Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanabek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all furnessing the power of Business
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Speaker 1: YouTube search Bloomberg Global News. Let's get our daily check
Speaker 1: on COVID. Dr Jacob B. Kraft is a biologist. He's
Speaker 1: CEO and co founder the privately held biopharma company Strand Therapeutics,
Speaker 1: and he joins us on the phone in Cambridge, Massachusetts. Jake,
Speaker 1: nice to have you here with Tim and myself. How
Speaker 1: are you doing, Jimmy L It's good to be here. UM,
Speaker 1: I'm doing fantastic. UM. You know I think that um.
Speaker 1: It is a it is a it is a challenging bud,
Speaker 1: a rewarding time to be in the bio sex sector.
Speaker 1: Why so and tell us specifically about the work that
Speaker 1: you guys are doing, because you're in this whole world
Speaker 1: of something that we've all become, UM not quite an
Speaker 1: expert on, but we know a lot more, and that
Speaker 1: is messenger RNA. Yeah. So myself as a scientist that
Speaker 1: I did my PhD and m I T focused on
Speaker 1: messenger RNA therapeutics. Going back to u UM and really
Speaker 1: even back then we were we were sitting around talking
Speaker 1: about the potential of what this technology could do. UM. Luckily,
Speaker 1: some some visionary people UM at DARTHA back then Dan
Speaker 1: Lattendorf actually um AT at the DODS Research Division DARTHA
Speaker 1: UM chose to start backing companies and research groups like
Speaker 1: my own UM to begin researching this mrn A technology
Speaker 1: as a as a therapeutic UM. That funded a lot
Speaker 1: of Maderna's work. UM, that funded work that ended up
Speaker 1: going into violent tech, and that funded the work that
Speaker 1: ended up ultimately becoming my company Strand therapeutic UM. And
Speaker 1: so it's it's a rewarding time really to see I
Speaker 1: think the power of biotech innovation, I think the power
Speaker 1: of this technology that those of us who are champions
Speaker 1: of this of this field have been promising for a
Speaker 1: long time, UM, and it's you know, it's rewarding to
Speaker 1: UH in a in a year that has been just
Speaker 1: absolutely awful. UH. I think it's it's the silver lining
Speaker 1: to see, UM, just what can happen when private industry
Speaker 1: along with the public UH and public funding can come
Speaker 1: together UH and deploy these therapeutics. Jacob, can you talk
Speaker 1: a little bit about what mRNA does to the human body,
Speaker 1: because I think there has been a lot of questions
Speaker 1: about it because it's it's perceived as being a new technology,
Speaker 1: at least for use in humans, despite the fact that
Speaker 1: it has been being researched for years. Absolutely. So the
Speaker 1: first thing to to say is that m RNA is
Speaker 1: a molecule that our bodies use all the time. UM.
