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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio this.

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Speaker 2: Week on the podcast What a Fascinating Guest, Mike Freno

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Speaker 2: is chairman and CEO of Barings. They run over four

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Speaker 2: hundred and thirty one billion dollars in global assets. Fascinating combination.

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Speaker 2: Not really related to the Barings Bank of old. You know,

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Speaker 2: if I think of Barings Bank, you think of the

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Speaker 2: bank that blew up when you had an unauthorized trader

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Speaker 2: acting out as well as the first bank in China

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Speaker 2: and Japan and financed the Louisiana purchase. That is not

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Speaker 2: this entity. Irong purchased them out of bankruptcy. I think

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Speaker 2: it was for like a dollar or a euro, and

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Speaker 2: some years later sold them to Mass Mutual and then

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Speaker 2: Mass Mutual combined Bearings Investing with a number of other

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Speaker 2: shops including BABS in a very well regarded investing firm.

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Speaker 2: The shop manages about well over four hundred and thirty

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Speaker 2: billion dollars. About half of that comes from Mass Mutual,

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Speaker 2: the other half comes from institutional investors. What they do

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Speaker 2: is really fascinating. They have been working in various credit

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Speaker 2: and other private areas for decades. I know there's been

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Speaker 2: a big rush into private credit and private debt over

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Speaker 2: the past few years. Bearings has been doing this and

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Speaker 2: Mass Mutual has been doing this for decades and decades.

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Speaker 2: They run a ton of money in order to manage

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Speaker 2: their future liabilities as an insurer, and it's pretty much

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Speaker 2: non equities. I think they have about ten billion dollars

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Speaker 2: out of the four hundred and change billion that's in

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Speaker 2: public equities. Most of what they do are real assets,

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Speaker 2: credit debt, middle market banking. They're looking for a fairly

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Speaker 2: reasonable stream of future income, less volatility in the potential

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Speaker 2: to meet those as an insurer, those future liabilities down

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Speaker 2: the road. Really not just a fascinating area. But Mike

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Speaker 2: Frino is so knowledgeable. He worked as a trader, he

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Speaker 2: worked as essentially a high yield portfolio manager before going

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Speaker 2: to the president and then CEO of the company, so

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Speaker 2: he's has seen the world of private investing from both sides,

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Speaker 2: both as an investor and as part of the management team.

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Speaker 2: Super knowledgeable, super informative. I found this conversation to be

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Speaker 2: absolutely fascinating, and I think you will also, with no

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Speaker 2: further ado, My discussion with my like Freno, chairman and

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Speaker 2: CEO of Barings.

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Speaker 3: Now, thank you, thanks for having me.

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Speaker 2: Great to see you, great, great to have you here.

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Speaker 2: Let's talk a little bit about your background and what

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Speaker 2: led you to this career. A BA from Freman University

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Speaker 2: an MBA from wake Forest Business School. Was finance always

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Speaker 2: the career plan.

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Speaker 4: Well originally started out in accounting. So I was an

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Speaker 4: accounting major coming out of out of Furman and worked

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Speaker 4: with the legacy firm for the date myself a little

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Speaker 4: bit Coopers and Libray, oh briefly before it was merged

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Speaker 4: into Price Waterhouse Coopers, and so I spent a couple

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Speaker 4: of years on the audit side and then actually transferred

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Speaker 4: over to the tax side. So my first four working

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Speaker 4: years were spent in public accounting, and so that was

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Speaker 4: that was really the intention at the time was I

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Speaker 4: was interested in accounting. I loved many people won't won't

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Speaker 4: appreciate this, but love the way financial statements work.

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Speaker 3: I like to see how.

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Speaker 4: How businesses make money and and so I always envisioned

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Speaker 4: myself doing that.

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Speaker 3: But it did have a good.

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Speaker 4: Fortunate opportunity to go really work at a startup hedge fund.

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Speaker 3: It was Eminem Partners.

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Speaker 4: At the time, it was relatively small. We were just

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Speaker 4: over one hundred million. When I went to work there,

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Speaker 4: went as a controller so to kind of help out

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Speaker 4: on the accounting side of things, the fun side of things.

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Speaker 4: And then as companies grow and you're only five people,

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Speaker 4: you tend to start to wear a lot of hats.

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Speaker 4: And as a result of that, had the opportunity to

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Speaker 4: start trading, had to start the opportunity to start doing

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Speaker 4: some analysis. We had multi strategies that we ran. We

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Speaker 4: ran a merger ARB strategy, also distressed debt, which is

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Speaker 4: really where I probably gravitated to the most, just because

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Speaker 4: of the fundamental analysis that's associated with debt investing.

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Speaker 2: All Right, so you start out as an accountant at

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Speaker 2: Price Waterhouse Coopers, you're a controller at Eminem Partner's hedge funds.

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Speaker 2: How do you go from there to BABS in a

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Speaker 2: fairly large investment shop.

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Speaker 4: Yeah, So it was again often these things, you have

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Speaker 4: to be in the right spot at the right time,

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Speaker 4: and fortune was there for me, and so again I

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Speaker 4: was gravitating more towards I did some trading, so I

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Speaker 4: was working on the trading desk, but really gravitated toward

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Speaker 4: our distressed and event driven strategy, which was largely around

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Speaker 4: at that point in time. It was the early two thousands.

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Speaker 4: You had a number of bankruptcies going on. We were

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Speaker 4: analyzing all sorts of things, and I really enjoyed the

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Speaker 4: analysis around that, and then had the opportunity to speak

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Speaker 4: to the folks at Babson, which was one of the

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Speaker 4: predecessor firms to Bearings, and they were really down there

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Speaker 4: running a leverage loan in a high yield business again,

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Speaker 4: which was fit really nicely with what I was doing.

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Speaker 4: They were moving into more event driven strategies as well,

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Speaker 4: and had the opportunity to go over there and start

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Speaker 4: working with them. At the time, Babson had about twenty

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Speaker 4: some odd people in Charlotte. We can talk more about

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Speaker 4: this later, but we're up to over seven hundred now,

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Speaker 4: so there's been a tremendous amount of growth there. But

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Speaker 4: really in two thousand and five I made that shift

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Speaker 4: to Babson and really still doing what I was doing,

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Speaker 4: focused on fundamental fixed income analysis.

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Speaker 2: It's kind of fascinating because you almost defensively said how

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Speaker 2: much you enjoy accounting, but if you're a good accountant,

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Speaker 2: you look at a balance sheet. You can imagine what's

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Speaker 2: going on in the company, where their growth areas are,

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Speaker 2: where their problem areas are, where they're spending too much money.

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Speaker 2: I would imagine that would lend itself very well to

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Speaker 2: distressed asset investing and leveraged asset investing.

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Speaker 3: Tell us a little bit, Yeah, I think it has.

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Speaker 4: And I do I say this to folks and folks

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Speaker 4: and other industries when you talk about the excitement of

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Speaker 4: analyzing the financial statements and going through but it.

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Speaker 3: Does tell a story.

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Speaker 4: I mean, if you know how how income statements and

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Speaker 4: cash flow statements and translate into balance sheets, it will

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Speaker 4: tell a story of how companies are doing.

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Speaker 3: And if you have.

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Speaker 4: The intellectual curiosity to dig deeper into it, you can

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Speaker 4: really get a full picture of who's got a sustainable business,

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Speaker 4: who who possibly doesn't. And so you couple the fundamental

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Speaker 4: analysis that with some general understanding of a business, and

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Speaker 4: I think it's an exciting combination and one that I

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Speaker 4: really had passionate rout.

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Speaker 3: And enjoyed doing so.

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Speaker 4: Again, was very fortunate to find myself in many roles

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Speaker 4: which allowed me to do that.

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Speaker 2: And you mentioned Charlotte, my friend has an office in Charlotte.

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Speaker 2: I seem to visit Charlotte like every few years, and

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Speaker 2: every time I show up, it's like, oh my god,

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Speaker 2: this place is double the size it was eighteen months ago.

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Speaker 2: The growth in Charlotte is really quite amazing, and it's

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Speaker 2: become this giant finance hub. Tell us a little bit

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Speaker 2: about it, and you've been there your whole career, right,

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Speaker 2: I've been there largely.

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Speaker 3: I started out in South Carolina.

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Speaker 4: I went to school Firman was in Greenville, South Carolina,

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Speaker 4: so really started my work there. But then ultimately the

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Speaker 4: majority of my time since nineteen ninety nine has been

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Speaker 4: spent in Charlotte. And to your point, it continues to

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Speaker 4: grow at a rapid pace. It is a financial services hub.

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Speaker 4: It's certainly not New York City, but it's definitely the

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Speaker 4: top two or three in terms of large financial services.

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Speaker 4: We had the benefit of having Bank of America be

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Speaker 4: located there. Wacovia in First Union, the predecessors to now

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Speaker 4: Wells Fargo, had a headquarters thereep they do continue to

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Speaker 4: keep a large presence there. But what's interesting about is

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Speaker 4: when we first started, you know, going around and marketing

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Speaker 4: to the world and our institutional clients we would often

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Speaker 4: get questions, how do.

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Speaker 3: You retain talent?

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Speaker 4: How do you attract talent in Charlotte, And the response

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Speaker 4: was just come see.

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Speaker 2: Oh my god, it's first of all, it's beautiful. Second

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Speaker 2: of all, everything is very reasonably priced, and you have

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Speaker 2: great barbecue and the NASCAR Museum and headquarters. Really, there

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Speaker 2: are worse places in the world. And the weather is

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Speaker 2: like temperate and reasonable.

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Speaker 3: And you sound like you're working for the Chamber of Commerce.

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Speaker 2: Well, we have in office there, and every time I

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Speaker 2: go down there, it's very funky and hip. It feels

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Speaker 2: like a southern version of Brooklyn. And so I don't

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Speaker 2: see attracting and retaining talent as very difficult.

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Speaker 4: And it's it's become an asset for us to be

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Speaker 4: located there for sure, and we've the talents there. And

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Speaker 4: so you've seen a number of smaller financial services firms

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Speaker 4: start up around there because and financial services firms like

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Speaker 4: yourself moved down there because that's where talent is and

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Speaker 4: that's where people want to live. So it's been it's

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Speaker 4: been great. It's been nice to see the growth and

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Speaker 4: there's a real commitment to the city there. So I

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Speaker 4: think we've got a few more years of growth for sure.

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Speaker 2: Yeah, no, to say the very least, there's a bright

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Speaker 2: future there. So I want to talk a little bit

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Speaker 2: about leadership, especially leadership at a large investment firm. First,

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Speaker 2: what was the transition like going from being on a

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Speaker 2: training desk and managing portfolios to running the complete organization

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Speaker 2: of CEO.

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Speaker 4: Yeah, it's it was. I stepped in in November of

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Speaker 4: twenty twenty. So it's because a lot of things were

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Speaker 4: going on during that period of time, and so there

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Speaker 4: was a there was it was. It's a change, but

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Speaker 4: I was fortunate, as I said before, I came from

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Speaker 4: a counting background. I was also at the Hedge Fund.

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Speaker 4: I was involved in the operations early day of getting

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Speaker 4: things up, understanding how settlements work, things.

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Speaker 3: Of that nature. That is in the they called the.

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Speaker 4: Back office today but is increasingly important and complex candidly

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Speaker 4: when you move into different types of asset classes. So

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Speaker 4: I had some familiarity with that. I did have a

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Speaker 4: stepping stone from when I was managing portfolios to before

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Speaker 4: I took over the CEO. I briefly for about eight

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Speaker 4: months set in the president's role, which gave me also

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Speaker 4: oversight over investments. I had the investments of sales, technology

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Speaker 4: and operations, and while a brief period, it gave me

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Speaker 4: an appreciation for things I didn't know well, and I

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Speaker 4: think actually provided me a pretty good roadmap for starting

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Speaker 4: to rely on other people because you're not going to

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Speaker 4: know everything about everything. I was investments, that's in my background,

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Speaker 4: but running a company requires a lot of other people

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Speaker 4: to do a lot of other things, and making sure

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Speaker 4: that you are comfortable and will say, in this way,

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Speaker 4: letting the plumbers fix the sink. So I wasn't an

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Speaker 4: expert in technology, I wasn't an expert in operations, so

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Speaker 4: I had to rely on and make sure I had

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Speaker 4: people there I trusted to make the decisions. And I

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Speaker 4: think that was one of the things I learned early

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Speaker 4: on was I should probably make few decisions as the

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Speaker 4: leader of the company and then trust my people to

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Speaker 4: make a lot of them. But make sure you've got

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Speaker 4: the right people there to do it. And then the

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Speaker 4: transition is it's different managing money and managing people is

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Speaker 4: dramatically different. And this is the people business. Our asset

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Speaker 4: is our people. It's an incredibly valuable asset. And then

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Speaker 4: running something that's global creates a whole.

