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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 Masters in Business, I have a very

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Speaker 1: special guest, and I know I say that every week,

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Speaker 1: but this week Mario Gabelly is our guest, and he

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Speaker 1: is just tremendous. He is known as a stockpickers, stockpicker,

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Speaker 1: a deep value guy schooled at Columbia in the Graham

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Speaker 1: and Dodd tradition, the Warren Buffett tradition of value investing.

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Speaker 1: I think the twist that Mario brings is that he

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Speaker 1: learns an industry as well as anybody ever can, and

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Speaker 1: then within that industry goes hunting for value. Uh. He's

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Speaker 1: also a force of nature. As you'll here, I very

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Speaker 1: much completely lose control of the interview and and he

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Speaker 1: um pretty much steam rolls over um a lot of

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Speaker 1: the questions I asked. It was really a fascinating conversation.

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Speaker 1: And if you're at all interested in stock picking, uh,

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Speaker 1: this is a guy you really want to listen to. So,

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Speaker 1: without any further ado, here is my conversation with Mario Gabelly.

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

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Speaker 1: I know I say this every week that I have

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Speaker 1: a special guest. But this week I have a very

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Speaker 1: special guest, founder, CEO, chairman of Gabelly Asset Management, Mario Gabelly.

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Speaker 1: I'll give you a quick version of his background. Formed

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Speaker 1: the company in the midst of the bear market in

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Speaker 1: the nineties seventies UH now managing over forty billion that's

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Speaker 1: billion with a being assets, known as an intense researcher

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Speaker 1: into the businesses of the companies who stock he buys. Mario,

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Speaker 1: also known as Super Mario, buy stocks as if he

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Speaker 1: was purchasing the whole companies. He's recently UM gifted the

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Speaker 1: Formum School of Business, which has since been renamed the

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Speaker 1: Gabilly School of Business at Fordham University, Nario. Gabilly, welcome

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Speaker 1: to Bloomberg. Heys terrific to be here. Talk about stocks.

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Speaker 1: Let's talk a little bit about stocks. So your background

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Speaker 1: is that you UM went to the Columbia UH School

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Speaker 1: of Business. What do were you doing before you went

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Speaker 1: for your business degree. Well, essentially, back in the period

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Speaker 1: of time the early sixties, you did not have to

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Speaker 1: take the two or three years of work experience so

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Speaker 1: college rights. So I graduated from Fordham in June, went

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Speaker 1: to Columbia in September, and obviously had a variety of

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Speaker 1: entrepreneurial gigs, so to speak, for the prior twenty years,

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Speaker 1: starting at the age of five, Oh, what were you doing? Uh,

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Speaker 1: prior to college? What? What sort of work were you doing? Well?

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Speaker 1: Arranged from everything from caddying to shining shoes, to picking

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Speaker 1: up crates and supermarkets for recycling purposes to actually working

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Speaker 1: a gig with ABC down at UH sixty seven Street

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Speaker 1: and Broadway just as they were building Lincoln Center. I mean,

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Speaker 1: there's so many it's unusual not to be able to

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Speaker 1: remember to mention the will, including some where I was

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Speaker 1: running dances for college students along with two partners back

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Speaker 1: in the sixties. We'd hired the band the Bounces and

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Speaker 1: A and the location which the booze was served, any

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Speaker 1: any finance, any Wall Street prior to business school or

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Speaker 1: where these two no, I think the I I did

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Speaker 1: take some summer internships. The one with ABC, as I mentioned,

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Speaker 1: was where I would go in using my undergraduate degree

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Speaker 1: in accounting or a study of accounting at the time,

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Speaker 1: but also essentially checking off the each television station where

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Speaker 1: a TV ad was placed and whether it was preempted

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Speaker 1: and whether they'd have to get what make make goods.

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Speaker 1: In addition to I think, I worked for W. A.

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Speaker 1: Grace for a while down in Wall Street UH in

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Speaker 1: the County Department, and that's where I learned about the

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Speaker 1: UH and Choby's disappearing when El Nino came along. And

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Speaker 1: it was kind of fascinating because I was plugging in

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Speaker 1: a lot of numbers. What happens when Elnino comes along?

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Speaker 1: What does that mean to UH? The anchobies probably go up, disappear,

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Speaker 1: and the price goes up. So if you've got a

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Speaker 1: big fleet off Peru or Chili, you would have a

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Speaker 1: little challenge of finding those little fishies. And that started

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Speaker 1: a lifetime deep dive research into that. Really that was

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Speaker 1: just that that was just basically generating cash flow, and

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Speaker 1: it to pay my tuition because I didn't want to

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Speaker 1: have any tuition loans, but I did have some coming

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Speaker 1: out of graduate school. So you went to Columbia with

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Speaker 1: a couple of other guests that we found on the show.

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Speaker 1: Um Lee Cooperman told us that he used to car pool.

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Speaker 1: Is this true? He would car pool with you Art

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Speaker 1: Sandberg back and forth to college. There were four of

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Speaker 1: us and what happened is at the time I was

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Speaker 1: at Columbia, we both and all of us lived up

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Speaker 1: in the West Bronx and Riverdale and I by Van

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Speaker 1: Cortland Park. There was a subway strike, so I we

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Speaker 1: figured out that we should car pool, a very practical solution.

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Speaker 1: And then when we did that, for several years we

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Speaker 1: didn't took turns driving. And I'm surprised that both of

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Speaker 1: them still alive since I was the driver many times.

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Speaker 1: And in addition to there was always a fourth fellow,

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Speaker 1: and then we would have a Stanley shop corn at

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Speaker 1: one time we'd car pool with. And so it was

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Speaker 1: a wonderful bunch of guys that were focused on stocks,

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Speaker 1: love the markets, had great passion for making money for clients.

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Speaker 1: Even then, Lee said he learned more in the car

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Speaker 1: pool than he did in class. Well, I can't remember

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Speaker 1: any of that. So you had a professor. You started

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Speaker 1: with Roger Murray known as um Uh, one of the

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Speaker 1: editors of Graham and Dott, and I think he did

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Speaker 1: the fourth or fifth edition of Security Analysis. Let me

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Speaker 1: make it simple, Columbia Business School had two professors back

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Speaker 1: in the late twenties early thirties. Graham and Dodd, and

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Speaker 1: they wrote a book on cold security analysis. UH the

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Speaker 1: fifty Warren Buffett takes the class and writes a story saying, hey,

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Speaker 1: I was a pretty good investor before I got Ben

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Speaker 1: Graham teaching me, and that I became an extraordinarily good

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Speaker 1: investor after Graham retired, Roger Murray succeeded and took on

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Speaker 1: that program. So when I took security analysis, who at

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Speaker 1: Roger Murray, Cooperman was there, Sandberg was there for me?

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Speaker 1: It was the moon, the sun and the stars. I

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Speaker 1: always known that to be in the markets, but I

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Speaker 1: didn't know exactly what aspect and so that was a

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Speaker 1: very important light chatting and changing moment formative. That's what

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Speaker 1: you said, I want to go out and research companies

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Speaker 1: and buy stocks and be an investor. Um. So one

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Speaker 1: of the quotes that you that was attributed to you

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Speaker 1: in that car was we were all pH d s, poor,

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Speaker 1: hungary and driven. Explain that, well, I think it's a

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Speaker 1: little different version as time goes on. The fish was

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Speaker 1: twenty two ft as opposed to twenty two inches. What

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Speaker 1: happened was about I gonna I'm gonna cuff numbers. Maybe

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Speaker 1: twenty years ago, Rick Pettino was coaching for Quotes Kentucky.

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Speaker 1: He said, now at Louisville, obviously, and he had a player,

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Speaker 1: Jamal Marshburn, and he was looking around for a money manager.

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Speaker 1: Came up to our office and he was walking down

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Speaker 1: and I was introducing to analyst. He looks and he says, Mario,

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Speaker 1: how do you find these guys or gals? And I said, well,

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Speaker 1: they have to be bah bah bah, but they also

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Speaker 1: have a PhD attitude. He looks at he says what

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Speaker 1: I said, poor, hungry and driven. Then one of the

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Speaker 1: individuals in the office of woman who went to Wesley

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Speaker 1: and and then went to Columbia Business School and her

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Speaker 1: father was especially says, don't ignore the fact that could

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Speaker 1: also be privileged, hungre and driven. So Rick, writing a

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Speaker 1: book called Success as a Choice that wrote the success

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Speaker 1: put a chapter on there called the PhD attitude. And

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Speaker 1: that's the dynamic barrier about how we came about with

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Speaker 1: the notion that we love to hire PhD s po,

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Speaker 1: hungering and driven with a passion for the market. You're

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Speaker 1: listening to Masters in Business on Bloomberg Radio today. We

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Speaker 1: are speaking with super Mario Mario Gabelli, CEO chairman and

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Speaker 1: portfolio manager of about sixteen different funds at GAMCO. You

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Speaker 1: picked quite an auspicious time to launch Gabelly Asset Management.

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Speaker 1: Nineteen seventy six or so was when you first about right. Yeah,

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Speaker 1: let me give you a little background. I started right

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Speaker 1: out of Columbia, graduated on Friday, and on Monday morning

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Speaker 1: I joined Low Bros. On Friday night, Michael Stinhart quit.

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Speaker 1: Michael started an extraordinarily successful hedge fund called Stinhart Berkason Fine,

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Speaker 1: and they gave me his industry. So I became the

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Speaker 1: auto analyst, farm equipment and conglomerate analysts. Fast forward. I

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Speaker 1: covered the media and entertainment business when nobody wanted to

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Speaker 1: do it, and a bunch of business service companies. Fast forward.

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Speaker 1: I left joined William D. Witter, a great research firm,

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Speaker 1: and we were emerged into Drexel Burn, not merged, taken

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Speaker 1: over by Drexel. I walked into Tubby Burn and I said, Tubby,

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Speaker 1: you are a great investor, much like Mr Loebe. However,

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Speaker 1: I'm looking for smaller firm and I'm going to start

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Speaker 1: my own. And the reason I picked starting my own

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Speaker 1: I was in Denver reading with a Guyared Richard Goldstein.

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Speaker 1: Goldstein was one of the founders of Janice Bailey, Griffiths

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Speaker 1: and Goldstein, and he says, Mario, why do you want

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Speaker 1: to go to work for someone else? Start your own firm.

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Speaker 1: And at the time I knew I could make money

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Speaker 1: in the market. I had been very successful in picking

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Speaker 1: stocks within the context of the areas of which I

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Speaker 1: had accumulated and compounded knowledge. That is what I mentioned,

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Speaker 1: which is entertainment and media, automotive and farm equipment, as

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Speaker 1: well as conglomerates. But I didn't have the rolladex of

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Speaker 1: collecting assets. And so I started an institutional research firm

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Speaker 1: and had clients like General Motives paying me cash from

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Speaker 1: my research as well as uh the institutions that we

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Speaker 1: had been covering when I was at William D. Winter.

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Speaker 1: So you launch your own shop. What you was a

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Speaker 1: seventy the first time in which we got to prove

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Speaker 1: from the regulators, and it wasn't as bad as it

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Speaker 1: is today because no one was starting a business at

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Speaker 1: the time. Uh So we got started a bit of

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Speaker 1: first week in January of nineteen seventy seven. That's we

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Speaker 1: actually applied for the ability to do that, and no

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Speaker 1: one else wanted to join me. Two other individuals at

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Speaker 1: William D. Witter thought about it for a while and

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Speaker 1: I would have been called brand Wailed, Gabelly and Hathaway

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Speaker 1: in that seat in that alphabet sequence. But we didn't

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Speaker 1: get paid. I think in my first year I made

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Speaker 1: five thousand dollars. So this was as just doing research

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Speaker 1: or you really kind of launched the set of hedge

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Speaker 1: funds as well. No, no, no, no. In nine hundred

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Speaker 1: and seventy seven we had one business. We did research

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Speaker 1: and sold it for commission and or cash to whoever

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Speaker 1: we could figure out anywhere in the world. However, about

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Speaker 1: three weeks after I started, maybe two weeks after I started,

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Speaker 1: I was going to Toronto, which have previously scheduled meeting,

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Speaker 1: to visit a company that ran shock absorbers in Canada

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Speaker 1: and Barrio liked this one, the guy whose name is

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Speaker 1: Jack Vanderhoten public company. Jack and I taught out chatity.

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Speaker 1: I tell him what I'm there. I'm learning all about

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Speaker 1: the shock absorber business, getting an update on on Merriman, Monroe,

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Speaker 1: Competitive Dynamics, other companies that are doing it. And then

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Speaker 1: he says to me, Mario, tell me what your businesses.

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Speaker 1: I said, blah blah blah. He says, he looks at me, says,

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Speaker 1: Mary will never succeed. I said, Jack, I'm very good

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Speaker 1: at picking stocks and making money. So Jack says to me,

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Speaker 1: I know because I made money off your ideas over

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Speaker 1: the years, opens a drawer, hands me a check and

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Speaker 1: gives me my first client of a hundred thousand dollars

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Speaker 1: to match. And he said to me, the reason you're

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Speaker 1: going to fail. You forgot to ask for the order

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Speaker 1: always be closing. Is that the uh that the advice

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Speaker 1: and even he said, followed the eleven commandment. If you

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Speaker 1: don't ask, you don't get. Notwithstanding that, within that framework,

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Speaker 1: we then decided that we were also started managing money.

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Speaker 1: So the initial structure was that along only separately managed

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Speaker 1: accounts charging a one percent fee up to a certain breakpoint.

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Speaker 1: And today we have two thousand separately managed customized accounts,

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Speaker 1: tax sensitive for those that attack sensitive Institute of Corporate

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Speaker 1: and that's about twenty billion dollars all all equities. In

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Speaker 1: terms of what we are a portion of what we're managing.

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Speaker 1: So when did the mutual funds come along? Well, the

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Speaker 1: hedge funds started earlier in the early eighties, we started

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Speaker 1: book on that subject. There's only been three or four

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Speaker 1: written on the subject. The first one was written by g.

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Speaker 1: Wiser Pratt when he was taking his studies at n

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Speaker 1: y U, and it really unclothed a really closely guarded

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Speaker 1: aspect of how firms made money with proper money on

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Speaker 1: Wall Street. And then somewhere in the mid eighties somebody

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Speaker 1: else wrote a book on it, and uh, then we

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Speaker 1: wrote a book on it. And the bottom line, um,

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Speaker 1: that was our first hedge fund. It's still a very

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Speaker 1: important part of our business. We manage a billion dollars

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Speaker 1: in a hedge fund of arbitrage. That is, company announced

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Speaker 1: his company buying company B, and at what point do

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Speaker 1: you buy it? And whether the risks It's called risk arbitrage.

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Speaker 1: The second part was that I was on Barons starting

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Speaker 1: on about nineteen seventy eight, seventy nine or eighty. I

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Speaker 1: got a call from Alan Nabelson said, Mario, come by

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Speaker 1: for the round table. No, he called me for a

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Speaker 1: different subject. I had known Alan I would send them

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Speaker 1: copies at my research. By somewhere around nineteen seventy seventy

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Speaker 1: eight or seventy nine. I wrote a report on Chris

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Speaker 1: graft herb Seagulls Company and uh the manufacturer, and well

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Speaker 1: he was not well. Bottom line, he was in a

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Speaker 1: broadcast business. He also had perhaps some other businesses. He

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Speaker 1: was trying to do things like go after Piper Aircraft

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Speaker 1: and he's a really great entrepreneur. Bottom line. I write

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Speaker 1: to Alan, I say, Alan, I'm in closing a report

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Speaker 1: I wrote and Chris Craft for three reasons. One, I

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Speaker 1: liked the stock. Secondly, my clients along, so I want

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Speaker 1: you to publish it. And third I understand that if

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Speaker 1: you do publish it, I get fifty bucks and I

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Speaker 1: need the money. So Alan and he said that that blunt,

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Speaker 1: just right out, and he was receptive to that. Allen

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Speaker 1: is Allen. It was Allen Allen is one of the

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Speaker 1: great writers of all time in the financial world. But

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Speaker 1: anybody invites me over. And that's how I got into

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Speaker 1: the Barrage round Table. And I'm the longest living member

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Speaker 1: of that round table. I've been on it for about

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Speaker 1: thirty odd years, over thirty five years or whatever. I

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Speaker 1: don't remember the math, that it could be thirty five years.

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Speaker 1: So starting in nineteen nine, you began exploring companies that

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Speaker 1: were headquartered overseas. It weren't a whole lot of people

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Speaker 1: who either had boots on the ground. Well, you know,

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Speaker 1: that's a great point. But in two or three I

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Speaker 1: was involved with the Auto Analysts of New York and

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Speaker 1: we had a trip to Tokyo and Japan, uh Tokyo

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Speaker 1: and China, in part through Henry Kissinger Walton kiss of

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Speaker 1: his brother who ran a company in Long Island called Ellen.

