Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Right now,
Speaker 1: we know that investors are hoping for returns that are
Speaker 1: often bigger than what a lot of institutional managers will
Speaker 1: say that they can get, and they don't want extra
Speaker 1: taxes cutting into that. And there's a new popular way
Speaker 1: to avoid taxes that has um name that's less than exciting,
Speaker 1: insurance dedicated funds. Here to tell us a little bit
Speaker 1: more about these and why they're a little bit more
Speaker 1: exciting than they sound, Tom Metcalf, who is able to
Speaker 1: produce reporter in choices in our Brick eleven three our studios, Tom,
Speaker 1: what exactly our insurance dedicated funds? So they're pretty complicated product. Basically,
Speaker 1: they're a way for very wealthy investors to invest in
Speaker 1: hedge funds and without have to pay any sort of
Speaker 1: tax on those gains. So there's two types a life
Speaker 1: insurance product and an annuity product. But basically what you
Speaker 1: do as an investor, you effectly buy a life insurance
Speaker 1: product and then that insurer will invest for you into
Speaker 1: a hedge fund and then there is absolutely zero tax
Speaker 1: on that. Do you have a sense of how big
Speaker 1: the idea for the insurance dedicated fund industry has become?
Speaker 1: So it's pretty hard to get like official statistics. One
Speaker 1: guy said, you know, people are trying to keep this
Speaker 1: relatively quiet just because it's so successful. They don't want
Speaker 1: everyone else to know how well it's going. But one
Speaker 1: one guy sort of estimated for us it was at
Speaker 1: least fifteen and perhaps eighteen billion in terms of total assets,
Speaker 1: and that's tripled over the last ten years or so.
Speaker 1: Let me just get a handle on this, because it's
Speaker 1: not necessarily new that insurance policies are used for things
Speaker 1: like a state planning purposes. Right, if you have a
Speaker 1: projected tax bill because of your estate, many times what
Speaker 1: you'll do is you, if you can afford it, you
Speaker 1: will pay the premium for an insurance policy whose payoff
Speaker 1: value to the beneficiaries is equal to whatever the tax
Speaker 1: liability is. So in other words, you're getting a tax
Speaker 1: free distribution from your insurance policy and you use that
Speaker 1: money to go and pay your estate taxes. That's already
Speaker 1: well known and I mean, I mean it's pretty widely widespread, correct, Yeah,
Speaker 1: And this is sort of, I guess, even more grander
Speaker 1: than that. So it's become a more popular because what
Speaker 1: we're seeing is obviously family officers that have exploded, So
Speaker 1: you're getting so many more investors out there you can
Speaker 1: afford to leave their money locked away effectively for decades.
Speaker 1: And also the difference here is effectively you can with
Speaker 1: this structure effectively avoid any sort of tax on that
Speaker 1: death benefit if it's structured correctly. Well, So, just to
Speaker 1: give us a sense of how this differs from a
Speaker 1: typical annuity, just in terms of the promised yields. What
Speaker 1: kind of returns on their investments have some of these
Speaker 1: wealthy individuals been expecting to receive. So in some of
Speaker 1: the marketing documents it's basically, over say a forty year period,
Speaker 1: you can under a normal structure, get about fifty million
Speaker 1: in terms of a total you investment two I think
Speaker 1: it's two and a half million over four years, and
Speaker 1: then leave it there, you know, making returns for forty
Speaker 1: odd years, and that would be fifty million under a
Speaker 1: normal structure, and in this sort of totally tax restructure
Speaker 1: that rises to about hundred and twenty million. Holy cow.
