1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:07,400 --> 00:00:10,800 Speaker 1: This week on the podcast, I have such an extra 3 00:00:10,880 --> 00:00:15,560 Speaker 1: special guest. His name is Will Danoff. He runs Fidelities 4 00:00:15,760 --> 00:00:19,960 Speaker 1: Country Funds. It's the largest single manager fund with about 5 00:00:20,000 --> 00:00:23,160 Speaker 1: a hundred and thirty billion dollars, and the track record 6 00:00:23,200 --> 00:00:26,520 Speaker 1: of the fund is just outstanding. He has crushed all 7 00:00:26,560 --> 00:00:31,320 Speaker 1: the competition over thirty years. He's beat large cap growth 8 00:00:31,800 --> 00:00:34,920 Speaker 1: by four hundred basis points. He's beat the SMP five 9 00:00:35,000 --> 00:00:39,839 Speaker 1: hundred three hundred basis points. Not only has he outperformed 10 00:00:39,880 --> 00:00:42,960 Speaker 1: on an annual basis, if you put money into his 11 00:00:43,080 --> 00:00:48,600 Speaker 1: fund versus the SMP five hundred he started, his fund 12 00:00:48,720 --> 00:00:51,599 Speaker 1: is now worth two and a half times more than 13 00:00:51,680 --> 00:00:55,080 Speaker 1: the index is. This is really a master class on 14 00:00:55,280 --> 00:00:58,760 Speaker 1: how to think about active management, what you need to 15 00:00:58,800 --> 00:01:03,520 Speaker 1: do to engage in stock picking, why it's so difficult, 16 00:01:04,040 --> 00:01:07,640 Speaker 1: and why you need a powerful team of experts around 17 00:01:07,640 --> 00:01:10,200 Speaker 1: you to help you with this. He has worked with 18 00:01:10,240 --> 00:01:14,040 Speaker 1: all of the greats at Fidelity and explains why Fidelity 19 00:01:14,120 --> 00:01:17,400 Speaker 1: is such a key aspect of this. I could babble 20 00:01:17,600 --> 00:01:21,600 Speaker 1: about the conversation forever. Rather than do that, let me 21 00:01:21,680 --> 00:01:25,360 Speaker 1: just stop and say with no further ado. My conversation 22 00:01:25,680 --> 00:01:31,800 Speaker 1: with the Fidelity Contra Funds Will Danoff. This is Masters 23 00:01:31,800 --> 00:01:36,319 Speaker 1: in Business with Verry Ridholts on Bloomberg Radio. My extra 24 00:01:36,360 --> 00:01:39,640 Speaker 1: special guest this week is Will Danoff. He has been 25 00:01:39,720 --> 00:01:44,959 Speaker 1: running Fidelities Contra funds for just about thirty years. The 26 00:01:44,959 --> 00:01:49,760 Speaker 1: fund is the largest actively managed mutual fund run by 27 00:01:49,840 --> 00:01:54,440 Speaker 1: one person. It's about a hundred and thirty billion dollars. 28 00:01:54,480 --> 00:02:00,120 Speaker 1: And since September when he took over the funds, he 29 00:02:00,160 --> 00:02:05,280 Speaker 1: has outperformed the benchmark SMP index by more than three 30 00:02:05,400 --> 00:02:10,960 Speaker 1: hundred basis points annually. Will then off, Welcome to Bloomberg. 31 00:02:11,280 --> 00:02:13,920 Speaker 1: Thanks Berry, It's great to be with you. So that 32 00:02:14,000 --> 00:02:17,680 Speaker 1: track record is really quite astonishing. You you've returned on 33 00:02:17,880 --> 00:02:24,480 Speaker 1: average compounded annually. Your benchmark, the SMP five hundred is 34 00:02:24,600 --> 00:02:29,160 Speaker 1: ten percent. The average large cap growth funds has returned 35 00:02:29,200 --> 00:02:34,919 Speaker 1: about nine. So what is the secret of your success? Yeah, Berry, 36 00:02:34,960 --> 00:02:37,680 Speaker 1: I think you know, sometimes you lose track of the percentages. 37 00:02:37,800 --> 00:02:40,919 Speaker 1: But I think if you had invested ten thousand dollars 38 00:02:40,919 --> 00:02:43,919 Speaker 1: in the SMP, and you should have your fact checkers 39 00:02:44,560 --> 00:02:48,320 Speaker 1: figure this out. But I think that after thirty years 40 00:02:48,360 --> 00:02:50,919 Speaker 1: of being up whatever it is, ten percent a year 41 00:02:51,720 --> 00:02:54,480 Speaker 1: you're at like two hundred thousand, and if you are 42 00:02:54,520 --> 00:02:58,200 Speaker 1: invested in contrafund, you'd be closer to like four and 43 00:02:58,280 --> 00:03:03,320 Speaker 1: eighty thousands. So really can make a difference. Compounding is 44 00:03:03,480 --> 00:03:07,760 Speaker 1: an important concept for your listeners when it comes to investing, 45 00:03:07,840 --> 00:03:11,720 Speaker 1: and to the extent you can find a fund or 46 00:03:11,760 --> 00:03:15,680 Speaker 1: a company that can compound over time, it really does 47 00:03:15,760 --> 00:03:19,080 Speaker 1: make a difference over the decades. But i'd say Barry 48 00:03:19,360 --> 00:03:23,000 Speaker 1: for For me, the north star has been the importance 49 00:03:23,040 --> 00:03:28,280 Speaker 1: of analyzing companies, keeping an open mind, working really hard 50 00:03:29,480 --> 00:03:34,600 Speaker 1: and staying flexible, having a great team, and then maybe 51 00:03:34,639 --> 00:03:38,760 Speaker 1: just bringing it all back to the earnings per share 52 00:03:39,400 --> 00:03:43,720 Speaker 1: of the underlying companies and trying to think about, you know, 53 00:03:44,240 --> 00:03:49,920 Speaker 1: what the company could earn looking out five seven years, 54 00:03:50,600 --> 00:03:55,320 Speaker 1: you know, will this company be bigger and better? So 55 00:03:55,840 --> 00:04:01,800 Speaker 1: I do believe that the growth discipline is a superior discipline. 56 00:04:02,680 --> 00:04:05,640 Speaker 1: And then you know, once you've determined what you think 57 00:04:05,680 --> 00:04:09,560 Speaker 1: the company might earn looking out to the extent you 58 00:04:09,600 --> 00:04:13,160 Speaker 1: can look out and you have to be honest and say, 59 00:04:13,200 --> 00:04:15,520 Speaker 1: you know, I really am not sure. You know. In 60 00:04:15,560 --> 00:04:18,440 Speaker 1: the in the world of technology, you have to be 61 00:04:18,520 --> 00:04:23,240 Speaker 1: really careful about extrapolating growth rates. But then ideally you're 62 00:04:24,000 --> 00:04:28,520 Speaker 1: trying to pay the the best price you can for 63 00:04:29,080 --> 00:04:33,200 Speaker 1: you know, as well positioned growth company with you know, 64 00:04:33,279 --> 00:04:36,360 Speaker 1: a good brand and great management and strong cash flow 65 00:04:36,400 --> 00:04:39,880 Speaker 1: and stuff like that. But I'd say, you know, cast 66 00:04:39,920 --> 00:04:44,279 Speaker 1: a wide net, be flexible, and then you know, continue 67 00:04:44,320 --> 00:04:48,080 Speaker 1: to monitor what your your investments are doing and what 68 00:04:48,160 --> 00:04:52,479 Speaker 1: your managements are doing. I'm much more of an advocate 69 00:04:52,520 --> 00:04:55,680 Speaker 1: of the you know, sort of the poker game approach. 70 00:04:56,760 --> 00:04:59,279 Speaker 1: I think it's hard to say, you know, X y 71 00:04:59,360 --> 00:05:01,080 Speaker 1: Z is going to be a buy and hold for 72 00:05:01,160 --> 00:05:04,760 Speaker 1: ten years, but you know, and this is the greatest 73 00:05:04,760 --> 00:05:07,400 Speaker 1: thing since sliced bread, and therefore we're all in. Some 74 00:05:07,560 --> 00:05:11,599 Speaker 1: investors can do that. I think over over thirty years, 75 00:05:11,640 --> 00:05:14,240 Speaker 1: you you make a lot of mistakes, You accept your mistakes, 76 00:05:14,240 --> 00:05:18,240 Speaker 1: you learn from your mistakes. But one idea I have 77 00:05:18,480 --> 00:05:22,800 Speaker 1: is just to say, listen, I think you know, you're 78 00:05:22,960 --> 00:05:26,000 Speaker 1: you know, we're playing poker. I have an ace, you're 79 00:05:26,040 --> 00:05:29,800 Speaker 1: showing a three. I think this is starting out to 80 00:05:29,880 --> 00:05:31,960 Speaker 1: be a good hand for me. So I'm going to 81 00:05:32,040 --> 00:05:36,200 Speaker 1: bet some and start to build a position, and then 82 00:05:36,240 --> 00:05:40,160 Speaker 1: if I'm served another ace, meaning the company, you know, 83 00:05:40,640 --> 00:05:44,680 Speaker 1: says it's going to expand into California, or expand in India, 84 00:05:45,640 --> 00:05:49,640 Speaker 1: or you know, introduce the new product, and the results 85 00:05:50,000 --> 00:05:56,279 Speaker 1: show that those efforts are going really well, then you 86 00:05:56,400 --> 00:06:00,320 Speaker 1: bet more so again for me, it's a little more 87 00:06:00,360 --> 00:06:04,839 Speaker 1: incremental and a little less Aha, the light bulb went off. 88 00:06:05,000 --> 00:06:08,240 Speaker 1: You know, plastics are you know, we're all in on 89 00:06:08,360 --> 00:06:13,320 Speaker 1: plastical plastics without data. So I would say, you know, 90 00:06:14,040 --> 00:06:17,080 Speaker 1: let's start with the facts. You know, Fidelity is just 91 00:06:17,120 --> 00:06:20,039 Speaker 1: an unbelievable place to manage money. We've got an unbelievable 92 00:06:20,080 --> 00:06:24,200 Speaker 1: research team, we have you know, experts and virtually every 93 00:06:24,200 --> 00:06:28,680 Speaker 1: industry that matters. We have experts in virtually every region 94 00:06:28,720 --> 00:06:33,039 Speaker 1: of the world that matters. We have experts in all 95 00:06:33,920 --> 00:06:39,039 Speaker 1: disciplines in the market value, growth, small, mid, large, all 96 00:06:39,160 --> 00:06:43,320 Speaker 1: parts of the cap table, you know, investment grade, high yields, 97 00:06:44,360 --> 00:06:48,600 Speaker 1: convertibles and so, you know, Fidelity sort of the big 98 00:06:48,640 --> 00:06:52,960 Speaker 1: city hospital Barry. And you know, for your listeners, you know, 99 00:06:53,800 --> 00:06:56,440 Speaker 1: do you want to have the brain surgery and you know, 100 00:06:56,560 --> 00:07:00,200 Speaker 1: a small regional hospital in the middle of nowhere are 101 00:07:00,360 --> 00:07:05,800 Speaker 1: probably not. But if you go to a big city 102 00:07:05,839 --> 00:07:09,800 Speaker 1: hospital where they're doing large numbers of these procedures, you're 103 00:07:09,800 --> 00:07:13,400 Speaker 1: probably going to feel better. You know, everybody makes mistakes, 104 00:07:13,520 --> 00:07:20,360 Speaker 1: but we see more companies, we attend more meetings, we 105 00:07:20,440 --> 00:07:26,440 Speaker 1: interview more management teams, and through that process, hopefully we're 106 00:07:26,480 --> 00:07:30,080 Speaker 1: going to be able to identify changes that are important 107 00:07:30,160 --> 00:07:36,800 Speaker 1: in different industries and also just identify what we consider 108 00:07:37,080 --> 00:07:41,000 Speaker 1: truly world class management teams that are doing things a 109 00:07:41,040 --> 00:07:44,880 Speaker 1: little better. And you know, you try to keep track 110 00:07:44,960 --> 00:07:47,360 Speaker 1: and you do your best, and you know, I've just 111 00:07:47,440 --> 00:07:51,280 Speaker 1: survived frankly in a very competitive industry, Barry. But you 112 00:07:51,320 --> 00:07:54,160 Speaker 1: know the Fidelity Hall of Fame managers, I mean, Joel 113 00:07:54,240 --> 00:07:58,120 Speaker 1: tilling Has, who's managing the Low Price Stock Fund, has 114 00:07:58,160 --> 00:08:01,880 Speaker 1: done phenomenally well. Steve y Umer, who runs our Growth fund, 115 00:08:01,960 --> 00:08:04,520 Speaker 1: is done phenomenally well. We've got a whole cast of 116 00:08:04,720 --> 00:08:08,280 Speaker 1: other folks in our starting lineup who are doing exceptionally well. 117 00:08:09,000 --> 00:08:11,760 Speaker 1: And then, of course you know the long history going 118 00:08:11,800 --> 00:08:15,600 Speaker 1: back to you know, George Vanderheyde and Peter Lynch, Bruce Johnstone, 119 00:08:16,200 --> 00:08:19,400 Speaker 1: but even before that, you know Ned Johnson, Jerry Sigh. 120 00:08:21,720 --> 00:08:26,880 Speaker 1: The idea of doing bottoms up fundamental company analysis is 121 00:08:26,920 --> 00:08:30,120 Speaker 1: not going away. You mentioned the index, Barry, and you 122 00:08:30,120 --> 00:08:33,840 Speaker 1: know the index is very hard to peak. Let's understand 123 00:08:33,920 --> 00:08:38,400 Speaker 1: that there is survivor bias in the index. The better 124 00:08:38,440 --> 00:08:43,400 Speaker 1: companies like Microsoft and Google and Amazon grow and become 125 00:08:43,440 --> 00:08:46,920 Speaker 1: a larger part of the index, and the weaker companies, 126 00:08:47,760 --> 00:08:51,640 Speaker 1: you know, slow down and don't grow and therefore don't 127 00:08:51,640 --> 00:08:55,680 Speaker 1: appreciate in value and therefore are smaller part of the index. 128 00:08:55,720 --> 00:08:59,240 Speaker 1: So the index is hard to beat. And I agree 129 00:08:59,240 --> 00:09:01,959 Speaker 1: with Warren buff that, you know, the S and P 130 00:09:02,120 --> 00:09:06,520 Speaker 1: five hundred or even the Dow now is not the 131 00:09:06,520 --> 00:09:09,280 Speaker 1: the Dow or the S and P of of seventy 132 00:09:09,600 --> 00:09:11,920 Speaker 1: or eighty years ago. You know, it's it's a much 133 00:09:12,720 --> 00:09:17,520 Speaker 1: more cash generative, much more growth oriented. You know, globalization 134 00:09:17,600 --> 00:09:21,480 Speaker 1: has been very positive for you know, corporate profits and 135 00:09:21,600 --> 00:09:24,840 Speaker 1: I think very positive for society in the world. But 136 00:09:24,880 --> 00:09:27,880 Speaker 1: we can get into that later. So you know, i'd say, 137 00:09:28,120 --> 00:09:33,440 Speaker 1: work really hard, know yourself, know your companies. You know, 138 00:09:33,520 --> 00:09:37,920 Speaker 1: continue to monitor your companies, try to upgrade on weakness, 139 00:09:38,600 --> 00:09:41,080 Speaker 1: and you know, try to be patient and long term. 140 00:09:41,160 --> 00:09:44,640 Speaker 1: You know, you mentioned earlier the sort of so much 141 00:09:44,720 --> 00:09:48,560 Speaker 1: noise now in the market, and people worried about every tick. 142 00:09:48,720 --> 00:09:52,000 Speaker 1: You know, I think if you step back and say, 143 00:09:52,040 --> 00:09:55,760 Speaker 1: what do I own you know, you know, can I imagine, 144 00:09:55,840 --> 00:09:59,520 Speaker 1: you know, just look around you and say, gosh, you know, 145 00:10:00,720 --> 00:10:05,640 Speaker 1: my kids can't live without their smartphones, and they they 146 00:10:06,080 --> 00:10:09,960 Speaker 1: love their smartphones. You know. In in Fideliti's case, we're 147 00:10:10,000 --> 00:10:13,560 Speaker 1: able to talk to Luca my Street, who's the CFO 148 00:10:13,640 --> 00:10:16,760 Speaker 1: of Apple, and you know, he shared with us recently 149 00:10:16,920 --> 00:10:23,160 Speaker 1: that in the America's Apple's customer satisfaction with the iPhone 150 00:10:23,280 --> 00:10:28,360 Speaker 1: is and you know, it's like, oh my god, that's unbelievable. 151 00:10:28,360 --> 00:10:30,440 Speaker 1: And then you step back and say, well, gosh, you know, 152 00:10:31,559 --> 00:10:34,240 Speaker 1: ten years ago, no one had you know, iPhones, everyone 153 00:10:34,240 --> 00:10:37,599 Speaker 1: had blackberries. And now you know, I have two smartphones. 