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Speaker 3: Other set of challenges.

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Speaker 4: We're in over twenty countries, and when people talk about culture,

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Speaker 4: we have different cultures camudly in different regions because there's

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Speaker 4: different behaviors and things that are done there.

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Speaker 3: But I will say.

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Speaker 4: What we do when we describe it as we have

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Speaker 4: a set of philosophies, a set of principles, and a

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Speaker 4: sort of values that are consistent. In understanding that and

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Speaker 4: recognizing what works in Charlotte, North Carolina may not work

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Speaker 4: necessarily in Soul Korea was actually a pretty big learning

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Speaker 4: curve for me.

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Speaker 2: Yeah, I could imagine. So you're it's interesting your your

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Speaker 2: background is at M and M started out with five

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Speaker 2: people at Price Waterhouse Coopers, or even back in the

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Speaker 2: day when.

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Speaker 3: It was just Library and Coopers and Lybranary.

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Speaker 2: Coopers and Library. They're giant, there are thousands and thousands

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Speaker 2: of people. What did the experience at both a small

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Speaker 2: firm and a giant firm? How did that shape your

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Speaker 2: leadership at Barons?

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Speaker 3: Yeah?

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Speaker 4: I think working at a small firm you begin to

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Speaker 4: appreciate how how effective quick decision making can be. But

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Speaker 4: understanding working at a large corporation that you need to

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Speaker 4: have controls, you need to have some element of controls

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Speaker 4: and process that goes along, and so balancing those two

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Speaker 4: out and creating an environment where you're empowering people to

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Speaker 4: make relatively quick decisions in failing fast as well, make

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Speaker 4: decisions to invest, makes decisions to go grow businesses, to

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Speaker 4: acquire businesses, and if things don't work, let's be let's

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Speaker 4: be intellecttion a honest about it and move quickly. So

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Speaker 4: I think the balance of those two in marrying those

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Speaker 4: two together. And while we're a large company, we're around

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Speaker 4: two hundred two thousand people again in over twenty twenty countries,

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Speaker 4: it's big enough where it requires certain process. You can't

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Speaker 4: have the decision makers all sitting in a room every

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Speaker 4: single day just making them. It does require some ability

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Speaker 4: to decentralize the decision making process. And as I said earlier,

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Speaker 4: you know, as you move further and further up an organization,

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Speaker 4: you probably should be making less less decisions and you're

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Speaker 4: empowering you make the big decisions, the ones that are

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Speaker 4: critical to the survival and effectiveness of the company, but

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Speaker 4: outside of that really relying on your.

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Speaker 3: Team to to do a lot of that. So I think.

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Speaker 4: Working at both and having the experience that both gave

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Speaker 4: me the appreciation for both.

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Speaker 2: So, you've spent about twenty years, maybe a little over

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Speaker 2: twenty years at the same company, now increasingly becoming a rarity.

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Speaker 2: Everybody seems to move jobs and companies pretty regularly these days.

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Speaker 2: Tell us what keeps you at the same firm for

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Speaker 2: so long?

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Speaker 4: Yeah, it's so, it's coming up on twenty I've been

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Speaker 4: over nineteen years now, so we're coming in on twenty.

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Speaker 4: And I was very fortunate to find myself working at

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Speaker 4: Babson at the time, in a place that fit my

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Speaker 4: personality and my skill sets well. It was a very

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Speaker 4: much a team based approach. It was very much a

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Speaker 4: collaborative approach. It was built on fundamental analysis which fit

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Speaker 4: my skill sets get well.

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Speaker 3: And so I think when.

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Speaker 4: You're fortunate enough to find an environment where your skill

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Speaker 4: set can be amplified by those around you and by

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Speaker 4: the business process or the culture that's there, it works.

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Speaker 4: And I was again very and had an opportunity to

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Speaker 4: take on a lot of responsibilities. I was entrusted with

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Speaker 4: things early on in my tenure there and was able

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Speaker 4: to start new products, to go out and market those products,

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Speaker 4: to see how things worked. And so I've I hopefully

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Speaker 4: have have created what I enjoyed, or at least foster

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Speaker 4: what I enjoyed so much when I joined the legacy

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Speaker 4: company Babson, and it's allowed me to stay there. And again,

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Speaker 4: I can't thank my predecessors enough for giving me the

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Speaker 4: opportunity and chance to really grow as a person, but

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Speaker 4: also grow the business.

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Speaker 2: Last question in this section, you alluded to something that

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Speaker 2: I'm kind of fascinated by, and I've observed it in

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Speaker 2: a number of different companies. I'd love to get your

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Speaker 2: thoughts on this. As a company grows, as you wear

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Speaker 2: more assets, more people, more divisions, exactly what you said

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Speaker 2: about you making the critical decisions, but being willing and

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Speaker 2: able to delegate decision making authority to people underneath you.

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Speaker 2: I have heard a number of people talk about how

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Speaker 2: challenging that is to let go. Tell us a little

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Speaker 2: bit about your experience with it.

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Speaker 4: Yeah, I think one thing I'm fortunate and blessed to

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Speaker 4: have is self awareness. I know what I don't know,

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Speaker 4: and I've been proven. That's been proved to me a

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Speaker 4: number of times through some mistakes, but I've have the

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Speaker 4: scars to show it. But but knowing what you're what

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Speaker 4: you're good at and we all have very good gifts,

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Speaker 4: and we all have weaknesses, and I think it's okay

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Speaker 4: to accept that and say I have a gap here.

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Speaker 4: I need to build people around me who fill in

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Speaker 4: that gap. But it's it's hard because I think you know,

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Speaker 4: inherently most of us believe that we make the best decisions,

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Speaker 4: and so you do have to start moving that and

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Speaker 4: I try what I'll what I'll tell when new people

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Speaker 4: join the team or when I take over a new

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Speaker 4: What in the past, when I've taken over a new

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Speaker 4: team is because often what happens is people are making

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Speaker 4: a decision. They're looking to their boss, well, what would

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Speaker 4: what what kind of lean would would you go? I'm

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Speaker 4: not looking for an answer, but just kind of give

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Speaker 4: me a direction of where you go, and maybe that's

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Speaker 4: where I'll go. But I've often said, you'll have ten

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Speaker 4: decisions to make this year. They're your ten decisions. Eight

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Speaker 4: of them I'll support one hundred percent and I'll love them.

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Speaker 4: Two of them I may hate, But that's okay because

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Speaker 4: they're your decisions, and they're probably better than I would

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Speaker 4: do because you're closer to it. And I have to

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Speaker 4: remind myself of that too, because there's some times times

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Speaker 4: when I get uncomfortable, I want to go back to

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Speaker 4: the areas where I'm comfortable, and everyone hates to see

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Speaker 4: me sitting on the trading desk because then, ah, here we.

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Speaker 2: Goes micromanaging for the win. So let's talk a little

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Speaker 2: bit about the modern version of Barings and a little

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Speaker 2: bit of history. What people think of is Barings Bank

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Speaker 2: from the nineties and two thousands. I in g bought

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Speaker 2: them after their little mishap, and then some years later

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Speaker 2: Mass Mutual purchased them the big insurance company and eventually

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Speaker 2: mass Mutual put together Babson Capital, Barings Asset Management, Cornerstone

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Speaker 2: and woods Creek. Do I have that more or less right?

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Speaker 3: Yep, that's right, that's right.

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Speaker 2: So tell us what did this combination of four firms do?

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Speaker 2: Tell us about the reach and capabilities and why mash

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Speaker 2: up for fairly substantial investment firms.

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Speaker 4: Yes, at the time Mass Mutual was really you saw

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Speaker 4: the value and asset management not only for its general

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Speaker 4: account but also to be a third party business, and

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Speaker 4: at times was it was opportunistic in purchasing up smaller

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Speaker 4: asset management. At the time, Bearings was one that was

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Speaker 4: purchased from Ing as you mentioned, to really be it

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Speaker 4: was the multi asset international equity business. There was also

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Speaker 4: wood Creek, which you mentioned, which was a real assets business.

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Speaker 4: Think of it in music rights, royalty, streams, infrastructure type

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Speaker 4: things that have tractor trailers that have longer term cash

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Speaker 4: flow profiles. And then there was Babson Capital, of which

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Speaker 4: I was a part of, which was the largest, and

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Speaker 4: Babson was actually the predecessor to that was D. L. Babson,

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Speaker 4: the equity manager. Mass Mutual had purchased that and then

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Speaker 4: ultimately had spun out what was the Mass Mutual Investment

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Speaker 4: Management into Babson Capital, and so we had four affiliates

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Speaker 4: at the time, there was actually five affiliates because Mass

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Speaker 4: Mutual at the time also owned Oppenheimer Funds, which has

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Speaker 4: subsequently been sold to Investco.

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Speaker 3: But we took we.

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Speaker 4: Made a decision to combine the four brands, the four

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Speaker 4: aforementioned brands together under the new Bearings and Babson was

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Speaker 4: actually the largest. It was the fixed income manager, but

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Speaker 4: it was the largest in terms of au M.

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Speaker 3: But what we.

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Speaker 4: Recognized was the Bearings brand actually carried more value than

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Speaker 4: the Babson brand. Certainly internationally where our presence was very

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Speaker 4: well known, and so we made the decision to combine

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Speaker 4: all four of those businesses together under what was now

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Speaker 4: titled Bearings.

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Speaker 2: So how do you create and maintain a corporate culture

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Speaker 2: when you're starting with four very distinct entities.

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Speaker 4: Yeah, it's a challenge at times. And what was interesting

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Speaker 4: is is Babson itself had been a series of acquisitions

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Speaker 4: as well.

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Speaker 3: I mentioned d L. Babson was the first. There was

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Speaker 3: a group called.

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Speaker 4: IDM, which was institutional debt management that was purchased out

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Speaker 4: of First Union Bank. It was really a clo and

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Speaker 4: loan manager. That was actually the group that I joined

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Speaker 4: at the time. We also bought a business in the

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Speaker 4: UK that was a parallel It was a leverage loan

385
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Speaker 4: and mezzanine investor called Duke Street Capital Partners. So we

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Speaker 4: had we had brought companies in together, all with the

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Speaker 4: philosophy that we want to fully integrate these and I'll

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Speaker 4: talk a little bit about the philosophy on that and

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Speaker 4: some of the challenges that come along, but really when

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Speaker 4: the decision was to bring them together, we felt to

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Speaker 4: get the most scale and the most long term value

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Speaker 4: to our ultimate owner. Owners, which are the policy owners

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Speaker 4: of Mass Mutual, was to combine these businesses under one brand,

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Speaker 4: under one operating model, and under one culture. Now, not

395
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Speaker 4: everyone made the transition. I'd love to say that it

396
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Speaker 4: was It was really easy to do, but but you know,

397
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Speaker 4: at what we decided to do was really have an

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Speaker 4: investment committee driven, team based approach, and some of the

399
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Speaker 4: portfolio managers of some of the firms were more driven

400
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Speaker 4: towards the the I have sole discretion on everything I do.

401
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Speaker 4: There's not a process. It's it's my decision to make

402
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Speaker 4: these with and I have at the support of a

403
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Speaker 4: research team.

404
00:21:02,840 --> 00:21:06,320
Speaker 3: And that didn't always mesh up. But we made the decision.

405
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Speaker 4: To move to move to the one standard of investing

406
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Speaker 4: and created what is now Bearings and have subsequently been

407
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Speaker 4: able to bring in additional acquisitions, again all under the

408
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Speaker 4: idea of we want to fully integrate these.

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Speaker 2: So we're talking about corporate culture. November twenty twenty, you're

410
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Speaker 2: elevated from president to CEO. I recall lots and lots

411
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Speaker 2: of CEOs talking about in twenty twenty and twenty twenty one,

412
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Speaker 2: right in the midst of the COVID pandemic, Hey, how

413
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Speaker 2: are we going to maintain a form of corporate culture.

