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Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: His name is Regiev Jane, and he has quite the

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Speaker 1: fascinating background. UM. He is currently chairman and Chief Investment

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Speaker 1: Officer at his own firm, g q G Partners, which

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Speaker 1: manages about twenty four billion dollars. Previously, UH, he was

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Speaker 1: co CEO and and c i O at Vante Bell

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Speaker 1: Asset Management. UH. If you are at all interested in

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Speaker 1: a wealth of things from global and international and E

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Speaker 1: M investing two portfolio management and the process that goes

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Speaker 1: in uh to putting together a portfolio, You're gonna find

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Speaker 1: this conversation to be absolutely fascinating. Rajiv Is is both

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Speaker 1: humble and soft spoken, but is filled with all sorts

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Speaker 1: of inside and wisdom. UM. I know I got a

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Speaker 1: ton out of the conversation. I just found lots and

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Speaker 1: lots of things that he said to be intriguing and fascinating,

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Speaker 1: and I think you will also so, with no further ado,

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Speaker 1: my conversation with Regive Jane. This is Masters in Business

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Speaker 1: with Barry Ridholts on Bloomberg Radio. I'm Barry Ridholts. You're

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Speaker 1: listening to Masters in Business on Bloomberg Radio. My extra

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Speaker 1: special guest this week is Regieve Jane. He is the

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Speaker 1: chairman and chief investment officer of g q G Partners

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Speaker 1: affirm with over twenty four billion dollars in assets under management.

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Speaker 1: Regiev was the morning Star International Manager of the Year.

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Speaker 1: He runs a number of different funds, the Goldman Sacks,

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Speaker 1: g q G Partners International Opportunities Funds, the Partners Emerging

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Speaker 1: Market Equity Fund, and the Partners US Select Equity Funds.

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Speaker 1: Last year, his Global fund was positive while the benchmark

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Speaker 1: was down nine percent. Over the past twenty years, we've

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Speaker 1: seen our performance in all of the areas Regeeve works

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Speaker 1: in between three hundred and four hundred basis points. Rajiv Jane,

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Speaker 1: Welcome to Bloomberg. Thanks verty, thanks for having me. I've

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Speaker 1: been looking forward to this conversation because you're one of

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Speaker 1: these people who have been shooting the lights out. Uh

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Speaker 1: and I think most of the investing public is not

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Speaker 1: very familiar with you or your background, which is quite fascinating.

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Speaker 1: Tell us about your personal history and how you got

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Speaker 1: to running a large asset management firm. Yeah, thanks, Betty,

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Speaker 1: So I think first of all, I was born in India,

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Speaker 1: grew up in India. Uh, and I got hooked onto

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Speaker 1: stocks when I was in high school. Uh. I guess

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Speaker 1: my dad wanted to keep me busy doing summer so

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Speaker 1: he gave me some those days you get old, you know,

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Speaker 1: stock certificates and dividend checks. He is that, why don't

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Speaker 1: tell you those and dividen haven't come in? And I

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Speaker 1: used to go remember going to broker and he was

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Speaker 1: an ex army guy, and he said, look, I need

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Speaker 1: to talk to a dad. Why they live He allows

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Speaker 1: a high school kid to come to this broker's house.

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Speaker 1: He looks, you see the average around hub, other people

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Speaker 1: sitting here. So that's how I ended up getting hooked.

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Speaker 1: Came to us when I was you know two, and

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Speaker 1: and yeah, I ever, I've been doing the same thing

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Speaker 1: ever since. I guess I can't do anything else. So

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Speaker 1: let's talk a little bit about your background at Vontabelle

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Speaker 1: Asset Management. You were there for a good couple of years.

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Speaker 1: Tell us what that shop was like and how that

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Speaker 1: led to the decision to launch your own firm. Yes,

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Speaker 1: so it was it was a part of a large

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Speaker 1: Swiss bank and it was kind of a small boutique

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Speaker 1: where first seven eight years that we couldn't even afforded trader.

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Speaker 1: So I I used to put in my own trades. Uh.

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Speaker 1: So I joined as a CopM for global and emerging

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Speaker 1: markets uh in international Actually, And what's the most interesting

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Speaker 1: experience I would say, UM would be the I began

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Speaker 1: the CEE IO and two thousand two and quickly seventy

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Speaker 1: person of the client's virtus. Really yeah, why was that?

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Speaker 1: Well because the past performance wasn't great and there was

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Speaker 1: a change in PM. So that's my view of saying

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Speaker 1: it that I wasn't want to blame. So, so you

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Speaker 1: were did you begin as an analyst? Also? How did

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Speaker 1: how did you work your way up to portfolio managers? Yeah? Yeah,

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Speaker 1: so um, I started at at the U B S

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Speaker 1: or Swiss Band Corporation, then as an analyst, and I

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Speaker 1: did become a CopM and after a couple of years.

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Speaker 1: So what this is a question that I've had people

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Speaker 1: asked me. You're the person perfect person to ask this.

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Speaker 1: What is the difference when you're looking at stocks as

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Speaker 1: an analyst and trying to take an individual equity apart

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Speaker 1: versus making the buy or cell decision as a portfolio manager.

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Speaker 1: Very different approaches, aren't they. Yeah. Look, I think I

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Speaker 1: think the abster right, there's a big difference between the two,

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Speaker 1: and I would categorize in two parts of that. The

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Speaker 1: first is, as an analyst, you expect to know as

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Speaker 1: much as you can, but as a portfolio manager, you

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Speaker 1: really don't have that luxury are waiting for getting let's say,

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Speaker 1: of the information which is norble. You can't get to

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Speaker 1: that level of a certainty. But as an analyst you

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Speaker 1: are expected to know more. That's a big difference, and

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Speaker 1: I think that sometimes when analysts become pms, they sort

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Speaker 1: of missed that. They keep ending looking for more and

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Speaker 1: more information, which you know can can can be you know, paralyzing.

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Speaker 1: The second part is when you're looking at a portfolio,

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Speaker 1: the risk management of the part of the portfolio construction

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Speaker 1: part become paramount. You may love the name, and you

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Speaker 1: actually tend to love all the names you want the portfolio,

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Speaker 1: but when you're constructing portfolio the the you may end

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Speaker 1: up taking too much risk in a particularly area. And

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Speaker 1: I mean, if you go back to two thousand crises,

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Speaker 1: a lot of folks blew up because they had too

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Speaker 1: much in an area, because consider risk because we love

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Speaker 1: this area and got cheaper and we love it, do

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Speaker 1: more and it kept getting cheaper. So oh, you've got

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Speaker 1: to be careful about you know. And and most time

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Speaker 1: it's the things that we love that kill us. So

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Speaker 1: let's talk a little bit about that and portfolio construction.

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Speaker 1: I think a lot of individual investors, to them, portfolio

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Speaker 1: construction is really just the stocks they've collected over the years.

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Speaker 1: You obviously approach it very differently. How do you think

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Speaker 1: about portfolio construction in terms of what you're holdings are,

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Speaker 1: in terms of how they're diversified by either sector or geography,

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Speaker 1: and and lastly about the risk you just mentioned. So um,

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Speaker 1: the first part is that you've got to make sure

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Speaker 1: that the business would be around for long term, right.

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Speaker 1: I mean, if you're not sure how the business gonna

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Speaker 1: look like five years out, you probably not shouldn't. Shouldn't

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Speaker 1: be invested. Doesn't mean you want for five years. But

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Speaker 1: you've got to be careful because markets anticipate deturing fundamental

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Speaker 1: a lot faster than than we we like to think.

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Speaker 1: If if if the drug is expiring in three years,

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Speaker 1: guess what, markets started discounting a lot sooner, and you

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Speaker 1: see a bunch of names which are selling it very

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Speaker 1: low multiples because oh it's still a few years out,

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Speaker 1: and it's it's a low multiple, so and so for

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Speaker 1: the market is already discounting deterioration, right, So that's part

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Speaker 1: of the first risk management. Is that a little bit

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Speaker 1: of a value trap situation for people exactly, And I think,

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Speaker 1: I think if you look at what has happened last year,

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Speaker 1: is the reason why a lot of folks have underperformed.

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Speaker 1: And I feel investing is nothing but a journey of

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Speaker 1: learning from a mistakes. If you're not willing to evolve

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Speaker 1: an adapt you won't survive long term. It's very easy

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Speaker 1: to say, look, I found this mouse trap, and how

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Speaker 1: wonderful it has worked in nineteen thirties. So my question

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Speaker 1: of how many anelets around in nineteen eighties level or

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Speaker 1: nineteen thirties maybe the market become a little more efficient.

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Speaker 1: So the the low multiple trap is is essentially markets

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Speaker 1: being much more forward looking than we would be gave

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Speaker 1: it credit for. So you sound a little bit like

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Speaker 1: Ray Dalio who talks about mistakes and the learning process

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Speaker 1: and improving. How long should an investor expect that journey

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Speaker 1: to take before they have some degree of components or

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Speaker 1: even um actual skill in managing assets. That that's a

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Speaker 1: hard question to answer because it's a function of a

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Speaker 1: are you truly trying to look at in on a

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Speaker 1: verny broad spectrum, the broader the spectrum chance that you

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Speaker 1: will learn a little bit faster. In other words, if

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Speaker 1: you if you're focusing on one specific sector only, you're

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Speaker 1: too natrowly focused. When you operate in the silo, you

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Speaker 1: really don't know the you know the there's no cross pollination.

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Speaker 1: I feel I'm a better US manager because I do

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Speaker 1: emerging markets and vice versa. I'm Barry rid Halts. You're

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Speaker 1: listening to Masters in Business on Bloomberg Radio. My special

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Speaker 1: guest today is Ragief Jane. He is the chairman and

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Speaker 1: chief investment officer of the twenty four billion dollar firm

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Speaker 1: g q G Partners. So let's talk a little bit

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Speaker 1: about the launch of of the firm. You co invest

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Speaker 1: alongside with your clients. I think you've you've said previously

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Speaker 1: something like your own assets are in your funds. To

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Speaker 1: discuss the idea behind eating your own cooking. My personal

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Speaker 1: belief is that managing somebody else's money as a privilege

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Speaker 1: it's an order to manage somebody else's money and our

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Speaker 1: decision to impact how our clients do and whether they

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Speaker 1: have a dignified retirement or not. Right. So when we

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Speaker 1: talk about if you have to ask things, I personally

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Speaker 1: feel if you have to ask a single question anybody,

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Speaker 1: the question would be what percent of your network are

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Speaker 1: you willing to put in your own funds? Restless talk

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Speaker 1: because that that that gives you a very good view

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Speaker 1: of a how they think about investing, because you become

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Speaker 1: much more absolute oriented, right, whether you think about taxes

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Speaker 1: or you know, after tax returns, uh, the fees and

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Speaker 1: so on, so forth. So it's sort of encompasses almost everything.

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Speaker 1: And I have vast majority of my wealth. I don't

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Speaker 1: have money in any other long only manager longshore private degree.

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Speaker 1: If we don't allow only personal trading a GQG, for example,

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Speaker 1: every employees and investor. And I'm quite proud of the

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Speaker 1: fact that we have quite a bit of skin in

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Speaker 1: the game. That's quite interesting. The the expression I recall

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Speaker 1: from years ago was I can't hear what you're saying

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Speaker 1: because what you're doing is speaking so loudly. That seems

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Speaker 1: to apply dead center to this doesn't it. Thank you, guys,

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Speaker 1: it does. So, so let's talk a little bit about um,

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Speaker 1: about how you go about selecting stocks and making the

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Speaker 1: decision to to get rid of them. You've described your

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Speaker 1: quote clinical approach to shedding positions when they no longer

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Speaker 1: fit your thesis. Explain that there's been plenty of evidence

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Speaker 1: and I can tell you with my own experience that

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Speaker 1: buying is easy. Selling is whether where the trouble starts.

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Speaker 1: And there has been recently been academic you know, work

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Speaker 1: on that that portfolio managed to do a pretty good

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Speaker 1: job buying. It's just selling. When when when things tend

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Speaker 1: to go wrong, and and and and and people describe

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Speaker 1: me as a kind of a ruthless seller, I'm happy

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Speaker 1: to go back again and revisit. And sometimes I would

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Speaker 1: sell just to clear up my mind and revisited. Um.

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Speaker 1: When when we talk about selling, it's the best selling

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Speaker 1: happens when things are subtle, not when they are in papers.

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Speaker 1: And when things that are subtle, it means does the

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Speaker 1: thesis actually hold or has beginning to shift a little bit?

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Speaker 1: And I think, I think, I think that's where you

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Speaker 1: almost have to be willing to be wrong and admitted

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Speaker 1: you're wrong. In fact, one of the tests I feel

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Speaker 1: for for my analysis is have you found new ways

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Speaker 1: of losing money? Explain that new ways of losing money,

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Speaker 1: like investing is said, is a journey of learning from mistakes.

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Speaker 1: How do we expand our investing horizon horizon means you're

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Speaker 1: our brand, our breadth, not time horizon, and that means

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Speaker 1: that you have to experiment sometimes in areas that you're

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Speaker 1: not invested before. If you've wily invest in financials, you

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Speaker 1: keep investing financial guests forward. Last decade hasn't been too

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Speaker 1: good for you in the nineties, if you didn't know

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Speaker 1: how to invest in financials in tech, you wouldn't have

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Speaker 1: done well in the next decade. If you only did that,

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Speaker 1: you probably wouldn't have done well either. So you need

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Speaker 1: to be able to experiment, and many talk about experimentation.

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Speaker 1: Losses have to be small, But that's how you would learn,

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Speaker 1: because the only way you really learn is by putting

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Speaker 1: some some money on, you know, on on on on

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Speaker 1: on on those stocks. Paper trading doesn't get it done.