Speaker 1: Well that's because of the tax, the tax status something
Speaker 1: of the investment, right, because it's growing status. This is
Speaker 1: because they're investing in huge funds. They're not investing in
Speaker 1: just sort of income producing securities. Right. Um, it's both basically,
Speaker 1: So it's effectively in terms of that hundred twenty million. Basically,
Speaker 1: if you are the beneficiary rather than ensured, that hundred
Speaker 1: twenty million will landing your bank account for all effect
Speaker 1: without any tax at all. Right, because it's an insurance payout. Yeah,
Speaker 1: because it's a life insurance payout, right, and when meeting
Speaker 1: life insurance meaning you're not going to get it, the
Speaker 1: beneficiary is going to get I said, well, I could
Speaker 1: buy the policy for and insure someone else, so I
Speaker 1: could be the beneficiary. So you know, let's say I
Speaker 1: have a nice elderly relative. Perhaps that might be a
Speaker 1: thing I could do if I had to spare. You know,
Speaker 1: people say about you need seven to eight million. But
Speaker 1: that also used to be a very popular investment product.
Speaker 1: Which is banks companies. I mean they were viadical settlements.
Speaker 1: In other words, you would ensure someone else and when
Speaker 1: they passed away that the benefit of that policy would
Speaker 1: accrue to you because you paid the premiers for that person. Yeah, exactly.
Speaker 1: And the guess the twist here is the involvement hedge
Speaker 1: runs that you get to select because technically you don't
Speaker 1: get to select what the insurance company invests in. But
Speaker 1: now you're saying that you can do this by selecting
Speaker 1: these specific kinds of products, these idefs. Yeah, you've got
Speaker 1: to be very careful. So the I r S looks
Speaker 1: very closely at this in terms of you can't show
Speaker 1: what they term investor control. But basically, and this is
Speaker 1: another reason why it's becoming more popular, is what you
Speaker 1: can do is move from fund to fund. So let's
Speaker 1: say you're invested in one hedge fund and you go,
Speaker 1: I can't tell them what to invest in, but I
Speaker 1: don't like their performance. You can move to another. They
Speaker 1: are called insurance dedicated funds without any sort of kind
Speaker 1: of implications and tax works or anything. This is such
Speaker 1: an interesting story. And one thing that you talk about
Speaker 1: is that these vehicles have become so mainstream that you've
Speaker 1: got banks like JPMorgan and Goldman Sachs offering them, as
Speaker 1: well as hedge funds like Paulson and Company and Millennium Partners.
Speaker 1: And it was interesting and somewhat telling that no one
Speaker 1: wanted to comment for your story whatsoever. And you know,
Speaker 1: do you do you think that, um that there is
Speaker 1: some concern that regulators could kind of home in and
Speaker 1: try to remove the loophole that's kind of being exploded here. Yeah,
Speaker 1: we were asking the various people spect to the story
Speaker 1: about that. And what has happened originally is the RS
Speaker 1: is constantly raised, a few lawsuits and stuff. I think
Speaker 1: at the moment there's a feeling which is again, popularities
Speaker 1: increase and as long as you're very clear and can
Speaker 1: make this case for invest in control that you're not involved,
Speaker 1: that they're quite secure. And I think part of the
Speaker 1: reason they're not commenting as well is you know that
Speaker 1: it's a private placement, so they don't they're not really
Speaker 1: allowed to talk about sort of client issues like that.
Speaker 1: That's what they told their compliance department would probably you know,
Speaker 1: a brain uh melt down just just quickly. Insurance payouts
Speaker 1: are in a sense guaranteed. Right, you buy a life
Speaker 1: insurance policy for a million dollars, it pays out a
Speaker 1: million dollars. In this case, you buy a life insurance
Speaker 1: policied invested in hedge funds? Is there any guarantee? Um?
Speaker 1: I mean it's variable. And in fact it was a
Speaker 1: case where a guy who invest in these is a
Speaker 1: rich head from guy and invested as in a I
Speaker 1: d F and then try to sue them because they
Speaker 1: didn't get the returns he wanted. So there is definitely
Speaker 1: that risk level. But when you take out tax, as
Speaker 1: long as you're not going for a super super high
Speaker 1: risk fund, then it's just easy returns. On that level
Speaker 1: at least, it's almost like having an additional IRA A right,
Speaker 1: I mean the money grows tax free. Although the IRA
Speaker 1: case you actually attacks when you pull the money out,
Speaker 1: in this case you could potentially not pay anything. Thanks
Speaker 1: very much, Tom Metcalf, always a pleasure talking about i dfs.
