's absolutely the case and the data proves it out. So,

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Speaker 3: for example, if you look at the last ten years

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Speaker 3: of returns, the media and active e manager across style

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Speaker 3: so value growth and core has outperformed the benchmark or

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Speaker 3: passive strategies over the last decade. That is not the

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Speaker 3: case when you look at US large coop.

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Speaker 2: One hundred percent. In fact, I think the number is

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Speaker 2: NETA fees ten years out, it's like ninety three percent

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Speaker 2: underperform the benchmark in US, not even big cap, just

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Speaker 2: US period. It's pretty amazing. So let's talk a little

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Speaker 2: bit about what you did before you joined Ariel. You

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Speaker 2: were Alliance Bernstein, a very well regarded firm for about

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Speaker 2: ten years, and you managed a couple of different projects

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Speaker 2: and funds. Tell us a little bit about your experiences

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Speaker 2: at Alliance.

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Speaker 3: Yeah, absolutely so essentially decided to leave grossroots business fund

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Speaker 3: really to be able to go back into the listed

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Speaker 3: equity space and to join a larger investment platform, and

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Speaker 3: so at the time that I was considering potential opportunities,

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Speaker 3: I came across the team that I joined and the

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Speaker 3: fact that they were interested in launching a frontier and

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Speaker 3: small emerging markets equity fund, which really paired well with

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Speaker 3: my experience in small and frontier funds, and so I

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Speaker 3: joined in early twenty thirteen and specifically joined initially to

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Speaker 3: cover Sub Saharan African stocks and also to help launch

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Speaker 3: this new fund, which was called the Next fifty Emerging

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Speaker 3: Markets Equity Strategy, and the idea was to have a

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Speaker 3: fund that specifically focused on frontier and small emerging markets

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Speaker 3: that were even less efficient, So one of the least

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Speaker 3: efficient markets in an already inefficient part of the caval markets,

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Speaker 3: which is emerging market.

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Speaker 2: So let's just define some terms a little bit. I

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Speaker 2: think listeners know what developed markets are a developed x US,

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Speaker 2: which would be things like Europe and Japan. What's the

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Speaker 2: difference between frontier funds and emerging markets? Like, how do

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Speaker 2: you just define those two geographies?

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Speaker 4: Yeah, that's a great question.

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Speaker 3: A lot of times the lines can be blurred and

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Speaker 3: countries could go from one to the other and back.

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Speaker 3: So we use the MSCI benchmark definition, so they have

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Speaker 3: specific criteria on differentiating between what's in the emerging markets

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Speaker 3: benchmark and what's in the dedicated frontier benchmark. So parameters around,

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Speaker 3: for example, liquidity, market mechanisms, and other criteria depth of

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Speaker 3: the markets that will determine what's emerging what's frontier. But

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Speaker 3: I think the broader sense that we focus on is

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Speaker 3: really again around this notion of efficiency or lack thereof,

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Speaker 3: and opportunities and markets in which we can get an

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Speaker 3: edge through active management. And I would say the benefits

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Speaker 3: of the inefficiencies and emerging markets are that much more

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Speaker 3: magnified for frontier markets.

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Speaker 4: But there are.

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Speaker 3: Reviews icicles in which countries get upgraded to emerging markets

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Speaker 3: or downgraded to frontier markets depending on how some of

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Speaker 3: those market characteristics evolve.

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Speaker 2: So let's let's put some specific geographies to test. Where

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Speaker 2: does China fall into this? Is it still emerging not

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Speaker 2: quite developed? What about South Korea?

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Speaker 4: That's a great question.

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Speaker 3: So South Korea, for the MSCI definition, is emerging, is

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Speaker 3: that it should be developed?

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Speaker 4: I mean south guest.

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Speaker 2: If Japan is obviously a developed nation, is South Korea

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Speaker 2: all that far behind Japan? In terms of their maturity

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Speaker 2: of their markets.

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Speaker 4: So there's I guess there's two parameters there.

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Speaker 3: So one is, you know, from the economic standpoint, if

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Speaker 3: you look at economic characteristics and criteria, that's one layer

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Speaker 3: within which to categorize countries between developed and emerging. The

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Speaker 3: other is really around just how the equity markets function,

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Speaker 3: the depth in terms of depth, liquidity market rules, and

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Speaker 3: other criteria. That will then cause another layer of differentiation

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Speaker 3: between emerging and developed and frontier.

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Speaker 2: So when I think about let's say the Middle East,

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Speaker 2: you have Egypt, you have Saudi Arabia, you have Dubai

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Speaker 2: and Qatar and the Emirates. Are these all still considered emerging?

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Speaker 3: Yes they are, So they're except Egypt, for example, would

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Speaker 3: be categorized as frontier.

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Speaker 4: Oh really yes, But Saudi is emerging right because.

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Speaker 2: You think again, you think Saudi is like a fairly

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Speaker 2: develop I mean, granted, it's a kingdom and a lot

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Speaker 2: of there's a lot of poverty as well, there's a

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Speaker 2: lot of wealth there.

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Speaker 4: Yeah.

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Speaker 3: So I think for us, the way we think about

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Speaker 3: it for our emerging market strategy is we have the

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Speaker 3: ability to invest across emerging and frontier markets, So.

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Speaker 2: It doesn't matter what we label them exactly.

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Speaker 3: We do have a limit on what percentage of the

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Speaker 3: portfolio could be in what's classified as frontier, but ultimately

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Speaker 3: we're looking across all of these markets. I mean, there's

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Speaker 3: fifty plus countries in the emerging markets world that have

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Speaker 3: listed equity markets, so that's a big pool to draw upon,

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Speaker 3: and ultimately we're looking for the sixty stocks that we

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Speaker 3: think have the best upside potential toake into account liquidity

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Speaker 3: and other parameters of risk.

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Speaker 2: So I was going to ask about the structural differences

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Speaker 2: between emerging markets and front team markets, but it sounds

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Speaker 2: like it's a pretty technical definition. So let me go

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Speaker 2: to what you just referenced. In terms of selecting stocks.

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Speaker 2: Do you approach that process from a top down country

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Speaker 2: by country basis? Is it a bottom up analysis company

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Speaker 2: by company or a little bit of both.

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Speaker 3: So we're bottoms up investors at the end of the day,

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Speaker 3: we're picking stocks. If you look at our sources of

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Speaker 3: active risk, about fifty to sixty percent of that consistently

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Speaker 3: is from idiosynchronic or stock specific drivers. That being said,

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Speaker 3: and just to put that in context, country would contribute

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Speaker 3: about ten to fifteen percent. That being said, neighborhood matters,

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Speaker 3: particularly in emerging markets, and so we cannot disentangle top

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Speaker 3: down considerations from our bottoms up analysis because as we

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Speaker 3: determine what discount rate to discount the free casualows of

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Speaker 3: specific company, we need to think about the risk premium

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Speaker 3: of that country, how the sovereign yields are likely to unfold,

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Speaker 3: what are the currency risks. As we think about the

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Speaker 3: growth potential of a specific stock, we need to put

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Speaker 3: that in the context of the growth potential of that country.

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Speaker 3: And so these top down considerations are ultimately really critical

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Speaker 3: to consider as we look at specific individual stock opportunities. So,

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Speaker 3: like real estate, neighborhood matters, and it also helps determine

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Speaker 3: where we lean into or out of in terms of

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Speaker 3: where we place our focus. We want to make sure

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Speaker 3: that we have an alignment of interest, particularly as minority shareholders.

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Speaker 3: That alignment is not just relevant to the specific stocks

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Speaker 3: in terms of the management teams and the equity holders

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Speaker 3: or the majority shareholders of the companies we invest in.

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Speaker 3: We also think about alignment at the country level. What

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Speaker 3: is the government looking to achieve, how is that evolving,

439
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Speaker 3: how is that changing? And our very simplistic criteria is

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Speaker 3: to not get in the way. If there's a country

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Speaker 3: where we think the economic direction is moving in the

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Speaker 3: wrong direction and where there's not that alignment with what

443
00:24:27,280 --> 00:24:29,960
Speaker 3: the government's looking to achieve, we don't need to be

444
00:24:30,080 --> 00:24:33,679
Speaker 3: invested in that country. There's other places for us to fish.

445
00:24:34,040 --> 00:24:36,240
Speaker 2: So I look around the world and I think about

446
00:24:36,280 --> 00:24:40,159
Speaker 2: the various hotspots. I mean, hold aside Russia, which is

447
00:24:40,280 --> 00:24:46,600
Speaker 2: essentially become uninvestable. But Argentina and Venezuela went through their issues.

448
00:24:46,640 --> 00:24:50,160
Speaker 2: In Turkey obviously has had some problems, and to say

449
00:24:50,280 --> 00:24:53,000
Speaker 2: nothing of what's going on in the Middle East. Do

450
00:24:53,119 --> 00:24:55,359
Speaker 2: you have to have boots on the ground. You have

451
00:24:55,440 --> 00:24:58,880
Speaker 2: to actually go visit these countries and get a sense of,

452
00:24:59,400 --> 00:25:02,720
Speaker 2: hey the headline are overblown or hey this could be

453
00:25:02,800 --> 00:25:06,680
Speaker 2: potentially worse than we realize. How often are you traveling

454
00:25:06,680 --> 00:25:10,639
Speaker 2: to different places to get a feel for risk factors there?

455
00:25:10,880 --> 00:25:13,960
Speaker 4: Absolutely so we travel quite often. So our team.

456
00:25:14,040 --> 00:25:17,240
Speaker 3: Just to talk about our team structure, six of us

457
00:25:17,359 --> 00:25:20,840
Speaker 3: have been working together, have moved from Alliance Burnstein to Ariel,

458
00:25:21,640 --> 00:25:24,840
Speaker 3: and our team has been working together for over a decades,

459
00:25:24,880 --> 00:25:29,600
Speaker 3: so no less than twelve years specifically, and throughout that time,

460
00:25:30,400 --> 00:25:32,480
Speaker 3: even though we're based in New York, we understand the

461
00:25:32,480 --> 00:25:37,560
Speaker 3: importance of visiting all the different countries were actively invested in,

462
00:25:38,480 --> 00:25:41,320
Speaker 3: and so to that point, for example, last year, I

463
00:25:41,359 --> 00:25:45,760
Speaker 3: spent in aggregate four weeks in China to really not

464
00:25:45,840 --> 00:25:49,320
Speaker 3: only meet with the management teams of listed companies, but

465
00:25:49,359 --> 00:25:52,639
Speaker 3: to meet with their competitors privately held and publicly held,

466
00:25:52,960 --> 00:25:56,040
Speaker 3: To meet with local contacts, to meet with domestic investors,

467
00:25:56,920 --> 00:26:01,720
Speaker 3: to meet with other key contacts and players, where you

468
00:26:01,760 --> 00:26:04,359
Speaker 3: can get more insights by having a face to face

469
00:26:04,400 --> 00:26:07,199
Speaker 3: conversation oftentimes than you may be able to get on

470
00:26:07,320 --> 00:26:11,600
Speaker 3: Zoom or even via text. And even doing site visits

471
00:26:11,960 --> 00:26:16,240
Speaker 3: right going to the malls, visiting real estate sites, going

472
00:26:16,280 --> 00:26:20,200
Speaker 3: to the auto manufacturing plants, visiting battery plants, really gives

473
00:26:20,240 --> 00:26:22,720
Speaker 3: you a more concrete sense of what is occurring and

474
00:26:22,760 --> 00:26:26,800
Speaker 3: to your point, what is beneath the headlines and what

475
00:26:26,840 --> 00:26:30,360
Speaker 3: the market could be missing really interesting.

476
00:26:30,720 --> 00:26:34,480
Speaker 2: You know, I haven't brought up China partly because it

477
00:26:34,640 --> 00:26:39,720
Speaker 2: feels like China has become sort of uninvestable to outside

478
00:26:40,480 --> 00:26:44,880
Speaker 2: companies because of their A shares and their foreign B shares.