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Speaker 1: But prior to that, in the mid seventies, we hoganized,

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Speaker 1: as part of my institutional research, a trip to c

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Speaker 1: Forge Motor Company of a US here as well as

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Speaker 1: Ford Motor Company and several companies in in Europe. So

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Speaker 1: we had been following companies but not necessarily recommending it.

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Speaker 1: You're listening to Masters in Business on Bloomberg Radio. I'm

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Speaker 1: Barry Rihults. I'm here with Marioga Belly Master, stock picker,

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Speaker 1: portfolio manager CEO and chairman of gam COO the Belly

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Speaker 1: Asset Management. Let's talk a little bit about you as

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Speaker 1: an investor. You come out of Columbia, which is known

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Speaker 1: for generating all these fantastic value investors, but you're not

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Speaker 1: quite the usual mold. How do you describe yourself as

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Speaker 1: an investor? Well, what we did with security analysis, which

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Speaker 1: means in my terminology, you gather the data, you read

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Speaker 1: the public company data in a given industry, you develop

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Speaker 1: a core competency in that industry. You are raided data

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Speaker 1: based on the way we like to look at it,

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Speaker 1: and then you project it and then you interpret it

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Speaker 1: and then we communicate it. So we call it gaping.

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Speaker 1: So we take an industry like automotive. We cover companies

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Speaker 1: that are either distributors of parts like O'Reilly's and Genuine

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Speaker 1: Parts or AutoZone. We do a car dealerships, we do

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Speaker 1: original equipment manufacturers, we do the car companies, and we

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Speaker 1: do a global today. But at that time Barry was

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Speaker 1: not very complicated. What is a company worth? How do

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Speaker 1: you value the business? And so we looked at it

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Speaker 1: from the point of view of what would you pay

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Speaker 1: for the business if you can buy So, if their

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Speaker 1: company was public, again this is the late seventies, if

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Speaker 1: the company was public, what would you pay to own

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Speaker 1: a dent of it? So you treat you treated stocks

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Speaker 1: as if there were businesses, not as if they were

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Speaker 1: just little pieces of paper representing a small ownership. Well,

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Speaker 1: they were not soybeans, and they would not come out

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Speaker 1: of these that you can trade like an ETF. So

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Speaker 1: it was not mindless investing. It was basically understanding and

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Speaker 1: industry understanding your company, dealing with all the public information,

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Speaker 1: going to trade shows, going to meet the company's. I

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Speaker 1: mean I used to spend a lot of time in Detroit, uh,

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Speaker 1: you know, and all of the emviron's uh that one

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Speaker 1: would go to go to see a company and I

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Speaker 1: think it was Romulus and uh Kelsey Hayes and a

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Speaker 1: Tryer business and so on. And you go down in Monroe, Michigan,

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Speaker 1: and then you go to U Dayton, Ohio, and then

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Speaker 1: you would go to uh Toledo and you'd see all

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Speaker 1: these companies that you do it three or four times

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Speaker 1: a year, and you'd read everything, and then you start

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Speaker 1: giving speeches, and so you would learn about the details,

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Speaker 1: and you start anticipating how managements would think, what if

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Speaker 1: there was an oil crisis, what if there was a

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Speaker 1: car strike, what if the price of steel went up?

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Speaker 1: What if? And so you would then say, but who's

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Speaker 1: going to buy the business. So again you started the

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Speaker 1: conversation by saying This was the murky world of the

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Speaker 1: mid seventies when you could buy stocks at three times EBIT.

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Speaker 1: But interest rates at that time, Barry, a ten year

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Speaker 1: govy was ten percent. In fact, in August you had

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Speaker 1: you could get fifteen percent, fourteen and seven eights for

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Speaker 1: ten year government. Today's two point one oh tax free,

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Speaker 1: risk free out. There was a tax. It was a

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Speaker 1: government volda, not immunity. But the communities I assumed were

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Speaker 1: locked step I mean, but any event, so we said, look,

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Speaker 1: let's figure out who Again. Back in the sixties when

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Speaker 1: I was at Low Broads, you did bootstrap financing. You'd

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Speaker 1: go out and you figure out what was the receivable's

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Speaker 1: worth ninety cents on the dollar, you figure it out,

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Speaker 1: what was inventory worked fifty cents on what was property planned,

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Speaker 1: equipment worth at the gabble. So you would string together

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Speaker 1: a company and then figure out how to assemble the financing.

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Speaker 1: Then in the seventies or eighties came along Henry Cravis

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Speaker 1: and so on, and they did leverage buyouts. And then

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Speaker 1: today it's private equity. But at the time we said,

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Speaker 1: let assume I'm a wealthy family, what would I pay

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Speaker 1: to buy this business? Why would I want to own it,

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Speaker 1: and then I would ask myself what would a strategic

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Speaker 1: that as a company, what would they pay because they

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Speaker 1: would get some synergies. So we developed a phrase called

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Speaker 1: the private market value. So this was in the mid

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Speaker 1: seventies late seventies. What was the value of a business

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Speaker 1: that was publicly trading if I could buy the whole thing.

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Speaker 1: So it's the intrinsic value that is the present value

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Speaker 1: of the future stream plus the takeout premium. And then

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Speaker 1: we said, it's not complicated. We had no tenure in

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Speaker 1: our client's money and they were very uncertain, so we

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Speaker 1: try to figure out a time frame in which we

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Speaker 1: would have to hold the stock. So we said maybe

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Speaker 1: two or three years. So we look for a catalyst

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Speaker 1: that would surface the value that is the spread between

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Speaker 1: the public price and the private price, and then we

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Speaker 1: try to figure out what was the was the value

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Speaker 1: growing just in case this thing didn't work right away.

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Speaker 1: So you're looking at a number of things, but let

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Speaker 1: me see if I understand the key points. First, you're

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Speaker 1: trying to find things that are worth less, that are

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Speaker 1: trading for less than you think the intrinsic value and

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Speaker 1: or takeout value is going to be. Secondly, you're looking

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Speaker 1: for some events, some catalyst, something that's gonna draw i've

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Speaker 1: or uncover that value. We're driving into the private to

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Speaker 1: the public price you're very quickly. In addition to that,

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Speaker 1: some of the language that's used in the value investing

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Speaker 1: world is called margin of safety. Seth Klarman, ETCETERA. Well, Girl,

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Speaker 1: Graham and Dodd Murray now Greenwald. So he learned well. Uh,

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Speaker 1: Seth is a good, good, good practitioner of that strategy.

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Speaker 1: So you want to make sure there's enough head overhead

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Speaker 1: value so that if you're wrong or as you call

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Speaker 1: it early, you got to look at the price of

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Speaker 1: the stock that you're buying. Okay, you can have all

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Speaker 1: of the same dynamics. If you pay two x as

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Speaker 1: supposed to x. Uh. You know, you're on a ten

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Speaker 1: foot wall, you can get hurt if it comes down.

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Speaker 1: If you're on a two foot wall, you'll do Okay,

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Speaker 1: that's that sounds great. You're listening to Masters in Business

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Speaker 1: on Bloomberg Radio. We're speaking with Mario Gabelly. He is

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Speaker 1: the founder and chairman of Gabelly Asset Management and portfolio

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Speaker 1: manager for about sixteen different funds. Is that about right

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Speaker 1: or old portfolio manager. We we have our fingerprint on

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Speaker 1: two thousands separately managed accounts because I helped direct those,

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Speaker 1: and we have a growth team in our firm, and

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Speaker 1: then we have teams that do specialty products. So I'm

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Speaker 1: involved with the value and all cap value team. In

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Speaker 1: addition to that, we have an oversight in some of

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Speaker 1: the hedge funds that we run. In addition to that,

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Speaker 1: we do have a fingerprint on some of the mutual funds.

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Speaker 1: So you're pretty busy. Well. I enjoy it is. I

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Speaker 1: like the competitiveness. I like every day I come in,

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Speaker 1: something goes wrong and I look stupid. I feel stupid,

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Speaker 1: and that keeps you up at night, and that's why

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Speaker 1: you get up at four in the morning to figure

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Speaker 1: out what do you make? What mistakes did you make today? Right?

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Speaker 1: And They're always gonna be mistakes. It's just how you

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Speaker 1: respond to them and how you prevent them from getting

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Speaker 1: out of hand. The world changes very quickly. For example,

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Speaker 1: you know, somebody will come along and say, you know,

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Speaker 1: why should any healthcare company be public? They should always rationals,

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Speaker 1: you know, owned by the state. Somebody can come along

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Speaker 1: and say that the government will go on strike. I mean,

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Speaker 1: there's always something that goes on, and that's not just here,

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Speaker 1: but that's all around the world. Let's let's talk a

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Speaker 1: little bit about your trips overseas. You're you're a inveterate traveler,

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Speaker 1: You're not exactly a home body. How many countries have

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Speaker 1: you been to kicking the tires and looking at different companies. Look,

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Speaker 1: I avoided uh certain countries over the last forty years,

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Speaker 1: of fifty years, sixty years. Notwithstanding that, we would go

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Speaker 1: to follow industries globally, so simple example barriers. If you

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Speaker 1: drink it, we follow it. So I would be in

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Speaker 1: Paris to visit with Pernoul. I would go to London

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Speaker 1: to revisit Grand Bet now known as the Agio. I

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Speaker 1: would go down to visit companies that were in the

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Speaker 1: booze business. I go to Chicago to visit James Beam.

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Speaker 1: I will go to Japan to visit Centauri. Along with

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Speaker 1: the analysts, so we have a team that covers beverages, wine, water, beer,

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Speaker 1: soda and so on. There are certain characteristics about that industry, uh,

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Speaker 1: the rising middle class around the world. Fact that after

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Speaker 1: the brilliant Wall came down, you had three billion new

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Speaker 1: customers to try and ease and the UH people in

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Speaker 1: India do drink and that's good UH. And those are

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Speaker 1: beverages that I have certain pricing characteristics. So the beer industry,

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Speaker 1: for example, we did the craft brewers. I went to

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Speaker 1: see Sam Adams and I had to go all the

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Speaker 1: way to Boston. It was terrible. As a Yankee fan,

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Speaker 1: it was a challenge. But notwithstanding that, I like Bob

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00:23:19,440 --> 00:23:25,720
Speaker 1: Kraft and the past and stockers up to two and

427
00:23:25,800 --> 00:23:28,040
Speaker 1: you know, we still have tax clients with twenty dollar

428
00:23:28,160 --> 00:23:31,200
Speaker 1: tax bass. But the point is we cover industries. So

429
00:23:31,240 --> 00:23:33,680
Speaker 1: what is going on at any point in time, And

430
00:23:33,720 --> 00:23:36,399
Speaker 1: if you're traveling to Europe, do you have time? For example,

431
00:23:36,440 --> 00:23:40,399
Speaker 1: I would go to Milan to see Expo Balan. That

432
00:23:40,560 --> 00:23:43,280
Speaker 1: is a food expo that deals with food that was

433
00:23:43,359 --> 00:23:48,320
Speaker 1: by antibiotic uh no, natural and organic, and so you

434
00:23:48,440 --> 00:23:51,560
Speaker 1: learn a lot about who's doing what. And we let's

435
00:23:51,560 --> 00:23:55,880
Speaker 1: see a company called Comparti which owns UH beverages and

436
00:23:55,920 --> 00:23:59,119
Speaker 1: it owns Bourbon Bourbon. This is one of the areas

437
00:23:59,119 --> 00:24:00,719
Speaker 1: that we like. So that's an example. The other one

438
00:24:00,760 --> 00:24:03,639
Speaker 1: is simple. Following the movie industry in the late sixties

439
00:24:04,200 --> 00:24:07,200
Speaker 1: and following the broadcasters. You follow the cable guys today,

440
00:24:07,440 --> 00:24:10,800
Speaker 1: So you look at content and distribution globally. So you

441
00:24:10,800 --> 00:24:13,359
Speaker 1: would follow companies around the world that do that and

442
00:24:13,400 --> 00:24:15,800
Speaker 1: you develop a core competency and so you'd go around

443
00:24:15,840 --> 00:24:18,919
Speaker 1: the world. Same thing with vendors to Boeing and Airbus.

444
00:24:19,840 --> 00:24:23,000
Speaker 1: So let's talk a little bit about the process for

445
00:24:23,160 --> 00:24:26,400
Speaker 1: selecting a stuff. You become an expert in an industry,

446
00:24:26,440 --> 00:24:29,400
Speaker 1: in an industry you and your team, um is that

447
00:24:29,400 --> 00:24:32,000
Speaker 1: that's where the process begins. How do you then take

448
00:24:32,040 --> 00:24:35,919
Speaker 1: that industry expertise and apply it to specific company? You know,

449
00:24:35,960 --> 00:24:39,240
Speaker 1: that's a great question. We started following a company h

450
00:24:39,280 --> 00:24:44,040
Speaker 1: an individual starting about the mid seventies, Dr John Malone.

451
00:24:44,880 --> 00:24:49,000
Speaker 1: John was in Denver. He actually started a cable business,

452
00:24:49,000 --> 00:24:52,520
Speaker 1: a T and T s PhD, and so we would

453
00:24:52,560 --> 00:24:55,800
Speaker 1: follow everything he's done. So as a result of that, recently,

454
00:24:55,800 --> 00:24:57,240
Speaker 1: about a year and a half ago, there was a

455
00:24:57,280 --> 00:25:00,600
Speaker 1: company in London that relocated to Miami called Cable and Wireless.

456
00:25:00,640 --> 00:25:03,479
Speaker 1: They had they had operations in the Caribbean, so we

457
00:25:03,480 --> 00:25:06,520
Speaker 1: were following it. All of a sudden, they decided to

458
00:25:06,560 --> 00:25:09,439
Speaker 1: buy a company called Columbus, which is privately Ombican. But

459
00:25:09,640 --> 00:25:12,480
Speaker 1: John Malone was on the board and an important owner.

460
00:25:12,520 --> 00:25:16,320
Speaker 1: So Malonea was running Liberty at the time. He runs

461
00:25:16,359 --> 00:25:18,440
Speaker 1: a whole bunch of guys. He's got his fingerprints on

462
00:25:18,480 --> 00:25:21,480
Speaker 1: about a hundred and hundred forty billion dollars of assets.

463
00:25:21,480 --> 00:25:24,560
Speaker 1: He's personally worth about twelve billion, uh not that anybody's

464
00:25:24,600 --> 00:25:27,400
Speaker 1: counting that. Notwithstanding that, he's a moneymaker for clients. He's

465
00:25:27,440 --> 00:25:29,800
Speaker 1: constantly coming in to look at scale instructure, look at

466
00:25:29,840 --> 00:25:33,920
Speaker 1: text uh way to handle things from a tax basis,

467
00:25:34,359 --> 00:25:38,040
Speaker 1: and he's a great financial architect. Independent of that. He

468
00:25:38,119 --> 00:25:41,600
Speaker 1: understood the content of cable and understand speed and understand

469
00:25:41,720 --> 00:25:45,080
Speaker 1: video and content. So he was a master chess player

470
00:25:45,119 --> 00:25:47,919
Speaker 1: in a multidinancial game. Now independent of that, So go

471
00:25:48,000 --> 00:25:50,400
Speaker 1: back to cable and wireless. It was on our radar

472
00:25:50,440 --> 00:25:52,719
Speaker 1: screen because I started following it in the early nineties

473
00:25:52,760 --> 00:25:56,600
Speaker 1: because they owned uh Hong Kong Telecom. So when I

474
00:25:56,640 --> 00:25:59,199
Speaker 1: went to Hong Kong to follow the telecom industry, you

475
00:25:59,240 --> 00:26:01,320
Speaker 1: would then go in London to figure out what Cable

476
00:26:01,320 --> 00:26:03,360
Speaker 1: and Wallace is doing, but also understanding what was going

477
00:26:03,400 --> 00:26:06,119
Speaker 1: on Hong Kong Telecom. Bottom line, we kept track of it.