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Speaker 1: Paper trading doesn't get it done. It overstays the reality because,

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Speaker 1: as somebody has said, the money is made by the

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Speaker 1: how thick is your stomach aligning rather than now how

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Speaker 1: much i Q you have? That's really interesting. What about

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Speaker 1: the selection process you You seem to have come up

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Speaker 1: with the process that's a little different from everybody else,

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Speaker 1: as the results have shown, What are you doing, um,

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Speaker 1: when you're thinking about building a portfolio and making individual

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Speaker 1: stock selections. First of all, um, balance sheet matters, right,

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Speaker 1: so so so that this you need to eliminate weaker

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Speaker 1: companies worst. In other words, that's an easy one negative

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Speaker 1: screen get exactly. So it is not about trying to

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Speaker 1: find the best company, is avoiding the worst. In fact, investing,

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Speaker 1: like a lot of things in life, it's sometimes easier

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Speaker 1: to to identify what shouldn't be done rather than or

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Speaker 1: it should be done, because that just increases the odds

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Speaker 1: of success. So you avoid mistakes, and even if everything

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Speaker 1: else is okay, you're way ahead of people whose portfolios

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Speaker 1: are filled with mistakes. Exactly. In fact, I've kind of

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Speaker 1: joked around the reason why I've survived over the longer

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Speaker 1: run is because you just avoid blowing up, and enough

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Speaker 1: people blow up and you'll be top quartile just because

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Speaker 1: you don't blow up. So I think I think from

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Speaker 1: a process of perspective. First of all, you take out

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Speaker 1: the weaker balance sheets, and the second part is think

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Speaker 1: about the capital allocation decisions managements have made. In other words,

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Speaker 1: how much what returns have degenerate on intremental instremental capital

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Speaker 1: that they put in the business? Return capital is probably

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Speaker 1: the single biggest you know measure that that that I

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Speaker 1: feel one has to look at. Valuations comes distant second

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Speaker 1: or third really, So so let's start with that first piece,

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Speaker 1: screening out the negative the weaker companies. What are you

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Speaker 1: looking for? Are you looking for lots of dat Are

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Speaker 1: you're looking for no real growth in revenue and income

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Speaker 1: or you're looking at the management team themselves or all

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Speaker 1: the above and more management team is is second. First

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Speaker 1: would be numbers. In other words, you know, leverage is

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Speaker 1: an easy one, but also in terms of, you know,

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Speaker 1: the sicklicality of earning stream relative to their own sector,

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Speaker 1: the returns that the generating related their own space, because

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Speaker 1: you can't compare a bank and and and a European utility, right,

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Speaker 1: And I think I think when people talk us talk

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Speaker 1: about quality, they look at much more on an absolute

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Speaker 1: based across the board. But banks the best time to

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Speaker 1: buy banks is actually when the numbers don't look good, right,

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Speaker 1: that's not necessitude for staples. In fact, if you look

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Speaker 1: at even technology last forty year, if you back test

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Speaker 1: the numbers, the most expensive dis style has outperformed the

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Speaker 1: cheapest DECIDL in tech and in pharma. So, in other words,

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Speaker 1: momentum is much more powerful than value in those sectors. Okay,

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Speaker 1: so I want to be over you know you're overstating

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Speaker 1: the momentum issue. It's not momentum issue. It's much more

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Speaker 1: about well, first of all, it is the balance she

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Speaker 1: it good. And the second thing is the growth coming through.

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Speaker 1: So growth is important. But but but but you need

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Speaker 1: the combination of those, and then you look at the

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Speaker 1: management and then you look at the valuations a lot

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Speaker 1: of because think about this face if if if, if,

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Speaker 1: if you're moving to Florida, would you call a realtor

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Speaker 1: say get you know, give me the cheapest neighborhood? No,

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Speaker 1: of course not. Why do you do that in stocks? Well,

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Speaker 1: because there's this belief that UM on average, if you're

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Speaker 1: um pe ratio or price to book or whatever your

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Speaker 1: preferred metric is, UM, the cheaper stocks over long periods

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Speaker 1: of time should outperform the most expensive stocks. That at

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Speaker 1: least is the common belief that's out there. Well, see that,

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Speaker 1: I've a lot of problem with averages. Averages like your

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Speaker 1: foot might be enough on, your head might be in freezer,

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Speaker 1: and on average you're dead. That's that's a fair um,

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Speaker 1: that's a fair description. So so so I think I

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Speaker 1: think you gotta be careful about averages because in especially

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Speaker 1: this day and age, there isn't enough appreciation that how

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Speaker 1: many how many bison alis of operating thirty years ago

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Speaker 1: verses today? If that amount exactly? And what about fifties

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Speaker 1: and sixty And you see managers showing how well priced

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Speaker 1: to book at work in ninet thirties, Well, it's wonderful.

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Speaker 1: You're fooling yourselves. You're not fooling anybody else. That doesn't

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Speaker 1: work anymore. It didn't work in the seventies, in the seventies,

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Speaker 1: So Marcus, do get efficient. I mean, let's not kill ourselves.

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Speaker 1: The question how are you evolve to incorporate that? I mean,

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Speaker 1: you can buy dozens of ETFs to you know WHI

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Speaker 1: should run on quality. So if you're backward looking quality,

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Speaker 1: it has stopped working. I'm Barry ritolts. My extra special

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Speaker 1: guest this week is Regiev Jane. He is chairman and

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Speaker 1: chief investment officer of the twenty four billion dollar firm

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Speaker 1: g q G Partners. He runs a number of different

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Speaker 1: funds UM, all of which have outperformed. Over the past

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Speaker 1: UH twenty years, he has handily beaten his benchmark. Last year,

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Speaker 1: his global funds UH was about nine hundred basis points

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Speaker 1: above the benchmark, which was down about nine percent for

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Speaker 1: the year. Uh. Let's talk a little bit about international investing.

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Speaker 1: One of your biggest holdings is India makes up about

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Speaker 1: twenty seven percent of the fund bullpark. Uh. Why are

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Speaker 1: you still enthusiastic about India? What do you think is

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Speaker 1: happening there and what companies have caught your attention in

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Speaker 1: that country? Yes, so India is big only in the

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Speaker 1: emerging market fund and internactionally you only have five percent,

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Speaker 1: And similarly in global I think I think, I think

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Speaker 1: the couple of things one is well, first of all,

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Speaker 1: there's a risk of me being biased, so I think

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Speaker 1: I think gotta be careful. So you have home country bias.

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Speaker 1: Even after you leave the country, they like you, you

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Speaker 1: feel you know it better, right, So that's one saying

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Speaker 1: you gotta be careful. You you should surprise folks over

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Speaker 1: France chance, so they would have more in France. So

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Speaker 1: home country bias excess. But I think in this case, um,

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Speaker 1: there's a differences, particularly now. India wasn't always that big.

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Speaker 1: The reason is because if you look at what's happening

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Speaker 1: around the world, there's earnings pressure. So domestic oriented businesses

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Speaker 1: are actually delivering better earnings growth. And India is a

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Speaker 1: very large domestic market. China is two, and so in

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Speaker 1: Brazil in the within the emerging market context, the same

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Speaker 1: in US actually right, I mean multinational rejects for a

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Speaker 1: lot of China are not exactly doing that well. For

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Speaker 1: domestic orientage stocks are just doing better. So India is

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Speaker 1: a big domestic market and you can get fairly high,

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Speaker 1: high quality, predictable businesses which are still selling it reasonable

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Speaker 1: valuations UM. And hence we have higher exposure in the

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Speaker 1: E M punt. So so let's talk about Russia. You

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Speaker 1: were quote massively underweight Russia for eighteen or so years.

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Speaker 1: Now you say you're overweight Russia. What has changed, um,

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Speaker 1: either in your view or in Russia itself to have

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Speaker 1: that big shift. But first of all, from a philosophical perspective,

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Speaker 1: investing is all about change, is not about static. In

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Speaker 1: other words, Singapore might be wonderful place, but if it's

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Speaker 1: deteriorting that's not you know, that's a problem in Russia.

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Speaker 1: I'm not saying it's going to be next with de

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Speaker 1: Land or anything like that, but it's improved quite a

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Speaker 1: bit compared to it it was five, ten, fifteen years ago.

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Speaker 1: Corporate governance has improved, um. And they talked about managing

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Speaker 1: companies which are actually very well positioned and as selling

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Speaker 1: for very attractive prices, so that there's a big difference

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Speaker 1: for let's say ten twenty years ago, and that's I

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Speaker 1: was very better rush. I'm talking about twenty years now,

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Speaker 1: uh till a few years ago. Uh and today it

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Speaker 1: looks actually reasonably attractive. Some of the folks who have

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Speaker 1: have pointed out that Russia is always cheap, But the

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Speaker 1: concern is rule of law, and how do you know

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Speaker 1: that the state isn't just gonna arrest your CEO or

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Speaker 1: or capture assets. How confident can you be investing in

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Speaker 1: Russia that the normal rules apply. I thought you were

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Speaker 1: describing China. See you gets arrested in stock collapses, right,

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Speaker 1: I guess it happens in other countries. It happens happened

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Speaker 1: here also, we've had people arrested and the stocks haven't

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Speaker 1: done that well, but it seems to be a little

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Speaker 1: more endemic to certain countries. Now, you're absolutely right, I think.

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Speaker 1: I think first of all, that's where you got to

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Speaker 1: see whether the business interests are aligned with the with

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Speaker 1: the government policy and what the you know, what the

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Speaker 1: outlook would be longer term. So um So, one interesting fact,

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Speaker 1: if you do the last twenty years, Russia has been

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Speaker 1: one of the best performing markets versus China and mostly

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Speaker 1: other markets, by the way, and which is not how

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Speaker 1: people think about it. Uh. And the reason is that

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Speaker 1: you can get some really high battered true businesses which

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Speaker 1: are very well aligned with what the government policy is.

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Speaker 1: And and and ironically because of the capital flight issues,

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Speaker 1: actually a lot of companies pay a lot of dividends,

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Speaker 1: so you basically getting dividend return on business that are

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Speaker 1: still growing at reasonable you know, at regional prices. So

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Speaker 1: I think I think it's a combination of the two.

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Speaker 1: Um So, if you can buy a business where the

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Speaker 1: bond heels are, foreigners are willing to buy bonds of

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Speaker 1: the same company at four and four and a half percent.

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Speaker 1: Why the stocky link twelve percent? That's a question, right,

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Speaker 1: I mean, the corporate governors should apply as much as

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Speaker 1: the bond site. But but but if you can get

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Speaker 1: truly good business like spur Bank for example, uh it

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Speaker 1: has sixty pc deposit franchise in in a deposit market

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Speaker 1: share in Russia and the banking system is consolidating rapidly,

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Speaker 1: I mean, it's it's meaningful consolidation. Over the last five years.

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Speaker 1: The central banker and Ubulina has done a very good job.

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Speaker 1: But it's yielding almost eight percent growing plus rows selling

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Speaker 1: at six time mornings. So it is I think. I think,

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Speaker 1: I think you can do a lot worse in other places.

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Speaker 1: So do you bring a different sort of fundamental analysis

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Speaker 1: to different countries? Do you have to think about stock

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Speaker 1: selection and let's say China or Russia differently than you

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Speaker 1: would think about Singapore or Vietnam? How do you look

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Speaker 1: at each country with their own unique political situation You

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Speaker 1: mentioned aligning the interests of the company with the government.

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Speaker 1: Is it the same approach country to country or do

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Speaker 1: you have to adapt depending on the local politics. Yes,

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Speaker 1: so I think, I think there's clearly a little bit

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Speaker 1: of adaptation needed. I mean, if you're investing only in

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Speaker 1: the US, if, for example, if you're running a user

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Speaker 1: refund um, there a lot of things you wouldn't necessarily

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Speaker 1: have to think about, right, I mean, some country companies

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Speaker 1: have currency theres but most don't have that. On the

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Speaker 1: other side, if you're investing in emerging markets, you know,

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Speaker 1: country risk matters. So what I call a macro switch off,

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Speaker 1: you don't look for a good macro You can't say

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Speaker 1: China is ring. I'm gonna try to find companies there.

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Speaker 1: That doesn't work. However, if this political risk in a company,

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Speaker 1: if the if the company is getting contracts from the government,

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Speaker 1: off they are they are as For example, last summer

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Speaker 1: there was increased risk in Chinese tech companies. Now that

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Speaker 1: seemed to have gone down a little bit. I'm not

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Speaker 1: saying you sell out because of that, but you've got

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Speaker 1: to be aware of the macro switches. And by the way,

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Speaker 1: that if I take a five year review, I think

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Speaker 1: the political risk is increasing in some of the largest

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Speaker 1: U S companies too. It is not here or now,

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Speaker 1: but it's not zero risk that you could see you know,

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Speaker 1: you could see some some antitrust investigation and in some

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Speaker 1: of the larger companies, the Amazons of the world. So

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Speaker 1: it is not a factor today, but it will be

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Speaker 1: naive to assume it's not a factor if you're taking

429
00:23:28,160 --> 00:23:30,400
Speaker 1: five plus year of view. I'm very rich Helts. You're

430
00:23:30,440 --> 00:23:33,280
Speaker 1: listening to Masters in Business on Bloomberg Radio. My guest

431
00:23:33,320 --> 00:23:36,600
Speaker 1: today is Rajiv Jane. He is chief investment Officer and

432
00:23:36,680 --> 00:23:40,360
Speaker 1: chairman at g q G Partners, at twenty four billion

433
00:23:40,400 --> 00:23:44,520
Speaker 1: dollar firm. Let's talk a little bit about your strategies.

434
00:23:44,640 --> 00:23:47,800
Speaker 1: You're long only, so what are your goals? Is it

435
00:23:47,880 --> 00:23:51,000
Speaker 1: to beat the benchmark or you or are you targeting

436
00:23:51,119 --> 00:23:55,600
Speaker 1: higher risk adjusted returns? What what is the goals of

437
00:23:55,600 --> 00:23:59,159
Speaker 1: of your specific strategies for each of your funds. So

438
00:23:59,240 --> 00:24:03,440
Speaker 1: the official activists outperformed the benchmark by a few hundred

439
00:24:03,480 --> 00:24:06,639
Speaker 1: based point with less risk, so losing lesson down markets

440
00:24:06,720 --> 00:24:08,840
Speaker 1: is important. So it's much more conservative compounding and the

441
00:24:08,880 --> 00:24:12,440
Speaker 1: fact that every employee and an investor, that's where the

442
00:24:12,440 --> 00:24:14,840
Speaker 1: alignment of interest matters, right, So we're not talking about

443
00:24:14,840 --> 00:24:17,520
Speaker 1: acid girl. There's all about can we compound our money

444
00:24:18,200 --> 00:24:21,000
Speaker 1: along with our client's money, and that means that it's

445
00:24:21,080 --> 00:24:24,240
Speaker 1: much more absolute oriented rather than relative focused. And just

446
00:24:24,280 --> 00:24:28,879
Speaker 1: as an example, in eighteen um the international benchmark was

447
00:24:28,920 --> 00:24:33,639
Speaker 1: down about nine your fund was positive slightly positive for

448
00:24:33,680 --> 00:24:38,000
Speaker 1: the year. So there's an example of managing into a downturn.