Speaker 1: So inside if your nucleus is your is where your
Speaker 1: genome is kept, and that that's all made of d
Speaker 1: N A UM and so on your you, You of
Speaker 1: all of these genes, and those genes code for proteins
Speaker 1: and protein is really what life is. It's what makes
Speaker 1: up the substance of what we are, of what every
Speaker 1: organism is. And in order for the DNA genes to
Speaker 1: get out and become proteins out in your body. They
Speaker 1: have to be sent on on this information molecule UM,
Speaker 1: and that's what messenger RNA is. And so every day
Speaker 1: your body is turning on genes by creating messenger RNA
Speaker 1: from the DNA and using those messages to to actually
Speaker 1: actuate themselves. What messenger RNA therapeutics are are just creating
Speaker 1: that same messenger rna UM and using it to deliver
Speaker 1: different sorts of of genes that are only temporary. Right,
Speaker 1: This isn't this isn't genal modification. This actually never touches
Speaker 1: any part of your of your DNA whatsoever. But you
Speaker 1: can you can use these instructions, these messenger RNA instructions
Speaker 1: to temporarily deliver instructions into the body, and that could
Speaker 1: be used to create a vaccine. Right, that could be
Speaker 1: used to help your body train up to to learn
Speaker 1: what a virus might look like without actually delivering the
Speaker 1: virus into the body. And in the broader field of
Speaker 1: messenger RNA therapeutics, what my company Strand has been focused
Speaker 1: on is further in that technology for the use in
Speaker 1: fighting cancer, fighting rare diseases, fighting autoimmune diseases, UM, all
Speaker 1: of that can be augmented in this much safer platform
Speaker 1: than general engineering as well. So it just says we're
Speaker 1: not touching the DNA helix or double helix, we're not
Speaker 1: doing playing around with that. But what is it? And
Speaker 1: unfortunately you have to come back and talk some more
Speaker 1: because this is stuff we love to talk about. But
Speaker 1: in a minute or so, what is it that we
Speaker 1: don't know about messenger RNA that maybe puts people still
Speaker 1: on edge a little bit? And again, just got about
Speaker 1: fifty seconds. I think new technology is always, uh is
Speaker 1: always can can be a little startling to to see
Speaker 1: at first, especially when it's when it's run out um,
Speaker 1: you know, fairly fast in the public. Suye, I wouldn't
Speaker 1: say that we have a lot left to learn about
Speaker 1: um messenger RNA itself. Um, it's really I think right
Speaker 1: now about giving vaccines in the arms of people to
Speaker 1: make sure that we're not rolling the dice on you know,
Speaker 1: what are the long terms effect of a COVID infection.
Speaker 1: I think that's a much more kind of serious thing,
Speaker 1: um that we need to protect ourselves against getting these
Speaker 1: vaccines out and really you know, continuing to invest in
Speaker 1: technology like this so we can be protected from future
Speaker 1: you know, pandemic outperak right or cancer, and I know
Speaker 1: that's something we barely scratched the service, So I hope
Speaker 1: you'll come back so we can continue this conversation. We've
Speaker 1: been talking to Dr Jacob B. Kraft, to CEO and
Speaker 1: co founder of Strand Therapeutics, with us on the phone
Speaker 1: in Cambridge, Massachusetts. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio.
Speaker 1: It is, without a doubt the financial story of the week.
Speaker 1: It will turn out to be one of the stories
Speaker 1: of the year about the private investment firm that continues
Speaker 1: to be at the center of one of the biggest
Speaker 1: margin calls of all time. And a member of our
Speaker 1: Bloomberg News team that broke the story is Bloomberg News
Speaker 1: Finance reporter Shrina Rajan. He's with us on the phone
Speaker 1: in New York City reporting for Business Week along with
Speaker 1: Bloomberg Business Week editor Joel Weber. He's on the access
Speaker 1: line in Brooklyn. Joel, this is a story that we
Speaker 1: are continually finding out more and more kind of every
Speaker 1: hour about it. And one of the angles that Tree
Speaker 1: is dealing with is kind of what was happening at
Speaker 1: you know, some of the big banks, like Credit Sweets,
Speaker 1: Like you had to wonder last week, what were the
Speaker 1: phone calls and conversations that were going on among the
Speaker 1: big Wall Street banks. Yeah, I think we've just all
Speaker 1: been um in awe of the story. And you know,
Speaker 1: we we first start to trickle out Friday, and then
Speaker 1: over the weekend Bloomberg News was just all over it.