478
00:26:06,200 --> 00:26:08,760
Speaker 1: They spun off the business, they sold it to Vota

479
00:26:08,760 --> 00:26:10,879
Speaker 1: Phone in the UK and they have this company. They

480
00:26:10,920 --> 00:26:14,000
Speaker 1: sold it. It is a way to consolidate the Caribbean,

481
00:26:15,119 --> 00:26:18,520
Speaker 1: Latin America and the Caribbean in terms of wireless, cable,

482
00:26:18,960 --> 00:26:22,680
Speaker 1: old fashioned pots playing, old telephone service. And John owned

483
00:26:22,680 --> 00:26:25,640
Speaker 1: a company called Columbus emerges it into it. So now

484
00:26:25,680 --> 00:26:29,160
Speaker 1: I have a new management that's very good at Cable

485
00:26:29,200 --> 00:26:32,080
Speaker 1: and Wallace located in Miami, and now I'm looking at

486
00:26:32,080 --> 00:26:36,200
Speaker 1: the whole ecosystem in the Caribbean. Uh. Dennis O'Brien was

487
00:26:36,200 --> 00:26:38,120
Speaker 1: going to go public, which did you sell? He didn't

488
00:26:38,160 --> 00:26:40,240
Speaker 1: do it, So we watched, we visit with him on

489
00:26:40,280 --> 00:26:43,800
Speaker 1: that company. We're watching Milcom, which has lots of fingerprints

490
00:26:43,800 --> 00:26:46,360
Speaker 1: and footprints in the Caribbean. We go to scott Holm

491
00:26:46,480 --> 00:26:48,800
Speaker 1: to visit the company of controls it called Shinevic. So

492
00:26:48,840 --> 00:26:51,480
Speaker 1: this all starts from being an expert industry and then

493
00:26:51,560 --> 00:26:54,080
Speaker 1: drilling down and then finding new ideas all the time.

494
00:26:54,119 --> 00:26:56,280
Speaker 1: And that is the short version of how to do it.

495
00:26:56,600 --> 00:26:58,639
Speaker 1: So when you're looking at these companies, do you have

496
00:26:58,680 --> 00:27:01,399
Speaker 1: any favored metrics, anything is that you like or don't like?

497
00:27:01,760 --> 00:27:04,560
Speaker 1: How do you determine valuation? How do you determine what

498
00:27:04,760 --> 00:27:08,280
Speaker 1: gives you that little margin? Of safety or what's ge

499
00:27:08,280 --> 00:27:11,440
Speaker 1: that's sexy, but it's the start off with some simple principles.

500
00:27:11,760 --> 00:27:14,320
Speaker 1: What company will do well with the business model in

501
00:27:14,359 --> 00:27:18,200
Speaker 1: an inflationary environment, in an inflationary environment, and what will

502
00:27:18,240 --> 00:27:20,280
Speaker 1: that company, how will that company do well in a

503
00:27:20,400 --> 00:27:23,240
Speaker 1: deflationary environment. So if I can get one that does

504
00:27:23,280 --> 00:27:26,840
Speaker 1: well in an inflationary environment as well as doing okay

505
00:27:26,880 --> 00:27:29,919
Speaker 1: in a deflationary environment, that's a good story point. Then

506
00:27:29,960 --> 00:27:33,040
Speaker 1: the second thing you look at is if I sell

507
00:27:33,080 --> 00:27:36,000
Speaker 1: you a pound of sugar and I make a dollar,

508
00:27:36,440 --> 00:27:40,160
Speaker 1: that's one transaction. But I sell you a subscribe razor blade.

509
00:27:40,160 --> 00:27:42,679
Speaker 1: I sell you a razor blade at a dollar. I

510
00:27:42,720 --> 00:27:45,919
Speaker 1: made a dollar and I got a gross margin. But

511
00:27:45,960 --> 00:27:48,600
Speaker 1: if I sell you a subscription to sell you razor

512
00:27:48,640 --> 00:27:51,120
Speaker 1: blades for the rest of your life and a monthly revenue,

513
00:27:51,119 --> 00:27:53,360
Speaker 1: is that has a higher valuation. So we look at

514
00:27:53,440 --> 00:27:56,439
Speaker 1: not only the accounting, we look at the cash, We

515
00:27:56,480 --> 00:27:58,359
Speaker 1: look at the economics and look at the calory, and

516
00:27:58,359 --> 00:28:01,600
Speaker 1: then look at the methodology of pre ability and what's

517
00:28:01,640 --> 00:28:04,400
Speaker 1: the valuation un though, so these are not complicated, very

518
00:28:04,400 --> 00:28:07,200
Speaker 1: simple to do. Let's talk a little bit about the accounting,

519
00:28:07,280 --> 00:28:09,760
Speaker 1: which has changed so much over the past twenty or

520
00:28:09,800 --> 00:28:14,280
Speaker 1: thirty years. How has the shift in the fasby rules

521
00:28:14,320 --> 00:28:17,680
Speaker 1: for things like stock options and what have you? Has

522
00:28:17,720 --> 00:28:19,639
Speaker 1: that made it harder to be a stock picker, to

523
00:28:19,720 --> 00:28:24,240
Speaker 1: actually get to the core numbers lying underneath. No, not

524
00:28:24,320 --> 00:28:26,520
Speaker 1: really is you gotta understand. I was an accounting major

525
00:28:26,560 --> 00:28:29,680
Speaker 1: at Fordham. I had thirty two credits of accounting philosophy,

526
00:28:29,760 --> 00:28:32,800
Speaker 1: so I can tell you a lot about what if

527
00:28:32,640 --> 00:28:35,160
Speaker 1: a tree falls in the woods, if an accounting falls

528
00:28:35,160 --> 00:28:37,960
Speaker 1: in the woods, whether there's a sound or not, any

529
00:28:37,960 --> 00:28:42,760
Speaker 1: of it. The The point is that rules change, but

530
00:28:42,880 --> 00:28:48,560
Speaker 1: people that implement the rules also don't change. Notwithstanding that,

531
00:28:49,120 --> 00:28:52,280
Speaker 1: you have to be aware of gap accounting as much

532
00:28:52,320 --> 00:28:55,080
Speaker 1: as you would like to run a business for cash economics.

533
00:28:55,240 --> 00:28:58,840
Speaker 1: And there's a material difference between all of these. So

534
00:28:58,920 --> 00:29:00,960
Speaker 1: you have to understand the accoun I mean, and obviously

535
00:29:01,000 --> 00:29:04,840
Speaker 1: that comes into play a lot. Uh, and how companies

536
00:29:04,880 --> 00:29:08,240
Speaker 1: could use the the erasa, the old eracer on the

537
00:29:08,280 --> 00:29:11,360
Speaker 1: back of a pencil. So you haven't other than talking

538
00:29:11,360 --> 00:29:15,520
Speaker 1: about John alone, you really haven't mentioned companies management. How

539
00:29:15,560 --> 00:29:19,360
Speaker 1: important is it um if there's a good business but

540
00:29:19,840 --> 00:29:22,240
Speaker 1: you know, yeah, well that's the old fashioned story. A

541
00:29:22,280 --> 00:29:25,160
Speaker 1: good business run by a great manager. You know, broadcasting

542
00:29:25,240 --> 00:29:28,000
Speaker 1: was a great business. Tom Burfy was a fantastic manager,

543
00:29:28,040 --> 00:29:30,360
Speaker 1: and therefore cap Citi's became a great company. They brought

544
00:29:30,360 --> 00:29:33,920
Speaker 1: ABC and Mergeon into Disney. Okay, and uh he was

545
00:29:34,040 --> 00:29:36,120
Speaker 1: very good. He hired a goett me of Bob Eiger.

546
00:29:36,720 --> 00:29:38,600
Speaker 1: Bob Eiker has been a head of Disney now for

547
00:29:38,760 --> 00:29:41,200
Speaker 1: um teen years. And uh, you know, the moon of

548
00:29:41,240 --> 00:29:43,200
Speaker 1: the sun and the stars come together for that company

549
00:29:43,240 --> 00:29:45,760
Speaker 1: with the right management, and so it's both the both

550
00:29:45,800 --> 00:29:48,080
Speaker 1: the horse and the job. Well, ideal world would be that,

551
00:29:48,240 --> 00:29:51,080
Speaker 1: but I I tend to uh, you know, I don't know.

552
00:29:51,120 --> 00:29:53,840
Speaker 1: American Faraoh run by a different Jackey would have still won.

553
00:29:54,560 --> 00:29:59,200
Speaker 1: Interesting question. Okay, yeah, fascinating philosophical question. Um, so let's

554
00:29:59,200 --> 00:30:01,280
Speaker 1: talk a little bit about out your research staff. You

555
00:30:01,400 --> 00:30:04,480
Speaker 1: have a couple of hundred people working for you. How

556
00:30:04,560 --> 00:30:07,480
Speaker 1: much do you rely on this deep bench that you

557
00:30:07,560 --> 00:30:10,200
Speaker 1: have or are you still you know, rolling up your

558
00:30:10,200 --> 00:30:15,840
Speaker 1: sleeves and pouring over spreadsheets every morning? Combination of both.

559
00:30:15,840 --> 00:30:19,400
Speaker 1: I look, we have developed a wonderful team Christmas Andy,

560
00:30:19,520 --> 00:30:23,280
Speaker 1: Kevin Dryer and the value team Bob Blenager, Barbara Marson

561
00:30:23,360 --> 00:30:26,400
Speaker 1: and so on. And we have the UH. Some would

562
00:30:26,400 --> 00:30:29,640
Speaker 1: like to do large cap, some will do microcap. So

563
00:30:29,720 --> 00:30:32,360
Speaker 1: I have a team that does microcap Lailta Handed, Beth

564
00:30:32,480 --> 00:30:34,000
Speaker 1: Lily and so on. They don't have to be in

565
00:30:34,000 --> 00:30:36,680
Speaker 1: one location anywhere. They could be everywhere. And as a

566
00:30:36,720 --> 00:30:40,680
Speaker 1: result of that, they are constantly looking at stocks that

567
00:30:40,760 --> 00:30:43,040
Speaker 1: we think would fit within the framework of what we

568
00:30:43,440 --> 00:30:46,640
Speaker 1: match the portfolio. So if you're dealing with a we

569
00:30:46,680 --> 00:30:49,640
Speaker 1: have a fund called Mighty Mites dealing with companies under

570
00:30:50,440 --> 00:30:53,640
Speaker 1: ideally six hundred million dollar market cap. The name came

571
00:30:53,680 --> 00:30:57,880
Speaker 1: from my family children playing football in the pop Wornal League.

572
00:30:57,880 --> 00:30:59,880
Speaker 1: They were the Midgets, the Peeweees, and the Mighty Mites.

573
00:31:00,480 --> 00:31:02,640
Speaker 1: So if I picked Peewee's, I'd be sued. If I

574
00:31:02,680 --> 00:31:05,040
Speaker 1: picked Midgets, I'd be sued. But unfortunately, I picked Mighty

575
00:31:05,120 --> 00:31:07,320
Speaker 1: Mites twenty five years ago as the brand name. And

576
00:31:07,360 --> 00:31:10,400
Speaker 1: that's what we do. And they look for ideas. For example,

577
00:31:10,440 --> 00:31:12,280
Speaker 1: they were just in New Jersey looking at x y

578
00:31:12,360 --> 00:31:16,040
Speaker 1: Z company UH. And we follow industries in which we

579
00:31:16,120 --> 00:31:19,960
Speaker 1: like the other day, a company called Lance uh what

580
00:31:20,200 --> 00:31:23,320
Speaker 1: about three years ago, merged with a company called Snyder's.

581
00:31:23,360 --> 00:31:27,440
Speaker 1: Snyder's Lance Pretzels, you know, the pretzels lightest pretzels, and

582
00:31:27,960 --> 00:31:30,360
Speaker 1: yesterday they announced to buying Diamond Foods. But it was

583
00:31:30,400 --> 00:31:32,920
Speaker 1: something that we had thought about that would fit like

584
00:31:33,640 --> 00:31:37,600
Speaker 1: interesting a long time. So we've been speaking with Mariol Gibelly.

585
00:31:37,680 --> 00:31:41,840
Speaker 1: He's the chairman and chief investment officer and just about

586
00:31:41,880 --> 00:31:46,240
Speaker 1: everything else at Gabelly Asset Management. If you enjoy this conversation,

587
00:31:46,360 --> 00:31:48,640
Speaker 1: be sure and check out our podcast extras, where we

588
00:31:48,720 --> 00:31:52,240
Speaker 1: keep the type rolling and continue the conversation. If you

589
00:31:52,320 --> 00:31:55,600
Speaker 1: want to learn more about what Mario Gabelly does, it's

590
00:31:55,600 --> 00:31:57,720
Speaker 1: easy enough to go to Gabelly dot com and you

591
00:31:57,720 --> 00:32:01,200
Speaker 1: can look up all of various fun and their outstanding

592
00:32:01,280 --> 00:32:05,120
Speaker 1: track records. Be sure and check out my daily column

593
00:32:05,280 --> 00:32:08,640
Speaker 1: on Bloomberg View dot com or follow me on Twitter

594
00:32:08,760 --> 00:32:11,560
Speaker 1: at rid Halts. I'm Barry rid Halts. You've been listening

595
00:32:11,640 --> 00:32:15,200
Speaker 1: to Masters in Business on Bloomberg Radio. Welcome back to

596
00:32:15,240 --> 00:32:17,760
Speaker 1: the show. This is the podcast portion. As you've probably

597
00:32:17,800 --> 00:32:20,240
Speaker 1: figured out before, I forget Mario. Thank you so much

598
00:32:20,240 --> 00:32:22,680
Speaker 1: for doing this. Um, I've really been looking forward to

599
00:32:22,720 --> 00:32:26,000
Speaker 1: having this conversation with you, and you know you're my

600
00:32:26,760 --> 00:32:29,480
Speaker 1: colleagues that you have interviewed to pass say you're terrific,

601
00:32:29,560 --> 00:32:31,960
Speaker 1: and I can see why they said that they're all right,

602
00:32:32,080 --> 00:32:35,760
Speaker 1: And um, I they're both all right, and they are right.

603
00:32:35,800 --> 00:32:38,640
Speaker 1: That wasn't what I meant. But um, they've all been

604
00:32:38,720 --> 00:32:43,640
Speaker 1: fantastic interviews. Samberg and Cooperman, we're both, um, really interesting

605
00:32:43,680 --> 00:32:46,520
Speaker 1: guys to speak to. Since you brought that up, let

606
00:32:46,560 --> 00:32:51,520
Speaker 1: me ask you something that um Cooperman and and uh

607
00:32:51,600 --> 00:32:55,720
Speaker 1: Samberg both alluded to, which was the role of luck,

608
00:32:55,840 --> 00:33:01,600
Speaker 1: the role of serendipity in both people's years and in markets.

609
00:33:01,720 --> 00:33:03,560
Speaker 1: But what are your what are your thoughts on that?

610
00:33:05,080 --> 00:33:07,320
Speaker 1: There is no question that you have to step back

611
00:33:07,400 --> 00:33:09,880
Speaker 1: when you're in figure out what do you want to do?

612
00:33:10,120 --> 00:33:14,040
Speaker 1: What's your passion? Okay, a lot of very smart people

613
00:33:14,080 --> 00:33:16,880
Speaker 1: in the world, a lot of people. I want to

614
00:33:16,920 --> 00:33:19,760
Speaker 1: work from five to nine, not nine to five. So

615
00:33:19,840 --> 00:33:22,680
Speaker 1: then you gotta say where do I want to spend

616
00:33:23,160 --> 00:33:25,280
Speaker 1: my life at the next forty or fifty or sixty

617
00:33:25,360 --> 00:33:28,560
Speaker 1: or seventy years. And so that's for me. It was

618
00:33:28,680 --> 00:33:30,760
Speaker 1: very simple. I was carrying at something the old country

619
00:33:30,800 --> 00:33:34,080
Speaker 1: Club in Westchester County. I would hitchhike up from the

620
00:33:34,120 --> 00:33:38,200
Speaker 1: Bronx or somehow get up there by public transportation. And

621
00:33:38,320 --> 00:33:40,320
Speaker 1: because I didn't have a van that would drove me

622
00:33:40,400 --> 00:33:42,320
Speaker 1: to pick me up in your arcors, I would stay

623
00:33:42,400 --> 00:33:45,200
Speaker 1: late and as a side by by the way, the

624
00:33:45,320 --> 00:33:47,920
Speaker 1: caddy and the prose name was Whitey Void. He had

625
00:33:47,960 --> 00:33:51,760
Speaker 1: two sons, West Void, who became a fabulous singer under

626
00:33:51,800 --> 00:33:54,040
Speaker 1: the name of Chip Taylor, and a son by name

627
00:33:54,080 --> 00:33:58,640
Speaker 1: of John Void, the actor, the actor whose father of

628
00:33:58,800 --> 00:34:02,000
Speaker 1: who is the father of angel Lea Jolie. So I

629
00:34:02,120 --> 00:34:04,000
Speaker 1: used to caddy for him. He was it was an

630
00:34:04,000 --> 00:34:06,920
Speaker 1: assistant pro any event. It went to a great school

631
00:34:06,960 --> 00:34:10,120
Speaker 1: in West Chess called Stepanax. So, but I was around

632
00:34:10,200 --> 00:34:11,960
Speaker 1: and the specialist would come up from the New York

633
00:34:12,000 --> 00:34:14,400
Speaker 1: Stock Exchange and they played golf and I would be

634
00:34:14,440 --> 00:34:15,960
Speaker 1: able to caddy for them. So I was like twelve

635
00:34:16,000 --> 00:34:18,480
Speaker 1: or thirteen years old, and I figured out this was

636
00:34:18,520 --> 00:34:22,719
Speaker 1: an interesting gig, that's fascinating. But I never knew which

637
00:34:22,800 --> 00:34:24,959
Speaker 1: part of it that I wanted to be in until

638
00:34:25,000 --> 00:34:26,880
Speaker 1: I went, as I mentioned earlier, to be in graduate

639
00:34:26,880 --> 00:34:29,560
Speaker 1: school and took the security analysis court with Roger Murray.