479
00:26:45,359 --> 00:26:49,080
Speaker 2: I'm curious, as a professional EM investor, how do you

480
00:26:49,160 --> 00:26:53,080
Speaker 2: look at the opportunity and risks in China. Can we

481
00:26:53,359 --> 00:26:57,120
Speaker 2: have a legitimate fair investment in China given the way

482
00:26:57,160 --> 00:27:00,240
Speaker 2: things are structured, or how do you think about China?

483
00:27:00,400 --> 00:27:03,760
Speaker 3: So we think the opportunity in China today is meaningful

484
00:27:04,119 --> 00:27:07,719
Speaker 3: largest country weight in our portfolio, it's about thirty percent

485
00:27:08,119 --> 00:27:12,080
Speaker 3: of our portfolio today, and we think that the opportunities

486
00:27:12,119 --> 00:27:15,040
Speaker 3: are very attractive. I think there's a couple of reasons

487
00:27:15,040 --> 00:27:16,639
Speaker 3: for that. And by the way, we didn't always have

488
00:27:16,720 --> 00:27:19,280
Speaker 3: such a large weight in China. For many years were

489
00:27:19,359 --> 00:27:23,720
Speaker 3: underweight China, but we moved to an overweight position last

490
00:27:23,800 --> 00:27:27,520
Speaker 3: year in large part because from a bottom up standpoint,

491
00:27:28,040 --> 00:27:31,520
Speaker 3: we were seeing companies that started treating at single digit

492
00:27:31,600 --> 00:27:36,640
Speaker 3: multiples so six to eight times forward pe, that can

493
00:27:36,680 --> 00:27:40,840
Speaker 3: generate double digit earnings growth, and that are returning more

494
00:27:40,840 --> 00:27:44,480
Speaker 3: capital to shareholders, that are actually improving their capital allocation

495
00:27:45,119 --> 00:27:48,400
Speaker 3: for the first time in decades. That is not being

496
00:27:48,440 --> 00:27:53,439
Speaker 3: reflected in valuations from a top down standpoint, even though

497
00:27:53,480 --> 00:27:57,880
Speaker 3: the macroeconomic situation in China is challenged, we're not debating that.

498
00:27:58,480 --> 00:28:01,479
Speaker 3: For us, we're less interested in the absolute level and

499
00:28:01,560 --> 00:28:04,399
Speaker 3: more in the second derivative. So, for example, for the

500
00:28:04,440 --> 00:28:08,880
Speaker 3: real estate sector. What is the directionality of inventories. There's

501
00:28:08,880 --> 00:28:11,840
Speaker 3: still too much inventory, but is it going up or

502
00:28:11,880 --> 00:28:14,800
Speaker 3: is it going down? And we're seeing evidence of inventories declining.

503
00:28:15,720 --> 00:28:19,080
Speaker 3: Just as an example, new starts have declined over sixty

504
00:28:19,080 --> 00:28:22,399
Speaker 3: five percent from the peak, So even though demand has declined,

505
00:28:22,480 --> 00:28:26,120
Speaker 3: new starts has declined even further. In the latest data,

506
00:28:26,160 --> 00:28:32,080
Speaker 3: we're saying for secondary prices and primary prices there's still

507
00:28:32,080 --> 00:28:34,959
Speaker 3: a decline, but the level of decline is lower than

508
00:28:35,000 --> 00:28:39,040
Speaker 3: it had been. So we think the evidence indicates that

509
00:28:39,360 --> 00:28:42,880
Speaker 3: when looking at cycles, looking at that second derivative tends

510
00:28:42,920 --> 00:28:46,280
Speaker 3: to be more correlated with how equity prices perform as

511
00:28:46,320 --> 00:28:48,520
Speaker 3: opposed to focusing just on the absolute levels.

512
00:28:49,200 --> 00:28:52,959
Speaker 2: Really interesting. You know, you mentioned you were underweight China

513
00:28:53,760 --> 00:28:56,680
Speaker 2: for a while. When we look at the returns dating

514
00:28:56,720 --> 00:28:58,800
Speaker 2: back to an't I want to say the early nineties

515
00:28:59,240 --> 00:29:05,680
Speaker 2: hasn't really stinguished itself despite incredibly rapid economic growth, which

516
00:29:05,720 --> 00:29:10,240
Speaker 2: really raises an interesting question. Do we invest in emerging

517
00:29:10,280 --> 00:29:13,800
Speaker 2: market countries because their economies are growing, or do we

518
00:29:13,840 --> 00:29:18,560
Speaker 2: invest in those countries because their companies are generating growth

519
00:29:18,600 --> 00:29:20,560
Speaker 2: in profits at a rapid clip.

520
00:29:20,880 --> 00:29:24,640
Speaker 3: I think that's a really critical point specifically with China. So,

521
00:29:24,760 --> 00:29:28,600
Speaker 3: as you pointed out, if you look at the history

522
00:29:28,600 --> 00:29:33,440
Speaker 3: over decades, despite very strong GDP growth, EPs growth lag

523
00:29:33,760 --> 00:29:39,200
Speaker 3: that GDP growth, partly because of management decision making, equity issuance,

524
00:29:39,240 --> 00:29:40,800
Speaker 3: and capital location decisions.

525
00:29:41,720 --> 00:29:42,360
Speaker 4: We're starting to.

526
00:29:42,280 --> 00:29:46,560
Speaker 3: See the reverse now happen, where GDP growth is slowing

527
00:29:46,600 --> 00:29:49,520
Speaker 3: and it's never going to match what the GDP growth

528
00:29:49,560 --> 00:29:52,640
Speaker 3: has been like for the last decades, and BPS growth

529
00:29:53,200 --> 00:29:56,719
Speaker 3: is going to actually exceed that GDP growth because of

530
00:29:56,720 --> 00:29:59,920
Speaker 3: some of the behaviors I mentioned of a steep exc

531
00:30:00,000 --> 00:30:04,680
Speaker 3: toleration and share repurchases, more judicious use of capital exiting

532
00:30:04,760 --> 00:30:09,880
Speaker 3: non core businesses, redeploying that in higher incremental returns generating ventures,

533
00:30:10,520 --> 00:30:14,280
Speaker 3: and so the relationship between EPs growth and GDP growth

534
00:30:14,800 --> 00:30:18,040
Speaker 3: in many cases there's a strong correlation, but in other

535
00:30:18,120 --> 00:30:20,800
Speaker 3: cases you really need to pay attention to the company

536
00:30:20,880 --> 00:30:24,560
Speaker 3: specific drivers for the EPs growth and free casual generation

537
00:30:24,640 --> 00:30:28,040
Speaker 3: because that's ultimately what determines share price moves, not overal

538
00:30:28,120 --> 00:30:28,720
Speaker 3: GDP growth.

539
00:30:28,920 --> 00:30:32,719
Speaker 2: Really fascinating, what about the risk I have a vivid

540
00:30:32,880 --> 00:30:35,400
Speaker 2: recollection of a couple of years ago when some of

541
00:30:35,440 --> 00:30:40,920
Speaker 2: the senior executives at big tech companies fell into disfavor

542
00:30:41,000 --> 00:30:45,240
Speaker 2: from the let's be blunt, the Central Communist Planning Group

543
00:30:45,760 --> 00:30:49,760
Speaker 2: and folks disappeared for a while. The head of ten Cent,

544
00:30:49,800 --> 00:30:52,080
Speaker 2: the head of Ali Boba, the head of a couple

545
00:30:52,080 --> 00:30:57,080
Speaker 2: of other companies just suddenly disappeared, or at least temporarily.

546
00:30:57,600 --> 00:31:00,720
Speaker 2: How much of a risk is there when you're investing

547
00:31:00,760 --> 00:31:04,160
Speaker 2: in China that you don't know what the Chinese government

548
00:31:04,200 --> 00:31:06,840
Speaker 2: is going to do? And to be fair, hey, I

549
00:31:06,880 --> 00:31:09,040
Speaker 2: have no idea what the American government's going to do either,

550
00:31:09,160 --> 00:31:12,560
Speaker 2: but it seems to be a very specific risk that's

551
00:31:12,600 --> 00:31:14,920
Speaker 2: foreign to American investors.

552
00:31:15,560 --> 00:31:18,800
Speaker 3: Yeah, and I think that goes back to this idea

553
00:31:18,920 --> 00:31:22,880
Speaker 3: of trying to understand the incentive structures of the government,

554
00:31:23,200 --> 00:31:26,120
Speaker 3: having a view on what they're looking to achieve, and

555
00:31:26,160 --> 00:31:29,000
Speaker 3: not getting in the way. So to use the example

556
00:31:29,200 --> 00:31:32,400
Speaker 3: of the tech crackdown, and I'll extend that to also

557
00:31:32,480 --> 00:31:39,520
Speaker 3: the education sector crackdown that preceded it. He Heeping had

558
00:31:39,560 --> 00:31:42,560
Speaker 3: been I would argue pretty clear on some of the

559
00:31:42,680 --> 00:31:47,760
Speaker 3: issues he had with private sector, with private education, with

560
00:31:48,760 --> 00:31:53,800
Speaker 3: how tech companies had evolved and the role, the disproportionate

561
00:31:53,880 --> 00:31:56,000
Speaker 3: role they were playing in the economy, and the relationship

562
00:31:56,000 --> 00:32:00,040
Speaker 3: with merchants and ultimately some of the concerns around and

563
00:32:00,680 --> 00:32:04,680
Speaker 3: common prosperity or that going against the common prosperity agenda.

564
00:32:05,600 --> 00:32:10,680
Speaker 3: And so I think there was that tension already in place.

565
00:32:11,800 --> 00:32:14,400
Speaker 3: It was a surprise about how the government decided to

566
00:32:14,400 --> 00:32:18,440
Speaker 3: go about resolving that tension, but the tension was there.

567
00:32:19,560 --> 00:32:22,720
Speaker 3: And so I would argue based on our framework of

568
00:32:22,800 --> 00:32:27,440
Speaker 3: really trying to understand what are the problems the government's

569
00:32:27,480 --> 00:32:30,960
Speaker 3: looking to solve and lead into the companies that could

570
00:32:31,000 --> 00:32:33,680
Speaker 3: be solutions to those problems, as opposed to the companies

571
00:32:33,720 --> 00:32:38,000
Speaker 3: they're viewed as obstacles to solving those problems. Is a

572
00:32:38,040 --> 00:32:41,360
Speaker 3: way to reduce the resk. So you want regulatory intervention, You.

573
00:32:41,320 --> 00:32:44,440
Speaker 2: Want to align your investments with things that the central

574
00:32:44,480 --> 00:32:47,880
Speaker 2: planners are in favor with, and so when you're investing

575
00:32:47,920 --> 00:32:51,320
Speaker 2: with a company that also has the backing of the government,

576
00:32:51,800 --> 00:32:54,840
Speaker 2: you're much less likely to have those sort of kind

577
00:32:54,840 --> 00:32:57,200
Speaker 2: of surprising one off risks that we saw a few

578
00:32:57,280 --> 00:32:57,680
Speaker 2: years ago.

579
00:32:58,520 --> 00:33:01,280
Speaker 3: Yeah, and I think just going to the big tech

580
00:33:01,280 --> 00:33:08,000
Speaker 3: companies today, they are now proactively managing how they engage

581
00:33:08,040 --> 00:33:12,320
Speaker 3: with merchants and making sure, for example, that the split

582
00:33:12,600 --> 00:33:17,479
Speaker 3: of value is I would argue more favorable to merchants

583
00:33:17,480 --> 00:33:20,280
Speaker 3: today than it was during the period of the crackdowns.