414
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Speaker 2: How do we keep everybody on the same page.

415
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Speaker 4: What were your experiences like, Yeah, I would say communications

416
00:21:46,680 --> 00:21:49,360
Speaker 4: was key, and it was it was much more regular

417
00:21:49,400 --> 00:21:52,240
Speaker 4: speaking to the entire company as opposed to you know,

418
00:21:52,600 --> 00:21:55,720
Speaker 4: episodic and we would do town halls on a I

419
00:21:55,760 --> 00:21:58,800
Speaker 4: would say an infrequent basis, but you very much every week.

420
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Speaker 4: You needed to be out there speaking to the company.

421
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Speaker 2: You know.

422
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Speaker 4: One of the things that was fortunate we were global

423
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Speaker 4: to begin with, so we had an operating model that

424
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Speaker 4: didn't have us fully face to face all.

425
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Speaker 2: The time, so semi virtual, semi virtual.

426
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Speaker 4: At that point, we had invested in some technology. The

427
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Speaker 4: amazing it was amazing how quickly the technology took over

428
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Speaker 4: at that at that point in time. But we did

429
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Speaker 4: have regional heads that were able to continue to stay

430
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Speaker 4: engaged with our teammates, and I think the communications was

431
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Speaker 4: the big part. It was really making sure that you're

432
00:22:29,960 --> 00:22:33,639
Speaker 4: constantly and consistently out there telling everyone what's going on

433
00:22:34,400 --> 00:22:37,080
Speaker 4: in full transparency, and one of the things we've really

434
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Speaker 4: tried to do throughout the company and it's something that

435
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Speaker 4: I've appreciated as I've worked my way up to my

436
00:22:42,960 --> 00:22:45,920
Speaker 4: career is as much transparency as we can.

437
00:22:46,560 --> 00:22:48,000
Speaker 3: I've always had.

438
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Speaker 4: This belief and the folks at Bearings have heard me

439
00:22:49,960 --> 00:22:53,439
Speaker 4: say this many, many, many times. I would rather know

440
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Speaker 4: what's going on and know I don't like it than

441
00:22:55,640 --> 00:22:57,840
Speaker 4: not know what's going on and think I don't like it.

442
00:22:57,920 --> 00:23:00,359
Speaker 4: And I think it just creates a level of anxiety

443
00:23:00,600 --> 00:23:03,320
Speaker 4: when people suspect something, and so when you're going through

444
00:23:03,359 --> 00:23:06,959
Speaker 4: tough periods like that, having transparency as much as you can.

445
00:23:07,000 --> 00:23:09,720
Speaker 4: There's certain things you can't share, obviously, but to provide

446
00:23:09,760 --> 00:23:12,159
Speaker 4: that level of clarity to people I think provides some

447
00:23:12,280 --> 00:23:13,919
Speaker 4: level of ease and it makes them feel more that

448
00:23:13,960 --> 00:23:17,240
Speaker 4: they're a part of what we're doing, and candidly they are.

449
00:23:17,240 --> 00:23:19,080
Speaker 4: They're a part of the solution, they're part of the growth,

450
00:23:19,080 --> 00:23:20,160
Speaker 4: and they're part of the success.

451
00:23:20,560 --> 00:23:23,520
Speaker 2: So you guys are not that far away from five

452
00:23:23,560 --> 00:23:27,480
Speaker 2: hundred billion in assets. Let's talk a little bit about

453
00:23:27,480 --> 00:23:32,760
Speaker 2: who your clients are. Obviously, Mass Mutual Insurer as the

454
00:23:32,800 --> 00:23:36,720
Speaker 2: parent company, is a big client. I'm assuming that's where

455
00:23:36,720 --> 00:23:40,359
Speaker 2: the genesis of all these different asset management strategies came from.

456
00:23:40,840 --> 00:23:42,200
Speaker 2: Who are your other clients?

457
00:23:42,280 --> 00:23:44,800
Speaker 4: Yeah, so Mass Mutual makes up roughly half of our

458
00:23:44,920 --> 00:23:47,840
Speaker 4: of our assets and that's for the general account and

459
00:23:47,880 --> 00:23:51,320
Speaker 4: then outside of that, we are predominantly an institutional manager

460
00:23:51,359 --> 00:23:54,240
Speaker 4: at this time. We do have some penetration into the

461
00:23:54,320 --> 00:23:56,360
Speaker 4: we'll say wealth and retail channel.

462
00:23:56,040 --> 00:23:59,399
Speaker 2: Global family office more like as opposed to mom and

463
00:23:59,400 --> 00:24:00,000
Speaker 2: pop investment.

464
00:24:00,480 --> 00:24:02,919
Speaker 4: It's it's through some some ri a relationships we have

465
00:24:03,000 --> 00:24:06,320
Speaker 4: and then over internationally we we we go through wealth

466
00:24:06,359 --> 00:24:09,000
Speaker 4: as well, through through some of the larger banks. But

467
00:24:09,040 --> 00:24:11,800
Speaker 4: we're we're definitely more skewed towards what we would consider

468
00:24:11,840 --> 00:24:16,720
Speaker 4: an institutional or an intermediary type relationship. But but it's

469
00:24:16,720 --> 00:24:19,040
Speaker 4: going to make up the full full spectrum of that. Obviously,

470
00:24:19,080 --> 00:24:21,919
Speaker 4: insurance is a big component of what we do, just

471
00:24:21,960 --> 00:24:24,720
Speaker 4: given our heritage in our DNA, that's a large component

472
00:24:24,760 --> 00:24:27,679
Speaker 4: of our third party business, but also sovereign wealth funds,

473
00:24:27,880 --> 00:24:32,520
Speaker 4: family offices, pensions really across the spectrum in terms of

474
00:24:33,040 --> 00:24:36,479
Speaker 4: where any any institutional client really globally, and that's one

475
00:24:36,520 --> 00:24:39,200
Speaker 4: of the benefit we have. We do have client base

476
00:24:39,240 --> 00:24:42,120
Speaker 4: that's split relatively easy amongst the three regions i'll say,

477
00:24:42,119 --> 00:24:45,360
Speaker 4: with the America's EMA and then in an Asia pack

478
00:24:45,400 --> 00:24:46,159
Speaker 4: in Australia.

479
00:24:46,200 --> 00:24:49,040
Speaker 2: So I want to wrap my head around a large

480
00:24:49,040 --> 00:24:53,320
Speaker 2: insurer like Mass Mutual as a client, I would imagine

481
00:24:53,680 --> 00:24:58,080
Speaker 2: very long term and perspective, But I don't really grasp

482
00:24:58,240 --> 00:25:03,159
Speaker 2: what sort of risk tolerance an insurance company has. I

483
00:25:03,240 --> 00:25:06,399
Speaker 2: assume they don't want you swinging for the fences. But

484
00:25:06,480 --> 00:25:09,480
Speaker 2: on the other hand, hey, they could buy treasuries without you.

485
00:25:10,040 --> 00:25:13,920
Speaker 2: What is that sort of risk embracing, Like, how does

486
00:25:13,960 --> 00:25:17,560
Speaker 2: that settle out? What are they looking for in terms

487
00:25:17,560 --> 00:25:18,200
Speaker 2: of returns?

488
00:25:18,359 --> 00:25:20,040
Speaker 4: Yeah, and so I would say, you know, not many

489
00:25:20,080 --> 00:25:22,119
Speaker 4: of our clients want to swing in for the fences,

490
00:25:22,160 --> 00:25:23,680
Speaker 4: and usually that we're not the ones to.

491
00:25:23,680 --> 00:25:24,320
Speaker 3: Hire to do that.

492
00:25:24,840 --> 00:25:28,600
Speaker 4: We are more very much focused on fundamental, long term

493
00:25:28,680 --> 00:25:31,600
Speaker 4: type and type investing. We do it all up and down,

494
00:25:31,640 --> 00:25:33,520
Speaker 4: and we do it within fixed income, we do it

495
00:25:33,520 --> 00:25:35,240
Speaker 4: within real assets, and we do it within what we

496
00:25:35,280 --> 00:25:39,960
Speaker 4: call capital solutions. But you know, insurance companies. And I

497
00:25:39,960 --> 00:25:42,960
Speaker 4: will say this the Masses Mass Mutual obviously is a

498
00:25:43,040 --> 00:25:46,280
Speaker 4: mutual company. And you mentioned the long term horizon. I

499
00:25:46,320 --> 00:25:48,640
Speaker 4: think is one of the best ownership structures we could

500
00:25:48,720 --> 00:25:52,360
Speaker 4: have because they are owned by their policy holders who

501
00:25:52,400 --> 00:25:53,560
Speaker 4: have a very very.

502
00:25:53,400 --> 00:25:54,240
Speaker 3: Long time horizon.

503
00:25:54,359 --> 00:25:57,639
Speaker 4: At the current time, I think our oldest policy holders

504
00:25:57,680 --> 00:25:58,760
Speaker 4: owned a policy.

505
00:25:58,400 --> 00:26:01,320
Speaker 3: For eighty years. Wow, And that's that's a long term horizon.

506
00:26:01,520 --> 00:26:04,800
Speaker 4: That policyholder loves to see us pay dividends and then

507
00:26:04,840 --> 00:26:06,760
Speaker 4: would wants us to be there to pay the benefits

508
00:26:06,800 --> 00:26:10,200
Speaker 4: to their descendants. So it's really taking a long term

509
00:26:10,200 --> 00:26:13,480
Speaker 4: horizon which allows us not only do we make investments

510
00:26:13,920 --> 00:26:16,240
Speaker 4: on behalf of our clients, but we make investments in

511
00:26:16,280 --> 00:26:19,600
Speaker 4: the business, which is equally important for the longevity and

512
00:26:19,600 --> 00:26:23,120
Speaker 4: sustainability of our company. We have a longer term horizon.

513
00:26:23,160 --> 00:26:26,600
Speaker 4: We're not necessarily worried about quarterly earnings or even annual earnings.

514
00:26:26,600 --> 00:26:29,160
Speaker 4: We're fiduciaries of what we've been given, but we can

515
00:26:29,200 --> 00:26:32,440
Speaker 4: take a long term look. And in fact, our middle

516
00:26:32,440 --> 00:26:35,920
Speaker 4: market direct lending business, we started building that in twenty thirteen,

517
00:26:36,080 --> 00:26:38,800
Speaker 4: well ahead of a lot of the conversations that had

518
00:26:39,760 --> 00:26:41,840
Speaker 4: knowing we may be a little bit early in terms

519
00:26:41,840 --> 00:26:44,760
Speaker 4: of the acceptance from LPs to move into middle market

520
00:26:44,760 --> 00:26:47,760
Speaker 4: direct lending of the size and scale it is, but

521
00:26:47,880 --> 00:26:49,920
Speaker 4: we took a view that long term, we think this

522
00:26:49,960 --> 00:26:52,600
Speaker 4: is going to be a valuable place to be. We

523
00:26:52,640 --> 00:26:55,520
Speaker 4: also knew that Mass Mutual had an interest in the

524
00:26:55,560 --> 00:27:00,239
Speaker 4: asset class, which helps us start new strategies. I mean,

525
00:27:00,280 --> 00:27:01,960
Speaker 4: so I think it's it's a good it's a good

526
00:27:01,960 --> 00:27:04,280
Speaker 4: blend of that. And as we move further and further,

527
00:27:04,920 --> 00:27:08,040
Speaker 4: you know, insurance companies have been buying private or ill

528
00:27:08,040 --> 00:27:11,439
Speaker 4: liquid assets really for forever, forever. I mean it's you know,

529
00:27:11,480 --> 00:27:13,600
Speaker 4: back in mass MWS one hundred and one hundred and

530
00:27:13,600 --> 00:27:15,600
Speaker 4: seventy five years old, one hundred and seventy five years ago,

531
00:27:15,640 --> 00:27:18,159
Speaker 4: there wasn't a lot of public bonds that were trading

532
00:27:18,160 --> 00:27:21,480
Speaker 4: outside of of of of government bonds. So they've been

533
00:27:21,480 --> 00:27:23,919
Speaker 4: in this space for a long period of time and

534
00:27:24,000 --> 00:27:26,200
Speaker 4: now we're just you know, somewhat showing it to other

535
00:27:26,359 --> 00:27:30,600
Speaker 4: other parties. So they're they're obviously skewed more towards higher

536
00:27:30,680 --> 00:27:33,679
Speaker 4: rated assets, just given the rating of the company as

537
00:27:33,720 --> 00:27:37,800
Speaker 4: a double A entity. But that being said, our business

538
00:27:38,160 --> 00:27:42,040
Speaker 4: has other things further down the risk spectrum that that

539
00:27:42,200 --> 00:27:44,360
Speaker 4: allows us to grow and service other clients.