154 00:10:38,280 --> 00:10:41,960 Speaker 1: I have a MacBook Air, i have an iPad, and 155 00:10:42,000 --> 00:10:45,480 Speaker 1: I've got EarPods, you know, and it's I'm really happy 156 00:10:45,520 --> 00:10:48,680 Speaker 1: they all work. And you know, so you've got to 157 00:10:48,760 --> 00:10:51,800 Speaker 1: be aware of what's happening in the world. And I 158 00:10:51,840 --> 00:10:57,080 Speaker 1: think that's often where some Wall Street folks, particularly the 159 00:10:57,400 --> 00:11:01,000 Speaker 1: the value discipline, can you know, get a little confused. 160 00:11:01,040 --> 00:11:04,160 Speaker 1: It's like, you know, the classic value trap. It's a 161 00:11:04,160 --> 00:11:07,719 Speaker 1: really you know, cheap stock, but it's not going in 162 00:11:08,040 --> 00:11:10,160 Speaker 1: I mean, it's not going to get cheaper, right, you know, 163 00:11:10,200 --> 00:11:13,080 Speaker 1: it's a capital intensive, cyclical business and you've got to 164 00:11:13,120 --> 00:11:20,200 Speaker 1: make sure your assumptions are appropriately conservative. So let's stay 165 00:11:20,200 --> 00:11:23,520 Speaker 1: with with talking about Fidelity a little bit. You mentioned 166 00:11:23,559 --> 00:11:27,760 Speaker 1: some of the the murderers row the twenty Yankees lineup, 167 00:11:27,760 --> 00:11:33,040 Speaker 1: you guys, have you started it Fidelity in But if 168 00:11:33,040 --> 00:11:36,600 Speaker 1: my research is correct, it wasn't as a fund manager, right, 169 00:11:36,679 --> 00:11:41,360 Speaker 1: You came in as an analyst, Yes, Barry, an interesting 170 00:11:41,360 --> 00:11:45,280 Speaker 1: footnote for your listeners. I applied for a summer job 171 00:11:45,320 --> 00:11:51,600 Speaker 1: in and I was rejected, So Barry, one must always persevere. 172 00:11:52,679 --> 00:11:55,480 Speaker 1: And you know, I think the decision was probably the 173 00:11:55,559 --> 00:11:58,720 Speaker 1: right one. I was a bit immature and not as experience, 174 00:11:58,880 --> 00:12:03,400 Speaker 1: but luck really I was accepted and for the full 175 00:12:03,440 --> 00:12:09,400 Speaker 1: time job as an analyst in And I think it's 176 00:12:09,440 --> 00:12:15,000 Speaker 1: important when you think about companies as investments as employers, 177 00:12:15,280 --> 00:12:19,160 Speaker 1: to understand the culture of the company. And you know, 178 00:12:19,240 --> 00:12:25,000 Speaker 1: I'm so grateful and lucky that Fidelity was and still 179 00:12:25,240 --> 00:12:32,760 Speaker 1: is a research oriented, you know, active manager and everyone 180 00:12:33,200 --> 00:12:36,440 Speaker 1: you know that I mentioned earlier, all the great fund 181 00:12:36,440 --> 00:12:40,839 Speaker 1: managers all started as analysts at Fidelity. You know, does 182 00:12:40,880 --> 00:12:45,400 Speaker 1: that include Peter Lynch? He started as an analyst. Oh, yes, yes, yes, yes, yes, 183 00:12:45,559 --> 00:12:49,280 Speaker 1: Peter started as an analyst. George was an analyst. Bruce, 184 00:12:49,360 --> 00:12:53,280 Speaker 1: of course, everyone came up from the ranks. Ned was 185 00:12:53,320 --> 00:12:56,240 Speaker 1: an analyst. Abby Johnson, who is the curren CEO, was 186 00:12:56,280 --> 00:13:00,160 Speaker 1: an analyst and then a fund manager. So when you 187 00:13:00,240 --> 00:13:05,520 Speaker 1: have that common experience and common language, it's just so helpful. 188 00:13:05,960 --> 00:13:09,920 Speaker 1: So you would be between you and Lynch, right, So yeah, 189 00:13:10,040 --> 00:13:15,480 Speaker 1: one um Jeff Finnick, of course, you know, an unbelievably 190 00:13:15,559 --> 00:13:26,640 Speaker 1: talented analyst, UM and fund manager and investor started my year. 191 00:13:27,360 --> 00:13:29,880 Speaker 1: But he started in the spring because he had taken 192 00:13:29,880 --> 00:13:34,439 Speaker 1: a job in New York and then decided he wanted 193 00:13:34,480 --> 00:13:37,319 Speaker 1: to work for Fidelity, so he started in the spring. 194 00:13:37,400 --> 00:13:40,760 Speaker 1: But there were about seven of us, including Joel Tilling 195 00:13:40,880 --> 00:13:45,120 Speaker 1: has to started a little later that year, and Frankly Berry, 196 00:13:45,200 --> 00:13:49,560 Speaker 1: I was probably below average from my class. We you know, 197 00:13:49,640 --> 00:13:53,520 Speaker 1: we had a very strong class. But I was lucky 198 00:13:53,760 --> 00:13:59,920 Speaker 1: that I was assigned the retail stocks. And the retails 199 00:14:00,000 --> 00:14:04,520 Speaker 1: stocks were it was a large group of stores. You know, 200 00:14:04,600 --> 00:14:08,480 Speaker 1: consumer spending is something like two thirds of the US economy, 201 00:14:08,679 --> 00:14:12,679 Speaker 1: and they had all sorts of different stocks. You know, 202 00:14:12,880 --> 00:14:18,400 Speaker 1: Kmart and Sears were stodgy potential turnarounds, and then you 203 00:14:18,480 --> 00:14:22,200 Speaker 1: had the membership warehouse clubs were sort of the new 204 00:14:22,400 --> 00:14:26,440 Speaker 1: shiny concept that you had to really think hard about, 205 00:14:26,680 --> 00:14:29,360 Speaker 1: you know, what's this industry going to look like? And 206 00:14:29,400 --> 00:14:32,360 Speaker 1: then the department stores were sort of slower growers but 207 00:14:32,480 --> 00:14:35,960 Speaker 1: generating free cash flow. And you know, the Walmart was 208 00:14:36,560 --> 00:14:40,800 Speaker 1: the thorough bred, and you know it was really fun 209 00:14:40,920 --> 00:14:45,880 Speaker 1: and great and it was relatively understandable. So I think 210 00:14:46,240 --> 00:14:52,120 Speaker 1: I was exposed to many different types of stocks and managements. 211 00:14:52,160 --> 00:14:55,520 Speaker 1: All were people sort of people people, so you didn't 212 00:14:55,560 --> 00:14:58,520 Speaker 1: have to try to understand technology or science. It was 213 00:14:58,600 --> 00:15:02,120 Speaker 1: just you know, going into a store with a CEO 214 00:15:02,480 --> 00:15:05,360 Speaker 1: or a CFO and you know, seeing how they interacted 215 00:15:05,400 --> 00:15:08,960 Speaker 1: with the customer and looking at the prices and you know, 216 00:15:09,560 --> 00:15:13,600 Speaker 1: is this store appealing? So anyway, but you know, the 217 00:15:13,600 --> 00:15:16,520 Speaker 1: beauty of fidelities were all in the trenches together, and 218 00:15:17,000 --> 00:15:20,560 Speaker 1: you know, Peter and George and Bruce were in these 219 00:15:20,600 --> 00:15:24,000 Speaker 1: meetings with me and many others, and you know, it 220 00:15:24,160 --> 00:15:29,960 Speaker 1: was a really great sort of apprenticeship to watch, you know, 221 00:15:30,040 --> 00:15:35,240 Speaker 1: these great investors analyze different companies and understand, you know, 222 00:15:35,320 --> 00:15:39,920 Speaker 1: the idea of unit growth. If I think when I 223 00:15:40,040 --> 00:15:42,800 Speaker 1: first met Bernie Marcus, the founder of the Home Depot. 224 00:15:42,920 --> 00:15:45,600 Speaker 1: He might have had like forty stores and now they 225 00:15:45,640 --> 00:15:49,960 Speaker 1: have two thousand. But you know, the the thought was, 226 00:15:50,000 --> 00:15:54,160 Speaker 1: if it's working in Atlanta, Georgia, it can work in Florida. 227 00:15:54,200 --> 00:15:57,520 Speaker 1: And I remember when they first opened their stores and 228 00:15:57,560 --> 00:16:00,800 Speaker 1: they acquired some stores to expand in exist which didn't 229 00:16:00,840 --> 00:16:02,800 Speaker 1: work out as well. But when they first opened the 230 00:16:02,840 --> 00:16:05,160 Speaker 1: stores in California, you know, I mean it was literally 231 00:16:05,760 --> 00:16:08,960 Speaker 1: there was another concept across the street, and you know, 232 00:16:09,120 --> 00:16:11,880 Speaker 1: the Home Depot parking lot was near full and the 233 00:16:11,880 --> 00:16:14,400 Speaker 1: other store was sort of going into a bowling alley. 234 00:16:14,440 --> 00:16:18,000 Speaker 1: You know, it was virtually empty. So you know, part 235 00:16:18,000 --> 00:16:20,120 Speaker 1: of it is being practical, you know, sort of what 236 00:16:20,360 --> 00:16:23,720 Speaker 1: is actually happening. As I said earlier, Barry earnings per 237 00:16:23,800 --> 00:16:29,880 Speaker 1: share becomes sort of the north star for a growth investor. 238 00:16:30,040 --> 00:16:33,560 Speaker 1: And you know, if Colone Deepot was opening new stores 239 00:16:33,600 --> 00:16:36,320 Speaker 1: a year and they're old stores were generating let's say, 240 00:16:36,760 --> 00:16:39,160 Speaker 1: you know, five or ten percent growth and the margins 241 00:16:39,160 --> 00:16:41,640 Speaker 1: were going up and the r o I on the 242 00:16:41,680 --> 00:16:45,240 Speaker 1: new stores was high, you know, you start projecting out 243 00:16:46,440 --> 00:16:49,800 Speaker 1: growth and whatever that works out too, but you know, 244 00:16:50,080 --> 00:16:54,840 Speaker 1: doubling of earnings and three years with you know, the 245 00:16:54,880 --> 00:16:58,120 Speaker 1: potential for many, many more stores. So that was a 246 00:16:58,200 --> 00:17:01,520 Speaker 1: great insight for me. That helped me, you know, and 247 00:17:01,560 --> 00:17:05,080 Speaker 1: again I over thirty years. All I can tell you 248 00:17:05,200 --> 00:17:08,080 Speaker 1: is that I was there and I should have. You know, 249 00:17:08,160 --> 00:17:10,879 Speaker 1: the one of the great lessons learned Berry is I 250 00:17:10,920 --> 00:17:14,239 Speaker 1: should have bought more of these great growth stocks like 251 00:17:14,320 --> 00:17:17,480 Speaker 1: the Home Depot or you know, I was there when 252 00:17:17,480 --> 00:17:22,000 Speaker 1: Howard Schultz went public. I mean, you can't, you can't. 253 00:17:22,119 --> 00:17:25,439 Speaker 1: I mean it was two but again I was a 254 00:17:25,480 --> 00:17:31,000 Speaker 1: young fund manager. But picture this. You know, Schultz had 255 00:17:31,040 --> 00:17:34,920 Speaker 1: a hundred I think a hundred and forty cafes when 256 00:17:34,920 --> 00:17:37,280 Speaker 1: he opened up. They were all in Seattle and Portland. 257 00:17:37,359 --> 00:17:40,000 Speaker 1: I remember someone sitting next to me on the road 258 00:17:40,040 --> 00:17:43,919 Speaker 1: show lunch saying, you know, it might work in the 259 00:17:43,960 --> 00:17:47,520 Speaker 1: Pacific Northwest, but you know, they're tree huggers there and 260 00:17:47,560 --> 00:17:49,960 Speaker 1: they like, you know, to sit around in a coffee shop. 261 00:17:50,800 --> 00:17:53,040 Speaker 1: But it's not gonna work in New York, or it's 262 00:17:53,040 --> 00:17:56,680 Speaker 1: not gonna work in San Francisco. But the data showed, 263 00:17:57,040 --> 00:17:59,600 Speaker 1: you know, I believe or In Smith, who was a 264 00:17:59,640 --> 00:18:02,560 Speaker 1: CEF at the time, said they had opened a couple 265 00:18:02,600 --> 00:18:04,920 Speaker 1: of stores in San fran and they were all exceeding 266 00:18:04,920 --> 00:18:08,240 Speaker 1: their expectations, and you know the r O I s 267 00:18:08,280 --> 00:18:11,320 Speaker 1: and the new units were through the roof. I think 268 00:18:11,400 --> 00:18:16,680 Speaker 1: they were arithmetic was because they were leased units. It 269 00:18:16,800 --> 00:18:19,760 Speaker 1: costs two hundred fifty thousand dollars to open a Starbucks 270 00:18:19,840 --> 00:18:23,480 Speaker 1: way back when the stores were doing six hundred fifty 271 00:18:23,480 --> 00:18:28,280 Speaker 1: thousand of revenue and like year two and at twenty 272 00:18:28,520 --> 00:18:33,560 Speaker 1: percent EVA DOC or cash on cash unit volumes, so 273 00:18:33,560 --> 00:18:35,280 Speaker 1: they were you know, for two hundred fifty thousand, you 274 00:18:35,320 --> 00:18:37,879 Speaker 1: were getting a hundred and twenty five thousand dollars of 275 00:18:38,040 --> 00:18:42,480 Speaker 1: cash in like year two, which meant you could finance 276 00:18:43,240 --> 00:18:46,560 Speaker 1: rapid growth. And it was working. And you know, the 277 00:18:46,600 --> 00:18:50,080 Speaker 1: camp store sales, you know, the comp cafe snails were 278 00:18:50,119 --> 00:18:52,280 Speaker 1: double digit for the last three years. It was the 279 00:18:52,320 --> 00:18:56,040 Speaker 1: perfect story. So here's the lesson to your listeners. Barry. 280 00:18:56,400 --> 00:18:59,800 Speaker 1: The stock pops on day one or day two, and 281 00:19:00,480 --> 00:19:04,920 Speaker 1: it was always very expensive for what it was. It 282 00:19:05,000 --> 00:19:07,760 Speaker 1: was like thirty five thirty times the out ear estimate. 283 00:19:08,520 --> 00:19:11,639 Speaker 1: But the company continued to grow and grow and it 284 00:19:11,800 --> 00:19:15,320 Speaker 1: stayed expensive for like fifteen years. But it was a 285 00:19:15,320 --> 00:19:20,480 Speaker 1: great Yeah, it kept growing, it stayed expensive. So sometimes 286 00:19:20,480 --> 00:19:24,879 Speaker 1: an expensive stock that executes really well can be a 287 00:19:24,920 --> 00:19:28,240 Speaker 1: great story. You know, they added frappuccinos. They went out 288 00:19:28,240 --> 00:19:30,720 Speaker 1: to the overseas and it worked in China, but it 289 00:19:31,359 --> 00:19:33,920 Speaker 1: worked everywhere in the US, and you know, no one 290 00:19:33,960 --> 00:19:37,840 Speaker 1: else was able to replicate. I remember Pets came in 291 00:19:38,040 --> 00:19:41,400 Speaker 1: and this one and that one, and you know McDonald's 292 00:19:41,400 --> 00:19:44,280 Speaker 1: was going to offer you know, cheaper coffee and try 293 00:19:44,320 --> 00:19:47,919 Speaker 1: to upgrade. But anyway, so sometimes you have to say, 294 00:19:49,000 --> 00:19:53,520 Speaker 1: a truly outstanding franchise with a great management team and 295 00:19:53,560 --> 00:19:57,680 Speaker 1: a great business model can be a great stock. I mean, 296 00:19:57,680 --> 00:20:01,440 Speaker 1: the analogy in sports would be, you know, what do 297 00:20:01,560 --> 00:20:05,200 Speaker 1: you pay Michael Jordan's or one of these truly exceptional 298 00:20:05,240 --> 00:20:12,119 Speaker 1: athletes whatever, if they you know, hit the three pointers 299 00:20:12,320 --> 00:20:15,159 Speaker 1: and win the championship, You're going to pay them a 300 00:20:15,200 --> 00:20:18,280 Speaker 1: lot of money. So one of the lessons is that, 301 00:20:18,840 --> 00:20:21,600 Speaker 1: you know, better businesses are going to trade at higher 302 00:20:21,680 --> 00:20:25,159 Speaker 1: pease and you just have to accept that. Now, of course, 303 00:20:25,200 --> 00:20:29,760 Speaker 1: your listeners have to monitor. You know, a retail investor 304 00:20:29,880 --> 00:20:34,159 Speaker 1: can go into the stores. They're out there comparing you 305 00:20:34,200 --> 00:20:36,960 Speaker 1: know what Starbucks is doing, the quality of the coffee, 306 00:20:37,000 --> 00:20:40,159 Speaker 1: the experience in the cafe. You know how is the 307 00:20:40,200 --> 00:20:44,040 Speaker 1: mobile order and pay experience, you know how is the app, 308 00:20:44,200 --> 00:20:47,439 Speaker 1: is it easy to use? Is it delighting me? You know, 309 00:20:47,520 --> 00:20:50,680 Speaker 1: some of the great entrepreneurs in the last decade of 310 00:20:50,960 --> 00:20:53,760 Speaker 1: talk to me about, you know, what would the world 311 00:20:53,920 --> 