584
00:33:20,840 --> 00:33:26,480
Speaker 3: There's also an element of making sure that the entrepreneurs

585
00:33:26,680 --> 00:33:30,560
Speaker 3: are not outshining party officials. And so there's a lot

586
00:33:30,640 --> 00:33:34,920
Speaker 3: of different elements that are being explicitly taken into account

587
00:33:35,680 --> 00:33:37,520
Speaker 3: that one needs to be aware of as we think

588
00:33:37,560 --> 00:33:40,800
Speaker 3: about again, what are those potential risk and pressure points,

589
00:33:41,200 --> 00:33:43,280
Speaker 3: how do we mitigate them? And ultimately, we're looking to

590
00:33:43,280 --> 00:33:47,920
Speaker 3: build a sixty stock portfolio across twenty plus different markets,

591
00:33:48,520 --> 00:33:50,000
Speaker 3: So we don't have to be in all countries, and

592
00:33:50,040 --> 00:33:51,680
Speaker 3: we certainly don't have to be in a whole sectors

593
00:33:51,680 --> 00:33:53,760
Speaker 3: if we think that that misalignment exists.

594
00:33:53,800 --> 00:33:58,920
Speaker 2: So final question about this topic. Now, you know, pretty

595
00:33:59,000 --> 00:34:03,200
Speaker 2: much the past decade, everybody lagged what the US did,

596
00:34:03,800 --> 00:34:06,320
Speaker 2: and I've been hearing lots of people throwing the towels

597
00:34:06,320 --> 00:34:09,360
Speaker 2: and saying, hey, if you can't beat them, join them.

598
00:34:09,520 --> 00:34:11,799
Speaker 2: Is now the wrong time to capitulate? Is now the

599
00:34:11,840 --> 00:34:15,000
Speaker 2: wrong time to give up on emerging markets? In frontiers?

600
00:34:15,040 --> 00:34:18,040
Speaker 2: Tell us what opportunities are out there looking forward?

601
00:34:18,280 --> 00:34:21,719
Speaker 3: Absolutely so, if you look at the history of EM

602
00:34:21,719 --> 00:34:26,520
Speaker 3: equity performance relative to US equities performance, there's a clear

603
00:34:26,560 --> 00:34:29,320
Speaker 3: pattern over the last couple of decades of very long

604
00:34:29,800 --> 00:34:35,360
Speaker 3: cycles of outperformance and underperformance, and clearly we're in a

605
00:34:35,520 --> 00:34:39,680
Speaker 3: very long cycle of over a decade of EM and

606
00:34:39,760 --> 00:34:43,640
Speaker 3: quite frankly, anything outside of the US underperforming the US.

607
00:34:44,120 --> 00:34:46,479
Speaker 3: The reason why I think now is the wrong time

608
00:34:46,520 --> 00:34:49,799
Speaker 3: to capitulate is for a couple of reasons. One is,

609
00:34:50,280 --> 00:34:53,680
Speaker 3: if you think about EM equity valuations versus the S

610
00:34:53,760 --> 00:34:57,600
Speaker 3: and P, the EM index's trading at ten to eleven

611
00:34:57,640 --> 00:35:02,920
Speaker 3: times forward PE, the S above twenty times, so the

612
00:35:03,040 --> 00:35:05,840
Speaker 3: discounts from a price to book standpoint is over sixty

613
00:35:05,920 --> 00:35:09,759
Speaker 3: percent price to earnings about forty percent discount. That's the

614
00:35:09,800 --> 00:35:15,440
Speaker 3: widest discount we've seen ever. But key valuations are necessary,

615
00:35:15,480 --> 00:35:18,960
Speaker 3: but not sufficient condition for an opportunity to be attractive.

616
00:35:19,000 --> 00:35:19,160
Speaker 4: Right.

617
00:35:19,200 --> 00:35:21,680
Speaker 3: You also want to see what is the catalyst to

618
00:35:21,800 --> 00:35:24,759
Speaker 3: that valuation discount closing, and we see several of those

619
00:35:24,800 --> 00:35:29,400
Speaker 3: catalysts and emerging markets. One is emerging market's earnings this

620
00:35:29,520 --> 00:35:32,400
Speaker 3: year and for the next few years are expected to accelerate.

621
00:35:32,440 --> 00:35:35,480
Speaker 3: EPs growth for some of the reasons I mentioned earlier

622
00:35:36,040 --> 00:35:40,360
Speaker 3: is expected to accelerate and be higher than the arguably

623
00:35:40,400 --> 00:35:44,440
Speaker 3: lofty EPs growth expectations. Out of the US, and that's

624
00:35:44,480 --> 00:35:49,240
Speaker 3: written by nonway economic drivers, but also fundamental company specific drivers.

625
00:35:49,960 --> 00:35:53,360
Speaker 3: I think the other standpoint you think about is in

626
00:35:53,440 --> 00:35:56,880
Speaker 3: terms of flows, the US dollar is at close to

627
00:35:56,920 --> 00:36:01,720
Speaker 3: twenty year highs in a period where the US deficit

628
00:36:02,200 --> 00:36:06,120
Speaker 3: running at six percent arguably is going to widen at

629
00:36:06,120 --> 00:36:10,560
Speaker 3: a period where rate policy is TBD. Our thesis is

630
00:36:10,560 --> 00:36:14,239
Speaker 3: not premised on the US dollar massively weakening, but we

631
00:36:14,239 --> 00:36:18,840
Speaker 3: think that there's increasing probabilities of dollar weakness given the

632
00:36:18,840 --> 00:36:23,480
Speaker 3: starting point that we're in, and that from a flow standpoint,

633
00:36:23,640 --> 00:36:29,280
Speaker 3: should be an additional upside driver to flows into emerging markets.

634
00:36:29,360 --> 00:36:34,000
Speaker 2: Huh really really interesting. So after a decade at Alliance Bernstein,

635
00:36:34,200 --> 00:36:37,440
Speaker 2: you land at Ariel about a year ago. Tell us

636
00:36:37,480 --> 00:36:41,480
Speaker 2: what that transition was like from what's a giant investment

637
00:36:41,520 --> 00:36:43,759
Speaker 2: house to something that's a little more of a boutique.

638
00:36:44,120 --> 00:36:50,000
Speaker 3: Yeah. Absolutely, So Ariel was seeking to launch a dedicated

639
00:36:50,239 --> 00:36:55,279
Speaker 3: emerging market equity strategy. Ariel has a forty plus year

640
00:36:55,440 --> 00:37:00,239
Speaker 3: history of value investing in equity markets, starting in the

641
00:37:00,320 --> 00:37:03,919
Speaker 3: small and mid cap segments in the US. The firm

642
00:37:04,000 --> 00:37:08,160
Speaker 3: launched in international and global strategies about twelve years ago,

643
00:37:08,640 --> 00:37:12,439
Speaker 3: and so emerging markets was actually a natural extension as

644
00:37:12,560 --> 00:37:17,200
Speaker 3: Aerial focuses on investing in the less efficient parts of

645
00:37:17,280 --> 00:37:20,719
Speaker 3: global capital markets, because you imagine US small cap is

646
00:37:20,719 --> 00:37:23,840
Speaker 3: also relatively less efficient compared in the context of the

647
00:37:23,960 --> 00:37:28,560
Speaker 3: US equity markets. Our team had an opportunity to join

648
00:37:28,760 --> 00:37:32,440
Speaker 3: to help build the emerging markets business at Aerial, and

649
00:37:32,480 --> 00:37:35,080
Speaker 3: this is really extremely exciting opportunities. I mentioned, our team

650
00:37:35,120 --> 00:37:38,200
Speaker 3: has been working together for no less than a decade.

651
00:37:39,160 --> 00:37:43,279
Speaker 3: We've had an investment process, an investment style that has

652
00:37:43,360 --> 00:37:48,239
Speaker 3: been deployed for decades, and to me personally, it was

653
00:37:48,280 --> 00:37:52,480
Speaker 3: really exciting to have the opportunity to be an entrepreneur

654
00:37:53,480 --> 00:37:56,840
Speaker 3: and to really launch a new business with the backing

655
00:37:57,040 --> 00:38:01,040
Speaker 3: of such an established and well respected platform like Ariel.

656
00:38:01,480 --> 00:38:05,120
Speaker 3: And I had been following Ariel and John Rodgers and

657
00:38:05,120 --> 00:38:09,160
Speaker 3: Melodie Hopson since my analyst days at JP Morgan, so

658
00:38:09,200 --> 00:38:12,520
Speaker 3: I was particularly excited to join a firm just given

659
00:38:12,560 --> 00:38:14,800
Speaker 3: the really strong track record and reputation.

660
00:38:15,239 --> 00:38:17,960
Speaker 2: One of the things I find interesting about Ariel is

661
00:38:18,000 --> 00:38:21,960
Speaker 2: the insignia of the firm, which is a turtle holding

662
00:38:22,000 --> 00:38:25,720
Speaker 2: a trophy, and like the sash says slow and steady

663
00:38:25,719 --> 00:38:29,240
Speaker 2: wins the race. What does that say about their philosophy

664
00:38:30,080 --> 00:38:33,720
Speaker 2: of investing and their emphasis on long term goals.

665
00:38:34,400 --> 00:38:37,840
Speaker 3: Well, that's one of the many elements that made joining

666
00:38:37,920 --> 00:38:41,319
Speaker 3: Ariel so incredibly attractive. First of all, in terms of

667
00:38:41,320 --> 00:38:45,120
Speaker 3: their investment philosophy. It really is across all of the

668
00:38:45,160 --> 00:38:51,000
Speaker 3: investment strategies at Ariel having a fundamental, bottoms up value

669
00:38:51,080 --> 00:38:55,440
Speaker 3: oriented style that really thinks about the long term. So

670
00:38:55,640 --> 00:38:59,760
Speaker 3: we're not looking to call quarters. We're really thinking about

671
00:38:59,800 --> 00:39:03,600
Speaker 3: the longer term trajectory of a business and owning businesses

672
00:39:03,600 --> 00:39:07,160
Speaker 3: that are treating at meaningful discounts to their intrinsic value.

673
00:39:07,520 --> 00:39:10,640
Speaker 3: We're able to look at that longer term horizon and

674
00:39:10,760 --> 00:39:14,719
Speaker 3: take advantage of market dislocations that often focus too much

675
00:39:14,800 --> 00:39:17,520
Speaker 3: on short term noise as opposed to long term trajectory,

676
00:39:17,520 --> 00:39:20,680
Speaker 3: and we take advantage of that discrepancy. But it not

677
00:39:20,760 --> 00:39:24,080
Speaker 3: only reflects how they invest, it also reflects how Aerol

678
00:39:24,120 --> 00:39:27,600
Speaker 3: thinks about building the business and growing the business. So

679
00:39:27,800 --> 00:39:32,720
Speaker 3: we were strategy number four at Aerial. This firm started

680
00:39:32,719 --> 00:39:35,200
Speaker 3: in the early eighties, so you could say that Aerial's

681
00:39:35,200 --> 00:39:39,040
Speaker 3: adding a new strategy once a decade. That's very different

682
00:39:39,080 --> 00:39:42,399
Speaker 3: than other firms, particularly larger asset management firms. Where there's

683
00:39:42,440 --> 00:39:46,160
Speaker 3: often pressure to add more and more new strategies in

684
00:39:46,239 --> 00:39:49,719
Speaker 3: a much more diversified fashion. And so I think the

685
00:39:49,880 --> 00:39:55,000
Speaker 3: focus on value investing, the discipline to really just focus

686
00:39:55,040 --> 00:39:58,440
Speaker 3: on expanding and adding strategies where it's a fit with

687
00:39:58,560 --> 00:40:02,640
Speaker 3: the culture and the investment philosophy of the firm is

688
00:40:02,719 --> 00:40:05,879
Speaker 3: really attractive. And for us as a new team, their

689
00:40:05,960 --> 00:40:09,920
Speaker 3: longer term horizon is also attractive because they're thinking about

690
00:40:09,920 --> 00:40:13,360
Speaker 3: emerging markets in the long haul. They're not saying, Okay,

691
00:40:13,400 --> 00:40:17,880
Speaker 3: we need this to work after six months. They're thinking

692
00:40:17,880 --> 00:40:21,200
Speaker 3: about building this business from a longer term horizon, which,

693
00:40:21,239 --> 00:40:23,680
Speaker 3: again as a team, was extremely attractive for us.