449
00:24:38,920 --> 00:24:40,800
Speaker 1: I have to think clients are pretty happy about that

450
00:24:40,840 --> 00:24:43,160
Speaker 1: sort of situation. Yeah, And I think I think that's

451
00:24:43,480 --> 00:24:45,920
Speaker 1: that's the reason why we've seen we continue to see,

452
00:24:46,320 --> 00:24:49,359
Speaker 1: you know, reasonable influence from some of the most sophisticated institutions.

453
00:24:49,960 --> 00:24:51,800
Speaker 1: Is that it's all about I think. Look, I think

454
00:24:51,800 --> 00:24:54,919
Speaker 1: I think you've got to be careful about relative returns.

455
00:24:54,960 --> 00:24:56,760
Speaker 1: You can't focus on too much. And it doesn't matter

456
00:24:56,760 --> 00:24:59,560
Speaker 1: whether it's a pension fund or an individual. Right, if

457
00:24:59,600 --> 00:25:03,320
Speaker 1: there kets down and you're only down, you're still down.

458
00:25:04,720 --> 00:25:07,920
Speaker 1: That that's true. But if you're long older, you can't

459
00:25:07,920 --> 00:25:10,080
Speaker 1: manage that. And and there's no free lunch. So if

460
00:25:10,080 --> 00:25:12,720
Speaker 1: you're trying to manage it too much, you leave the

461
00:25:12,760 --> 00:25:15,200
Speaker 1: upside and seeing on the hedge fund site, right, ivan, yes,

462
00:25:15,480 --> 00:25:17,360
Speaker 1: they didn't lose that much and maybe two thou eight,

463
00:25:17,400 --> 00:25:20,840
Speaker 1: but you gave more plus some or the next decade

464
00:25:20,880 --> 00:25:22,920
Speaker 1: because the markets, you know, tend to go up over

465
00:25:22,920 --> 00:25:25,879
Speaker 1: the long run. Right, So let's talk about capacity. You

466
00:25:25,880 --> 00:25:28,639
Speaker 1: you recently announced one of your funds was going to

467
00:25:28,720 --> 00:25:31,280
Speaker 1: be capped at ten billion dollars? Is that is that right?

468
00:25:31,359 --> 00:25:33,840
Speaker 1: Was it a fund or was it a separate managed

469
00:25:33,880 --> 00:25:38,000
Speaker 1: to counts? So it's a uh did the multiple vehicles,

470
00:25:38,440 --> 00:25:42,240
Speaker 1: So it's a product issue. I've run thirty billion in

471
00:25:42,240 --> 00:25:45,800
Speaker 1: emerging markets before. Performance was fine, but I did lose

472
00:25:45,840 --> 00:25:48,680
Speaker 1: a lot of flexibility. So we've you know, we've said

473
00:25:48,680 --> 00:25:51,879
Speaker 1: bild soft claws. In other words, existing clients can add

474
00:25:52,840 --> 00:25:55,480
Speaker 1: at ten billions, but you won't take into new clients

475
00:25:55,480 --> 00:25:57,239
Speaker 1: once you hit that ten billion dollars. You will keep

476
00:25:57,359 --> 00:26:00,199
Speaker 1: maybe that some of the mutual funds open, uh for

477
00:26:00,280 --> 00:26:03,000
Speaker 1: technical reasons. But but we'll we'll we'll start hitting the

478
00:26:03,040 --> 00:26:05,800
Speaker 1: brakes as we get to ten. So so when emerging

479
00:26:05,800 --> 00:26:07,719
Speaker 1: only but global internationally, we have a lot of capacity

480
00:26:07,760 --> 00:26:10,040
Speaker 1: because they're very large liquid. So what is it about

481
00:26:10,080 --> 00:26:13,440
Speaker 1: emerging market that limits the capacity? Is it there's just

482
00:26:13,600 --> 00:26:18,320
Speaker 1: not that many big companies or what what specifically puts

483
00:26:18,320 --> 00:26:22,359
Speaker 1: a cap on on that? You know, I was just

484
00:26:22,440 --> 00:26:25,000
Speaker 1: mentioning that that around thirty billion and e M and

485
00:26:25,040 --> 00:26:29,080
Speaker 1: probably was the largest pool under single manager. Uh. How

486
00:26:29,160 --> 00:26:33,919
Speaker 1: and the performance was okay, uh, but you clearly lose nimbleness.

487
00:26:34,520 --> 00:26:37,760
Speaker 1: Emerging markets actually much larger space than than than the perception.

488
00:26:37,760 --> 00:26:39,880
Speaker 1: Seems to be a lot of very large that could names.

489
00:26:40,000 --> 00:26:41,639
Speaker 1: And I think I think, I mean, for example, the

490
00:26:41,680 --> 00:26:43,680
Speaker 1: Chinese tex space itself is probably a trillion and a

491
00:26:43,720 --> 00:26:47,000
Speaker 1: half dollars didn't exist a decade ago pretty much so,

492
00:26:47,400 --> 00:26:50,199
Speaker 1: and it's China. Is China still technically? E M? Have

493
00:26:50,320 --> 00:26:53,119
Speaker 1: we when does that get moved? Didn't M s C

494
00:26:53,320 --> 00:26:56,359
Speaker 1: I just do a whole thing with China and e

495
00:26:56,600 --> 00:26:59,320
Speaker 1: M do we still think of China as an emerging

496
00:26:59,359 --> 00:27:02,440
Speaker 1: market or or have they graduated yet? Now? Look, I think,

497
00:27:02,480 --> 00:27:04,080
Speaker 1: I think, I think if you look at any sort

498
00:27:04,080 --> 00:27:08,400
Speaker 1: of um common sensical wave from in terms of rule

499
00:27:08,480 --> 00:27:10,800
Speaker 1: of law, in terms of you know right to you know,

500
00:27:11,920 --> 00:27:14,200
Speaker 1: you know you're properly right, and so in the full,

501
00:27:14,280 --> 00:27:17,080
Speaker 1: China is clearly in emerging market emerging market. It's not

502
00:27:17,119 --> 00:27:20,120
Speaker 1: a now some Shanghai developed more developed in New York.

503
00:27:20,240 --> 00:27:22,320
Speaker 1: It feels that way if you go there, but it

504
00:27:22,359 --> 00:27:25,520
Speaker 1: doesn't mean the whole country as such. M quite quite interesting.

505
00:27:25,920 --> 00:27:28,240
Speaker 1: So so let's talk a little bit about how you

506
00:27:28,600 --> 00:27:32,879
Speaker 1: um think about entering positions. I know, some managers do

507
00:27:32,960 --> 00:27:36,080
Speaker 1: a pre mortem where they right out with their full

508
00:27:36,119 --> 00:27:40,639
Speaker 1: explanation of why they're making the investment, so afterwards they

509
00:27:40,640 --> 00:27:44,159
Speaker 1: can look back and say, this is exactly, um, what

510
00:27:44,200 --> 00:27:46,280
Speaker 1: they were thinking, whether it works well or goes bad.

511
00:27:46,720 --> 00:27:48,520
Speaker 1: What what do you do when you're in the midst

512
00:27:48,520 --> 00:27:52,280
Speaker 1: of adding a new name to a portfolio. First of all,

513
00:27:52,359 --> 00:27:54,680
Speaker 1: you need true diversity, and we talk about diversity, but

514
00:27:54,680 --> 00:27:56,160
Speaker 1: if you look at our team, there are folks who

515
00:27:56,200 --> 00:28:00,640
Speaker 1: have done long short equity long short credited investigative journalists, uh,

516
00:28:00,680 --> 00:28:04,040
Speaker 1: you know, um, forensic accountants you want to be You

517
00:28:04,080 --> 00:28:07,919
Speaker 1: want to have a true devil's advocacy, right um. And

518
00:28:07,920 --> 00:28:10,000
Speaker 1: And that means that multiple pairs of ice will look

519
00:28:10,000 --> 00:28:11,960
Speaker 1: at the name. And I work as a full time

520
00:28:12,000 --> 00:28:14,200
Speaker 1: analyst and a part time PM. There's no name that

521
00:28:14,200 --> 00:28:16,480
Speaker 1: will go that has gone in over the last twenty

522
00:28:16,480 --> 00:28:18,520
Speaker 1: five years without me actually working on a name, you know,

523
00:28:18,720 --> 00:28:21,200
Speaker 1: having some sense. Obviously some of the analysts will do

524
00:28:21,240 --> 00:28:23,879
Speaker 1: a lot deeper work on those names. And then we

525
00:28:23,920 --> 00:28:26,280
Speaker 1: want to have a separate pairs of eyes, whether from

526
00:28:26,280 --> 00:28:29,199
Speaker 1: an accounting perspective or from an investigative journalists, which is

527
00:28:29,200 --> 00:28:33,160
Speaker 1: more to sort of get a sense of where, um,

528
00:28:33,200 --> 00:28:36,320
Speaker 1: you know, are there any sort of grassroot issue that

529
00:28:36,359 --> 00:28:40,200
Speaker 1: we are missing, for example, if there's any governance issues.

530
00:28:40,200 --> 00:28:42,080
Speaker 1: So we don't talk to existing employees, but are there

531
00:28:42,080 --> 00:28:44,360
Speaker 1: any governance issue that we should be aware of? Any

532
00:28:44,480 --> 00:28:47,280
Speaker 1: regulator is that we should be aware of, uh sort

533
00:28:47,320 --> 00:28:51,280
Speaker 1: of you know, kind of e s g um hygiene,

534
00:28:51,720 --> 00:28:56,840
Speaker 1: if if if you if you will. So what that

535
00:28:56,960 --> 00:28:59,320
Speaker 1: does is is that again, the idea is to reduce

536
00:28:59,360 --> 00:29:02,120
Speaker 1: the chance of a blow up. The idea is not

537
00:29:02,200 --> 00:29:04,360
Speaker 1: to find the best name. The idea is to eliminate

538
00:29:04,440 --> 00:29:09,840
Speaker 1: the weakest name. So you mentioned investigative journalists. You hired

539
00:29:10,480 --> 00:29:14,760
Speaker 1: Carolyn Q from the Wall Street Journal. What was the

540
00:29:14,800 --> 00:29:18,200
Speaker 1: thinking behind saying, I know, I need an investigative reporter

541
00:29:18,280 --> 00:29:20,719
Speaker 1: on my team. It's interesting if you think about what

542
00:29:20,800 --> 00:29:23,560
Speaker 1: we do, it is it is kind of investigated journalism anywhere.

543
00:29:24,080 --> 00:29:27,000
Speaker 1: I mean, it's it's actually what a good analyst should be.

544
00:29:27,000 --> 00:29:30,080
Speaker 1: Is very similar to making sure you're getting the facts right,

545
00:29:30,160 --> 00:29:33,120
Speaker 1: being more objective. So you want to have devil's advocacy

546
00:29:33,200 --> 00:29:36,120
Speaker 1: within the team and investigator journalist kind of work as

547
00:29:36,120 --> 00:29:38,280
Speaker 1: a separate team. They're basically there to find faults with

548
00:29:38,280 --> 00:29:41,760
Speaker 1: our existing names. So what I call them internal critics. Ah,

549
00:29:41,800 --> 00:29:43,160
Speaker 1: And as you can see, a lot of anils get

550
00:29:43,160 --> 00:29:46,400
Speaker 1: pretty uncomfortable with that internally I'm talking about. But I

551
00:29:46,400 --> 00:29:48,840
Speaker 1: think the idea is my view is I would rather

552
00:29:48,960 --> 00:29:54,160
Speaker 1: have internal debate and discussion rather than the markets criticizing you.

553
00:29:54,960 --> 00:29:59,200
Speaker 1: When the markets criticize you, that's expensive to say, to

554
00:29:59,280 --> 00:30:05,120
Speaker 1: say the very least. Um, so something else you said previously, Um,

555
00:30:05,160 --> 00:30:09,160
Speaker 1: it seems most investors and evaluate managers just by looking

556
00:30:09,320 --> 00:30:13,560
Speaker 1: at their past performance. You suggest that that's the wrong approach.

557
00:30:13,680 --> 00:30:19,560
Speaker 1: How should an investor evaluate a potential manager they're interested

558
00:30:19,560 --> 00:30:24,560
Speaker 1: in hiring? But you can't undermine the past performance? It

559
00:30:24,600 --> 00:30:26,760
Speaker 1: matters because I mean, that's that's a good starting point.

560
00:30:26,800 --> 00:30:28,719
Speaker 1: But that's all it is. It's a starting point. And

561
00:30:28,760 --> 00:30:32,479
Speaker 1: I feel that, um, the other way to look at it,

562
00:30:32,720 --> 00:30:35,200
Speaker 1: which is actually more important, provided there's a good past

563
00:30:35,240 --> 00:30:39,560
Speaker 1: tract recker, because as somebody said, past performance not a

564
00:30:39,560 --> 00:30:43,360
Speaker 1: good indicator past performance? Right now? Why is that? As

565
00:30:43,360 --> 00:30:45,200
Speaker 1: I say, I'm I'm contracting myself. So I like the

566
00:30:45,240 --> 00:30:48,240
Speaker 1: ying and yang debate in every very discussion. So the

567
00:30:48,280 --> 00:30:51,440
Speaker 1: reason is decision makers can change, so you know, firm

568
00:30:51,520 --> 00:30:54,680
Speaker 1: self past performance. But you know, but who took the

569
00:30:54,720 --> 00:30:58,040
Speaker 1: decisions ten years ago, maybe totally different guys. So you've

570
00:30:58,040 --> 00:31:00,000
Speaker 1: got to be careful about because you know people said

571
00:31:00,120 --> 00:31:01,840
Speaker 1: teams and so ons of forth, but it's not an

572
00:31:01,880 --> 00:31:04,680
Speaker 1: indy cator of decision maker and who was a decision maker.

573
00:31:04,760 --> 00:31:06,440
Speaker 1: So you've got to be careful and look at long

574
00:31:06,520 --> 00:31:09,840
Speaker 1: term track records. Is the same individual or individuals who

575
00:31:09,880 --> 00:31:12,000
Speaker 1: are taking the decision and if it's a one individual

576
00:31:12,360 --> 00:31:14,640
Speaker 1: like a PM, you know if somebody might have changed,

577
00:31:14,640 --> 00:31:16,920
Speaker 1: but the firm might be selling the track record of

578
00:31:16,960 --> 00:31:18,880
Speaker 1: the firm, right, So you've got to be careful that.