Speaker 1: We're talking about insurance dedicated funds. Check it out Bloomberg
Speaker 1: dot com. Well, companies all across the world are still
Speaker 1: grappling with a cyber attack that's similar to the want
Speaker 1: to cry attack that we saw a couple of months ago. Um,
Speaker 1: it's reached parts of Asia after hitting Europe, US, South America,
Speaker 1: and who is really to blame? I want to bring
Speaker 1: in Robert Knapp's chief executive officer and co founder of
Speaker 1: cyber Ghost, which is based in Bucharest, Romania. Robert, thank
Speaker 1: you so much for joining us. In previous news articles,
Speaker 1: you've been quoted saying that, frankly, governments are in large
Speaker 1: part to blame for some of these cyber attacks because
Speaker 1: there you know, for example, the U. S N s A,
Speaker 1: We'll find some of these loopholes and problems with programs
Speaker 1: widely is programs, and they won't report them because they
Speaker 1: want to be able to access people's information. Can you
Speaker 1: talk a little bit about that exactly. I mean I
Speaker 1: was talking a couple of years now about the fact
Speaker 1: that we have to decide in the future how we
Speaker 1: wanna move forward with online security. One of the big
Speaker 1: problems we see now and these attack shows it, um
Speaker 1: and leave me. We are just now before the next
Speaker 1: attack because all these attacks we see, how we saw
Speaker 1: in the last years, are using so called backdoors means
Speaker 1: um loopholes in in normally secure systems that are either
Speaker 1: implemented by um national security organizations or detect a financial
Speaker 1: security agencies and not reported to the developers, because these
Speaker 1: agencies use them to spire on people, which weakens the
Speaker 1: security for all of us. And I think we need
Speaker 1: to make a decision um as a as a society
Speaker 1: about how we want to proceed in future with putting
Speaker 1: our whole life on the internet. Robert, would this would
Speaker 1: would an analogy be that, you know, in in some
Speaker 1: science fiction movies, you know, you've got the scientist who's trying,
Speaker 1: you know, creating some crazy chemical, you know, to rule
Speaker 1: the world. But it gets loose, right, it gets loose
Speaker 1: and someone else takes it and does bad things with it.
Speaker 1: Is this what's happening right now? I know, not exactly.
Speaker 1: I I know a better analogy. It's like, you know,
Speaker 1: it is like we live in a neighborhood and we
Speaker 1: implement now in our houses absolutely safe doors so nobody
Speaker 1: could break into the house. But the police has the idea,
Speaker 1: let it make even more safe. Leave all of us,
Speaker 1: give us a key, so so we could prevent the
Speaker 1: bad guys entering the door. Okay, but here's what I
Speaker 1: don't understand, Robert. But here's here's what I don't understand,
Speaker 1: because if the government is to blame for not reporting
Speaker 1: some of these back doors and loopholes, wouldn't the technology
Speaker 1: companies hire some people If these hacks aren't that difficult
Speaker 1: to do, wouldn't they just hire a team of people
Speaker 1: to try to break in and go through every back
Speaker 1: door and find every vulnerability and fix it. Um. I
Speaker 1: disagree that the point is that would that would mean
Speaker 1: that we believe that it's possible to build one hundre
Speaker 1: the centature systems, so and that is simply not possible. Um.