694
00:40:23,880 --> 00:40:27,360
Speaker 2: If you go to the website today, it specifically says

695
00:40:27,680 --> 00:40:31,480
Speaker 2: active patients. Yes, So a new strategy once a decade

696
00:40:32,320 --> 00:40:37,080
Speaker 2: that seems fairly patient approach to investing. What was it

697
00:40:37,280 --> 00:40:40,440
Speaker 2: like rolling out their fourth strategy.

698
00:40:41,200 --> 00:40:42,120
Speaker 4: It's been incredible.

699
00:40:42,400 --> 00:40:46,040
Speaker 3: I think going in, we clearly had high expectations going in,

700
00:40:46,160 --> 00:40:49,680
Speaker 3: or else we wouldn't have made the move. But our

701
00:40:49,760 --> 00:40:52,799
Speaker 3: experience there's been a lot of upside surprise to use

702
00:40:52,840 --> 00:40:55,719
Speaker 3: the term of an investor, relative to the already higher

703
00:40:55,719 --> 00:41:00,239
Speaker 3: original expectations. So it's been incredible. I think the port

704
00:41:00,280 --> 00:41:03,680
Speaker 3: we've received from the organization has been phenomenal. And again

705
00:41:03,680 --> 00:41:06,239
Speaker 3: I'm talking about from the you know, from the leadership on,

706
00:41:07,000 --> 00:41:11,839
Speaker 3: you know on throughout the organization, because ultimately we are

707
00:41:11,880 --> 00:41:12,880
Speaker 3: the fourth strategy.

708
00:41:12,920 --> 00:41:15,239
Speaker 4: We're not one of two hundred strategies.

709
00:41:16,120 --> 00:41:19,279
Speaker 3: And so what also made makes it a very exciting opportunity,

710
00:41:19,280 --> 00:41:22,960
Speaker 3: and it really scratches my entrepreneurial itch, is that we

711
00:41:23,000 --> 00:41:26,120
Speaker 3: are really able to have a meaningful impact on the firm.

712
00:41:26,440 --> 00:41:30,560
Speaker 3: We're not a drop in the bucket. So if we succeed,

713
00:41:30,719 --> 00:41:33,680
Speaker 3: which I know we will, we can really move the

714
00:41:33,719 --> 00:41:38,000
Speaker 3: needle and that has a lot of impact and that

715
00:41:38,320 --> 00:41:42,120
Speaker 3: does an incredible amount to increase level of motivation.

716
00:41:42,920 --> 00:41:46,600
Speaker 2: One of the strategies that you guys manage is Emerging

717
00:41:46,680 --> 00:41:50,640
Speaker 2: Markets Value X China. Tell us a little bit about

718
00:41:50,640 --> 00:41:51,960
Speaker 2: that strategy.

719
00:41:51,840 --> 00:41:55,320
Speaker 3: Yes, So what's interesting is the impetus for launching that strategy,

720
00:41:55,320 --> 00:41:58,279
Speaker 3: which we launched a month after our Emerging Markets Value strategy,

721
00:41:59,320 --> 00:42:05,200
Speaker 3: was because several allocators indicated that they had an interest

722
00:42:05,239 --> 00:42:07,520
Speaker 3: in an ex China strategy, not because they don't want

723
00:42:07,560 --> 00:42:12,560
Speaker 3: to invest in China, but because they already have dedicated

724
00:42:12,640 --> 00:42:16,760
Speaker 3: China allocations. China is a very large and an efficient

725
00:42:16,880 --> 00:42:20,600
Speaker 3: market where allocators. Some allocators decide to invest in local

726
00:42:20,640 --> 00:42:24,920
Speaker 3: managers and have dedicated China allocations.

727
00:42:25,040 --> 00:42:25,840
Speaker 4: So for those.

728
00:42:25,680 --> 00:42:28,200
Speaker 3: Managers, some of them have decided, you know what, I

729
00:42:28,239 --> 00:42:31,799
Speaker 3: want my global emerging markets equities manager to focus on

730
00:42:31,880 --> 00:42:34,719
Speaker 3: everything else outside of China, to not necessarily double up

731
00:42:34,719 --> 00:42:39,239
Speaker 3: my China exposure. But it is not to date, has

732
00:42:39,360 --> 00:42:43,760
Speaker 3: not been a reflection of a desire to not invest

733
00:42:43,800 --> 00:42:45,120
Speaker 3: in China.

734
00:42:45,200 --> 00:42:47,600
Speaker 2: So we've talked about lots of different parts of the world.

735
00:42:47,640 --> 00:42:51,200
Speaker 2: The one area we haven't spoken about is India, which

736
00:42:51,239 --> 00:42:53,759
Speaker 2: has had some pretty good, pretty robust performance over the

737
00:42:53,800 --> 00:42:56,600
Speaker 2: past few years. Give us an update what's going on

738
00:42:56,640 --> 00:42:59,799
Speaker 2: in India? How attractive is that? Has that gotten ahead

739
00:42:59,800 --> 00:43:03,600
Speaker 2: of it it self? Share your thoughts on the subcontinent

740
00:43:03,680 --> 00:43:04,120
Speaker 2: of India.

741
00:43:04,200 --> 00:43:04,960
Speaker 4: Yeah, absolutely, So.

742
00:43:05,080 --> 00:43:10,040
Speaker 3: India has been the standout outperformer within emerging markets, and

743
00:43:10,760 --> 00:43:13,759
Speaker 3: I think that it's a market that will continue to

744
00:43:13,800 --> 00:43:18,840
Speaker 3: have a strong economic growth outlook. That started with the

745
00:43:18,920 --> 00:43:21,239
Speaker 3: rise to power of Modi, who implemented a number of

746
00:43:21,239 --> 00:43:24,880
Speaker 3: reforms that really helped unlock economic growth. We see the

747
00:43:24,920 --> 00:43:28,920
Speaker 3: growth being powered by infrastructure investments which will unleash some

748
00:43:28,920 --> 00:43:34,080
Speaker 3: productivity improvement by consumer, by credit growth. So there's a

749
00:43:34,080 --> 00:43:37,480
Speaker 3: lot to like with the India economic story. The challenge

750
00:43:37,520 --> 00:43:40,600
Speaker 3: is that we think that's already priced in to the

751
00:43:40,640 --> 00:43:44,239
Speaker 3: equity markets. So the market trade is above twenty times.

752
00:43:43,960 --> 00:43:45,640
Speaker 2: For pees not cheap at all.

753
00:43:45,680 --> 00:43:49,360
Speaker 3: We think it's price to perfection, and so for us

754
00:43:49,480 --> 00:43:52,960
Speaker 3: as value investors, we prefer to invest in a market

755
00:43:53,000 --> 00:43:58,879
Speaker 3: like Southeast Asia, which has similarly attractive economic growth six

756
00:43:58,960 --> 00:44:02,160
Speaker 3: to seven percent real GDP growth over the next few

757
00:44:02,239 --> 00:44:06,200
Speaker 3: years at a fraction of the multiple. You know, Vietnam

758
00:44:06,239 --> 00:44:08,640
Speaker 3: and Philippines are training at tental eleven times.

759
00:44:07,960 --> 00:44:13,120
Speaker 2: For specifically, as so it's it's Vietnam, It's Philippines, Indonesia,

760
00:44:13,360 --> 00:44:13,680
Speaker 2: uh huh.

761
00:44:13,760 --> 00:44:13,960
Speaker 4: Yeah.

762
00:44:14,239 --> 00:44:15,840
Speaker 3: And we think it's a really interesting time in the

763
00:44:15,880 --> 00:44:19,000
Speaker 3: emerging markets universe because we think it's one of the

764
00:44:19,080 --> 00:44:22,560
Speaker 3: few opportunities I've seen in the last few decades where

765
00:44:22,560 --> 00:44:23,880
Speaker 3: you don't have to choose between.

766
00:44:23,719 --> 00:44:24,560
Speaker 4: Value and growth.

767
00:44:25,520 --> 00:44:30,239
Speaker 3: You can get growth at extremely compelling valuations. India is

768
00:44:30,280 --> 00:44:32,480
Speaker 3: not one of those markets in our opinion, but there

769
00:44:32,480 --> 00:44:34,240
Speaker 3: are plenty of markets that fit that criteria.

770
00:44:34,840 --> 00:44:37,920
Speaker 2: So help me understand how you guys come up with

771
00:44:38,040 --> 00:44:43,239
Speaker 2: a way of waiting the various geographies you're exposed to.

772
00:44:43,280 --> 00:44:48,080
Speaker 2: We've talked about the Middle East, South America, various parts

773
00:44:48,120 --> 00:44:52,400
Speaker 2: of Asia. Is it a function of the specific companies

774
00:44:52,400 --> 00:44:55,879
Speaker 2: that you find in each region, or do you approach it, Hey,

775
00:44:55,920 --> 00:44:59,359
Speaker 2: I think we should have some Southeast Asia and try

776
00:44:59,360 --> 00:45:01,799
Speaker 2: and ramp that up to x percent. How does that

777
00:45:01,880 --> 00:45:02,480
Speaker 2: balance out?

778
00:45:02,640 --> 00:45:05,799
Speaker 3: Yees? So it's really a bottoms up approach. So ultimately,

779
00:45:06,200 --> 00:45:12,080
Speaker 3: we're looking for stocks that we think can deliver meaningful upsides.

780
00:45:12,200 --> 00:45:15,560
Speaker 3: So today, for example, we're not going to invest in

781
00:45:15,560 --> 00:45:18,640
Speaker 3: a new opportunity that doesn't give us at least thirty

782
00:45:18,680 --> 00:45:24,080
Speaker 3: percent absolute upside in dollar terms. We think there's just

783
00:45:24,120 --> 00:45:26,880
Speaker 3: a lot of really great opportunities in the market, and

784
00:45:26,960 --> 00:45:29,000
Speaker 3: so we start with that bottoms up approach where we're

785
00:45:29,040 --> 00:45:32,160
Speaker 3: looking for those opportunities that can deliver that. And our

786
00:45:32,200 --> 00:45:35,839
Speaker 3: investment philosophy is really anchored around value with a catalyst,

787
00:45:36,360 --> 00:45:40,080
Speaker 3: So we're value investors. Valuations in price matter, but it's

788
00:45:40,120 --> 00:45:42,719
Speaker 3: not the only criteria. We also want to make sure

789
00:45:42,719 --> 00:45:45,920
Speaker 3: that we're focused on companies where there's a stabilization and

790
00:45:45,960 --> 00:45:50,000
Speaker 3: an inflection point at hand in the underlying business momentum.

791
00:45:50,360 --> 00:45:52,880
Speaker 3: And we think that discipline focusing on value with a

792
00:45:52,920 --> 00:45:56,720
Speaker 3: catalyst helps make sure we're focused on the value opportunities

793
00:45:57,120 --> 00:45:59,719
Speaker 3: as opposed to the value traps. And so with that

794
00:46:00,160 --> 00:46:05,000
Speaker 3: in mind, we're picking stocks that meet that criteria. And ultimately,

795
00:46:05,200 --> 00:46:09,000
Speaker 3: as a mentioned, we can lean into or maybe put

796
00:46:09,719 --> 00:46:12,759
Speaker 3: higher focus on countries where we think the top down

797
00:46:12,880 --> 00:46:18,839
Speaker 3: environment is fruitful and lean out of countries that are

798
00:46:18,880 --> 00:46:22,080
Speaker 3: we think heading in the wrong direction. But ultimately the

799
00:46:22,160 --> 00:46:26,160
Speaker 3: country overweights and underweights are really driven by that stock

800
00:46:26,200 --> 00:46:27,080
Speaker 3: selection approach.