Speaker 1: Um And the most surprising part that has come from
Speaker 1: Freeze letters reporting today that I saw was that the
Speaker 1: banks were all talking about this this time last week,
Speaker 1: So so sweet, kind of take us inside those conversations,
Speaker 1: like how did they begin and how did they how
Speaker 1: did they go? Oh, Joe, you're absolutely right. For all
Speaker 1: of us and the outside, you really started trickling out
Speaker 1: mid to late Friday, over the weekend, and of course
Speaker 1: to the first days of this week. But for those
Speaker 1: who have been dealing with Bill Huang and his family office,
Speaker 1: they were starting to get worried and alarmed by the
Speaker 1: middle of the week as some of his big positions
Speaker 1: were moving in the other direction, and very soon by
Speaker 1: the middle of the week, the banks did realize they
Speaker 1: had a big problem on their hands. The Risk Department
Speaker 1: that a number of Wall three banks, European banks, and
Speaker 1: even Japanese banks were starting to get worried, so they
Speaker 1: all decided to get together in an eastily arranged call
Speaker 1: that included some of the top lawyers from all of
Speaker 1: these firms, also included Bill Hong to find a solution,
Speaker 1: to figure out how to untie and unwind these positions
Speaker 1: in a tidy manner. From our reporting, we understand the
Speaker 1: Cradles in fact, was the one that was pushing for
Speaker 1: this idea of a stand still agreement, asking everyone to
Speaker 1: cool down, back off for a little bit, let's see
Speaker 1: how the price action moved and look at it again
Speaker 1: on Monday, because they did not want to see an
Speaker 1: immediate force liquidation. Well, the clearly regional agreement they were
Speaker 1: all in it for themselves by Friday was clear because
Speaker 1: they're all broken rank And now as we see the
Speaker 1: consequence of that action, we see the big U, S Bank,
Speaker 1: Long of Stanley, Government, sax Well Sago appear to have
Speaker 1: emerged from this largely unscathed. But that is not true
Speaker 1: for an mm U of j which overnight told us
Speaker 1: that their losses could be about three million mura Al
Speaker 1: would says that has a two billion dollar claim without
Speaker 1: actually saying what its actual hit could be from this,
Speaker 1: and Credit Swift, which has still not provided a bigger
Speaker 1: what estimates on that are heading into multibillion dollars And
Speaker 1: that sort of starts to explain Swiss stance on that
Speaker 1: faithful called Last Those Day tree. What what could have
Speaker 1: been a tidier way to unwind this? You you know,
Speaker 1: you said the banks were looking for a tidier way
Speaker 1: to do this, But but how could these losses have
Speaker 1: been prevent it when the stock started moving lower? No
Speaker 1: to me, You're absolutely right. So we're still trying to
Speaker 1: piece together that part of the puzzle. But one possibility
Speaker 1: very well could be instead of the banks moving to
Speaker 1: says collateral and force some sort of liquidation event, perhaps
Speaker 1: the strategy was wait and see if the staff rebounds.
Speaker 1: Perhaps the strategy was asking some of the banks who
Speaker 1: had the potential to demand much more margin to give
Speaker 1: some sort of margin holiday. It isn't clear what the
Speaker 1: solution could have been, but what is clear is for
Speaker 1: at least some of those participants on the call, the
Speaker 1: idea that banks would move into the market by Friday
Speaker 1: and do a rapid fire sale of a number of
Speaker 1: these positions was going to be the worst case outcome,
Speaker 1: and that's what they're dealing with now. So sweet, What
Speaker 1: are the big unanswered questions that that remain Why in
Speaker 1: the now the regulators investor than everyone on the outside
Speaker 1: is trying to make sure. Is there more to come?
Speaker 1: Are we going to see more blocks, chunky doc trades happening?
Speaker 1: Is there a systemic risk? Is the market largely insulated
Speaker 1: but without a doubt? As we moved fast this into
Speaker 1: next weekend beyond in the weeks and months ahead, the
Speaker 1: big question that will emerge from the saga, and really
Speaker 1: the big focus point, will likely be around this concept
Speaker 1: of unknown hidden leverage. How is it that someone could
Speaker 1: build such concentrated positions in some fairly prominent names. These
Speaker 1: are Chinese giants, US media conglomerates, and yet no one
Speaker 1: knows about it. If you're in the cash equity market,
Speaker 1: if you build a position that is larger than five percent,
Speaker 1: that has to be regulatory filing, but appears in this
Speaker 1: case he was using the swap lines with banks that
Speaker 1: allowed him to avoid having to make any listing of
Speaker 1: what peace position and would be so we are not
Speaker 1: aware of any such disclosure. There's no outside money, so
Speaker 1: he didn't even have the usual disclosures about the size
Speaker 1: of the fund that we would get from every other
Speaker 1: hedge fund. Right, but clearly was a big, big player
Speaker 1: in the market, and estimates our ghost exploser could have
Speaker 1: been good at the fifty sixty billion dollars. That seems
Speaker 1: like a worry. That seems like an area where there
Speaker 1: will be demands for are a lot more transparency. I
Speaker 1: just want to know who's the bankers. Are their bankers
Speaker 1: on this call that just parted themselves the Steffan because
Speaker 1: we just started drink being poor? Just getta say, um, listen,
Speaker 1: this story is far from over and I'm sure regulators
Speaker 1: we know that they've been reaching out to the bank.