540
00:27:44,520 --> 00:27:47,880
Speaker 2: I want to better define what capital solutions and real

541
00:27:47,920 --> 00:27:51,120
Speaker 2: assets are. Let's start with real assets. So you mentioned

542
00:27:51,560 --> 00:27:56,240
Speaker 2: music royalties and copyrights and things like long haul trucks.

543
00:27:56,800 --> 00:28:01,080
Speaker 2: What other real assets do you guys own? And is

544
00:28:01,119 --> 00:28:03,880
Speaker 2: the goal We're just looking for a steady low volatility

545
00:28:03,880 --> 00:28:05,080
Speaker 2: income stream.

546
00:28:04,920 --> 00:28:07,080
Speaker 4: In most of our strategies, it's that And so I

547
00:28:07,080 --> 00:28:11,119
Speaker 4: would say real assets for US is broadly defined as

548
00:28:11,240 --> 00:28:14,639
Speaker 4: real estate and infrastructure, and even infrastructure and real estate

549
00:28:14,680 --> 00:28:16,320
Speaker 4: can blur at some point in time when you start

550
00:28:16,320 --> 00:28:18,399
Speaker 4: to look at logistics and things of that nature.

551
00:28:18,400 --> 00:28:18,640
Speaker 3: There.

552
00:28:19,119 --> 00:28:22,040
Speaker 2: So when you say infrastructure, are we talking highways and bridges?

553
00:28:22,119 --> 00:28:24,520
Speaker 2: Are we talking trucks and rails?

554
00:28:24,560 --> 00:28:26,960
Speaker 4: Do you think trucks and truck it's all of the above.

555
00:28:27,040 --> 00:28:31,000
Speaker 4: For us, it's more along the trucks and rails and towers,

556
00:28:31,240 --> 00:28:34,119
Speaker 4: wireless towers, things of that nature that fits within their

557
00:28:34,200 --> 00:28:37,000
Speaker 4: data centers can fall into to either one of those

558
00:28:37,400 --> 00:28:37,800
Speaker 4: type things.

559
00:28:37,840 --> 00:28:39,920
Speaker 3: So that's that's the real assets. But we do have

560
00:28:40,000 --> 00:28:40,800
Speaker 3: the capabilities.

561
00:28:40,840 --> 00:28:43,120
Speaker 4: Again we own we own trailers, we own an aircraft

562
00:28:43,240 --> 00:28:45,800
Speaker 4: leasing business, and so those things that are are are

563
00:28:46,120 --> 00:28:48,600
Speaker 4: longer term, more stable.

564
00:28:48,200 --> 00:28:49,360
Speaker 3: Type cash flows.

565
00:28:49,800 --> 00:28:54,479
Speaker 4: Capital solutions is really encompasses all of it. To be honest,

566
00:28:54,560 --> 00:28:57,920
Speaker 4: it's it's more of a unique solution, a more bespoke

567
00:28:58,080 --> 00:29:00,400
Speaker 4: solution for a client when it comes to it's not

568
00:29:00,520 --> 00:29:03,760
Speaker 4: something that would and certainly when we originate things in

569
00:29:03,800 --> 00:29:06,480
Speaker 4: all of our private assets, there's some level of some

570
00:29:06,640 --> 00:29:08,840
Speaker 4: level of customization for those clients. But when you get

571
00:29:08,840 --> 00:29:13,120
Speaker 4: into capital solutions, it's really a unique solution to a

572
00:29:13,200 --> 00:29:15,640
Speaker 4: client who has a financing need of some side. It

573
00:29:15,680 --> 00:29:18,239
Speaker 4: can be a preferred equity piece, it can be an

574
00:29:18,280 --> 00:29:21,200
Speaker 4: equity or a debt piece with equity kickers, all sorts

575
00:29:21,200 --> 00:29:24,600
Speaker 4: of things that fit within that that's slightly unique and

576
00:29:24,640 --> 00:29:27,600
Speaker 4: that will come more than likely with higher returns. It's

577
00:29:27,600 --> 00:29:29,360
Speaker 4: a little heavier lift to be able to do a

578
00:29:29,360 --> 00:29:31,560
Speaker 4: little bit different analysis that goes along with it, but

579
00:29:31,600 --> 00:29:33,280
Speaker 4: it's a higher returning profile.

580
00:29:33,400 --> 00:29:37,080
Speaker 2: So I get the sense that there are some advantages

581
00:29:37,160 --> 00:29:43,000
Speaker 2: to working with a large insurance firm, not just the longevity,

582
00:29:43,120 --> 00:29:46,640
Speaker 2: but it seems like there is the freedom to do

583
00:29:46,680 --> 00:29:50,520
Speaker 2: the sort of things that a lot of investors just

584
00:29:50,640 --> 00:29:52,080
Speaker 2: don't have the patience to wait for.

585
00:29:52,440 --> 00:29:55,280
Speaker 4: Yeah, and there's also an alignment. I mean, Mass Mutual

586
00:29:55,720 --> 00:29:59,680
Speaker 4: is alongside our investors on almost everything we do. They're

587
00:29:59,720 --> 00:30:02,920
Speaker 4: in this same strategies and varying sizes and scales, So

588
00:30:03,240 --> 00:30:07,200
Speaker 4: there is a complete alignment from where we're investing our

589
00:30:07,240 --> 00:30:10,000
Speaker 4: parent companies capital as well as where we're investing our

590
00:30:10,320 --> 00:30:13,239
Speaker 4: third party event. But it does help to have a

591
00:30:13,280 --> 00:30:16,040
Speaker 4: parent company like this who allows us to seed seed

592
00:30:16,080 --> 00:30:19,080
Speaker 4: investments allows us to grow things. And you've seen more

593
00:30:19,160 --> 00:30:22,600
Speaker 4: and more frequently now the tie ups of what we'll

594
00:30:22,600 --> 00:30:25,680
Speaker 4: call alternative managers with insurance companies because there is a

595
00:30:25,760 --> 00:30:28,200
Speaker 4: need on the asset side as well as the liability

596
00:30:28,240 --> 00:30:31,120
Speaker 4: sides of the liabilities coming from the insurance company. Those

597
00:30:31,160 --> 00:30:34,360
Speaker 4: assets are those liabilities. The cash that comes with those

598
00:30:34,400 --> 00:30:37,280
Speaker 4: needs to be invested in assets that provide a return

599
00:30:37,720 --> 00:30:40,960
Speaker 4: that meet that liability, and so there's naturally this move.

600
00:30:41,200 --> 00:30:41,360
Speaker 3: Now.

601
00:30:41,400 --> 00:30:43,560
Speaker 4: We did this twenty years ago, and so we're seeing

602
00:30:43,600 --> 00:30:44,760
Speaker 4: a lot of this happen now.

603
00:30:44,840 --> 00:30:45,760
Speaker 3: But this is something that.

604
00:30:45,720 --> 00:30:48,240
Speaker 4: We had done a long, long time ago and seeing

605
00:30:48,280 --> 00:30:52,000
Speaker 4: that a captive which is what we started as an

606
00:30:52,040 --> 00:30:54,840
Speaker 4: ask captive asset manager for an insurance company, can also

607
00:30:55,120 --> 00:30:57,800
Speaker 4: be a great service provider to other clients as well.

608
00:30:57,840 --> 00:31:00,160
Speaker 4: And that's really in two thousand when we started this

609
00:31:00,240 --> 00:31:03,520
Speaker 4: focus of making what was Babson and the other brands

610
00:31:04,040 --> 00:31:06,600
Speaker 4: more focused on third party as well as the parent company.

611
00:31:06,880 --> 00:31:11,400
Speaker 2: And when you discuss liabilities for an insurance company, those

612
00:31:11,440 --> 00:31:16,600
Speaker 2: future obligations are fairly predictable. I mean there's some variability. Hey,

613
00:31:16,600 --> 00:31:18,959
Speaker 2: you're working with annuity tables and things like that. But

614
00:31:19,560 --> 00:31:24,719
Speaker 2: it's a pretty predictable set of obligations. How does that

615
00:31:24,800 --> 00:31:28,480
Speaker 2: impact how you think about the risk tolerances and where

616
00:31:28,480 --> 00:31:29,720
Speaker 2: you want to go with the investment of.

617
00:31:29,960 --> 00:31:33,600
Speaker 4: Yeah, I mean it's as with most fixed all fixed

618
00:31:33,640 --> 00:31:37,000
Speaker 4: income investment. Candidly, you want to get your return, you

619
00:31:37,040 --> 00:31:38,720
Speaker 4: get your coupon, and then you get paid back at

620
00:31:38,760 --> 00:31:39,200
Speaker 4: the end of the day.

621
00:31:39,240 --> 00:31:40,120
Speaker 3: So it really is.

622
00:31:40,160 --> 00:31:43,760
Speaker 4: And then how things are measured in terms of duration,

623
00:31:44,800 --> 00:31:47,520
Speaker 4: in terms of tenor and all those things. Really that's

624
00:31:47,520 --> 00:31:49,640
Speaker 4: something that we don't do as much. The parent company

625
00:31:49,680 --> 00:31:52,000
Speaker 4: handles all the asset liability.

626
00:31:51,600 --> 00:31:52,800
Speaker 3: Management side of things.

627
00:31:53,360 --> 00:31:56,640
Speaker 4: They give us asset allocations, we go ahead and invest

628
00:31:56,680 --> 00:32:00,240
Speaker 4: those dollars. So with the security selectors, if you will. Yeah,

629
00:32:00,280 --> 00:32:02,400
Speaker 4: when you look at the liabilities of a number of

630
00:32:02,440 --> 00:32:05,160
Speaker 4: insurance companies out there and you think of whether there's

631
00:32:05,280 --> 00:32:07,440
Speaker 4: there's there's the life business. It could be termed or

632
00:32:07,480 --> 00:32:09,680
Speaker 4: it could be whole life. You also then look at

633
00:32:09,680 --> 00:32:12,400
Speaker 4: the annuities, the pension risk transfer. All of those have

634
00:32:12,520 --> 00:32:17,040
Speaker 4: a set you know, pensioner's transfer, a longer, much longer dated.

635
00:32:16,760 --> 00:32:18,840
Speaker 3: Set of liabilities. But it's it is.

636
00:32:18,920 --> 00:32:22,720
Speaker 4: It creates an interesting opportunity in different asset classes to

637
00:32:22,800 --> 00:32:26,120
Speaker 4: profine excess returns, and I think what what folks are

638
00:32:26,160 --> 00:32:28,640
Speaker 4: starting to see, and this is certainly the case with us.

639
00:32:29,320 --> 00:32:31,880
Speaker 4: We have always recognized that we would be happy to

640
00:32:31,920 --> 00:32:36,600
Speaker 4: pick up additional returns for ill liquidity and illiquidity premium

641
00:32:36,640 --> 00:32:38,880
Speaker 4: without taking additional risk. And that's that's really what I

642
00:32:38,880 --> 00:32:42,520
Speaker 4: think insurance companies have the flexibility to do, is to

643
00:32:42,560 --> 00:32:45,320
Speaker 4: take that illiquidity premium because they they have a much

644
00:32:45,360 --> 00:32:48,000
Speaker 4: better idea of what their liabilities look like in matching

645
00:32:48,040 --> 00:32:48,480
Speaker 4: those up.

646
00:32:48,760 --> 00:32:51,280
Speaker 2: And you're a member of the executive leadership team at

647
00:32:51,280 --> 00:32:55,360
Speaker 2: Mass Mutual, discuss a little bit, if you will, what

648
00:32:55,680 --> 00:32:59,720
Speaker 2: those conversations are like. It must be fascinating to sit

649
00:33:00,120 --> 00:33:04,680
Speaker 2: on that board that's essentially overseeing your day job.