00:20:56,840 Speaker 1: look like without my company? And you know, during the 312 00:20:56,880 --> 00:20:59,440 Speaker 1: COVID pandemic, I think a lot of people have said, 313 00:21:00,040 --> 00:21:04,040 Speaker 1: you know, if I didn't have Amazon, my world would 314 00:21:04,040 --> 00:21:08,159 Speaker 1: be significantly worse. And isn't that a great place to 315 00:21:08,240 --> 00:21:12,280 Speaker 1: be if you're a partner with you know, Jeff Bezos 316 00:21:12,359 --> 00:21:16,160 Speaker 1: and the Amazon team, or you know, there are other 317 00:21:16,680 --> 00:21:20,120 Speaker 1: a handful of companies that are you know, Costco, I 318 00:21:20,160 --> 00:21:23,520 Speaker 1: think is one of those special companies that have delighted 319 00:21:23,560 --> 00:21:27,560 Speaker 1: their members over many years. And you know, so many 320 00:21:27,600 --> 00:21:29,760 Speaker 1: people said, my gosh, do you believe you know, when 321 00:21:29,800 --> 00:21:32,680 Speaker 1: I just got a Costco it was such high quality 322 00:21:32,760 --> 00:21:37,280 Speaker 1: and such a great price. That's the type of company 323 00:21:37,320 --> 00:21:42,320 Speaker 1: that over thirty years, you know, used there to say, gosh, 324 00:21:42,359 --> 00:21:45,480 Speaker 1: I wish I had owned more of those. And by 325 00:21:45,520 --> 00:21:48,720 Speaker 1: the way, it's it's not it's a little easier than 326 00:21:49,320 --> 00:21:51,960 Speaker 1: you know. When I first started in the early nineties 327 00:21:52,600 --> 00:21:56,119 Speaker 1: as a fund manager, I was trying to find companies 328 00:21:56,160 --> 00:21:57,960 Speaker 1: that no one else had heard of, that no one 329 00:21:58,000 --> 00:22:01,359 Speaker 1: else owned, and you know, there are a lot of 330 00:22:03,080 --> 00:22:07,000 Speaker 1: tough businesses that are selling cheap, and I was running 331 00:22:07,040 --> 00:22:10,520 Speaker 1: around saying cheap and getting better, Let's try to find 332 00:22:10,520 --> 00:22:15,440 Speaker 1: a turnaround. And you know, turnarounds sometimes work. They can 333 00:22:15,480 --> 00:22:19,879 Speaker 1: be really awesome stocks when they do work. But the 334 00:22:19,960 --> 00:22:23,960 Speaker 1: degree of difficulty is higher than just saying, my gosh. 335 00:22:24,040 --> 00:22:27,480 Speaker 1: You know, Google is just unbelievable. You know, how did 336 00:22:27,520 --> 00:22:31,000 Speaker 1: we live without Google? Or you know, how did we live, 337 00:22:31,200 --> 00:22:34,439 Speaker 1: you know, without Amazon? For example, You're coming up on 338 00:22:34,440 --> 00:22:37,480 Speaker 1: your thirtieth anniversary right by the time this broadcast, it 339 00:22:37,520 --> 00:22:43,600 Speaker 1: will be September. You started at the contra funds in September? 340 00:22:45,560 --> 00:22:48,320 Speaker 1: Did you ever and then imagine you would be running 341 00:22:48,880 --> 00:22:54,639 Speaker 1: these same exact funds for thirty years? Honestly buried? No, 342 00:22:55,520 --> 00:22:58,159 Speaker 1: I think you know, again, as I said, Fidelity is 343 00:22:58,160 --> 00:23:01,600 Speaker 1: a great place to manage money. There's some very very 344 00:23:01,600 --> 00:23:05,440 Speaker 1: talented and and fun people, and we you know, continue 345 00:23:05,480 --> 00:23:08,600 Speaker 1: to attract some really good people. But it's it's the 346 00:23:08,680 --> 00:23:13,280 Speaker 1: kind of place where ordinary folks can do extraordinary things 347 00:23:13,320 --> 00:23:17,080 Speaker 1: when they work together and they communicate. And you know, 348 00:23:17,440 --> 00:23:19,919 Speaker 1: I'm sort of the Woody Allen of Fidelity. I just 349 00:23:20,000 --> 00:23:23,160 Speaker 1: show up, and you know, I show up to more meetings, 350 00:23:23,200 --> 00:23:27,240 Speaker 1: and you know, I remember one year I had an 351 00:23:27,280 --> 00:23:31,440 Speaker 1: odd seven am meeting, which is early. Usually our meeting 352 00:23:31,480 --> 00:23:34,840 Speaker 1: start at eight am, but somebody wanted to see me 353 00:23:35,080 --> 00:23:38,159 Speaker 1: or somebody was there, so we did a seven am meeting. 354 00:23:39,600 --> 00:23:42,320 Speaker 1: So then the meeting ends at eight and I'm kind 355 00:23:42,320 --> 00:23:46,760 Speaker 1: of hungry, and I see that somebody else is hosting 356 00:23:46,760 --> 00:23:50,040 Speaker 1: an eight am meeting that hadn't started. So I go 357 00:23:50,160 --> 00:23:54,119 Speaker 1: in to grab a muffin, and then the host and 358 00:23:54,160 --> 00:23:58,520 Speaker 1: the management walk in. I think it was Joel hosting 359 00:23:58,560 --> 00:24:01,879 Speaker 1: an Irish bank, so I was like, oh, hi, and 360 00:24:01,920 --> 00:24:03,639 Speaker 1: they thought I was there to see the meeting. What 361 00:24:03,800 --> 00:24:08,240 Speaker 1: I really wanted a muffin, But anyway, I was like, yeah, sure, 362 00:24:08,480 --> 00:24:11,520 Speaker 1: I'll listen to your story. You know, I had to 363 00:24:11,560 --> 00:24:15,320 Speaker 1: fudge it, and so we listened, and it turned out 364 00:24:15,440 --> 00:24:19,760 Speaker 1: that the Irish economy was coming back, and I don't 365 00:24:19,760 --> 00:24:23,159 Speaker 1: know because it was Ireland. The stock was like an 366 00:24:23,200 --> 00:24:26,840 Speaker 1: eight times earnings and there were only like three banks 367 00:24:26,880 --> 00:24:30,160 Speaker 1: of any size in Ireland. And you know, it turned 368 00:24:30,160 --> 00:24:33,159 Speaker 1: out there's a certain serendipity involved with the business that 369 00:24:33,280 --> 00:24:36,760 Speaker 1: again the fidelity, there's so many companies. Sometimes Joel and 370 00:24:36,800 --> 00:24:40,000 Speaker 1: I are just like what do you you know, what's 371 00:24:40,040 --> 00:24:42,760 Speaker 1: going on right now? Is there a call that could 372 00:24:42,760 --> 00:24:45,400 Speaker 1: be of interest? There's there a company management coming in, 373 00:24:46,080 --> 00:24:49,640 Speaker 1: you know every week, you know, on Fridays, I look 374 00:24:49,720 --> 00:24:52,840 Speaker 1: at the schedule for the next week and it's just like, oh, 375 00:24:52,840 --> 00:24:54,800 Speaker 1: these are two companies that are in at the same time. 376 00:24:54,840 --> 00:24:57,720 Speaker 1: We've got to move one of them, or wow, you know, 377 00:24:57,880 --> 00:25:01,080 Speaker 1: I definitely have to see this company because you know, 378 00:25:01,119 --> 00:25:04,679 Speaker 1: oil and gas is way out of favor, and you know, 379 00:25:04,760 --> 00:25:08,240 Speaker 1: this management team has done a decent job surviving over time, 380 00:25:08,359 --> 00:25:14,040 Speaker 1: and you know, the ability to stay current on lots 381 00:25:14,040 --> 00:25:17,880 Speaker 1: of industries and lots of geographies, and and then there's 382 00:25:17,880 --> 00:25:20,040 Speaker 1: sort of luck every once in a while you meet 383 00:25:20,119 --> 00:25:25,679 Speaker 1: managements that help you. I mean again, over thirty years, 384 00:25:26,119 --> 00:25:32,439 Speaker 1: Verry one important. You know clearly that the you know, 385 00:25:32,480 --> 00:25:39,240 Speaker 1: the oh one Internet bubble burst was you know, an 386 00:25:39,240 --> 00:25:42,879 Speaker 1: important event. But what was most important, I think was 387 00:25:42,960 --> 00:25:48,160 Speaker 1: the aftermath. In this sort of O three oh four period, 388 00:25:48,960 --> 00:25:52,120 Speaker 1: most growth investors were still hiding under their desks, they 389 00:25:52,119 --> 00:25:56,160 Speaker 1: were shelf stocked. In many cases, they were experiencing outflows. 390 00:25:57,720 --> 00:26:02,320 Speaker 1: And I remember again and just you know, seeing on 391 00:26:02,400 --> 00:26:09,119 Speaker 1: our meeting schedule a company meeting for ask Jeeves a 392 00:26:09,480 --> 00:26:15,639 Speaker 1: s kJ early early search engine exactly, and I believe 393 00:26:15,680 --> 00:26:19,600 Speaker 1: it's now owned by Interactive Group. But you know, again, 394 00:26:19,720 --> 00:26:23,760 Speaker 1: it's like what motivated me to say, I think I 395 00:26:23,760 --> 00:26:27,199 Speaker 1: should go and hear the story. The stock had I 396 00:26:27,200 --> 00:26:31,359 Speaker 1: think had gone from like five to a hundred and 397 00:26:31,720 --> 00:26:34,800 Speaker 1: was back to like bottomed at two, and it was 398 00:26:34,840 --> 00:26:38,399 Speaker 1: at eight. So I said, you know, a hundred to 399 00:26:38,520 --> 00:26:44,720 Speaker 1: eight means expectations are low. Maybe I'll learn something, you know, 400 00:26:44,760 --> 00:26:47,359 Speaker 1: and again at Fidelity, you can you know, between you 401 00:26:47,400 --> 00:26:49,400 Speaker 1: and me, I can go in in an half hour, 402 00:26:50,480 --> 00:26:54,639 Speaker 1: learn something and then politely leave the You know, I 403 00:26:54,640 --> 00:26:57,760 Speaker 1: guess I take my job very seriously. You know, I 404 00:26:57,800 --> 00:27:01,960 Speaker 1: have pictures of my shareholders in my office, and I 405 00:27:02,119 --> 00:27:05,720 Speaker 1: just decided, you know, if I'm going to do my job, 406 00:27:06,119 --> 00:27:08,640 Speaker 1: I'm in the I'm in the fashion industry. I've got 407 00:27:08,720 --> 00:27:14,600 Speaker 1: to look and consider all possibilities of management has come 408 00:27:14,840 --> 00:27:17,000 Speaker 1: I think, asked Jeeves was based in New York, not 409 00:27:17,160 --> 00:27:20,960 Speaker 1: in California. But you know, if management has traveled all 410 00:27:20,960 --> 00:27:24,680 Speaker 1: the way to Boston right to our offices to tell 411 00:27:24,760 --> 00:27:29,399 Speaker 1: us what's going on, I should at least attend, and 412 00:27:29,480 --> 00:27:33,320 Speaker 1: I should be ideally prepared. I've just told you two stories, 413 00:27:33,400 --> 00:27:38,800 Speaker 1: Barry where I wasn't prepared, but you know, engage with management, 414 00:27:38,880 --> 00:27:44,000 Speaker 1: asked some intelligent questions. Try to understand and empathize with management, 415 00:27:44,080 --> 00:27:46,320 Speaker 1: you know, sort of what has happened, Where are you going? 416 00:27:46,480 --> 00:27:50,040 Speaker 1: What your goal is? So asked Jeeves had hired a 417 00:27:50,080 --> 00:27:54,919 Speaker 1: new CEO, right young man, and he said, our niche 418 00:27:55,119 --> 00:27:59,760 Speaker 1: is natural language search, which means in Google you would 419 00:28:00,080 --> 00:28:05,359 Speaker 1: hype in, you know, population Morocco, and Google would figure 420 00:28:05,400 --> 00:28:07,560 Speaker 1: out what you wanted. But and asked Jeeves, you would 421 00:28:07,600 --> 00:28:12,200 Speaker 1: type in what is the population of Morocco and that 422 00:28:12,400 --> 00:28:14,719 Speaker 1: you know, they had like one, one or two percent 423 00:28:14,800 --> 00:28:17,720 Speaker 1: market share and the goal was to go to five 424 00:28:17,840 --> 00:28:20,680 Speaker 1: or six and that was going to sort of lead 425 00:28:20,720 --> 00:28:25,640 Speaker 1: them to profitability and in a much bigger business. So 426 00:28:26,200 --> 00:28:29,440 Speaker 1: at some point I forget we had a young search 427 00:28:30,000 --> 00:28:32,399 Speaker 1: engine analysts. I guess I can't remember who was hosted 428 00:28:32,400 --> 00:28:35,600 Speaker 1: in a meeting, maybe a small cap analyst or fund manager. 429 00:28:35,640 --> 00:28:39,920 Speaker 1: But I said, can we just step back and explain, 430 00:28:40,120 --> 00:28:42,720 Speaker 1: you know, the lay of the land for search engines? 431 00:28:44,520 --> 00:28:48,280 Speaker 1: So you know, he sort of flippantly said, well, you know, 432 00:28:49,080 --> 00:28:54,240 Speaker 1: Google was crushing everybody. They have market share, plus they're 433 00:28:54,280 --> 00:28:58,040 Speaker 1: doing the search for I think it was a o 434 00:28:58,280 --> 00:29:01,320 Speaker 1: L so they had forty percent plus the fifteen or 435 00:29:02,040 --> 00:29:04,880 Speaker 1: that was a o L related search, So they had 436 00:29:04,920 --> 00:29:09,360 Speaker 1: market share and they were crushing everybody. And then I 437 00:29:09,400 --> 00:29:14,680 Speaker 1: think Yahoo had bought overture and maybe Microsoft had some 438 00:29:14,760 --> 00:29:17,880 Speaker 1: skin in the game somewhere. But you know, it was 439 00:29:17,920 --> 00:29:22,440 Speaker 1: like fifty five to sixty then player and then a several, 440 00:29:23,040 --> 00:29:26,120 Speaker 1: you know, very smaller players. So again, you know, Barry, 441 00:29:26,280 --> 00:29:28,479 Speaker 1: I don't know what happened, but I just you know, 442 00:29:29,160 --> 00:29:32,360 Speaker 1: what's the key to my success? I just say why 443 00:29:32,480 --> 00:29:36,920 Speaker 1: you know, or please elaborate. So I said, God, why 444 00:29:37,120 --> 00:29:44,320 Speaker 1: is Google doing so well? And the answer was, you know, 445 00:29:44,880 --> 00:29:48,240 Speaker 1: they have a better algorithm, they have a larger index 446 00:29:49,000 --> 00:29:52,440 Speaker 1: because they have so much market share, they're seeing more searches, 447 00:29:53,280 --> 00:29:57,640 Speaker 1: and you know, they're just innovating faster. And I think, 448 00:29:57,800 --> 00:30:00,280 Speaker 1: you know, as I said, you know the wout and 449 00:30:00,320 --> 00:30:02,640 Speaker 1: I would have to check my notes, and if you want, Barry, 450 00:30:02,680 --> 00:30:05,360 Speaker 1: I do have my notes from that meeting. You know, 451 00:30:05,680 --> 00:30:09,520 Speaker 1: they are crushing everybody. There is no way we're going 452 00:30:09,560 --> 00:30:12,640 Speaker 1: to catch Google. We do our our plan does not 453 00:30:13,400 --> 00:30:15,920 Speaker 1: We don't need to beat Google at what they're doing. 454 00:30:16,120 --> 00:30:18,920 Speaker 1: We're going to play in this little niche. So again, 455 00:30:19,040 --> 00:30:23,160 Speaker 1: by that point, Barry, I was already thirteen years into 456 00:30:23,200 --> 00:30:26,320 Speaker 1: contrafund and I had developed this idea of the best 457 00:30:26,360 --> 00:30:31,280 Speaker 1: of breed and I, you know, listen politely to the 458 00:30:31,600 --> 00:30:36,400 Speaker 1: Asketeves story for another couple of minutes, and I excuse myself, 459 00:30:36,440 --> 00:30:39,960 Speaker 1: and in my mind I was thinking I want to 460 00:30:40,000 --> 00:30:43,080 Speaker 1: own Google. I don't you know, That's what I was 461 00:30:43,240 --> 00:30:49,479 Speaker 1: hearing between the lines. They competitive exactly. So again, you know, 462 00:30:49,640 --> 00:30:53,600 Speaker 1: by attending meetings, by paying attention, you know, listen, your 463 00:30:53,640 --> 00:30:58,520 Speaker 1: readers can listen to podcasts, they can listen to YouTube interviews, 464 00:30:58,520 --> 00:31:01,200 Speaker 1: which I would highly recommend they do. They can read 465 00:31:01,240 --> 00:31:03,480 Speaker 1: the papers, they can pay attention. They can watch what 466 00:31:03,520 --> 00:31:05,560 Speaker 1: their kids are doing, they watch what their friends are doing. 