Speaker 1: So incredible reporting by Street. Part of the team that
Speaker 1: broke this story and has been on it from the
Speaker 1: get go. Shri Nataraja and Financial portrap Bloomberg News on
Speaker 1: the phone in New York City along with Joel Webber,
Speaker 1: editor Rep Bloomberg Business Week on the remote access from Brooklyn. Right,
Speaker 1: it was a banker right poor to drink it has
Speaker 1: to be. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Take. Tim Stinovic from Bloomberg Radio. Tough
Speaker 1: story in our minds today, Tim, no doubt about it
Speaker 1: President Biden's infrastructure plan. Yeah. Chris Condon is Federal Reserve
Speaker 1: and US Economy reporter for Bloomberg News, joins us on
Speaker 1: the phone from Virginia. Chris, it's great to have you
Speaker 1: on the show. When we think about what the Biden
Speaker 1: administration wants to do with its next phase right after
Speaker 1: this COVID recovery package that was pushed through one point
Speaker 1: nine trillion dollar plan, what is the priority for the president? Well, Tim,
Speaker 1: I think there's two overarching motivations here. Number One, they
Speaker 1: want to bring up the longer run rates of economic
Speaker 1: growth in the U S which have been historically quite
Speaker 1: disappointing for for ten or twenty years, you might say.
Speaker 1: Also very much tied into this is they want to
Speaker 1: engineer a more equal distribution of the benefits of that growth,
Speaker 1: because we do see increasingly, over a number of decades,
Speaker 1: a greater concentration wealth and income in this country at
Speaker 1: the higher echelons of that distribution, and the Democrats really
Speaker 1: would like to attack that well. And before we get
Speaker 1: into politics, Chris. Let's because this is something several I
Speaker 1: would say heads of the Federal Reserve have certainly had
Speaker 1: on their radar. Do you have and like, listen, there's
Speaker 1: lots of statistics out there about the gaps in wealth
Speaker 1: and gaps and income. Um. You lay out a couple
Speaker 1: of statistics, can you just kind of remind us of
Speaker 1: what they are? That just kind of sets the scene
Speaker 1: of where we are and how bad it's got in
Speaker 1: terms of the inequities, certainly the financial inequities in our society. Sure, sure,
Speaker 1: I mean I would promise that just a little bit
Speaker 1: by saying that there's all sorts of disputes over various statistics,
Speaker 1: would you know one? But you know, if you just
Speaker 1: look at basic um distributions of income and net worth,
Speaker 1: here's a good example, and net worth of the top
Speaker 1: ten of households in ninety eight nine, that was nine
Speaker 1: point five excuse me, nine point four times as much
Speaker 1: as the middle fifth. You know, if you divide everybody
Speaker 1: up twenty percentage points each, that's nine point four times
Speaker 1: as much. That by two seven grew to thirteen times,
Speaker 1: and by two seventeen seventeen times, and that's before the
Speaker 1: pandemic hit, and that of course has fallen disproportionately on
Speaker 1: poor and middle income people. The rich suf financial assets
Speaker 1: really greater for a while, but they have bounced back
Speaker 1: uh and more since then, So those multiples will even
Speaker 1: probably have grown even more since the onset of the pandemic.
