1 00:00:02,800 --> 00:00:05,120 Speaker 1: This is Coast to Coast. I'm Carol Masser and I'm 2 00:00:05,120 --> 00:00:07,440 Speaker 1: Corey Johnson. We're here every day bring you the latest 3 00:00:07,440 --> 00:00:09,480 Speaker 1: news in the world of business and finance and the 4 00:00:09,520 --> 00:00:13,480 Speaker 1: most interesting stories in global technology from Silicon Valley and beyond. 5 00:00:13,600 --> 00:00:17,120 Speaker 1: Powered by our more than journalists and Alice in more 6 00:00:17,120 --> 00:00:19,799 Speaker 1: than one twenty countries. You can download Coast to Coast 7 00:00:19,840 --> 00:00:22,439 Speaker 1: on iTunes, sound Clondal Bloomberg dot com. You can also 8 00:00:22,480 --> 00:00:24,720 Speaker 1: listen to our radio show weekdays at two o'clock Eastern 9 00:00:24,760 --> 00:00:28,160 Speaker 1: only on Bloomberg Radio. We are at a critical turning 10 00:00:28,200 --> 00:00:31,600 Speaker 1: point in this country and this is dangerous. The only 11 00:00:31,680 --> 00:00:37,680 Speaker 1: way forward is to get organized and politically alright. That 12 00:00:37,800 --> 00:00:40,640 Speaker 1: is a clip from the new Netflix documentary. It's based 13 00:00:40,680 --> 00:00:42,839 Speaker 1: on a book by former Secretary of Labor of the 14 00:00:42,880 --> 00:00:45,560 Speaker 1: United States States, Robert Rice. She's written more than a 15 00:00:45,600 --> 00:00:48,440 Speaker 1: dozen books, but this one's based on his books Saving 16 00:00:48,479 --> 00:00:51,839 Speaker 1: Capitalism for the Many, Not the Few. He is uh 17 00:00:51,960 --> 00:00:54,520 Speaker 1: the Chancellor's Professor of Public Policy at the University of 18 00:00:54,560 --> 00:00:57,240 Speaker 1: California in Berkeley, and he joins us on the phone 19 00:00:57,280 --> 00:01:00,240 Speaker 1: from Berkeley. Professor Rice, so nice to have you hear 20 00:01:00,280 --> 00:01:05,039 Speaker 1: on Bloomberg Radio. Um tell us about this documentary and 21 00:01:05,120 --> 00:01:07,640 Speaker 1: what your purpose was in terms of writing your book 22 00:01:07,640 --> 00:01:11,360 Speaker 1: and then making a documentary. High. Yeah, the purpose is 23 00:01:11,400 --> 00:01:15,520 Speaker 1: basically the kind of help explain in a nonpartisan way 24 00:01:15,600 --> 00:01:18,320 Speaker 1: two people, how did we get to where we are today? 25 00:01:18,319 --> 00:01:21,560 Speaker 1: Why are so many people so upset both about the 26 00:01:21,600 --> 00:01:24,600 Speaker 1: economy and also politics? And how do we get out 27 00:01:24,640 --> 00:01:27,360 Speaker 1: of the mess we are now in? Um? Right now, 28 00:01:28,360 --> 00:01:32,440 Speaker 1: we have an almost unpresnted amount of income and wealth 29 00:01:32,480 --> 00:01:35,039 Speaker 1: going to the very top. We've got a lot of 30 00:01:35,080 --> 00:01:38,760 Speaker 1: people in the middle and below who are very upset 31 00:01:38,880 --> 00:01:42,440 Speaker 1: because they don't feel like they are getting a fair deal. Uh. 32 00:01:42,480 --> 00:01:46,200 Speaker 1: And we have a political system that seems rigged by 33 00:01:46,280 --> 00:01:49,559 Speaker 1: many people. In fact, that theme of it being rigged 34 00:01:49,760 --> 00:01:52,440 Speaker 1: was used not only by Donald Trump in sixteen in 35 00:01:52,480 --> 00:01:55,480 Speaker 1: the election, but also by Hillary Clinton and in the 36 00:01:55,520 --> 00:01:59,840 Speaker 1: Democratic primary by Bernie Sanders. How is so, what we 37 00:02:00,000 --> 00:02:03,480 Speaker 1: what we're attempting to do in this documentary is explained? 38 00:02:03,480 --> 00:02:07,440 Speaker 1: It all make it comprehensible to people, connect the dots 39 00:02:07,480 --> 00:02:10,200 Speaker 1: and talk about what are real choices are in the future. 40 00:02:10,800 --> 00:02:14,200 Speaker 1: So I love the only Berkeleywood saving capitalism being an 41 00:02:14,240 --> 00:02:19,160 Speaker 1: actual debate? Perhaps, well, what is it? Doesn't capitalism cure itself. Ultimately, 42 00:02:19,600 --> 00:02:21,560 Speaker 1: when you talk about saving capitalism, what what kind of 43 00:02:21,600 --> 00:02:26,280 Speaker 1: things are needed to save a capitalist system to govern 44 00:02:26,280 --> 00:02:29,120 Speaker 1: our economy? Hi, Corey, Well, it's interesting when I go 45 00:02:29,160 --> 00:02:32,240 Speaker 1: out in the country, a lot of people are are 46 00:02:32,360 --> 00:02:34,839 Speaker 1: provoked by the title of both my book and now 47 00:02:34,919 --> 00:02:38,720 Speaker 1: by the documentary, because a lot of very conservative people say, well, 48 00:02:38,720 --> 00:02:41,799 Speaker 1: why do you why do you worry about capitalism? What? What? What? 49 00:02:42,000 --> 00:02:44,680 Speaker 1: What needs to be saved? And then when I go 50 00:02:44,720 --> 00:02:48,200 Speaker 1: into more liberal progressive areas, they say, why do you 51 00:02:48,240 --> 00:02:52,320 Speaker 1: want to save capitalism? So it's you know, the word 52 00:02:52,360 --> 00:02:56,760 Speaker 1: itself is controversial enough. I think the real reality today 53 00:02:57,080 --> 00:02:59,959 Speaker 1: is that so many people, and if you you believe 54 00:03:00,000 --> 00:03:04,280 Speaker 1: of polls, a majority of Americans are wondering if this 55 00:03:04,360 --> 00:03:07,320 Speaker 1: system as it is now organized. I'm talking about our 56 00:03:07,360 --> 00:03:12,280 Speaker 1: political economic system, not just not just capitalism but democratic capitalism, 57 00:03:13,040 --> 00:03:16,920 Speaker 1: is is going to be sustainable given current trends, not 58 00:03:16,960 --> 00:03:20,919 Speaker 1: only in terms of inequality, but also the extraordinary amounts 59 00:03:20,919 --> 00:03:25,200 Speaker 1: of money coming into politics from big corporations, Wall Street 60 00:03:25,200 --> 00:03:27,760 Speaker 1: banks and wealthy individuals. And you talk a lot about that. 61 00:03:27,800 --> 00:03:30,320 Speaker 1: There's some great stuff, some videos and various things that 62 00:03:30,360 --> 00:03:32,840 Speaker 1: you've done in terms of talking about you know, so 63 00:03:32,919 --> 00:03:36,520 Speaker 1: much wealth concentrated in so few you know, you're our 64 00:03:36,560 --> 00:03:38,840 Speaker 1: top one per centers, if you will, and then they 65 00:03:39,000 --> 00:03:42,440 Speaker 1: are able to use that capital and money to influence 66 00:03:42,520 --> 00:03:44,640 Speaker 1: what goes on in Washington. And we spend a lot 67 00:03:44,640 --> 00:03:47,960 Speaker 1: of time talking about it. I'm curious, though, Professor Wright, 68 00:03:48,360 --> 00:03:50,680 Speaker 1: what you see as solutions to this. How do we 69 00:03:50,760 --> 00:03:53,520 Speaker 1: break down kind of what I sometimes think is a 70 00:03:53,520 --> 00:03:57,840 Speaker 1: bit of a money machine between the wealthy and politicians. Well, 71 00:03:57,840 --> 00:03:59,680 Speaker 1: there are a couple of ways, Carol, And you know, 72 00:03:59,720 --> 00:04:02,760 Speaker 1: I'm not I'm very optimistic about the future. I think 73 00:04:02,800 --> 00:04:05,400 Speaker 1: we can save our democracy and save capitalism. I think 74 00:04:05,400 --> 00:04:08,720 Speaker 1: that they're both closely related. Uh. The way we do it, though, 75 00:04:08,920 --> 00:04:11,840 Speaker 1: is we have to put, as we did in nineteen 76 00:04:11,840 --> 00:04:15,040 Speaker 1: o one and as we did in nineteen seventy four, 77 00:04:15,400 --> 00:04:17,919 Speaker 1: We've got to put some restrictions on the amount of 78 00:04:18,000 --> 00:04:21,599 Speaker 1: money that can go into politics. We also have got 79 00:04:21,640 --> 00:04:25,960 Speaker 1: to disclose fully the source of all the money that's 80 00:04:26,000 --> 00:04:30,560 Speaker 1: coming into politics from corporations, from individuals, from from banks. 