Speaker 1: We're speaking here about highly complex systems with sometimes hundreds
Speaker 1: of thousands and millions of lines of codes. So the
Speaker 1: problem is, first of all, we cannot build safe systems
Speaker 1: once we detect the vulnerability. We need to have laws
Speaker 1: that prevents anyone from using these vulnerabilities and to report
Speaker 1: these vulnerability So that means we need a common effort
Speaker 1: into into making the web more secure and not making
Speaker 1: the web more unsecure. And you know, having state organizations
Speaker 1: having these keys are not giving them back to the
Speaker 1: rightful owners of the doors. That doesn't make sense and
Speaker 1: the reality shows that, UM, this is not the way
Speaker 1: to go for the future because we're gonna see now
Speaker 1: more and more of these kind of attacks that all
Speaker 1: used vulnerabilities in normally secure systems. Well, given the current
Speaker 1: political environment, it seems unlikely that there's going to be
Speaker 1: a consensus about very much, specifically about cyber attack accent
Speaker 1: trying to put forth some kind of legislation. I'm wondering
Speaker 1: if you could offer businesses and individuals any advice on
Speaker 1: how to prepare or deal with the current cyber attack
Speaker 1: and future attacks. What should people and businesses be doing. Look,
Speaker 1: the weapon of the twenty one century is encryption technology.
Speaker 1: So the answer exists. The solution exists. We have it.
Speaker 1: It's pure mathematics, and it's called encryption. So that means
Speaker 1: protect yourself with tools like our cyberablest hand that is
Speaker 1: an entrypted come into the internet, use PGP for your email,
Speaker 1: use encrypted check systems, and do a pack up of
Speaker 1: your data. So the problem that we see right now
Speaker 1: we want to try to take over these kind of
Speaker 1: a kick is that these people lock your data. That
Speaker 1: means the only way to protect yourself from that is
Speaker 1: to back up, but to pick ups keys in a
Speaker 1: way that you would encrypt your data in the cloud.
Speaker 1: So don't pick ups in the clouds a pickups in
Speaker 1: your own networkeding on and try and trypt your data.
Speaker 1: And as long as we don't have bactors and encrypted solutions,
Speaker 1: these solutions are really safe. I want to thank you
Speaker 1: very much for joining us. Robert Napp is the chief
Speaker 1: executive and the co founder of cybergost joining us from Bucharest, Romania. Well,
Speaker 1: he is here to continue the saga of Puerto Rico.
Speaker 1: Joe Masac is our editor for Bloomberg Briefs Municipal Market
Speaker 1: Brief and he joins us in studio. Joe, you know,
Speaker 1: I'm I guess this is what chapter. I don't even
Speaker 1: know what chapter this is in the long saga and
Speaker 1: story of Puerto Rico. But the Puerto Rico Board has
Speaker 1: some checked in the power utilities debt restructuring. Bring us
Speaker 1: up to date on what's going on. Oh man, the
Speaker 1: board last night and executive meeting said that the Prepper deal,
Speaker 1: which promised to give creditors but cents on the dollar
Speaker 1: and was the only deal that they came to pre
Speaker 1: bankruptcy only deal right, Uh, that that no longer was
Speaker 1: alive and that they should go back and uh it
Speaker 1: looks like, now it's going to happen. If Prepper is
Speaker 1: gonna wind up into some you know that they're gonna
Speaker 1: wind up in Title three bankruptcy along with the you know,
Speaker 1: the Commonwealth, the GEO holders and Cofino holders are slugging
Speaker 1: it out. So now you're gonna have Preppa in the
Speaker 1: same boat. And uh, the board not only did that,
Speaker 1: the Board also threwout the budget last night that was
Speaker 1: passed by the legislature and said, no, you know what,
Speaker 1: you have to take another three million dollars out of
Speaker 1: this budget and the budgets about nine and six billion.