579
00:31:19,280 --> 00:31:21,560
Speaker 1: But more importantly, I think the way to look at

580
00:31:23,680 --> 00:31:27,520
Speaker 1: or to assess a portfolio manager our track record is

581
00:31:28,600 --> 00:31:31,600
Speaker 1: how did they do in different environments? So for example,

582
00:31:31,640 --> 00:31:33,560
Speaker 1: if you look at growth Magic today, most of them

583
00:31:33,560 --> 00:31:37,680
Speaker 1: look like geniuses right right now, most of these won't

584
00:31:37,720 --> 00:31:39,600
Speaker 1: have a good track record going back to if you

585
00:31:39,640 --> 00:31:42,400
Speaker 1: go back two thousand two three era, how many actually

586
00:31:42,440 --> 00:31:45,960
Speaker 1: them did well? So this whole growth and value debate

587
00:31:46,080 --> 00:31:49,600
Speaker 1: is is kind of I personally feel it's it's it's

588
00:31:49,640 --> 00:31:53,480
Speaker 1: it's nonsensical in a way because why would you consciously

589
00:31:53,480 --> 00:31:58,520
Speaker 1: overpay for anything. So so you've mentioned previously, Um, what

590
00:31:58,560 --> 00:32:02,000
Speaker 1: you've described as quality growth, what is that and how

591
00:32:02,040 --> 00:32:06,440
Speaker 1: does that relate to the value growth debate? So, first

592
00:32:06,440 --> 00:32:09,320
Speaker 1: of all, nobody construally looks for bad quality. I don't

593
00:32:09,320 --> 00:32:11,080
Speaker 1: know if you have somebody come across here and said, look,

594
00:32:11,120 --> 00:32:14,760
Speaker 1: we buy low quality, high prices, right, growth manager, value manager.

595
00:32:14,800 --> 00:32:16,520
Speaker 1: That's all wonderful. In fact, one of the things I've

596
00:32:16,560 --> 00:32:20,640
Speaker 1: observed is people, The more disciplined people sound, the more

597
00:32:20,720 --> 00:32:25,600
Speaker 1: rigid they are and more chance of than blowing up steps.

598
00:32:26,880 --> 00:32:31,440
Speaker 1: Stability is a close cousin of stagnation, and discipline is

599
00:32:31,440 --> 00:32:36,640
Speaker 1: a close cousin cousin of rigidity. So how they adapted

600
00:32:36,680 --> 00:32:40,280
Speaker 1: to changing environments. Look at Buffett, I mean he's adapted dramatically,

601
00:32:40,320 --> 00:32:43,560
Speaker 1: even a low low you know, classic low multiple, you know,

602
00:32:43,640 --> 00:32:46,640
Speaker 1: cigar but kind of investor. And then do you know,

603
00:32:46,680 --> 00:32:49,240
Speaker 1: moved to to a different area in terms of quality

604
00:32:49,320 --> 00:32:51,640
Speaker 1: you know, you know high you know big more high

605
00:32:51,640 --> 00:32:55,600
Speaker 1: bad gentry businesses, and and I was buying tech. And

606
00:32:55,640 --> 00:32:57,080
Speaker 1: on top of that, he's done a whole bunch of

607
00:32:57,080 --> 00:32:59,720
Speaker 1: private deals on the side, which are all nothing but cyclicals.

608
00:32:59,760 --> 00:33:01,680
Speaker 1: By them, I mean, can you tell me one name

609
00:33:01,880 --> 00:33:04,920
Speaker 1: one one large part maybe except sees candies in Berkship,

610
00:33:04,960 --> 00:33:07,360
Speaker 1: which is not cyclical? I mean, his guy could not cyclical?

611
00:33:07,760 --> 00:33:12,520
Speaker 1: Is some of the you know, boot companies, insurance, reinsurance,

612
00:33:12,720 --> 00:33:18,400
Speaker 1: home building, what brick companies, railroad? What is not cyclical? Right?

613
00:33:18,600 --> 00:33:21,560
Speaker 1: So this whole debate is much more around I feel

614
00:33:21,920 --> 00:33:26,120
Speaker 1: at the end is you expected compounding and sometimes a

615
00:33:26,160 --> 00:33:28,840
Speaker 1: cyclical with the high berded entry could be very attractive,

616
00:33:29,200 --> 00:33:32,360
Speaker 1: and sometimes a very steady, eaty business could be very attractive.

617
00:33:33,160 --> 00:33:37,560
Speaker 1: So like in today's environment, if you look at most

618
00:33:37,560 --> 00:33:43,160
Speaker 1: of the value oriented names, you're making a cyclical call.

619
00:33:43,800 --> 00:33:46,880
Speaker 1: Mm hmm. In other words, if the economy really starts ripping,

620
00:33:47,000 --> 00:33:49,000
Speaker 1: they would do very well. So it is not that

621
00:33:49,040 --> 00:33:51,719
Speaker 1: they are being given away to you because people they

622
00:33:51,720 --> 00:33:55,800
Speaker 1: are being misunderstood. There's a fear of downturn. Hence some

623
00:33:55,920 --> 00:33:58,400
Speaker 1: of these names, whether it's car companies in Europe or

624
00:33:58,520 --> 00:34:01,000
Speaker 1: hair or some of the financial why are the banks

625
00:34:01,680 --> 00:34:03,680
Speaker 1: been underperforming in the U as well? The fear is

626
00:34:03,720 --> 00:34:05,800
Speaker 1: that you know npls will go up. So it's a

627
00:34:05,880 --> 00:34:11,359
Speaker 1: binary bet on on future economic performance, not necessarily a

628
00:34:11,440 --> 00:34:15,600
Speaker 1: specific company exactly. And I think I think, I think

629
00:34:15,640 --> 00:34:17,520
Speaker 1: I think that is it may be a perfect call

630
00:34:17,560 --> 00:34:18,640
Speaker 1: to make by the way, so I'm not here to

631
00:34:18,840 --> 00:34:21,680
Speaker 1: criticize that, but it is not something g they are

632
00:34:21,719 --> 00:34:25,680
Speaker 1: totally misunderstood and you know they kind of um underappreciated

633
00:34:25,680 --> 00:34:29,680
Speaker 1: assets as obviously market might be overestimating the downturn, if

634
00:34:29,680 --> 00:34:32,080
Speaker 1: there is one. Uh, but I think I think, I

635
00:34:32,120 --> 00:34:36,200
Speaker 1: think it's much more around what are the earnings trajectory

636
00:34:36,239 --> 00:34:37,799
Speaker 1: and what are you paying for? So if you look

637
00:34:37,840 --> 00:34:42,640
Speaker 1: at some of the tech names, for example, some of

638
00:34:42,640 --> 00:34:45,480
Speaker 1: the SaaS names right, the cloud names which are some

639
00:34:45,520 --> 00:34:47,400
Speaker 1: of them don't even have multiple because they are not

640
00:34:47,480 --> 00:34:49,799
Speaker 1: earning any money. How much of they are investing in

641
00:34:49,800 --> 00:34:51,520
Speaker 1: the business, and how much of that is and you

642
00:34:51,600 --> 00:34:54,839
Speaker 1: really like business? Now what I call the Amazon in fact,

643
00:34:54,840 --> 00:34:58,680
Speaker 1: that because you made money in Amazon despite it not

644
00:34:58,840 --> 00:35:01,520
Speaker 1: making any sort of net pro of it, um, it's

645
00:35:01,560 --> 00:35:03,080
Speaker 1: being extra poled. A lot of areas and a lot

646
00:35:03,120 --> 00:35:06,560
Speaker 1: of areas companies would blow up because they're not Amazon. Right,

647
00:35:06,600 --> 00:35:09,440
Speaker 1: Amazon did not have cash losses after I believe two

648
00:35:09,440 --> 00:35:11,440
Speaker 1: thousand two or something, you know, because it's a negative

649
00:35:11,480 --> 00:35:13,719
Speaker 1: working capital model, which is a very different model than

650
00:35:13,760 --> 00:35:15,840
Speaker 1: than whole lots of other companies are looking at today.

651
00:35:15,960 --> 00:35:20,200
Speaker 1: But it does mean that if businesses that are willing

652
00:35:20,239 --> 00:35:24,879
Speaker 1: to take longer term view, are willing to invest chance

653
00:35:24,920 --> 00:35:27,560
Speaker 1: that they probably would do better than folks were very

654
00:35:27,560 --> 00:35:30,440
Speaker 1: focused on short to margin and you saccer with craft right.

655
00:35:30,760 --> 00:35:32,319
Speaker 1: I mean, if you look at the whole three G model,

656
00:35:32,360 --> 00:35:34,880
Speaker 1: why had that that has not done well well? Partially

657
00:35:34,920 --> 00:35:38,040
Speaker 1: because they're too focused on profitability. They cut down everything

658
00:35:38,080 --> 00:35:40,440
Speaker 1: through the bone. And guess what, You're not investing in

659
00:35:40,480 --> 00:35:42,960
Speaker 1: the business. And there are not many people interested in

660
00:35:43,000 --> 00:35:45,960
Speaker 1: chief spread anymore. Quite quite fascinating, and can you stick

661
00:35:46,000 --> 00:35:47,920
Speaker 1: around a bit? I have a ton more questions for you.

662
00:35:48,640 --> 00:35:51,560
Speaker 1: We have been speaking with Rage Jane, chairman and chief

663
00:35:51,600 --> 00:35:55,280
Speaker 1: investment Officer of g q G Partners. If you enjoy

664
00:35:55,360 --> 00:35:57,480
Speaker 1: this conversation, we'll be sure and come back for the

665
00:35:57,520 --> 00:36:00,759
Speaker 1: podcast afters, where we keep the tape rolling and continue

666
00:36:00,800 --> 00:36:06,400
Speaker 1: discussing all things international markets. You can find that at Apple, iTunes,

667
00:36:06,480 --> 00:36:12,520
Speaker 1: Google Podcasts, Spotify, Overcast, wherever finer podcasts are sold. We

668
00:36:12,600 --> 00:36:16,680
Speaker 1: love your comments, feedback and suggestions right to us at

669
00:36:17,360 --> 00:36:20,400
Speaker 1: m IB podcast at Bloomberg dot net. Be sure and

670
00:36:20,480 --> 00:36:22,600
Speaker 1: check out my daily column. You can find that at

671
00:36:22,600 --> 00:36:26,480
Speaker 1: Bloomberg dot com slash Opinion. Follow me on Twitter at

672
00:36:26,600 --> 00:36:29,920
Speaker 1: rid Holts. I'm Barry Riholts. You're listening to Masters in

673
00:36:29,960 --> 00:36:36,600
Speaker 1: Business on Bloomberg Radio. Welcome to the podcast for Geeve.

674
00:36:36,719 --> 00:36:38,480
Speaker 1: Thank you so much for doing this. I've been looking

675
00:36:38,600 --> 00:36:43,680
Speaker 1: forward to having this conversation. You know, there is a

676
00:36:43,719 --> 00:36:48,120
Speaker 1: group of people who are significant and influential in the

677
00:36:48,160 --> 00:36:52,759
Speaker 1: world of investing that forget the public half of the

678
00:36:53,040 --> 00:36:56,960
Speaker 1: investing world. UM, may not be familiar with their background

679
00:36:57,040 --> 00:37:00,960
Speaker 1: in history. UM, you're one of those people. You're You've

680
00:37:00,960 --> 00:37:03,040
Speaker 1: been running a substantial amount of money for a long

681
00:37:03,120 --> 00:37:06,239
Speaker 1: time and I followed your career for a while. I

682
00:37:06,280 --> 00:37:09,560
Speaker 1: think a lot of people may not know who you are,

683
00:37:09,840 --> 00:37:14,240
Speaker 1: and I hope this conversation helps more people learn about

684
00:37:14,239 --> 00:37:18,600
Speaker 1: you and your background. Thank you so so, we missed

685
00:37:18,600 --> 00:37:22,560
Speaker 1: a bunch of questions during the broadcast portion. Let let

686
00:37:22,600 --> 00:37:25,240
Speaker 1: me um, let me go through some of the areas

687
00:37:25,239 --> 00:37:29,040
Speaker 1: we didn't get to. We talked about quality growth, We

688
00:37:29,200 --> 00:37:32,719
Speaker 1: did not talk about the shift from active to passive.

689
00:37:33,280 --> 00:37:37,600
Speaker 1: So first, what does this mean going forward? Is this

690
00:37:37,680 --> 00:37:42,520
Speaker 1: a temporary shift or is this more permanent? And I

691
00:37:42,560 --> 00:37:45,359
Speaker 1: can't help but wonder does the move too as more

692
00:37:45,400 --> 00:37:50,160
Speaker 1: and more people become passive investors, does that create opportunities

693
00:37:50,200 --> 00:37:54,839
Speaker 1: for the remaining active investors. Yeah, like, I think that's

694
00:37:54,920 --> 00:37:57,640
Speaker 1: that's obviously the most important debate, And frankly, I don't

695
00:37:57,640 --> 00:37:59,560
Speaker 1: think there's a debate anymore. I think it's the reality

696
00:37:59,640 --> 00:38:02,120
Speaker 1: and it's not a temporary issue. It's a permanent uh

697
00:38:02,360 --> 00:38:07,520
Speaker 1: structural shift towards passive UH. And the reasons are beside

698
00:38:07,560 --> 00:38:10,480
Speaker 1: the fact that active you know, hasn't add added value

699
00:38:10,880 --> 00:38:15,799
Speaker 1: on an average UH, probably don't add value. But I

700
00:38:15,800 --> 00:38:18,520
Speaker 1: think that you're being kind, But I think, I think,

701
00:38:18,560 --> 00:38:21,440
Speaker 1: I think a couple of reasons where And the second

702
00:38:21,440 --> 00:38:25,200
Speaker 1: part of a question was whether it helps active remaining active?

703
00:38:25,280 --> 00:38:27,960
Speaker 1: It does because you know, if if you're paying attention

704
00:38:27,960 --> 00:38:29,640
Speaker 1: over the longer run, and hopefully you should will add

705
00:38:29,880 --> 00:38:32,120
Speaker 1: you should be able to add value. But I think,

706
00:38:32,160 --> 00:38:34,400
Speaker 1: I think, I think the big reason why is is

707
00:38:34,960 --> 00:38:40,560
Speaker 1: Number one, is active manager charged too much money? M hm.

708
00:38:41,360 --> 00:38:45,400
Speaker 1: They are being boxed into into in you know, they

709
00:38:45,440 --> 00:38:50,640
Speaker 1: boxed into their specific sandbox, and the market changes changes colors.