467 00:31:05,640 --> 00:31:10,320 Speaker 1: But you know, that was a data point by a 468 00:31:10,320 --> 00:31:15,320 Speaker 1: well placed competitor that clearly showed that Google was doing 469 00:31:15,400 --> 00:31:18,560 Speaker 1: special things and was a special company. So, and I 470 00:31:18,600 --> 00:31:22,200 Speaker 1: think at that time, maybe it was oh three, they 471 00:31:22,200 --> 00:31:25,440 Speaker 1: were already perhaps a couple of articles about you know, 472 00:31:25,520 --> 00:31:29,000 Speaker 1: Google hiring Eric Schmidt as a CEO, preparing to go public, 473 00:31:29,080 --> 00:31:33,200 Speaker 1: whatever it was. There was some ground swell of articles 474 00:31:33,200 --> 00:31:38,840 Speaker 1: about Google um and so I was very interested when 475 00:31:39,200 --> 00:31:42,440 Speaker 1: Google announced that we're going to go public, and again 476 00:31:42,560 --> 00:31:47,280 Speaker 1: the backdrop was the growth investor was struggling the mark. 477 00:31:47,360 --> 00:31:49,719 Speaker 1: I can't remember exactly what was happening in the market, 478 00:31:49,800 --> 00:31:55,000 Speaker 1: but they came public in August of O four. August. 479 00:31:55,240 --> 00:31:58,360 Speaker 1: You know, here we are in August of you know, 480 00:31:58,640 --> 00:32:02,280 Speaker 1: things quiet down a little bit, people are taking vacation. 481 00:32:03,480 --> 00:32:06,240 Speaker 1: But I was there front and center. Sarah gey Brand 482 00:32:06,240 --> 00:32:09,360 Speaker 1: and Eric Schmidt, you know, came on the road show 483 00:32:09,520 --> 00:32:13,760 Speaker 1: and again, you know, do a little preparation opened the perspectus. 484 00:32:14,560 --> 00:32:18,600 Speaker 1: And Google had doubled the revenue in O two, double 485 00:32:18,680 --> 00:32:21,840 Speaker 1: the revenue and oh three, and doubled the revenue in 486 00:32:21,880 --> 00:32:24,920 Speaker 1: the first quarter of OH four. It was like, oh 487 00:32:25,000 --> 00:32:28,840 Speaker 1: my gosh, they are doing something right. You know, by 488 00:32:28,880 --> 00:32:33,200 Speaker 1: the way operating margins were like or even then they 489 00:32:33,240 --> 00:32:35,440 Speaker 1: had a billion dollars of cash on the balance sheet 490 00:32:35,520 --> 00:32:41,760 Speaker 1: before they went public. That's amazing. Yeah, aga, I'm gonna share. 491 00:32:42,000 --> 00:32:44,960 Speaker 1: I'm gonna share a very quick Google story. And it 492 00:32:45,160 --> 00:32:48,479 Speaker 1: was that period. It was two thousand and two and 493 00:32:48,520 --> 00:32:51,320 Speaker 1: I had been publishing for a few years on Yahoo 494 00:32:51,760 --> 00:32:55,240 Speaker 1: Yahoo Geo Cities, and I get an invite to be 495 00:32:55,320 --> 00:32:59,080 Speaker 1: a beta tester for one of the early versions of Google, 496 00:32:59,520 --> 00:33:01,960 Speaker 1: and you just had to use it for ten minutes 497 00:33:02,000 --> 00:33:06,040 Speaker 1: in Oh my god, this is so much better than anything. 498 00:33:06,120 --> 00:33:09,600 Speaker 1: You could find whatever you want almost instantly. So I 499 00:33:09,760 --> 00:33:12,160 Speaker 1: right back and say happy to be a beta tester. 500 00:33:12,520 --> 00:33:15,400 Speaker 1: By the way, I'm in finance. Do you guys need 501 00:33:15,400 --> 00:33:17,800 Speaker 1: any money? I'd love to make an investment day Right back, 502 00:33:18,240 --> 00:33:20,720 Speaker 1: We're good. Thanks. Anyway, I want to say that was 503 00:33:21,040 --> 00:33:24,840 Speaker 1: on or O two, but um, it was so clearly, 504 00:33:25,600 --> 00:33:28,760 Speaker 1: so clearly superior. So will let's talk a little bit 505 00:33:28,800 --> 00:33:32,440 Speaker 1: about your process. How do you look at a company? 506 00:33:32,440 --> 00:33:36,920 Speaker 1: Where do you begin? Not every Google falls into your 507 00:33:37,000 --> 00:33:40,760 Speaker 1: lap through competitors, how do you start the process of 508 00:33:40,800 --> 00:33:45,120 Speaker 1: deciding what you want to think about purchasing. Yeah, that's 509 00:33:45,120 --> 00:33:49,200 Speaker 1: a great question, Barry, and I would just urge your 510 00:33:49,280 --> 00:33:55,680 Speaker 1: listeners that if you want to invest, you know wisely 511 00:33:55,760 --> 00:33:58,120 Speaker 1: over the long term. You know you have to make 512 00:33:58,160 --> 00:34:02,080 Speaker 1: a commitment. You know it's a very competitive world, but 513 00:34:02,600 --> 00:34:06,840 Speaker 1: you know, know yourself, stay within your circle of competence. 514 00:34:06,840 --> 00:34:09,200 Speaker 1: I mean, Warren Buffett is you know, the greatest investor 515 00:34:09,239 --> 00:34:12,360 Speaker 1: of our generation, and you know he's out there on YouTube. 516 00:34:12,360 --> 00:34:15,200 Speaker 1: Please listen to a couple of interviews with Warren Buffett. 517 00:34:15,480 --> 00:34:19,480 Speaker 1: He always talks about staying within his area of expertise, 518 00:34:19,640 --> 00:34:22,520 Speaker 1: and you know, he knows the insurance industry really well, 519 00:34:22,560 --> 00:34:26,920 Speaker 1: the financial industry knows consumer products very well and in 520 00:34:26,920 --> 00:34:30,799 Speaker 1: a fascinating way. Barry, he always says, you know, when 521 00:34:30,840 --> 00:34:33,239 Speaker 1: the Internet hit, you know, I was curious if the 522 00:34:33,239 --> 00:34:35,000 Speaker 1: Internet was going to affect the people are gonna be 523 00:34:35,080 --> 00:34:37,560 Speaker 1: drinking coca cola or chewing gum, and he decided not. 524 00:34:37,880 --> 00:34:42,200 Speaker 1: But you know, you have to monitor what's happening. But 525 00:34:42,560 --> 00:34:44,920 Speaker 1: you know, I'm interested in companies that I think are 526 00:34:44,960 --> 00:34:48,120 Speaker 1: going to be bigger and better in the next you 527 00:34:48,160 --> 00:34:51,839 Speaker 1: know call of three to five, seven years. And I'm 528 00:34:51,880 --> 00:34:55,600 Speaker 1: interested in companies that are doing well or getting better 529 00:34:55,800 --> 00:34:58,839 Speaker 1: right now. That was one of the great you know 530 00:34:58,920 --> 00:35:02,520 Speaker 1: insights you talking to Peter Lynch, working with Peter Lynch, 531 00:35:02,600 --> 00:35:07,400 Speaker 1: watching Peter Lynch, you know, especially the small and MidCap companies. 532 00:35:07,440 --> 00:35:09,280 Speaker 1: I mean, you know, as we talked about with Google, 533 00:35:09,320 --> 00:35:13,279 Speaker 1: I mean, if if you're a billion in revenues, you know, 534 00:35:13,440 --> 00:35:16,360 Speaker 1: why shouldn't you be growing much faster than a company 535 00:35:16,440 --> 00:35:19,520 Speaker 1: with a hundred billions of revenues? And you know, so 536 00:35:19,920 --> 00:35:24,799 Speaker 1: if you really have something special, consumers should know it 537 00:35:24,920 --> 00:35:28,520 Speaker 1: and see it and you know, want it. So I 538 00:35:28,920 --> 00:35:33,920 Speaker 1: am intrigued with the subset of companies that are growing 539 00:35:34,120 --> 00:35:40,239 Speaker 1: quickly and usually, frankly Berry, it's easier to find, you know, 540 00:35:40,320 --> 00:35:45,680 Speaker 1: to go from the specific company to the sort of 541 00:35:45,719 --> 00:35:49,360 Speaker 1: neighborhood or the general theme that it is to start 542 00:35:49,480 --> 00:35:54,520 Speaker 1: a priori and say, oh, gosh, the Internet. Therefore, you know, 543 00:35:54,560 --> 00:35:57,040 Speaker 1: I'm going to find some internet companies for me. It's 544 00:35:57,760 --> 00:36:01,000 Speaker 1: you know, starting bottoms up. And you know, I think 545 00:36:01,080 --> 00:36:05,720 Speaker 1: your listeners and you know, potential investors are well served 546 00:36:05,719 --> 00:36:10,000 Speaker 1: by saying, Okay, what has this company done in the 547 00:36:10,080 --> 00:36:13,759 Speaker 1: last five years? You know, have they grown their revenues, 548 00:36:14,320 --> 00:36:18,480 Speaker 1: have they improved their margins? You know, have they expanded 549 00:36:18,480 --> 00:36:23,160 Speaker 1: into new markets? You know, and then try to understand 550 00:36:23,200 --> 00:36:26,560 Speaker 1: what management wants to do in the next five years 551 00:36:26,640 --> 00:36:31,480 Speaker 1: and try to decide, you know, what you think the 552 00:36:31,520 --> 00:36:36,120 Speaker 1: likelihood of that management team to execute on their plan. 553 00:36:36,600 --> 00:36:40,839 Speaker 1: And you know, so I'm a little concerned when you know, 554 00:36:41,440 --> 00:36:45,839 Speaker 1: these special purpose acquisition companies are coming and you know, 555 00:36:45,960 --> 00:36:48,400 Speaker 1: they really don't have a track record. So you know, 556 00:36:48,480 --> 00:36:51,120 Speaker 1: I always say, let's see what you buy and what 557 00:36:51,280 --> 00:36:54,640 Speaker 1: you pay and try to assess the management team that's 558 00:36:54,680 --> 00:36:57,399 Speaker 1: doing the buying, and you know, what have they done 559 00:36:57,440 --> 00:37:00,719 Speaker 1: if they sort of good at you know, rolling up 560 00:37:00,760 --> 00:37:03,359 Speaker 1: companies but not so good at integrating them. I'm not 561 00:37:03,400 --> 00:37:05,920 Speaker 1: that interested. How much of this is art and how 562 00:37:06,000 --> 00:37:08,040 Speaker 1: much of this is science? I was going to ask 563 00:37:08,080 --> 00:37:12,040 Speaker 1: it is this a qualitative assessment? Is this a quantitative assessment? 564 00:37:12,480 --> 00:37:16,920 Speaker 1: But you strike me as someone who is pre naturally 565 00:37:17,120 --> 00:37:23,640 Speaker 1: insightful at evaluating companies, managements, and products. It's not just 566 00:37:24,280 --> 00:37:26,520 Speaker 1: here's the numbers. Anybody can look at the cage or 567 00:37:26,520 --> 00:37:30,719 Speaker 1: anybody can look at the IBADA. Not everybody can consistently 568 00:37:30,840 --> 00:37:34,480 Speaker 1: pick companies that beat the index. So so, how much 569 00:37:34,560 --> 00:37:37,640 Speaker 1: of this is will dan Off magic and how much 570 00:37:37,640 --> 00:37:41,759 Speaker 1: of this is something else? It's probably a lot of 571 00:37:41,800 --> 00:37:45,960 Speaker 1: something else, Barry, because I don't have that much magic, 572 00:37:46,040 --> 00:37:48,520 Speaker 1: and I certainly after thirty years, I'm not sure if 573 00:37:48,520 --> 00:37:52,000 Speaker 1: I have any magic left. But it's it's competitive and 574 00:37:52,120 --> 00:37:54,960 Speaker 1: you have to play to your strengths. And you know, 575 00:37:55,360 --> 00:37:58,920 Speaker 1: as I said, one of the advantages of of you know, 576 00:37:59,000 --> 00:38:03,480 Speaker 1: a fidelity as the management teams are willing to talk 577 00:38:03,560 --> 00:38:07,239 Speaker 1: to us and and you know, share some of the 578 00:38:07,320 --> 00:38:12,040 Speaker 1: insights that they have and ideally, you know, you're in 579 00:38:12,080 --> 00:38:14,840 Speaker 1: the business of asking good questions. I'm in the business 580 00:38:14,920 --> 00:38:19,400 Speaker 1: of asking good questions. So I do try to empathize 581 00:38:19,440 --> 00:38:24,040 Speaker 1: with management. And you'd be surprised, Barry, even the most 582 00:38:24,160 --> 00:38:29,879 Speaker 1: successful CEOs like to be recognized. They like to be 583 00:38:29,960 --> 00:38:33,480 Speaker 1: thanked for their efforts. You know, they like to be 584 00:38:33,600 --> 00:38:38,480 Speaker 1: treated as you know, sort of guests and as you know, 585 00:38:38,640 --> 00:38:42,719 Speaker 1: special people. So when these managements come to Boston, you know, 586 00:38:42,800 --> 00:38:45,480 Speaker 1: I like to be prepared. I like to offer them, 587 00:38:45,520 --> 00:38:48,080 Speaker 1: you know, some water or coffee or a doughnut or 588 00:38:48,080 --> 00:38:51,800 Speaker 1: whatever they want. And you know, sometimes we have lunches 589 00:38:51,880 --> 00:38:54,640 Speaker 1: and it's just a matter of you know, what do 590 00:38:54,680 --> 00:38:56,960 Speaker 1: you like for lunch? You know, I don't want you 591 00:38:57,000 --> 00:39:01,120 Speaker 1: to have a cheeseburger if you don't like cheeseburger. So anyway, 592 00:39:01,360 --> 00:39:06,239 Speaker 1: you know, I do think that a little empathy as 593 00:39:06,280 --> 00:39:12,239 Speaker 1: an investor goes a long way. And you know, I 594 00:39:12,320 --> 00:39:16,160 Speaker 1: do think that if if you step back and try 595 00:39:16,200 --> 00:39:20,439 Speaker 1: to put yourself in the shoes of an entrepreneur and 596 00:39:20,560 --> 00:39:24,400 Speaker 1: think about, you know, what is you know this CEO 597 00:39:25,320 --> 00:39:30,040 Speaker 1: really thinking about, And you know that I think makes 598 00:39:30,080 --> 00:39:35,400 Speaker 1: you a better investor as well, because so often, you know, 599 00:39:35,440 --> 00:39:39,719 Speaker 1: they've had a big idea. They've had an insight, you know, 600 00:39:39,800 --> 00:39:43,240 Speaker 1: the Michael Dell let's go direct. You know, the PC 601 00:39:43,440 --> 00:39:46,560 Speaker 1: business was it was a commodity business, but he figured out, 602 00:39:47,080 --> 00:39:49,720 Speaker 1: you know, a better way to get closer to his customer. 603 00:39:49,840 --> 00:39:52,839 Speaker 1: But you know, when you think back to you know 604 00:39:53,000 --> 00:39:55,120 Speaker 1: someone I think he was in high school and he 605 00:39:55,239 --> 00:39:59,120 Speaker 1: started to you know, take computers apart and put them 606 00:39:59,120 --> 00:40:03,600 Speaker 1: back together and add certain features. You know, I think 607 00:40:03,600 --> 00:40:07,240 Speaker 1: he was adding sloppy disk drives or hard disk drives. 