801
00:46:27,320 --> 00:46:30,400
Speaker 2: Huh really interesting, you know, I read this data point

802
00:46:30,400 --> 00:46:32,719
Speaker 2: on Ariel that I had to ask about because it's

803
00:46:32,719 --> 00:46:37,200
Speaker 2: so interesting. Employees in board members own almost ninety five

804
00:46:37,239 --> 00:46:39,879
Speaker 2: percent of the firm. What does this mean to you

805
00:46:40,160 --> 00:46:42,640
Speaker 2: as an employee and what does it mean to your clients?

806
00:46:43,200 --> 00:46:46,360
Speaker 3: So, just as I as an investor focus on alignment

807
00:46:46,400 --> 00:46:49,840
Speaker 3: of interest with the companies I'm investing in and with

808
00:46:50,040 --> 00:46:56,279
Speaker 3: the countries we're investing in, I think our clients are

809
00:46:56,320 --> 00:46:59,000
Speaker 3: equally asking similar questions of what is the alignment of

810
00:46:59,080 --> 00:47:02,719
Speaker 3: interest with the investment managers I do business with? And

811
00:47:02,800 --> 00:47:08,600
Speaker 3: so with that statistic, it's very clear that at Aerial

812
00:47:09,560 --> 00:47:13,440
Speaker 3: there is that strong level of alignment. Not only do

813
00:47:13,600 --> 00:47:20,359
Speaker 3: the Aerial employees a majority of Aerial employees, compensation is

814
00:47:20,520 --> 00:47:26,840
Speaker 3: tied to stock. It's also tied to the performance of

815
00:47:27,280 --> 00:47:31,120
Speaker 3: the strategies you're responsible for managing. So we're eating our cooking.

816
00:47:32,840 --> 00:47:36,480
Speaker 3: And at a firm level, because it's such a focused firm,

817
00:47:37,800 --> 00:47:41,520
Speaker 3: when I own shares an Aerial as a Portfoli manager

818
00:47:41,560 --> 00:47:44,240
Speaker 3: in the emerging markets division, I can move the needle

819
00:47:44,320 --> 00:47:47,759
Speaker 3: of that broader Aerial share price in a way that

820
00:47:47,880 --> 00:47:51,760
Speaker 3: is hard to do when you're at a six hundred

821
00:47:51,800 --> 00:47:55,040
Speaker 3: billion or one trillion dollar asset management firm, where if

822
00:47:55,040 --> 00:47:59,920
Speaker 3: you get equity in that company, your contribution just mathematically

823
00:48:01,000 --> 00:48:01,680
Speaker 3: is a lot lower.

824
00:48:02,120 --> 00:48:05,160
Speaker 2: And historically, you were at Alliance Barnstein, you were JP Morgan,

825
00:48:05,239 --> 00:48:08,560
Speaker 2: you were at Morgan Stanley. You could shoot the lights out.

826
00:48:09,000 --> 00:48:10,799
Speaker 2: It's not going to impact the bottom line all that

827
00:48:10,880 --> 00:48:13,280
Speaker 2: much because they're just such behemoths exactly.

828
00:48:13,280 --> 00:48:15,440
Speaker 4: So it's just a different structure and a different model.

829
00:48:16,440 --> 00:48:19,200
Speaker 3: But I think with this model and I see it

830
00:48:19,239 --> 00:48:24,160
Speaker 3: with our team, it's clear we've always been an extremely

831
00:48:24,239 --> 00:48:28,200
Speaker 3: hard working, diligent, motivated team, but it got kicked up

832
00:48:28,239 --> 00:48:31,960
Speaker 3: a thousand knachas when joying Aeriel. And so it's just

833
00:48:32,200 --> 00:48:36,640
Speaker 3: incredible case study and what strong alignment of interests can

834
00:48:36,719 --> 00:48:38,719
Speaker 3: do in terms of just shaping your day to day

835
00:48:38,719 --> 00:48:44,040
Speaker 3: behavior and how you interact at work and ultimately how

836
00:48:44,080 --> 00:48:47,200
Speaker 3: aligned you are with the clients you're investing money for.

837
00:48:47,800 --> 00:48:51,760
Speaker 2: I think I have an interview coming up at future

838
00:48:51,760 --> 00:48:55,200
Speaker 2: Proof Citywide Miami with Melody Hobson, who you work with.

839
00:48:55,640 --> 00:48:58,120
Speaker 2: She's a legend in the industry. What's it like to

840
00:48:58,160 --> 00:48:58,960
Speaker 2: work with Melody?

841
00:48:59,280 --> 00:49:00,000
Speaker 4: She's incredible.

842
00:49:00,160 --> 00:49:03,760
Speaker 3: As I mentioned, I've you know, been following her since

843
00:49:03,800 --> 00:49:06,800
Speaker 3: I was a junior analyst at JP Morgan Asset Management.

844
00:49:07,800 --> 00:49:11,160
Speaker 3: Getting to work with her and John Rodgers has been

845
00:49:11,239 --> 00:49:15,560
Speaker 3: just unbelievable and incredible. And one thing I think about

846
00:49:15,600 --> 00:49:20,640
Speaker 3: Melody is that he is really funny, very down to earth.

847
00:49:20,840 --> 00:49:23,000
Speaker 3: I mean, I was surprised how down to earth she

848
00:49:23,160 --> 00:49:29,280
Speaker 3: is and just very passionate and diligent about her work.

849
00:49:29,480 --> 00:49:32,040
Speaker 3: And so you know, the fact that she is out

850
00:49:32,080 --> 00:49:40,040
Speaker 3: there actively advocating for and fundraising for our emerging market strategy,

851
00:49:40,200 --> 00:49:43,560
Speaker 3: I'm just so incredibly grateful for. But it just shows

852
00:49:43,600 --> 00:49:46,319
Speaker 3: that level of focus and dedication and the fact that

853
00:49:46,360 --> 00:49:49,840
Speaker 3: Melody can do that because we are a firm that

854
00:49:49,960 --> 00:49:52,719
Speaker 3: is focused and not trying to be you know, all

855
00:49:52,719 --> 00:49:55,799
Speaker 3: things to all people. So that's just been a really

856
00:49:55,960 --> 00:49:57,880
Speaker 3: incredible and inspiring experience.

857
00:49:58,000 --> 00:49:59,520
Speaker 2: And let me throw you a little bit of a

858
00:49:59,520 --> 00:50:03,200
Speaker 2: CURVEBA before we get to our favorite questions. You serve

859
00:50:03,239 --> 00:50:07,200
Speaker 2: on the board of directors of the Small Enterprise Assistance Fund, Yes,

860
00:50:07,520 --> 00:50:10,600
Speaker 2: tell us a little bit about what that impact fund does.

861
00:50:10,800 --> 00:50:11,600
Speaker 4: Yeah, absolutely so.

862
00:50:11,680 --> 00:50:14,040
Speaker 3: I recently stepped off of the board, but I had

863
00:50:14,080 --> 00:50:17,319
Speaker 3: been on the board for a number of years. And

864
00:50:18,000 --> 00:50:23,080
Speaker 3: the SEAF Fund is an impact investing fund that actually

865
00:50:23,160 --> 00:50:25,239
Speaker 3: I had a chance to co invest with and work

866
00:50:25,280 --> 00:50:28,279
Speaker 3: alongside when I was at Grassroots Business Fund. So it's

867
00:50:28,320 --> 00:50:31,319
Speaker 3: the fun I'm very familiar with that really focuses on

868
00:50:31,520 --> 00:50:35,440
Speaker 3: private equity investing amongst small and mid sized companies as

869
00:50:35,480 --> 00:50:38,719
Speaker 3: a tool of grassroots bottoms up economic development.

870
00:50:39,040 --> 00:50:44,520
Speaker 2: So impact not merely looking to generate a return solely.

871
00:50:44,560 --> 00:50:45,759
Speaker 4: You want to have looking at both.

872
00:50:45,840 --> 00:50:48,000
Speaker 3: Yeah, So what I guess we would call a double

873
00:50:48,000 --> 00:50:54,320
Speaker 3: bottom line fund exactly. So the fund has experience from

874
00:50:54,560 --> 00:51:00,400
Speaker 3: China to Tanzania, to Peru to Ukraine. I mean that

875
00:51:00,480 --> 00:51:03,880
Speaker 3: they've worked in They've worked not only in emerging and

876
00:51:03,920 --> 00:51:07,120
Speaker 3: frontier markets, but I would call horizon markets, which are

877
00:51:07,280 --> 00:51:11,680
Speaker 3: kind of the level I guess below Frontier markets. They've

878
00:51:11,680 --> 00:51:15,480
Speaker 3: worked in really challenging but interesting places, and so it's

879
00:51:15,520 --> 00:51:18,040
Speaker 3: a fun that even though I recently stepped off the

880
00:51:18,080 --> 00:51:20,440
Speaker 3: board after a number of years, I have a tremendous

881
00:51:20,440 --> 00:51:22,120
Speaker 3: amount of respect for the work that they do.

882
00:51:22,360 --> 00:51:24,879
Speaker 2: Huh, really really interesting. All right, Let's jump to our

883
00:51:25,080 --> 00:51:28,440
Speaker 2: favorite questions that we ask all of our guests, starting

884
00:51:28,480 --> 00:51:31,680
Speaker 2: with what's keeping you entertained these days? What are you

885
00:51:31,719 --> 00:51:32,759
Speaker 2: watching or listening to?

886
00:51:33,640 --> 00:51:36,920
Speaker 3: So it's interesting. I tend to in terms of streaming

887
00:51:37,040 --> 00:51:43,200
Speaker 3: and TV, I tend to lean towards dystopian scripted dramas,

888
00:51:43,360 --> 00:51:47,800
Speaker 3: So think Squid Game, Black Mirror, Three Body Problem.

889
00:51:47,920 --> 00:51:48,800
Speaker 4: I love those shows.

890
00:51:48,840 --> 00:51:50,200
Speaker 2: I love three Body Problems.

891
00:51:50,239 --> 00:51:50,880
Speaker 4: It's incredible.

892
00:51:50,960 --> 00:51:52,680
Speaker 2: Did you start the new season?

893
00:51:52,719 --> 00:51:54,759
Speaker 3: I did not, because now I'm on squid Game. Oh yeah,

894
00:51:54,760 --> 00:51:56,640
Speaker 3: I did start Squid Game version two.

895
00:51:56,800 --> 00:51:59,000
Speaker 2: I just saw the preview for it.

896
00:51:59,000 --> 00:52:00,520
Speaker 4: It's increasing. I love it. I love it.

897
00:52:00,520 --> 00:52:03,279
Speaker 3: It has mixed reviews, it has the second season has

898
00:52:03,280 --> 00:52:07,040
Speaker 3: mixed reviews, but I'm really enjoying it so far so

899
00:52:07,080 --> 00:52:10,120
Speaker 3: that I would say is my core. But I also

900
00:52:10,200 --> 00:52:11,399
Speaker 3: really enjoy Below Deck.

901
00:52:12,000 --> 00:52:14,160
Speaker 2: So below Deck? What is below Deck? Oh? You mean

902
00:52:14,200 --> 00:52:15,040
Speaker 2: the Star Trek.

903
00:52:14,840 --> 00:52:19,480
Speaker 3: Animated No No Below Deck is literally a reality show

904
00:52:19,520 --> 00:52:22,800
Speaker 3: on Bravo. It's the only reality show that I watch.