81 00:04:31,120 --> 00:04:34,280 Speaker 1: We've got to make sure that the revolving door between 82 00:04:34,320 --> 00:04:38,039 Speaker 1: business and government is slowed down. Now these should not 83 00:04:38,120 --> 00:04:41,559 Speaker 1: be controversial issues. In fact, when we made the film 84 00:04:42,120 --> 00:04:45,000 Speaker 1: I really spent a lot of time talking to people 85 00:04:45,080 --> 00:04:50,039 Speaker 1: who describe themselves as conservative Republicans and business people and others. Uh. 86 00:04:50,080 --> 00:04:54,240 Speaker 1: And the one area of agreement was that we need 87 00:04:54,279 --> 00:04:56,880 Speaker 1: to get rid of what a lot of conservatives now 88 00:04:56,920 --> 00:05:00,880 Speaker 1: called chronic capitalism. In fact, I even talked to David Bratts, 89 00:05:00,880 --> 00:05:03,680 Speaker 1: who is one of the most conservative members of Congress 90 00:05:03,720 --> 00:05:08,520 Speaker 1: Republican from Virginia. UH. And where we overlapped, where we 91 00:05:08,960 --> 00:05:13,400 Speaker 1: really really did achieve a kind of consensus was exactly 92 00:05:13,440 --> 00:05:18,080 Speaker 1: on this point. So well to that corony capitalism defined 93 00:05:18,120 --> 00:05:21,400 Speaker 1: as what I mean, defined as uh, family members in 94 00:05:21,400 --> 00:05:24,960 Speaker 1: in in your in your office, or what well, I 95 00:05:24,960 --> 00:05:27,080 Speaker 1: suppose you could define it that way. But what David 96 00:05:27,080 --> 00:05:30,039 Speaker 1: Brott and I were talking about, and again where I 97 00:05:30,040 --> 00:05:34,760 Speaker 1: saw businesses and individuals across the country, Democrats, Republicans, we 98 00:05:34,800 --> 00:05:40,159 Speaker 1: all were talking about corony capitalism as big money getting favors. Uh. 99 00:05:40,200 --> 00:05:44,240 Speaker 1: Now those favors from politicians could be special tax breaks, 100 00:05:44,839 --> 00:05:50,040 Speaker 1: they could be subsidies, they could be bailout as the 101 00:05:50,080 --> 00:05:54,720 Speaker 1: Wall Street bailout, They could be all sorts of regulatory favors. 102 00:05:55,400 --> 00:05:59,440 Speaker 1: But the point is that when money, big money really 103 00:05:59,520 --> 00:06:04,279 Speaker 1: does to storts political outcomes, it has not only the 104 00:06:04,320 --> 00:06:09,159 Speaker 1: negative effect of reducing trust in governments, but also it 105 00:06:09,360 --> 00:06:12,919 Speaker 1: rewards big money. It's the reason that you have so 106 00:06:13,000 --> 00:06:16,880 Speaker 1: much money right now from big corporations and Wall Street 107 00:06:16,920 --> 00:06:22,320 Speaker 1: and individuals is because they're investing in basically political outcomes 108 00:06:22,360 --> 00:06:24,800 Speaker 1: that gave them more money. So how do you stop that? 109 00:06:24,839 --> 00:06:27,040 Speaker 1: Because nobody really wants to step up to the plate 110 00:06:27,240 --> 00:06:30,960 Speaker 1: Democrat or Republican or other and kind of stop that 111 00:06:31,080 --> 00:06:35,320 Speaker 1: money train because everybody is so concerned. Many would argue 112 00:06:35,680 --> 00:06:39,200 Speaker 1: about individuals being reelected, and that's what they think about. 113 00:06:39,279 --> 00:06:40,880 Speaker 1: They need the money to be re elected. So what 114 00:06:40,880 --> 00:06:43,320 Speaker 1: do we do. Well, you've got to have a public 115 00:06:43,400 --> 00:06:45,640 Speaker 1: You've gotta have a kind of movement. I mean, people 116 00:06:45,680 --> 00:06:49,240 Speaker 1: have got to understand how dangerous the current trends are 117 00:06:49,400 --> 00:06:51,680 Speaker 1: that you've got to have big money out of politics. 118 00:06:51,760 --> 00:06:55,720 Speaker 1: You've got to elect people who will pledge to vote 119 00:06:55,760 --> 00:06:59,039 Speaker 1: for restrictions on big money and politics. And you've got 120 00:06:59,080 --> 00:07:03,159 Speaker 1: to also make sure that people are held accountable, not 121 00:07:03,279 --> 00:07:05,599 Speaker 1: only the people who are taking the big money, but 122 00:07:05,720 --> 00:07:08,080 Speaker 1: also people who are giving the big money. And that's 123 00:07:08,080 --> 00:07:11,240 Speaker 1: where disclosure, full disclosure comes in. I feel like the 124 00:07:11,280 --> 00:07:14,760 Speaker 1: Professor Rice, those folks um and I'm certainly sympathetic to 125 00:07:14,800 --> 00:07:18,120 Speaker 1: what you're saying. But those individuals who might vote and 126 00:07:18,240 --> 00:07:21,000 Speaker 1: stand up are just struggling to put food on their 127 00:07:21,000 --> 00:07:23,240 Speaker 1: table right now for their family of four or what 128 00:07:23,400 --> 00:07:26,880 Speaker 1: have you. Well that that's true, I mean, but every 129 00:07:26,920 --> 00:07:30,720 Speaker 1: movement we've had in American politics over the last hundred years, 130 00:07:31,480 --> 00:07:33,880 Speaker 1: you've had a lot of people who are struggling to 131 00:07:34,080 --> 00:07:36,720 Speaker 1: put food on their table. But they put you know, 132 00:07:37,000 --> 00:07:40,360 Speaker 1: they get involved just the same. Maybe maybe they watch 133 00:07:40,400 --> 00:07:44,400 Speaker 1: a little bit less television, or they they just find 134 00:07:44,520 --> 00:07:48,160 Speaker 1: time in their schedules because they understand how important it 135 00:07:48,240 --> 00:07:52,679 Speaker 1: is change American politics. You know, this is I would 136 00:07:52,680 --> 00:07:55,120 Speaker 1: not be doing this if I didn't think it was possible. 137 00:07:55,400 --> 00:07:59,800 Speaker 1: And there's been a sea change in the public awareness 138 00:07:59,800 --> 00:08:04,040 Speaker 1: from the corrupting effects of big money since the really 139 00:08:04,080 --> 00:08:07,240 Speaker 1: since the Wall Street bailout. I would that's when the 140 00:08:07,320 --> 00:08:11,600 Speaker 1: Chief Party movement and also briefly the Occupy movement, both 141 00:08:11,600 --> 00:08:14,040 Speaker 1: of them reflected on the right and the left a 142 00:08:14,120 --> 00:08:19,800 Speaker 1: lot of common concerns about corruption in American politics. Let 143 00:08:19,800 --> 00:08:21,560 Speaker 1: me ask you about thirty seconds left, how did you 144 00:08:21,600 --> 00:08:25,360 Speaker 1: like working in the medium of film and documentaries? What 145 00:08:25,560 --> 00:08:27,880 Speaker 1: was unusual because I you know, I consider if I'm 146 00:08:27,920 --> 00:08:31,000 Speaker 1: a writer and I'm a professor. Um, it was not easy. 147 00:08:31,840 --> 00:08:33,960 Speaker 1: But a lot of people we did. We did a 148 00:08:34,000 --> 00:08:38,280 Speaker 1: movie about three years ago called Inequality for All, which 149 00:08:38,320 --> 00:08:41,840 Speaker 1: was critically acclaimed, got a lot of awards, Sundance and 150 00:08:41,880 --> 00:08:45,360 Speaker 1: so on. Uh. And this one, I think we sort 151 00:08:45,360 --> 00:08:48,559 Speaker 1: of we sort of built on that experience. A director 152 00:08:48,679 --> 00:08:54,120 Speaker 1: Jake Cornbluth, very very competent, talented, was very helpful. And 153 00:08:54,679 --> 00:08:58,559 Speaker 1: I just I just I just took direction. I take 154 00:08:58,600 --> 00:08:59,800 Speaker 1: some for my producer right now. As soon as we 155 00:08:59,840 --> 00:09:02,560 Speaker 1: got go, thank you so much, perish foremost last sector 156 00:09:02,559 --> 00:09:05,880 Speaker 1: of labor at cal University of Berkeley, go bears. Uh. 157 00:09:05,920 --> 00:09:08,760 Speaker 1: And with the document is called saving Capitalism. On Netflix 158 00:09:16,360 --> 00:09:19,040 Speaker 1: Takes two, we're talking about M and A companies linking up. 159 00:09:19,040 --> 00:09:21,640 Speaker 1: In fact, we had some news every weekend. I was expected. 