640
00:34:30,120 --> 00:34:32,359
Speaker 1: And how did you end up choosing Columbia just because

641
00:34:32,360 --> 00:34:35,080
Speaker 1: it was local in New York or what led to that?

642
00:34:35,160 --> 00:34:37,760
Speaker 1: Since I have no idea. How I chose my grammar school,

643
00:34:37,840 --> 00:34:41,080
Speaker 1: UH was PS four in the Bronx, and then I

644
00:34:41,120 --> 00:34:45,640
Speaker 1: went to a school called Saint Joe's on on Tremont

645
00:34:46,120 --> 00:34:48,480
Speaker 1: Tremont Avenue at a hundred seventy seven, right across from

646
00:34:48,520 --> 00:34:51,640
Speaker 1: police station. Those are long stories, not necessary. I'm sure

647
00:34:51,640 --> 00:34:54,799
Speaker 1: they're fascinating though they are so, so let's let's hear

648
00:34:54,880 --> 00:34:56,800
Speaker 1: some stories from the Bronx. You grew up in the Bronx,

649
00:34:57,160 --> 00:34:59,600
Speaker 1: by the way, no Leon Cooperman, and we go through

650
00:34:59,600 --> 00:35:03,399
Speaker 1: the risk list. I'm amazed at how many people in

651
00:35:03,400 --> 00:35:07,440
Speaker 1: this industry are right here. They're spinning distance from uh

652
00:35:07,920 --> 00:35:10,840
Speaker 1: from Wall Street. They're growing up in in Staten Island

653
00:35:10,880 --> 00:35:14,440
Speaker 1: or Brooklyn or the Bronx, and somehow Wall Street. I

654
00:35:14,520 --> 00:35:16,480
Speaker 1: give you. I give you an example three blocks from

655
00:35:16,480 --> 00:35:21,360
Speaker 1: where I moved through by Vanachelse High School, Ivan Sidenberg,

656
00:35:23,160 --> 00:35:26,839
Speaker 1: literally four blocks away. So that you know a lot

657
00:35:26,880 --> 00:35:28,840
Speaker 1: of individuals, and I is a long list that you

658
00:35:28,840 --> 00:35:32,480
Speaker 1: can name. I'll give you a quick Ivan Suidenberg story.

659
00:35:33,680 --> 00:35:37,440
Speaker 1: His daughter married my wife's cousin and it was the

660
00:35:37,600 --> 00:35:41,560
Speaker 1: Saturday right after September eleven. That was one of the

661
00:35:41,600 --> 00:35:44,879
Speaker 1: most astonishing weddings of all times. And that's a whole

662
00:35:44,920 --> 00:35:47,799
Speaker 1: another agree with that. You got a lot that you

663
00:35:47,840 --> 00:35:50,480
Speaker 1: can talk about. But we're here to talk to you,

664
00:35:50,560 --> 00:35:54,320
Speaker 1: not not to have me tell my stories. So let's um,

665
00:35:54,400 --> 00:35:57,560
Speaker 1: let's talk a little bit about Gamco and a little

666
00:35:57,560 --> 00:35:59,719
Speaker 1: bit about stock picking, and a little bit about your

667
00:35:59,760 --> 00:36:03,360
Speaker 1: bad around. So you start out, it's really just you

668
00:36:03,480 --> 00:36:05,200
Speaker 1: and a couple of guys, and no, no, no, when

669
00:36:05,239 --> 00:36:08,600
Speaker 1: I started out, it was very lonely. It was just you.

670
00:36:08,800 --> 00:36:10,719
Speaker 1: BRANDWOA wouldn't join me, hath the way I wouldn't join

671
00:36:10,760 --> 00:36:14,839
Speaker 1: me because they needed I was willing to make five

672
00:36:14,880 --> 00:36:16,160
Speaker 1: thousand and two and a half or three and a

673
00:36:16,160 --> 00:36:19,080
Speaker 1: half kids at the time, and obviously nobody from the

674
00:36:19,120 --> 00:36:20,920
Speaker 1: government came along to say I was gonna help you.

675
00:36:22,400 --> 00:36:27,080
Speaker 1: Bottom line. Fast forward, we go public in through Maryland

676
00:36:27,120 --> 00:36:29,320
Speaker 1: Smith Barney. So for the last sixteen years were a

677
00:36:29,360 --> 00:36:34,280
Speaker 1: public company. So we have a simple a mission statement.

678
00:36:34,320 --> 00:36:36,400
Speaker 1: Make money for the client, make money for my teammates,

679
00:36:36,400 --> 00:36:38,279
Speaker 1: make money for the shareholders. That was what we did

680
00:36:38,320 --> 00:36:42,759
Speaker 1: in seven that's what we do today. And uh so

681
00:36:42,800 --> 00:36:44,799
Speaker 1: you bet on yourself and it worked out quite well.

682
00:36:46,040 --> 00:36:49,960
Speaker 1: Uh no, I. But the underlying premise was that the

683
00:36:50,000 --> 00:36:54,600
Speaker 1: methodology of gathering, arraying, projecting, interpreting data under the Murray

684
00:36:54,600 --> 00:36:58,040
Speaker 1: Greenwald Graham and Dodd Murray Greenwald met the dology of

685
00:36:58,080 --> 00:37:02,040
Speaker 1: security analysis made sense for the extended period of time. Okay,

686
00:37:02,040 --> 00:37:07,560
Speaker 1: this started, it's good for another eight or ninety years.

687
00:37:07,560 --> 00:37:10,760
Speaker 1: It's this. It's basically buying it a business at a discount.

688
00:37:10,800 --> 00:37:12,920
Speaker 1: And what business do you want to buy from? What

689
00:37:13,000 --> 00:37:16,680
Speaker 1: it's worth? And every day you come in, whether you

690
00:37:16,719 --> 00:37:19,200
Speaker 1: were looking at fires, are buying alegain this morning, or

691
00:37:19,200 --> 00:37:21,080
Speaker 1: announcing they try to put their arms around it, or

692
00:37:21,080 --> 00:37:23,840
Speaker 1: whether somebody's gonna buy star Wards. What are they willing

693
00:37:23,880 --> 00:37:26,440
Speaker 1: to pay? Why? When? And why are they willing to

694
00:37:26,480 --> 00:37:28,640
Speaker 1: pay it? What are the elements that go into that parfait?

695
00:37:28,680 --> 00:37:30,520
Speaker 1: What is a private equity firm willing to pay for

696
00:37:30,560 --> 00:37:34,480
Speaker 1: a business? Why does stocks sometimes go up sharply when

697
00:37:34,480 --> 00:37:37,160
Speaker 1: somebody announces they want to buy them? What? What's the

698
00:37:37,239 --> 00:37:40,640
Speaker 1: rationale for that? And you've been quite successful at identifying

699
00:37:40,680 --> 00:37:45,200
Speaker 1: these companies before the big increase in value. So let

700
00:37:45,239 --> 00:37:47,800
Speaker 1: me shift gears a little bit on you and say,

701
00:37:48,080 --> 00:37:50,759
Speaker 1: so you started loud, it was you. Now the firm

702
00:37:50,840 --> 00:37:54,640
Speaker 1: has over two hundred employees. Well, there, we call them teammates, teammates,

703
00:37:55,120 --> 00:37:57,719
Speaker 1: you have two hundred and thirty two teammates. What is

704
00:37:57,760 --> 00:38:01,200
Speaker 1: that transition? Like, granted was over period of time, but

705
00:38:01,320 --> 00:38:05,560
Speaker 1: how different is it from being a running a portfolio,

706
00:38:05,680 --> 00:38:10,040
Speaker 1: running a small shop to running a large corporation first

707
00:38:10,120 --> 00:38:14,319
Speaker 1: or we're now a large corporation where what they call

708
00:38:14,360 --> 00:38:16,520
Speaker 1: in the world street it's a small cap stock. As

709
00:38:16,520 --> 00:38:19,640
Speaker 1: a small cap company, we live by our ability to

710
00:38:19,680 --> 00:38:22,160
Speaker 1: earn a return for our clients, which are most important,

711
00:38:22,160 --> 00:38:23,920
Speaker 1: and every day we come in and want to be

712
00:38:23,960 --> 00:38:27,880
Speaker 1: focused on that. That is the driving dynamic. Uh, nothing

713
00:38:27,920 --> 00:38:31,440
Speaker 1: else is important. And we expect our teammates to have

714
00:38:31,480 --> 00:38:33,960
Speaker 1: the same passion and some of them don't have it

715
00:38:34,000 --> 00:38:36,880
Speaker 1: all the time. So if you're in quotes on vacation

716
00:38:37,000 --> 00:38:39,160
Speaker 1: and something happens in your stock, you've gotta be available.

717
00:38:39,160 --> 00:38:41,640
Speaker 1: I mean, you know, you've got no choice. And so

718
00:38:41,800 --> 00:38:44,200
Speaker 1: we have trained a lot of individuals that way, and

719
00:38:44,239 --> 00:38:46,920
Speaker 1: I've been very fortunate. We have a team of really

720
00:38:47,520 --> 00:38:51,680
Speaker 1: highly skilled individuals that were analysts and now are managing

721
00:38:51,719 --> 00:38:55,160
Speaker 1: money and they are We announced that we have Kevin

722
00:38:55,239 --> 00:39:00,000
Speaker 1: Dryer and Chris Moranji running as co chief Investment Off

723
00:39:00,400 --> 00:39:02,880
Speaker 1: the value side, Howard Ward has a team doing growth,

724
00:39:02,960 --> 00:39:05,560
Speaker 1: international growth, global growth, and then we have a great

725
00:39:05,640 --> 00:39:08,000
Speaker 1: arbitrage team, and we have great individuals doing a lot

726
00:39:08,040 --> 00:39:12,120
Speaker 1: of different things. So your role within the company, how

727
00:39:12,160 --> 00:39:14,600
Speaker 1: has that morphed over the years? Do you find yourself?

728
00:39:14,800 --> 00:39:17,960
Speaker 1: I spent fifty forty years ago. It's when I first

729
00:39:17,960 --> 00:39:20,480
Speaker 1: started Lowbros. I spent fifty percent of my time gathering

730
00:39:20,600 --> 00:39:25,800
Speaker 1: data and understanding research and fifty communicating and either visiting clients. Okay,

731
00:39:25,800 --> 00:39:28,480
Speaker 1: today I spent fifty percent of my time doing research,

732
00:39:28,960 --> 00:39:30,920
Speaker 1: talking to analyst, listening to conference I was on the

733
00:39:30,960 --> 00:39:35,600
Speaker 1: conference calls today. These earning season is very rich in content.

734
00:39:35,680 --> 00:39:39,080
Speaker 1: For example, today at eleven o'clock O'Reilly's was having a presentation,

735
00:39:39,160 --> 00:39:41,279
Speaker 1: somebody else was having one attend, somebody else was having

736
00:39:41,280 --> 00:39:43,560
Speaker 1: one at night. So I get the transcripts when I

737
00:39:43,600 --> 00:39:46,000
Speaker 1: can't listen to them and read them at night. So

738
00:39:46,040 --> 00:39:51,600
Speaker 1: you learn a lot. Cheesecake Factory fantastic insights into the business.

739
00:39:51,600 --> 00:39:54,280
Speaker 1: If you read the details and ponder over them and

740
00:39:54,320 --> 00:39:56,799
Speaker 1: pull them apart, you know the company for the last

741
00:39:56,800 --> 00:39:58,759
Speaker 1: twenty years. They started with seventy five minute In fact,

742
00:39:58,800 --> 00:40:03,160
Speaker 1: I was at the one of this locations in Malibu

743
00:40:03,320 --> 00:40:07,200
Speaker 1: or somewhere Marina del Rey is somewhere in California about

744
00:40:07,920 --> 00:40:09,960
Speaker 1: I used to say this melody twenty five years ago.

745
00:40:10,239 --> 00:40:13,240
Speaker 1: So you keep following that company and the things change.

746
00:40:13,280 --> 00:40:15,520
Speaker 1: And meanwhile they've taken the cash flow, they've taken the

747
00:40:15,560 --> 00:40:18,560
Speaker 1: shares outstanding from seventy five million forty eight million, So

748
00:40:18,760 --> 00:40:21,719
Speaker 1: you owning two thousand shares, you own a bigger piece

749
00:40:21,719 --> 00:40:23,600
Speaker 1: of the company today. And the company is still doing

750
00:40:23,680 --> 00:40:26,080
Speaker 1: quite well. Even in an environment which people in quote

751
00:40:26,080 --> 00:40:30,080
Speaker 1: a calorie conscious there's always the menu changes and the

752
00:40:30,120 --> 00:40:32,080
Speaker 1: people are changed, as long as they're good at what

753
00:40:32,160 --> 00:40:33,680
Speaker 1: they're doing and they have skin in the game because

754
00:40:33,680 --> 00:40:38,239
Speaker 1: they own a big piece of the company. Quite fascinating. Um,

755
00:40:38,360 --> 00:40:42,719
Speaker 1: let's keep working down this list of of questions. So

756
00:40:43,520 --> 00:40:45,799
Speaker 1: on the site on the belly side, it says that

757
00:40:45,880 --> 00:40:49,880
Speaker 1: you are manager or co manager of sixteen different funds.

758
00:40:50,360 --> 00:40:54,640
Speaker 1: Are you the direct manager of that or are you

759
00:40:54,680 --> 00:40:57,920
Speaker 1: really coordinating the team? How do you handle all of

760
00:40:57,960 --> 00:41:00,640
Speaker 1: the above. And let's take one of our those than funds,

761
00:41:00,680 --> 00:41:02,520
Speaker 1: which we started in two thousand and three. I've got

762
00:41:02,520 --> 00:41:07,240
Speaker 1: Barbara Morris and Bob Leinager, i got uh Christmaer Andie

763
00:41:07,280 --> 00:41:10,000
Speaker 1: Kevin Dryer Jeff Jonas. Each of us manage a piece

764
00:41:10,040 --> 00:41:12,319
Speaker 1: of it, knowing full well that we each complement each

765
00:41:12,320 --> 00:41:15,319
Speaker 1: other where our core competencies are. So one fellow would

766
00:41:15,360 --> 00:41:18,720
Speaker 1: have a significant competency in the in the financial services industries,

767
00:41:18,760 --> 00:41:22,959
Speaker 1: one other one would have a terrific competency of accumulated

768
00:41:22,960 --> 00:41:26,359
Speaker 1: knowledge that he's and compounded knowledge in the healthcare. So

769
00:41:26,400 --> 00:41:30,960
Speaker 1: we blend that together much much the way you know, uh,

770
00:41:31,000 --> 00:41:33,279
Speaker 1: you'd get a five star French restaurant a three star

771
00:41:33,360 --> 00:41:36,960
Speaker 1: like per se. So someone's doing the dessert, someone else

772
00:41:37,040 --> 00:41:39,160
Speaker 1: is doing the main courses. You have associated or you

773
00:41:39,160 --> 00:41:41,839
Speaker 1: can have something, You could have something on a Monday, Tuesday, Wednesday, Thursday.

774
00:41:41,920 --> 00:41:43,840
Speaker 1: Very well, it is. The key is to blend it together.

