Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. All right, let's talk a
Speaker 1: little bit about where we are in the stock market.
Speaker 1: I think Carol is entering this segment with a little
Speaker 1: bit of trepidation because Sandy Villery is here, partner of
Speaker 1: Villary Funds, looking after about two billion dollars. He's based
Speaker 1: down in New Orleans. We've been talking about the Saints,
Speaker 1: We've been talking about l s U, We're talking about
Speaker 1: University of Georgia. He's going to the SEC Championship this weekend.
Speaker 1: But we're not going to talk about that. Maybe we'll
Speaker 1: talk about it a little bit later. We're gonna talk
Speaker 1: about the market. Sandy, great to have you. Wait, I'm sorry,
Speaker 1: oh wait what? Yeah? You just did you check out?
Speaker 1: Did you go to your halty place. I'm actually looking
Speaker 1: for a Giffy that's got an eye roll so that
Speaker 1: I can tweet it out. Good good, well that tiffy, Giffy,
Speaker 1: Tiffy whatever. Yeah, okay, so let's talk about investing. Yeah,
Speaker 1: so what's the state of the markets here? Is Sandy.
Speaker 1: You know, I feel like the theme that's developed on
Speaker 1: this program over the past couple of weeks is, oh man,
Speaker 1: this feels much better than than we did, certainly back
Speaker 1: in September, even with those uh sort of unpleasant couple
Speaker 1: days earlier in the week. How do we finish the year? Yeah?
Speaker 1: I think it's interesting. We were more i'd say fed driven,
Speaker 1: So everything was revolving around are we're going up or
Speaker 1: down an interest rates? And now that looks like inflation
Speaker 1: is comfortably below you know, their targeted two percent. I
Speaker 1: think that kind of fed risk or interest rate uh
Speaker 1: you know, possibility of rate hikes or that sort of
Speaker 1: thing or kind of you know, there's nothing that's gonna
Speaker 1: happen from that front probably for another twelve months. So
Speaker 1: now it's all trade war related. So that's what's kind
Speaker 1: of been um moving moving things uh recently. And if
Speaker 1: if the trade war, if it causes some headline risk
Speaker 1: and that sort of thing, we're gonna look for our
Speaker 1: individual stocks to try to find good value. And I
Speaker 1: do think we uh, I think these little dips in
Speaker 1: here are gonna be great opportunities before the December fifteen
Speaker 1: tried trade war deadline. And and I think you'll be
Speaker 1: pleasantly uh surprised to have a nice Christmas rally. Let's
Speaker 1: talk about your fund. The Hillary Balance Fund beating just
Speaker 1: about all of its peers so far this year. It's
Speaker 1: returning nearly twenty eighty nine percent according to Bloomberg Data. Um,
Speaker 1: what's balanced mean right now? What's the right balanced strategy
Speaker 1: in this environment? Yeah? So in a in a in
Speaker 1: a perfect environment, I guess we'd be about seventy percent
Speaker 1: in stocks and thirty percent in bonds. And we're we're
Speaker 1: actually a little bit heavier on in cash right now
Speaker 1: as the market goes higher and higher. We how actually
Speaker 1: we're about ten to ten percent in cash. That it
Speaker 1: sounds like a lot, yeah for us, it is when
Speaker 1: we're historically one to two percent in cash. So we've
Speaker 1: recently taken some profits in a few names that have
Speaker 1: you know, kind of exceeded our expectations. So have you
Speaker 1: backed out of more of the fixed income? Are backed
Speaker 1: out more of the equity side becasts they've done? Okay? Yeah,
Speaker 1: so we're we're down at about in stocks right now,
Speaker 1: so we've kind of back out of that, and then
Speaker 1: we're kind of at the minimum level on bonds as well,
Speaker 1: just thinking that you know, with rates going as low
Speaker 1: as they have, maybe there's not much more you know,
Speaker 1: left in the bond market either. So are you with
Speaker 1: that high cash position. Is it just a case you're
Speaker 1: waiting for some new equities that kind of catch your
Speaker 1: attention to invest in, or is it because you think
Speaker 1: our sessions near? Yeah? I know that basically we we
Speaker 1: we see it as sort of bullets in the gun.
Speaker 1: And if you think about last year December of let's
Speaker 1: call it December of two thousand and eighteen, when the
Speaker 1: market fell nine point two percent, that gave us the
Speaker 1: opportunity to get two new names to work, and literally
Speaker 1: between Christmas and New Year's we would have put by
Speaker 1: two more stocks. So we're looking for opportunities and volatility
Speaker 1: to buy. So let's talk about some of the names
Speaker 1: that you like. On Semiconductor is a really interesting one.
Speaker 1: Not when we hear about a ton, but you like it. Why. Yeah,
Speaker 1: So we had owned Cypress Semiconductor and Cyper's got bought
Speaker 1: out by in finniy On for for literally like fifteen
Speaker 1: times that we were happy, nice premium and and so, uh,
Speaker 1: there wasn't much left in that, and so we switched
Speaker 1: to on Semiconductor. Really, we think it's a kind of
Speaker 1: a secret way to play the five G build out
Speaker 1: because they had no exposure, no content at all on
Speaker 1: on three G or four G. Yet they have a
Speaker 1: hundred dollars of content on each of these base stations.