Speaker 1: And that's a good example, I think, um and that
Speaker 1: really goes back over forty years, we've seen the deterioration
Speaker 1: of that kind of both in net worth and in
Speaker 1: average incomes across the board. So, Chris, let's now get
Speaker 1: to the politics of this, because this is going to
Speaker 1: be very political, even just the way the Democrats and
Speaker 1: Republicans talk differently about inequality and inequity, using terms like
Speaker 1: structural versus not structural? How does how does? How do
Speaker 1: Democrats and Republicans come to some sort of solution? And
Speaker 1: and right now do they even see the same problems
Speaker 1: out there? Well, it is a really good question. No,
Speaker 1: they don't see the same problems. I mean, to a
Speaker 1: certain exting, yes they do. First of all, we have
Speaker 1: to say that in the United States, compared to what
Speaker 1: they're developed economies, there is a much greater tolerance of inequality.
Speaker 1: Americans have in our fabric, this idea that if you
Speaker 1: work harder, you're smarter, you invent something, and you make
Speaker 1: zillion bucks, good for you. Americans really have a problem
Speaker 1: with is an inequality of opportunities. So if a kid
Speaker 1: is smart but just can't get educational opportunities, work opportunities
Speaker 1: because they come from a poor neighborhood and their schools
Speaker 1: are crappy, their parents are connected, etcetera. If those things
Speaker 1: deep in the inequalities, that's something that most Americans have
Speaker 1: a serious barble with. Now, how do you address it? Economists,
Speaker 1: I school on both sides of the philosophical I agree
Speaker 1: that education and training absolutely deserve more resources and more attention,
Speaker 1: um so as to create that more equal set of opportunities.
Speaker 1: But it's not just more right, because it's not just
Speaker 1: more of it, but the right one that kind of
Speaker 1: opens the doors to opportunities. Right. Well, this is what
Speaker 1: makes it such a complex issue. You know, one economist said,
Speaker 1: it's not just a matter of throwing money at these things.
Speaker 1: Are You know, if they were easy to solve, they
Speaker 1: would have been solved decades ago. And there are loads
Speaker 1: of theories about how we should go about Just one
Speaker 1: example Biden wants to make community college tuition free. Conserner
Speaker 1: economists say, hold on, you're getting it wrong here. You
Speaker 1: have to incentivize the colleges by time eyeing the assistance
Speaker 1: to the outcomes. I think it could getting degrees at
Speaker 1: community college, are they getting jobs and good jobs? And
Speaker 1: the ones that do that are should get more assistants
Speaker 1: at schools at it um. So that's just one example, um.
Speaker 1: And then, of course is the taxation issue. Massive disagreement
Speaker 1: about this. Conservatives believe that wealth is being demonized in
Speaker 1: the US UM and that it's kind of a cheap,
Speaker 1: populous ploy to go after the rich and say they
Speaker 1: must be taxed more. Liverpools will say, look, we've tried
Speaker 1: to allow corporations and wealthy people to keep more of
Speaker 1: their income under your theory that this would help the
Speaker 1: overcomony more by investing job creating adventures, but hasn't really
Speaker 1: quite worked out that way. Let's get them to pay
Speaker 1: more a greater share and invest that in education, infrastructure,
Speaker 1: which to the best of which has dispersed more rightly,
Speaker 1: great healthcare, which can improve the quality of the labor
Speaker 1: about you. So again, as you say, care a huge
Speaker 1: philosophical difference on this um and we're not like to
Speaker 1: see those difference in just solved. We're going to see
Speaker 1: one side pushed through legislation. Hey Chris, justin fifteen seconds,
Speaker 1: is there a chance that Biden can do this with
Speaker 1: getting any Republican support unlike what he did at the
Speaker 1: one point nine trillion dollar stimulus package relief package. I
Speaker 1: do not believe. No, not such a large package. If
Speaker 1: they broke off one piece here, they're like a pure
Speaker 1: surface transit infrastructure piece that could get maybe some Republican
Speaker 1: proposal support, but highly skeptically. Well, we're gonna hear more
Speaker 1: from the President on all of this starting tomorrow, at
Speaker 1: least we expect to. Hey Chris Connan, thank you so
Speaker 1: much for breaking it down. He is Federal Reserve and
Speaker 1: US Economy reporter at Bloomberg News joining us on the
Speaker 1: phone from Virginiam. A little bit bomb that this might
Speaker 1: not go through, especially the infrastructure part. Yeah, Like, like
Speaker 1: Chris said, there's a agreement on sort of what the
Speaker 1: problem is, just not on the way to attack it.