160 00:09:21,800 --> 00:09:23,920 Speaker 1: I guess you could kind of say after some time though, 161 00:09:24,160 --> 00:09:26,800 Speaker 1: Marith Corp Agreeing to acquire Timing for about one point 162 00:09:26,800 --> 00:09:30,640 Speaker 1: a billion in cash. Let's talk deal flow. Maybe not 163 00:09:30,720 --> 00:09:32,280 Speaker 1: so much in some of the big cap space, but 164 00:09:32,520 --> 00:09:34,480 Speaker 1: the mid cap space because a lot of things happen 165 00:09:34,880 --> 00:09:36,520 Speaker 1: in that part of the M and A market. Paul 166 00:09:36,559 --> 00:09:39,240 Speaker 1: Cologne is managing director and partner at a Launcho. It 167 00:09:39,320 --> 00:09:42,000 Speaker 1: is a global mid market investment, banking and asset management 168 00:09:42,000 --> 00:09:45,160 Speaker 1: firm based in Boston. In Bloomberg eleven three Studio, New 169 00:09:45,200 --> 00:09:48,000 Speaker 1: York City. Welcome to Bloomberg Radio. Nice to be here, thanks, Carol. 170 00:09:48,120 --> 00:09:50,559 Speaker 1: I do like the mid market space. It isn't necessarily 171 00:09:50,600 --> 00:09:52,880 Speaker 1: what catches you know, gets in the headlines. That's not 172 00:09:52,920 --> 00:09:54,720 Speaker 1: what we spend an awful lot of time talking about. 173 00:09:54,720 --> 00:09:57,280 Speaker 1: But there is a lot of deal flow within that 174 00:09:57,400 --> 00:10:00,960 Speaker 1: part of the m and a market, very significant deal flow, 175 00:10:01,000 --> 00:10:05,560 Speaker 1: many interesting companies, very innovative companies, and significant demand to 176 00:10:05,640 --> 00:10:10,600 Speaker 1: acquire these businesses from domestic acquirers, international acquirers, and from 177 00:10:10,800 --> 00:10:12,839 Speaker 1: a significant amount of pent up capital in the private 178 00:10:12,840 --> 00:10:15,640 Speaker 1: equity market. It's interesting to um, you know, when we 179 00:10:15,640 --> 00:10:18,000 Speaker 1: look at mid markets for most the deals happen, UM, 180 00:10:18,080 --> 00:10:20,520 Speaker 1: they don't get the most attention because they're companies that 181 00:10:20,559 --> 00:10:22,800 Speaker 1: are smaller in size or companies that don't touch as 182 00:10:22,800 --> 00:10:24,040 Speaker 1: many people in some of the big companies when we 183 00:10:24,040 --> 00:10:28,600 Speaker 1: look at them. But I wonder if there are commonalities drivers, 184 00:10:28,720 --> 00:10:31,640 Speaker 1: uh within industry that are causing a lot of these 185 00:10:31,679 --> 00:10:35,880 Speaker 1: mergers to happen, whether it's government policy, taxation, technological adoption, 186 00:10:35,960 --> 00:10:38,440 Speaker 1: or so on. I think one of the commonalities that 187 00:10:38,480 --> 00:10:42,280 Speaker 1: we see is just a real desire from big companies 188 00:10:42,600 --> 00:10:47,160 Speaker 1: or from private equity groups defined innovation in middle market businesses, 189 00:10:47,200 --> 00:10:50,280 Speaker 1: whether it's innovation in terms of how they go to market, 190 00:10:50,360 --> 00:10:53,679 Speaker 1: innovation in terms of how they manufacture. Often these businesses 191 00:10:53,720 --> 00:10:58,319 Speaker 1: are lean, efficient, nimble, and I think many many acquirers 192 00:10:58,360 --> 00:11:00,839 Speaker 1: seek that and find those types of companies in the 193 00:11:00,880 --> 00:11:02,680 Speaker 1: middle market. So it's not that they're finding companies they 194 00:11:02,720 --> 00:11:05,640 Speaker 1: can transform, they're finding companies that have already transformed. There's 195 00:11:05,640 --> 00:11:10,400 Speaker 1: some transformation. There's certainly some areas where middle market companies 196 00:11:10,400 --> 00:11:15,079 Speaker 1: can often benefit from additional investment, whether it's in strategic marketing, 197 00:11:15,080 --> 00:11:17,880 Speaker 1: whether it's a new product development. But there's also many 198 00:11:17,920 --> 00:11:21,240 Speaker 1: things that that middle market companies already possess the larger 199 00:11:21,280 --> 00:11:23,560 Speaker 1: businesses are seeking out. I want to ask you about 200 00:11:24,080 --> 00:11:27,080 Speaker 1: a new sector that you guys have created a practice in, 201 00:11:27,120 --> 00:11:29,880 Speaker 1: and that is technology. So forgive me if this sounds 202 00:11:29,920 --> 00:11:32,079 Speaker 1: a little, I don't know, strange, but are you behind 203 00:11:32,080 --> 00:11:34,719 Speaker 1: the times because I feel like technology and disruption we've 204 00:11:34,720 --> 00:11:36,679 Speaker 1: been talking about for a long time, or was there 205 00:11:36,760 --> 00:11:39,920 Speaker 1: something that happened that made you said, Okay, it's time 206 00:11:39,920 --> 00:11:41,880 Speaker 1: for us to do it now. I think I think 207 00:11:41,880 --> 00:11:43,400 Speaker 1: it's time for us to do it now as a 208 00:11:43,440 --> 00:11:46,760 Speaker 1: middle market focus firm and as a global focus firm. 209 00:11:46,800 --> 00:11:49,120 Speaker 1: And I think the real reason for that is that 210 00:11:49,320 --> 00:11:52,559 Speaker 1: historically many of the winners and technology where companies that 211 00:11:52,640 --> 00:11:56,000 Speaker 1: went straight from venture capital backing to the I P 212 00:11:56,120 --> 00:11:58,960 Speaker 1: O markets. And what we found over time is that 213 00:11:59,000 --> 00:12:03,720 Speaker 1: there's a new step venture capital to M and A too, 214 00:12:03,760 --> 00:12:07,679 Speaker 1: potentially additional M and A transactions order the public markets. 215 00:12:07,720 --> 00:12:10,559 Speaker 1: And with the additional step of of M and A, 216 00:12:10,880 --> 00:12:15,520 Speaker 1: there's also UH international acquirers that are coming in seeking 217 00:12:15,520 --> 00:12:19,200 Speaker 1: out US technology companies, which lends itself to our business 218 00:12:19,240 --> 00:12:22,800 Speaker 1: where we tend to focus on global transactions, what kind 219 00:12:22,840 --> 00:12:25,800 Speaker 1: of tech. Honestly, it's across the board. We have. We 220 00:12:25,880 --> 00:12:29,960 Speaker 1: have people focus on enterprise software, on on digital media. 