710
00:38:50,719 --> 00:38:55,240
Speaker 1: So if you're a let's say mid cap value manager,

711
00:38:55,360 --> 00:38:57,839
Speaker 1: that's wonderful to be compared. But is the is an

712
00:38:57,840 --> 00:39:02,920
Speaker 1: incline really looking for a US MidCap value manager or

713
00:39:02,960 --> 00:39:05,160
Speaker 1: you just talk about long term compounding, right, So the

714
00:39:05,200 --> 00:39:07,520
Speaker 1: segmentation has made life more difficult. So if you're not

715
00:39:07,560 --> 00:39:10,120
Speaker 1: able to break through that, it'll it's a problem. In fact,

716
00:39:12,600 --> 00:39:14,440
Speaker 1: there was a time and people have accused me of

717
00:39:14,440 --> 00:39:16,640
Speaker 1: being a value manager their time, and people accuse me

718
00:39:16,640 --> 00:39:19,799
Speaker 1: of a growth manager, and I'm doing exactly the same thing.

719
00:39:20,040 --> 00:39:22,640
Speaker 1: So I think you need to have the ability to

720
00:39:23,120 --> 00:39:26,600
Speaker 1: not be labeled for rest of your life because yes,

721
00:39:26,680 --> 00:39:30,239
Speaker 1: of course you won't buy higher quality sensible prices, but

722
00:39:30,320 --> 00:39:33,480
Speaker 1: sometimes the market gives you very high quality business a

723
00:39:33,719 --> 00:39:38,400
Speaker 1: very attractive evaluations. So why wouldn't you buy those? Right? Uh?

724
00:39:38,600 --> 00:39:41,280
Speaker 1: And I think I think that if you are open

725
00:39:41,320 --> 00:39:45,000
Speaker 1: minded and if you keep your costs low. And that's

726
00:39:45,000 --> 00:39:47,440
Speaker 1: an important part because if you look at especially on

727
00:39:47,440 --> 00:39:53,799
Speaker 1: the institutional side, institutions growth basis do actually our perform.

728
00:39:53,840 --> 00:39:57,800
Speaker 1: The problem is on net basis they're nder perform the

729
00:39:57,840 --> 00:40:00,000
Speaker 1: way Yeah exactly. So I mean the question why people

730
00:40:00,040 --> 00:40:02,239
Speaker 1: still of charging hundred hundred ten based funds for US

731
00:40:02,320 --> 00:40:06,319
Speaker 1: large mandates no sense. What's even more shocking is you

732
00:40:06,360 --> 00:40:09,440
Speaker 1: can find SMP five index funds at a hundred and

733
00:40:09,480 --> 00:40:13,000
Speaker 1: fifty basis points. That makes no sense whatsoever. That's hybrid Robert, right,

734
00:40:13,040 --> 00:40:16,719
Speaker 1: So that that shouldn't be allowed actually because of misleading

735
00:40:16,719 --> 00:40:20,200
Speaker 1: practice because typically institutions will not get would not get

736
00:40:20,280 --> 00:40:21,600
Speaker 1: you know, would not pay for that. But it's a

737
00:40:21,640 --> 00:40:24,759
Speaker 1: retail it's kind of misleading. I personally find misleading. So,

738
00:40:24,800 --> 00:40:26,799
Speaker 1: I mean it's been around for a while, So I

739
00:40:26,920 --> 00:40:30,200
Speaker 1: know you cut fees five basis points on a couple

740
00:40:30,280 --> 00:40:34,520
Speaker 1: of your funds. What is your thinking and is this

741
00:40:34,640 --> 00:40:39,480
Speaker 1: something that you're doing because you're comfortable with it? Are

742
00:40:39,520 --> 00:40:42,520
Speaker 1: you responding to fee pressure in the industry? Do you

743
00:40:42,560 --> 00:40:44,920
Speaker 1: plan on making more cuts in the future. How do

744
00:40:45,000 --> 00:40:50,920
Speaker 1: you think about what's the appropriate level of fees relative

745
00:40:50,960 --> 00:40:52,840
Speaker 1: to the size of the funds and the performance of

746
00:40:52,880 --> 00:40:57,279
Speaker 1: the funds? So something you said at the tail in

747
00:40:57,320 --> 00:40:59,840
Speaker 1: about the performance of the fund At the end of

748
00:40:59,840 --> 00:41:03,799
Speaker 1: the day, clients care about net performance, not gross performance, right,

749
00:41:04,160 --> 00:41:07,040
Speaker 1: and net performance means your fees matter. So what hedge

750
00:41:07,080 --> 00:41:10,480
Speaker 1: funds problem is not lack of talent, is the fee structure. Right.

751
00:41:10,520 --> 00:41:12,440
Speaker 1: There isn't that m juice in the game to have

752
00:41:12,480 --> 00:41:15,239
Speaker 1: to or twenty and be able to add any value unfortunately, right,

753
00:41:15,239 --> 00:41:17,280
Speaker 1: I mean, how many hedge funds around in late nineties

754
00:41:17,360 --> 00:41:20,640
Speaker 1: let alone, you know, thirty four years ago, right one,

755
00:41:20,680 --> 00:41:24,120
Speaker 1: from a hundred hedge funds to eleven exactly, So so

756
00:41:24,200 --> 00:41:25,600
Speaker 1: I think, I think so that's why one of the

757
00:41:25,600 --> 00:41:27,719
Speaker 1: things we have done consciously is that we want to

758
00:41:27,760 --> 00:41:31,760
Speaker 1: make sure that our fees are below median and very comparedive.

759
00:41:31,800 --> 00:41:33,719
Speaker 1: Why because I want to be you know, we want

760
00:41:33,760 --> 00:41:35,920
Speaker 1: to be known as a firm to have added value,

761
00:41:35,920 --> 00:41:39,480
Speaker 1: which is net performance. So you want to be you know,

762
00:41:39,760 --> 00:41:43,359
Speaker 1: very cost competitive simply because you want to have better performance. Right.

763
00:41:43,440 --> 00:41:45,759
Speaker 1: So it's actually an odd interest. And then you can

764
00:41:45,800 --> 00:41:50,120
Speaker 1: have a long term sustainable client base because the higher

765
00:41:50,160 --> 00:41:53,440
Speaker 1: recharge the expectations go up on on a shorter term

766
00:41:53,440 --> 00:41:57,000
Speaker 1: basis of our performance, which is not not possible. So

767
00:41:57,040 --> 00:42:00,279
Speaker 1: I think, I think to build a sustainable investment managment shop,

768
00:42:00,400 --> 00:42:03,000
Speaker 1: you have to be very cost competitive, and the lower

769
00:42:03,160 --> 00:42:07,399
Speaker 1: the cost, better your net performance going to be. It's

770
00:42:07,400 --> 00:42:10,239
Speaker 1: not about margins. So my personal view is that you

771
00:42:10,320 --> 00:42:12,880
Speaker 1: can't build a business with a specific margin target. That

772
00:42:12,960 --> 00:42:16,040
Speaker 1: makes absolutely no sense. That should be an that should

773
00:42:16,080 --> 00:42:18,040
Speaker 1: be a fall out of what you're doing, not a

774
00:42:18,080 --> 00:42:23,160
Speaker 1: target itself. Quite quite interesting. So you're you're known as

775
00:42:23,200 --> 00:42:28,560
Speaker 1: an international manager, but you also run a US domestic fund.

776
00:42:29,120 --> 00:42:34,520
Speaker 1: How do you balance the two? They're such different um environments,

777
00:42:34,560 --> 00:42:38,000
Speaker 1: such different stocks. How do how do you go back

778
00:42:38,040 --> 00:42:41,480
Speaker 1: and forth between thinking about equities in the US and

779
00:42:41,520 --> 00:42:46,000
Speaker 1: thinking about international equities. I have I've done it for

780
00:42:46,040 --> 00:42:48,719
Speaker 1: twenty years and now both developed an emerging markets and

781
00:42:48,760 --> 00:42:50,920
Speaker 1: I feel I'm a better emerging market manager because I

782
00:42:50,960 --> 00:42:54,480
Speaker 1: do developed advisive versa. So, for example, last year that

783
00:42:54,800 --> 00:42:58,879
Speaker 1: the implication of trade we thought were clearly being underappreciated

784
00:42:58,960 --> 00:43:02,239
Speaker 1: in a lot of Chinese companies, meaning the tariffs, the

785
00:43:02,239 --> 00:43:04,520
Speaker 1: Tarifan trade ward. I mean it's not just putting tariff,

786
00:43:04,600 --> 00:43:06,879
Speaker 1: but it also impacts Apple and a bunch of other

787
00:43:06,880 --> 00:43:10,040
Speaker 1: companies here. So if you look at Nike, Starbucks, and Apple,

788
00:43:10,120 --> 00:43:12,319
Speaker 1: I mean this, this, this, You've got to incorporate the

789
00:43:12,360 --> 00:43:16,440
Speaker 1: potential risk coming from what's happening in China. So in fact,

790
00:43:16,480 --> 00:43:19,040
Speaker 1: some of the names that we did cut back last summer,

791
00:43:19,080 --> 00:43:22,400
Speaker 1: which added ultimately added value, was primarily because of read

792
00:43:22,600 --> 00:43:24,960
Speaker 1: on ground in China. So I think there's a lot

793
00:43:24,960 --> 00:43:29,640
Speaker 1: of cross pollination. In fact, I personally feel that if

794
00:43:29,680 --> 00:43:32,640
Speaker 1: you're learning a large gap mandate in US on U

795
00:43:32,680 --> 00:43:34,960
Speaker 1: S secretaries, I don't see how you would survive the

796
00:43:35,000 --> 00:43:37,520
Speaker 1: long run without having good insights what's happening as of

797
00:43:37,520 --> 00:43:40,160
Speaker 1: the world. So you you really need to have that

798
00:43:40,239 --> 00:43:42,440
Speaker 1: level of sort of some understanding. You don't have to

799
00:43:42,480 --> 00:43:44,759
Speaker 1: run emerging market portfolio, but you need to have some

800
00:43:44,960 --> 00:43:47,640
Speaker 1: understanding what happened in some of these countries because that's

801
00:43:47,640 --> 00:43:50,040
Speaker 1: where the growth might become a lot of large multinationals.

802
00:43:50,320 --> 00:43:52,640
Speaker 1: Are you in these countries on a regular basis? Do

803
00:43:52,640 --> 00:43:54,400
Speaker 1: you do a lot of traveling or does do you

804
00:43:54,400 --> 00:43:57,520
Speaker 1: have your team um put boots on the ground or

805
00:43:57,640 --> 00:44:00,480
Speaker 1: is that just not necessary these days? Yeah? You boots

806
00:44:00,520 --> 00:44:02,440
Speaker 1: on the ground is not necessary. In fact, what I

807
00:44:02,440 --> 00:44:05,239
Speaker 1: found is a little bit counterproductive. Really. Why is because

808
00:44:05,239 --> 00:44:07,760
Speaker 1: people tend to become bias. It's like trees versus forests.

809
00:44:07,760 --> 00:44:09,400
Speaker 1: It's so close to the three that you forget the

810
00:44:09,440 --> 00:44:12,640
Speaker 1: forest maybe on fire, right and and by the way,

811
00:44:12,640 --> 00:44:15,600
Speaker 1: it happens more often. Uh so, so you've gotta be

812
00:44:15,600 --> 00:44:17,319
Speaker 1: careful of that. But yeah, if you do travel. But

813
00:44:17,360 --> 00:44:20,960
Speaker 1: I think again that's part of the evolution. Corporate access

814
00:44:21,000 --> 00:44:23,640
Speaker 1: to corporate management is a lot less valuable than you

815
00:44:23,680 --> 00:44:27,080
Speaker 1: used to be. Changed a lot it's changed, and I

816
00:44:27,080 --> 00:44:29,480
Speaker 1: think that's a lot of wild large shops struggling. You

817
00:44:29,520 --> 00:44:31,279
Speaker 1: can talk to the CEO and say, look, the next

818
00:44:31,320 --> 00:44:33,799
Speaker 1: coup is gonna great, and you load up on the stock.

819
00:44:33,880 --> 00:44:36,360
Speaker 1: Lets just happened in nineties all the time. It doesn't

820
00:44:36,360 --> 00:44:40,440
Speaker 1: work that way anymore, and which is why. And you

821
00:44:40,520 --> 00:44:41,960
Speaker 1: just have to sort of adapt to say that that

822
00:44:42,000 --> 00:44:44,960
Speaker 1: you know, corporate access is actually is important to understand

823
00:44:44,960 --> 00:44:47,880
Speaker 1: how they think. But just because you happen to know

824
00:44:47,880 --> 00:44:50,160
Speaker 1: a uccer Bruck doesn't mean you're gonna get the stock right. Right,

825
00:44:50,360 --> 00:44:54,840
Speaker 1: So so you mentioned you do. Both US and international

826
00:44:55,520 --> 00:44:59,920
Speaker 1: U S equities have outperformed international now for at least

827
00:45:00,000 --> 00:45:04,080
Speaker 1: a decade, and by a substantial amount. Historically that's been

828
00:45:04,120 --> 00:45:07,600
Speaker 1: a much shorter cycle. US leads and international leads. And

829
00:45:07,640 --> 00:45:10,840
Speaker 1: it goes back and forth. Oh what what do you

830
00:45:10,880 --> 00:45:14,759
Speaker 1: attribute this huge out performance over the past decade two?

831
00:45:15,120 --> 00:45:18,719
Speaker 1: And and when do you suspect um global stocks and

832
00:45:18,840 --> 00:45:23,400
Speaker 1: international stocks might take the leadership role again? Yeah? I

833
00:45:23,400 --> 00:45:25,200
Speaker 1: mean if you take a very long tram view, these

834
00:45:25,239 --> 00:45:29,320
Speaker 1: things tend to tend to go in cycles, right, I mean, Um,

835
00:45:29,400 --> 00:45:31,440
Speaker 1: if you look at US corporate margins and by the

836
00:45:31,440 --> 00:45:33,919
Speaker 1: why US are performed because ben't fastened rest of the world.

837
00:45:33,920 --> 00:45:36,520
Speaker 1: I'm and simple as that, right, But all right, which

838
00:45:36,560 --> 00:45:39,560
Speaker 1: raises the fundamental question, why have earnings growth been faster

839
00:45:39,680 --> 00:45:43,760
Speaker 1: here than internationally? Was it the US response to the crisis?