Speaker 1: That's uh, they've got almost all of us, all the suppliers, um,
Speaker 1: so they're involved in all of those and I think
Speaker 1: that's gonna be a nice play for them. It looks like,
Speaker 1: though I'm just gonna at our f a page on
Speaker 1: the Bloomberg, it looks like revenues though have been declining
Speaker 1: quarter to quarter year every year. Uh, same thing with earning,
Speaker 1: So what what's the problem here. What's interesting is if
Speaker 1: you look at they do have exposure to auto so
Speaker 1: they're in um, they're in you know, Europe we saw
Speaker 1: weaker auto numbers. China we saw weaker auto numbers. The
Speaker 1: amazing thing is when you look at their peers, their
Speaker 1: peers are down like nine or ten. Because of that,
Speaker 1: they were only down two percent. So they're they're doing
Speaker 1: much better. And it's because of the content story in
Speaker 1: autos where each iteration of these electric vehicles or autonomous vehicles, uh,
Speaker 1: they're getting more and more their content um on each one.
Speaker 1: So that's what's that's what's helping them out. Talk to
Speaker 1: me about E Health. That's another interesting name because I
Speaker 1: had did an interview earlier today we're gonna play out
Speaker 1: with the CEO of I A C. And he was
Speaker 1: talking about getting into the travel business early sort of
Speaker 1: early Internet, early two thousand's health is sort of trying
Speaker 1: to do what expedient and travelosity we're doing. You know
Speaker 1: that that that's it, and it's it's amazing if you
Speaker 1: compare their their website, which e health dot com, and
Speaker 1: you compare it to medicare dot com, or you compare
Speaker 1: it to healthcare I'm sorry dot gov. Uh, it's it's
Speaker 1: an amazing difference. The the government run website is so clunky. Uh,
Speaker 1: there's is extremely slick and a true e commerce website.
Speaker 1: UH love the demographics. Ten thousand, five hundred people are
Speaker 1: turning sixty five in the US every single day. Sixty
Speaker 1: million UH seniors are are eligible for their for for
Speaker 1: medicare and they just have one percent market share. We're
Speaker 1: hoping it gets up to four percent market share, so
Speaker 1: so they sell insurance they do. It's This is a
Speaker 1: stock that's up a hundred and thirty four percent this
Speaker 1: year and we're talking about a forward looking pe of
Speaker 1: about forty one, which is fine if the if the
Speaker 1: growth rates justify that. When did you get into this name?
Speaker 1: We actually got in UM with within about thirty days ago.
Speaker 1: We bought it. How many days about? It was around
Speaker 1: fifty nine dollars a share. There was a lot of
Speaker 1: headlines on nine. Now it's a ninety. It's been a
Speaker 1: great performer so far, right, But this is kind of
Speaker 1: my you know what I'm saying in terms of use
Speaker 1: these macro headlines to sort of find individual stories and
Speaker 1: buy them quickly. Because when there was the Medicare for
Speaker 1: All discussion, this stock got absolutely walloped. As UM. This
Speaker 1: would kind of this wouldn't do so well for their
Speaker 1: business if if every you know, you didn't have to
Speaker 1: go purchase healthcare when the market gets slammed down, whether
Speaker 1: it was three months ago, whether it was August, is
Speaker 1: that what you do a bunch of buying? Yeah, actually
Speaker 1: we did so, um and and that's that's that's what
Speaker 1: we're that's what we're hoping to do. And um we
Speaker 1: we will continue to take advantage of volatility to buy
Speaker 1: good stuff. You want the markets to be beat up
Speaker 1: a little bit, a little bit, a little bit of volatility.
Speaker 1: Use it as your friend, not your enemy, all right.
Speaker 1: Sandy Villery, partner of Villary Funds based down New Orleans.
Speaker 1: Go Tigers, Go Saints, and that is spelled g E
Speaker 1: A u X go. I'm rolling my eyes me and
Speaker 1: Taylor Swift. I just put it on Twitter, boy, all right,
Speaker 1: you must a lot. So we do want to talk
Speaker 1: about vaping, already under scrutiny for health risks and deaths.
Speaker 1: It was linked to a rare type of lung damage
Speaker 1: in a new case report released just yesterday. Controversy of
Speaker 1: the safety of the cigarettes man it is raging big
Speaker 1: time in the U S, where the deaths of as
Speaker 1: many as forty seven people have been linked to a
Speaker 1: different severe respiratory illness. The FDA, meantime, has said it
Speaker 1: does not know when final guidance will be issued when
Speaker 1: it comes to East cigarettes. So let's talk about regular
Speaker 1: regulations of the e cigarette market. With us. Is Dr
Speaker 1: Joanna co And, Professor of disease prevention and director of
Speaker 1: the Institute for Global Tobacco Control at Johns Hopkins Bloomberg
Speaker 1: School of Public Health, joining us on the phone from Baltimore.
Speaker 1: We do want to point out that the Bloomberg School
Speaker 1: of Public Health is supported by Michael R. Bloomberg, founder
Speaker 1: Bloomberg LP and Bloomberg Philanthropies. Michael Bloomberg has also committed
Speaker 1: a hundred and sixty million dollars in an effort to
Speaker 1: ban flavored East cigaret and vaping devices. Dr Cohen, nice
Speaker 1: to have you with us. This is certainly, um one
Speaker 1: of the big issues that the country is grappling with,
Speaker 1: and I think regulators are as well. You know, what
Speaker 1: are some of the issues that are front and center
Speaker 1: when it comes to vaping regulation? Right? Well, this is
Speaker 1: a tricky issue, exactly as you say. On one hand,
Speaker 1: we want to help get cigarette smokers off of cigarettes,
Speaker 1: because that's the most harmful thing you can do. Um.