608 00:40:07,239 --> 00:40:09,440 Speaker 1: I forget he you know, he he was able to 609 00:40:09,520 --> 00:40:12,919 Speaker 1: soup up you know, a basic IBM PC and then 610 00:40:13,800 --> 00:40:16,680 Speaker 1: other PCs to make them better. You know, it's just 611 00:40:16,760 --> 00:40:20,160 Speaker 1: like this guy has a passion for what he's doing 612 00:40:21,080 --> 00:40:25,080 Speaker 1: and try to tap into you know, where do you 613 00:40:25,120 --> 00:40:29,600 Speaker 1: see the bigger opportunities, Why are you doing well? Where 614 00:40:29,600 --> 00:40:32,960 Speaker 1: do you think your vulnerabilities are? And if you have 615 00:40:33,160 --> 00:40:38,240 Speaker 1: these discussions early on, you know, in your learning about 616 00:40:38,239 --> 00:40:43,960 Speaker 1: a company, maybe later, you know, three or four years 617 00:40:43,960 --> 00:40:48,200 Speaker 1: down the road, that becomes a really important issue that 618 00:40:48,320 --> 00:40:52,719 Speaker 1: you know, these entrepreneurs often have a sixth sense of 619 00:40:53,920 --> 00:40:56,640 Speaker 1: you know, what they need to do. And and then 620 00:40:56,680 --> 00:41:01,879 Speaker 1: of course hopefully they're planting seas and you know, strengthening 621 00:41:01,920 --> 00:41:05,720 Speaker 1: their company, hiring new executives that can you know, prepare 622 00:41:05,760 --> 00:41:09,120 Speaker 1: them for whatever competitive onslaught or the change in the 623 00:41:09,200 --> 00:41:12,600 Speaker 1: market so that they can capitalize on it. But you know, 624 00:41:13,239 --> 00:41:16,279 Speaker 1: you do you have to decide, you know, is the 625 00:41:16,360 --> 00:41:19,880 Speaker 1: executive in it for the money or in it to 626 00:41:19,960 --> 00:41:22,680 Speaker 1: build something really special. I mean we talked about, you know, 627 00:41:23,120 --> 00:41:26,480 Speaker 1: am I trying to build a company where people are 628 00:41:26,480 --> 00:41:28,520 Speaker 1: going to say, my gosh, I can't. You know the 629 00:41:28,560 --> 00:41:32,560 Speaker 1: world is a better place because of you know, Instagram 630 00:41:32,680 --> 00:41:39,080 Speaker 1: or What's app or um you know whatever. You know, Microsoft, 631 00:41:39,640 --> 00:41:42,640 Speaker 1: you know teams. You know, it's a different it's a 632 00:41:42,719 --> 00:41:45,239 Speaker 1: it's a it's another way of looking at things. And 633 00:41:45,320 --> 00:41:47,279 Speaker 1: you know, I think something like a new company like 634 00:41:47,320 --> 00:41:54,440 Speaker 1: Shopify really is dedicated to making entrepreneurs, you know, more successful, 635 00:41:54,960 --> 00:42:01,560 Speaker 1: helping merchants sell online in a very sort of easy way. 636 00:42:01,600 --> 00:42:04,520 Speaker 1: And you know they're building you know what seems to 637 00:42:04,560 --> 00:42:07,640 Speaker 1: be a very powerful business and you know it's taking 638 00:42:07,719 --> 00:42:10,520 Speaker 1: off and Covid has been a huge tail wind for them. 639 00:42:10,560 --> 00:42:13,880 Speaker 1: But again, when you listen to management and you know, 640 00:42:13,960 --> 00:42:17,160 Speaker 1: you can go on Twitter and follow the founders there, 641 00:42:17,600 --> 00:42:20,160 Speaker 1: or you know, go on YouTube and listen to some 642 00:42:20,440 --> 00:42:24,200 Speaker 1: interviews and decide for yourself. Are these the sorts of 643 00:42:24,239 --> 00:42:28,600 Speaker 1: people I want to partner with? Quite interesting? So well, 644 00:42:28,680 --> 00:42:31,920 Speaker 1: let's talk a little bit about the nuts and bolts 645 00:42:32,120 --> 00:42:37,160 Speaker 1: of running a fund more or less as a single manager. 646 00:42:37,840 --> 00:42:42,600 Speaker 1: How does that affect your decision making versus so many 647 00:42:42,640 --> 00:42:45,480 Speaker 1: funds that seem to be run by committees. That's a 648 00:42:45,520 --> 00:42:49,840 Speaker 1: great question. Barry ned Johnson, who you know, I believe 649 00:42:49,960 --> 00:42:54,120 Speaker 1: is the chairman emeritus the fidelity. Now, who built the firm? 650 00:42:54,160 --> 00:42:59,480 Speaker 1: You know, from the mid seventies through let's say so 651 00:42:59,560 --> 00:43:04,640 Speaker 1: a great four the year run. Believed in accountability and 652 00:43:04,719 --> 00:43:08,160 Speaker 1: I think, you know, in life, we all have to 653 00:43:08,160 --> 00:43:13,280 Speaker 1: be accountable. So he really liked the idea of having 654 00:43:13,880 --> 00:43:19,840 Speaker 1: single managers responsible for individual funds. I am responsible for 655 00:43:19,880 --> 00:43:22,759 Speaker 1: the performance of the Contra fund. I have a great 656 00:43:22,840 --> 00:43:26,600 Speaker 1: team of analysts that I work closely with, and in 657 00:43:26,680 --> 00:43:31,680 Speaker 1: some cases I will buy a stock the recommendation of 658 00:43:31,719 --> 00:43:36,880 Speaker 1: an analyst, but usually I work and say, you know, okay, 659 00:43:36,920 --> 00:43:39,640 Speaker 1: what are you covering, what do you like? Why do 660 00:43:39,680 --> 00:43:43,320 Speaker 1: you like it? And if this is your very best 661 00:43:43,400 --> 00:43:47,160 Speaker 1: idea and you think this company is doing something special 662 00:43:47,640 --> 00:43:50,200 Speaker 1: and they're going to gain market share profitably, over time. 663 00:43:50,719 --> 00:43:53,640 Speaker 1: Let's just call the company together. Let me know next 664 00:43:53,680 --> 00:43:56,440 Speaker 1: time you're going to do an update call or a 665 00:43:56,560 --> 00:44:00,520 Speaker 1: post quarterly earnings call, and I'll just hear the story myself. 666 00:44:01,160 --> 00:44:03,400 Speaker 1: And you know, Peter Hinch used to joke and say, 667 00:44:03,680 --> 00:44:07,120 Speaker 1: we're just asking for a picture after someone offers you 668 00:44:07,160 --> 00:44:10,279 Speaker 1: a blind date. You know, we want to do some 669 00:44:10,400 --> 00:44:14,280 Speaker 1: basic work. And you know, Doltill and Half my great, 670 00:44:14,320 --> 00:44:17,560 Speaker 1: you know, longtime colleague. Just as you know, if you 671 00:44:17,800 --> 00:44:23,440 Speaker 1: would simply avoid unprofitable companies that you know would improve 672 00:44:23,520 --> 00:44:28,000 Speaker 1: your performance significantly. Now the world has changed in thirty years, 673 00:44:28,040 --> 00:44:31,880 Speaker 1: and the biotech industry has become bigger and better and 674 00:44:32,000 --> 00:44:37,040 Speaker 1: leveraged all these great insights into the human genome so 675 00:44:37,080 --> 00:44:39,520 Speaker 1: that you can go from losing a lot of money 676 00:44:39,640 --> 00:44:43,279 Speaker 1: to FDA approval of a drug that turns into a 677 00:44:43,360 --> 00:44:47,080 Speaker 1: billion dollar blockbuster very quickly. But you know, for the 678 00:44:47,120 --> 00:44:50,040 Speaker 1: most part, I think you know, there are certain lessons 679 00:44:50,080 --> 00:44:52,959 Speaker 1: that we've learned. But you know, when do you sell 680 00:44:52,960 --> 00:44:54,840 Speaker 1: a stock berry You sell a stock when you have 681 00:44:54,880 --> 00:44:58,640 Speaker 1: a better idea or when the fundamentals deteriorates. So if 682 00:44:58,640 --> 00:45:02,000 Speaker 1: you're casting a wide now at your you know, attending 683 00:45:02,040 --> 00:45:04,399 Speaker 1: a lot of company meetings. You're listening to a lot 684 00:45:04,440 --> 00:45:08,600 Speaker 1: of calls. You know, I don't know, I think over 685 00:45:08,680 --> 00:45:11,600 Speaker 1: thirty years, Barry, the numbers are. You know, Let's say, 686 00:45:11,640 --> 00:45:14,239 Speaker 1: on average, I talked to five management teams a day. 687 00:45:14,360 --> 00:45:19,200 Speaker 1: That's twenty five management teams a week, fifty weeks. You know, 688 00:45:19,280 --> 00:45:25,080 Speaker 1: in a working year, companies a year over thirty years, 689 00:45:25,120 --> 00:45:28,799 Speaker 1: you know, some crazy number of company meetings, you know, 690 00:45:28,920 --> 00:45:33,960 Speaker 1: thirty thousand. You know interviews I've had said, you know, 691 00:45:34,640 --> 00:45:37,160 Speaker 1: as I said the poker game. You know, this one 692 00:45:37,200 --> 00:45:39,439 Speaker 1: sounds a little better, I'm going to buy this one. 693 00:45:39,880 --> 00:45:41,839 Speaker 1: This one sounds a little worse. I'm going to sell 694 00:45:41,920 --> 00:45:46,239 Speaker 1: this one. It's sort of like tasting. I'm a chef 695 00:45:46,320 --> 00:45:50,640 Speaker 1: making the master stew that everyone is going to hopefully love. 696 00:45:50,800 --> 00:45:53,160 Speaker 1: And you know, but you've got to taste the stew 697 00:45:53,239 --> 00:45:55,400 Speaker 1: all the time. It needs a little more pepper, is 698 00:45:55,440 --> 00:45:58,560 Speaker 1: a little more solid, a little less of this. You know. 699 00:45:58,680 --> 00:46:03,239 Speaker 1: That's sort of the date at a operation. But hopefully, 700 00:46:03,280 --> 00:46:08,160 Speaker 1: you know, every year I can find you know, one name, 701 00:46:08,920 --> 00:46:11,560 Speaker 1: you know, maybe one name a year that I can 702 00:46:11,600 --> 00:46:15,800 Speaker 1: make a large position. So I have so many questions 703 00:46:15,800 --> 00:46:19,560 Speaker 1: about that exact thing, and I'll ask a short one 704 00:46:19,600 --> 00:46:23,480 Speaker 1: and then a more nuts and bolts longer question. So 705 00:46:23,560 --> 00:46:26,600 Speaker 1: you're doing, over the course of your career tens of 706 00:46:26,760 --> 00:46:34,760 Speaker 1: thousands of company calls, how finely tuned is your BS detector? 707 00:46:34,800 --> 00:46:37,600 Speaker 1: And let me let me phrase it a little more nicely. 708 00:46:38,040 --> 00:46:41,400 Speaker 1: When you're speaking to a manager, do you get a 709 00:46:41,440 --> 00:46:44,920 Speaker 1: pretty immediate sense of Hey, this guy is telling a 710 00:46:45,000 --> 00:46:50,719 Speaker 1: great story because there's a really something substantial underneath, Or hey, 711 00:46:50,719 --> 00:46:53,000 Speaker 1: this guy's a salesman and he's selling me a line 712 00:46:53,000 --> 00:46:56,080 Speaker 1: of stuff that I'm not I'm not biting, Like, how 713 00:46:56,120 --> 00:47:01,120 Speaker 1: how do you read people in those calls? Yeah? No, Verry, 714 00:47:01,200 --> 00:47:04,600 Speaker 1: you made a very good point earlier that you know, 715 00:47:04,640 --> 00:47:07,680 Speaker 1: your emotional quotation is very important in this business. But 716 00:47:08,239 --> 00:47:13,360 Speaker 1: I would say sitting across the table and asking some 717 00:47:13,560 --> 00:47:17,840 Speaker 1: very basic questions can give you a very good sense 718 00:47:17,880 --> 00:47:21,520 Speaker 1: of management. You know, are they humble, are they honest? 719 00:47:21,680 --> 00:47:27,719 Speaker 1: Are they willing to you know, be realistic? But you 720 00:47:27,760 --> 00:47:31,319 Speaker 1: know you have to understand, as I said, Okay, you 721 00:47:31,360 --> 00:47:34,200 Speaker 1: know this management has traveled halfway around the world to 722 00:47:34,280 --> 00:47:37,520 Speaker 1: talk to Fidelity. You know, yeah, maybe we are the 723 00:47:37,600 --> 00:47:40,960 Speaker 1: largest shareholder, or maybe we could be the largest shareholder, 724 00:47:41,040 --> 00:47:45,520 Speaker 1: but there's a reason why this management team is here. 725 00:47:46,440 --> 00:47:50,440 Speaker 1: Why is it? You know? And often you know, there 726 00:47:50,560 --> 00:47:52,239 Speaker 1: is a reason. You know, they want to do a 727 00:47:52,280 --> 00:47:56,000 Speaker 1: secondary offering and raise money. They want to do an acquisition, 728 00:47:56,040 --> 00:47:58,880 Speaker 1: and therefore they want to hire stock price so they 729 00:47:58,920 --> 00:48:02,640 Speaker 1: have a richer currency to do the acquisition. But you know, 730 00:48:02,800 --> 00:48:06,239 Speaker 1: I would say that the management teams that we talked 731 00:48:06,320 --> 00:48:11,160 Speaker 1: to are honest. And you know, once in a while, 732 00:48:11,880 --> 00:48:17,120 Speaker 1: you know, different people do tell the stories more humbly 733 00:48:17,360 --> 00:48:21,440 Speaker 1: or more arrogantly. But you want to see, as I 734 00:48:21,480 --> 00:48:25,560 Speaker 1: said earlier, you know, management with passion. I would say, 735 00:48:25,600 --> 00:48:29,640 Speaker 1: one way to reduce the risk of you know, the 736 00:48:29,800 --> 00:48:34,959 Speaker 1: arrogant CEO is to watch how the entire management team 737 00:48:35,000 --> 00:48:40,120 Speaker 1: interacts and ideally, you see, you know, more than just 738 00:48:40,320 --> 00:48:44,440 Speaker 1: one great leader, but an entire team, you know, the CEO, 739 00:48:44,760 --> 00:48:49,800 Speaker 1: the CFO, the cso. You know, does the entire c 740 00:48:50,040 --> 00:48:54,680 Speaker 1: suite sing the same you know song from the hymn book? 741 00:48:54,719 --> 00:48:57,000 Speaker 1: You know, are they all on the same page? Do 742 00:48:57,080 --> 00:49:00,160 Speaker 1: they work well together? Do they seem to you know? 743 00:49:00,200 --> 00:49:02,320 Speaker 1: I remember, you know again it all goes back to 744 00:49:02,440 --> 00:49:05,600 Speaker 1: you know, I was the retail analyst. I'm you know, 745 00:49:05,719 --> 00:49:09,120 Speaker 1: at a dinner with the great Sam Walton. You know, 746 00:49:09,200 --> 00:49:14,319 Speaker 1: one of the you know, truly great you know, post war. Yeah, 747 00:49:14,560 --> 00:49:17,600 Speaker 1: and you know, people are asking all sorts of questions 748 00:49:17,600 --> 00:49:21,279 Speaker 1: and Sam was like, well, you know, Jack Schumacher, why 749 00:49:21,320 --> 00:49:23,759 Speaker 1: don't you answer that one? Don Soder quest why don't 750 00:49:23,760 --> 00:49:25,879 Speaker 1: you take that one? Paul Carter, why don't you take 751 00:49:25,960 --> 00:49:28,239 Speaker 1: that one? David Glass, why don't you take that one? 752 00:49:28,760 --> 00:49:33,839 Speaker 1: And you know, he was a very effective leader, and 753 00:49:33,960 --> 00:49:36,480 Speaker 1: you know, you just realized that this was a very 754 00:49:36,560 --> 00:49:40,359 Speaker 1: powerful culture. You know, we're going to lower prices and 755 00:49:40,440 --> 00:49:44,560 Speaker 1: you know sort of enable you know, middle class Americans 756 00:49:44,600 --> 00:49:48,080 Speaker 1: and rural Americans, you know, deliver better life by you know, 757 00:49:48,200 --> 00:49:51,719 Speaker 1: sort of being more efficient, you know, embracing you know, 758 00:49:51,880 --> 00:49:54,480 Speaker 1: you think back and again I didn't appreciate it at 759 00:49:54,480 --> 00:49:58,560 Speaker 1: the time, but Sam and his team were aware of 760 00:49:58,640 --> 00:50:02,600 Speaker 1: salt prices New Price Club, which was the membership warehouse club. 761 00:50:03,200 --> 00:50:07,040 Speaker 1: They copied it or experimented themselves. You know, they were 762 00:50:07,120 --> 00:50:10,600 Speaker 1: open to a new idea and they you know, started 763 00:50:10,640 --> 00:50:15,120 Speaker 1: the Sam's Club business. And I think with Sam's then 764 00:50:15,160 --> 00:50:18,880 Speaker 1: they sort of learned about the food business, which became 765 00:50:18,960 --> 00:50:22,480 Speaker 1: very important, and started opening supercenters, you know, and they 766 00:50:22,520 --> 00:50:25,759 Speaker 1: were aware of Carrefour in France and I don't know 767 00:50:25,760 --> 00:50:28,279 Speaker 1: how it's pronounced m E I j E r S. 768 00:50:28,320 --> 00:50:31,719 Speaker 1: Which was a hypermarket up and the Upper Midwest. So 769 00:50:32,200 --> 00:50:34,680 Speaker 1: you know, again you want to see managements that are 770 00:50:34,920 --> 00:50:40,120 Speaker 1: open to new ideas, open to adjacent markets, willing to experiment. 