840
00:45:44,200 --> 00:45:46,239
Speaker 1: Is it just the nature of the economy? What is

841
00:45:46,320 --> 00:45:50,000
Speaker 1: it that why US companies have been doing so well

842
00:45:50,320 --> 00:45:52,600
Speaker 1: compared to their overseas piers. I think I think it's

843
00:45:52,600 --> 00:45:54,439
Speaker 1: a combination of what some of what you said, because

844
00:45:54,440 --> 00:45:56,440
Speaker 1: I look at the European banking system that did not

845
00:45:56,520 --> 00:45:58,920
Speaker 1: sort of you know, clean up as fast as what

846
00:45:59,000 --> 00:46:00,600
Speaker 1: happened here. I think one of the things there will

847
00:46:00,640 --> 00:46:02,319
Speaker 1: just put everybody in the room and say everybody's gonna

848
00:46:02,360 --> 00:46:06,560
Speaker 1: take capital and while you recappalize everybody, but right, I

849
00:46:06,560 --> 00:46:09,160
Speaker 1: mean you forced capital down everybody's throats, which is the

850
00:46:09,160 --> 00:46:11,600
Speaker 1: best thing that could have happened in hindsight. In Europe.

851
00:46:12,560 --> 00:46:16,000
Speaker 1: Can be done, won't be done? Um, that's a problem.

852
00:46:16,080 --> 00:46:18,839
Speaker 1: What what about austerity we've seen in the UK and

853
00:46:18,920 --> 00:46:21,160
Speaker 1: the EU? Was that How much of a factor was

854
00:46:21,239 --> 00:46:26,480
Speaker 1: that that they basically ignored everything keens toward us and

855
00:46:27,120 --> 00:46:29,719
Speaker 1: try to tighten their belts in the middle of a downturn. Well,

856
00:46:29,760 --> 00:46:32,960
Speaker 1: that's that's the whole problem in Europe. In general is

857
00:46:33,040 --> 00:46:35,439
Speaker 1: you know, there's there's difference between what's happening or what

858
00:46:35,480 --> 00:46:37,480
Speaker 1: was happening in Germany and what was happening in Spain

859
00:46:37,520 --> 00:46:41,759
Speaker 1: and Italy and Portugal. Right, so they would big differences

860
00:46:41,800 --> 00:46:44,680
Speaker 1: in terms of radar growth, unemployment, terms of fourth. And

861
00:46:44,680 --> 00:46:46,440
Speaker 1: and that's why I've seen property price in Germany go

862
00:46:46,520 --> 00:46:50,879
Speaker 1: up dramatically now because it's basically free money, UM. So

863
00:46:51,200 --> 00:46:54,560
Speaker 1: I think that's a fundamental flaw in Europe. Um. Having

864
00:46:54,600 --> 00:46:58,280
Speaker 1: said that, there are some really good companies um which

865
00:46:59,080 --> 00:47:00,719
Speaker 1: can allow you to come only a wealth over the

866
00:47:00,719 --> 00:47:03,880
Speaker 1: longer run. So if you take set of view, you

867
00:47:03,920 --> 00:47:06,560
Speaker 1: get these cycles in between. It feels like, oh US

868
00:47:06,560 --> 00:47:09,040
Speaker 1: always going to do well or internationals gonna do well.

869
00:47:09,080 --> 00:47:11,800
Speaker 1: For example, if you're sitting here in two thousands, even

870
00:47:12,960 --> 00:47:15,120
Speaker 1: you didn't make a dime, you didn't really make any

871
00:47:15,120 --> 00:47:18,520
Speaker 1: money in US equities or the prior decade. That's why

872
00:47:18,600 --> 00:47:20,719
Speaker 1: meaningful model of money was going in emerging markets and

873
00:47:20,719 --> 00:47:23,799
Speaker 1: non US. Now fast forward another eight nine years, that's

874
00:47:23,800 --> 00:47:26,840
Speaker 1: the opposite. So I think these these things go in cycles.

875
00:47:27,080 --> 00:47:29,719
Speaker 1: One aspect I would say I would highlight but is

876
00:47:29,760 --> 00:47:34,320
Speaker 1: not being appreciated, is the US corporate profitability has gone

877
00:47:34,360 --> 00:47:39,439
Speaker 1: up dramatically since two thousand. I would argue a lot

878
00:47:39,520 --> 00:47:43,360
Speaker 1: because of Chinese entry into w t O and this

879
00:47:43,440 --> 00:47:47,760
Speaker 1: whole decoupling notion of decoupling with China means that Apple

880
00:47:47,800 --> 00:47:50,560
Speaker 1: has to shift its manufacturing based to other areas out

881
00:47:50,880 --> 00:47:53,520
Speaker 1: of China, outside of Chinnel just as an example, right

882
00:47:53,560 --> 00:47:58,319
Speaker 1: ample Apple is just one example that has to be

883
00:47:58,440 --> 00:48:01,319
Speaker 1: margin negative for margins or the longer run. So the

884
00:48:01,360 --> 00:48:05,960
Speaker 1: corporate profitability US corporate margins are we seeing some sort

885
00:48:05,960 --> 00:48:09,319
Speaker 1: of secular peak, not because of some cyclists such but

886
00:48:09,400 --> 00:48:11,879
Speaker 1: because now you have to go somewhere else to set

887
00:48:11,920 --> 00:48:14,000
Speaker 1: a manufacturing based So again, a lot of companies will

888
00:48:14,000 --> 00:48:16,160
Speaker 1: not be IMPACTEDS software is it will not be impacted,

889
00:48:16,360 --> 00:48:19,520
Speaker 1: but other companies will be impacted. So but that's you know,

890
00:48:19,560 --> 00:48:23,440
Speaker 1: that's that's kind of what makes investing interesting. So you

891
00:48:23,520 --> 00:48:26,360
Speaker 1: did an interview a couple of years ago with City

892
00:48:26,360 --> 00:48:30,680
Speaker 1: wire over in in London, and your answer to one

893
00:48:30,680 --> 00:48:33,800
Speaker 1: of the questions was, and I don't remember the question,

894
00:48:33,840 --> 00:48:37,719
Speaker 1: but it doesn't even matter long term performance, long term performance,

895
00:48:37,719 --> 00:48:41,920
Speaker 1: long term performance, explain I think. I think at the

896
00:48:42,000 --> 00:48:46,799
Speaker 1: end of the day, it's longer term performance incorporates multiple cycles.

897
00:48:46,880 --> 00:48:49,160
Speaker 1: And which is why I feel to do. To really

898
00:48:49,280 --> 00:48:52,200
Speaker 1: judge an investor or portfolio managing, you've got to look

899
00:48:52,239 --> 00:48:56,239
Speaker 1: at how they how they survived the inflection points, because

900
00:48:56,239 --> 00:48:59,120
Speaker 1: if you think about it, what kills quants inflection points,

901
00:49:00,080 --> 00:49:02,719
Speaker 1: it's almost a guarantee that the market cycles would turn

902
00:49:02,760 --> 00:49:05,520
Speaker 1: into something else. I can't sit in forecast. So you

903
00:49:05,560 --> 00:49:07,880
Speaker 1: need to able to navigate the inflection points. People did

904
00:49:08,000 --> 00:49:11,359
Speaker 1: in late nineties got killed the cycle turned in March

905
00:49:11,440 --> 00:49:13,279
Speaker 1: or two thousand, for example, right then there was a

906
00:49:13,280 --> 00:49:16,640
Speaker 1: commodity super Bowl market people called commodity supercycle. Well, we

907
00:49:16,680 --> 00:49:19,399
Speaker 1: don't discuss them anymore as such, right, And I'm sure

908
00:49:19,400 --> 00:49:22,719
Speaker 1: there's super same in the text site, right. I mean

909
00:49:23,640 --> 00:49:25,799
Speaker 1: there's a different breed of tech names that are doing well.

910
00:49:26,480 --> 00:49:28,239
Speaker 1: You don't talk about Intel as much. You still talk

911
00:49:28,239 --> 00:49:30,719
Speaker 1: about Microsoft when you talk about Intel as much. So

912
00:49:30,960 --> 00:49:32,360
Speaker 1: I think that's why you need to be able to

913
00:49:32,440 --> 00:49:35,080
Speaker 1: capture a few inflection points to be able to see

914
00:49:35,360 --> 00:49:38,080
Speaker 1: whether the managers adapted or they keep bidding the drum off.

915
00:49:38,440 --> 00:49:41,200
Speaker 1: We do a B C D RNs repeat and don't

916
00:49:41,200 --> 00:49:43,720
Speaker 1: worry about it that that actually makes me very nervous

917
00:49:43,719 --> 00:49:47,080
Speaker 1: because you know that that typically It's like saying you're

918
00:49:47,080 --> 00:49:50,800
Speaker 1: going to drive from New York to Washington a sixty

919
00:49:50,840 --> 00:49:55,080
Speaker 1: miles an hour irrespective road conditions. Makes makes a lot

920
00:49:55,120 --> 00:49:58,280
Speaker 1: of sense. So, so you mentioned quants don't do especially

921
00:49:58,280 --> 00:50:02,279
Speaker 1: well at turning points. Arguably the past couple of years

922
00:50:02,280 --> 00:50:05,560
Speaker 1: have not been too kind to the quants, especially the

923
00:50:05,560 --> 00:50:09,480
Speaker 1: ones with an emphasis on factor investing. Um, are we

924
00:50:09,520 --> 00:50:12,600
Speaker 1: in a turning point now or is this something different

925
00:50:12,960 --> 00:50:16,680
Speaker 1: that's causing them to underperform? I think I think what's

926
00:50:16,680 --> 00:50:18,440
Speaker 1: happening is part of that is a lot of the

927
00:50:18,440 --> 00:50:22,120
Speaker 1: fact that everybody talks about factor investing, question how much

928
00:50:22,160 --> 00:50:26,160
Speaker 1: that is an arbitrage away. I mean, there was a

929
00:50:26,200 --> 00:50:29,960
Speaker 1: recent piece in you know, academia that once a study

930
00:50:30,000 --> 00:50:34,560
Speaker 1: is published about a particular type, factor or style, how

931
00:50:34,600 --> 00:50:37,520
Speaker 1: well it works historically the efficacy that goes down, right,

932
00:50:38,120 --> 00:50:40,120
Speaker 1: So I think we sometimes if we get we are

933
00:50:40,200 --> 00:50:44,480
Speaker 1: competing with ourselves. So once it is recognized eas to

934
00:50:44,480 --> 00:50:48,719
Speaker 1: do well, the efficacy will be lore makes makes a

935
00:50:48,719 --> 00:50:53,120
Speaker 1: lot of sense. You mentioned earlier the academic piece, UH

936
00:50:53,280 --> 00:50:57,520
Speaker 1: that looked at fund managers who add value in buying

937
00:50:58,000 --> 00:51:02,000
Speaker 1: on average, but generally do a terrible job selling. And

938
00:51:02,000 --> 00:51:05,040
Speaker 1: and I recul seeing that in January Uh, and I

939
00:51:05,080 --> 00:51:08,480
Speaker 1: had written about it, and the takeaway seemed to be

940
00:51:09,360 --> 00:51:13,200
Speaker 1: that the two things the fund managers were very poor

941
00:51:13,239 --> 00:51:18,720
Speaker 1: at selling were either stocks that had gone up a lot, UH,

942
00:51:19,000 --> 00:51:22,920
Speaker 1: that were strong growth with momentum. They sold because look

943
00:51:22,960 --> 00:51:25,479
Speaker 1: how much money we've made, or stocks that have gone

944
00:51:25,520 --> 00:51:28,879
Speaker 1: down a lot and had become very cheap. Uh. How

945
00:51:28,960 --> 00:51:33,360
Speaker 1: much of that is a fundamental misunderstanding of why stocks

946
00:51:33,360 --> 00:51:34,920
Speaker 1: go up and down? And how much of that is

947
00:51:34,960 --> 00:51:40,800
Speaker 1: just pure behavioral finance and the application of emotions to

948
00:51:40,800 --> 00:51:43,480
Speaker 1: to the decision making process. But if you think about it,

949
00:51:43,520 --> 00:51:46,239
Speaker 1: isn't the second one, i e. Behavior driving how much

950
00:51:46,280 --> 00:51:48,759
Speaker 1: stock has gone and up and down? Sure, my view

951
00:51:48,800 --> 00:51:51,320
Speaker 1: is that cost you bought the stock is irrelevant. In fact,

952
00:51:51,800 --> 00:51:53,799
Speaker 1: somebody asked me the other day, what what's your price

953
00:51:53,840 --> 00:51:56,200
Speaker 1: of stock x Y? You know excess? Look, I don't know,

954
00:51:56,440 --> 00:51:58,560
Speaker 1: and it's not relevant because the moment you think about

955
00:51:58,840 --> 00:52:02,680
Speaker 1: I bought it this price, you anchoring to that. And

956
00:52:02,719 --> 00:52:08,080
Speaker 1: therefore it's because the market doesn't care where you bought it, right,

957
00:52:08,160 --> 00:52:10,000
Speaker 1: so you don't. And I think that anchoring is the

958
00:52:10,040 --> 00:52:12,920
Speaker 1: biggest issue, and frankly, be anchored to our own knowledge

959
00:52:12,960 --> 00:52:15,360
Speaker 1: base because if you think about our knowledge is history,

960
00:52:16,920 --> 00:52:21,319
Speaker 1: that makes perfect sense. The so so you're you're gonna say,

961
00:52:21,440 --> 00:52:25,920
Speaker 1: behavior makes a great deal of difference obviously to now,

962
00:52:25,960 --> 00:52:28,080
Speaker 1: why doesn't it have the same impact on buying? I

963
00:52:28,080 --> 00:52:32,080
Speaker 1: guess there is no there, there's no endownment effect, there's

964
00:52:32,080 --> 00:52:35,279
Speaker 1: no anchor. You don't own it previously, So it's a

965
00:52:35,320 --> 00:52:37,960
Speaker 1: fresh sheet of paper when you're making a purchase. Is

966
00:52:38,000 --> 00:52:40,040
Speaker 1: that thinking? Yeah? Exactly? And I think I think that's

967
00:52:40,040 --> 00:52:41,919
Speaker 1: why I've done a number of times that I would

968
00:52:41,920 --> 00:52:44,600
Speaker 1: just sell the stock to clear my own mind, because

969
00:52:44,640 --> 00:52:46,879
Speaker 1: that this game is played inside, it's not outside. You're

970
00:52:46,880 --> 00:52:51,239
Speaker 1: not fooling anybody, fooling yourself. So how do you how