Speaker 1: So the idea of the cigarettes and the promise of
Speaker 1: them was to really provide that off ramp for cigarette smokers.
Speaker 1: The problem is that, um, instead, we've seen a huge
Speaker 1: uptake of the cigarette use among kids, and that's exactly
Speaker 1: not what we want to see. It's turned out to
Speaker 1: be a public health disaster. And so what happens next
Speaker 1: from a regulatory perspective? Dr Cohen? Because you know, what
Speaker 1: are the interesting things that care was alluding to this,
Speaker 1: It's happened very fast that the government, uh, and I
Speaker 1: think even public health advocates have really identified this as
Speaker 1: a major issue. How do we get sort of smart regulation?
Speaker 1: But it sounds like in a relatively quick manner given
Speaker 1: the speed at which this is all happening, that's right.
Speaker 1: So Um. One of the things that's very concerning with
Speaker 1: a huge increase in use among kids is that the
Speaker 1: vast majority of them are using flavored the cigarettes. Um.
Speaker 1: We also hear that cigarette smokers who are using the
Speaker 1: cigarettes to quit also like flavors. So it gets really tricky.
Speaker 1: How do you get flavors to cigarette smokers who are
Speaker 1: trying to quit, but keep them completely away from the kids.
Speaker 1: So it does get tricky, and I think that's why
Speaker 1: the f d A is taking a little bit of
Speaker 1: time to make sure that they get it right. So
Speaker 1: I guess what I'm trying to understand. Two is I
Speaker 1: feel like we have various conversations where folks say the
Speaker 1: problems are with like black market e cigarettes. But I
Speaker 1: mean the point that you're making is we obviously don't
Speaker 1: want these in the hands of children. For smokers who
Speaker 1: are trying to break the habit, East cigarettes is a
Speaker 1: better option. Is that fair? Is that correct? Well, we
Speaker 1: still don't have great evidence yet that it really does
Speaker 1: help cigarette smokers quip, but that was the promise. That's
Speaker 1: that's the one reason why we would we might have
Speaker 1: these cigarettes on the market. What's interesting too, and I
Speaker 1: know Bloomberg Business Week magazine has covered this um in
Speaker 1: depth in terms of how quickly East cigarettes seemed to
Speaker 1: get to be able to come to market, um, even
Speaker 1: though the FDA oversight wasn't necessarily all in place. I mean,
Speaker 1: how did that happen? Well, when the sigarettes first came
Speaker 1: into the market, the FDA saw them and thought, hey,
Speaker 1: this is a smoking cessation device, and we need to
Speaker 1: regulate it as other smoking cessation devices. So we certainly
Speaker 1: have approved nicotine replacement therapy and other pharmaceutical products that
Speaker 1: have been shown to be effective to help smokers quit
Speaker 1: um but Egrette companies food and so we don't want
Speaker 1: to be regulated like smoking sensation devices. We want to
Speaker 1: be regulated like tobacco products. And that put a huge
Speaker 1: delay in the process. That's taken a while for all
Speaker 1: the administrative pieces to fall into place for the FDA
Speaker 1: to actually be able to now take action in regulating
Speaker 1: the cigarettes like tobacco products. And so, what are the
Speaker 1: companies saying at this point, Because, as you're alluding to
Speaker 1: Dr Cohen, you know, companies have very powerful voices among regulators,
Speaker 1: among lawmakers. We've seen that for decades in the case
Speaker 1: of tobacco. Uh, what are they saying and doing that
Speaker 1: may either help this move along or hinder it. Well,
Speaker 1: they certainly have their backs against the wall right now
Speaker 1: and trying to maintain credibility and and trying to maintain
Speaker 1: as many as much profits as they can as um
Speaker 1: as the regulators are are working to also address the
Speaker 1: public's health and keep kids away from these products. So
Speaker 1: you know, on one hand, we hear about one of
Speaker 1: the major e cigarette companies, um taking flavors off the
Speaker 1: market in this country, but just like we've seen with
Speaker 1: Big Tobacco in the past, they still have their flavors
Speaker 1: on the market in other countries around the world. So
Speaker 1: you know, they're just acting where they feel the pressure
Speaker 1: and not really taking the high road and thinking about
Speaker 1: the true impacts of their products bottom line. Just got
Speaker 1: about thirty seconds here. Do you think that we just
Speaker 1: went too fast on this? Uh, they went too fast.
Speaker 1: We went a little too slow and um, and we're
Speaker 1: in a bit of a tragedy right now where um,
Speaker 1: you know, hopefully now our politicians are going to be
Speaker 1: more concerned about doing right by the kids then by
Speaker 1: uh concerned about votes in the next election, and that
Speaker 1: we can pull this epidemic under control. All right, We're
Speaker 1: gonna leave it that note. UM, Dr Cohen, thank you
Speaker 1: so much. Joanna co And, Professor of disease Prevention, Director
Speaker 1: of the Institute for Global Tobacco Control at Johns Hopkins
Speaker 1: Bloomberg School of Public Health. Of course, that school supported
Speaker 1: by Michael R. Bloomberg, founder Bloomberg LP and Bloomberg philanthropies,
Speaker 1: and as we mentioned earlier Earlier, Michael Bloomberg has also
Speaker 1: committed money to an effort to ban flavored e cigarettes
Speaker 1: and vaping devices. All right, so let's talk a little motorcycles.