771 00:50:40,719 --> 00:50:43,040 Speaker 1: You know. I like the management that you know, we're 772 00:50:43,080 --> 00:50:45,920 Speaker 1: going to try a few things. They may not work, 773 00:50:45,960 --> 00:50:49,400 Speaker 1: they may not You know, I did really well early 774 00:50:49,480 --> 00:50:53,000 Speaker 1: on with George Sherman at dana Her. You know, and 775 00:50:53,120 --> 00:50:57,000 Speaker 1: George used to always talk about, you know, one business 776 00:50:57,040 --> 00:51:00,400 Speaker 1: reviews and the dana Her business system, and you know, 777 00:51:00,480 --> 00:51:05,880 Speaker 1: he had studied the great plants, you know, the manufacturing 778 00:51:05,920 --> 00:51:09,480 Speaker 1: techniques in Japan, the Toyota business system. Dr oh no, 779 00:51:09,800 --> 00:51:12,360 Speaker 1: and then he went to Korea. But you know, I 780 00:51:12,440 --> 00:51:14,719 Speaker 1: was like, George, you know, tell me about this, and 781 00:51:14,760 --> 00:51:19,479 Speaker 1: you know, chucka chucka, which was I think the either 782 00:51:19,560 --> 00:51:23,440 Speaker 1: the Japanese or Korean term for justin time inventory and 783 00:51:23,480 --> 00:51:28,000 Speaker 1: the idea of reducing waste. Garry, this is like, you know, 784 00:51:28,360 --> 00:51:32,879 Speaker 1: waste his time, it's waste his inventory. Waste is like 785 00:51:33,000 --> 00:51:36,239 Speaker 1: if you have to move from you know, one part 786 00:51:36,239 --> 00:51:38,160 Speaker 1: of the kitchen to the other part of the kitchen, 787 00:51:38,760 --> 00:51:40,560 Speaker 1: you know, you just sort of say, this guy can 788 00:51:40,600 --> 00:51:43,520 Speaker 1: go deep and you know, so, yes, there is some 789 00:51:44,680 --> 00:51:49,440 Speaker 1: arrogance for a successful executive and you want to be 790 00:51:49,560 --> 00:51:53,239 Speaker 1: careful about that. But again, when you know, what I've 791 00:51:53,360 --> 00:51:55,799 Speaker 1: what I've loved during this COVID period is to be 792 00:51:55,880 --> 00:51:59,560 Speaker 1: able to zoom with management teams. And there are a 793 00:51:59,760 --> 00:52:05,840 Speaker 1: law proportion, frankly of American management teams that have emphasized 794 00:52:06,320 --> 00:52:10,600 Speaker 1: and prioritize the health and safety of their colleagues. And 795 00:52:10,640 --> 00:52:14,319 Speaker 1: it's been you know, very inspiring to hear. You know, 796 00:52:14,440 --> 00:52:18,080 Speaker 1: these these great executives understand that they have to be 797 00:52:18,120 --> 00:52:21,000 Speaker 1: on the front line. They have to make sure their 798 00:52:21,080 --> 00:52:24,200 Speaker 1: people are are safe. And a lot of the companies 799 00:52:24,200 --> 00:52:27,200 Speaker 1: have invested a lot of money, you know, in protective 800 00:52:27,200 --> 00:52:31,480 Speaker 1: gear and you know, thinking hard about the return to 801 00:52:31,560 --> 00:52:36,280 Speaker 1: work and you know, so anyway, yes it is a concern. 802 00:52:36,480 --> 00:52:40,800 Speaker 1: And again I would urge your listeners YouTube these executives 803 00:52:40,880 --> 00:52:44,319 Speaker 1: decide if you like their arc. You know, how did 804 00:52:44,360 --> 00:52:46,640 Speaker 1: you come to this company? And you know what was 805 00:52:46,680 --> 00:52:50,520 Speaker 1: the great insight? And I mean, let's let's remember, you know, 806 00:52:51,239 --> 00:52:55,319 Speaker 1: Bernie Marcus was fired by Handy Dan and you know 807 00:52:55,400 --> 00:52:57,719 Speaker 1: he started the home depot in his forties, so You 808 00:52:57,719 --> 00:53:00,560 Speaker 1: don't have to be a college dropout at you know, 809 00:53:00,640 --> 00:53:04,080 Speaker 1: twenty years old to start the latest tech company. You 810 00:53:04,160 --> 00:53:08,680 Speaker 1: experience matters, and if you are dedicated and you know, 811 00:53:08,760 --> 00:53:11,600 Speaker 1: have the right skill set, you can you know, be 812 00:53:11,680 --> 00:53:17,080 Speaker 1: a great success later in life. I do like smart, motivated, 813 00:53:17,080 --> 00:53:20,879 Speaker 1: passionate folks who have done it before. As I said, 814 00:53:20,920 --> 00:53:22,040 Speaker 1: you know, what have you done for me in the 815 00:53:22,120 --> 00:53:23,520 Speaker 1: last five years? What are you going to do in 816 00:53:23,520 --> 00:53:26,239 Speaker 1: the future. I mean, I remember when Mark Zuckerberg came 817 00:53:26,280 --> 00:53:28,680 Speaker 1: out on the I P O road Show and you know, 818 00:53:28,800 --> 00:53:31,200 Speaker 1: you know, what's the right question for a twenty seven 819 00:53:31,280 --> 00:53:34,360 Speaker 1: year old who I think at the time had three 820 00:53:34,440 --> 00:53:38,000 Speaker 1: quarters of a billion, seven hundred and fifty million daily 821 00:53:38,040 --> 00:53:40,560 Speaker 1: active users. You know, it's just like what you have 822 00:53:40,640 --> 00:53:44,759 Speaker 1: accomplished is remarkable, you know, and then try to learn 823 00:53:44,880 --> 00:53:48,399 Speaker 1: from these folks and anyway, and you want to try 824 00:53:48,400 --> 00:53:52,239 Speaker 1: to go ahead? Yeah, no, no, no, I mean it 825 00:53:52,320 --> 00:53:55,320 Speaker 1: was I remember Mark showed up in a T shirt 826 00:53:55,320 --> 00:53:57,839 Speaker 1: and a hoodie and I was like, that's great, that's 827 00:53:57,840 --> 00:54:00,520 Speaker 1: what we want. We want somebody to be who they are. 828 00:54:00,840 --> 00:54:04,440 Speaker 1: But I will tell you that I projected my Facebook account, 829 00:54:05,239 --> 00:54:10,200 Speaker 1: which had like thirty friends onto you know, the conference 830 00:54:10,280 --> 00:54:12,520 Speaker 1: room wall, just to try to make him feel a 831 00:54:12,520 --> 00:54:15,600 Speaker 1: little more comfortable. It was just like, we're engaged with 832 00:54:15,640 --> 00:54:20,880 Speaker 1: our product. And when Evan's eagle from Snapchat came public, 833 00:54:20,920 --> 00:54:24,640 Speaker 1: the analysts made a Snapchat story when he came in 834 00:54:24,760 --> 00:54:26,960 Speaker 1: and we showed it to Evan and he loved it. 835 00:54:27,000 --> 00:54:29,640 Speaker 1: You know, you gotta kind of try to connect with 836 00:54:29,719 --> 00:54:33,520 Speaker 1: these executives at their level, you know, like when I 837 00:54:33,600 --> 00:54:37,920 Speaker 1: was the stores analysts and even now as a fund manager, 838 00:54:37,920 --> 00:54:41,280 Speaker 1: when these companies come around, it's just like, we should 839 00:54:41,280 --> 00:54:44,480 Speaker 1: go shopping together. Let's go to your store together. You 840 00:54:44,520 --> 00:54:46,120 Speaker 1: don't want to be in a conference room. I don't 841 00:54:46,120 --> 00:54:48,840 Speaker 1: want to be necessarily be in a conference room. Let's 842 00:54:48,880 --> 00:54:52,080 Speaker 1: go out there. And Jason Weiner was one of my 843 00:54:52,239 --> 00:54:55,239 Speaker 1: close colleagues. He's done a great job with some of 844 00:54:55,280 --> 00:54:58,640 Speaker 1: the Fidelity funds and growth funds, and you know, for 845 00:54:58,680 --> 00:55:02,120 Speaker 1: a while there, every time management was coming in early 846 00:55:02,400 --> 00:55:04,759 Speaker 1: and sort of the early days of the internet, he 847 00:55:04,880 --> 00:55:07,239 Speaker 1: was going onto their website and it's like, you know, 848 00:55:07,360 --> 00:55:09,960 Speaker 1: you talk about you know, what management says and what 849 00:55:10,000 --> 00:55:12,680 Speaker 1: they're doing is like this all sounds great, but I 850 00:55:12,719 --> 00:55:15,360 Speaker 1: don't see any of those initiatives on the front page. 851 00:55:15,360 --> 00:55:19,120 Speaker 1: Of your website, and it was just like, oh, you know, 852 00:55:19,360 --> 00:55:24,600 Speaker 1: why not a good question? Yeah, so anyway, but the 853 00:55:24,640 --> 00:55:27,319 Speaker 1: other point, Barry and your listeners have to keep in 854 00:55:27,360 --> 00:55:34,200 Speaker 1: mind that whatever management says, there is accountability. You know, 855 00:55:34,600 --> 00:55:39,080 Speaker 1: every quarter. You know, Warren Buffett doesn't like quarterly earnings. 856 00:55:39,160 --> 00:55:41,480 Speaker 1: You know, Jamie Diamond doesn't like quarterly earnings. But the 857 00:55:41,480 --> 00:55:48,480 Speaker 1: reality is every quarter you have more fundamental data by 858 00:55:48,560 --> 00:55:53,920 Speaker 1: which to at least analyze what has happened. And every 859 00:55:53,960 --> 00:56:00,080 Speaker 1: industry is cyclical. Every industry is affected by COVID, the 860 00:56:00,120 --> 00:56:05,760 Speaker 1: global financial crisis, or the Internet bubble. But it should 861 00:56:05,840 --> 00:56:12,200 Speaker 1: make sense. Oh god, you know, Argentina, oil prices spiked 862 00:56:12,480 --> 00:56:16,239 Speaker 1: in the last quarter. Therefore our raw material costs went 863 00:56:16,239 --> 00:56:19,719 Speaker 1: through the roof. Our gross margins were down. But guess what, 864 00:56:20,040 --> 00:56:22,200 Speaker 1: it's a two quarter phenomenon, and we're going to be 865 00:56:22,239 --> 00:56:26,120 Speaker 1: back to more normal level. You know. The airline, Oh god, 866 00:56:26,239 --> 00:56:28,799 Speaker 1: oil prices, you know, jet fuel went way up. Our 867 00:56:28,800 --> 00:56:31,799 Speaker 1: margins were down, but that's going to affect everybody in 868 00:56:31,800 --> 00:56:37,440 Speaker 1: our industry. So we're gonna be relatively okay. We're still expanding. 869 00:56:38,080 --> 00:56:41,960 Speaker 1: We still have you know, a low cost operation because 870 00:56:42,000 --> 00:56:45,520 Speaker 1: we only use the same bowing seven three seven's and 871 00:56:45,640 --> 00:56:48,000 Speaker 1: the other guys are going to struggle blah blah blah. 872 00:56:48,520 --> 00:56:52,919 Speaker 1: So it makes sense. I remember meeting the great Herb 873 00:56:52,960 --> 00:56:57,279 Speaker 1: caliher and I think one of my questions one, you 874 00:56:57,320 --> 00:57:00,879 Speaker 1: know again, Fidelity is a great place to man of money. 875 00:57:00,960 --> 00:57:06,359 Speaker 1: For whatever reason, Herb came in and everybody was at 876 00:57:06,360 --> 00:57:09,160 Speaker 1: a tech conference or everybody was at a healthcare conference. 877 00:57:09,880 --> 00:57:13,200 Speaker 1: I think there were two other investors and me in 878 00:57:13,280 --> 00:57:17,240 Speaker 1: the meeting, and I was like Herb, the gray Warren 879 00:57:17,280 --> 00:57:20,240 Speaker 1: Buffett says, you know he got you know, he lost 880 00:57:20,280 --> 00:57:23,280 Speaker 1: a lot of money in US air How can you 881 00:57:23,320 --> 00:57:27,959 Speaker 1: make money in the airline industry? He said, Warren better 882 00:57:27,960 --> 00:57:32,480 Speaker 1: than the wrong airline. But we talked a little bit 883 00:57:32,520 --> 00:57:35,240 Speaker 1: about the idea of flexibility and you know what his 884 00:57:35,280 --> 00:57:38,120 Speaker 1: managements supposed to be doing. Management has to pay attention. 885 00:57:38,200 --> 00:57:41,880 Speaker 1: And he gave some example that when Midway Airlines was 886 00:57:42,480 --> 00:57:45,640 Speaker 1: opening up or there were some new gates, they called 887 00:57:45,720 --> 00:57:50,160 Speaker 1: and said, hey, someone canceled on us. We've got six gates. 888 00:57:50,680 --> 00:57:52,800 Speaker 1: You know, it was like a Thursday afternoon. But do 889 00:57:52,840 --> 00:57:54,920 Speaker 1: you want them? You gotta let us know A S 890 00:57:55,000 --> 00:57:57,640 Speaker 1: A P. And Herb and his team like pulled an 891 00:57:57,680 --> 00:58:01,360 Speaker 1: all nighter and by Friday afternoon they said, we want them, 892 00:58:01,400 --> 00:58:04,080 Speaker 1: and here are the terms that we want, and they negotiated. 893 00:58:04,160 --> 00:58:06,840 Speaker 1: But you know, that's sort of what an active manager 894 00:58:06,840 --> 00:58:08,800 Speaker 1: should be doing. We you know, you have to pay 895 00:58:08,800 --> 00:58:12,320 Speaker 1: attention and hopefully you bet big when you see a 896 00:58:12,320 --> 00:58:17,280 Speaker 1: big opportunity. Quite fascinating. So well, You've mentioned so many 897 00:58:17,320 --> 00:58:21,880 Speaker 1: fascinating stories about so many companies Walmart and Starbucks and 898 00:58:22,000 --> 00:58:27,000 Speaker 1: Costco and Amazon and Southwest and Home Depot. I gotta 899 00:58:27,040 --> 00:58:30,440 Speaker 1: ask how many of these companies are you still long 900 00:58:30,840 --> 00:58:34,760 Speaker 1: or more generally, when you find a company like a 901 00:58:34,800 --> 00:58:38,400 Speaker 1: Home Depot or a Starbucks, how long do you stay 902 00:58:38,480 --> 00:58:41,800 Speaker 1: with them? And how can you tell when something is 903 00:58:41,840 --> 00:58:46,200 Speaker 1: just a temporary wobble or a more significant threat to 904 00:58:46,200 --> 00:58:49,680 Speaker 1: the business model. That's a great question, Barry. And again, 905 00:58:49,800 --> 00:58:54,720 Speaker 1: we're always learning, we're always trying to improve, and I've 906 00:58:54,720 --> 00:58:59,560 Speaker 1: made so many mistakes over the years. But I'd say 907 00:58:59,600 --> 00:59:05,120 Speaker 1: maybe in the last fifteen years I realized that lowering 908 00:59:05,280 --> 00:59:12,640 Speaker 1: my turnover would change my process to think longer term 909 00:59:12,680 --> 00:59:17,600 Speaker 1: and therefore sort of raise the bar of the companies 910 00:59:17,600 --> 00:59:20,400 Speaker 1: that I was buying. To say, hey, if you think 911 00:59:20,400 --> 00:59:22,320 Speaker 1: about it, Verry, if I am going to own the 912 00:59:22,360 --> 00:59:25,760 Speaker 1: stock for the next ten years, it better be a 913 00:59:25,880 --> 00:59:29,800 Speaker 1: really high quality company, and I better have a high 914 00:59:29,800 --> 00:59:32,040 Speaker 1: degree of conviction that the company is going to be 915 00:59:32,080 --> 00:59:34,680 Speaker 1: bigger and better in the next five years. So maybe 916 00:59:34,680 --> 00:59:37,720 Speaker 1: I want to do another couple of months of research 917 00:59:37,800 --> 00:59:42,200 Speaker 1: to make sure I really understand the company's competitive advantages. 918 00:59:42,320 --> 00:59:46,400 Speaker 1: I really know the management team and the entire you know, 919 00:59:46,520 --> 00:59:48,640 Speaker 1: culture of the company and why they're going to do 920 00:59:48,760 --> 00:59:53,000 Speaker 1: so well, and better understand their product roadmap and the 921 00:59:53,040 --> 00:59:58,080 Speaker 1: innovation and the competitive sets. So that's helped me a lot. 922 00:59:58,680 --> 01:00:03,960 Speaker 1: And so you know, I've I've tried to stay in 923 01:00:04,120 --> 01:00:07,760 Speaker 1: companies and not be faked out. And sort of again, 924 01:00:08,480 --> 01:00:12,040 Speaker 1: what is sort of market noise, you know, worried about 925 01:00:12,240 --> 01:00:17,000 Speaker 1: some tweet or you know, some concern about inflation or 926 01:00:17,040 --> 01:00:19,160 Speaker 1: you know, the dollar moving this way or that way, 927 01:00:19,240 --> 01:00:23,240 Speaker 1: which is sort of irrelevant in most cases to the 928 01:00:23,360 --> 01:00:28,280 Speaker 1: strength and long term profitability of a company. I would say, 929 01:00:28,320 --> 01:00:30,560 Speaker 1: and I'd urge your listeners, and I'd urge you to 930 01:00:30,640 --> 01:00:35,520 Speaker 1: think about this idea of when in doubt, check the fundamentals. 931 01:00:35,960 --> 01:00:41,120 Speaker 1: When in doubt, listen to the latest quarterly webcast. When 932 01:00:41,160 --> 01:00:46,560 Speaker 1: in doubt, look at the latest presentation to investors when 933 01:00:46,600 --> 01:00:49,720 Speaker 1: in doubt. You know, if you were if you can 934 01:00:50,440 --> 01:00:54,360 Speaker 1: call the company, that's really intriguing. And I have to 935 01:00:54,400 --> 01:00:57,320 Speaker 1: ask you. Most people go out, they buy a thousand 936 01:00:57,360 --> 01:00:59,680 Speaker 1: shares of stock. They can jump all in or all 937 01:00:59,720 --> 01:01:04,960 Speaker 1: out very easily. You're obviously swinging around a lot more weight. 