Speaker 1: So they were very busy last night. The board is
Speaker 1: asserting their power. Yeah. Well they also Puerto Rico also
Speaker 1: said that their fiduciary duty was not too bondholders, it
Speaker 1: was to residents of the island, which is a stark
Speaker 1: departure from typical bankruptcies where the company's fiduciary duty really
Speaker 1: is two creditors first and foremost. Right, Well, you know
Speaker 1: the Yeah, they're arguing that today in court. And uh,
Speaker 1: you know, actually, the the adversarial relationship there, we saw
Speaker 1: glimpses of it in nine the Orange County bankruptcy, and
Speaker 1: then it really came back in Detroit, where the city said, well,
Speaker 1: guess what, GEO bond holders are going to have to
Speaker 1: take a haircut, and they did. Uh So, the the
Speaker 1: adversarial nature is something that we have seen in the
Speaker 1: muni market, the business about well, we don't really of
Speaker 1: a fiduciary duty and guess what, we have to take
Speaker 1: care of the people on the island first. Okay, So
Speaker 1: if that's the case, why why is anyone surprised? Why
Speaker 1: is anyone anyone surprised that the Fiduciary Board is throwing
Speaker 1: out these agreements, reducing the amount of money in the budget,
Speaker 1: basically doing everything that it can to protect the island
Speaker 1: and its people rather than creditors. Well, no, actually the
Speaker 1: board went throughout the budget is really saying, you know,
Speaker 1: on the one hand, yes, on the PREPA deal, they're saying,
Speaker 1: it looks like bond holders are gonna have to take
Speaker 1: more of a haircut than fifteen cents on the dollar.
Speaker 1: But with throwing out the entire budget, they're saying, you
Speaker 1: haven't made enough cuts. There are going to have to
Speaker 1: either be employee furloughs or we might have to cut
Speaker 1: back those Christmas bonuses to government employees on the island. Uh.
Speaker 1: So the board is being how should I put it there,
Speaker 1: being very hard right now, and they should be no cash.
Speaker 1: I mean there was a story in the Wall Street
Speaker 1: Journal this week about how Puerto Rico is looking to
Speaker 1: sell itself off in pieces to raise money. Oh sure, yeah,
Speaker 1: and I suspect that the board is going to have
Speaker 1: a very um uh you know, they'll have something to
Speaker 1: say about that now. Whether they, you know, approve those
Speaker 1: sorts of sales or not, we'll see. But I would
Speaker 1: say it's almost good, you know, from a I don't
Speaker 1: know from a public finance point of view, that somebody
Speaker 1: on the island is is sitting down and taking things
Speaker 1: very very seriously as opposed to what's sort of gone
Speaker 1: on before here. Well, let's can you just put this
Speaker 1: into some kind of perspective. I think you mentioned what
Speaker 1: the total budget that was passed was nine point nine
Speaker 1: point six nine point six billion, just to give that comparison,
Speaker 1: you know, the budget of the City of New York
Speaker 1: is eight five billion. Uh. State of Rhode Island I
Speaker 1: think about nine point two billion. Why is I mean
Speaker 1: these are they are large sums, but the havoc that
Speaker 1: they are going to wreck on the economy is gonna
Speaker 1: last a much longer time than just a one year budget.
Speaker 1: Is there a cohesive plan or is anybody thinking about
Speaker 1: what life in Puerto Rico is going to be like
Speaker 1: for businesses and people after this happens? Or presumably the
Speaker 1: the Federal Oversight Board is and they they seem to
Speaker 1: have taken or are taking the long term. Look. You
Speaker 1: mentioned that the haddock that this is going to a reek. Uh,
Speaker 1: you know, recall back to the nineteen seventy five in
Speaker 1: New York City, which did not go into Chapter nine bankruptcy,
Speaker 1: but entered a period of austerity that took perhaps ten years. Uh.
Speaker 1: In many ways, a lot of the the infrastructure problems
Speaker 1: we're seeing in New York City today or you know,
Speaker 1: could almost be traced back to nineteen and that extended
Speaker 1: period of austerity. So who knows how long it's going
Speaker 1: to take for Puerto Rico to you know, turn the corner.