775
00:41:44,160 --> 00:41:46,600
Speaker 1: So you walked us through the process of how you

776
00:41:46,640 --> 00:41:49,760
Speaker 1: identify a stock, starting with an industry and then drilling

777
00:41:49,800 --> 00:41:54,560
Speaker 1: down what goes into the cell decision. How do you decide, well,

778
00:41:54,680 --> 00:41:57,279
Speaker 1: this company is no longer fit for our PORTFOLI well

779
00:41:57,560 --> 00:41:59,680
Speaker 1: several else. First of all, if it gets over five

780
00:41:59,680 --> 00:42:02,440
Speaker 1: percent of a particular portfolio, we really want to make

781
00:42:02,480 --> 00:42:05,359
Speaker 1: sure that we examine, no matter how smart we are

782
00:42:05,360 --> 00:42:07,800
Speaker 1: and how good the company is, we want to marginal

783
00:42:07,840 --> 00:42:10,680
Speaker 1: save the in the portfolio. Secondly, we do not want

784
00:42:10,719 --> 00:42:14,480
Speaker 1: to have, you know, a client with ten million dollars

785
00:42:14,920 --> 00:42:17,759
Speaker 1: all in one industry, no matter how good, and so

786
00:42:17,840 --> 00:42:21,480
Speaker 1: we diversify the industry and so on and uh uh,

787
00:42:22,360 --> 00:42:25,640
Speaker 1: and maybe we'll have anywhere from ten names representing thirty

788
00:42:25,680 --> 00:42:28,200
Speaker 1: percent of portfolio. And if it's a taxable client, we

789
00:42:28,280 --> 00:42:32,160
Speaker 1: try to make sure we are out of style. It's

790
00:42:32,160 --> 00:42:34,240
Speaker 1: a very important one and that is that our turnover

791
00:42:34,320 --> 00:42:37,560
Speaker 1: is probably six percent a year six year. That means

792
00:42:37,560 --> 00:42:40,440
Speaker 1: you're holding companies on average sixteen years. So within the

793
00:42:40,480 --> 00:42:43,360
Speaker 1: framework of buying something, we're already looking for our exits streaty.

794
00:42:43,480 --> 00:42:46,440
Speaker 1: So why are we buying x y Z company today

795
00:42:46,520 --> 00:42:49,640
Speaker 1: at eighty four dollars with sixty two million shares, five

796
00:42:49,719 --> 00:42:52,879
Speaker 1: billion market cap, they're gonna do five of even after

797
00:42:52,880 --> 00:42:55,520
Speaker 1: the n start October one? What is the value of

798
00:42:55,520 --> 00:42:59,799
Speaker 1: that business? And why was this company spun off from

799
00:42:59,840 --> 00:43:03,160
Speaker 1: an another company? What were they thinking of? Why were

800
00:43:03,200 --> 00:43:06,719
Speaker 1: they were they preparing the company so that it would

801
00:43:06,760 --> 00:43:10,719
Speaker 1: be tax efficiently bought by someone else? And you see

802
00:43:10,719 --> 00:43:12,560
Speaker 1: that all the time, whether it was Zoeta spun off

803
00:43:12,640 --> 00:43:15,279
Speaker 1: from Fiser, whether it is x y Z spun off

804
00:43:15,360 --> 00:43:18,239
Speaker 1: from X, Y Z and so on. So we're constantly

805
00:43:18,280 --> 00:43:22,279
Speaker 1: asking those kinds of questions analytically, So you talk a

806
00:43:22,320 --> 00:43:26,480
Speaker 1: lot about very very specific bottoms up with different companies.

807
00:43:26,880 --> 00:43:31,120
Speaker 1: How important is the overall here's where the economy is,

808
00:43:31,200 --> 00:43:34,719
Speaker 1: here's what the market valuation is, and here's what's going

809
00:43:34,760 --> 00:43:38,000
Speaker 1: on in the world of macroeconomics. Is any of that

810
00:43:38,080 --> 00:43:41,320
Speaker 1: significant or do you really just focus on the industry

811
00:43:41,360 --> 00:43:45,799
Speaker 1: and the individual style Well to the degree that inflation

812
00:43:46,520 --> 00:43:51,360
Speaker 1: accelerates from one percent to four percent over the next

813
00:43:51,400 --> 00:43:58,080
Speaker 1: ten years because of rising wages um that is important

814
00:43:58,120 --> 00:44:03,279
Speaker 1: to understand the implications on a industry or company from

815
00:44:03,320 --> 00:44:06,600
Speaker 1: the impact of higher inflation. For example, if I said

816
00:44:06,600 --> 00:44:09,440
Speaker 1: to you tomorrow what you and I would shop for,

817
00:44:10,320 --> 00:44:14,480
Speaker 1: Let's say a basket of shopping basket, everything constantly the

818
00:44:14,560 --> 00:44:16,920
Speaker 1: same number of cereal box, the same number of yo good,

819
00:44:16,960 --> 00:44:19,800
Speaker 1: same number of milk, same number of orange juice, coffee,

820
00:44:19,800 --> 00:44:23,960
Speaker 1: and so on, same mix. If next year that basket

821
00:44:23,960 --> 00:44:27,640
Speaker 1: would be five percent higher, that would be very positive

822
00:44:27,840 --> 00:44:31,160
Speaker 1: for those that distribute those products because they are working

823
00:44:31,160 --> 00:44:34,719
Speaker 1: on very low margins, and you would leverage the s

824
00:44:34,760 --> 00:44:37,360
Speaker 1: g n A with a rising constant un account. But

825
00:44:37,480 --> 00:44:41,160
Speaker 1: higher revenues per unit. That's very positive. Take a company

826
00:44:41,160 --> 00:44:44,040
Speaker 1: of genuine parts located in Atlanta, Georgia. I've been following

827
00:44:44,040 --> 00:44:46,640
Speaker 1: the company only for forty five years. They sell parts

828
00:44:46,640 --> 00:44:50,160
Speaker 1: on the NAPA brand. If inflation picks up first, there's

829
00:44:50,160 --> 00:44:52,840
Speaker 1: two fifty million cars on the road each year. This

830
00:44:52,920 --> 00:44:55,680
Speaker 1: year will sell seventeen million with scrap twelve or thirteen.

831
00:44:55,880 --> 00:44:58,359
Speaker 1: That means we're adding four million cars. That's one five.

832
00:44:58,960 --> 00:45:01,200
Speaker 1: What's the average agent car? How long are they driven?

833
00:45:01,760 --> 00:45:04,279
Speaker 1: Does the consumer want to repair cars? Where did they repair,

834
00:45:04,400 --> 00:45:06,880
Speaker 1: where did they buy parts? And all of those elements.

835
00:45:06,960 --> 00:45:09,319
Speaker 1: And then what happens to that bread basket of autoparts

836
00:45:09,560 --> 00:45:11,759
Speaker 1: is their inflation. There hasn't been inflation, and that for

837
00:45:11,840 --> 00:45:14,440
Speaker 1: two or three years the company has done extraordinarily well

838
00:45:14,480 --> 00:45:17,200
Speaker 1: because miles driven her up. They you started off asking

839
00:45:17,200 --> 00:45:20,279
Speaker 1: about gasolene price, fleet ages way up there also, Yeah,

840
00:45:20,280 --> 00:45:22,200
Speaker 1: it could be that's an important element. But the cars

841
00:45:22,280 --> 00:45:24,640
Speaker 1: last a lot longer. I can sure you know, I

842
00:45:24,680 --> 00:45:26,400
Speaker 1: can drive a car now for a hundred and fifty

843
00:45:26,400 --> 00:45:29,479
Speaker 1: thousand miles and uh, it's like driving one for forty

844
00:45:29,920 --> 00:45:33,320
Speaker 1: miles in the sixties. And by the way, gasolene in

845
00:45:33,440 --> 00:45:35,799
Speaker 1: nineteen sixty two where I saw a photograph the other

846
00:45:35,840 --> 00:45:37,840
Speaker 1: day thirty two cents, so I was getting ten miles

847
00:45:37,840 --> 00:45:39,879
Speaker 1: in a gallon was three cents a gallon today I get.

848
00:45:40,280 --> 00:45:42,120
Speaker 1: I bought some the other day in New Jersey for

849
00:45:42,239 --> 00:45:44,680
Speaker 1: dollar eighty and I get twenty five miles in a gallon.

850
00:45:44,760 --> 00:45:47,400
Speaker 1: We're paying seven cents, So you're paying twice what you

851
00:45:47,440 --> 00:45:50,080
Speaker 1: did forty years ago. And that is the sad part

852
00:45:50,200 --> 00:45:53,120
Speaker 1: about not raising the gasolene tax to fund out highways

853
00:45:53,160 --> 00:45:58,680
Speaker 1: because the infrastructure is terrible. Roads, bridges, tunnels, and so on.

854
00:45:59,239 --> 00:46:02,080
Speaker 1: I've been riding about that and screaming about that eighteen

855
00:46:02,080 --> 00:46:06,360
Speaker 1: point four cents since nine hasn't gone up in what

856
00:46:06,520 --> 00:46:10,920
Speaker 1: is that the federal tax. Jersey doesn't even have state taxes.

857
00:46:10,960 --> 00:46:13,719
Speaker 1: That's why they're so cheap, or almost no gas tax.

858
00:46:13,840 --> 00:46:15,759
Speaker 1: Whatever it is. The point is that we need to

859
00:46:15,800 --> 00:46:20,520
Speaker 1: cover our infrastructure. It increases productivity, whether it's an avionics,

860
00:46:20,560 --> 00:46:24,560
Speaker 1: whether it's bridges, whether it's roads, whether it is cybersecurity.

861
00:46:24,719 --> 00:46:26,920
Speaker 1: We need better infrastructure. Somebody's got to fund it, and

862
00:46:26,920 --> 00:46:29,160
Speaker 1: somebody's gotta pay for it. The the electrical grid in

863
00:46:29,160 --> 00:46:32,960
Speaker 1: the United States is absolutely vulnerable, not just a physical attack,

864
00:46:33,320 --> 00:46:35,920
Speaker 1: but to cyber attack, we can lose large swaths of

865
00:46:35,920 --> 00:46:38,680
Speaker 1: Electric'm glad you're thinking about things at night. It's that

866
00:46:38,840 --> 00:46:41,120
Speaker 1: it's a by the way post, not eleven. We've done

867
00:46:41,120 --> 00:46:44,040
Speaker 1: almost nothing to really secure all. It sounds like an

868
00:46:44,080 --> 00:46:46,520
Speaker 1: individual that wants to have solar power on this roof

869
00:46:46,600 --> 00:46:48,560
Speaker 1: so that it could be independent enough the grid. If

870
00:46:48,560 --> 00:46:50,480
Speaker 1: you have to be I live in an area that's

871
00:46:50,520 --> 00:46:53,520
Speaker 1: so wooded, I can't um. You got to have these

872
00:46:53,560 --> 00:46:55,880
Speaker 1: giant old ghost trees that I can't cut down. You

873
00:46:55,960 --> 00:46:59,360
Speaker 1: can act part of them. I could. I could actually

874
00:46:59,360 --> 00:47:03,759
Speaker 1: put it on a enough so any of it independable.

875
00:47:03,960 --> 00:47:06,239
Speaker 1: That The point is that there are elements that we

876
00:47:06,320 --> 00:47:09,200
Speaker 1: look at that have that tie into the stocks we do.

877
00:47:09,520 --> 00:47:11,760
Speaker 1: And going back to the question which I did not answer,

878
00:47:12,160 --> 00:47:17,400
Speaker 1: our exit strategy, it's aside from clients specific is also

879
00:47:17,440 --> 00:47:19,680
Speaker 1: baked into why we're buying a company because we think

880
00:47:19,680 --> 00:47:21,960
Speaker 1: it's gonna be subject to some form of financial engineering.

881
00:47:22,400 --> 00:47:24,359
Speaker 1: So at a certain point it hits a certain either

882
00:47:24,360 --> 00:47:26,560
Speaker 1: it's taken out or it hits a certain dollar amount,

883
00:47:26,800 --> 00:47:29,480
Speaker 1: and that's what triggers this out. A certain dollar amount

884
00:47:29,520 --> 00:47:32,640
Speaker 1: as a percentage of a client's portfolio Okay, I mean

885
00:47:32,640 --> 00:47:36,640
Speaker 1: I've owned Genuine Parts now for forty years, even before

886
00:47:36,640 --> 00:47:38,959
Speaker 1: I was managing money, we still on it. We owned

887
00:47:38,960 --> 00:47:42,120
Speaker 1: Berkshire had the way since we started mutual funds seven.

888
00:47:42,160 --> 00:47:45,239
Speaker 1: We still out it. Uh we uh. So, you know,

889
00:47:45,920 --> 00:47:48,600
Speaker 1: there are certain companies like I think General Mills, Campbell Soup.

890
00:47:48,640 --> 00:47:51,359
Speaker 1: General Mills business model has more often changed than they

891
00:47:51,400 --> 00:47:53,920
Speaker 1: are doing quite well over and yogurt is a nine

892
00:47:54,480 --> 00:47:57,080
Speaker 1: billion dollar industry globally, twelve being in the United States,

893
00:47:57,520 --> 00:48:00,359
Speaker 1: and they're doing quite well at your play. They now

894
00:48:00,400 --> 00:48:02,799
Speaker 1: have the global brand and that's very good for quick,

895
00:48:03,000 --> 00:48:07,279
Speaker 1: easy snacking, quick, easy grab and go, and it is

896
00:48:07,320 --> 00:48:10,319
Speaker 1: also perceived to be a healthy product. So so how

897
00:48:10,320 --> 00:48:13,600
Speaker 1: do you decide to to say, you know, for whatever reason,

898
00:48:13,680 --> 00:48:16,319
Speaker 1: this one company isn't working out. What goes into that

899
00:48:16,440 --> 00:48:20,719
Speaker 1: decision to say we're gonna cut this one loose. Essentially,

900
00:48:20,760 --> 00:48:24,080
Speaker 1: if the company leverages it up because the CEO she

901
00:48:24,239 --> 00:48:27,319
Speaker 1: decides to get married again and wants to impress a

902
00:48:27,400 --> 00:48:29,640
Speaker 1: new husband that she wants to be bigger, and makes

903
00:48:29,680 --> 00:48:32,840
Speaker 1: an acquisition and maturely overpays, then we would seriously have

904
00:48:32,920 --> 00:48:37,319
Speaker 1: some issues. So that's what that's a factor. Together, we acquisition,

905
00:48:37,400 --> 00:48:40,359
Speaker 1: What about just pure valuation. At a certain point you say, hey,

906
00:48:40,400 --> 00:48:43,000
Speaker 1: this is trading times, am I are you gonna hold

907
00:48:43,040 --> 00:48:45,160
Speaker 1: onto that? Or it depends on how we look at

908
00:48:45,200 --> 00:48:48,040
Speaker 1: the world for the company over the next ten years.

909
00:48:48,680 --> 00:48:51,320
Speaker 1: How will would this company do when it's business model?

910
00:48:51,360 --> 00:48:54,080
Speaker 1: What are the risks to it? So we're having those

911
00:48:54,080 --> 00:48:57,239
Speaker 1: conversations all the time about stock specific That's a much

912
00:48:57,280 --> 00:49:02,239
Speaker 1: more sophisticated answer than ah, this is expensive punting it.

913
00:49:02,320 --> 00:49:06,360
Speaker 1: You're really saying, this is a very complex picture with

914
00:49:06,400 --> 00:49:08,719
Speaker 1: a lot of moving parts, and there is no one

915
00:49:08,800 --> 00:49:12,239
Speaker 1: single metric that's gonna make us say we're very make

916
00:49:12,280 --> 00:49:15,120
Speaker 1: it life simple. We're overworked and we're overpaid, and we

917
00:49:15,160 --> 00:49:19,359
Speaker 1: intend to stay that way. Overworked and over Well, let's

918
00:49:19,360 --> 00:49:23,120
Speaker 1: talk about that. You you, um, there was somebody I

919
00:49:23,120 --> 00:49:26,440
Speaker 1: think was over the summer that had looked at the

920
00:49:26,560 --> 00:49:30,080
Speaker 1: highest paid people in finance, and I think you were

921
00:49:30,200 --> 00:49:34,279
Speaker 1: number one or two on that list. And this goes

922
00:49:34,320 --> 00:49:36,640
Speaker 1: to show you the tunnel vision of whoever that was.

923
00:49:37,560 --> 00:49:39,720
Speaker 1: So here you are, You're the founder of a company,

924
00:49:39,719 --> 00:49:44,560
Speaker 1: you're running sixteen portfolios, and they're saying, uh, you're overpaid.

925
00:49:44,600 --> 00:49:48,120
Speaker 1: What what's the pushback to that sort of my opic. Well, I,

926
00:49:48,840 --> 00:49:51,239
Speaker 1: first of all, I anybody can say anything they want.