905
00:52:23,320 --> 00:52:28,480
Speaker 3: But it's basically about crew that work on yachts, okay,

906
00:52:28,760 --> 00:52:31,279
Speaker 3: And what I love about the show it's I mean,

907
00:52:31,280 --> 00:52:33,719
Speaker 3: it's the typical reality show where there's drama and all

908
00:52:33,719 --> 00:52:35,560
Speaker 3: this other stuff. But what I love about it is

909
00:52:35,880 --> 00:52:39,640
Speaker 3: because they're actually working. There's a lot of kind of

910
00:52:39,760 --> 00:52:45,279
Speaker 3: managerial lessons of leadership, the relations between the captain and

911
00:52:45,320 --> 00:52:49,120
Speaker 3: the bosin, the relationships between different departments like the interior

912
00:52:49,280 --> 00:52:53,080
Speaker 3: versus the exterior of the boat, hiring and firing decisions.

913
00:52:53,560 --> 00:52:57,080
Speaker 3: There's a lot there that I find to be absolutely fascinating.

914
00:52:57,880 --> 00:53:02,000
Speaker 3: And beyond that, they're in mega yachts in incredible locations

915
00:53:02,000 --> 00:53:02,680
Speaker 3: around the world.

916
00:53:02,840 --> 00:53:04,799
Speaker 2: So it looks great. I bet.

917
00:53:04,920 --> 00:53:06,520
Speaker 3: I think Harvard should do a case study on it

918
00:53:06,560 --> 00:53:09,319
Speaker 3: at some point, But it's it's a fun show.

919
00:53:09,640 --> 00:53:13,840
Speaker 2: Huh. I'm gonna I'm gonna drop a footnote with you

920
00:53:14,120 --> 00:53:16,799
Speaker 2: on squid Games. Do you know the background of the

921
00:53:16,840 --> 00:53:19,480
Speaker 2: guy who wrote squid Games? So there was a Wall

922
00:53:19,520 --> 00:53:23,799
Speaker 2: Street Journal article like write in the early part of

923
00:53:23,800 --> 00:53:27,040
Speaker 2: the pandemic when squid Games had blown up. It turns

924
00:53:27,080 --> 00:53:29,360
Speaker 2: out that this guy had been trying to sell the

925
00:53:29,360 --> 00:53:34,280
Speaker 2: script for Squid Games for a decade and could everybody

926
00:53:34,320 --> 00:53:38,560
Speaker 2: this is crazy, a competition for money where people die.

927
00:53:38,719 --> 00:53:41,360
Speaker 2: This is nobody would believe this. This is too crazy.

928
00:53:41,920 --> 00:53:46,600
Speaker 2: And Netflix, as they tend to do, they just buy

929
00:53:46,680 --> 00:53:49,680
Speaker 2: stuff in mass and then go through the process of

930
00:53:50,080 --> 00:53:52,440
Speaker 2: seeing what they can develop. Like they they don't just

931
00:53:52,680 --> 00:53:55,840
Speaker 2: buy something from Fred over there. It's like, let's just

932
00:53:55,840 --> 00:53:57,880
Speaker 2: scoop up all this and see what we can find.

933
00:53:58,560 --> 00:54:01,000
Speaker 2: And at one point in time, the guy who wrote it,

934
00:54:01,040 --> 00:54:03,600
Speaker 2: who developed it, how to sell his laptop because he

935
00:54:03,719 --> 00:54:06,720
Speaker 2: was that broke. And it just goes to show you

936
00:54:06,800 --> 00:54:10,399
Speaker 2: like nobody wanted anything to do with this, and it's

937
00:54:10,440 --> 00:54:14,719
Speaker 2: the single most successful show in the history of Netflix.

938
00:54:15,000 --> 00:54:16,360
Speaker 2: It's just it's just wild.

939
00:54:16,480 --> 00:54:18,759
Speaker 3: And it's fascinating to me too, because it's also just

940
00:54:18,840 --> 00:54:24,440
Speaker 3: part of this surge of Korean the globalization of Korean culture, right,

941
00:54:24,480 --> 00:54:31,720
Speaker 3: whether it's k pop in movies, television, even food is cosmetics.

942
00:54:32,280 --> 00:54:34,799
Speaker 3: So it's really interesting to think to put Squid Games

943
00:54:34,800 --> 00:54:40,360
Speaker 3: in the context of this huge resurgence in Korean culture globalization,

944
00:54:40,400 --> 00:54:42,880
Speaker 3: which quite frankly, I think people wouldn't have predicted, you know,

945
00:54:42,920 --> 00:54:43,800
Speaker 3: a decade ago.

946
00:54:43,640 --> 00:54:44,600
Speaker 4: So it's really interesting.

947
00:54:44,800 --> 00:54:47,480
Speaker 2: I think Netflix just spent another billion dollars over the

948
00:54:47,560 --> 00:54:53,160
Speaker 2: past three years since squid Game buying more South Korean product,

949
00:54:53,160 --> 00:54:57,120
Speaker 2: which is which is pretty pretty amazing. Next question, tell

950
00:54:57,200 --> 00:54:59,680
Speaker 2: us about your mentors who helped shape your career.

951
00:55:00,200 --> 00:55:02,560
Speaker 3: So I've been tremendously lucky that over the course of

952
00:55:02,600 --> 00:55:07,160
Speaker 3: my career, I've had incredible mentors and also sponsors. And

953
00:55:07,160 --> 00:55:09,320
Speaker 3: I like to put the point on the sponsors piece

954
00:55:09,480 --> 00:55:12,719
Speaker 3: because I like to think that mentors, you know, get

955
00:55:12,760 --> 00:55:14,799
Speaker 3: you into the building, but sponsors put you on the

956
00:55:14,800 --> 00:55:17,759
Speaker 3: express elevator to the top, and so they're the ones

957
00:55:17,760 --> 00:55:20,839
Speaker 3: who are pounding the table for you when you're not there.

958
00:55:21,960 --> 00:55:24,680
Speaker 3: And so I've been lucky to have incredible, you know,

959
00:55:24,840 --> 00:55:29,719
Speaker 3: relationships in both dimensions. People would call out specifically. I

960
00:55:29,719 --> 00:55:31,719
Speaker 3: mean there's a lot, there are a lot of people

961
00:55:31,719 --> 00:55:34,600
Speaker 3: who have been very helpful. But I would say if

962
00:55:34,640 --> 00:55:37,200
Speaker 3: I think about my JP Morgan days, you know, particularly

963
00:55:37,320 --> 00:55:41,600
Speaker 3: you know earlier on at JP Morgan, individuals like Kahr,

964
00:55:42,719 --> 00:55:46,320
Speaker 3: who you know, was an equities analyst now he's actually

965
00:55:47,320 --> 00:55:51,200
Speaker 3: in fixed income at JP Morgan Asset Management. He really

966
00:55:51,200 --> 00:55:53,319
Speaker 3: when I was just a college student, that didn't know

967
00:55:53,640 --> 00:55:57,879
Speaker 3: anything about emergen about investment management, really took me under

968
00:55:57,880 --> 00:56:01,280
Speaker 3: her wing and and really encourage me to actually pursue

969
00:56:01,280 --> 00:56:04,480
Speaker 3: credit research before equity research because there's no opening in

970
00:56:04,560 --> 00:56:06,720
Speaker 3: equity research. And she said, you know what, credit research.

971
00:56:06,719 --> 00:56:08,320
Speaker 3: I know that's not what you want to do right now,

972
00:56:09,160 --> 00:56:11,880
Speaker 3: but this will help you build the skill set that

973
00:56:11,920 --> 00:56:15,640
Speaker 3: you will need in equity research in terms of assessing companies,

974
00:56:15,680 --> 00:56:17,239
Speaker 3: et cetera. And I'm so glad you gave me that

975
00:56:17,280 --> 00:56:19,840
Speaker 3: advice because that really was the starting point of my

976
00:56:19,920 --> 00:56:26,080
Speaker 3: career in securities analysis. You know, other individuals include Professor

977
00:56:26,120 --> 00:56:30,719
Speaker 3: Andre Parold, who was my finance professor at HBS, who

978
00:56:30,719 --> 00:56:33,759
Speaker 3: I'm still in touch with. He's been a really great

979
00:56:33,760 --> 00:56:35,920
Speaker 3: advisor and mentor to me and really has helped counsel

980
00:56:36,040 --> 00:56:40,239
Speaker 3: me through, you know, different stages of my career. And again,

981
00:56:40,239 --> 00:56:41,799
Speaker 3: I feel bad because there's a lot of people I'm

982
00:56:41,840 --> 00:56:44,359
Speaker 3: not naming, but there's just been you know, I've been.

983
00:56:44,360 --> 00:56:47,160
Speaker 4: Very speech I know, I want to thank everyone, but.

984
00:56:47,400 --> 00:56:51,520
Speaker 3: I've just been very fortunate to have incredible mentors still

985
00:56:51,560 --> 00:56:53,880
Speaker 3: in my life and I just hope that I can

986
00:56:53,920 --> 00:56:56,480
Speaker 3: pay it forward for that next generation and in the

987
00:56:56,480 --> 00:56:59,640
Speaker 3: process of mentoring kind of more junior talent to again

988
00:56:59,680 --> 00:57:00,480
Speaker 3: try to forward.

989
00:57:00,800 --> 00:57:03,120
Speaker 2: Let's talk about books. What are some of your favorites?

990
00:57:03,160 --> 00:57:04,240
Speaker 2: What are you reading right now?

991
00:57:04,840 --> 00:57:09,120
Speaker 3: So I just finished The Obstacle is the Way Holiday.

992
00:57:09,239 --> 00:57:11,759
Speaker 4: Yeah, that really I found to.

993
00:57:11,719 --> 00:57:18,440
Speaker 3: Be an incredible book because it essentially talks about how obstacles, challenges,

994
00:57:18,560 --> 00:57:21,520
Speaker 3: problems are not things to be avoided but embraced and

995
00:57:21,560 --> 00:57:25,000
Speaker 3: sought after, which seems very counterintuitive because we're cassanally trying

996
00:57:25,000 --> 00:57:28,280
Speaker 3: to optimize our professional and personal lives to you know,

997
00:57:28,400 --> 00:57:31,520
Speaker 3: avoid stumbling blocks. And this is saying no, embrace the

998
00:57:31,560 --> 00:57:35,040
Speaker 3: stumbling blocks because that's ultimately how you learn. And for

999
00:57:35,120 --> 00:57:40,120
Speaker 3: me in particular, as a recovering perfectionist, it really resonated

1000
00:57:40,160 --> 00:57:42,880
Speaker 3: with me to kind of hear that message and I

1001
00:57:42,960 --> 00:57:46,000
Speaker 3: actually find myself referring back to it in my personal

1002
00:57:46,080 --> 00:57:48,680
Speaker 3: and professional life that you know what, the obstacles are

1003
00:57:48,720 --> 00:57:52,040
Speaker 3: a good thing and you learn from them and that's

1004
00:57:52,040 --> 00:57:55,280
Speaker 3: how you become stronger. And he just points to so

1005
00:57:55,360 --> 00:58:00,880
Speaker 3: many different examples from history, philosophy, current events that really

1006
00:58:00,920 --> 00:58:02,960
Speaker 3: ties and brings to life that concept. So it's a

1007
00:58:02,960 --> 00:58:06,280
Speaker 3: book I really really enjoyed and what I'm reading right

1008
00:58:06,400 --> 00:58:08,800
Speaker 3: now I'm kind of twenty five percent of the way

1009
00:58:08,880 --> 00:58:14,000
Speaker 3: in is on jiji Ping, written by Kevin Rudd, who's

1010
00:58:14,040 --> 00:58:19,560
Speaker 3: the former Australian ambassador who has decades of experience living

1011
00:58:19,600 --> 00:58:22,680
Speaker 3: and working with China and with politicians in China. I

1012
00:58:22,720 --> 00:58:25,960
Speaker 3: read The Avoidable War, which was an incredible book that

1013
00:58:26,040 --> 00:58:29,000
Speaker 3: talked about US China relations and the outlook for that.