Speaker 1: You know, Joe, I have to wonder as we talk
Speaker 1: and focus on Puerto Rico's differ cultis I have to
Speaker 1: wonder what precedent it sets for Illinois, which is teetering
Speaker 1: close to junk status with respect to its credit rating
Speaker 1: and is facing a whole host of problems. I mean,
Speaker 1: is there anything that debt holders are taking. Are they
Speaker 1: selling more aggressively because they know that they could get um,
Speaker 1: they could get shafted in a future reorganization. Actually, uh,
Speaker 1: you know, the banks I've read several analytical comments in
Speaker 1: the last couple of weeks saying, hey, you know what,
Speaker 1: Illinois actually represents a value right now because it's trading
Speaker 1: so far out of line, almost three basis points over
Speaker 1: the triple A scale. So Illinois gus. They're talking New
Speaker 1: Jersey appropriation back debt. Uh. The banks are saying that,
Speaker 1: you know, these are recommended because the U States, unlike
Speaker 1: Puerto Rico, uh you know, A, they don't have bank
Speaker 1: criptsy right now, but be the States are still very
Speaker 1: strong and have a lot of flexibility. So it's sound
Speaker 1: you know it always it always sounds apocalyptic and now
Speaker 1: all right risk on stale for at least across the
Speaker 1: Wall Street analytic desks. Joe Mysak, thank you so much
Speaker 1: for joining us. Joe Mysak is the editor of the
Speaker 1: Bloomberg Brief that's focused on the municipal market. Talking all
Speaker 1: things this moment of the muni, stock buybacks and free
Speaker 1: cash flow. How do you use them as a strategy
Speaker 1: in order to make money? Well. Charles Biederman is the
Speaker 1: chairman of trim Tab's asset management and he joins us
Speaker 1: now to tell us more. Charles, always a pleasure, Thanks
Speaker 1: for being here in our studio. Maybe you could just
Speaker 1: give a little bit of a description as to how
Speaker 1: you came to formula this strategy and the experience that
Speaker 1: you have in implementing it. Well, all there is in
Speaker 1: stock market of shares of stock and money, and so
Speaker 1: if companies are growing cash and using a portion of
Speaker 1: it to reduce the share count, the price of the
Speaker 1: remaining shares should go up by the percentage of the
Speaker 1: share count reduction, everything else being equal, particularly since they
Speaker 1: generate using cash that they're generating. Now there's a difference
Speaker 1: if they use cash that they're borrowing, because that increase
Speaker 1: increases risk and it means they don't have the cash
Speaker 1: to do it. So you want to buy shares in
Speaker 1: stock first. Companies are growing cash, and if they're using
Speaker 1: a portion to reduce the share a count and they're
Speaker 1: not borrowing to buy that's our strategy for trim tabs.
Speaker 1: Uh Flow drink et F which we launched in October,
Speaker 1: and as you know, we've done quite well since. I've
Speaker 1: been on the show many times with you in the
Speaker 1: past us talking about it, Charles, I'm wondering there are
Speaker 1: so many people who are launching exchange treated funds right now.
Speaker 1: Does it matter whether you have a good idea or
Speaker 1: is there something else that works with respect to marketing
Speaker 1: and e TF Well, I think performance works, always hasn't
Speaker 1: always will. In essence, we're a hedge fund at a
Speaker 1: fifty nine speak basis point price. In other words, we
Speaker 1: have a formula and no one else does. Now. We
Speaker 1: just launched today trim tabs International Free cash Flow uh
Speaker 1: t t A I is the ticker symbol. It's gonna
Speaker 1: do exactly what t t FS does in the US
Speaker 1: to non U S stocks. It's going to be about
Speaker 1: eighty five stocks UM Developed countries, Asia, Canada, UM, Europe, etcetera.
Speaker 1: And uh it's companies growing free cash flow, reducing the
Speaker 1: share count and maintaining a strong balance sheet. So it's
Speaker 1: a global compliment. So the U S one is work.
Speaker 1: We've outperformed in the past of the Numbers Show, Morning Star.