221 00:12:30,400 --> 00:12:33,199 Speaker 1: Certainly we want to make a push into security, into 222 00:12:33,240 --> 00:12:37,240 Speaker 1: big data analytics, so all those areas are really primed 223 00:12:37,280 --> 00:12:41,680 Speaker 1: for for transactions. UM in terms of sourcing deals, is 224 00:12:41,720 --> 00:12:43,160 Speaker 1: it is it changed a lot? Has it changed on 225 00:12:43,480 --> 00:12:44,840 Speaker 1: the finding the companies that are meant going to make 226 00:12:45,280 --> 00:12:47,360 Speaker 1: one of the common things just we find privately held 227 00:12:47,360 --> 00:12:49,080 Speaker 1: businesses that are looking to roll over one from one 228 00:12:49,080 --> 00:12:52,040 Speaker 1: generation to the next. I think what's changed is just 229 00:12:52,120 --> 00:12:56,599 Speaker 1: the emergence of private equity as being significant owners of 230 00:12:56,640 --> 00:12:59,640 Speaker 1: businesses in the middle market Historically, well, now you have 231 00:12:59,720 --> 00:13:03,800 Speaker 1: family the offices, family offices as well, but they want 232 00:13:03,800 --> 00:13:06,199 Speaker 1: to roll them up into one thing. Well, historically many 233 00:13:06,240 --> 00:13:09,319 Speaker 1: of the middle market businesses were owned by families or 234 00:13:09,800 --> 00:13:12,760 Speaker 1: multigenerational businesses, and today many of those companies have been 235 00:13:12,800 --> 00:13:15,520 Speaker 1: acquired by private equity. So what you find from a 236 00:13:15,559 --> 00:13:19,480 Speaker 1: sourcing perspective is that private equity firms tend to own 237 00:13:19,520 --> 00:13:22,079 Speaker 1: more and more of the middle market companies. And whether 238 00:13:22,160 --> 00:13:24,160 Speaker 1: they want to pursue a roll up strategy such as 239 00:13:24,200 --> 00:13:26,520 Speaker 1: what you describe Corey, or whether they're just looking to 240 00:13:26,559 --> 00:13:31,040 Speaker 1: pursue organic growth, they tend to They tend to hold 241 00:13:31,080 --> 00:13:33,000 Speaker 1: the business for three to five years and then and 242 00:13:33,040 --> 00:13:35,720 Speaker 1: then look for a new owner. That's that's short. Quite 243 00:13:35,720 --> 00:13:37,640 Speaker 1: often it's three to five years. Some have longer hold 244 00:13:38,000 --> 00:13:40,120 Speaker 1: Who are the buyers? Uh? If if private equity is 245 00:13:40,160 --> 00:13:42,480 Speaker 1: the seller, who's the buyer? Is more private equity again? 246 00:13:42,840 --> 00:13:45,760 Speaker 1: Private equity again? Or there comes a time when a 247 00:13:45,760 --> 00:13:50,040 Speaker 1: business may become more of interest to a strategic buyer, 248 00:13:50,040 --> 00:13:53,000 Speaker 1: whether it's a domestic buyer or a global international buyer. 249 00:13:53,120 --> 00:13:54,959 Speaker 1: I'm just thinking about our audience who is listening in. 250 00:13:55,200 --> 00:13:57,840 Speaker 1: I mean, what is it that you can tell them 251 00:13:58,400 --> 00:14:00,760 Speaker 1: as they look at kind of the invest an environment. 252 00:14:01,240 --> 00:14:03,240 Speaker 1: What I would say is that it's a wonderful time 253 00:14:03,280 --> 00:14:07,600 Speaker 1: to be a seller of an attractive middle market company. 254 00:14:07,640 --> 00:14:10,760 Speaker 1: And that's really simple. It's supply and demand. There's so 255 00:14:10,840 --> 00:14:14,480 Speaker 1: much demand for transactions, which is driven by the abundance 256 00:14:14,520 --> 00:14:18,200 Speaker 1: of capital almost a trillion dollars of private equity capital 257 00:14:18,200 --> 00:14:20,760 Speaker 1: on the sidelines. Does that lead to messy deals, though 258 00:14:20,840 --> 00:14:24,440 Speaker 1: not necessarily messy deals, it leads to highly priced deal 259 00:14:24,560 --> 00:14:27,520 Speaker 1: highly priced deals because there's so much competition for the 260 00:14:27,560 --> 00:14:31,440 Speaker 1: good assets that valuations are are driven driven up in 261 00:14:31,520 --> 00:14:35,640 Speaker 1: the debt markets are very accommodating. Strategic buyers are seeking 262 00:14:35,680 --> 00:14:39,600 Speaker 1: a creative transactions. What you find is competition leading to 263 00:14:39,680 --> 00:14:43,880 Speaker 1: high valuations. But honestly, most acquirers these days are are 264 00:14:43,960 --> 00:14:48,520 Speaker 1: sophisticated and professional and therefore tend tend not to make mistakes. Yeah, 265 00:14:48,560 --> 00:14:51,720 Speaker 1: certainly people hopefully have learned from some past bad deal making. 266 00:14:51,840 --> 00:14:54,520 Speaker 1: Paul Cologne, nice to talk with you, Thank you, Thank you. 267 00:14:54,600 --> 00:14:57,560 Speaker 1: Polcla imagining director and partner at Alantra, joining us in 268 00:14:57,560 --> 00:15:04,640 Speaker 1: our Bloomberg eleven three year studio. He's typically based in Boston. Well, good, nice, 269 00:15:05,080 --> 00:15:09,960 Speaker 1: I hope you understanding to go to the George Washington 270 00:15:09,960 --> 00:15:12,000 Speaker 1: Bridge Day is saying goodbye to rich people as they 271 00:15:12,120 --> 00:15:14,560 Speaker 1: flee New York City and droves the passage of this 272 00:15:14,600 --> 00:15:18,200 Speaker 1: new tax bill that hasn't happened yet. Goldman Sax is 273 00:15:18,240 --> 00:15:20,760 Speaker 1: predicting as much. Charles Durin joined us. Another CEO of 274 00:15:21,040 --> 00:15:23,960 Speaker 1: Durrain Wealth Banager joined us from Corpus Christie, Texas, speaking 275 00:15:23,960 --> 00:15:28,000 Speaker 1: of fleeing. Yeah, everybody's coming here. We've got our we 276 00:15:28,120 --> 00:15:30,840 Speaker 1: got our barbecues on. We're just we're handed out to 277 00:15:31,040 --> 00:15:33,880 Speaker 1: liquor and all sorts of good things. There's no city 278 00:15:33,960 --> 00:15:37,320 Speaker 1: or state or city or state taxes in Texas. Were 279 00:15:37,320 --> 00:15:40,280 Speaker 1: a great place to live. That was my commercial were 280 00:15:40,880 --> 00:15:43,640 Speaker 1: wait wait no building wait wait, no building codes either. 281 00:15:44,240 --> 00:15:47,000 Speaker 1: I'm just gonna say no, no, we have building codes. 282 00:15:47,200 --> 00:15:50,040 Speaker 1: You know, we survived the hurricane. My my information that 283 00:15:50,240 --> 00:15:53,400 Speaker 1: comes from Bloomberg and other sources, and I provide individualized 284 00:15:53,400 --> 00:16:00,880 Speaker 1: investment advice for my clients. Alright, do we know that 285 00:16:01,000 --> 00:16:03,640 Speaker 1: over the long terms, some of these moves can happen, 286 00:16:03,760 --> 00:16:06,960 Speaker 1: but not in big numbers. What do we know about 287 00:16:06,960 --> 00:16:10,000 Speaker 1: the history of people deciding where they're going to live 288 00:16:10,040 --> 00:16:13,760 Speaker 1: based in the tax taxes of those We we know 289 00:16:13,840 --> 00:16:18,080 Speaker 1: that people always vote for their feet, and anytime something 290 00:16:18,120 --> 00:16:22,000 Speaker 1: goes up, it's it's like, uh, there's always a motion 291 00:16:22,040 --> 00:16:24,640 Speaker 1: in an opposite motion. Right, it's like a jet aircraft. Right, 292 00:16:25,360 --> 00:16:28,320 Speaker 1: always vote with their feet. I mean, you know, you know, 293 00:16:28,400 --> 00:16:30,520 Speaker 1: I live in New York and California, and everyone I 294 00:16:30,600 --> 00:16:32,960 Speaker 1: know of a certain income complains about their taxes, but 295 00:16:33,000 --> 00:16:35,760 Speaker 1: they still live in New York and California. Yeah, but 296 00:16:35,840 --> 00:16:38,640 Speaker 1: that's only for now. When you are ready to retire, 297 00:16:38,920 --> 00:16:42,120 Speaker 1: you're coming to Texas, You're going to Florida, you're going 298 00:16:42,160 --> 00:16:45,560 Speaker 1: to Nevada. You're not staying where you are. It's only 299 00:16:45,600 --> 00:16:48,120 Speaker 1: good where you make all the money. It's not good 300 00:16:48,200 --> 00:16:50,360 Speaker 1: where when you retire and you still have to pay 301 00:16:50,360 --> 00:16:53,640 Speaker 1: all the tax and you have the biggest property taxes. So, Charles, 302 00:16:53,680 --> 00:16:56,520 Speaker 1: what's your take on this that will things change dramatically 303 00:16:57,040 --> 00:17:01,000 Speaker 1: in some of these states, whether it's New York to California, 304 00:17:01,120 --> 00:17:03,440 Speaker 1: or will people still do what