Speaker 1: We have got just the man to do it. Jason
Speaker 1: Chinok is here. He is CEO of Ducati North America.
Speaker 1: And can I just start by say we're gonna talk
Speaker 1: about new bikes and stuff like that. But can I
Speaker 1: just say, this must be like the coolest job in
Speaker 1: the world. Unquestionably, it's definitely one of the coolest motorcycle guy.
Speaker 1: I mean, you actually started working behind the counter at
Speaker 1: a like doing motorcycle parts, right, Yes, I did. In fact,
Speaker 1: it was something that years ago, I was following a
Speaker 1: different career path and I made the decision. I said, Okay,
Speaker 1: this is clearly not working out for me this other
Speaker 1: way I was going, And so I decided I'm going
Speaker 1: to follow another passion in life. And I started doing
Speaker 1: my homework, research, informational interviews with executives in the motorcycling industry.
Speaker 1: And then I realized, I said, the way for me
Speaker 1: to really learn this is just to cut my teeth
Speaker 1: at the at the beginning at the very bottom. And
Speaker 1: so I started off as a parts guy at a
Speaker 1: motorcycle dealership. Men, I had an education, and I was
Speaker 1: way over qualified for like what I was doing, But
Speaker 1: I said, this is where I got to learn, and
Speaker 1: I learned customers, I learned the product, I learned how
Speaker 1: to work with manufacturers. I mean, like that was those
Speaker 1: those four years were probably the most formative years of
Speaker 1: my career, uh, in terms of setting me for my future.
Speaker 1: What's changed about the industry since you started, Uh, the
Speaker 1: industry is actually it's become a little bit smaller than
Speaker 1: back then. I mean back then. Obviously, back in the
Speaker 1: early nineties or late nineties, credit was a little looser, uh,
Speaker 1: and so a lot of people were getting finance for
Speaker 1: motorcycles that maybe weren't really in the position where they
Speaker 1: should be financing motorcycles. And so as a result, what
Speaker 1: we saw as we saw a bit of shrinking in
Speaker 1: the industry when the recession hitting, credit tried up. But
Speaker 1: the good thing is is for brands like Ducati and
Speaker 1: where we're at, we really weren't affected by that because
Speaker 1: we always sold in the premium and we never had
Speaker 1: predatory lending or questionable credit practices, and so as a result,
Speaker 1: we gained a tremendous amount of market share when the
Speaker 1: recession hit. Now, volumes did affect We're effected a little
Speaker 1: bit as well. But and then as the market came back,
Speaker 1: not to the same degree as it was before. As
Speaker 1: it came back, we retained our share, increased our volumes,
Speaker 1: and so it's been quite positive for us in that regard.
Speaker 1: All right, so let's talk about this new lineup. What's different?
Speaker 1: What can people be looking for. Well, one of the
Speaker 1: flagship motorcycles that a lot of people are getting really
Speaker 1: excited about is a new motorcycle that we have called
Speaker 1: the street Fighter, and ye know that it is and
Speaker 1: and it comes from the idea of somebody taking a
Speaker 1: sport motorcycle like what you would see out on the racetrack,
Speaker 1: removing the farings off of it, the body work, and
Speaker 1: putting on a really cool headlight in the handlebar and
Speaker 1: that basically takes a very aggressive sport bike and makes
Speaker 1: it accessible for the street. Except for we've taken it
Speaker 1: and redone a completely beautiful redesign and it's built off
Speaker 1: of the V four platform and chassis which is uh
Speaker 1: which which is a number one seller last year for us.
Speaker 1: So there's that product and that that's on one end,
Speaker 1: and on the other end we find ourselves into the
Speaker 1: e bike world as well. Well, that's what I'm curious about.
Speaker 1: Tell us how aggressively you guys are pursuing I mean,
Speaker 1: how much your customer wants this? Well, this is something
Speaker 1: they launched in Europe last year as a pilot project,
Speaker 1: and then when I saw it come out on myself
Speaker 1: being a mountain biker, was like, I want that product,
Speaker 1: even if it's just to have one for myself. Uh.
Speaker 1: And then we took the last year in taking feedback
Speaker 1: from our customer base, from our dealer network and just
Speaker 1: really to understand and research what that markets like. And
Speaker 1: it's incredible. It's a very fast growing segment in North America.
Speaker 1: In Europe, it had actually been going for quite years.
Speaker 1: But our customer bases our first audience for this product
Speaker 1: because it's branded Dukati. But there's also really unique technologies
Speaker 1: and the partnership that we have with the company that's
Speaker 1: making the bikes with us. So but what's how how
Speaker 1: well did it sell in Europe? And I knew it
Speaker 1: sounds like you tinkered with it a little bit. Uh,
Speaker 1: it's going to the first sales in North America are
Speaker 1: going to happen, in correct, So what are your anticipation.
Speaker 1: What kind of a market size is this? Our market potential? Well,
Speaker 1: in terms of market potential, we're actually not looking necessarily
Speaker 1: at the bicycle business to try and compare us to that.