Speaker 1: Whatever we've outperformed by several hundred basis points over the
Speaker 1: Russell three thousand, and we're hoping to count. You know,
Speaker 1: the design purpose of business is to grow cash, unless,
Speaker 1: of course, you're Musk or or Netflix, which is design
Speaker 1: purposes to grow your stock price. But most companies, if
Speaker 1: they're growing their cash and they use a portion of
Speaker 1: it to reduce the share count, everybody wins. I want
Speaker 1: to ask about this idea of stock buy backs, because
Speaker 1: what happens when a company buy backs buys back the
Speaker 1: stock but doesn't actually retire the shares. In other words,
Speaker 1: they just sit there in the corporate treasury for use
Speaker 1: later on. Perhaps does that matter? Yes, we we don't
Speaker 1: look at bibe. We look at share count. How many
Speaker 1: shares are outstanding, what they do, how they got there
Speaker 1: is not really relevant. As long as they have more
Speaker 1: cash than they started at the beginning of the period
Speaker 1: and their debt asset ratio didn't go up. You know,
Speaker 1: it's it's companies, uh or if they're doing well, the
Speaker 1: management likes to reduce the share account because the management
Speaker 1: then owns a greater percentage of the company, as does
Speaker 1: every pre existing shareholder. And if they're not growing cash,
Speaker 1: they probably want to sell stock. Well, Charles, how do
Speaker 1: Apple and Google fit into this equation? We know that Apple,
Speaker 1: for example, has been a poster child of keeping cash
Speaker 1: offshore and issuing debt to buy back shares simply because
Speaker 1: they don't want to have to pay the taxes on
Speaker 1: repatriating some of that cash. So where does that company
Speaker 1: stand in this whole equation. Well, there, They've been a
Speaker 1: member of t T a C from the get go,
Speaker 1: or from when they started doing buy backs, which was
Speaker 1: I think after eleven uh, and they remain. I mean,
Speaker 1: even though they do borrow occasionally, they're debt to asset ratio,
Speaker 1: they're growing cash so fast that even if they borrow
Speaker 1: money so they don't have to repatriate, and they're borrowing
Speaker 1: a very little, very low rate, that they're still in
Speaker 1: our model. Google, on the other hand, is not doing
Speaker 1: any share count reduction that I'm aware of, So well
Speaker 1: they are Well, I personally own Google because they create
Speaker 1: their own demand and they're growing cash there. Until they
Speaker 1: do buy backs, they won't be in the fund. You know.
Speaker 1: One of the things I thought was interesting is looking
Speaker 1: at the constituents of t t f S, which is
Speaker 1: the domestic T T A C T T A C
Speaker 1: I beg your pardon. The we were We were removed
Speaker 1: as subadvisor. They kept the ticker symbol, but we relaunched
Speaker 1: under a new ticker symbol, trimp TEPS, Folk Drink as
Speaker 1: T T A C. Okay, So all right, so just
Speaker 1: so just quickly, this idea of being able to put
Speaker 1: these companies together eighty five in the new one, how
Speaker 1: often do they change? Uh? Uh the twenty I'd say,
Speaker 1: uh have portfolio turnover is the third to a half
Speaker 1: a year. In other words, we only like the last
Speaker 1: six months performance if a company stops growing or stops
Speaker 1: meeting the criteria. Every day we track each of the
Speaker 1: three thousand Russell stocks and on our Bloomberg terminal for
Speaker 1: a listing of which are the top one hundred, and
Speaker 1: every so often we rebalance and typically h significant number
Speaker 1: fall out. Yeah, Charles Peterman, thank you so much for
Speaker 1: joining us. Charles Peterman as chairman of trim Tab's asset
Speaker 1: management and he joins us here in our Bloomberg eleven
Speaker 1: three oh studios talking about his new International Free cash
Speaker 1: Flow et F. Thanks for listening to the Bloomberg P
Speaker 1: and L podcast. You can subscribe and listen to interviews
Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.
Speaker 1: I'm Pim Fox. I'm on Twitter at Pam Fox. I'm
Speaker 1: on Twitter at Lisa Abrama. It's one before the podcast.
Speaker 1: You can always catch us worldwide on Bloomberg Radio