971
00:52:51,280 --> 00:52:54,879
Speaker 1: do you reboot your own mind? And sometimes you might

972
00:52:54,920 --> 00:52:57,560
Speaker 1: well sort of take it off the table, And a

973
00:52:57,600 --> 00:52:58,960
Speaker 1: lot of times you don't want to. You don't know

974
00:52:58,960 --> 00:53:02,359
Speaker 1: why the name again, do you not anchor on your

975
00:53:02,360 --> 00:53:05,359
Speaker 1: previous buy or sell when you're approaching a name. I'll

976
00:53:05,400 --> 00:53:08,640
Speaker 1: give you my favorite example before the I when the

977
00:53:08,719 --> 00:53:13,200
Speaker 1: iPod not iPhone iPod first came out, Apple was about

978
00:53:13,239 --> 00:53:17,600
Speaker 1: fifteen bucks with thirteen cash dirt cheap. It ran up

979
00:53:17,600 --> 00:53:20,480
Speaker 1: to about forty five dollars in a relatively cheap amount

980
00:53:20,480 --> 00:53:23,279
Speaker 1: of short amount of time and then pulled back. And

981
00:53:23,280 --> 00:53:26,280
Speaker 1: I remember selling that stock in the low forties, thinking

982
00:53:26,280 --> 00:53:28,640
Speaker 1: there I tripled my money, and here it is. It's falling,

983
00:53:29,160 --> 00:53:31,600
Speaker 1: and I said, if it ever gets back over forty five,

984
00:53:31,640 --> 00:53:33,920
Speaker 1: I'm a buyer again. And of course it goes back

985
00:53:33,960 --> 00:53:36,960
Speaker 1: over forty five, and I'm like, I paid fifteen dollars,

986
00:53:37,000 --> 00:53:39,319
Speaker 1: how do I pay forty five? What is the thing

987
00:53:39,320 --> 00:53:41,719
Speaker 1: to go even higher? And of course we know what

988
00:53:41,800 --> 00:53:45,719
Speaker 1: happened that that was a classic anchoring trading error. How

989
00:53:45,719 --> 00:53:48,840
Speaker 1: do you avoid doing that? When you do a clean

990
00:53:48,920 --> 00:53:51,840
Speaker 1: sheet of paper and say, okay, I've sold this stock

991
00:53:51,880 --> 00:53:54,160
Speaker 1: and I'm just forgetting about where I bought it or

992
00:53:54,239 --> 00:53:58,200
Speaker 1: sold it. It's difficult. I think. I think I've been

993
00:53:58,239 --> 00:54:00,680
Speaker 1: working on it forever and I still have you know,

994
00:54:00,760 --> 00:54:02,920
Speaker 1: some of us, You know I still commit the same

995
00:54:03,080 --> 00:54:05,319
Speaker 1: or similar mistakes. So I think you can only work

996
00:54:05,320 --> 00:54:08,120
Speaker 1: on reducing that, which is where you want to have

997
00:54:08,160 --> 00:54:12,120
Speaker 1: the diversity in terms of how people think about the names.

998
00:54:12,520 --> 00:54:14,680
Speaker 1: You want to have a bull and bear case within

999
00:54:14,719 --> 00:54:18,120
Speaker 1: the team, right, which is why we've actually hired folks

1000
00:54:18,160 --> 00:54:21,920
Speaker 1: who have good shorting experience. Um, We're not gonna launch

1001
00:54:22,080 --> 00:54:25,640
Speaker 1: long short How many long only folks are willing to

1002
00:54:25,760 --> 00:54:29,800
Speaker 1: entertain folks have shorting experience in the team. That's interesting.

1003
00:54:29,840 --> 00:54:32,920
Speaker 1: So the way you deal with behavioral issues is you

1004
00:54:33,000 --> 00:54:35,000
Speaker 1: make sure that a lot of people at the table

1005
00:54:35,440 --> 00:54:38,520
Speaker 1: have broadly different views and histories and perspective. I have

1006
00:54:38,560 --> 00:54:42,919
Speaker 1: had client meetings where a name, Um, I I said, look,

1007
00:54:43,160 --> 00:54:45,080
Speaker 1: this is a bull and this isn't bear, and I'm

1008
00:54:45,120 --> 00:54:46,719
Speaker 1: out of the room. We can talk to both of them.

1009
00:54:46,880 --> 00:54:48,760
Speaker 1: We don't own the stock right now we wanted before.

1010
00:54:49,080 --> 00:54:51,719
Speaker 1: So but look, I think I think, I think you

1011
00:54:51,840 --> 00:54:54,160
Speaker 1: just would work on reducing that. It's very hard to

1012
00:54:54,200 --> 00:54:57,680
Speaker 1: get over that, to say the very least. I know,

1013
00:54:57,800 --> 00:55:00,480
Speaker 1: I only have you for a finite amount of time. Him.

1014
00:55:00,520 --> 00:55:04,319
Speaker 1: So let's jump to our favorite questions that we ask

1015
00:55:04,400 --> 00:55:07,319
Speaker 1: all of our guests. Uh, tell us, what was the

1016
00:55:07,320 --> 00:55:11,640
Speaker 1: first car you owned? Your make and model? Uh it

1017
00:55:11,800 --> 00:55:16,600
Speaker 1: was Honda Civic ninety two. Right. It's hard to kill

1018
00:55:16,640 --> 00:55:18,239
Speaker 1: those and it will stick shift because I'm trying to

1019
00:55:18,239 --> 00:55:20,799
Speaker 1: save a little bit of money. Right, same same for me.

1020
00:55:21,120 --> 00:55:25,720
Speaker 1: Those cars are all but impossible to kill. They run forever. Uh.

1021
00:55:25,840 --> 00:55:29,080
Speaker 1: What's the most important thing that people don't know about

1022
00:55:29,120 --> 00:55:33,359
Speaker 1: regif Jane. Yeah, it's it's kind of hard to say

1023
00:55:33,400 --> 00:55:38,520
Speaker 1: because a lot of pretty much everything is public. But

1024
00:55:38,520 --> 00:55:40,640
Speaker 1: but maybe the fact that I've not been on a

1025
00:55:40,640 --> 00:55:44,319
Speaker 1: golf course will last ten years now. Uh So were

1026
00:55:44,320 --> 00:55:46,400
Speaker 1: you a big golfer? No? I was never a big golfer,

1027
00:55:46,440 --> 00:55:48,760
Speaker 1: So that's what I'm saying. But I live in Florida

1028
00:55:48,760 --> 00:55:52,600
Speaker 1: and I should drive through its golf course. So who

1029
00:55:52,600 --> 00:55:55,319
Speaker 1: are your early mentors who helped influence the way you

1030
00:55:55,360 --> 00:56:00,959
Speaker 1: think about stocks and investing? Um, I can't say I've

1031
00:56:00,960 --> 00:56:03,719
Speaker 1: worked with any individual ways sort who has mentored me.

1032
00:56:03,760 --> 00:56:06,239
Speaker 1: But obviously he learned a lot from reading Buffett, I think.

1033
00:56:07,480 --> 00:56:11,200
Speaker 1: Or there's a whole sloop you know Phil Fisher? Um,

1034
00:56:11,200 --> 00:56:14,040
Speaker 1: Phil Fisher? What the name is familiar where? Yeah? He

1035
00:56:14,080 --> 00:56:17,360
Speaker 1: wrote that, you know, the famous book in the fifties,

1036
00:56:17,840 --> 00:56:20,080
Speaker 1: and he has influenced you know a lot of folks,

1037
00:56:20,120 --> 00:56:26,560
Speaker 1: including including Buffett. Uh common Stocks? Sure? Yeah, Um that's

1038
00:56:26,560 --> 00:56:29,319
Speaker 1: not Ken Fisher's father, is it? I think it is.

1039
00:56:29,440 --> 00:56:32,120
Speaker 1: I think it is too. That's quite interesting. Speaking of books,

1040
00:56:32,640 --> 00:56:35,240
Speaker 1: what are some of your favorite books fiction, non fiction?

1041
00:56:35,280 --> 00:56:40,920
Speaker 1: What what do you like to read? So? Um, I

1042
00:56:40,920 --> 00:56:43,480
Speaker 1: I think the lessons for corporate America probably is one

1043
00:56:43,480 --> 00:56:45,600
Speaker 1: of the better from an investment perspective, I feel, and

1044
00:56:45,640 --> 00:56:48,560
Speaker 1: anything Buffett has written obviously is is what you know,

1045
00:56:48,600 --> 00:56:51,680
Speaker 1: definitely worth reading and rereading, meaning his annual letters or

1046
00:56:51,760 --> 00:56:55,239
Speaker 1: annual letters. Uh. And you know some of the transcripts

1047
00:56:55,280 --> 00:56:57,680
Speaker 1: from his and you know a g MS that kind

1048
00:56:57,719 --> 00:56:59,520
Speaker 1: of thing. I went to grad school with a guy

1049
00:56:59,560 --> 00:57:02,440
Speaker 1: named Lauren Cunningham who came up with a brilliant idea

1050
00:57:02,600 --> 00:57:07,160
Speaker 1: twenty five plus years ago of taking Buffett's annual letters

1051
00:57:07,160 --> 00:57:09,400
Speaker 1: and printing them in a book. And well, that's what

1052
00:57:09,440 --> 00:57:11,799
Speaker 1: I'm talking about lesson for Corporate America. So that's Karring

1053
00:57:11,840 --> 00:57:14,120
Speaker 1: Cunningham's book that that I went to school with him.

1054
00:57:14,239 --> 00:57:17,080
Speaker 1: And who would have known back years ago that was

1055
00:57:17,120 --> 00:57:19,080
Speaker 1: the thing. And it's become I think in a nuity

1056
00:57:19,120 --> 00:57:20,840
Speaker 1: any any of the books you want to mention, Yeah,

1057
00:57:20,840 --> 00:57:22,640
Speaker 1: like I think, I think, I think, I feel that

1058
00:57:22,760 --> 00:57:25,200
Speaker 1: it has to be a little more holistic. Um. So

1059
00:57:25,240 --> 00:57:28,400
Speaker 1: I do quite like the Art of Happiness. Why. I

1060
00:57:28,400 --> 00:57:31,680
Speaker 1: think it's about Howard Cutler or something. There's an interview

1061
00:57:31,680 --> 00:57:36,400
Speaker 1: of Dalai Lama really Yeah, and you know recently add

1062
00:57:36,400 --> 00:57:39,520
Speaker 1: that this book by and Duke on Betting that was

1063
00:57:40,200 --> 00:57:43,880
Speaker 1: book Thinking Bets. The other. Actually, I'm reading this book

1064
00:57:43,920 --> 00:57:48,280
Speaker 1: by Rory Sutherland, which I quite like. The Alchemy just

1065
00:57:48,320 --> 00:57:52,960
Speaker 1: came out. Um, the Alchemy, The Alchemy. Yeah, he's he's

1066
00:57:53,000 --> 00:57:55,959
Speaker 1: from the advertising side, so it's kind of colorful book.

1067
00:57:56,000 --> 00:57:59,920
Speaker 1: It's it's a fun read. So I I read rather eclectic.

1068
00:58:00,800 --> 00:58:04,160
Speaker 1: That's that's quite quite interesting. UM, tell us about a

1069
00:58:04,200 --> 00:58:07,160
Speaker 1: time you failed and what you learned from the experience.

1070
00:58:09,000 --> 00:58:12,080
Speaker 1: I think, I think from an investment perspective, UM, what

1071
00:58:12,240 --> 00:58:14,800
Speaker 1: if I go back in two thousand eight. You know,

1072
00:58:14,920 --> 00:58:18,120
Speaker 1: I actually pretty much ended up exiting all our financial

1073
00:58:18,120 --> 00:58:20,760
Speaker 1: exposure by two thousand seventh. Their bats, but I still

1074
00:58:20,760 --> 00:58:23,040
Speaker 1: a lot of exposure which could have an impacted negatively

1075
00:58:23,640 --> 00:58:25,440
Speaker 1: because of slowing economy and the fact that I was

1076
00:58:25,440 --> 00:58:27,320
Speaker 1: so nervous on the financial side. The question why didn't

1077
00:58:27,320 --> 00:58:29,400
Speaker 1: I connect the dots? And that actually led me to

1078
00:58:29,480 --> 00:58:31,840
Speaker 1: revamping the whole investment team over the years, how I

1079
00:58:31,880 --> 00:58:34,400
Speaker 1: thought about investment team. Uh and in fact, g k

1080
00:58:34,600 --> 00:58:38,000
Speaker 1: as you know, I didn't bring anybody from my prior team.

1081
00:58:38,040 --> 00:58:41,080
Speaker 1: This was really uh keeps using a clean sheet of paper.

1082
00:58:41,640 --> 00:58:46,040
Speaker 1: You started from scratch and launched with UM. Nobody from

1083
00:58:46,720 --> 00:58:49,360
Speaker 1: your prior firm. What was the thinking that the thinking

1084
00:58:49,440 --> 00:58:51,320
Speaker 1: is again, you know, what have I learned, I mean,

1085
00:58:51,720 --> 00:58:54,240
Speaker 1: over the years in terms of what works and doesn't work?

1086
00:58:54,240 --> 00:58:56,919
Speaker 1: How can create more diversity, And so tried to hide

1087
00:58:56,960 --> 00:58:58,760
Speaker 1: with a lot more diversity in terms of folks with long,

1088
00:58:58,760 --> 00:59:02,600
Speaker 1: short experience, credit, low credited experience, full capital structure analysis,

1089
00:59:02,640 --> 00:59:06,080
Speaker 1: so different type of investigative journalists. And I think I

1090
00:59:06,120 --> 00:59:08,360
Speaker 1: think that's part of learning evolving. In fact, there was

1091
00:59:08,520 --> 00:59:12,120
Speaker 1: again somebody who has covered a consultant, has covered this

1092
00:59:12,160 --> 00:59:15,000
Speaker 1: space for a while said to me something which is interesting.

1093
00:59:16,440 --> 00:59:19,280
Speaker 1: What they found was that the team that had no

1094
00:59:19,400 --> 00:59:23,640
Speaker 1: employee analyst turnover, the chance of then going under was

1095
00:59:23,680 --> 00:59:27,600
Speaker 1: the highest. Really, that's interesting, and that actually makes sense.

1096
00:59:28,280 --> 00:59:30,400
Speaker 1: This interesting does a very good job selling how everything

1097
00:59:30,440 --> 00:59:32,560
Speaker 1: is stable, everybody has been here since they were childhood

1098
00:59:32,560 --> 00:59:35,040
Speaker 1: and don't really batter kind of stuff. But that's misleading.