650
00:33:05,000 --> 00:33:08,120
Speaker 4: Yeah, it was very insightful for me. I had some

651
00:33:08,280 --> 00:33:11,240
Speaker 4: knowledge of the insurance industry and really just how it

652
00:33:11,400 --> 00:33:14,080
Speaker 4: touched the asset management industry. But it does give me

653
00:33:14,120 --> 00:33:17,560
Speaker 4: a bigger perspective on the industry as a whole. And

654
00:33:17,640 --> 00:33:20,480
Speaker 4: I think more and more as you see, and certainly

655
00:33:20,560 --> 00:33:25,880
Speaker 4: there are really deep cases of this where alternative asset managers,

656
00:33:25,920 --> 00:33:28,880
Speaker 4: whether it's with reinsurers or insurance companies, have become one.

657
00:33:29,800 --> 00:33:30,760
Speaker 3: We have a front row.

658
00:33:30,640 --> 00:33:33,280
Speaker 4: Seat to how the too are managed, and so I

659
00:33:33,280 --> 00:33:36,000
Speaker 4: think it's just given us a much better perspective. And

660
00:33:36,040 --> 00:33:39,920
Speaker 4: I also think it's made Bearings and hopefully myself, as

661
00:33:39,960 --> 00:33:42,920
Speaker 4: a better partner to some of our other clients is

662
00:33:42,960 --> 00:33:45,200
Speaker 4: recognizing and have a better understanding.

663
00:33:44,680 --> 00:33:48,960
Speaker 2: Of that really interesting. Before we get into the details

664
00:33:49,000 --> 00:33:52,160
Speaker 2: of investment management, I have to ask you a question.

665
00:33:52,840 --> 00:33:55,400
Speaker 2: There was a quote of yours that kind of grabbed me.

666
00:33:56,320 --> 00:34:02,160
Speaker 2: You've self described your own leadership style as confident humility.

667
00:34:02,720 --> 00:34:05,200
Speaker 2: Explain what that means that that's a fascinating phrase.

668
00:34:05,280 --> 00:34:07,160
Speaker 3: Yeah, thank you for asking that. I use it. I

669
00:34:07,280 --> 00:34:07,720
Speaker 3: use it a lot.

670
00:34:07,760 --> 00:34:09,680
Speaker 4: I'm not sure where I where I picked it up,

671
00:34:09,960 --> 00:34:11,400
Speaker 4: but I but I love it, and I think it

672
00:34:11,480 --> 00:34:14,759
Speaker 4: describes how we operate it at Bearings. It goes back

673
00:34:14,800 --> 00:34:17,120
Speaker 4: to the element of having some self awareness and I

674
00:34:17,120 --> 00:34:19,960
Speaker 4: think understanding. We need to be confident in what we do.

675
00:34:20,000 --> 00:34:22,520
Speaker 4: We make big decisions, whether we're on the investment team

676
00:34:22,840 --> 00:34:26,160
Speaker 4: making decisions for clients portfolios, or whether we're in management

677
00:34:26,280 --> 00:34:27,799
Speaker 4: or any other part of the business. We have to

678
00:34:27,800 --> 00:34:30,200
Speaker 4: be confident in the decisions that we make, and we

679
00:34:30,280 --> 00:34:33,480
Speaker 4: have to you know, rebound from from mistakes at times

680
00:34:33,480 --> 00:34:37,160
Speaker 4: but at the same time recognizing with an element of humility,

681
00:34:37,160 --> 00:34:39,000
Speaker 4: which I think is a gift for people to have.

682
00:34:39,400 --> 00:34:41,520
Speaker 4: That that we don't have all the answers all the time,

683
00:34:41,560 --> 00:34:44,960
Speaker 4: and seeking counsel and seeking partnerships and seeking people to

684
00:34:45,000 --> 00:34:48,160
Speaker 4: do that isn't necessarily a sign of of of not

685
00:34:48,400 --> 00:34:50,160
Speaker 4: knowing things. It's a sign of just saying, hey, I

686
00:34:50,160 --> 00:34:51,480
Speaker 4: need I need a little bit of help here. So

687
00:34:51,520 --> 00:34:55,279
Speaker 4: I use the phrase very frequently. I love it again.

688
00:34:55,320 --> 00:34:58,200
Speaker 4: I'm whoever whoever came up with it. I I'll attribute

689
00:34:58,200 --> 00:35:00,680
Speaker 4: it to him if I find out, but it it

690
00:35:00,400 --> 00:35:03,040
Speaker 4: is something I think and I hope I live by,

691
00:35:03,120 --> 00:35:05,120
Speaker 4: and I think most of the teammates at Bearings do

692
00:35:05,200 --> 00:35:05,560
Speaker 4: as well.

693
00:35:05,840 --> 00:35:08,560
Speaker 2: So let's talk a little bit about how the asset

694
00:35:08,640 --> 00:35:12,640
Speaker 2: management industry is going to evolve over the next decade.

695
00:35:12,680 --> 00:35:16,719
Speaker 2: You guys aren't very equity heavy, but you're much more

696
00:35:16,760 --> 00:35:20,800
Speaker 2: focused on private markets, on anything that is a fairly

697
00:35:20,880 --> 00:35:25,759
Speaker 2: regular income stream. How do you see not just insurance,

698
00:35:25,800 --> 00:35:29,600
Speaker 2: but the entire asset management industry evolving in the future.

699
00:35:29,760 --> 00:35:31,799
Speaker 4: Well, there's clearly a growth into to what folks are

700
00:35:31,840 --> 00:35:34,680
Speaker 4: calling private assets. I think that's that's definitely going to

701
00:35:34,719 --> 00:35:37,319
Speaker 4: continue to be the trend. I also think in some

702
00:35:37,360 --> 00:35:40,560
Speaker 4: of the more established private assets there's a blurring of

703
00:35:40,600 --> 00:35:43,480
Speaker 4: lines between public and private. And you know what was

704
00:35:43,560 --> 00:35:46,160
Speaker 4: in leverage loan, The lever's loan market is a pretty

705
00:35:46,200 --> 00:35:49,520
Speaker 4: good market for that. You've got deals that are several

706
00:35:49,560 --> 00:35:52,759
Speaker 4: billion which are going to private credit firms. You've got

707
00:35:52,880 --> 00:35:55,759
Speaker 4: deals that were started in the middle market space which

708
00:35:55,800 --> 00:35:58,000
Speaker 4: would have been five hundred million, Like I said, now

709
00:35:58,000 --> 00:36:01,080
Speaker 4: they're several billion. And so is that syndicated market or

710
00:36:01,120 --> 00:36:03,920
Speaker 4: is that a private market? So you're seeing the ebbs

711
00:36:03,960 --> 00:36:05,879
Speaker 4: and flows of that, and I think that makes sense.

712
00:36:05,920 --> 00:36:09,160
Speaker 4: There's relative values that change between public and private markets

713
00:36:09,200 --> 00:36:11,520
Speaker 4: over the time, but also more and more what you're

714
00:36:11,520 --> 00:36:15,440
Speaker 4: seeing is, isn't it kind of an emergence of more

715
00:36:15,960 --> 00:36:22,120
Speaker 4: private asset classes being purchased by individuals and probably more

716
00:36:22,160 --> 00:36:24,879
Speaker 4: by institutionals, less by individuals at this time, but over

717
00:36:25,080 --> 00:36:28,840
Speaker 4: time you'll see that. It's in the asset based finance space,

718
00:36:29,080 --> 00:36:32,319
Speaker 4: the securitization space, and things that were always somewhat in

719
00:36:32,320 --> 00:36:34,920
Speaker 4: the private space but didn't come out into the public

720
00:36:35,000 --> 00:36:39,759
Speaker 4: markets through ACUSIP actually coming off of bank's balance sheet.

721
00:36:39,800 --> 00:36:41,719
Speaker 4: So I think that's going to continue, and you've seen

722
00:36:41,760 --> 00:36:45,120
Speaker 4: any numbers of three trillion to five trillion of how

723
00:36:45,160 --> 00:36:48,000
Speaker 4: big the market can be. Really, anything that's in a

724
00:36:48,080 --> 00:36:51,200
Speaker 4: public market from a debt standpoint can really operate in

725
00:36:51,239 --> 00:36:54,040
Speaker 4: the private market. And so it just depends on what

726
00:36:54,120 --> 00:36:58,279
Speaker 4: borrowers are candidly looking for. Are they looking for some

727
00:36:58,320 --> 00:37:00,520
Speaker 4: sort of certainty of execution? Can I get that better

728
00:37:00,560 --> 00:37:02,040
Speaker 4: in the public market? Can I get it better in

729
00:37:02,080 --> 00:37:03,879
Speaker 4: the private market? What terms can I get in each

730
00:37:03,920 --> 00:37:05,799
Speaker 4: do I want? Do I want my information in the

731
00:37:05,800 --> 00:37:08,960
Speaker 4: public market? Perhaps I prefer to keep I'm a closely

732
00:37:09,000 --> 00:37:13,160
Speaker 4: held company, prefer maybe I'd prefer to keep my information

733
00:37:13,239 --> 00:37:16,200
Speaker 4: amongst a private and small group of lenders.

734
00:37:16,280 --> 00:37:18,080
Speaker 3: So that's moving, you know.

735
00:37:18,320 --> 00:37:21,840
Speaker 4: You see new things like portfolio finance, which which is

736
00:37:21,880 --> 00:37:24,560
Speaker 4: something we do on a large scale, which is it's

737
00:37:24,600 --> 00:37:27,279
Speaker 4: slightly different from from NAV lending, but it's it is

738
00:37:27,680 --> 00:37:32,600
Speaker 4: lending to GPS and lending to portfolios. It's a growing business,

739
00:37:33,000 --> 00:37:37,680
Speaker 4: highly customized, highly bespoke structures that take a lot of heavy.

740
00:37:37,440 --> 00:37:39,920
Speaker 3: Lifting to do. But I think more and more we're going.

741
00:37:39,920 --> 00:37:42,200
Speaker 4: To see that as as people try to find and

742
00:37:42,239 --> 00:37:46,960
Speaker 4: I described it earlier, possibly take getting more higher yields,

743
00:37:47,080 --> 00:37:50,160
Speaker 4: higher returns, but not taking more risk, but picking that

744
00:37:50,280 --> 00:37:53,920
Speaker 4: up through either complexity premium or an illiquidity premium.

745
00:37:53,960 --> 00:37:56,680
Speaker 2: So you mentioned a couple of things earlier than I

746
00:37:56,719 --> 00:38:00,400
Speaker 2: want to hit back on, which is how v various

747
00:38:00,400 --> 00:38:03,920
Speaker 2: markets have kind of moved up. And I see this

748
00:38:04,000 --> 00:38:07,640
Speaker 2: across lots of different things, whether it's public financing or

749
00:38:07,719 --> 00:38:10,920
Speaker 2: even public companies, whether they stay private or go public.

750
00:38:11,239 --> 00:38:15,560
Speaker 2: It seems that everything has gotten bigger, higher, assets, higher,

751
00:38:15,560 --> 00:38:19,399
Speaker 2: aum and it almost feels as if Wall Street has

752
00:38:19,560 --> 00:38:23,440
Speaker 2: kind of abandoned that middle market. You mentioned things that

753
00:38:24,480 --> 00:38:27,080
Speaker 2: used to be private at at three four five hundred

754
00:38:27,120 --> 00:38:30,240
Speaker 2: million are now still private at two three four billion.

755
00:38:31,920 --> 00:38:34,640
Speaker 2: This seems to be going across every sector I look at.

756
00:38:34,960 --> 00:38:39,200
Speaker 2: Is this just a natural evolution of capital markets? Or

757
00:38:39,320 --> 00:38:45,239
Speaker 2: have valuations and size just gotten so large that Wall

758
00:38:45,239 --> 00:38:49,880
Speaker 2: Street can only service these giant shops and it creates

759
00:38:49,920 --> 00:38:52,480
Speaker 2: this void in the middle underneath.

760
00:38:52,680 --> 00:38:55,520
Speaker 4: Well, I think the ability for companies to stay private

761
00:38:55,600 --> 00:38:57,239
Speaker 4: longer is a good thing, right, And I think it's

762
00:38:57,280 --> 00:38:59,600
Speaker 4: actually and there's definitely a need for the public markets.