927
00:49:51,520 --> 00:49:56,400
Speaker 1: God bless America. I really liked the notion of the

928
00:49:56,440 --> 00:50:01,320
Speaker 1: French Charlie Liberdeaux approach to UH with it's just we Charlie,

929
00:50:01,920 --> 00:50:05,040
Speaker 1: the notion of the free market, and it's very important

930
00:50:05,080 --> 00:50:07,520
Speaker 1: to have that kind of pushback and don't worry about

931
00:50:07,520 --> 00:50:11,600
Speaker 1: being politically correct. Notwithstanding that, you gotta get your facts right.

932
00:50:12,880 --> 00:50:18,279
Speaker 1: So you mentioned two colleagues. What who am I competing with?

933
00:50:18,840 --> 00:50:21,920
Speaker 1: Is it the hedge fund guys? And where are they

934
00:50:22,000 --> 00:50:26,759
Speaker 1: in the list of earning returns. Secondly, within the framework

935
00:50:26,840 --> 00:50:29,520
Speaker 1: of what we do, we are a public company, and

936
00:50:29,520 --> 00:50:33,279
Speaker 1: to compare a W two, an individual that did not

937
00:50:33,760 --> 00:50:36,640
Speaker 1: start a firm, did not make five thousand dollars when

938
00:50:36,640 --> 00:50:38,680
Speaker 1: he earned it, started into the firm and took all

939
00:50:38,680 --> 00:50:42,200
Speaker 1: of the entrepreneurial risk. This is a slight difference. I

940
00:50:42,280 --> 00:50:45,239
Speaker 1: just saw the movie Steve Jobs okay, and the and

941
00:50:45,600 --> 00:50:49,520
Speaker 1: the risk that that individual took. So one has to

942
00:50:49,840 --> 00:50:52,680
Speaker 1: kind of way that no matter how you look at it. Um,

943
00:50:54,360 --> 00:50:58,560
Speaker 1: I enjoy being competitive. I like the pressure, but I

944
00:50:58,600 --> 00:51:01,440
Speaker 1: also like giving back. So you started off the conversation,

945
00:51:01,440 --> 00:51:05,160
Speaker 1: but I've given significant amounts of money to Columbia, Boston College,

946
00:51:05,239 --> 00:51:09,480
Speaker 1: Roger Williams, University of Miami, University of Nevada. What about Fordham,

947
00:51:09,760 --> 00:51:14,160
Speaker 1: Fordham prep schools everywhere? Uh that we have fingerprints on

948
00:51:14,360 --> 00:51:17,360
Speaker 1: ranging for even schools on the West coast. So and

949
00:51:17,400 --> 00:51:21,360
Speaker 1: I'm sure this will create more conversation about more schools

950
00:51:21,360 --> 00:51:25,120
Speaker 1: that are indeed. So so your basic response to I

951
00:51:25,080 --> 00:51:29,040
Speaker 1: don't remember the name of the company, but your responses, Hey,

952
00:51:29,120 --> 00:51:32,799
Speaker 1: I I earn a competitive salary versus so you have

953
00:51:32,840 --> 00:51:34,640
Speaker 1: a foot in the hedge fund world, foot in the

954
00:51:34,920 --> 00:51:37,479
Speaker 1: separately managed accounts world, and a foot in your three

955
00:51:37,520 --> 00:51:40,960
Speaker 1: feeded within the mutual fun world. You're running all these

956
00:51:40,960 --> 00:51:44,160
Speaker 1: differences like, well, we need a fourth and then the

957
00:51:44,200 --> 00:51:46,920
Speaker 1: fourth is the research world. So there's the four footed

958
00:51:46,960 --> 00:51:49,239
Speaker 1: horse that is married a belly and you're saying what

959
00:51:49,360 --> 00:51:54,680
Speaker 1: I earn is competitive with other people's realistic. We have

960
00:51:54,920 --> 00:51:58,640
Speaker 1: a challenge in this country to look my father I

961
00:51:58,680 --> 00:52:01,600
Speaker 1: found that was a charter member of Local six in

962
00:52:01,600 --> 00:52:05,920
Speaker 1: New York. That's a restaurant of hotel workers. And uh,

963
00:52:06,040 --> 00:52:08,640
Speaker 1: you know, we need to raise wages. We need to

964
00:52:08,680 --> 00:52:12,960
Speaker 1: have everyone have that vision of success and allow them

965
00:52:13,000 --> 00:52:16,120
Speaker 1: to earn a faraway to return, so we have to

966
00:52:16,120 --> 00:52:18,520
Speaker 1: deal with that. Notwithstanding that at my tax rate is

967
00:52:18,520 --> 00:52:23,759
Speaker 1: probably close. Okay, So you're you're kicking back both through

968
00:52:23,800 --> 00:52:28,680
Speaker 1: philanthropy and through one Uncle Sam one of them, and

969
00:52:28,760 --> 00:52:31,480
Speaker 1: maybe both are very inefficient ways for the money to

970
00:52:31,520 --> 00:52:34,160
Speaker 1: be spent. But it is what it is, all right,

971
00:52:34,200 --> 00:52:37,640
Speaker 1: So let's let's stick with um the discussion of of

972
00:52:37,719 --> 00:52:40,600
Speaker 1: stock picking. I love the fact that you don't shrink

973
00:52:40,640 --> 00:52:43,359
Speaker 1: from any question. It's like, bring it on and I'll

974
00:52:43,360 --> 00:52:46,080
Speaker 1: take a swat at it. That's uh. There are some

975
00:52:46,120 --> 00:52:49,319
Speaker 1: people like next question you You're not that sort of guy.

976
00:52:49,440 --> 00:52:55,640
Speaker 1: Next question, Okay, next question. Um. I got pages and

977
00:52:55,680 --> 00:53:00,520
Speaker 1: pages of this stuff. So we um. We've been talking

978
00:53:00,560 --> 00:53:02,920
Speaker 1: about individual stocks, but we never really got to the

979
00:53:03,000 --> 00:53:07,760
Speaker 1: question of market valuation and what happens when the market

980
00:53:08,040 --> 00:53:12,560
Speaker 1: is pricing does that really other than the inflation questions

981
00:53:12,680 --> 00:53:14,840
Speaker 1: that really we try to be a dent invest at

982
00:53:14,840 --> 00:53:18,319
Speaker 1: all the time within the framework of our client accounts.

983
00:53:18,320 --> 00:53:21,440
Speaker 1: We're also very conscious that its X y Z individual

984
00:53:22,480 --> 00:53:25,680
Speaker 1: gives us a dent of their assets. We're not gonna

985
00:53:25,719 --> 00:53:28,920
Speaker 1: put it dent equities all the time. On the other

986
00:53:28,960 --> 00:53:30,920
Speaker 1: side of the point, if you're a two billion dollar

987
00:53:31,600 --> 00:53:34,799
Speaker 1: pension plan to find benefits or to find contributions. And

988
00:53:34,800 --> 00:53:36,480
Speaker 1: you give us a hundred million dollars and you want

989
00:53:36,520 --> 00:53:38,919
Speaker 1: us to be the best in small cap, We're gonna

990
00:53:38,920 --> 00:53:40,640
Speaker 1: be a hunder percent invested as best as we can

991
00:53:41,120 --> 00:53:43,760
Speaker 1: all the time. And so we're constantly looking for ideas.

992
00:53:43,760 --> 00:53:47,200
Speaker 1: So we customize two thousand accounts for each client specific

993
00:53:47,440 --> 00:53:49,680
Speaker 1: and I have a wonderful team both in terms of

994
00:53:49,760 --> 00:53:52,080
Speaker 1: judgment and in terms of client service that does that.

995
00:53:52,640 --> 00:53:55,440
Speaker 1: And there are challenges in times like this because we

996
00:53:55,480 --> 00:53:58,680
Speaker 1: don't fully know all of the client's tax basis. Uh,

997
00:53:58,760 --> 00:54:00,960
Speaker 1: they're all at their entire tax pictures that we have

998
00:54:01,000 --> 00:54:03,239
Speaker 1: to be sensitive about all of that. So if you're

999
00:54:03,280 --> 00:54:06,200
Speaker 1: on the on the other side, uh, the question is

1000
00:54:07,080 --> 00:54:10,239
Speaker 1: do you want me to look at how we do this?

1001
00:54:12,360 --> 00:54:16,920
Speaker 1: So so if you're almost always invested, the assumption is

1002
00:54:17,360 --> 00:54:19,520
Speaker 1: are you hedging or do you not even bother with

1003
00:54:19,560 --> 00:54:22,200
Speaker 1: the client? The client the clients which we have twenty

1004
00:54:22,200 --> 00:54:25,239
Speaker 1: billion dollars and trusted us do not allow us to

1005
00:54:25,239 --> 00:54:28,960
Speaker 1: go short or hedge. The way we can hedge is

1006
00:54:29,000 --> 00:54:33,520
Speaker 1: by buying companies like Warren Buffett Is buying precision cast parts.

1007
00:54:34,840 --> 00:54:37,560
Speaker 1: Let's assume that we own a quarter of a billion

1008
00:54:37,560 --> 00:54:40,000
Speaker 1: dollars worth of that stock, or we own a quarter

1009
00:54:40,040 --> 00:54:43,960
Speaker 1: of a billion dollars worth of o'riley's. Uh that is

1010
00:54:44,000 --> 00:54:46,160
Speaker 1: not being taken over. Should we sell a little bit

1011
00:54:46,160 --> 00:54:48,640
Speaker 1: of o'riley's and put it in because the stock is

1012
00:54:48,680 --> 00:54:51,359
Speaker 1: now selling it that they're gonna earn eleven dollars next year,

1013
00:54:51,480 --> 00:54:54,320
Speaker 1: eleven fifty next year. A great business model of great management,

1014
00:54:54,960 --> 00:54:57,640
Speaker 1: and that's twenty five times earnings. Should we take a

1015
00:54:57,640 --> 00:54:59,960
Speaker 1: little bit off the table and put it into precision

1016
00:55:00,040 --> 00:55:02,279
Speaker 1: hast parts. We have very low data and very low

1017
00:55:02,280 --> 00:55:06,000
Speaker 1: correlation with the market, and you could earn four percent annualized.

1018
00:55:07,520 --> 00:55:09,480
Speaker 1: It's better than the T bills which is six basis

1019
00:55:09,480 --> 00:55:12,480
Speaker 1: points then, and it's better than you know, hedging and

1020
00:55:12,560 --> 00:55:16,160
Speaker 1: being wrong if the market keeps running. There are certain

1021
00:55:16,200 --> 00:55:18,759
Speaker 1: of those elements and so we are practitioners of this

1022
00:55:18,840 --> 00:55:21,360
Speaker 1: and we've been doing it very successfully. We've compound the

1023
00:55:21,400 --> 00:55:25,000
Speaker 1: client assets at about six kego for thirty nine years.

1024
00:55:25,600 --> 00:55:27,759
Speaker 1: Not too chevy, No, but what have you done for

1025
00:55:27,840 --> 00:55:31,400
Speaker 1: me lately? Nothing? But that's the nature of yes of

1026
00:55:31,480 --> 00:55:33,839
Speaker 1: what we do is it's always what was the last month,

1027
00:55:33,880 --> 00:55:37,440
Speaker 1: what was the last quarter, you could have a yeah.

1028
00:55:37,800 --> 00:55:39,719
Speaker 1: On the other side of the coin, our private wealth

1029
00:55:39,719 --> 00:55:42,759
Speaker 1: management clients are really understand and appreciate it's not what

1030
00:55:42,840 --> 00:55:44,879
Speaker 1: you make, it's what you keep. And if you can

1031
00:55:44,920 --> 00:55:47,720
Speaker 1: hold something for thirteen months as opposed to thirteen minutes,

1032
00:55:48,520 --> 00:55:53,120
Speaker 1: you pay eight percent tax versus forty three percent tax,

1033
00:55:53,120 --> 00:55:55,720
Speaker 1: depending on if you're living in a great state like Florida.

1034
00:55:55,760 --> 00:56:00,440
Speaker 1: New York has got all sorts of taxes. Sure they're tuesta,

1035
00:56:00,440 --> 00:56:04,279
Speaker 1: it's Californiausetts six percent. New York is eight if you're

1036
00:56:04,280 --> 00:56:07,319
Speaker 1: in New York City, and California's but there's you don't

1037
00:56:07,320 --> 00:56:09,960
Speaker 1: have an estate Texas. Everyone has everything. There are a

1038
00:56:09,960 --> 00:56:12,719
Speaker 1: lot of pluses and minuses in every state. To say

1039
00:56:12,760 --> 00:56:14,520
Speaker 1: the least, let let me shift. Being in New York

1040
00:56:14,600 --> 00:56:16,480
Speaker 1: is a plus to be with you, that's and to

1041
00:56:16,560 --> 00:56:19,399
Speaker 1: be in in the city of which generates so much

1042
00:56:19,440 --> 00:56:23,200
Speaker 1: economic activity. Everybody just steps into the Have you been

1043
00:56:23,200 --> 00:56:27,719
Speaker 1: to Singapore lately? London? I have Man Tokyo, Hong Kong,

1044
00:56:28,040 --> 00:56:30,239
Speaker 1: Um a lot of places, and there are a lot

1045
00:56:30,239 --> 00:56:33,000
Speaker 1: of places Dallas, Texas, where I was not too long ago,

1046
00:56:33,239 --> 00:56:35,760
Speaker 1: there are a lot of fantastic places that generate economic

1047
00:56:36,000 --> 00:56:38,520
Speaker 1: We were just in Seattle, that's a town that's on fire.

1048
00:56:38,800 --> 00:56:42,200
Speaker 1: And San Francisco the sitting on top of something that

1049
00:56:42,239 --> 00:56:45,560
Speaker 1: could be a fire. But that's beside the Seattle or

1050
00:56:45,600 --> 00:56:51,040
Speaker 1: San Francisco both what's going on in Seattle. Okay, So

1051
00:56:51,160 --> 00:56:54,040
Speaker 1: let's talk a little bit about some of your early mentors.

1052
00:56:54,080 --> 00:56:57,480
Speaker 1: Who were the people that were the big influences early

1053
00:56:57,560 --> 00:57:00,440
Speaker 1: on in your career. Well, I was to admit I

1054
00:57:00,520 --> 00:57:03,920
Speaker 1: had a professor at Fordham that taught me money and banking.

1055
00:57:04,600 --> 00:57:07,240
Speaker 1: His name was Amon Kelly. Amon was getting his PhD

1056
00:57:07,280 --> 00:57:10,279
Speaker 1: at Columbia, taught at Fordham undergraduate of finance class. He

1057
00:57:10,320 --> 00:57:13,359
Speaker 1: then became the president of Tulane for seventeen years, and

1058
00:57:13,600 --> 00:57:15,720
Speaker 1: he was very good. So I had a whole bunch

1059
00:57:16,320 --> 00:57:20,000
Speaker 1: of individuals with the guy that taught me Latin uh

1060
00:57:20,080 --> 00:57:22,880
Speaker 1: in high school. Uh and uh. You know, it was

1061
00:57:23,080 --> 00:57:26,600
Speaker 1: very influential because it taught you how to parse sentences

1062
00:57:26,680 --> 00:57:29,880
Speaker 1: and how to structure sentences. And I had a guy

1063
00:57:29,920 --> 00:57:33,040
Speaker 1: at Low Brows by name of Eric Renner who and

1064
00:57:33,320 --> 00:57:36,080
Speaker 1: Alan Kirschberg who would take a part your research reports

1065
00:57:36,080 --> 00:57:38,240
Speaker 1: and really make sure that you had every eye and

1066
00:57:38,240 --> 00:57:42,120
Speaker 1: every tea dotted grammatically and that kind of discipline. Uh,

1067
00:57:42,160 --> 00:57:47,280
Speaker 1: with that was important to the idea of communication. UM,

1068
00:57:47,360 --> 00:57:49,920
Speaker 1: let's talk about books. What are some of your favorite

1069
00:57:50,280 --> 00:57:54,560
Speaker 1: nonfiction books, investment or otherwise. I read a lot of

1070
00:57:54,560 --> 00:57:57,400
Speaker 1: annual reports. No more books. Anyway, you at least said

1071
00:57:57,440 --> 00:58:00,120
Speaker 1: the same thing I I. My my wife said, you've

1072
00:58:00,120 --> 00:58:04,920
Speaker 1: got to read Steve Jobs, I said, when so. I

1073
00:58:04,960 --> 00:58:08,800
Speaker 1: read trade magazines, Billboard. I've been doing that for forty years.

1074
00:58:08,800 --> 00:58:11,120
Speaker 1: I read at age I read four in the orderable

1075
00:58:11,200 --> 00:58:13,920
Speaker 1: bile parts business. I read about three or four in

1076
00:58:13,960 --> 00:58:16,280
Speaker 1: the gaming industry, and that's more recent the last ten years.