Speaker 1: I'm broad mac a journal Yeah, but you let me
Speaker 1: drive Oh no, no, no, no, who's going to drive home? Honey, please,
Speaker 1: I'll do the right rivel let me. I want to drive,
Speaker 1: just drive baby, the questions trying. This is the drive
Speaker 1: to the globe commune. Thanks, we'll drive us to dawn
Speaker 1: on Bloomberg Radio. All right, folks, just about nine and
Speaker 1: a half minutes, nine minutes, ten minutes left in today's
Speaker 1: trading session. Let's get to it with Iria Rothberg, co
Speaker 1: portfolio manager and managing member of broad Run Investment Management,
Speaker 1: that is a subadvisor to the Hennessy Focus Fund, which,
Speaker 1: by the way, uh is that more than so far
Speaker 1: this year, putting it into the nine percentile according to
Speaker 1: our data. And he joins us on the phone from Virginia.
Speaker 1: Are good to have you here on Bloomberg. How are you?
Speaker 1: I'm doing well. How are you Carol? Doing okay? Doing okay? Um,
Speaker 1: why don't you start abroad before we kind of dig
Speaker 1: a bit into your market, into your fund and it's holding.
Speaker 1: How do you see this market environment right now? This
Speaker 1: is an interesting market environments. There are certainly um pockets
Speaker 1: of exuberance in the market, particularly in high growth and
Speaker 1: concept companies. It seems like in this low interest rate,
Speaker 1: low growth environment of the pandemic that investors are looking
Speaker 1: to find the next Amazon, They're looking to buy lottery tickets.
Speaker 1: Everybody's looking for the next trillion dollar market cap company.
Speaker 1: And as a consequence, you see people routinely paying thirty
Speaker 1: thirty five times sales for businesses with negative twenty year
Speaker 1: negative thirty percent but don margin. And you know, at
Speaker 1: the same time, the market overall is perfectly reasonably valued,
Speaker 1: with the sprading at about twenty two times Ford earnings
Speaker 1: since arts portfolio trading at a discount training at about
Speaker 1: seven times for earnings, where we see even better growth
Speaker 1: in the market. So you know, we think it's possible
Speaker 1: to find really compelling investment opportunities UM, improven businesses with
Speaker 1: long growth runways, UM, just not in the hot names
Speaker 1: or hot sectors that you talked about UM on TV
Speaker 1: every day. Let's talk about some of those, IRA, because
Speaker 1: I know one of your picks is restoration Hardware. Why
Speaker 1: are you seeing opportunity there? Sure to understand Restoration Hardware,
Speaker 1: you really need to understand It's chairman and CEO, Gary Friedman,
Speaker 1: was about of the company, and uh, I through rewind
Speaker 1: the clock about twenty years. Restoration Hardware Hardware was a
Speaker 1: nearly bankrupt company before UM Gary came in and turned
Speaker 1: things around. And today, you know, our age is really
Speaker 1: the leading UH luxury home furnishings brand in the United States,
Speaker 1: and we think over time that will become the leading
Speaker 1: brand globally. UM. They're really climbing the luxury mountains, mountains mountains.
Speaker 1: You know, as I mentioned, twenty years ago, they had
Speaker 1: a m they had a box of laundry detergent on
Speaker 1: the front of their catalog. And today, you know, if
Speaker 1: you walk into their New York design gallery ninety thousand
Speaker 1: square feed, six levels, you know, a rooftop restaurant. UM.