763
00:38:59,600 --> 00:39:01,759
Speaker 4: We don't want to lose those all together, and we

764
00:39:01,760 --> 00:39:03,919
Speaker 4: don't want it to only be for the trillion dollar

765
00:39:04,040 --> 00:39:05,040
Speaker 4: market cap companies.

766
00:39:05,080 --> 00:39:06,799
Speaker 3: I think it's healthy to have a.

767
00:39:06,719 --> 00:39:09,520
Speaker 4: Moving market because people at times will want some sort

768
00:39:09,560 --> 00:39:12,120
Speaker 4: of monetization. Event they will want some sort of liquidity,

769
00:39:12,120 --> 00:39:14,320
Speaker 4: and you can get some of that into private markets,

770
00:39:14,360 --> 00:39:16,760
Speaker 4: but it's it's not nearly the way you can get.

771
00:39:16,600 --> 00:39:17,600
Speaker 3: It in the public markets.

772
00:39:17,880 --> 00:39:20,040
Speaker 4: But I go back to using the leverage loan, and

773
00:39:20,080 --> 00:39:21,399
Speaker 4: your example is exactly right.

774
00:39:21,440 --> 00:39:22,400
Speaker 3: When I started out.

775
00:39:22,280 --> 00:39:27,080
Speaker 4: In the business, a broadly syndicated leverage loan deal could

776
00:39:27,120 --> 00:39:29,440
Speaker 4: have been five hundred million dollars. A bank would have

777
00:39:29,440 --> 00:39:31,759
Speaker 4: brought that deal and ten people would have owned it

778
00:39:31,800 --> 00:39:32,600
Speaker 4: and traded it.

779
00:39:33,120 --> 00:39:35,600
Speaker 3: Now that's that's not the case. You've got to be

780
00:39:35,640 --> 00:39:36,040
Speaker 3: moving up.

781
00:39:36,080 --> 00:39:38,120
Speaker 4: And so I think it is an evolution of things,

782
00:39:38,120 --> 00:39:41,360
Speaker 4: and I think your banking regulations have changed some of

783
00:39:41,400 --> 00:39:43,560
Speaker 4: the bank's ability to do some of this this type

784
00:39:43,560 --> 00:39:46,160
Speaker 4: of lending. We'll see if that changes in the future.

785
00:39:46,560 --> 00:39:49,920
Speaker 4: But the good thing about the capital markets in general

786
00:39:50,040 --> 00:39:52,200
Speaker 4: is it's efficient and if there's a if there's a

787
00:39:52,200 --> 00:39:55,680
Speaker 4: way for people to get excess returns, capital will flow

788
00:39:55,719 --> 00:39:58,399
Speaker 4: into that and over time, if spreads become compressed there,

789
00:39:58,719 --> 00:40:01,920
Speaker 4: they'll move to other areas, which I think is overall healthy,

790
00:40:02,239 --> 00:40:03,240
Speaker 4: healthy for a market.

791
00:40:03,800 --> 00:40:07,440
Speaker 2: And you talked about the relative value as assets shift

792
00:40:07,480 --> 00:40:10,920
Speaker 2: between public and private and back. How do you capture

793
00:40:11,040 --> 00:40:15,000
Speaker 2: that gap that difference. Is it just a function of

794
00:40:15,200 --> 00:40:19,800
Speaker 2: all this capital flowing into private markets. There's no doubt

795
00:40:19,800 --> 00:40:24,759
Speaker 2: public markets are historically pricey today, but it feels like

796
00:40:25,040 --> 00:40:29,160
Speaker 2: so much cash chasing all these private assets, you're going

797
00:40:29,239 --> 00:40:31,240
Speaker 2: to end up with a very similar situation.

798
00:40:31,400 --> 00:40:34,920
Speaker 4: Yeah, I mean, I think one of the distinct differences

799
00:40:34,880 --> 00:40:39,080
Speaker 4: is obviously the quickness of the rapidness at which a

800
00:40:39,400 --> 00:40:43,800
Speaker 4: public market changes price, whether it's valuation second by second,

801
00:40:43,800 --> 00:40:47,160
Speaker 4: whether it's valuation, or whether it's it's it's spreads on

802
00:40:47,320 --> 00:40:51,400
Speaker 4: yields going wider or going tighter. That's that's effectively real time.

803
00:40:51,719 --> 00:40:54,640
Speaker 4: It takes longer in the private markets because these deals

804
00:40:54,680 --> 00:40:59,280
Speaker 4: take a long time to longer to originate, to close,

805
00:40:59,320 --> 00:41:01,319
Speaker 4: and to move on, and so the reaction time is

806
00:41:01,320 --> 00:41:04,640
Speaker 4: slightly there. And if it's a brief correction in the market,

807
00:41:04,680 --> 00:41:06,720
Speaker 4: maybe the private markets get it right and the public

808
00:41:06,800 --> 00:41:10,880
Speaker 4: markets just had a period of inefficiency. But over time

809
00:41:11,080 --> 00:41:13,799
Speaker 4: those two should converge and you should be getting a

810
00:41:13,800 --> 00:41:16,719
Speaker 4: premium if you're moving into private assets. There's nothing to

811
00:41:16,760 --> 00:41:20,000
Speaker 4: suggest that you should be getting tighter spreads in a

812
00:41:20,000 --> 00:41:23,120
Speaker 4: private market giving up your liquidity, and there's some liquidity,

813
00:41:23,120 --> 00:41:25,680
Speaker 4: but nearly the case of the public markets, if you're

814
00:41:25,719 --> 00:41:27,920
Speaker 4: giving that up, you should be getting a premium. So

815
00:41:28,040 --> 00:41:30,919
Speaker 4: over time there needs to be a premium given into

816
00:41:30,960 --> 00:41:33,959
Speaker 4: the private markets over the public markets. Which would also

817
00:41:34,040 --> 00:41:37,960
Speaker 4: suggest that over time companies who are looking to as

818
00:41:38,080 --> 00:41:41,799
Speaker 4: much as possible reduce their cost of capital will gravitate

819
00:41:41,840 --> 00:41:44,640
Speaker 4: to where the financing is most appropriate to them, and

820
00:41:44,680 --> 00:41:46,040
Speaker 4: that may be in the publics, that may be in

821
00:41:46,040 --> 00:41:46,480
Speaker 4: the private.

822
00:41:46,880 --> 00:41:51,080
Speaker 2: So Barings has been in the space for decades now,

823
00:41:51,560 --> 00:41:56,920
Speaker 2: it seems, certainly since the financial crisis and more intensely

824
00:41:57,680 --> 00:42:01,600
Speaker 2: since the pandemic. Just you, huge flows of capital are

825
00:42:01,600 --> 00:42:05,960
Speaker 2: going to private At what point does that become a

826
00:42:06,080 --> 00:42:10,080
Speaker 2: crowded trade? What's the capacity like on the private side?

827
00:42:10,160 --> 00:42:13,640
Speaker 4: Yeah, it's big because in theory you can start taking

828
00:42:13,640 --> 00:42:15,600
Speaker 4: market share from the public side. And that's where I

829
00:42:15,600 --> 00:42:18,520
Speaker 4: think some you know are Our direct lending business is

830
00:42:18,560 --> 00:42:21,359
Speaker 4: really purely in the middle market space, and so think

831
00:42:21,400 --> 00:42:24,200
Speaker 4: of us looking at companies with seventy five million of

832
00:42:24,360 --> 00:42:26,440
Speaker 4: vadah in below rather than.

833
00:42:26,320 --> 00:42:27,280
Speaker 3: The multi billion.

834
00:42:27,719 --> 00:42:30,000
Speaker 4: We don't currently traffic in that, and we traffic in

835
00:42:30,040 --> 00:42:32,520
Speaker 4: the middle market and then we traffic in the syndicated space,

836
00:42:32,560 --> 00:42:36,360
Speaker 4: but the direct lending space in between is somewhat of

837
00:42:36,680 --> 00:42:38,319
Speaker 4: a white space for us. But I think that's what

838
00:42:38,360 --> 00:42:42,880
Speaker 4: you've seen is as large capital allocators and aggregators have

839
00:42:43,480 --> 00:42:46,239
Speaker 4: billions and tens of billions and twenties of billions to

840
00:42:46,280 --> 00:42:48,840
Speaker 4: put to work, it becomes hard to do that in

841
00:42:48,960 --> 00:42:51,600
Speaker 4: chunks of two hundred and fifty million, much easier to

842
00:42:51,640 --> 00:42:55,000
Speaker 4: do in two point five billion. And so there's a

843
00:42:55,080 --> 00:42:58,399
Speaker 4: tug of war between the public and private markets as

844
00:42:58,440 --> 00:43:02,000
Speaker 4: who's taking market share from from that All good companies,

845
00:43:02,040 --> 00:43:05,480
Speaker 4: it's just what is your strategy necessarily looking to do?

846
00:43:05,880 --> 00:43:09,640
Speaker 4: But without the private market seeing new deal volume. And

847
00:43:09,680 --> 00:43:12,040
Speaker 4: so whether we start to see M and A transactions

848
00:43:12,080 --> 00:43:14,960
Speaker 4: come back, whether we start to see club deals being

849
00:43:15,000 --> 00:43:18,319
Speaker 4: formed for public companies and club deals being club deals

850
00:43:18,360 --> 00:43:20,279
Speaker 4: will have to club deals being You get four or

851
00:43:20,280 --> 00:43:23,600
Speaker 4: five lenders together and they take down a four billion

852
00:43:23,640 --> 00:43:26,000
Speaker 4: dollar deal and say it's it's a club of us

853
00:43:26,080 --> 00:43:27,719
Speaker 4: rather than one person doing it on a buyer.

854
00:43:27,840 --> 00:43:29,320
Speaker 2: Not quite a syndicate, not quite.

855
00:43:29,600 --> 00:43:32,320
Speaker 4: It's that great, It's that it's that white space in between.

856
00:43:32,440 --> 00:43:34,920
Speaker 4: It evolves in there that you've got and so they'll

857
00:43:35,000 --> 00:43:37,000
Speaker 4: have to be either new deal volume, as I said,

858
00:43:37,120 --> 00:43:39,560
Speaker 4: or or the private markets will have to take market

859
00:43:39,600 --> 00:43:42,080
Speaker 4: share continue to take market share from the public markets.

860
00:43:42,280 --> 00:43:47,320
Speaker 2: So we're talking about institutional investors. Do they want fewer

861
00:43:47,560 --> 00:43:51,280
Speaker 2: but larger and more strategic relationships? What are they looking

862
00:43:51,280 --> 00:43:55,680
Speaker 2: for in terms of capabilities and portfolio solutions from an

863
00:43:55,680 --> 00:43:56,840
Speaker 2: investment shop like yours?

864
00:43:56,880 --> 00:43:59,319
Speaker 4: Well, absolutely, and I think probably everyone is looking for

865
00:43:59,440 --> 00:44:02,560
Speaker 4: fewer relationships. They have to deal with a lot of

866
00:44:02,880 --> 00:44:05,239
Speaker 4: relationships and a lot of partners. So the more you

867
00:44:05,280 --> 00:44:09,400
Speaker 4: can have a robust or a broad sense of capabilities,

868
00:44:09,760 --> 00:44:11,719
Speaker 4: the more value you are to be. When I think

869
00:44:11,760 --> 00:44:14,920
Speaker 4: what's interesting for what we've tried to build and how

870
00:44:14,960 --> 00:44:17,160
Speaker 4: we've kind of gone through acquisitions and how we've gone

871
00:44:17,160 --> 00:44:20,359
Speaker 4: through organic growth is to really make sure we cover

872
00:44:20,440 --> 00:44:21,960
Speaker 4: all of that. And so we've if you look at

873
00:44:22,000 --> 00:44:24,320
Speaker 4: our acquisitions over time, if you look at what we've grown,

874
00:44:24,560 --> 00:44:27,719
Speaker 4: we've tried to be global, and so we make acquisitions

875
00:44:27,719 --> 00:44:30,240
Speaker 4: of things that are adjacent or tangential to our currently

876
00:44:30,640 --> 00:44:34,440
Speaker 4: current strategies. Is that strategic or tactical, that's strategic, and

877
00:44:34,480 --> 00:44:35,960
Speaker 4: that's just a view that we take. We want to

878
00:44:35,960 --> 00:44:38,719
Speaker 4: have global capabilities for what we do, and so if

879
00:44:38,760 --> 00:44:41,279
Speaker 4: we do direct lending in the US, we do direct

880
00:44:41,360 --> 00:44:43,400
Speaker 4: lending in Europe, and we do direct lending in Asia.