1014
00:58:29,800 --> 00:58:34,520
Speaker 3: On Jijiping specifically focuses on jijiping thought and how what

1015
00:58:34,680 --> 00:58:37,080
Speaker 3: the basis for that thought, what's the basis for the thinking,

1016
00:58:37,120 --> 00:58:40,640
Speaker 3: what are the incentives and how those could evolve? And

1017
00:58:41,000 --> 00:58:44,320
Speaker 3: my friends who work and are based in China, different

1018
00:58:44,760 --> 00:58:48,080
Speaker 3: different individuals separately have told me that he's probably the

1019
00:58:48,120 --> 00:58:52,600
Speaker 3: top Westerner who has the best understanding of Chinese Chinese

1020
00:58:52,680 --> 00:58:56,360
Speaker 3: politics today and of China, and so I take their

1021
00:58:56,400 --> 00:58:59,840
Speaker 3: word for it that he has a lot of good insights.

1022
00:59:00,040 --> 00:59:03,640
Speaker 2: Huh. Really kind of interesting. As a side note, I

1023
00:59:03,680 --> 00:59:08,440
Speaker 2: am not a perfectionist, but I have noticed we've all

1024
00:59:08,440 --> 00:59:11,480
Speaker 2: heard the expression don't let the perfect be the enemy

1025
00:59:11,480 --> 00:59:13,600
Speaker 2: of the good. Yes, I could tell you from my

1026
00:59:13,920 --> 00:59:17,520
Speaker 2: personal experience it doesn't matter if you're shopping for a

1027
00:59:17,600 --> 00:59:22,920
Speaker 2: house or any time you're making a consumer choice. I

1028
00:59:23,120 --> 00:59:25,520
Speaker 2: have a tendency to go down a rabbit hole and

1029
00:59:25,640 --> 00:59:28,000
Speaker 2: let the perfect be the enemy of the good. And

1030
00:59:28,160 --> 00:59:32,320
Speaker 2: it's been a process to kind of learn how to

1031
00:59:32,360 --> 00:59:36,000
Speaker 2: get around that. How did you learn how to manage?

1032
00:59:36,360 --> 00:59:39,080
Speaker 2: And by the way, I am not a professionist. I'm

1033
00:59:39,080 --> 00:59:43,120
Speaker 2: gonna just get it done. Doesn't matter if it's not perfect,

1034
00:59:43,440 --> 00:59:46,920
Speaker 2: we'll fix it later. In most things, but in like

1035
00:59:47,040 --> 00:59:52,360
Speaker 2: that sort of big consumer choice, the perfect has always

1036
00:59:52,360 --> 00:59:55,000
Speaker 2: been the enemy of the good for me. And I

1037
00:59:55,040 --> 00:59:57,120
Speaker 2: look back at choices I made, I'm like, gee, you know,

1038
00:59:57,160 --> 01:00:00,360
Speaker 2: I should have done that house, which has appreciated more

1039
01:00:00,480 --> 01:00:03,040
Speaker 2: than because you don't end up in a perfect time, yes,

1040
01:00:03,400 --> 01:00:06,720
Speaker 2: and what you sometimes give up. So I'm curious, how

1041
01:00:06,720 --> 01:00:08,200
Speaker 2: did you manage that? Personally?

1042
01:00:08,800 --> 01:00:11,960
Speaker 3: I am still managing it, so I'm still you're going

1043
01:00:12,040 --> 01:00:15,280
Speaker 3: to be I'm always working on it. And so I mean,

1044
01:00:15,280 --> 01:00:17,960
Speaker 3: it's it's actually interesting talking about real estate. I mean,

1045
01:00:17,960 --> 01:00:20,560
Speaker 3: as a side note, my husband and I have been talking.

1046
01:00:20,640 --> 01:00:22,880
Speaker 3: We live in Brooklyn now we've been talking about moving

1047
01:00:23,440 --> 01:00:25,320
Speaker 3: closer to our kids school, which is on the Upper

1048
01:00:25,320 --> 01:00:28,920
Speaker 3: East Side. I'm talk to my commute, et cetera, et cetera.

1049
01:00:29,360 --> 01:00:31,840
Speaker 3: We've been talking about this for maybe six years.

1050
01:00:31,520 --> 01:00:34,240
Speaker 2: Now watching prices just go up, and.

1051
01:00:34,720 --> 01:00:37,080
Speaker 3: To your point, well, I want this and we want that,

1052
01:00:37,160 --> 01:00:39,280
Speaker 3: and this is like our perfect dream home and it

1053
01:00:39,280 --> 01:00:41,320
Speaker 3: needs to be two blocks away from the school. And

1054
01:00:41,400 --> 01:00:44,040
Speaker 3: so this is literally an active conversation now as we

1055
01:00:44,160 --> 01:00:46,600
Speaker 3: enter twenty twenty five, like at some point we just

1056
01:00:46,680 --> 01:00:48,960
Speaker 3: need to to do it. It's not gonna be perfect,

1057
01:00:49,520 --> 01:00:52,120
Speaker 3: and so for me, I think in terms of opportunity

1058
01:00:52,120 --> 01:00:56,160
Speaker 3: cost right, So what are we giving up by not

1059
01:00:56,360 --> 01:00:57,160
Speaker 3: doing this now?

1060
01:00:57,880 --> 01:00:58,160
Speaker 2: Right?

1061
01:00:59,440 --> 01:01:01,200
Speaker 3: And which is what you alluded to as well in

1062
01:01:01,240 --> 01:01:06,800
Speaker 3: terms of pricing appreciation, ETCEA, and also just understanding that

1063
01:01:06,880 --> 01:01:10,680
Speaker 3: there is no perfect anything. It's trade offs.

1064
01:01:10,720 --> 01:01:12,720
Speaker 2: You're one hundred percent right. I have a quick funny

1065
01:01:13,000 --> 01:01:15,919
Speaker 2: story to share. A couple of years ago. I'm trying

1066
01:01:15,920 --> 01:01:18,760
Speaker 2: to remember if it was pre or post pandemic. No,

1067
01:01:18,840 --> 01:01:21,360
Speaker 2: I think it was right after the pandemic. I gave

1068
01:01:21,400 --> 01:01:26,160
Speaker 2: a presentation to the International Luxury Real Estate Alliance and

1069
01:01:26,200 --> 01:01:29,680
Speaker 2: it was an Aspen, Colorado. So it's beautiful there, and

1070
01:01:30,200 --> 01:01:33,479
Speaker 2: you know, and it's a few one hundred real estate

1071
01:01:33,520 --> 01:01:38,040
Speaker 2: agents and each of them represent the highest performing realtor

1072
01:01:38,680 --> 01:01:41,400
Speaker 2: in their town. And it's not you know, po dunk

1073
01:01:42,000 --> 01:01:46,240
Speaker 2: it's it's Veil, and it's Nashville, and it's New York,

1074
01:01:46,760 --> 01:01:50,800
Speaker 2: and it's Seattle, and it's London. It's just crazy, the

1075
01:01:51,000 --> 01:01:55,880
Speaker 2: sort of sort of like top real estate producers all

1076
01:01:55,920 --> 01:01:58,680
Speaker 2: around the world, and we're having you know, there's a

1077
01:01:58,680 --> 01:02:01,800
Speaker 2: bunch the dinner that night, or a bunch of separate

1078
01:02:01,800 --> 01:02:05,720
Speaker 2: tables of six or eight, and there's an older woman

1079
01:02:05,800 --> 01:02:10,120
Speaker 2: from Palm Beach, Florida, Ritzy part of Florida, and uh.

1080
01:02:12,320 --> 01:02:15,360
Speaker 2: She takes a phone call and she's like, I apologize,

1081
01:02:15,400 --> 01:02:17,760
Speaker 2: I have to take this. She's gone for thirty seconds.

1082
01:02:17,800 --> 01:02:20,520
Speaker 2: She comes back and she goes, oh, deal is done.

1083
01:02:20,640 --> 01:02:23,600
Speaker 2: Oh would you sell Palm Beach on the Water one

1084
01:02:23,680 --> 01:02:27,520
Speaker 2: hundred and ten million dollars? And I say one hundred

1085
01:02:27,520 --> 01:02:31,560
Speaker 2: and ten million dollars. That house has to be perfect

1086
01:02:31,880 --> 01:02:35,800
Speaker 2: and I'll never forget her response. She's like, man, I'm like,

1087
01:02:35,840 --> 01:02:38,840
Speaker 2: wait a second, one hundred and ten million dollars. What

1088
01:02:38,880 --> 01:02:42,240
Speaker 2: are you talking about? And she goes, well, it's a

1089
01:02:42,240 --> 01:02:44,280
Speaker 2: part of Palm Beach. I like, but I don't love

1090
01:02:44,400 --> 01:02:47,600
Speaker 2: three blocks in either direction. I like better, it's a bulkhead,

1091
01:02:47,720 --> 01:02:50,320
Speaker 2: not a sandy beach. You go two doors over and

1092
01:02:50,360 --> 01:02:53,120
Speaker 2: it's Sandy Beach. They have a dock, but it's not

1093
01:02:53,200 --> 01:02:56,440
Speaker 2: a deep water. Like she starts clicking stuff off, and

1094
01:02:56,520 --> 01:02:59,120
Speaker 2: I'm like, do you mean to tell me that? Not

1095
01:02:59,240 --> 01:03:01,720
Speaker 2: that I have a hundred and ten million dollars, but

1096
01:03:01,840 --> 01:03:04,960
Speaker 2: if I did, the house I'm buying is really a

1097
01:03:05,000 --> 01:03:09,320
Speaker 2: series of compromises. And she said, every house at every

1098
01:03:09,360 --> 01:03:13,240
Speaker 2: price point is a compromise. That's very true, how insane,

1099
01:03:13,440 --> 01:03:15,800
Speaker 2: but you would think at a certain point.

1100
01:03:15,600 --> 01:03:17,800
Speaker 4: Right, like it needs to nail most of the right.

1101
01:03:18,200 --> 01:03:21,200
Speaker 2: And it's like, but she'd like clicked off, like wait,

1102
01:03:21,240 --> 01:03:23,160
Speaker 2: one hundred and ten and you don't love it. She's like,

1103
01:03:23,320 --> 01:03:26,200
Speaker 2: it's all right, Like, come on, you gotta be I'm

1104
01:03:26,200 --> 01:03:29,760
Speaker 2: sure there are lots of houses that most listeners would say,

1105
01:03:29,880 --> 01:03:33,320
Speaker 2: you know, for five million dollars, I would love that place. Yeah,

1106
01:03:33,360 --> 01:03:37,040
Speaker 2: and at twenty times that amount. It's like she was

1107
01:03:37,120 --> 01:03:40,320
Speaker 2: just so Now, granted she's been doing real estate and

1108
01:03:40,400 --> 01:03:44,160
Speaker 2: Palm Beach for forty years, she's seen everything, but still

1109
01:03:44,280 --> 01:03:46,680
Speaker 2: to just kind of shrug and say, eh, you know,

1110
01:03:46,720 --> 01:03:51,680
Speaker 2: it's all right, that's mind blowing. So and that's kind

1111
01:03:51,680 --> 01:03:54,840
Speaker 2: of what you know. Whenever I'm like I like this place,

1112
01:03:55,360 --> 01:03:57,240
Speaker 2: but it doesn't have this and this and this, it's like,

1113
01:03:57,320 --> 01:04:01,120
Speaker 2: well it's one hundred and seven million, then the met

1114
01:04:01,200 --> 01:04:05,120
Speaker 2: place cheaper than the met place bomb Beach. So deal

1115
01:04:05,160 --> 01:04:05,920
Speaker 2: with some trade.