Speaker 1: We're looking at the first year for to be a
Speaker 1: supplement to what our dealers are selling and also to
Speaker 1: complement our customers life so volumes honestly, where it's not
Speaker 1: something that we're going to be very aggressive on. We
Speaker 1: as a premium bran, I'd rather deliver a good experience
Speaker 1: not only with the dealership and the product, but also
Speaker 1: for the customer and to be able to build it
Speaker 1: in a much more natural way. But Jason, why do it? Then?
Speaker 1: Why do it? Because it's a compliment to our the
Speaker 1: brand and also to our dealers, and our customers love
Speaker 1: this and in the motorcycling world a lot of alart.
Speaker 1: I mean, I'm glad that you're doing it because I'm
Speaker 1: kind of all in on green, but I'm you know,
Speaker 1: you know, I would I would be it would be
Speaker 1: impossible for me to claim that we were doing this
Speaker 1: to be green. It's not that it's the fact that
Speaker 1: it's appreciate the honest it's it's a really interesting technology
Speaker 1: and product where people can actually enjoy out into the
Speaker 1: real world. I mean, as an avid mountain biker, I
Speaker 1: can now ride with people that maybe aren't as skilled
Speaker 1: as a mountain biker with me and can go for longer.
Speaker 1: And that's it's that's why it's a compliment versus let's say,
Speaker 1: a green approach to the idea of a quiet bike.
Speaker 1: Uh no, more different than than a bicycle would be.
Speaker 1: I mean, really, you have a little wizzard the electric motor,
Speaker 1: and it's a it's a cyst, so it's not it
Speaker 1: doesn't do the pedaling for you, and it's not like
Speaker 1: a motorcycle where you throttle it and go. You have
Speaker 1: to put the power in in order for it to
Speaker 1: assist you to go through it. And so talk to
Speaker 1: us about your customer because, as you say, it's higher end,
Speaker 1: so maybe a little more recession proof. But we're constantly
Speaker 1: talking to ceo s about what they're seeing from their
Speaker 1: customers in terms of their willingness to spend. The consumer
Speaker 1: has been unbelievably resilient through this very long bullmarket. As
Speaker 1: you know, are you seeing any cracks at all, any caution,
Speaker 1: any pullback as you talk to customers being through the
Speaker 1: last recession, I'm always have a bit of cautious optimism
Speaker 1: is we like to use that term, but we continue
Speaker 1: to bring out more premium product, and we continue to
Speaker 1: bring out product that's on the higher end in terms
Speaker 1: of both price that seems to be more resilient than
Speaker 1: let's say even the more entry level product in our brand. Interesting,
Speaker 1: so uh, they think the challenge that we see is
Speaker 1: how do we continue to bring people into motorcycling, and
Speaker 1: how do we bring them in through the sub ten
Speaker 1: thousand dollar motorcycles to help foster new growth in development
Speaker 1: because at some point those customers are our top end
Speaker 1: customers start to age out, so you have to replenish them.
Speaker 1: We're not really having that sort of effect like some
Speaker 1: other brands are that are let's say, have dominated that
Speaker 1: the baby boomer generation. We're less uh, there are other
Speaker 1: brands y, but we were less affected by that because
Speaker 1: we have if you have a younger demo on average,
Speaker 1: we definitely have a younger demographic, but also being a
Speaker 1: sport brand, sport you get youth. You stimulate this idea
Speaker 1: of like I want to relive my youth, and so
Speaker 1: even if you're forty four years old, you want to
Speaker 1: ride like you're twenty five year old. And so for
Speaker 1: a second I thought you were saying forty four, because
Speaker 1: I'm forty five was older. But I'm just gonna let
Speaker 1: that slide. No, no, no, that is actually our that's
Speaker 1: our average age for a Ducadi motorcycles. Who's your typical
Speaker 1: customer like our You know your your demographic, that's yours? Well,
Speaker 1: I mean it is it isn't that forty four? Your
Speaker 1: forty four years old? Mostly men? And actually with the
Speaker 1: with the launch of the Scrambler product a couple of
Speaker 1: years ago, we've been able to shift that trend as well.
Speaker 1: I mean we had our like a ninety five to
Speaker 1: five percent ratio and mostly experienced ratio, experienced writers, and
Speaker 1: with us bringing a new product and actually shift in
Speaker 1: our communications were actually opening in the world to more
Speaker 1: women motorcyclists as very cool stuff. All right, great to
Speaker 1: catch up with you. Congrats on the new line. Jason
Speaker 1: Chinik is the CEO of Ducati North America. Here with
Speaker 1: this in New York City, in our Bloomberg Interactive Brokers
Speaker 1: Studio today. You know, I don't know. I mean, actually
Speaker 1: the e bike is really I find very interesting. I
Speaker 1: find that whole movement, you know, people who go on
Speaker 1: bike tours and things like that. I hear a lot
Speaker 1: of good things about that segment. Maybe something there go
Speaker 1: maybe is a nice brand. I know it is. I
Speaker 1: noticed I was just like a tweeting outfit. It was.
Speaker 1: It was stolen in Germany for a new one. Yeah.