881
00:44:43,440 --> 00:44:47,440
Speaker 4: Pack and it's it's basically saying to companies, if you

882
00:44:47,520 --> 00:44:48,720
Speaker 4: have the desire.

883
00:44:48,360 --> 00:44:50,399
Speaker 3: For a global portfolio, if you.

884
00:44:50,360 --> 00:44:52,720
Speaker 4: Have the desire for us to determine where the best

885
00:44:52,760 --> 00:44:54,640
Speaker 4: relative value is, we.

886
00:44:54,520 --> 00:44:55,640
Speaker 3: Can do that capability.

887
00:44:55,640 --> 00:44:57,799
Speaker 4: You don't need to select three different managers to cover

888
00:44:57,880 --> 00:45:00,719
Speaker 4: three different parts of the globe. We've done that with

889
00:45:00,760 --> 00:45:03,040
Speaker 4: the liquid and I liquid side. And so if folks

890
00:45:03,040 --> 00:45:06,680
Speaker 4: come and say, I want I want to leverage finance product,

891
00:45:06,760 --> 00:45:09,000
Speaker 4: I want something that's below investment grade. But I know

892
00:45:09,680 --> 00:45:12,440
Speaker 4: at times high yields more attractive, at times leverage loans

893
00:45:12,480 --> 00:45:15,200
Speaker 4: are attracted more attractive, and at times direct lendings more attractive.

894
00:45:15,560 --> 00:45:17,880
Speaker 4: You determine where that best relative value is. And I

895
00:45:17,920 --> 00:45:20,239
Speaker 4: think that's been a hallmark of how we viewed it.

896
00:45:20,320 --> 00:45:22,960
Speaker 4: Let's do what we do well, and let's make sure

897
00:45:22,960 --> 00:45:25,879
Speaker 4: we do it globally and we have deep enough capabilities

898
00:45:25,920 --> 00:45:27,080
Speaker 4: to service all those needs.

899
00:45:27,239 --> 00:45:30,080
Speaker 2: You've been on the investing side of global high yield.

900
00:45:30,400 --> 00:45:35,200
Speaker 2: How has your perspective been affected as CEO from your

901
00:45:35,200 --> 00:45:38,760
Speaker 2: background as a trade er investor in that space.

902
00:45:38,840 --> 00:45:39,040
Speaker 3: Yeah.

903
00:45:39,040 --> 00:45:41,120
Speaker 4: So one of the things that came out of is

904
00:45:41,160 --> 00:45:43,960
Speaker 4: I was a part of a US loan group originally,

905
00:45:44,000 --> 00:45:46,640
Speaker 4: so a syndicated loan group was where I first started

906
00:45:46,640 --> 00:45:49,480
Speaker 4: at Babson. We then made the decision of you know,

907
00:45:49,520 --> 00:45:51,920
Speaker 4: these are similar two sides to the same coin. High

908
00:45:51,960 --> 00:45:54,239
Speaker 4: yield bonds and leverage loans are often in the same

909
00:45:54,320 --> 00:45:57,520
Speaker 4: capital structure. One just comes with a fixed coupon, one

910
00:45:57,680 --> 00:46:00,239
Speaker 4: just got accuse it. One's more private, but it's the

911
00:46:00,239 --> 00:46:03,880
Speaker 4: same company. So we decided to combine those two businesses together.

912
00:46:04,360 --> 00:46:06,879
Speaker 4: Then we went and said, you know what's unique about

913
00:46:06,920 --> 00:46:09,160
Speaker 4: US is we've got great capabilities in Europe and we've

914
00:46:09,160 --> 00:46:12,160
Speaker 4: got great capabilities in US. And so in two thousand

915
00:46:12,200 --> 00:46:14,720
Speaker 4: and nine we said, let's create a global high yield platform,

916
00:46:14,719 --> 00:46:16,600
Speaker 4: which was really one of the first of its of

917
00:46:16,600 --> 00:46:21,560
Speaker 4: its kind. And so that experience and perspective said to me,

918
00:46:21,840 --> 00:46:25,120
Speaker 4: this is really something that's here. Clients will value our

919
00:46:25,200 --> 00:46:28,360
Speaker 4: global perspective. They still may want to only allocate to

920
00:46:28,400 --> 00:46:31,000
Speaker 4: one region or another, one asset or another, but who

921
00:46:31,040 --> 00:46:33,239
Speaker 4: those are interested, Let's take a look at that. And

922
00:46:33,280 --> 00:46:37,960
Speaker 4: that as much as the investing side of it was,

923
00:46:37,960 --> 00:46:39,920
Speaker 4: there it was really the business side of it, I think,

924
00:46:39,920 --> 00:46:41,719
Speaker 4: which has helped me in my current role.

925
00:46:42,040 --> 00:46:46,360
Speaker 2: So I keep reading and hearing about new credit asset classes.

926
00:46:46,360 --> 00:46:47,879
Speaker 2: What's the appetite like for that.

927
00:46:48,120 --> 00:46:51,080
Speaker 4: Yeah, it's becoming more and more popular. I think it's

928
00:46:51,120 --> 00:46:53,759
Speaker 4: really on the asset base side of things. So there's

929
00:46:53,800 --> 00:46:56,840
Speaker 4: a lot of different things that can fall into that category.

930
00:46:56,880 --> 00:47:01,160
Speaker 4: And you're talking about origination platforms, it's a mortgage origination

931
00:47:01,280 --> 00:47:05,000
Speaker 4: platform where someone will take all the mortgages originated by

932
00:47:05,000 --> 00:47:08,120
Speaker 4: that and package it into something. So as more and

933
00:47:08,200 --> 00:47:11,239
Speaker 4: more it becomes more and more accepted to have a

934
00:47:11,320 --> 00:47:14,239
Speaker 4: portion of your portfolio in ill liquid assets. And I

935
00:47:14,280 --> 00:47:16,520
Speaker 4: don't think it's just for insurance companies. I think insurance

936
00:47:16,520 --> 00:47:19,200
Speaker 4: companies are well equipped to do that because their liabilities

937
00:47:19,239 --> 00:47:23,080
Speaker 4: are fairly well known. But pensions also have a bucket

938
00:47:23,360 --> 00:47:25,880
Speaker 4: for things that are ill liquid, and I think historically

939
00:47:25,960 --> 00:47:29,320
Speaker 4: they've used them for higher yielding things. But I suspect

940
00:47:29,360 --> 00:47:31,680
Speaker 4: going forward, and where a number of our conversations are

941
00:47:31,719 --> 00:47:35,520
Speaker 4: taking place is around the IG portion of their portfolio,

942
00:47:35,560 --> 00:47:38,319
Speaker 4: the investment grade portion of their portfolio that if I

943
00:47:38,320 --> 00:47:41,040
Speaker 4: can pick up an additional one hundred to one hundred

944
00:47:41,040 --> 00:47:44,200
Speaker 4: and fifty basis points of spread or yield in a

945
00:47:44,320 --> 00:47:47,759
Speaker 4: private market, I don't need all of my assets in

946
00:47:47,840 --> 00:47:50,320
Speaker 4: my portfolio to be on the liquid side. That's usually

947
00:47:50,360 --> 00:47:52,720
Speaker 4: the bucket I use for liquidity is in my investment

948
00:47:52,719 --> 00:47:56,440
Speaker 4: grade and government bond side of things. But maybe I

949
00:47:56,520 --> 00:47:59,000
Speaker 4: move a little bit into liquid assets and pick up

950
00:47:59,040 --> 00:48:02,520
Speaker 4: additional yield for that portion because I don't need five percent,

951
00:48:02,560 --> 00:48:05,440
Speaker 4: I can sacrifice for ill liquidity purposes.

952
00:48:05,719 --> 00:48:08,279
Speaker 2: So it sounds like there are a ton of tailwinds

953
00:48:08,320 --> 00:48:13,360
Speaker 2: for the private credit and debt sides. What do you

954
00:48:13,440 --> 00:48:17,600
Speaker 2: think is the next phase of growth the what's the

955
00:48:17,640 --> 00:48:23,160
Speaker 2: next area that's ripe that perhaps hasn't really been well explored.

956
00:48:23,360 --> 00:48:25,440
Speaker 3: Yeah, but we've canvassed a lot of it. I mean,

957
00:48:25,480 --> 00:48:26,480
Speaker 3: I think there's there's a lot.

958
00:48:26,520 --> 00:48:29,680
Speaker 4: But I do think the private investment grade side of

959
00:48:29,719 --> 00:48:31,040
Speaker 4: the market is really.

960
00:48:30,800 --> 00:48:32,239
Speaker 3: Going to be the area where it's going to grow.

961
00:48:32,280 --> 00:48:33,200
Speaker 3: And when people talk.

962
00:48:33,040 --> 00:48:35,640
Speaker 2: Of investment grade, that's private private, public.

963
00:48:35,760 --> 00:48:35,920
Speaker 3: Yes.

964
00:48:35,960 --> 00:48:39,080
Speaker 4: And so I think when people originally, even as early

965
00:48:39,080 --> 00:48:41,920
Speaker 4: as last year, when you have said direct lending or

966
00:48:42,000 --> 00:48:45,720
Speaker 4: private credit, everyone would have moved to middle market corporate

967
00:48:45,719 --> 00:48:48,279
Speaker 4: direct lending, and that's what was in everyone's mind, and

968
00:48:48,960 --> 00:48:51,440
Speaker 4: that was a component of it. It's a component of it,

969
00:48:51,480 --> 00:48:54,240
Speaker 4: but it's actually one of the smaller components of it. Candidly,

970
00:48:54,600 --> 00:48:57,520
Speaker 4: when you expand to all the other types of lending

971
00:48:57,880 --> 00:49:00,560
Speaker 4: that can be done and has traditionally been done by

972
00:49:00,680 --> 00:49:03,000
Speaker 4: banks and has now been done by is being done

973
00:49:03,040 --> 00:49:07,520
Speaker 4: by asset managers and insurance companies, the opportunities are vast,

974
00:49:07,640 --> 00:49:09,439
Speaker 4: and so I think that's going to be an area

975
00:49:09,480 --> 00:49:13,520
Speaker 4: that continues to grow and continues to offer investors on

976
00:49:13,600 --> 00:49:16,000
Speaker 4: the institutional side, and I suspect it will start to

977
00:49:16,040 --> 00:49:19,719
Speaker 4: gravitate more and more towards the individual and wealth side

978
00:49:19,719 --> 00:49:20,640
Speaker 4: of it business as well.

979
00:49:21,080 --> 00:49:25,640
Speaker 2: Really interesting, So you mentioned in passing some previous acquisitions,

980
00:49:26,080 --> 00:49:31,160
Speaker 2: I know Altis and Griffon most recently, what are your plans?

981
00:49:31,200 --> 00:49:35,680
Speaker 2: Are you thinking about more acquisitions? Is this deliberative or

982
00:49:35,760 --> 00:49:38,080
Speaker 2: is it merely opportunistic or a little bit.

983
00:49:38,000 --> 00:49:41,560
Speaker 4: About It's really strategic, you know. I think we have

984
00:49:41,680 --> 00:49:44,880
Speaker 4: looked at and where we love the portfolio capabilities that

985
00:49:44,920 --> 00:49:48,560
Speaker 4: we have when we're willing to expand on those, both

986
00:49:48,680 --> 00:49:52,200
Speaker 4: organically and inorganically. We've had a history of building out teams.

987
00:49:52,360 --> 00:49:54,879
Speaker 4: I've referenced earlier. We started building our mental market team

988
00:49:55,719 --> 00:49:57,920
Speaker 4: in twenty thirteen. At that same time, we built our

989
00:49:57,960 --> 00:50:00,560
Speaker 4: emerging market debt team at that time. But also as

990
00:50:00,600 --> 00:50:04,000
Speaker 4: your reference, we've just made two acquisitions. Both happened to

991
00:50:04,040 --> 00:50:08,080
Speaker 4: be in Australia, but they were extensions of capabilities we had.