1116
01:04:05,680 --> 01:04:08,560
Speaker 3: Offs like exactly, and like what do you prioritize because

1117
01:04:08,560 --> 01:04:11,200
Speaker 3: you're not going to get everything right are we trying

1118
01:04:11,240 --> 01:04:12,120
Speaker 3: to solve? For?

1119
01:04:12,680 --> 01:04:16,760
Speaker 2: So what once you adapt the attitude that right, I'm

1120
01:04:16,800 --> 01:04:19,760
Speaker 2: never going to get into everything, what's the bigger price? Hey,

1121
01:04:19,880 --> 01:04:23,360
Speaker 2: I don't really love this kitchen, and I you know

1122
01:04:23,520 --> 01:04:27,920
Speaker 2: where the driveway comes in. I don't love that, but

1123
01:04:28,040 --> 01:04:30,640
Speaker 2: you could always change if it bothers you that much,

1124
01:04:30,800 --> 01:04:34,400
Speaker 2: you can eventually change it. But it's shocking that even

1125
01:04:34,440 --> 01:04:37,040
Speaker 2: at that price point, that is there's some trade offs

1126
01:04:37,040 --> 01:04:42,120
Speaker 2: that has stayed with me for forever that I mean,

1127
01:04:42,160 --> 01:04:43,920
Speaker 2: it's only been a couple of years, but it stayed

1128
01:04:43,960 --> 01:04:46,760
Speaker 2: with me because when the perfect is the enemy of

1129
01:04:46,800 --> 01:04:50,400
Speaker 2: the good, Like at what point? What? At what point

1130
01:04:50,520 --> 01:04:53,280
Speaker 2: is it perfect? If it's not perfect at one hundred

1131
01:04:53,280 --> 01:04:55,560
Speaker 2: million dollars, well, I think you have to give up

1132
01:04:55,600 --> 01:04:58,640
Speaker 2: the idea exactly. But that that's been an issue that

1133
01:04:59,000 --> 01:05:01,960
Speaker 2: I've always kind of wrestled with. And the sooner you

1134
01:05:02,000 --> 01:05:04,360
Speaker 2: accept it's always a series of trade offs. Yeah, if

1135
01:05:04,400 --> 01:05:06,880
Speaker 2: you are. But that's an absolutely true story and it

1136
01:05:07,040 --> 01:05:09,560
Speaker 2: stayed with me to this day. All Right, our last

1137
01:05:09,600 --> 01:05:12,560
Speaker 2: two questions, what sort of advice would you give to

1138
01:05:12,600 --> 01:05:15,800
Speaker 2: a recent college grad who was interested in a career

1139
01:05:16,040 --> 01:05:20,960
Speaker 2: in either investing or emerging markets and value?

1140
01:05:21,280 --> 01:05:23,600
Speaker 3: Yeah, so I think it relates to what we're just

1141
01:05:23,640 --> 01:05:29,160
Speaker 3: talking about about not being a perfectionist, because as an investor,

1142
01:05:30,280 --> 01:05:34,479
Speaker 3: you are knocking out of the park. If you're right

1143
01:05:35,000 --> 01:05:37,720
Speaker 3: sixty percent of the time, even that's a high level right,

1144
01:05:37,760 --> 01:05:43,000
Speaker 3: you're going to be wrong a lot, and particularly in

1145
01:05:43,280 --> 01:05:46,440
Speaker 3: listed equities, Unlike when I was doing private equity, private credit,

1146
01:05:46,600 --> 01:05:49,640
Speaker 3: where there wasn't a mark to market every single minute,

1147
01:05:50,920 --> 01:05:54,640
Speaker 3: you know whether you're adding or detracting value on a

1148
01:05:54,640 --> 01:05:57,680
Speaker 3: real time basis, and so letting go of the idea

1149
01:05:57,760 --> 01:06:00,720
Speaker 3: that and I think sometimes young people feel this pressure

1150
01:06:00,760 --> 01:06:03,280
Speaker 3: when they start in this business that you know, I

1151
01:06:03,320 --> 01:06:05,200
Speaker 3: need to get it right one hundred percent of the time,

1152
01:06:05,720 --> 01:06:08,720
Speaker 3: and that leads to a lot of risk aversion as

1153
01:06:08,720 --> 01:06:10,960
Speaker 3: a result, because they're afraid of making a mistake. They're

1154
01:06:10,960 --> 01:06:13,920
Speaker 3: afraid of making the wrong call, and that could help

1155
01:06:13,960 --> 01:06:17,280
Speaker 3: stein me decision making and decisiveness. I try to tell

1156
01:06:17,320 --> 01:06:20,360
Speaker 3: people who are starting this business. You need to let

1157
01:06:20,400 --> 01:06:22,960
Speaker 3: go of that and just kind of understand.

1158
01:06:22,520 --> 01:06:23,520
Speaker 4: You will be wrong.

1159
01:06:24,400 --> 01:06:26,800
Speaker 3: Ideally, you want to be right slightly more times than

1160
01:06:26,800 --> 01:06:30,160
Speaker 3: you're wrong, and when you're right, ideally, the upside is

1161
01:06:30,200 --> 01:06:31,960
Speaker 3: greater than the downside when you're wrong. But that's the

1162
01:06:32,000 --> 01:06:33,840
Speaker 3: game we're trying to play. We're not shooting for one

1163
01:06:33,920 --> 01:06:37,240
Speaker 3: hundred percent. So I would say that's the biggest piece

1164
01:06:37,240 --> 01:06:41,640
Speaker 3: of advice. I would say the other broader advice is to,

1165
01:06:43,440 --> 01:06:45,960
Speaker 3: as someone put it earlier in my career, you know,

1166
01:06:46,080 --> 01:06:50,160
Speaker 3: lead with a yes. And so if there's projects that

1167
01:06:50,200 --> 01:06:55,240
Speaker 3: come up, if there's new opportunities, not over analyzing or overthinking, well,

1168
01:06:55,360 --> 01:06:57,440
Speaker 3: am I one hundred percent ready to do this? Just

1169
01:06:57,480 --> 01:07:00,560
Speaker 3: say yes, and then you'll figure it out. And I

1170
01:07:00,600 --> 01:07:02,640
Speaker 3: think that's where you grow, that's where you learn, that's

1171
01:07:02,640 --> 01:07:06,240
Speaker 3: where you can really stretch yourself and kind of step

1172
01:07:06,240 --> 01:07:10,080
Speaker 3: out of your your comfort zone, particularly in emerging markets

1173
01:07:10,120 --> 01:07:13,360
Speaker 3: where there's a lot required to kind of step out

1174
01:07:13,360 --> 01:07:16,120
Speaker 3: of comfort zones in terms of cultural differences, in terms

1175
01:07:16,120 --> 01:07:20,240
Speaker 3: of you know, other dynamics just being comfortable or embracing that.

1176
01:07:20,960 --> 01:07:24,800
Speaker 2: And yeah, really really interesting. And our final question, what

1177
01:07:24,840 --> 01:07:26,920
Speaker 2: do you know about the world of investing today you

1178
01:07:26,960 --> 01:07:29,560
Speaker 2: wish you knew twenty or so years ago when you

1179
01:07:29,600 --> 01:07:31,000
Speaker 2: were first starting out.

1180
01:07:32,400 --> 01:07:38,360
Speaker 3: I would say that the concept of it goes back

1181
01:07:38,400 --> 01:07:44,360
Speaker 3: to the importance of the mosaic theory, and particularly in

1182
01:07:44,400 --> 01:07:48,160
Speaker 3: less efficient markets like emerging markets. You know, all the

1183
01:07:48,240 --> 01:07:52,080
Speaker 3: data is not going to come in a neat package,

1184
01:07:52,320 --> 01:07:57,880
Speaker 3: and so needing to be creative with how you get information.

1185
01:07:58,080 --> 01:08:01,240
Speaker 3: It's almost like being a detective in some ways. How

1186
01:08:01,240 --> 01:08:04,720
Speaker 3: do you get information, how do you piece how do

1187
01:08:04,720 --> 01:08:07,360
Speaker 3: you put the pieces of the puzzle together, how do

1188
01:08:07,400 --> 01:08:10,520
Speaker 3: you think outside of the box, Because oftentimes I think

1189
01:08:10,640 --> 01:08:13,960
Speaker 3: when you know, when I was in school, you have

1190
01:08:14,520 --> 01:08:18,920
Speaker 3: an agenda, a textbook, you're learning things, you're doing the test,

1191
01:08:19,400 --> 01:08:21,479
Speaker 3: you get an A plus, and then you kind of

1192
01:08:21,520 --> 01:08:24,200
Speaker 3: move on. Right In the world of investing, it's just

1193
01:08:24,200 --> 01:08:27,640
Speaker 3: so much more nebulous, and so it just requires you

1194
01:08:27,680 --> 01:08:33,439
Speaker 3: to stretch and have more creativity than just expecting things

1195
01:08:33,439 --> 01:08:35,439
Speaker 3: to come at you in a cleaner fashion, which, to

1196
01:08:35,439 --> 01:08:39,200
Speaker 3: be honest, was my experience in you know, US large

1197
01:08:39,200 --> 01:08:43,960
Speaker 3: cap tech investing, where data was abundant and widely available

1198
01:08:44,080 --> 01:08:47,839
Speaker 3: and much more efficient. But even with that type of investing,

1199
01:08:47,880 --> 01:08:52,599
Speaker 3: I think thinking more along this, being creative and putting

1200
01:08:52,640 --> 01:08:56,519
Speaker 3: the mosaic together more proactively is probably a lesson that

1201
01:08:56,560 --> 01:08:59,240
Speaker 3: I would want to tell myself, you know, my twenty

1202
01:08:59,360 --> 01:08:59,960
Speaker 3: year old self.

1203
01:09:00,120 --> 01:09:03,719
Speaker 2: Hmm, really interesting. Thank you Christine for being so generous

1204
01:09:03,760 --> 01:09:07,360
Speaker 2: with your time. We have been speaking with Christine Philpotts

1205
01:09:07,760 --> 01:09:11,439
Speaker 2: of Aerial Investments, where she is a portfolio manager for

1206
01:09:11,680 --> 01:09:16,760
Speaker 2: emerging market value strategies. If you enjoy this conversation, well,

1207
01:09:16,880 --> 01:09:18,599
Speaker 2: be sure and check out any of it our more

1208
01:09:18,600 --> 01:09:22,400
Speaker 2: than five hundred previous discussions we've had over the past decade.

1209
01:09:22,760 --> 01:09:26,599
Speaker 2: You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever

1210
01:09:26,640 --> 01:09:29,760
Speaker 2: you find your favorite podcast, And be sure and check

1211
01:09:29,800 --> 01:09:33,840
Speaker 2: out my new book, How Not to Invest The Bad ideas,

1212
01:09:34,000 --> 01:09:39,120
Speaker 2: numbers and behaviors that Destroys Wealth publishing on March eighteenth.

1213
01:09:39,800 --> 01:09:41,640
Speaker 2: I would be remiss if I did not thank the

1214
01:09:41,680 --> 01:09:45,679
Speaker 2: Cracked team that helps put these conversations together each week.

1215
01:09:46,080 --> 01:09:51,160
Speaker 2: Sarah Livesey is my audio engineer. Anna Luke is my producer.

1216
01:09:51,600 --> 01:09:55,320
Speaker 2: Sean Russo is my head of research. Sage Bauman is

1217
01:09:55,360 --> 01:09:59,240
Speaker 2: the head of podcasts at Bloomberg. I'm Barry Ridoults. You've

1218
01:09:59,240 --> 01:10:06,080
Speaker 2: been listening to Master's in Business on Bloomberg Radio