they're gonna do raise 305 00:17:03,520 --> 00:17:05,240 Speaker 1: their families here. But like you said, when you go 306 00:17:05,280 --> 00:17:07,720 Speaker 1: to retire, you're gonna look where it's much more favorable 307 00:17:07,960 --> 00:17:11,760 Speaker 1: in terms of tax rules. Here's here's the state government 308 00:17:11,800 --> 00:17:15,359 Speaker 1: income tax collections as a share of total tax collections 309 00:17:15,560 --> 00:17:22,680 Speaker 1: in Oregon, it's the biggest of their state income tax comes. Well, 310 00:17:23,040 --> 00:17:25,440 Speaker 1: their revenues comes from state income tax in New York 311 00:17:25,480 --> 00:17:31,199 Speaker 1: at six, Massachusetts sixty one, Virginia sixty one, California fifty eight. Oh, 312 00:17:31,240 --> 00:17:35,720 Speaker 1: do we mention Connecticut? So if people start to leave 313 00:17:35,800 --> 00:17:40,119 Speaker 1: because it's no longer deductible, and frankly, if you can 314 00:17:40,200 --> 00:17:43,200 Speaker 1: work anywhere, wouldn't you rather work in a place where 315 00:17:43,200 --> 00:17:47,359 Speaker 1: it's cheaper to live and perhaps they're not even any 316 00:17:47,480 --> 00:17:51,720 Speaker 1: state and local taxes? Well, sure, why wouldn't you do that? Well? Sure, 317 00:17:51,800 --> 00:17:53,639 Speaker 1: but there are certain places if you want to be 318 00:17:53,640 --> 00:17:57,000 Speaker 1: in certain industries. Do you want to be in certain industries? 319 00:17:58,000 --> 00:18:00,359 Speaker 1: We wait, but I'm just saying that in certain industry trees. 320 00:18:00,720 --> 00:18:04,560 Speaker 1: You know, you've got to be meybe in New York City. Yes, yes, 321 00:18:04,600 --> 00:18:07,520 Speaker 1: but but we're much more collaborative country country than we 322 00:18:07,600 --> 00:18:09,760 Speaker 1: used to be. And and you know I have I 323 00:18:09,840 --> 00:18:12,920 Speaker 1: have Skype video, everybody has Skype. Everybody can work from 324 00:18:12,960 --> 00:18:16,400 Speaker 1: just about anywhere, So where you live is not necessarily 325 00:18:16,640 --> 00:18:20,560 Speaker 1: where you work, except in some industries. Okay, But but 326 00:18:20,640 --> 00:18:24,680 Speaker 1: here's the thing. If if it's not deductible anymore, there 327 00:18:24,840 --> 00:18:28,040 Speaker 1: there's a real cost, a real cost. So what do 328 00:18:28,080 --> 00:18:31,720 Speaker 1: you do then? I mean, people like Eddie Lambert and 329 00:18:31,720 --> 00:18:36,439 Speaker 1: and the fellow from what's his name? Oh from I 330 00:18:36,480 --> 00:18:39,679 Speaker 1: mean there's a bunch of these people, well about David Tepper, 331 00:18:39,920 --> 00:18:43,320 Speaker 1: Paul Tutor, Jones, Eddie Lambert. These people have already moved 332 00:18:43,320 --> 00:18:46,800 Speaker 1: to Florida. They've already made the move. I mean, are 333 00:18:46,840 --> 00:18:52,600 Speaker 1: they smart? You bet they're smart. Bill Gates and and 334 00:18:52,760 --> 00:18:55,439 Speaker 1: and Jeff Bezos started their businesses are big businesses in 335 00:18:55,520 --> 00:18:59,440 Speaker 1: Washington State after having either started or worked in businesses elsewhere. 336 00:18:59,640 --> 00:19:04,520 Speaker 1: You know, famously Microsoft setting in Albuquerque, not not Redmond, Washington, 337 00:19:04,600 --> 00:19:07,080 Speaker 1: but but to that and so well, so he's gonna 338 00:19:07,080 --> 00:19:09,920 Speaker 1: ask you those is. One of the things we've heard 339 00:19:09,960 --> 00:19:12,159 Speaker 1: out of the White House and out of Washington is 340 00:19:12,240 --> 00:19:15,720 Speaker 1: that by eliminating deductions, for example, of state and local 341 00:19:15,720 --> 00:19:19,359 Speaker 1: sale local taxes, it will force states and localities to 342 00:19:19,520 --> 00:19:22,280 Speaker 1: lower their taxes. Is there any evidence of that that 343 00:19:22,359 --> 00:19:27,159 Speaker 1: you see there's absolutely no evidence. All they'll do is 344 00:19:27,160 --> 00:19:30,480 Speaker 1: they'll go bankrupt sooner. And here's the problem. We have 345 00:19:30,600 --> 00:19:34,560 Speaker 1: municipal bonds issued by city, state and local governments right right. 346 00:19:34,760 --> 00:19:37,200 Speaker 1: How are they going to be covered if everybody moves 347 00:19:37,240 --> 00:19:41,399 Speaker 1: from New York to Florida. That's so that's the important 348 00:19:41,440 --> 00:19:43,639 Speaker 1: question at this point right for investors who are watching 349 00:19:43,680 --> 00:19:47,919 Speaker 1: tax overhaul work its way through lawmakers, what do you 350 00:19:47,960 --> 00:19:51,320 Speaker 1: think could be the ultimate implications here? We got about 351 00:19:51,320 --> 00:19:55,600 Speaker 1: forty fifty seconds here. Ultimately, I don't think this happens. 352 00:19:56,680 --> 00:19:59,720 Speaker 1: I do not think we get it the house in 353 00:19:59,760 --> 00:20:02,679 Speaker 1: this in it or way too far apart. Even if 354 00:20:02,720 --> 00:20:06,320 Speaker 1: it took this to to conference, it's they're they're like 355 00:20:06,400 --> 00:20:10,119 Speaker 1: apples in and motor oil. So I don't think this happens. 356 00:20:10,160 --> 00:20:12,440 Speaker 1: First of all, I think we're worried about something which 357 00:20:12,480 --> 00:20:14,480 Speaker 1: is not going to happen, as opposed to something that 358 00:20:14,640 --> 00:20:18,680 Speaker 1: is going to happen. Definitely, And if it happened, it 359 00:20:18,720 --> 00:20:23,320 Speaker 1: would cause some severe disruptions. People would be leaving big 360 00:20:23,359 --> 00:20:26,920 Speaker 1: tax states going to others. And what about retail sales? 361 00:20:27,520 --> 00:20:30,320 Speaker 1: What about retail sales? You're going to drop in all 362 00:20:30,359 --> 00:20:32,679 Speaker 1: the states that have high income Texas where it's no 363 00:20:32,760 --> 00:20:37,400 Speaker 1: longer deductible. What happens there, well, so there's some big issues. 364 00:20:38,200 --> 00:20:40,000 Speaker 1: You know, where you live is not as important as 365 00:20:40,160 --> 00:20:42,360 Speaker 1: how you live where you happen to be. Always fun 366 00:20:42,359 --> 00:20:45,560 Speaker 1: to talk with you. Charles Doraine, thank you, President, chief 367 00:20:45,560 --> 00:20:48,320 Speaker 1: executive officer at Doraine Wealth Management, on the phone from 368 00:20:48,359 --> 00:20:52,880 Speaker 1: Lovely Corpus Christie, Texas on this Monday afternoon where they're 369 00:20:52,920 --> 00:20:56,320 Speaker 1: passing out booze on mainstream. Paralyn come to Texas. Have 370 00:20:56,320 --> 00:20:58,639 Speaker 1: a lot of wonderful family in Texas. So and I 371 00:20:58,680 --> 00:21:00,199 Speaker 1: can see why you want to go there. This is 372 00:21:00,200 --> 00:21:10,320 Speaker 1: Bloomberg Radio. I'm ROC journal. Yeah, but you let me drive. No, No, 373 00:21:10,800 --> 00:21:14,240 Speaker 1: he's going to drive home. Honey, please, I'll do the 374 00:21:14,359 --> 00:21:20,000 Speaker 1: right ravel. Lets me. I want to drive all Just 375 00:21:20,240 --> 00:21:33,040 Speaker 1: drive baby. It's the questions drying. This is the drive 376 00:21:33,160 --> 00:21:35,879 Speaker 1: to the globe. Un give me. Thanks, we'll drive us 377 00:21:36,280 --> 00:21:39,399 Speaker 1: to dawn. On Bloomberg Radio, it is time for the 378 00:21:39,480 --> 00:21:41,680 Speaker 1: drive to the clothes and we're gonna talk a little 379 00:21:41,680 --> 00:21:44,200 Speaker 1: about the mid cap space. Check out MidCap stocks. They're 380 00:21:44,240 --> 00:21:47,000 Speaker 1: up nearly nine this year, a performing both large and 381 00:21:47,160 --> 00:21:50,720 Speaker 1: small caps in teen Brian Peerry back with US Portfolio 382 00:21:50,800 --> 00:21:54,840 Speaker 1: manager Hennessy Funds managing MidCap fund Space, which has some 383 00:21:54,960 --> 00:21:58,840 Speaker 1: one billion dollars in assets under management in those funds. 