1077
00:58:16,480 --> 00:58:20,000
Speaker 1: I read Asian There's a magazine that's fantastic if you

1078
00:58:20,000 --> 00:58:23,520
Speaker 1: want to understand the Asian world. Uh. And then you

1079
00:58:23,600 --> 00:58:27,800
Speaker 1: obviously what's the name of that magazine, The Asian Way, Yeah, Nika,

1080
00:58:27,840 --> 00:58:32,960
Speaker 1: I uh owns it. They used to do it when

1081
00:58:32,960 --> 00:58:35,439
Speaker 1: I was in Japan thirty years ago. I started reading

1082
00:58:35,440 --> 00:58:38,040
Speaker 1: and they changed it over to a weekly magazine format,

1083
00:58:38,360 --> 00:58:40,960
Speaker 1: and then it's Bloomberg business Week. I started reading Business

1084
00:58:41,000 --> 00:58:43,480
Speaker 1: Week back in the thirties of forty forties and fifties,

1085
00:58:43,520 --> 00:58:45,439
Speaker 1: but it's changed a lot in the last five years.

1086
00:58:45,600 --> 00:58:48,120
Speaker 1: To say, to say the least of that. UM, what

1087
00:58:48,200 --> 00:58:53,040
Speaker 1: other investors influenced your your approach. Obviously Graham and dot

1088
00:58:53,040 --> 00:58:56,000
Speaker 1: Are are big influences. And it sounds like, well, you know,

1089
00:58:56,280 --> 00:58:59,640
Speaker 1: I like war and I go to see his meetings

1090
00:58:59,680 --> 00:59:01,520
Speaker 1: every year for the last ten or twelve years. We

1091
00:59:01,560 --> 00:59:04,919
Speaker 1: in fact host a dinner on Friday night, our firm does,

1092
00:59:05,040 --> 00:59:07,640
Speaker 1: but for the Columbia Business Schools, their their guest list,

1093
00:59:07,680 --> 00:59:11,080
Speaker 1: our nickel and whatever money they raise they keep. So

1094
00:59:11,240 --> 00:59:13,280
Speaker 1: we do that every year. It's kind of like our

1095
00:59:13,280 --> 00:59:20,320
Speaker 1: pilgrimage to h every year. That sounds like that's fun. Um.

1096
00:59:20,400 --> 00:59:24,200
Speaker 1: So thirty five thousand individuals trekking out there, all with

1097
00:59:24,320 --> 00:59:26,960
Speaker 1: a mission and all with an understanding. All what a

1098
00:59:27,000 --> 00:59:28,960
Speaker 1: way to say thanks to Warren for making them a

1099
00:59:29,000 --> 00:59:32,720
Speaker 1: return and to watch what he does within the context

1100
00:59:32,800 --> 00:59:35,120
Speaker 1: of investing. Though I must have been precision cast parts

1101
00:59:35,200 --> 00:59:37,480
Speaker 1: was a surprise to me, a little expensive, more than

1102
00:59:37,520 --> 00:59:41,280
Speaker 1: he know. I think the notion, well, it's a big deal.

1103
00:59:41,720 --> 00:59:44,400
Speaker 1: Twenty eight million shares at two thirty five dollars and

1104
00:59:44,600 --> 00:59:48,720
Speaker 1: the mathis thirty odd billion. Uh. If you look at

1105
00:59:48,760 --> 00:59:50,920
Speaker 1: the cash flow over the next seven years, he will

1106
00:59:50,960 --> 00:59:53,520
Speaker 1: have recovered his cash, assuming they'll cost the capital for

1107
00:59:53,600 --> 00:59:56,680
Speaker 1: a moment, it does have a zero cost flow. Uh,

1108
00:59:56,720 --> 00:59:58,280
Speaker 1: that he would have gotten his money back and then

1109
00:59:58,320 --> 01:00:00,880
Speaker 1: you'll have a very interesting business for the next twenty years.

1110
01:00:01,600 --> 01:00:05,360
Speaker 1: So he seems to do that pretty well, doesn't he. Uh.

1111
01:00:05,640 --> 01:00:09,560
Speaker 1: He's made mistakes. We all have. Absolutely, it looks like

1112
01:00:09,640 --> 01:00:12,800
Speaker 1: he's made less than many and and has put a

1113
01:00:12,800 --> 01:00:14,720
Speaker 1: lot of wood on the ball. Well, when you think

1114
01:00:14,760 --> 01:00:19,040
Speaker 1: about the market valuation of Apple, the think about the

1115
01:00:19,080 --> 01:00:21,880
Speaker 1: new up starts, he's missed all the technology because he

1116
01:00:23,520 --> 01:00:26,000
Speaker 1: says he I don't understand it, I can't investment. He

1117
01:00:26,040 --> 01:00:27,960
Speaker 1: has not missed him. He just didn't want to play

1118
01:00:28,000 --> 01:00:34,680
Speaker 1: that game. Okay, So the fangs of the world Facebook, Amazon,

1119
01:00:34,880 --> 01:00:40,040
Speaker 1: Ali Baba, Netflix and no Netflix. You're not afraid of

1120
01:00:40,080 --> 01:00:42,640
Speaker 1: these names, are you. That doesn't mean I'm buying them,

1121
01:00:42,680 --> 01:00:45,320
Speaker 1: but it's something it's a space that you're willing to

1122
01:00:45,360 --> 01:00:49,320
Speaker 1: play in. But don't forget we do understand the subscription

1123
01:00:49,360 --> 01:00:52,080
Speaker 1: revenue model of a Netflix. Of course, that doesn't mean

1124
01:00:52,080 --> 01:00:53,920
Speaker 1: I pulled the trigger. And that means that there are

1125
01:00:53,960 --> 01:00:55,840
Speaker 1: mistakes that we've made that you won't know about. And

1126
01:00:55,840 --> 01:00:58,480
Speaker 1: that is not buying a stock. So you don't you

1127
01:00:58,520 --> 01:01:00,800
Speaker 1: find out, you find out about the mistakes you make

1128
01:01:00,840 --> 01:01:03,919
Speaker 1: when you buy something you perhaps shouldn't have, the ones

1129
01:01:03,960 --> 01:01:06,240
Speaker 1: that get away that you don't pull the trigger on.

1130
01:01:06,320 --> 01:01:08,480
Speaker 1: No one really knows you that. Yeah, I do. Well,

1131
01:01:08,600 --> 01:01:10,880
Speaker 1: now we all know about Netflix also, but I wear

1132
01:01:10,960 --> 01:01:13,800
Speaker 1: my hair shirts. There's so many of them, and they

1133
01:01:13,880 --> 01:01:16,160
Speaker 1: come and bother me every day when I think about it,

1134
01:01:16,240 --> 01:01:18,240
Speaker 1: just trying to figure out my Listen. I've been on

1135
01:01:18,320 --> 01:01:21,440
Speaker 1: Google when they had the reversed Dutch auction and I

1136
01:01:21,480 --> 01:01:25,240
Speaker 1: got all of several hundred shares eighty bucks several very

1137
01:01:25,240 --> 01:01:30,480
Speaker 1: good at that. Um, you remember that painful And that's

1138
01:01:30,520 --> 01:01:33,760
Speaker 1: before the split, That's that's right. And that's before the

1139
01:01:33,800 --> 01:01:37,800
Speaker 1: rename to Alphabet, which I have been unable to. It's

1140
01:01:37,800 --> 01:01:39,840
Speaker 1: fairly easy. They figured out how to not to pay

1141
01:01:39,960 --> 01:01:42,720
Speaker 1: royalty to get a name that was available, and Alphabet

1142
01:01:42,760 --> 01:01:44,480
Speaker 1: is a new holding company that allows them to do

1143
01:01:44,480 --> 01:01:47,400
Speaker 1: a lot of very creative things, very clever. Yeah. The

1144
01:01:47,480 --> 01:01:51,480
Speaker 1: financial engineering they certainly um seem to be. So you've

1145
01:01:51,480 --> 01:01:53,840
Speaker 1: been in the business the last ten minutes or so

1146
01:01:53,880 --> 01:01:56,440
Speaker 1: that we have. You've been in this business for forty

1147
01:01:56,440 --> 01:01:59,840
Speaker 1: plus years. What has change that you think is really

1148
01:02:00,000 --> 01:02:03,120
Speaker 1: significant for the better or the worst. Well, I think

1149
01:02:03,200 --> 01:02:06,240
Speaker 1: that what has to change is to make sure that

1150
01:02:06,240 --> 01:02:11,440
Speaker 1: the American public understands that capitalism is a very very

1151
01:02:11,960 --> 01:02:15,160
Speaker 1: important way of allocating capital. It's a combination that's made

1152
01:02:15,160 --> 01:02:18,200
Speaker 1: America a unique study in the history of mankind, the

1153
01:02:18,240 --> 01:02:22,280
Speaker 1: combination of free markets with all the floors UH, the

1154
01:02:22,360 --> 01:02:25,080
Speaker 1: rule of law with all of its floors, and meritocracy,

1155
01:02:25,120 --> 01:02:27,160
Speaker 1: which means everybody could be educated. We got to go

1156
01:02:27,240 --> 01:02:31,320
Speaker 1: back and really help individuals educated. From my point of view,

1157
01:02:31,320 --> 01:02:34,520
Speaker 1: in terms of the markets, you go through cycles. Okay,

1158
01:02:34,680 --> 01:02:38,720
Speaker 1: I was there in the sixties when you had UH

1159
01:02:38,840 --> 01:02:42,480
Speaker 1: the conglomerates and the and the pushback, and then you

1160
01:02:42,520 --> 01:02:44,840
Speaker 1: had the nifty fifty, and then you had the client

1161
01:02:44,880 --> 01:02:47,360
Speaker 1: of stocks, and then you had the T M T

1162
01:02:47,640 --> 01:02:49,640
Speaker 1: s and then you had in the eighties the UH

1163
01:02:49,960 --> 01:02:53,960
Speaker 1: leverage biouts but Drexel Burnham and then you had So

1164
01:02:54,000 --> 01:02:56,040
Speaker 1: you go through all these cycles and capitalism and there's

1165
01:02:56,040 --> 01:03:00,160
Speaker 1: some excellent flows. But are the challenges today are trying

1166
01:03:00,160 --> 01:03:03,720
Speaker 1: to figure out whether this experiment of trying to keep

1167
01:03:03,760 --> 01:03:06,640
Speaker 1: the world afloat by pumping money into the system is

1168
01:03:06,680 --> 01:03:09,200
Speaker 1: an interesting subject that we are going to write a

1169
01:03:09,200 --> 01:03:12,360
Speaker 1: casebook on twenty years from now. Together, How has the

1170
01:03:12,400 --> 01:03:17,280
Speaker 1: actions of the Fed affected what you do professionally. The

1171
01:03:17,320 --> 01:03:19,560
Speaker 1: second question was let me finish up on the first.

1172
01:03:19,960 --> 01:03:23,960
Speaker 1: Second thing was the way these products are packaged, starting

1173
01:03:23,960 --> 01:03:29,880
Speaker 1: with John Bogel and its mindless investing and yeah, but

1174
01:03:29,960 --> 01:03:33,360
Speaker 1: also the notion that they're cheaper. In some ways they are,

1175
01:03:33,400 --> 01:03:35,880
Speaker 1: but in some ways there are tax issues that are hidden.

1176
01:03:35,960 --> 01:03:39,200
Speaker 1: Some way, their transaction costs that are hidden. Uh. And

1177
01:03:39,520 --> 01:03:42,840
Speaker 1: then the notion of corporate governance. How did they vote?

1178
01:03:43,320 --> 01:03:44,960
Speaker 1: You know, they're getting better, but they got a long

1179
01:03:45,000 --> 01:03:48,640
Speaker 1: way to go. They don't pay attention to the vote. Uh.

1180
01:03:48,680 --> 01:03:51,400
Speaker 1: And they are getting better, but as I said, and

1181
01:03:51,480 --> 01:03:54,240
Speaker 1: in addition that, there is a constant abuse. If you

1182
01:03:54,280 --> 01:03:57,080
Speaker 1: sit at trading desk and you see flash trading and

1183
01:03:57,080 --> 01:03:59,720
Speaker 1: they're constantly probing, what you're trying to do is to scalp.

1184
01:04:00,200 --> 01:04:03,600
Speaker 1: It was like the specialist on on steroids. Okay, and

1185
01:04:06,080 --> 01:04:10,320
Speaker 1: well they may not have been fake quotes, and you

1186
01:04:10,360 --> 01:04:12,479
Speaker 1: should they should have them there for a little longer

1187
01:04:12,480 --> 01:04:14,320
Speaker 1: than that. So there's a lot of elements that have

1188
01:04:14,400 --> 01:04:16,680
Speaker 1: to go back into the free market. I don't like

1189
01:04:16,800 --> 01:04:18,640
Speaker 1: dark pools. I want to see everything in the fish

1190
01:04:18,680 --> 01:04:21,360
Speaker 1: bowl of the free market system because I want the

1191
01:04:21,760 --> 01:04:24,800
Speaker 1: world to believe that this is a fair game and

1192
01:04:24,880 --> 01:04:26,880
Speaker 1: that it's run by people that have come to work

1193
01:04:26,920 --> 01:04:29,320
Speaker 1: every day to keep it honest and open. And this

1194
01:04:29,400 --> 01:04:32,960
Speaker 1: is a challenge. And UH, we had specialists and when

1195
01:04:33,000 --> 01:04:34,880
Speaker 1: I was around in the forties and fifties and sixties,

1196
01:04:34,920 --> 01:04:37,560
Speaker 1: so you know, everyone has their own approach over the

1197
01:04:37,680 --> 01:04:42,680
Speaker 1: counter trading, trading, UH, fixed income instruments today, what are

1198
01:04:42,680 --> 01:04:44,880
Speaker 1: the spreads? What are the markets? So there are ways

1199
01:04:44,920 --> 01:04:46,760
Speaker 1: that we can't and the SEC is doing a very

1200
01:04:46,760 --> 01:04:49,480
Speaker 1: good job, but they should have committees of people that

1201
01:04:49,520 --> 01:04:55,080
Speaker 1: are practitioners and meet with them and have somebody organized

1202
01:04:55,120 --> 01:04:57,800
Speaker 1: it and open the UH that day. What is going

1203
01:04:57,840 --> 01:05:00,640
Speaker 1: on that we should be thinking about and things that

1204
01:05:00,760 --> 01:05:04,120
Speaker 1: things that are potentially problematic. That's correct, you guys, you're

1205
01:05:04,160 --> 01:05:07,160
Speaker 1: gonna see it before Mary Joe White sees it or

1206
01:05:07,200 --> 01:05:11,440
Speaker 1: any of our staff sees it as a problem. We're

1207
01:05:11,520 --> 01:05:14,880
Speaker 1: trained not marchhot, but we trained differently. Okay, if you

1208
01:05:14,920 --> 01:05:18,480
Speaker 1: look at flash trading, it's obvious if you look at

1209
01:05:18,480 --> 01:05:22,000
Speaker 1: the coal location, how can you do that? You put

1210
01:05:22,000 --> 01:05:27,040
Speaker 1: a server next to the actual exchange servers, and those

1211
01:05:27,080 --> 01:05:30,760
Speaker 1: folks get the sniff out orders quicker, right, so they

1212
01:05:30,800 --> 01:05:33,520
Speaker 1: get if they want to jump up a front. They're

1213
01:05:33,640 --> 01:05:36,480
Speaker 1: they're taking an extra penny or a dime from these

1214
01:05:36,480 --> 01:05:40,440
Speaker 1: big and they have great language of coal liquidity. We

1215
01:05:40,520 --> 01:05:43,720
Speaker 1: provide liquidity. We provide liquidity providers. This is all kind

1216
01:05:43,720 --> 01:05:47,160
Speaker 1: of well, it's not nonsense, but it certainly can be.