Speaker 1: I guess you could say that George Siros and the
Speaker 1: Siros fun taking it a little bit easy. It's definitely
Speaker 1: a different era. This story in the Finance section of
Speaker 1: the magazine this week, hitting newsstands as we speak. Also
Speaker 1: find it at business Week dot com and at Bloomberg
Speaker 1: dot com. Let's get into it because it is about
Speaker 1: George Soros and his fund um with me as editor
Speaker 1: Pat regne Er. He's the Bloomberg Business Week Markets and
Speaker 1: Finance editor. He's at our Bloomberg Interactor Broker Studio along
Speaker 1: with ChIL Weber, editor at Bloomberg business Week. This is
Speaker 1: a great story. We talked um with various folks, Kathy
Speaker 1: Burton among them, who has followed the hedge fund industry
Speaker 1: has written a book about the great hedge fund folks,
Speaker 1: and Um, it's a different time for George Siros. We
Speaker 1: know that we've seen that over the last couple of years,
Speaker 1: definitely for for Soros. But the story is really about
Speaker 1: Don fitz Fitzpatrick, who's the chief investment officer of the
Speaker 1: Soros of Source fund Management. UM And what's really been
Speaker 1: interesting sort of on her watches and went to the the
Speaker 1: stories about is the pull away from risk that's really
Speaker 1: happened there and with it have come returns and some
Speaker 1: internal internal turmoil that's come with that those decisions. Um
Speaker 1: And and Pat had been working with Kathy a little
Speaker 1: bit on this, um Cacha Porzynski All So on the byline, Pat,
Speaker 1: what did you what did you and Kathy ultimately come
Speaker 1: down on when you guys were talking about this story. Yes,
Speaker 1: so this is really a story about a culture shift. Um.
Speaker 1: If you imagine sort of the mystique around sorrows, right,
Speaker 1: I mean, he's famously the man who broke the Bank
Speaker 1: of England, and that's just another mystique that's the Wall
Speaker 1: Street Like, this guy is like a legend for breaking
Speaker 1: that a billion dollar beat, right, British Pound yeah, and
Speaker 1: he wanted to go even bigger. Right. He also made
Speaker 1: a big bet on the US elections and and got
Speaker 1: that wrong in the and went and went the wrong way.
Speaker 1: He's not a conservative guy. He's not a conservative guy
Speaker 1: in the sense of being a sheepish with what to
Speaker 1: do with his money. And so it's like the definition
Speaker 1: of macro trading. You're making these big moves that is
Speaker 1: um an interesting and can be an exciting strategy have
Speaker 1: when you're talking about your money and your clients who
Speaker 1: want to take big swings when you are now running
Speaker 1: the money in order to support the foundations that you run,
Speaker 1: and they need they need cash to do the things
Speaker 1: that they need to do. Uh, that requires that you
Speaker 1: think about your money a little bit differently. And so
Speaker 1: Don Fitzpatrick who's come in, she's really been charged with
Speaker 1: building a money management firm for this new purpose. And
Speaker 1: that's not always easy for the hedge fund managers who
Speaker 1: worked for her. Right, we'll tell us about that, because
Speaker 1: she's actually gone on a bit of a firing spreak, correct, right,
Speaker 1: I mean, so she's replaced thirteen portfolio managers some quits,
Speaker 1: Um got nudged out the door. Um, you know a
Speaker 1: lot of the people who have they've done very well
Speaker 1: since then in terms of raising money. People out there
Speaker 1: think that they're that they're good money managers, but she
Speaker 1: didn't necessarily feel like it was a good fit for
Speaker 1: the firm, both maybe in terms of their style, but
Speaker 1: also in terms of the kind of investments. I have
Speaker 1: to say, what's what's great about this story? And I
Speaker 1: love how it kind of kicks off about, you know,
Speaker 1: kind of a classic Business Week take of just reminding
Speaker 1: everybody about a podcast that happened where she was on it,
Speaker 1: right and she basically said, hey, you want to come
Speaker 1: work for us the podcast? I think it speaks too.
Speaker 1: And we talked about this a little bit on on
Speaker 1: our show board, where we're at a moment where the
Speaker 1: hedge fund industry it's not the same industry that it
Speaker 1: has been before. And so for somebody who's running a
Speaker 1: fund associated with Soros to come on a podcast and
Speaker 1: basically be like, hey, like, if you if you're interested
Speaker 1: in applying for a job, like, here's a place to apply,
Speaker 1: I think that really kind of speaks to um an
Speaker 1: industry at a certain moment, and I think it got,
Speaker 1: you know, in the in certain certain hedge fund circles.
Speaker 1: I think it really speaks to the moment, and it
Speaker 1: caught a lot of people by surprise, and with something
Speaker 1: that multiple people brought up to us during their the
Speaker 1: writer's reporting on the topic because it's weird, it's it's different,
Speaker 1: well different because you think about Soros, like over the
Speaker 1: last two three four decades, I mean, if you could
Speaker 1: get a job, everybody wanted a job there. Everybody wanted
Speaker 1: to be associated with George Soros and managing his money. Yeah,
Speaker 1: that's right. I mean this would have been like any
Speaker 1: manager's dream job. You wouldn't have needed to hear about
Speaker 1: it on a podcast. You might have paid money to
Speaker 1: get the email and like money what you know, to
Speaker 1: to send it, to send it to um and running
Speaker 1: what is kind of something similar to a university endowment.