Speaker 1: You know, it's quite a different experience. UM. And you know,
Speaker 1: sorry two, they're going to be expanding into England and
Speaker 1: into Paris and taking this successful concept globally. And so
Speaker 1: we think they're in the early inning. It's about a
Speaker 1: three billion dollars a company with about three billion dollars
Speaker 1: of revenue today. We think over time they can eclipse
Speaker 1: of revenue. So UM, very very exciting concept with a
Speaker 1: talented management team. It's a very different company. You know,
Speaker 1: if you go back, you're absolutely right, very very different company. UH.
Speaker 1: And you do think obviously playing into that luxury space.
Speaker 1: And especially over the last year, we're seeing everybody just
Speaker 1: kind of ramp up their plans for their home. They're
Speaker 1: just kind of tapping into something and so that globally
Speaker 1: means a lot of growth for them. Sure, and UM,
Speaker 1: existing home turnover is very strong right now. How the
Speaker 1: demands very strong, UM, particularly in a million dollar plus home,
Speaker 1: which you know, their target market, their their target customer
Speaker 1: has north of two hundred fifty dollars housefold income. You know,
Speaker 1: the rule of some is people spend about ten of
Speaker 1: their homes purchase price on the furniture. UM. And you know,
Speaker 1: if you're buying a five million dollar home in two
Speaker 1: and a half million dollar home, that's a lot of
Speaker 1: business for restoration, hardware. And people have been moving out
Speaker 1: of cities and and and there's been a robust second
Speaker 1: home market in the suburbs in beach locations, and that
Speaker 1: all has been very good for them. But you know,
Speaker 1: I think what's the most important here is that they've
Speaker 1: built this luxury brand and it's continuing to grow. They're
Speaker 1: gonna invest a hundred and five million dollars and build
Speaker 1: out really um, you know, a whole suite of solutions
Speaker 1: in the Aspen, Colorado market. They will have an r
Speaker 1: H guest house, which is a little bit more private
Speaker 1: than a hotel concept. They'll have their traditional furniture design gallery.
Speaker 1: They're gonna have spas in the restaurant and you know,
Speaker 1: all this the brand even more aspirational and that gives
Speaker 1: them pricing power. So again they're in the early innings here.
Speaker 1: Love me some English wing back chairs. Just gonna say,
Speaker 1: if you ever walk in one of these galleries, it's
Speaker 1: just like, can I just move in? Can I just
Speaker 1: move in? Hey? CarMax is another one that you like.
Speaker 1: KMX is the tick or what's what's your take on there?
Speaker 1: We've only got about forty seconds, which is and the
Speaker 1: stocks up, so it's already had quite a run. They
Speaker 1: revolutionized the car buying experience about twenty five years ago
Speaker 1: with the no haggle, big box format, and they're about
Speaker 1: to revolutionize in again with their omni channel concept, which
Speaker 1: has been rolled out nationally and you know, they're starting
Speaker 1: to put advertising dollars, you know, really behind it where um,
Speaker 1: you know, you can buy a car from the comfort
Speaker 1: of your living room sofa, you can arrange for your
Speaker 1: trade in, you can arrange financing, and they're really the
Speaker 1: only one ones that will allow you to do as
Speaker 1: much or as little of the transaction on store, in
Speaker 1: store or online if you'd like. And um, we think
Speaker 1: that this is gonna for them tremendous market share games.
Speaker 1: There will be a cost efficiencies as well, and it
Speaker 1: trades at a reasonable multiple about twenty times for so
Speaker 1: you only have to leave actually to go drive the
Speaker 1: car ultimately to drive to restoration hardware exactly and pick
Speaker 1: up one of those English green back chairs. All right, alright,
Speaker 1: thank you so much. Ira Rothberg, He's portfolio manager of
Speaker 1: at Hennessey Funds, on the phone in Virginia. Thanks for
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