1099
00:59:35,880 --> 00:59:38,320
Speaker 1: That leads to group think. So how do you sort

1100
00:59:38,320 --> 00:59:39,880
Speaker 1: of read And by the way, I've done that kind

1101
00:59:39,880 --> 00:59:44,440
Speaker 1: of you know, restructuring before too, because I feel I'm

1102
00:59:44,560 --> 00:59:46,720
Speaker 1: better hiding now than I was twenty years ago, fifteen

1103
00:59:46,760 --> 00:59:48,080
Speaker 1: years ago, right, I mean, you got to learn from

1104
00:59:48,120 --> 00:59:50,440
Speaker 1: the mistakes. So sure that that's part and parcel of

1105
00:59:50,760 --> 00:59:53,160
Speaker 1: which is why I have a I thought I'll have

1106
00:59:53,200 --> 00:59:56,040
Speaker 1: a clean sheet of paper, and what would I redo?

1107
00:59:56,280 --> 00:59:58,560
Speaker 1: And and and one reason I think we've done better

1108
00:59:58,600 --> 01:00:01,720
Speaker 1: now is partship because of Okay, these are the mistakes.

1109
01:00:01,760 --> 01:00:03,920
Speaker 1: It's like tennis. If your back end is weak, the

1110
01:00:03,960 --> 01:00:06,480
Speaker 1: good news is you can im You know, in tennis

1111
01:00:06,560 --> 01:00:08,240
Speaker 1: you can add somebody else to play a back end.

1112
01:00:09,480 --> 01:00:11,720
Speaker 1: In this game, you can. So what how can I

1113
01:00:11,760 --> 01:00:14,120
Speaker 1: address my own weaknesses? Let me hire those rather than

1114
01:00:14,120 --> 01:00:15,920
Speaker 1: sort of saying, gee, this is the same group of

1115
01:00:15,960 --> 01:00:20,440
Speaker 1: people and we're all happy living ever after. So so

1116
01:00:20,520 --> 01:00:22,760
Speaker 1: you mentioned golf and now tennis. Tell us what you

1117
01:00:22,840 --> 01:00:26,400
Speaker 1: do for fun when you're not in the office. Unfortunately

1118
01:00:26,400 --> 01:00:29,760
Speaker 1: you need I needed. I tried everything, including golf and tennis.

1119
01:00:29,800 --> 01:00:31,640
Speaker 1: So I don't think so I would say that I'm

1120
01:00:31,680 --> 01:00:34,280
Speaker 1: good at tennis at all. Um, I like to read.

1121
01:00:34,360 --> 01:00:36,920
Speaker 1: I mean, you know, eclectically doesn't do investment at all.

1122
01:00:36,960 --> 01:00:39,480
Speaker 1: So I think my best day would be having a

1123
01:00:39,520 --> 01:00:42,040
Speaker 1: good book and a couple of coffee and sitting alone

1124
01:00:42,040 --> 01:00:45,840
Speaker 1: and reading on a Sunday morning. That probably be describe

1125
01:00:45,840 --> 01:00:48,480
Speaker 1: what I like. That That sounds like fun. So what

1126
01:00:48,680 --> 01:00:51,400
Speaker 1: is it these days that you're most optimistic about, and

1127
01:00:51,440 --> 01:00:57,120
Speaker 1: what are you most pessimistic about. I think that, um,

1128
01:00:57,200 --> 01:01:00,520
Speaker 1: there's still quite a bit of pessimism generally speaking on markets.

1129
01:01:01,160 --> 01:01:05,840
Speaker 1: I'm talking about equity markets. Uh. The focus on on

1130
01:01:05,920 --> 01:01:08,640
Speaker 1: what FED is going to do is and it's not

1131
01:01:08,680 --> 01:01:11,920
Speaker 1: an important don't get me wrong. But there's real corporate

1132
01:01:12,640 --> 01:01:16,040
Speaker 1: earnings picture, which is important, not is not unimportant, but

1133
01:01:16,080 --> 01:01:18,720
Speaker 1: it's separate from just where rates are to if rates

1134
01:01:18,760 --> 01:01:22,120
Speaker 1: go lowered, how much does that really help Apple or Amazon? Yeah,

1135
01:01:22,880 --> 01:01:24,680
Speaker 1: it won't. It won't make that big a difference, right,

1136
01:01:24,680 --> 01:01:26,840
Speaker 1: I mean Amazon has not done well because of rates

1137
01:01:26,840 --> 01:01:31,040
Speaker 1: collapsing or something. Right, It's it's a fundament They're fundamentally transformed.

1138
01:01:31,120 --> 01:01:33,840
Speaker 1: How we you know, how we transact um and that

1139
01:01:33,960 --> 01:01:36,120
Speaker 1: kind of transformation happening a lot of different areas. So

1140
01:01:36,440 --> 01:01:39,000
Speaker 1: I feel that we need to focus on that true

1141
01:01:39,040 --> 01:01:42,800
Speaker 1: to find the next group of winners um uh. And

1142
01:01:42,800 --> 01:01:44,520
Speaker 1: and some of the old companies have sort of restructure

1143
01:01:44,560 --> 01:01:46,440
Speaker 1: themselves in in a dramatic fashion too. That's a lot

1144
01:01:46,440 --> 01:01:48,960
Speaker 1: more important. So I'm actually pretty optimistic in terms of

1145
01:01:48,960 --> 01:01:50,240
Speaker 1: where the world is. I'm not saying the market is

1146
01:01:50,240 --> 01:01:52,520
Speaker 1: going to go up next year. Or something. But but

1147
01:01:52,880 --> 01:01:57,360
Speaker 1: because sometimes too much focus on FED policy and you know,

1148
01:01:57,560 --> 01:02:00,680
Speaker 1: and and other things that are wrong in the world. UM.

1149
01:02:00,720 --> 01:02:02,840
Speaker 1: And by the way, that's why The Factfulness by Rosaling

1150
01:02:02,960 --> 01:02:06,280
Speaker 1: is another fantastic book. UM. I think I think the

1151
01:02:06,320 --> 01:02:08,480
Speaker 1: world is a lot better place today than than than

1152
01:02:08,560 --> 01:02:10,680
Speaker 1: we give it credit for. Anywhere in the world. I mean,

1153
01:02:10,720 --> 01:02:13,520
Speaker 1: I've invested in frontier markets twenty years ago. I mean

1154
01:02:14,040 --> 01:02:16,960
Speaker 1: almost invested invest in Zimbabwe in ninety after visiting their

1155
01:02:17,400 --> 01:02:21,120
Speaker 1: thank god I didn't. Um. We've invested in Botswana and Bibia,

1156
01:02:21,200 --> 01:02:23,960
Speaker 1: Mouritius and all over the place. Generally, you go, things

1157
01:02:24,000 --> 01:02:26,640
Speaker 1: are better today than they were ten twenty three years ago,

1158
01:02:26,680 --> 01:02:30,000
Speaker 1: I mean, broadly speaking. So that's the optimistic side. What

1159
01:02:30,000 --> 01:02:33,400
Speaker 1: what are you pessimistic about? I think I think I

1160
01:02:33,400 --> 01:02:36,520
Speaker 1: think this um, the trade water issues, I feel a

1161
01:02:36,640 --> 01:02:39,840
Speaker 1: much more deeper rooted. Uh. This is a paradigm shift

1162
01:02:39,920 --> 01:02:42,000
Speaker 1: that is basically unfore Lygen tried it in front of

1163
01:02:42,000 --> 01:02:45,400
Speaker 1: our eyes. Um. And I think I think there will

1164
01:02:45,440 --> 01:02:48,439
Speaker 1: be a transition Peter needed, you know, because of because

1165
01:02:48,440 --> 01:02:50,440
Speaker 1: of what is happening. And I think I think if

1166
01:02:50,480 --> 01:02:52,080
Speaker 1: it's slow, I think we should really handle it. I

1167
01:02:52,160 --> 01:02:54,760
Speaker 1: hope it's not too fast transitions just a batter life.

1168
01:02:54,760 --> 01:02:57,920
Speaker 1: So I'm not saying it's gotta bad. They happen. Makes sense.

1169
01:02:58,360 --> 01:03:01,600
Speaker 1: So if a millennie all or recent college grad came

1170
01:03:01,680 --> 01:03:03,920
Speaker 1: up to you and said they were interested in a career,

1171
01:03:04,480 --> 01:03:08,760
Speaker 1: uh in investing, what sort of advice would you give them?

1172
01:03:08,920 --> 01:03:10,480
Speaker 1: First of all, I would say that you have the

1173
01:03:10,600 --> 01:03:14,640
Speaker 1: open minded and humble about about things. If you're not humble,

1174
01:03:15,080 --> 01:03:18,000
Speaker 1: because what arrogance leads to is you become dogmatic about

1175
01:03:18,000 --> 01:03:20,520
Speaker 1: to us, and that's the worst thing to doing investing

1176
01:03:20,680 --> 01:03:23,200
Speaker 1: is become arrogant. In fact, what I've seen is my

1177
01:03:23,240 --> 01:03:25,320
Speaker 1: worst losses came and I knew I thought I knew

1178
01:03:25,360 --> 01:03:28,280
Speaker 1: the most because you become dogmatic. So being open minded

1179
01:03:28,360 --> 01:03:31,360
Speaker 1: humble is important. The second part is you always have

1180
01:03:31,400 --> 01:03:33,320
Speaker 1: to think about giving back. So we for example, a

1181
01:03:33,400 --> 01:03:36,720
Speaker 1: GG launched our foundation, but then basically and have a

1182
01:03:36,800 --> 01:03:40,760
Speaker 1: launching with employee matching. We've you know, it's important to

1183
01:03:40,760 --> 01:03:42,800
Speaker 1: get back and this industry pays well, we need to

1184
01:03:42,840 --> 01:03:45,160
Speaker 1: think about how we sort of you know, from a

1185
01:03:45,200 --> 01:03:47,800
Speaker 1: societal perspective, how what are we actually about giving back

1186
01:03:47,800 --> 01:03:50,800
Speaker 1: to society? So so how does that work? You're you're

1187
01:03:50,920 --> 01:03:53,760
Speaker 1: matching if an employee makes it comes up to you

1188
01:03:53,840 --> 01:03:58,560
Speaker 1: with a UM, appropriate philanthropy or charity g q G

1189
01:03:58,720 --> 01:04:01,640
Speaker 1: will match whatever the eployee. Yeah, so there's yeah, so

1190
01:04:01,800 --> 01:04:03,640
Speaker 1: if you're trying to be thoughtful about it. So there's

1191
01:04:03,640 --> 01:04:05,600
Speaker 1: a separate committee. I'm not on the committee within the

1192
01:04:05,640 --> 01:04:10,920
Speaker 1: firm from different areas of the firm, who would approve that, uh,

1193
01:04:10,960 --> 01:04:14,480
Speaker 1: and then we would match. Ah. But but that foundation

1194
01:04:14,560 --> 01:04:17,160
Speaker 1: is also now started actively giving out for from a

1195
01:04:17,600 --> 01:04:21,840
Speaker 1: you know, education, health care, you know, especially kids, and

1196
01:04:21,840 --> 01:04:24,760
Speaker 1: and and a few other causes. And finally, what is

1197
01:04:24,800 --> 01:04:27,240
Speaker 1: it that you know about the world of investing today

1198
01:04:27,360 --> 01:04:29,720
Speaker 1: that you wish you knew thirty years or so ago

1199
01:04:29,840 --> 01:04:34,120
Speaker 1: when you were first ramping up That I that I

1200
01:04:34,200 --> 01:04:36,960
Speaker 1: know a lot less than what I think. I think

1201
01:04:37,000 --> 01:04:42,240
Speaker 1: you said. You begin to appreciate your own um uh

1202
01:04:42,360 --> 01:04:49,760
Speaker 1: yeah yeah. You let me rephrase that. As you grow older,

1203
01:04:49,800 --> 01:04:51,959
Speaker 1: you tend to appreciate what you don't know a lot

1204
01:04:52,000 --> 01:04:54,320
Speaker 1: more and that is part of the strength, and that

1205
01:04:54,360 --> 01:04:56,440
Speaker 1: actually makes you not only better invested, but a better

1206
01:04:56,520 --> 01:04:59,080
Speaker 1: human being. So I think I think it's important to

1207
01:04:59,360 --> 01:05:01,760
Speaker 1: and I feel light, I feel a no, a lot

1208
01:05:01,840 --> 01:05:06,000
Speaker 1: less today then I thought I knew thirty years ago. Um,

1209
01:05:06,040 --> 01:05:08,919
Speaker 1: and that's important part of not just investing, but life

1210
01:05:09,520 --> 01:05:12,120
Speaker 1: makes perfect sense. Reggiev, thank you so much for being

1211
01:05:12,160 --> 01:05:15,080
Speaker 1: so generous with your time. We have been speaking to

1212
01:05:15,240 --> 01:05:19,880
Speaker 1: Rajiv Jane. He is the chairman and chief Investment Officer

1213
01:05:20,000 --> 01:05:23,400
Speaker 1: of g q G Partners. If you enjoy this conversation,

1214
01:05:23,480 --> 01:05:25,440
Speaker 1: well look up an intro down in Intro on Apple

1215
01:05:25,520 --> 01:05:28,560
Speaker 1: iTunes and you can see any of the other two

1216
01:05:28,880 --> 01:05:32,280
Speaker 1: d and fifty such conversations we've had over the previous

1217
01:05:32,480 --> 01:05:36,360
Speaker 1: five years. Be sure and give us a review and uh,

1218
01:05:36,400 --> 01:05:40,520
Speaker 1: if you wanna make any suggestions comments, feedback right to

1219
01:05:40,640 --> 01:05:44,760
Speaker 1: us at m IB podcast at Bloomberg dot net. I

1220
01:05:44,800 --> 01:05:47,560
Speaker 1: would be remiss if I did not think the crack

1221
01:05:47,680 --> 01:05:51,400
Speaker 1: staff that helps put these podcasts together each week. Michael

1222
01:05:51,400 --> 01:05:55,200
Speaker 1: Batnick is my head of research. Attica val Bron is

1223
01:05:55,280 --> 01:06:00,840
Speaker 1: our project manager. Michael Boyle is my producer. I'm Barry results.

1224
01:06:01,160 --> 01:06:04,600
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.

1225
01:06:10,320 --> 01:06:10,360
Speaker 1: H