Speaker 1: It is a different game. Now. One of the things
Speaker 1: that we we talked about internally is running an endowment
Speaker 1: is actually really interesting business and there's some legendary pioneering
Speaker 1: money managers doing that business. So there could be a
Speaker 1: really interesting future ahead for this for this firm. But
Speaker 1: you know, it's it's very early days and it's a
Speaker 1: rocky transition right now. Well, and she doesn't have to
Speaker 1: do a lot, but she's got to make sure she
Speaker 1: guarantees that the Purpose Fund is spending I think about
Speaker 1: a billion dollars a year. She's going to cover that. Basically,
Speaker 1: you have to keep it flat, right, and like that
Speaker 1: that's not totally easy with that much money that's going
Speaker 1: out the door. Ran right. You describe that as a
Speaker 1: as a simple task, but actually, you know, making sure
Speaker 1: that you have enough money for an institution to live
Speaker 1: on is actually one of the harder jobs in money man,
Speaker 1: and not lose money in the process. That's that's what
Speaker 1: it's all about. So yeah, that's to me, like everything's
Speaker 1: kind of a strategy story. How do you transition strategies here?
Speaker 1: And like she's in the middle of this little turbulent
Speaker 1: period trying to get to the other side of it.
Speaker 1: How she doing so far? Well, so quickly, so so far.
Speaker 1: She's behind her long term benchmark and a little bit
Speaker 1: closer to what they call her medium term benchmark. She's
Speaker 1: been at it for two and a half years. That's
Speaker 1: not a lot of time to measure something, all right, Yeah,
Speaker 1: kind of giving her a little bit more time. A
Speaker 1: great story, no doubt about it. It's in the current
Speaker 1: issue of the magazine, as I mentioned, on news stands
Speaker 1: now and you can also check it out online. Jill Webber,
Speaker 1: thank you so much, Editor of Bloomberg Business Week in
Speaker 1: our Bloomberg Interactor Broker Studio, Pat Ragneer, thank you as well,
Speaker 1: Markets and Finance or at Bloomberg Business Week bro a journal. Yeah,
Speaker 1: but you let me drive. Oh no, no, no, please,
Speaker 1: I'll do the right drivel. I want to drive. It's
Speaker 1: kind of tough. Just drive, baby. The questions get drying.
Speaker 1: This is the drive to the globe. Give me thanks,
Speaker 1: we'll drive radio. It is time for the Drive to
Speaker 1: the close. With us is David Richardson, Executive director and
Speaker 1: Impacts Asset Management, twenty point three billion dollars in assets
Speaker 1: under management, joining us in our Bloomberg Interactive Broker Studio
Speaker 1: on this Thursday. Nice to have you here on Bloomberg Radio.
Speaker 1: It's as I said to you, as we get a
Speaker 1: little cookie around here. It's been quite a jam packed week,
Speaker 1: but I feel like we could say that about every
Speaker 1: week for the last decade um. The market trade obviously
Speaker 1: a little bit quieter today as we wait for that
Speaker 1: monthly jobs report. How do you see it. What are
Speaker 1: the trends that you are watching when it comes to
Speaker 1: the equity market specifically. Sure, our focus has been on
Speaker 1: the transition to a more sustainable economy and the growth
Speaker 1: investment opportunities that support that. And there are a lot
Speaker 1: of areas of the economy that are actually pretty interesting.
Speaker 1: It's pretty positive and pretty upbeat. Yeah, for sure. I
Speaker 1: mean where we're thinking of sustainability is where's the sustainability
Speaker 1: of return is going to come from in the future,
Speaker 1: and we think growth and things that have tail winds
Speaker 1: in growth or interesting. Well, it is sustainability Week and
Speaker 1: we've been doing certainly a lot of things here at Bloomberg,
Speaker 1: including a global Responsible Investing form. I was involved in
Speaker 1: it earlier this week. Talk to us about the implications
Speaker 1: of climate change because it can be a huge risk
Speaker 1: for various industries and I think increasingly because of that
Speaker 1: they have to take it into account. How do you
Speaker 1: see it, how do you play it? Well, we think
Speaker 1: that there are both, yes, as you point out risks
Speaker 1: and opportunities, and the risks are thinking that the past
Speaker 1: is prologue for the future. We definitely see lots of
Speaker 1: changes being driven by climate change, whether that's changing, whether
Speaker 1: patterns and either drought or like we experience here in
Speaker 1: New York with Hurricane Sandy and flooding of subways. I mean,
Speaker 1: both of those are investment opportunities and trying to mitigate that.
Speaker 1: Um for climate change, there is an adaptation angle too well,
Speaker 1: So when it comes you know, it's interesting. I want
Speaker 1: to I want to ask you, David, because I feel
Speaker 1: like we've been talking about climate change and certainly um
Speaker 1: in vironmental types of investing for many, many, many years.
Speaker 1: I do feel like it's becoming a lot more productive,
Speaker 1: and it's not just kind of a niche or cool
Speaker 1: thing to do, but there's actually really remarkable returns in
Speaker 1: doing it. What are what are the bigger trends that
Speaker 1: you're following that you think investors should be allocating money
Speaker 1: to at this point. So, what we think about when
Speaker 1: we're thinking about climate changes the areas of the economy
Speaker 1: that are going to be most impacted, and one of
Speaker 1: those would be an energy and we see a movement
Speaker 1: from traditional energy to renewable energy, whether that's wind and
Speaker 1: solar and storage, sort of repowering the grid is a
Speaker 1: big theme that's going to be important for the future.