938 01:01:05,600 --> 01:01:08,280 Speaker 1: How do you enter any given stock? Is it a 939 01:01:08,320 --> 01:01:10,880 Speaker 1: position that you put a tone in the water and 940 01:01:10,960 --> 01:01:14,520 Speaker 1: build over time? Do you have a specific strategy? I 941 01:01:14,560 --> 01:01:17,560 Speaker 1: know some people like to add to what's working and 942 01:01:17,600 --> 01:01:21,440 Speaker 1: subtract to what's not. How do you own an Amazon 943 01:01:21,960 --> 01:01:25,400 Speaker 1: or a home depot? Is it? Is it a slow 944 01:01:25,440 --> 01:01:29,320 Speaker 1: gradual process or what's the method behind that? Yeah? As 945 01:01:29,320 --> 01:01:32,800 Speaker 1: I mentioned earlier, Barry, we all would love to have 946 01:01:34,080 --> 01:01:37,080 Speaker 1: huge amount of conviction, you know, And I think about 947 01:01:37,160 --> 01:01:39,600 Speaker 1: some of the great investors I know, you know, the 948 01:01:39,640 --> 01:01:43,520 Speaker 1: Bill Miller's, the Henry ellen Bogan's, you know, I think 949 01:01:43,600 --> 01:01:47,520 Speaker 1: they have more conviction than I do, or they get 950 01:01:47,560 --> 01:01:52,720 Speaker 1: it earlier. I'm trying to improve. And you know, often 951 01:01:53,760 --> 01:01:56,760 Speaker 1: it can be a meeting where you just you know, 952 01:01:56,920 --> 01:02:01,640 Speaker 1: meet someone who's running in an important division or a 953 01:02:01,680 --> 01:02:06,480 Speaker 1: smaller division, and you're like, wow, I was out at 954 01:02:06,520 --> 01:02:10,080 Speaker 1: Taypal and I met someone there who I thought was 955 01:02:10,120 --> 01:02:14,000 Speaker 1: really exceptional. And again, when you can visit with the 956 01:02:14,040 --> 01:02:18,120 Speaker 1: management team and get beyond you know, the CFO or 957 01:02:18,160 --> 01:02:21,400 Speaker 1: the treasurer or even the CEO, and meet some of 958 01:02:21,400 --> 01:02:24,440 Speaker 1: the people who were in the field who you truly 959 01:02:24,480 --> 01:02:28,440 Speaker 1: know the products set and the competitive set, you say, wow, 960 01:02:29,080 --> 01:02:32,800 Speaker 1: you know this makes sense to me. So anyway, whatever 961 01:02:32,840 --> 01:02:35,400 Speaker 1: it takes to get conviction. And you know, I've told 962 01:02:35,440 --> 01:02:38,760 Speaker 1: the analysts if you don't understand something, tell the management 963 01:02:38,800 --> 01:02:40,800 Speaker 1: you want to fly out to headquarters, and you know, 964 01:02:40,880 --> 01:02:44,680 Speaker 1: spend more time. It's okay, you know, no one the 965 01:02:44,760 --> 01:02:47,720 Speaker 1: light bulb. Sometimes I'm spending a lot of time when 966 01:02:48,240 --> 01:02:50,240 Speaker 1: I'm talking to management. They're like, well, why don't you 967 01:02:50,280 --> 01:02:52,840 Speaker 1: guys own more stock? And I've got to say, you know, 968 01:02:52,880 --> 01:02:55,320 Speaker 1: I made a mistake. But you know, one of the 969 01:02:55,360 --> 01:02:58,280 Speaker 1: great lessons over thirty years, Barry, and this is important 970 01:02:58,280 --> 01:03:02,680 Speaker 1: for all your listeners. If stock has doubled or even tripled, 971 01:03:03,120 --> 01:03:05,920 Speaker 1: you have not missed it. And I don't like to 972 01:03:06,000 --> 01:03:09,920 Speaker 1: give all my secrets, but if a stock has doubled 973 01:03:10,040 --> 01:03:13,040 Speaker 1: or tripled, you have not missed it. You have to say, 974 01:03:13,400 --> 01:03:15,600 Speaker 1: you know, have the mental white out that Peter Rentroys 975 01:03:15,640 --> 01:03:18,919 Speaker 1: talks about for the past and say what is going 976 01:03:18,960 --> 01:03:23,720 Speaker 1: to happen in the future, Because let's step back Bill Gates, 977 01:03:23,880 --> 01:03:26,640 Speaker 1: Michael Deal. They didn't sell after the first double, they 978 01:03:26,640 --> 01:03:29,600 Speaker 1: didn't sell after the first triple. So yes, I do 979 01:03:29,680 --> 01:03:33,400 Speaker 1: think it's an excellent idea to say I would like 980 01:03:33,600 --> 01:03:36,960 Speaker 1: to own this stock for the next decade or two 981 01:03:37,000 --> 01:03:41,880 Speaker 1: decades because I understand, you know, the niche that the 982 01:03:41,920 --> 01:03:44,800 Speaker 1: company is fulfilling. I think that they're in a big market. 983 01:03:44,920 --> 01:03:46,920 Speaker 1: I think the management team is going to continue to 984 01:03:46,920 --> 01:03:53,280 Speaker 1: innovate and continue to grow, make rational decisions about expanding 985 01:03:54,400 --> 01:03:58,880 Speaker 1: and developing new products, and they understand their customer. They 986 01:03:58,880 --> 01:04:01,080 Speaker 1: wanted to light their customer or blah blah blah. So 987 01:04:01,920 --> 01:04:06,440 Speaker 1: the reality is, Barry that I was influenced by Warren Buffett. 988 01:04:06,480 --> 01:04:10,800 Speaker 1: I was with Warren and he invited Fidelity to do 989 01:04:10,880 --> 01:04:15,520 Speaker 1: an MBA day in Omaha, and you know, we were all. 990 01:04:15,560 --> 01:04:17,360 Speaker 1: I was given a chance to ask him a question. 991 01:04:17,400 --> 01:04:19,920 Speaker 1: I said, Warren, I'm managing a hundred billion dollars, what 992 01:04:20,040 --> 01:04:21,920 Speaker 1: advice would you give me? And he said, when you 993 01:04:21,920 --> 01:04:24,640 Speaker 1: have a good idea that big and if you look 994 01:04:24,720 --> 01:04:27,720 Speaker 1: back and you know we were influenced Joel and I 995 01:04:27,800 --> 01:04:30,160 Speaker 1: were influenced by Peter Lynch, who had like a thousand 996 01:04:30,240 --> 01:04:33,760 Speaker 1: stocks and in Magellan. And Joel still runs with a 997 01:04:33,840 --> 01:04:36,520 Speaker 1: huge number of stocks and low price stock fund. You know, 998 01:04:36,600 --> 01:04:40,160 Speaker 1: he's he's an exceptional intellect and can handle that. But 999 01:04:41,040 --> 01:04:44,440 Speaker 1: the number of stocks and counter fund fell. I literally 1000 01:04:44,480 --> 01:04:46,520 Speaker 1: looked at I think I might have had five hundred 1001 01:04:46,560 --> 01:04:48,760 Speaker 1: or six hundred stocks at the time, and I just said, 1002 01:04:49,120 --> 01:04:51,360 Speaker 1: let's look at the bottom three hundred and say up 1003 01:04:51,440 --> 01:04:56,520 Speaker 1: or out. And I looked at the top fifty. And 1004 01:04:56,520 --> 01:04:59,160 Speaker 1: Peter always talks about this. You know, the best stocks 1005 01:04:59,200 --> 01:05:02,120 Speaker 1: are probably ox you already own, you need to bet bigger. 1006 01:05:02,760 --> 01:05:06,600 Speaker 1: So I was more concentrated, you know, but you mentioned 1007 01:05:06,600 --> 01:05:10,960 Speaker 1: earlier what you know, what's really happening right now? Technology 1008 01:05:11,200 --> 01:05:15,880 Speaker 1: has been a massive tidal way the Internet and software 1009 01:05:16,600 --> 01:05:19,720 Speaker 1: great market reason, you know said it best software is 1010 01:05:19,720 --> 01:05:23,880 Speaker 1: eating the world. It's it's more efficient, it makes less mistakes. 1011 01:05:24,560 --> 01:05:28,280 Speaker 1: It's enabling you know, people all over the world to 1012 01:05:28,320 --> 01:05:37,120 Speaker 1: connect with each other, and so the software of the sort. 1013 01:05:37,200 --> 01:05:41,840 Speaker 1: The short answer is the software industry is growing rapidly. 1014 01:05:43,360 --> 01:05:47,080 Speaker 1: It's highly profitable, and the you know, many parts of 1015 01:05:47,080 --> 01:05:51,680 Speaker 1: the tech industry are not capital intensive. The great Apple. 1016 01:05:52,000 --> 01:05:54,520 Speaker 1: You know, Steve Jobs is a genius to convince HANNAHI 1017 01:05:55,120 --> 01:05:58,680 Speaker 1: Fox con to make the phones for him, so he 1018 01:05:58,760 --> 01:06:02,440 Speaker 1: earns a high margin and he doesn't have to spend 1019 01:06:02,440 --> 01:06:05,800 Speaker 1: a lot of money building factories. But you know, you 1020 01:06:05,840 --> 01:06:09,400 Speaker 1: think about what you know Amazon has done generating a 1021 01:06:09,400 --> 01:06:11,760 Speaker 1: lot of free cash flow. Apples generating a huge amount 1022 01:06:11,760 --> 01:06:14,160 Speaker 1: of free cash flow. Facebook is generating a huge amount 1023 01:06:14,160 --> 01:06:17,120 Speaker 1: of free cash flow. Microsoft is generating a huge amount 1024 01:06:17,120 --> 01:06:22,240 Speaker 1: of free cash flow technology. The tech industry is knowledge 1025 01:06:22,280 --> 01:06:26,240 Speaker 1: based its hire margin and for the moment, you know, 1026 01:06:26,480 --> 01:06:30,480 Speaker 1: it's still growing because it's a global industry. Those are 1027 01:06:30,520 --> 01:06:33,440 Speaker 1: three of your biggest holdings you just ran through there, ye, 1028 01:06:33,960 --> 01:06:38,320 Speaker 1: Facebook and Microsoft. So someone I mentioned to a friend 1029 01:06:38,560 --> 01:06:41,680 Speaker 1: I was interviewing you, and I said, if you're going 1030 01:06:41,720 --> 01:06:45,400 Speaker 1: to ask, and he's a tech geek uh and runs 1031 01:06:45,400 --> 01:06:47,800 Speaker 1: a tech focused hedge fund. I said, if you're gonna 1032 01:06:47,800 --> 01:06:50,800 Speaker 1: ask will down Off a question about technology, what would 1033 01:06:50,800 --> 01:06:54,640 Speaker 1: it be? And he surprised me with why the S 1034 01:06:54,720 --> 01:06:57,200 Speaker 1: and P five hundred as a benchmark? Aren't you really 1035 01:06:57,240 --> 01:07:00,920 Speaker 1: more of a nastac one hundred guy? And I thought 1036 01:07:00,920 --> 01:07:06,080 Speaker 1: that was kind of an interesting observation. You know, there's 1037 01:07:06,120 --> 01:07:09,200 Speaker 1: a lot of truth to that. I am much more 1038 01:07:09,240 --> 01:07:12,840 Speaker 1: of a growth investor. I am, in my opinion, a 1039 01:07:12,880 --> 01:07:16,520 Speaker 1: capital appreciation fund with a growth bias. So I do 1040 01:07:16,640 --> 01:07:20,360 Speaker 1: have a go anywhere a large grow anywhere component. And 1041 01:07:21,040 --> 01:07:24,600 Speaker 1: it's just the technology has been such a powerful tidal 1042 01:07:24,600 --> 01:07:30,800 Speaker 1: wave that I've probably stayed in technology longer and bigger 1043 01:07:30,800 --> 01:07:35,960 Speaker 1: than you know, I would have expected. Benchmarks are important, 1044 01:07:36,040 --> 01:07:41,160 Speaker 1: and Fidelity, for legal reasons, does not want to change 1045 01:07:41,440 --> 01:07:45,360 Speaker 1: the benchmark. It's actually sort of time consuming and cumbersome 1046 01:07:45,400 --> 01:07:49,800 Speaker 1: to change benchmark. It probably makes hard enough to beat 1047 01:07:49,840 --> 01:07:52,640 Speaker 1: as is. Yeah, you know, I mean there are some 1048 01:07:52,880 --> 01:08:00,440 Speaker 1: of my larger, more institutional investors who do look at 1049 01:08:00,560 --> 01:08:04,880 Speaker 1: you know, the Russell one thousand growth, you know, versus contra, 1050 01:08:05,040 --> 01:08:08,800 Speaker 1: and there I'm not as frankly, the performance has not 1051 01:08:08,840 --> 01:08:11,600 Speaker 1: been as good. And I don't know if if my 1052 01:08:11,680 --> 01:08:14,560 Speaker 1: bench was the Russell one thousand growth, if I would 1053 01:08:14,720 --> 01:08:19,599 Speaker 1: be even bigger in some of these names. But so interesting, 1054 01:08:19,680 --> 01:08:23,479 Speaker 1: you know, yeah, I mean, I it is what it is. 1055 01:08:23,600 --> 01:08:26,840 Speaker 1: I do think benchmarks are important. I mean what what 1056 01:08:27,000 --> 01:08:31,160 Speaker 1: Larry Fink and you know, John Bogel did with passive 1057 01:08:31,200 --> 01:08:36,200 Speaker 1: investing has been really good for the individual investor. You know, 1058 01:08:36,280 --> 01:08:40,439 Speaker 1: you don't want to be in a situation when you know, 1059 01:08:40,840 --> 01:08:45,520 Speaker 1: oh my god, Dan off Reinholds has lost their fastball. 1060 01:08:45,880 --> 01:08:49,280 Speaker 1: I'm gonna sell the beauty of the index. If you 1061 01:08:49,400 --> 01:08:52,240 Speaker 1: just buy an index is I'm gonna own the index 1062 01:08:52,320 --> 01:08:56,000 Speaker 1: and I'm gonna I'm gonna buy the index every year 1063 01:08:56,479 --> 01:08:58,920 Speaker 1: with my four oh one K contribution, and you know, 1064 01:08:58,960 --> 01:09:02,559 Speaker 1: when I retire, I'm hopefully're going to have a nice 1065 01:09:02,800 --> 01:09:08,400 Speaker 1: nest egg to retire with. As opposed to speaking with 1066 01:09:08,439 --> 01:09:11,800 Speaker 1: individual funds, you've gotta you know, you're worried, and you 1067 01:09:11,840 --> 01:09:15,519 Speaker 1: know human beings worry a lot. So I'm worrying a 1068 01:09:15,520 --> 01:09:19,240 Speaker 1: lot for all of my investors. Berry trying my best, 1069 01:09:20,040 --> 01:09:23,519 Speaker 1: so so I bet they're worried about when you're going 1070 01:09:23,560 --> 01:09:26,479 Speaker 1: to retire. You've been there for thirty years. Do you 1071 01:09:26,520 --> 01:09:29,760 Speaker 1: have any plan on leaving any time soon? Or are 1072 01:09:29,760 --> 01:09:35,400 Speaker 1: you gonna run Contra for another thirty years? You know? 1073 01:09:36,760 --> 01:09:41,320 Speaker 1: The stock answer, Barry is that I feel I can 1074 01:09:41,360 --> 01:09:43,479 Speaker 1: add value, and as long as I feel I can 1075 01:09:43,479 --> 01:09:46,599 Speaker 1: add value, I'm going to continue to run Contra fund. 1076 01:09:46,640 --> 01:09:51,760 Speaker 1: As I said, Fidelity is a wonderful place to manage money. 1077 01:09:51,920 --> 01:09:56,280 Speaker 1: We're hiring new analysts, young analysts all the time every year, 1078 01:09:56,400 --> 01:10:00,160 Speaker 1: and it's those young analysts that provide extra entergy g 1079 01:10:01,000 --> 01:10:06,000 Speaker 1: new insights, sort of an openness to new ideas. You know, 1080 01:10:06,479 --> 01:10:09,280 Speaker 1: what do I know from Tinder and match dot com? 1081 01:10:09,479 --> 01:10:12,440 Speaker 1: But you know, if I can ask the young analysts, 1082 01:10:12,479 --> 01:10:16,639 Speaker 1: you know, what phones they're using, what apps they're using, 1083 01:10:17,240 --> 01:10:21,400 Speaker 1: you know, tell me about this technology. You know, again, 1084 01:10:22,000 --> 01:10:25,519 Speaker 1: if you think Airbnb is going to go public, you 1085 01:10:25,640 --> 01:10:28,400 Speaker 1: and I if are we going to sleep on somebody 1086 01:10:28,479 --> 01:10:32,600 Speaker 1: else's couch or in somebody else's apartment? Uber? Are you 1087 01:10:32,640 --> 01:10:36,240 Speaker 1: going to get into somebody's car? Often when you hear 1088 01:10:36,280 --> 01:10:39,759 Speaker 1: the story for the first time, you're like, no way. 1089 01:10:39,800 --> 01:10:42,800 Speaker 1: But you have to keep an open mind. And by 1090 01:10:42,840 --> 01:10:47,240 Speaker 1: working with my younger colleagues, they helped me stay open 1091 01:10:47,960 --> 01:10:51,640 Speaker 1: and you know, try to embrace change in the new ideas. 