1217
01:05:47,480 --> 01:05:51,080
Speaker 1: Uh A past you really a practitioner is no. And

1218
01:05:51,160 --> 01:05:54,400
Speaker 1: the uptick rule, I mean, there is no advantage of

1219
01:05:54,560 --> 01:05:57,160
Speaker 1: having eliminated the uptick rule except as an accommodation to

1220
01:05:57,160 --> 01:06:00,680
Speaker 1: somebody's packaging products. So there's still a lot of things

1221
01:06:00,680 --> 01:06:03,720
Speaker 1: that are going on. And then disclosures. How can someone

1222
01:06:03,840 --> 01:06:05,480
Speaker 1: legally they can do it right now, and how can

1223
01:06:05,520 --> 01:06:08,959
Speaker 1: they buy derivatives and not file at thirteen D until

1224
01:06:09,040 --> 01:06:12,520
Speaker 1: a certain time period. And so another word, they have

1225
01:06:12,560 --> 01:06:16,520
Speaker 1: to they have to disclose an ownership even if it's

1226
01:06:16,560 --> 01:06:19,560
Speaker 1: not the stock, if it's a secondary and do you

1227
01:06:19,600 --> 01:06:20,880
Speaker 1: own it? And how do you own it? And then

1228
01:06:20,880 --> 01:06:22,560
Speaker 1: on top of that, you know, if we keep going.

1229
01:06:22,680 --> 01:06:25,560
Speaker 1: For example, I can buy five percent of a bond,

1230
01:06:25,880 --> 01:06:28,640
Speaker 1: I don't have to file. I can buy of a

1231
01:06:28,680 --> 01:06:30,720
Speaker 1: bond and get control of a company. I don't have

1232
01:06:30,760 --> 01:06:32,600
Speaker 1: to file. I own five percent of a company, I

1233
01:06:32,600 --> 01:06:35,680
Speaker 1: have to file. We file over five percent of holdings

1234
01:06:35,720 --> 01:06:38,560
Speaker 1: of a company on at D filing within ten days

1235
01:06:39,040 --> 01:06:41,200
Speaker 1: and then every time we go over one percent delta,

1236
01:06:41,280 --> 01:06:43,000
Speaker 1: we have to file. We do that religiously on a

1237
01:06:43,040 --> 01:06:46,120
Speaker 1: hundred odd companies and so as a result of that,

1238
01:06:46,160 --> 01:06:49,560
Speaker 1: why not do it on the dead world? So transparency.

1239
01:06:49,640 --> 01:06:52,400
Speaker 1: Everything in a fish bolt so trans So you're looking

1240
01:06:52,440 --> 01:06:56,320
Speaker 1: for people to honor their quotes, to have full disclosures

1241
01:06:56,600 --> 01:06:59,840
Speaker 1: and be transparent. So you're really kind of an eye

1242
01:06:59,880 --> 01:07:02,439
Speaker 1: to list, aren't you. Uh No, I want the free

1243
01:07:02,440 --> 01:07:04,840
Speaker 1: market system to work because it worked for me. I

1244
01:07:04,880 --> 01:07:07,760
Speaker 1: grew up in the Bronx. Okay, I went to school

1245
01:07:08,440 --> 01:07:11,200
Speaker 1: and this system allowed me to flourish, and I think

1246
01:07:11,240 --> 01:07:13,400
Speaker 1: it allows should allow everyone to flourish, and we can.

1247
01:07:13,840 --> 01:07:16,320
Speaker 1: We want a system that allows everyone to succeed to

1248
01:07:16,400 --> 01:07:19,040
Speaker 1: the highest degree of their interests and their passion and

1249
01:07:19,160 --> 01:07:20,960
Speaker 1: the time they're willing to spend. So you want you

1250
01:07:20,960 --> 01:07:24,040
Speaker 1: want to actually create opportunity for anybody who wants to

1251
01:07:24,400 --> 01:07:26,960
Speaker 1: starting with grammar school. And so what do you do

1252
01:07:27,000 --> 01:07:29,800
Speaker 1: to help grammar schools out? We do what we can

1253
01:07:29,880 --> 01:07:32,320
Speaker 1: in terms of taking kids from grammar school to go

1254
01:07:32,320 --> 01:07:34,640
Speaker 1: to high school, give them a pay for the tuition

1255
01:07:35,680 --> 01:07:38,880
Speaker 1: for private high school or college. These are not charter schools.

1256
01:07:38,880 --> 01:07:43,320
Speaker 1: These are primarily religious schools, Catholic schools, because that's the

1257
01:07:43,360 --> 01:07:45,640
Speaker 1: ones that are in our radar screen. So in the

1258
01:07:45,720 --> 01:07:48,280
Speaker 1: last five minutes I have you for let me ask

1259
01:07:48,360 --> 01:07:51,280
Speaker 1: you two of my favorite questions that I ask all

1260
01:07:51,280 --> 01:07:54,120
Speaker 1: of my guests, and and let's see, um what you

1261
01:07:54,160 --> 01:07:55,960
Speaker 1: want to do with these. The first question is, well

1262
01:07:55,960 --> 01:07:59,080
Speaker 1: you you said I could say next, you can say next,

1263
01:07:59,560 --> 01:08:01,760
Speaker 1: I mshoo. You won't say next to either of these.

1264
01:08:02,160 --> 01:08:04,919
Speaker 1: So if you were dealing with a you were giving

1265
01:08:04,920 --> 01:08:09,160
Speaker 1: advice to a millennial or someone just graduating college who

1266
01:08:09,280 --> 01:08:12,480
Speaker 1: was interested in a career in finance, what would you

1267
01:08:12,520 --> 01:08:16,160
Speaker 1: say to them? Too late? Too late, they missed their

1268
01:08:16,160 --> 01:08:19,280
Speaker 1: window to get into finance. If they basically were a

1269
01:08:19,320 --> 01:08:21,559
Speaker 1: history major, they have to go to graduate school because

1270
01:08:22,080 --> 01:08:24,840
Speaker 1: we don't have the time to train them. We think

1271
01:08:24,880 --> 01:08:27,600
Speaker 1: they should understand a lot more of the quotes, the

1272
01:08:27,920 --> 01:08:31,200
Speaker 1: elements that go into it. It depends if you. So,

1273
01:08:31,320 --> 01:08:34,080
Speaker 1: someone coming out of college with a business or economics

1274
01:08:34,120 --> 01:08:38,240
Speaker 1: background and goes to Columbia gets an NBA. Let me

1275
01:08:38,240 --> 01:08:39,920
Speaker 1: tell you where we recruit from. We have no problem

1276
01:08:39,920 --> 01:08:42,240
Speaker 1: with anyone from hart. I'm politically correct. Okay, I'm the

1277
01:08:42,240 --> 01:08:44,639
Speaker 1: most politically correct guy in the world. I will recruit

1278
01:08:44,680 --> 01:08:50,560
Speaker 1: somebody from Wharton. Okay, so you will stoop that load. No, no, no, no.

1279
01:08:50,720 --> 01:08:52,479
Speaker 1: By the way, we just had Jeremy Siegel Heller, I

1280
01:08:52,520 --> 01:08:55,479
Speaker 1: understand Jeremy is a good guy. We we look at

1281
01:08:55,520 --> 01:09:00,240
Speaker 1: the best anywhere in the world, and they are rain

1282
01:09:00,360 --> 01:09:05,800
Speaker 1: individuals the way we want. Notwithstanding that, we will go

1283
01:09:05,960 --> 01:09:08,280
Speaker 1: in and if you're giving me advice, I'm in the

1284
01:09:08,320 --> 01:09:11,599
Speaker 1: high school. First of all, we should teach finance and

1285
01:09:11,800 --> 01:09:16,640
Speaker 1: basic uh what makes what? And how to save money

1286
01:09:16,720 --> 01:09:18,600
Speaker 1: for the rest of your life and how important is

1287
01:09:18,640 --> 01:09:20,800
Speaker 1: that to create options in your life. So if I

1288
01:09:20,840 --> 01:09:25,120
Speaker 1: was giving in high school, yes, and there are no

1289
01:09:25,320 --> 01:09:29,040
Speaker 1: mandated courses like that pretty much few and far between. Well,

1290
01:09:29,080 --> 01:09:32,320
Speaker 1: I think Buffet has put something together in a very

1291
01:09:32,400 --> 01:09:35,960
Speaker 1: light way to help individuals and grammar school understand that

1292
01:09:35,960 --> 01:09:38,919
Speaker 1: the teachers should tell them about the virtues of saving

1293
01:09:38,960 --> 01:09:43,160
Speaker 1: and uh, individual how to open accounts, not accounts, but

1294
01:09:43,439 --> 01:09:46,880
Speaker 1: the banking system and how that works. But uh, I

1295
01:09:46,920 --> 01:09:51,920
Speaker 1: would say the following by a stock really and get

1296
01:09:51,960 --> 01:09:54,280
Speaker 1: into the game, just like you would say you want

1297
01:09:54,280 --> 01:09:55,640
Speaker 1: to learn how to swim. You ain't gonna do it

1298
01:09:55,680 --> 01:09:58,800
Speaker 1: by thinking about it. So you buy one stock, I

1299
01:09:58,800 --> 01:10:03,439
Speaker 1: don't care what it is, us in square, garden, apple, whatever,

1300
01:10:04,520 --> 01:10:11,760
Speaker 1: hopefully the So you own a stock, and what does

1301
01:10:11,760 --> 01:10:13,920
Speaker 1: that teach you? As someone right out of high school? Well,

1302
01:10:13,960 --> 01:10:16,519
Speaker 1: you start following it. What do I own? Do I

1303
01:10:16,520 --> 01:10:19,200
Speaker 1: own a piece of American business? What? And how? Read

1304
01:10:19,200 --> 01:10:21,560
Speaker 1: the annual reports and get the re annual reports, to

1305
01:10:21,640 --> 01:10:24,559
Speaker 1: read it online, and do whatever it takes to continue

1306
01:10:24,600 --> 01:10:28,040
Speaker 1: to follow a company. Then secondly, I would say start saving.

1307
01:10:28,080 --> 01:10:30,080
Speaker 1: And the way you start saving is the following, though

1308
01:10:30,080 --> 01:10:33,200
Speaker 1: I must admit you gotta work, not I would buy

1309
01:10:33,240 --> 01:10:36,439
Speaker 1: one less lotty per day, assuming there are five dollars

1310
01:10:36,439 --> 01:10:38,200
Speaker 1: a day. That seven days a week is thirty five

1311
01:10:38,240 --> 01:10:41,240
Speaker 1: dollars at seventeen seventh almost two thousand dollars a year,

1312
01:10:41,240 --> 01:10:43,400
Speaker 1: and then figure out how much that would be in

1313
01:10:43,520 --> 01:10:46,040
Speaker 1: forty years compounding at four six and eight ten percent,

1314
01:10:46,200 --> 01:10:48,559
Speaker 1: And how you're gonna make that. Secondly, give up a beer.

1315
01:10:48,640 --> 01:10:50,600
Speaker 1: That's why I have to go that one has to

1316
01:10:50,600 --> 01:10:55,439
Speaker 1: be over the age of one and one bear per day,

1317
01:10:55,439 --> 01:10:57,400
Speaker 1: and see how much money you would have just for

1318
01:10:57,520 --> 01:11:01,120
Speaker 1: those simple things, assuming nobody smokes any more. Otherwise, the

1319
01:11:01,200 --> 01:11:04,360
Speaker 1: numbers would be staggering. Right, cigarettes are are through the roof.

1320
01:11:04,640 --> 01:11:06,280
Speaker 1: You still you walk out of a building, you still

1321
01:11:06,320 --> 01:11:09,280
Speaker 1: occas when we see the junkies out there puffing on. Well,

1322
01:11:09,320 --> 01:11:14,320
Speaker 1: there's no question that a well, you can smell it,

1323
01:11:14,400 --> 01:11:17,400
Speaker 1: you don't have to see it. And so the building

1324
01:11:17,400 --> 01:11:20,519
Speaker 1: itself is smoked free, but the campus setting or this

1325
01:11:21,240 --> 01:11:23,720
Speaker 1: is not. And you gotta give me a Mike a

1326
01:11:23,800 --> 01:11:27,200
Speaker 1: really good credit for that years ago. The whole subject

1327
01:11:27,200 --> 01:11:30,120
Speaker 1: of healthy living, though, I must admit sixty an ounces.

1328
01:11:30,200 --> 01:11:36,280
Speaker 1: He once said, uh to somebody, uh, sixteen ounces, And

1329
01:11:36,360 --> 01:11:38,960
Speaker 1: so he says, well, maybe they could have Baker's mark,

1330
01:11:40,560 --> 01:11:42,800
Speaker 1: that we have to be careful on all of those dynamics.

1331
01:11:43,160 --> 01:11:46,040
Speaker 1: But you know, I don't look. The advice is simple.

1332
01:11:46,320 --> 01:11:49,920
Speaker 1: Everyone's gonna be smart, but you have to work from

1333
01:11:49,920 --> 01:11:52,920
Speaker 1: five to night. Or if you're young, you could steal

1334
01:11:52,960 --> 01:11:54,800
Speaker 1: it from seven eleven because you want to watch the

1335
01:11:54,840 --> 01:11:57,639
Speaker 1: Mets games or something like that, or the Knicks tonight

1336
01:11:57,760 --> 01:11:59,240
Speaker 1: is going to take a long time. You know this,

1337
01:11:59,400 --> 01:12:01,639
Speaker 1: the games thought at eight, it's not over till eleven,

1338
01:12:02,200 --> 01:12:06,280
Speaker 1: and you gotta work afterwards, such as life. Last question,

1339
01:12:07,400 --> 01:12:10,599
Speaker 1: what do you know about investing today that you wish

1340
01:12:10,640 --> 01:12:14,720
Speaker 1: you knew when you began forty five years ago. I

1341
01:12:14,800 --> 01:12:18,439
Speaker 1: actually started buying stocks when I was thirteen, and forty

1342
01:12:18,479 --> 01:12:20,719
Speaker 1: five years ago, I was already working at low Broads,

1343
01:12:20,840 --> 01:12:25,200
Speaker 1: and so the notion of what I do is fairly simple,

1344
01:12:25,280 --> 01:12:27,040
Speaker 1: and buying a good business that I hold for an

1345
01:12:27,040 --> 01:12:29,880
Speaker 1: extended period of time to defer paying a cash tax

1346
01:12:29,960 --> 01:12:32,719
Speaker 1: on the sale of that asset. I would say that

1347
01:12:33,080 --> 01:12:36,120
Speaker 1: if I were picking a career, the individual has to

1348
01:12:36,160 --> 01:12:38,960
Speaker 1: ask himself, how much can I make given the amount

1349
01:12:39,000 --> 01:12:41,160
Speaker 1: of ergs of energy I have to expend in my life,

1350
01:12:41,160 --> 01:12:42,880
Speaker 1: and how do I get the best payback for that?

1351
01:12:43,000 --> 01:12:46,080
Speaker 1: Or and why? In my particular case, I should have

1352
01:12:46,120 --> 01:12:48,760
Speaker 1: started business a lot sooner, and I should have listened

1353
01:12:48,760 --> 01:12:51,880
Speaker 1: to Michael Steinhardt, who was always saying, what do you

1354
01:12:51,880 --> 01:12:53,559
Speaker 1: want to do anything else? Why don't you just do

1355
01:12:53,600 --> 01:12:56,200
Speaker 1: a hedge fund and go along? Short? But we're delighted

1356
01:12:56,200 --> 01:12:58,640
Speaker 1: with where you have. I have will continue to do

1357
01:12:58,680 --> 01:13:00,320
Speaker 1: what I want. I like the pressure or like the

1358
01:13:00,320 --> 01:13:03,280
Speaker 1: ATENSI I like me look stupid every day I come in.

1359
01:13:03,880 --> 01:13:06,559
Speaker 1: Mario Gabelly, this has been an absolute pleasure to have you.

1360
01:13:06,640 --> 01:13:09,599
Speaker 1: Thank you so much for being so generous with your

1361
01:13:09,640 --> 01:13:13,240
Speaker 1: time we have been speaking with Mario Gabelly. He is

1362
01:13:13,280 --> 01:13:18,040
Speaker 1: the founder, chairman and CEO of Gabelly Asset Managements, publicly

1363
01:13:18,080 --> 01:13:22,800
Speaker 1: traded as gb L. If you enjoy this conversation, look

1364
01:13:22,960 --> 01:13:25,679
Speaker 1: upward down an inch on iTunes and you could see

1365
01:13:25,680 --> 01:13:29,200
Speaker 1: the other UH sixty five or so such conversations we've

1366
01:13:29,240 --> 01:13:33,080
Speaker 1: had b shure in check out UH all the rest

1367
01:13:33,160 --> 01:13:37,679
Speaker 1: of these interviews. I want to thank my producer, Charlie Bohmer,

1368
01:13:37,800 --> 01:13:42,599
Speaker 1: and my head of research Mike pat Nick, and and

1369
01:13:42,720 --> 01:13:47,000
Speaker 1: Mark as Sinestalsi as my engineer. UH. You've been listening

1370
01:13:47,040 --> 01:13:49,559
Speaker 1: to Masters in Business on Bloomberg Radio