Speaker 1: But we've been talking about that for a while. What's
Speaker 1: different about it? Because it's interesting in a day when
Speaker 1: we've been talking about the Saudi Aramco i p biggest ever,
Speaker 1: you know, some have said, I wonder if this is
Speaker 1: the top of the oil markets for them to be
Speaker 1: doing this. I mean, the changes from you know, fuels
Speaker 1: as we've known them. It's taking longer than everybody anticipated it.
Speaker 1: So so what is the energy play? What is the
Speaker 1: right energy play right now? Well, we were now seeing
Speaker 1: the commitment to net zero economies, particularly over in Asia
Speaker 1: and in Europe, and that is going to be the
Speaker 1: requirements to do that and get to a net zero
Speaker 1: emissions economy by require complete rewiring and repowering, and it's
Speaker 1: not happening as fast as people would like. But you
Speaker 1: see the large tech companies committing to renewable energy for
Speaker 1: their power. It's driving down costs. Battery storage, I think,
Speaker 1: is a big theme. It's not yet investable in our view,
Speaker 1: but it's going to be fairly quickly. The rollout of
Speaker 1: electric vehicles and electrification of transportation, that's all a movement
Speaker 1: towards a low carbon economy. And there are some great
Speaker 1: themes that maybe it's not just the renewable energy, but
Speaker 1: it's the related technology. How do you invest in it
Speaker 1: in the most productive way today? The by productive I
Speaker 1: mean in terms of generating returns. Yeah. Sure. For the
Speaker 1: best way to reduce carbon emissions actually is to use
Speaker 1: less energy. And so energy efficiency is a theme that
Speaker 1: we've been investing in, whether that's reducing energy demand and
Speaker 1: UM er sorry, UH, residences and commercial facilities, power, industrial facilities.
Speaker 1: Those are really interesting and it's pretty in some respects
Speaker 1: low tech stuff. But UM we're also seeing that with
Speaker 1: climate change and climate risk, there's a lot of opportunity
Speaker 1: around what are because of changing weather patterns, you're seeing
Speaker 1: UM drought and we're seeing the horrific fires in Australia
Speaker 1: and UH in California. And I think what's interesting is,
Speaker 1: you know, a year ago there twenty thousand people affected
Speaker 1: by the fires in California. This year there were two
Speaker 1: million people affected because the power got turned off. And
Speaker 1: that makes it a headline issue that investors are taking
Speaker 1: notice of. Now you need all this stand by generation
Speaker 1: because that happened when they you know, the winemakers were
Speaker 1: crushing grapes, So now they need standby power and that
Speaker 1: begets a whole bunch of investment. Is that where you
Speaker 1: would allocate money at this point? Kind of that stand
Speaker 1: by generation area. It's been one area that's been quite
Speaker 1: profitable for us, and you've liked that. Um. What else
Speaker 1: in terms of electric vehicles? How do you see it? David? Um?
Speaker 1: You know, all of them are making big bag, spending
Speaker 1: lots of money, and as a result, they're you know,
Speaker 1: cutting back on workers because they're kind of getting rid
Speaker 1: of out of you know, businesses that they think don't
Speaker 1: make sense, you know, as much in terms of electric vehicles,
Speaker 1: how soon before it really is as significant as we
Speaker 1: kind of talk about it today, you know, like we
Speaker 1: kind of play it up a lot, and it's obviously coming.
Speaker 1: But I'm just curious in terms of an investment payoff,
Speaker 1: I think, well, there's lots of opportunity. Now. What we've
Speaker 1: been thinking about is what are the companies making technology
Speaker 1: that's going to go in every electric vehicle, not components,
Speaker 1: the components exactly, because there's a lot of new componentry
Speaker 1: that's required that's different than internal combustion engine vehicles, and
Speaker 1: those products and companies and services have been doing quite well.
Speaker 1: I think you're seeing a rollout of a lot of
Speaker 1: new electric vehicle models by almost every manufacturer, and new
Speaker 1: manufacturers coming into the four China's requiring electrification of their
Speaker 1: vehicle fleet and that's driving a lot of innovation and
Speaker 1: and growth in terms of metrics for identifying companies that
Speaker 1: are doing environmentally uh sustainable initiatives? Do we need to
Speaker 1: get better in terms of being able to create some
Speaker 1: transparency when it comes to companies and what they're doing.
Speaker 1: Just got about thirty seconds. Sure, I think that you know,
Speaker 1: we've had a focus on looking at the revenues that
Speaker 1: are involved in these environmental markets and looking at that first,
Speaker 1: but you can also measure some environmental impact, positive environmental impact,
Speaker 1: whether it's reduction and emissions or generation of renewable energy
Speaker 1: and things like that. Alright, well, popular, it's a great
Speaker 1: topic and I know like we've been talking about it
Speaker 1: a lot, focused on it. Um, Thank you so much,
Speaker 1: really appreciate it. David Richard, City's Executive Director of Impacts
Speaker 1: Asset Management twenty point three billion in assets under management
Speaker 1: in our Bloomberg Interactive Broker Studio. Thanks for listening to
Speaker 1: Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com. You can also listen to our
Speaker 1: radio show every weekday at two pm Eastern, only on
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