384 00:21:58,920 --> 00:22:01,760 Speaker 1: He joins us inter bloom brook leven three Studio. Welcome back, 385 00:22:01,880 --> 00:22:04,320 Speaker 1: thanks for ruing me. Nice to have you here. Make 386 00:22:04,400 --> 00:22:06,680 Speaker 1: cap space is doing really well this year. Yeah, and 387 00:22:06,720 --> 00:22:09,120 Speaker 1: actually we think it's actually poised to do well even 388 00:22:09,200 --> 00:22:10,639 Speaker 1: in the next year. I think if you if you 389 00:22:10,800 --> 00:22:12,920 Speaker 1: really look at some of the valuations in there, they're 390 00:22:12,920 --> 00:22:16,280 Speaker 1: still in reasonable um and I think that if we 391 00:22:16,359 --> 00:22:18,480 Speaker 1: do get any kind of attacks cut coming in the future, 392 00:22:18,560 --> 00:22:20,840 Speaker 1: that that's the area where we think that it's going 393 00:22:20,880 --> 00:22:22,480 Speaker 1: to be the most impacted. It's going to be in 394 00:22:22,520 --> 00:22:24,240 Speaker 1: the mid caps. I said that they're up as a 395 00:22:24,280 --> 00:22:27,159 Speaker 1: group almost this year. You guys, this year they were 396 00:22:27,240 --> 00:22:31,280 Speaker 1: up about not too bad. That sounds of October, I think, 397 00:22:31,359 --> 00:22:35,240 Speaker 1: but yeah, probably as of the latest reporting data. Give 398 00:22:35,280 --> 00:22:37,160 Speaker 1: me an idea of if there's some things you would 399 00:22:37,160 --> 00:22:39,760 Speaker 1: have played differently, you know, I think that, um, if 400 00:22:39,800 --> 00:22:41,119 Speaker 1: I were going to change some of the things, I 401 00:22:41,160 --> 00:22:43,520 Speaker 1: would have we had a pretty heavy weighting and consumer 402 00:22:43,560 --> 00:22:46,119 Speaker 1: discretionary just because I think that you know, all of 403 00:22:46,200 --> 00:22:48,239 Speaker 1: the factors are there that the consumers are actually doing 404 00:22:48,359 --> 00:22:52,160 Speaker 1: rather well. Um However, I mean I think we owned 405 00:22:52,160 --> 00:22:53,840 Speaker 1: a little bit in the in the restaurant space and 406 00:22:53,880 --> 00:22:56,720 Speaker 1: in the in the true retailing space that um, I 407 00:22:56,800 --> 00:23:00,440 Speaker 1: would expect that it's come out of our portfolio. So UM, 408 00:23:00,560 --> 00:23:03,320 Speaker 1: I think the consumer discretionary is still fine. I just 409 00:23:03,480 --> 00:23:06,320 Speaker 1: would kind of stay away from those retail and restaurant names. 410 00:23:06,880 --> 00:23:10,159 Speaker 1: Um So, retail, we've we've beaten that dead horse and 411 00:23:10,200 --> 00:23:13,879 Speaker 1: the cyber but talk about what's going on the restaurant field, 412 00:23:14,200 --> 00:23:17,120 Speaker 1: because you know, we generally the long term trends people 413 00:23:17,160 --> 00:23:18,959 Speaker 1: spend a lot more money in restaurants and spending more 414 00:23:19,000 --> 00:23:22,040 Speaker 1: more money in restaurants which you have higher margins. You know. 415 00:23:22,119 --> 00:23:23,920 Speaker 1: I think that what we've seen is a lot of 416 00:23:24,000 --> 00:23:26,359 Speaker 1: these restaurants that have tried to kind of take that 417 00:23:26,480 --> 00:23:28,879 Speaker 1: Internet space approach and say, Okay, well we want to 418 00:23:28,920 --> 00:23:32,320 Speaker 1: provide the convenience to our our customers so that they 419 00:23:32,359 --> 00:23:33,840 Speaker 1: don't have to come into the restaurants and they can 420 00:23:33,840 --> 00:23:36,680 Speaker 1: do delivery services and everything like that, you know, Uber 421 00:23:36,720 --> 00:23:38,960 Speaker 1: Eats or or one of those kind of subsidiaries that 422 00:23:39,000 --> 00:23:41,680 Speaker 1: are they're doing the drive through. Yeah, you know, I 423 00:23:41,760 --> 00:23:43,879 Speaker 1: think it's if you're in an urban area. It's probably 424 00:23:43,920 --> 00:23:46,680 Speaker 1: a great idea and can concrease margins, but the problem 425 00:23:46,760 --> 00:23:48,880 Speaker 1: is as if you're outside of that, your delivery area 426 00:23:48,960 --> 00:23:52,440 Speaker 1: is larger. So I mean, it's gonna be a wild 427 00:23:52,480 --> 00:23:54,760 Speaker 1: whether we can see really any traction there and whether 428 00:23:54,880 --> 00:23:58,679 Speaker 1: it really transfers to higher numbers. But you know, it's 429 00:23:58,720 --> 00:24:00,800 Speaker 1: been a difficult environment for I'm just as much as 430 00:24:00,840 --> 00:24:02,720 Speaker 1: it is for the retailers because a lot of these 431 00:24:02,760 --> 00:24:06,280 Speaker 1: pieces are situated in malls as well. So so talk 432 00:24:06,320 --> 00:24:08,840 Speaker 1: to that where you'd rather be. Um, I look at 433 00:24:08,960 --> 00:24:10,640 Speaker 1: and and correct me if I'm wrong, But it looks 434 00:24:10,680 --> 00:24:13,680 Speaker 1: like Brinks is your number one holding, uh in your 435 00:24:14,840 --> 00:24:17,600 Speaker 1: corners to Madcap thirty fun. Yeah, I mean, Brings is 436 00:24:17,640 --> 00:24:20,600 Speaker 1: one of those companies that we really like. Almo's almost 437 00:24:20,600 --> 00:24:22,480 Speaker 1: double this year. Yeah. And and the irony is is 438 00:24:22,880 --> 00:24:25,320 Speaker 1: you look at us transferring from a cash society to 439 00:24:25,400 --> 00:24:27,520 Speaker 1: a cash list society, and Bricks is doing really well, 440 00:24:27,600 --> 00:24:30,520 Speaker 1: especially in kind of the Latin American area. But you 441 00:24:30,600 --> 00:24:32,159 Speaker 1: know what's interesting for us is if you look at 442 00:24:32,200 --> 00:24:36,080 Speaker 1: Brinks and you think about okay, legalization in California, where 443 00:24:36,119 --> 00:24:39,520 Speaker 1: it's all cash business, You're gonna need Brinks to take 444 00:24:39,640 --> 00:24:42,920 Speaker 1: all of these things, these cash to you know, the deposit. 445 00:24:43,080 --> 00:24:45,600 Speaker 1: So they have a localized business that I think can 446 00:24:45,640 --> 00:24:47,879 Speaker 1: actually do pretty well. So I'm thinking of all our 447 00:24:48,040 --> 00:24:50,880 Speaker 1: listeners right now, who think of a money manager coming 448 00:24:50,920 --> 00:24:54,000 Speaker 1: from northern California talking about legalization of weed. So I 449 00:24:54,040 --> 00:24:57,400 Speaker 1: should play the picture he's got dreadlocks, he's wearing sandals. 450 00:24:57,480 --> 00:25:00,159 Speaker 1: Bergen's dog. Yeah, that's not the case, guy, but uh, 451 00:25:00,200 --> 00:25:03,120 Speaker 1: you know it is interesting, uh in terms of brings. 