1092 01:10:51,720 --> 01:10:54,559 Speaker 1: And you know, when I think about the future, you know, 1093 01:10:54,840 --> 01:10:58,760 Speaker 1: whatever power artificial intelligence and machine learning, they're going to 1094 01:10:58,880 --> 01:11:05,200 Speaker 1: make this great software industry even more productive and even better. 1095 01:11:05,520 --> 01:11:11,000 Speaker 1: The intersection of software and healthcare. If you think about 1096 01:11:11,040 --> 01:11:14,800 Speaker 1: all the you know, hopefully the great advances that are 1097 01:11:14,840 --> 01:11:19,320 Speaker 1: going to be made and health and preventive medicine through 1098 01:11:19,880 --> 01:11:24,880 Speaker 1: you know, leveraging big data and AI. It's just remarkable 1099 01:11:25,120 --> 01:11:29,040 Speaker 1: and you know, optimistic, and I think, you know, I 1100 01:11:29,080 --> 01:11:33,200 Speaker 1: think the US as a leader in the software industry 1101 01:11:33,640 --> 01:11:37,920 Speaker 1: and internet technology. You know, when you think about virtual 1102 01:11:38,040 --> 01:11:43,080 Speaker 1: reality and artificial reality and you know, ambient computing. I 1103 01:11:43,080 --> 01:11:46,760 Speaker 1: mean this whole idea of Alexa. You know Jeff Bezos, 1104 01:11:46,800 --> 01:11:49,679 Speaker 1: you know, it's a great experiment er. He's a great 1105 01:11:49,720 --> 01:11:53,200 Speaker 1: inventor and to you know, be able to walk into 1106 01:11:53,240 --> 01:11:57,240 Speaker 1: a room and talk to the computer. And as I 1107 01:11:57,360 --> 01:12:00,360 Speaker 1: understand it, pretty soon you're going to be walking down 1108 01:12:00,560 --> 01:12:04,599 Speaker 1: you know, you're in New York. You're walking down Madison Avenue. Oh, Barry, 1109 01:12:04,720 --> 01:12:08,759 Speaker 1: we know you like frappuccinos. There's a Starbucks around the corner. 1110 01:12:09,120 --> 01:12:12,439 Speaker 1: You can get ten percent off. Right now, it sounds 1111 01:12:12,479 --> 01:12:16,280 Speaker 1: like i've scene out of the movie Minority Report. Yeah, yeah, 1112 01:12:16,800 --> 01:12:19,640 Speaker 1: you can imagine it's going to happen, you know. And 1113 01:12:19,680 --> 01:12:23,320 Speaker 1: then of course all the innovation around the green industry 1114 01:12:23,479 --> 01:12:27,640 Speaker 1: and e vs and solar and wind. I think that 1115 01:12:28,280 --> 01:12:31,799 Speaker 1: it's going to be these US companies and and Silicon 1116 01:12:31,920 --> 01:12:37,599 Speaker 1: Valley and the entrepreneurs are going to find better ways 1117 01:12:37,880 --> 01:12:40,800 Speaker 1: to you know to do things and hopefully consumers are 1118 01:12:40,800 --> 01:12:45,720 Speaker 1: going to benefit, but sounds optimistic. As investors, you know, 1119 01:12:45,800 --> 01:12:49,519 Speaker 1: we have this great opportunity to partner with you know, 1120 01:12:49,720 --> 01:12:53,839 Speaker 1: Elon Musk or you know other truly exceptional Jeff Bezos, 1121 01:12:53,880 --> 01:12:57,680 Speaker 1: Mark Zuckerberg, Mark Bennie Off. I mean these these are 1122 01:12:57,800 --> 01:13:02,360 Speaker 1: truly exceptional people. And you know here we are, you know, 1123 01:13:02,520 --> 01:13:05,880 Speaker 1: John Q. Public can be a partner by a share 1124 01:13:06,720 --> 01:13:09,080 Speaker 1: I know I only have you another few minutes, another 1125 01:13:09,120 --> 01:13:12,400 Speaker 1: three minutes, so let me plow through my speed round 1126 01:13:12,520 --> 01:13:14,960 Speaker 1: questions and let's see if we can get through these quickly. 1127 01:13:15,439 --> 01:13:18,160 Speaker 1: What are you watching these days? Any favors on Netflix 1128 01:13:18,280 --> 01:13:22,639 Speaker 1: or Amazon Prime? Yeah, I don't have a lot of time, Barry, 1129 01:13:22,760 --> 01:13:28,439 Speaker 1: but I did really like Fata, which is uh yeah, 1130 01:13:28,680 --> 01:13:32,240 Speaker 1: I like the intensity, I guess. I guess I'm a 1131 01:13:32,320 --> 01:13:37,320 Speaker 1: sucker for for thrillers. And you know I liked House 1132 01:13:37,400 --> 01:13:40,479 Speaker 1: the Cards, And you know, I'm a big shareholder in Netflix, 1133 01:13:40,520 --> 01:13:43,360 Speaker 1: and I think what Netflix has done is truly exceptional. 1134 01:13:43,479 --> 01:13:45,679 Speaker 1: And if I had to do I would I would 1135 01:13:45,720 --> 01:13:49,839 Speaker 1: just google the you know, Netflix top tent. I've enjoyed 1136 01:13:50,479 --> 01:13:53,320 Speaker 1: a lot of that stuff, but Father is my favorite 1137 01:13:53,320 --> 01:13:55,479 Speaker 1: of all time. Let's talk about books. What are you 1138 01:13:55,520 --> 01:13:58,679 Speaker 1: reading now and what are some of your favorites. Yeah, 1139 01:13:58,800 --> 01:14:03,120 Speaker 1: during COVID, I really enjoyed a book called City of Thieves, 1140 01:14:03,479 --> 01:14:09,439 Speaker 1: which is about Leningrad during the war. A good friend 1141 01:14:09,560 --> 01:14:15,680 Speaker 1: recommended it. And now right now I'm reading this biography, 1142 01:14:15,760 --> 01:14:19,839 Speaker 1: the one volume biography of Churchill. I'm forgetting the author, 1143 01:14:19,960 --> 01:14:23,120 Speaker 1: but it was published and like two two or three 1144 01:14:23,200 --> 01:14:26,360 Speaker 1: years ago, and I mean it's just remarkable. His parents 1145 01:14:26,439 --> 01:14:30,280 Speaker 1: sort of ignored him, but he was an exceptional talent. 1146 01:14:30,400 --> 01:14:34,160 Speaker 1: And again, Barry, one insight is if you find a 1147 01:14:34,280 --> 01:14:38,960 Speaker 1: CEO or an entrepreneur who's exceptionally smart, like Winston Churchill 1148 01:14:39,040 --> 01:14:43,719 Speaker 1: was exceptionally smart, you know they're gonna possibly do really 1149 01:14:43,760 --> 01:14:47,880 Speaker 1: exceptional things. And you know he made he made a 1150 01:14:47,920 --> 01:14:53,479 Speaker 1: lot of mistakes, but you know, when his time, yeah, 1151 01:14:53,520 --> 01:14:56,240 Speaker 1: you know, when the time came, he was the right guy. 1152 01:14:56,400 --> 01:15:00,120 Speaker 1: So you know, one thing. Over thirty years, you try 1153 01:15:00,120 --> 01:15:05,679 Speaker 1: to collect executives and sometimes their sectors out of favor, 1154 01:15:05,800 --> 01:15:08,479 Speaker 1: but when they come into favor, the you know, the 1155 01:15:08,479 --> 01:15:12,559 Speaker 1: best of breed companies shine. What sort of advice would 1156 01:15:12,560 --> 01:15:16,000 Speaker 1: you give a recent college graduate who was interested in 1157 01:15:16,040 --> 01:15:20,200 Speaker 1: a career in asset management? I think you've gotta, you know, 1158 01:15:20,320 --> 01:15:24,120 Speaker 1: learn to swim by jumping in the water, so you know, 1159 01:15:24,200 --> 01:15:28,479 Speaker 1: start a paper portfolio and start investing. Ideally, you know, 1160 01:15:29,479 --> 01:15:33,840 Speaker 1: gets your lawnmowing savings or whatever savings you've got. And 1161 01:15:33,920 --> 01:15:37,320 Speaker 1: even with you know, a thousand dollars, you can buy 1162 01:15:37,320 --> 01:15:40,240 Speaker 1: a couple of shares of of your favorite companies. You've 1163 01:15:40,280 --> 01:15:44,200 Speaker 1: got to get in there. But the access to information 1164 01:15:44,920 --> 01:15:47,400 Speaker 1: has changed so much, Barry in the last thirty years. 1165 01:15:47,400 --> 01:15:50,559 Speaker 1: When I started as a retailing hosts of Fidelity, my 1166 01:15:50,680 --> 01:15:53,519 Speaker 1: first job was like write letters to the companies, send 1167 01:15:53,520 --> 01:15:57,360 Speaker 1: me the investment packet, send me the last two annual reports, 1168 01:15:58,040 --> 01:16:00,280 Speaker 1: and you know, the last quarterly report it in the 1169 01:16:00,320 --> 01:16:03,280 Speaker 1: ten queue. I mean, it took like two weeks to 1170 01:16:03,320 --> 01:16:06,400 Speaker 1: get started. And now you know, it takes two seconds 1171 01:16:06,439 --> 01:16:11,360 Speaker 1: to google, you know, IBM Investor Relations. You know you 1172 01:16:11,360 --> 01:16:14,719 Speaker 1: can YouTube the new CEO. You can do your work 1173 01:16:14,880 --> 01:16:19,160 Speaker 1: sort of instantaneously. So you know, you just gotta get 1174 01:16:19,200 --> 01:16:22,840 Speaker 1: in there and do some research. You know, listen to 1175 01:16:22,880 --> 01:16:27,360 Speaker 1: the webcast and you know, place your bets. So I 1176 01:16:27,360 --> 01:16:29,240 Speaker 1: I think, you know, you just got to get in 1177 01:16:29,280 --> 01:16:32,080 Speaker 1: there and do it. And you know, not everybody wants to, 1178 01:16:32,240 --> 01:16:36,479 Speaker 1: but I was a sort of a mediocre analyst. And 1179 01:16:36,840 --> 01:16:39,920 Speaker 1: you know, over time, by doing I have learned what 1180 01:16:40,040 --> 01:16:42,600 Speaker 1: works for me. And the only way you're going to 1181 01:16:42,760 --> 01:16:46,000 Speaker 1: learn your style and you know what works for you 1182 01:16:46,160 --> 01:16:48,519 Speaker 1: is to actually do it. And you know you've got 1183 01:16:48,520 --> 01:16:50,840 Speaker 1: to be accepting. You know, mistakes are a big part 1184 01:16:50,920 --> 01:16:53,840 Speaker 1: of this business. Try to learn from your mistakes. You 1185 01:16:53,880 --> 01:16:56,360 Speaker 1: know the great George van der Huyden who was a 1186 01:16:56,400 --> 01:17:00,519 Speaker 1: great mentor of mine, and I learned a lot from George. 1187 01:17:00,640 --> 01:17:05,679 Speaker 1: You know, he talked about keeping an investment diary on 1188 01:17:05,680 --> 01:17:08,880 Speaker 1: one little you know, on one little index card or 1189 01:17:08,920 --> 01:17:12,599 Speaker 1: you know whatever the the digital version of index card. 1190 01:17:13,080 --> 01:17:15,719 Speaker 1: Why am I buying the stock? You know, I'm gonna 1191 01:17:15,760 --> 01:17:19,960 Speaker 1: buy you know x y Z company at fifty dollars 1192 01:17:19,960 --> 01:17:25,720 Speaker 1: of share because they're expanding into India. India is a 1193 01:17:25,800 --> 01:17:29,080 Speaker 1: huge opportunity. I think, you know, they're earning two dollars 1194 01:17:29,200 --> 01:17:33,200 Speaker 1: right now, but if they continue to grow outside of 1195 01:17:33,200 --> 01:17:36,280 Speaker 1: India by ten to fift in India ads you know, 1196 01:17:36,320 --> 01:17:40,559 Speaker 1: another you know million of revenue at a certain margin, 1197 01:17:41,000 --> 01:17:43,000 Speaker 1: I think they can go from two dollars of earnings 1198 01:17:43,000 --> 01:17:45,599 Speaker 1: to five dollars in earnings. Let me let me ask 1199 01:17:45,640 --> 01:17:48,519 Speaker 1: you our final question, now, what do you know about 1200 01:17:48,560 --> 01:17:51,479 Speaker 1: the world of investing today? You wish you knew when 1201 01:17:51,520 --> 01:17:56,960 Speaker 1: you first joined thirty years ago, Barry. We've we've talked 1202 01:17:56,960 --> 01:18:01,520 Speaker 1: a lot about sort of best of breed great entrepreneurs. 1203 01:18:01,600 --> 01:18:07,680 Speaker 1: I guess I wish I had invested bigger with you know, 1204 01:18:07,840 --> 01:18:12,880 Speaker 1: these superior managers when they were younger, and you know, 1205 01:18:12,960 --> 01:18:15,920 Speaker 1: earlier on. You know, if I had met Sam Walton 1206 01:18:15,920 --> 01:18:19,080 Speaker 1: when he went public and I had that you know, 1207 01:18:19,280 --> 01:18:23,400 Speaker 1: insight to say, wow, this is an exceptional story. But 1208 01:18:24,400 --> 01:18:28,680 Speaker 1: what's so hard, Barry, is when you first meet the company, 1209 01:18:28,800 --> 01:18:31,720 Speaker 1: as I said earlier, with Airbnb or Uber, it's like 1210 01:18:31,960 --> 01:18:35,200 Speaker 1: what are you talking about? You know? Or you know, 1211 01:18:35,439 --> 01:18:40,679 Speaker 1: there's always the skeptic and you have to try to 1212 01:18:40,720 --> 01:18:45,240 Speaker 1: anticipate and see around the corner. And it's not easy. 1213 01:18:45,320 --> 01:18:48,160 Speaker 1: But that's what I would I would encourage people to, 1214 01:18:48,360 --> 01:18:53,879 Speaker 1: you know, keep thinking about the future, keep thinking about trends, 1215 01:18:54,360 --> 01:18:58,920 Speaker 1: stay within your circle of competence, and stay flexible and 1216 01:18:59,000 --> 01:19:02,080 Speaker 1: continue to cast to wide net. You've really got to 1217 01:19:02,240 --> 01:19:05,479 Speaker 1: look everywhere. I mean, if you think about what what's 1218 01:19:05,520 --> 01:19:09,000 Speaker 1: happened in China, you know, I think China has grown 1219 01:19:09,040 --> 01:19:12,439 Speaker 1: their GDP ten percent a year for the last thirty years. 1220 01:19:12,479 --> 01:19:15,680 Speaker 1: You know, it's going to overtake the US, you know, 1221 01:19:15,840 --> 01:19:19,760 Speaker 1: probably in the next decade. I mean, just it's remarkable 1222 01:19:19,920 --> 01:19:25,040 Speaker 1: what compounding can do. And you know you've just try 1223 01:19:25,120 --> 01:19:31,639 Speaker 1: to anticipate and project out into the future implications for 1224 01:19:31,920 --> 01:19:34,640 Speaker 1: you know, what you're hearing right now, and you know, 1225 01:19:34,760 --> 01:19:38,080 Speaker 1: just try to stay informed. But you know, there's a 1226 01:19:38,120 --> 01:19:42,200 Speaker 1: lot of opportunity. Yeah, it's really great. Thanks Will for 1227 01:19:42,280 --> 01:19:44,439 Speaker 1: being so generous with your time. That was Will then 1228 01:19:44,479 --> 01:19:49,480 Speaker 1: off he runs Fidelities contra funds. If you enjoy this conversation, 1229 01:19:49,560 --> 01:19:51,799 Speaker 1: we'll be sure and check out any of the previous 1230 01:19:52,320 --> 01:19:55,000 Speaker 1: three or so we've had over the past six years. 1231 01:19:55,520 --> 01:19:59,719 Speaker 1: You can find that at iTunes, Spotify, Overcast, Stitcher, wherever 1232 01:19:59,800 --> 01:20:03,679 Speaker 1: you're finer podcasts are sold. We love your comments, feedback 1233 01:20:03,720 --> 01:20:07,520 Speaker 1: in suggestions right to us at M I B Podcasts 1234 01:20:07,640 --> 01:20:10,479 Speaker 1: at Bloomberg dot net. Be sure to check out my 1235 01:20:10,560 --> 01:20:14,120 Speaker 1: weekly column on Bloomberg dot com slash Opinion, give us 1236 01:20:14,120 --> 01:20:17,479 Speaker 1: a review on Apple iTunes. Sign up for our daily 1237 01:20:17,560 --> 01:20:21,480 Speaker 1: reads at Ridholtz dot com. Follow me on Twitter at Ridholtz. 1238 01:20:22,200 --> 01:20:24,080 Speaker 1: I would be remiss if I did not thank the 1239 01:20:24,120 --> 01:20:27,599 Speaker 1: crack staff that helps us put these conversations together each week. 1240 01:20:28,120 --> 01:20:31,840 Speaker 1: Reggie Basil is our audio engineer, Atico val Bron is 1241 01:20:31,880 --> 01:20:35,599 Speaker 1: our project manager. Michael Batnick is my head of research. 1242 01:20:35,760 --> 01:20:39,920 Speaker 1: Our producer and booker is Michael Boyle. I'm Barry Ridholts. 1243 01:20:39,960 --> 01:20:43,479 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.