452 00:25:03,119 --> 00:25:04,920 Speaker 1: So you've seen twelve percent revenue growth in the most 453 00:25:04,960 --> 00:25:07,960 Speaker 1: recent quarter, but also accelerating revenue growth last four quarters 454 00:25:08,000 --> 00:25:10,600 Speaker 1: going five percent, nine percent, nine percent, twelve percent. That's 455 00:25:10,640 --> 00:25:12,560 Speaker 1: what you want to see in a big business like this. 456 00:25:12,640 --> 00:25:15,639 Speaker 1: It had previously many years of revenue shrinkage. Well, they 457 00:25:15,720 --> 00:25:18,320 Speaker 1: transferred to a new management based in about a year 458 00:25:18,320 --> 00:25:20,960 Speaker 1: and a half ago, and they've done a stellar job 459 00:25:21,000 --> 00:25:26,119 Speaker 1: at really driving the business and so brings, what have 460 00:25:26,240 --> 00:25:28,080 Speaker 1: they done to drive the business? Well, then, you know, 461 00:25:28,240 --> 00:25:30,560 Speaker 1: so they're looking at more fuel efficient vehicles, they're looking 462 00:25:30,600 --> 00:25:34,680 Speaker 1: at cutting cost, better distribution models, and they're actually going 463 00:25:34,720 --> 00:25:37,480 Speaker 1: after the Latin American market and kind of expanding there, 464 00:25:37,480 --> 00:25:39,280 Speaker 1: which tends to be a high revenue. Is there any 465 00:25:39,320 --> 00:25:44,080 Speaker 1: competition there. Um, yeah, there's competition everywhere. It's but you know, 466 00:25:44,160 --> 00:25:45,760 Speaker 1: brings to such a big name, and if you're gonna 467 00:25:45,800 --> 00:25:47,800 Speaker 1: happen to guard the company out of wasn't out of 468 00:25:47,880 --> 00:25:50,240 Speaker 1: Canada where there was there was an accounting scandal years ago, 469 00:25:50,359 --> 00:25:53,600 Speaker 1: and yeah, I don't that wasn't I was okay. Well, 470 00:25:53,640 --> 00:25:56,120 Speaker 1: but in any case with Brinks, what is the driving 471 00:25:56,440 --> 00:25:58,200 Speaker 1: Is it a cost cutting story here because revenue growth 472 00:25:58,240 --> 00:26:00,160 Speaker 1: doesn't come from cost cutting. Yeah, No, I think it's 473 00:26:00,160 --> 00:26:02,159 Speaker 1: a little of both. I think they have opportunities to 474 00:26:02,240 --> 00:26:04,960 Speaker 1: expand the marketplace and I think you've got opportunities to 475 00:26:05,119 --> 00:26:07,840 Speaker 1: drive margins. So I mean that's the best of both 476 00:26:07,880 --> 00:26:10,440 Speaker 1: worlds for me, where I've got, you know, potentially double 477 00:26:10,480 --> 00:26:13,320 Speaker 1: digit top line revenue growth and you know the same 478 00:26:13,400 --> 00:26:15,399 Speaker 1: thing for the EPs side. Brian, what's a new ad 479 00:26:15,520 --> 00:26:20,840 Speaker 1: to the portfolio? UM Builders first? Is is a new 480 00:26:20,880 --> 00:26:24,879 Speaker 1: ad for the portfolio? Basically it's a uh, their supplier 481 00:26:25,000 --> 00:26:27,879 Speaker 1: for UM A lot of home builders, a lot of 482 00:26:28,160 --> 00:26:31,160 Speaker 1: So we're looking at three billion roughly in damages through 483 00:26:31,200 --> 00:26:34,280 Speaker 1: the three hurricanes. The first source based in Dallas. Stocks 484 00:26:34,320 --> 00:26:36,719 Speaker 1: of scent in the last year. But y'all go once 485 00:26:36,720 --> 00:26:38,920 Speaker 1: again you've got to come through some kind of nice 486 00:26:39,160 --> 00:26:41,680 Speaker 1: single digit double digit revenue growth ten percent. Yeah, and 487 00:26:41,800 --> 00:26:43,359 Speaker 1: so I mean they were here a little bit by 488 00:26:43,440 --> 00:26:46,480 Speaker 1: the the hurricanes because they've got about thirteen percent of 489 00:26:46,480 --> 00:26:48,880 Speaker 1: their business that comes from that region. Right. But as 490 00:26:48,920 --> 00:26:51,120 Speaker 1: you're looking to rebuild, and we're doing it in northern 491 00:26:51,160 --> 00:26:53,639 Speaker 1: California and you're gonna do it in Houston and Miami 492 00:26:53,720 --> 00:26:55,520 Speaker 1: and Puerto Rico, you know, they are going to be 493 00:26:55,600 --> 00:26:57,760 Speaker 1: the major suppliers for a lot of this lumber for 494 00:26:57,880 --> 00:26:59,639 Speaker 1: these home builders, and so we think that they've got 495 00:26:59,720 --> 00:27:01,800 Speaker 1: a long tail period where they can actually do quite well. 496 00:27:01,880 --> 00:27:04,240 Speaker 1: You mentioned getting out of restaurants. Cheesecake factory was among 497 00:27:04,880 --> 00:27:07,199 Speaker 1: your I don't know, tough twenty holdings. I guess are 498 00:27:07,240 --> 00:27:11,520 Speaker 1: you out of it completely? Yes, you are, just like that. Well, 499 00:27:11,680 --> 00:27:14,560 Speaker 1: we've we've basically what we'll do is every time around 500 00:27:14,600 --> 00:27:16,399 Speaker 1: this time of year, what we'll do is we'll go 501 00:27:16,560 --> 00:27:20,159 Speaker 1: through and systematically take out everything that we don't like 502 00:27:20,280 --> 00:27:22,440 Speaker 1: in our portfolios anymore and replaced with stocks that we 503 00:27:22,480 --> 00:27:26,080 Speaker 1: think are working well. Urban outfitters out really because we're here. 504 00:27:26,080 --> 00:27:27,960 Speaker 1: We're doing really good things about traffic this last week 505 00:27:27,960 --> 00:27:29,840 Speaker 1: and the urban outfitters. Yeah, you know, And the thing 506 00:27:29,920 --> 00:27:31,520 Speaker 1: is that I think Urban has been a great story 507 00:27:31,560 --> 00:27:33,840 Speaker 1: for a long time, but it's been really difficult because 508 00:27:33,920 --> 00:27:35,760 Speaker 1: even if you're trading it at nine p E or 509 00:27:36,119 --> 00:27:37,600 Speaker 1: an a p E and you look at this and 510 00:27:37,640 --> 00:27:39,399 Speaker 1: you're like, Okay, is this a value trapp are they 511 00:27:39,400 --> 00:27:43,120 Speaker 1: actually doing good business? And I actually and I've liked 512 00:27:43,160 --> 00:27:45,000 Speaker 1: the story and I've liked the business. But you know, 513 00:27:45,160 --> 00:27:48,720 Speaker 1: sometimes these headwinds just get kicked out of our portfolio 514 00:27:48,760 --> 00:27:51,400 Speaker 1: because we do manage on such a strict basis. Fun 515 00:27:51,440 --> 00:27:54,680 Speaker 1: to talk with you, Thanks, thanks for having Yeah, Brian Perry, 516 00:27:54,760 --> 00:27:57,000 Speaker 1: He's a probably a managered Hennessy funds about a billion 517 00:27:57,040 --> 00:28:00,760 Speaker 1: in their Cornerstone fund. Based in California. Her Bloomberg eleven 518 00:28:00,840 --> 00:28:04,480 Speaker 1: three oh Studio, move Around, multi grade promotion up the 519 00:28:04,720 --> 00:28:09,240 Speaker 1: later moved on. They you moved like they do. I've 520 00:28:09,280 --> 00:28:15,520 Speaker 1: never seen anyone move that fast. Five people. Let's moved 521 00:28:15,520 --> 00:28:23,000 Speaker 1: like you've got a purpose. Something's called movers and Shakers. 522 00:28:23,400 --> 00:28:25,800 Speaker 1: They cost a little more. That name cracked me up. 523 00:28:32,160 --> 00:28:36,840 Speaker 1: Bloomberg Markets Movers and Shakers with Carol Masser and Corey 524 00:28:36,920 --> 00:28:40,160 Speaker 1: Johnson on Bloomberg Radio Light. Everybody let's take a look 525 00:28:40,160 --> 00:28:41,640 Speaker 1: at some of the names on the move in the 526 00:28:41,680 --> 00:28:44,800 Speaker 1: Monday session SMP five hundred overall, kind of even split. 527 00:28:44,840 --> 00:28:49,680 Speaker 1: Two two hundred forty nine names hired today, two forty 528 00:28:49,720 --> 00:28:52,760 Speaker 1: eight lower nine unchanged. I'm gonna talk a little about 529 00:28:52,800 --> 00:28:55,600 Speaker 1: have a Corey if I may. Stock up seven percent today. 530 00:28:56,280 --> 00:29:00,320 Speaker 1: This is, of course the big generic pharmaceutical company, so 531 00:29:00,480 --> 00:29:03,080 Speaker 1: up seven percent to fourteen sixty five dollars this year. 532 00:29:03,200 --> 00:29:07,840 Speaker 1: Still down six so far in seventeen. Teva Pharmaceuticals, though 533 00:29:07,920 --> 00:29:11,600 Speaker 1: shaking up its management ranks in a company wide re organization. 534 00:29:11,640 --> 00:29:14,920 Speaker 1: It's the biggest movie yet by the company's relatively new CEO, 535 00:29:15,520 --> 00:29:19,560 Speaker 1: CEO Care Schultz. He's really trying to boost efficiency at 536 00:29:19,600 --> 00:29:22,200 Speaker 1: the debt ridden generic jug maker since he took over 537 00:29:22,320 --> 00:29:25,320 Speaker 1: earlier this month. Keep in mind, this company has about 538 00:29:25,440 --> 00:29:28,280 Speaker 1: thirty five billion dollars worth of debt. It's more than 539 00:29:28,320 --> 00:29:31,680 Speaker 1: double the company's market camp, and they're operating in an 540 00:29:31,760 --> 00:29:34,960 Speaker 1: environment where competition is really squeezing profit margins from its 541 00:29:35,120 --> 00:29:37,840 Speaker 1: best selling product and its generic drug units, so they're 542 00:29:37,840 --> 00:29:39,400 Speaker 1: trying to figure things out wells far ago, though, I 543 00:29:39,440 --> 00:29:41,480 Speaker 1: like this. Corey put out a note and it says 544 00:29:41,680 --> 00:29:45,440 Speaker 1: the Teva CEO appears to have an ax in each hand, 545 00:29:45,520 --> 00:29:49,480 Speaker 1: not hedge clippers are pruning share shares. According to David 546 00:29:49,560 --> 00:29:52,480 Speaker 1: Marris over at Wells Fargo, he says the news investors 547 00:29:52,520 --> 00:29:54,280 Speaker 1: are like in the short run, which we saw that today, 548 00:29:54,280 --> 00:29:56,840 Speaker 1: but that quote serious questions will arise longer term as 549 00:29:56,880 --> 00:29:59,880 Speaker 1: to whether the new CEOs approaches cutting fat or my 550 00:30:00,040 --> 00:30:05,920 Speaker 1: full well. Shares of Amazon point eight percent today, not 551 00:30:06,040 --> 00:30:08,360 Speaker 1: a huge move in the context of a market that 552 00:30:09,400 --> 00:30:12,360 Speaker 1: was actually down, you know, point oh four percent in 553 00:30:12,400 --> 00:30:14,200 Speaker 1: the s but I thought it was worth looking at 554 00:30:14,200 --> 00:30:16,800 Speaker 1: Amazon today anyway, because stock hitting a new fifty two 555 00:30:16,880 --> 00:30:20,800 Speaker 1: week hi stock is up now sixty percent on the year. 556 00:30:21,800 --> 00:30:25,000 Speaker 1: This being Cyber Monday, Amazon and Walmarts selling a lot 557 00:30:25,080 --> 00:30:27,160 Speaker 1: online that a lot of people companies selling a lot online. 558 00:30:27,520 --> 00:30:30,360 Speaker 1: Adobe Systems out there, who does a lot of work 559 00:30:30,440 --> 00:30:33,680 Speaker 1: with online retailers says that they expect Monday's today at 560 00:30:33,720 --> 00:30:35,680 Speaker 1: sales on today to you know, every year is a 561 00:30:35,680 --> 00:30:37,280 Speaker 1: record of Cyber Monday because more and more people are 562 00:30:37,280 --> 00:30:40,000 Speaker 1: shopping on the internet and things get more expensive and 563 00:30:40,080 --> 00:30:42,320 Speaker 1: so on. But they expected to hit six point six 564 00:30:42,400 --> 00:30:44,880 Speaker 1: billion dollars and is to be the busiest day ever 565 00:30:45,360 --> 00:30:47,000 Speaker 1: uh in terms of revenues on the internet. To do 566 00:30:47,040 --> 00:30:49,880 Speaker 1: any shopping today I have. I did not do any 567 00:30:49,960 --> 00:30:53,440 Speaker 1: shopping online today. Know either I did buy lunch. We 568 00:30:53,520 --> 00:30:55,520 Speaker 1: did by lunch not the same thing, A cup of coffee, 569 00:30:55,560 --> 00:30:58,760 Speaker 1: apples and oranges. Here, kid, let's talk about Shopify if 570 00:30:58,800 --> 00:31:00,840 Speaker 1: we may up one point four sent up more than 571 00:31:01,160 --> 00:31:04,200 Speaker 1: a dollar, actually up a dollar fifty five, closing today 572 00:31:04,240 --> 00:31:06,560 Speaker 1: at a hundred and thirteen dollars thirty six cents a share. 573 00:31:06,600 --> 00:31:10,080 Speaker 1: Shopify gaining after the company reported that it's more than 574 00:31:10,200 --> 00:31:14,920 Speaker 1: five hundred thousand merchants cumulatively experienced their highest Black Friday 575 00:31:15,000 --> 00:31:17,280 Speaker 1: sales to date, with more than one million dollars in 576 00:31:17,320 --> 00:31:20,800 Speaker 1: sales going through the platform per minute at the peak, 577 00:31:20,960 --> 00:31:23,640 Speaker 1: easily beating last year's high of a little bit more 578 00:31:23,680 --> 00:31:26,719 Speaker 1: than five hundred and fifty five thousand dollars. Mobile continue 579 00:31:26,760 --> 00:31:29,160 Speaker 1: to grow, with sixty six percent of orders being made 580 00:31:29,240 --> 00:31:31,440 Speaker 1: with a phone or tablet, up from fifty percent in 581 00:31:31,520 --> 00:31:40,560 Speaker 1: twenty sixteen. Desktop desktok desktop sales accounted for remaining from anyway, busy, busy, busy, 582 00:31:40,640 --> 00:31:43,920 Speaker 1: what's this stock doing? In a quick check, it's up 583 00:31:43,920 --> 00:31:46,200 Speaker 1: a hundred and sixty four percent, given really quick here, 584 00:31:46,240 --> 00:31:49,840 Speaker 1: I l G. It's a it's a vacation services time 585 00:31:49,960 --> 00:31:54,719 Speaker 1: share business. Luxury brands. Stock was was surging to then 586 00:31:54,760 --> 00:31:57,640 Speaker 1: sort of cooled off when the company announced their executives 587 00:31:57,640 --> 00:32:00,680 Speaker 1: are canceled from a sun Trust conference. The company is 588 00:32:00,720 --> 00:32:03,800 Speaker 1: based in Miami, Florida, so the Suntra's conference in Boston 589 00:32:03,800 --> 00:32:06,200 Speaker 1: maybe doesn't seem like an entertaining trip, but November thirty, 590 00:32:06,200 --> 00:32:08,560 Speaker 1: they were expected to give a presentation. Now there. Now 591 00:32:08,560 --> 00:32:11,440 Speaker 1: they're saying they're only going to send their investor relations person. Uh, 592 00:32:11,560 --> 00:32:14,280 Speaker 1: and investors can kind of freak out when that kind 593 00:32:14,320 --> 00:32:16,200 Speaker 1: of thing can hit the tape. That happened in the 594 00:32:16,320 --> 00:32:18,160 Speaker 1: last few hours of trading, the stock dip just a 595 00:32:18,200 --> 00:32:20,080 Speaker 1: little bit. It closed for the day at one point 596 00:32:20,160 --> 00:32:23,000 Speaker 1: five percent, so not bad stock up big time fifty 597 00:32:23,080 --> 00:32:27,080 Speaker 1: six percent on the year. Very interesting company. But we'll 598 00:32:27,120 --> 00:32:30,160 Speaker 1: see what they've got to say. Given that the actual 599 00:32:30,240 --> 00:32:32,760 Speaker 1: CEOs are gonna make the trip to Boston on Wednesday, 600 00:32:32,800 --> 00:32:35,280 Speaker 1: it's just going to be investor relations. Maybe it's gonna 601 00:32:35,280 --> 00:32:37,959 Speaker 1: be about twenty nine degrees that it's low on. Boston 602 00:32:38,080 --> 00:32:39,959 Speaker 1: is always lovely, or they're not listening to us right now. 603 00:32:41,200 --> 00:32:43,880 Speaker 1: Boston Bash the other shows on right now, Yeah, Boston 604 00:32:44,120 --> 00:32:49,440 Speaker 1: in December. Come on. Thanks for listening to Coast to Coast. 605 00:32:49,560 --> 00:32:52,880 Speaker 1: You can subscribe to this podcast on iTunes, SoundCloud, or 606 00:32:52,960 --> 00:32:55,040 Speaker 1: Bloomberg dot com. You can also listen to our radio 607 00:32:55,080 --> 00:32:58,320 Speaker 1: show weekdays two o'clock Eastern only on Bloomberg Radio and 608 00:32:58,360 --> 00:33:00,959 Speaker 1: follow us on Twitter. She's at Carol Master. I'm at 609 00:33:01,080 --> 00:33:07,080 Speaker 1: Corey tzh