992
00:50:08,520 --> 00:50:10,520
Speaker 4: One was a real estate business, which gave us more

993
00:50:10,520 --> 00:50:13,080
Speaker 4: of a global real estate presence, and the other was

994
00:50:13,080 --> 00:50:16,600
Speaker 4: a securitization's business, which gave us global capabilities and securitizations.

995
00:50:16,600 --> 00:50:17,520
Speaker 3: So hopefully you're seeing a.

996
00:50:17,480 --> 00:50:19,840
Speaker 4: Theme here that we really want to continue to have

997
00:50:19,880 --> 00:50:23,319
Speaker 4: the global and so we are very much open and

998
00:50:23,360 --> 00:50:27,040
Speaker 4: looking for acquisitions. As I mentioned before, we want to

999
00:50:27,040 --> 00:50:30,040
Speaker 4: fully integrate those. And so this is a people business,

1000
00:50:30,320 --> 00:50:34,440
Speaker 4: and so when you're looking at specifically principally owned businesses,

1001
00:50:34,480 --> 00:50:36,960
Speaker 4: businesses that are owned by a founder, you've got to

1002
00:50:37,000 --> 00:50:38,919
Speaker 4: make sure your interests are aligned there and that there's

1003
00:50:38,920 --> 00:50:41,400
Speaker 4: an expectation that this is going to be an over time,

1004
00:50:41,840 --> 00:50:44,880
Speaker 4: an integrated company. Now, what we don't do is we

1005
00:50:44,880 --> 00:50:47,640
Speaker 4: don't mess with the investment process. That's what's got them there.

1006
00:50:47,640 --> 00:50:51,160
Speaker 4: What we do look to do is integrate operations, integrate

1007
00:50:51,200 --> 00:50:53,560
Speaker 4: sales to get a globe. We have a global sales force.

1008
00:50:53,600 --> 00:50:55,919
Speaker 4: We think it's best to leverage that way. But we're

1009
00:50:55,960 --> 00:51:00,040
Speaker 4: absolutely always looking for good opportunities and good things, and

1010
00:51:00,160 --> 00:51:03,200
Speaker 4: hopefully we'll all fit within the strategic lens. So we're

1011
00:51:03,239 --> 00:51:06,080
Speaker 4: not going to be looking to buy something that doesn't

1012
00:51:06,120 --> 00:51:08,680
Speaker 4: fit with where we're going as a company. But certainly

1013
00:51:08,680 --> 00:51:10,239
Speaker 4: there are a lot of good companies out there, and

1014
00:51:10,280 --> 00:51:12,600
Speaker 4: we're looking at a few now and hopefully be able

1015
00:51:12,600 --> 00:51:15,160
Speaker 4: to have a few more to announce over the coming years.

1016
00:51:15,760 --> 00:51:19,040
Speaker 2: Really really interesting. Let me throw you a curveball. All right,

1017
00:51:19,120 --> 00:51:23,120
Speaker 2: so you oversaw sales operations technology, you are on the

1018
00:51:23,160 --> 00:51:28,640
Speaker 2: investment side. Now you're CEO and chairman. How do you

1019
00:51:28,760 --> 00:51:34,840
Speaker 2: think about artificial intelligence affecting your business? What is the

1020
00:51:34,880 --> 00:51:40,520
Speaker 2: future of the sort of very personal relationships, very specific

1021
00:51:41,040 --> 00:51:44,719
Speaker 2: types of credit you guys swim in. How is AI

1022
00:51:44,840 --> 00:51:45,640
Speaker 2: going to impact that?

1023
00:51:46,120 --> 00:51:48,160
Speaker 4: It is going to impact for sure, And so what

1024
00:51:48,200 --> 00:51:51,160
Speaker 4: we've created a we have an innovation team that really

1025
00:51:51,200 --> 00:51:54,200
Speaker 4: focuses on this because I think the use cases for

1026
00:51:55,040 --> 00:51:57,239
Speaker 4: AI and for all of these technologies is going to

1027
00:51:57,239 --> 00:52:00,200
Speaker 4: come throughout everyone of our teammates. It's not necessarily going

1028
00:52:00,239 --> 00:52:02,080
Speaker 4: to be me sitting at the top of the organization

1029
00:52:02,160 --> 00:52:05,400
Speaker 4: saying this is how we should use it. I the

1030
00:52:05,480 --> 00:52:10,600
Speaker 4: applications are yet to be determined exactly how the art

1031
00:52:10,600 --> 00:52:12,880
Speaker 4: of the possible is here. I think one of the

1032
00:52:12,880 --> 00:52:17,600
Speaker 4: things we're finding is the data, especially in the private markets,

1033
00:52:17,640 --> 00:52:20,480
Speaker 4: has become so so important, and right now a lot

1034
00:52:20,480 --> 00:52:24,760
Speaker 4: of it is unstructured data from historical and then everyone's

1035
00:52:24,760 --> 00:52:28,080
Speaker 4: doing a better job of cataloging that data today. But

1036
00:52:28,160 --> 00:52:31,960
Speaker 4: the ability to use these machines to make decisions really

1037
00:52:32,000 --> 00:52:35,600
Speaker 4: depends on the access to data, and our data on

1038
00:52:35,680 --> 00:52:38,600
Speaker 4: private companies and others. Data on private companies is very,

1039
00:52:38,719 --> 00:52:43,000
Speaker 4: very valuable to help inform investment decisions and inform business decisions.

1040
00:52:43,280 --> 00:52:45,719
Speaker 4: But if it's not in a structure that works, it's

1041
00:52:45,760 --> 00:52:48,040
Speaker 4: not in a structure that can be accessible.

1042
00:52:47,880 --> 00:52:50,120
Speaker 2: It's of no value and not machine read.

1043
00:52:50,600 --> 00:52:53,680
Speaker 4: It's not Look, the technology is getting better to go

1044
00:52:53,719 --> 00:52:57,040
Speaker 4: out and find unstructured data and bring it in, but it's.

1045
00:52:56,960 --> 00:52:58,359
Speaker 3: It's still a ways a way.

1046
00:52:58,760 --> 00:53:02,200
Speaker 4: The public markets have done an incredible job of bringing

1047
00:53:02,239 --> 00:53:04,360
Speaker 4: things together and having it to be able to mine

1048
00:53:04,400 --> 00:53:07,879
Speaker 4: that information, but really the private data that exists out

1049
00:53:07,920 --> 00:53:12,160
Speaker 4: there is so large, and it's in many cases, certainly

1050
00:53:12,200 --> 00:53:15,160
Speaker 4: the historical data is very unstructured.

1051
00:53:15,000 --> 00:53:18,160
Speaker 2: Really interesting. So let's jump to our favorite questions that

1052
00:53:18,200 --> 00:53:21,720
Speaker 2: we ask all of our guests, starting with what's keeping

1053
00:53:21,719 --> 00:53:24,360
Speaker 2: you entertained these days? What are you watching or listening to?

1054
00:53:24,480 --> 00:53:27,000
Speaker 4: Yeah, in terms of streaming, I'm I'm you know, I've

1055
00:53:27,040 --> 00:53:29,880
Speaker 4: just finished or almost finished with season two of Silo,

1056
00:53:30,400 --> 00:53:32,680
Speaker 4: So that's really Yeah, it's an interesting one.

1057
00:53:32,840 --> 00:53:35,120
Speaker 2: Sci fi that's on Applifying sci.

1058
00:53:34,920 --> 00:53:38,040
Speaker 4: Fi, it's on Apple, It's it's, it's it's entertainment for

1059
00:53:38,040 --> 00:53:41,239
Speaker 4: for sure. I watched three Body Problem a while ago.

1060
00:53:41,440 --> 00:53:42,080
Speaker 2: Is so good.

1061
00:53:42,200 --> 00:53:42,799
Speaker 3: Yeah, so good.

1062
00:53:42,880 --> 00:53:45,760
Speaker 4: I'm waiting and anxious for the second and third season

1063
00:53:45,800 --> 00:53:48,120
Speaker 4: of of that to come up. So I get my

1064
00:53:48,200 --> 00:53:52,279
Speaker 4: fiction when I watch, and I mostly read nonfiction.

1065
00:53:52,400 --> 00:53:53,719
Speaker 3: I've you know, I'm in just a.

1066
00:53:53,760 --> 00:53:55,440
Speaker 2: Deep Well, we'll talk a little bit about books in

1067
00:53:55,440 --> 00:53:57,320
Speaker 2: a moment. Before we get there, I want to ask,

1068
00:53:58,040 --> 00:54:01,240
Speaker 2: who are your mentors who helped shape your career?

1069
00:54:01,560 --> 00:54:05,000
Speaker 4: Yeah, so I've used these two, and these these two

1070
00:54:05,000 --> 00:54:10,040
Speaker 4: are really Pivotabal one was my second boss at Price

1071
00:54:10,080 --> 00:54:14,960
Speaker 4: Waterhouse Scoopers. What he taught me was really the caring

1072
00:54:15,040 --> 00:54:18,040
Speaker 4: nature of business and how it should, how people should

1073
00:54:18,120 --> 00:54:20,000
Speaker 4: view others and treadeaus, and it was an interest. I

1074
00:54:20,000 --> 00:54:22,799
Speaker 4: worked for him for only two years and ever since

1075
00:54:22,840 --> 00:54:25,400
Speaker 4: I've left, I still get a call on my birthday

1076
00:54:25,960 --> 00:54:28,200
Speaker 4: without fail. I talked to him other times, but without fail,

1077
00:54:28,239 --> 00:54:30,280
Speaker 4: I get a call on my birthday, and that's always resonated.

1078
00:54:30,280 --> 00:54:32,759
Speaker 4: I mean, working for someone for two years, but then

1079
00:54:32,840 --> 00:54:36,319
Speaker 4: for decades afterwards, they continue to remember something that is

1080
00:54:36,600 --> 00:54:39,319
Speaker 4: you know, it's birthdays come and go every year, but

1081
00:54:39,400 --> 00:54:42,080
Speaker 4: it was important enough or I was important enough to

1082
00:54:42,160 --> 00:54:44,279
Speaker 4: him as a person to make that to make that call.

1083
00:54:44,360 --> 00:54:46,719
Speaker 4: So that's something I've tried to take away and be

1084
00:54:46,800 --> 00:54:48,600
Speaker 4: conscious of that people care about.

1085
00:54:48,320 --> 00:54:51,560
Speaker 2: Those things, talk about people, skills and people business.

1086
00:54:51,719 --> 00:54:54,879
Speaker 4: It was an admirable trait, certainly. And then another one

1087
00:54:54,960 --> 00:54:58,719
Speaker 4: was a coach of youth sports, was really one who

1088
00:54:58,800 --> 00:55:02,279
Speaker 4: taught me that the individual will never be above the team.

1089
00:55:02,719 --> 00:55:05,440
Speaker 4: And no matter how valuable someone is, no matter how

1090
00:55:05,480 --> 00:55:08,720
Speaker 4: important or capabilities or skill set are, if they don't

1091
00:55:08,760 --> 00:55:11,440
Speaker 4: fit within the strategy of a team or the approach

1092
00:55:11,440 --> 00:55:14,600
Speaker 4: and philosophy of a team.

1093
00:55:14,760 --> 00:55:16,560
Speaker 3: It won't matter. It will be destructive.

1094
00:55:16,600 --> 00:55:18,799
Speaker 4: And so learning those on really again, and I think

1095
00:55:18,800 --> 00:55:22,799
Speaker 4: my skill set, my personality fits well within a team

1096
00:55:22,840 --> 00:55:25,560
Speaker 4: based structure, which is to your earlier question about how

1097
00:55:25,640 --> 00:55:27,200
Speaker 4: why did I stay it or how have I stayed

1098
00:55:27,239 --> 00:55:29,880
Speaker 4: at Bearings for so long? It was a fit and

1099
00:55:29,920 --> 00:55:33,600
Speaker 4: so recognizing that always made me understand And again I

1100
00:55:33,600 --> 00:55:35,880
Speaker 4: think it pointed out to having some self awareness that

1101
00:55:35,960 --> 00:55:38,440
Speaker 4: these companies and part of my job is the steward

1102
00:55:38,440 --> 00:55:41,879
Speaker 4: of the company right now. But Mass Mutual, as I mentioned,

1103
00:55:41,920 --> 00:55:43,799
Speaker 4: has been around for one hundred and seventy five years.

1104
00:55:43,800 --> 00:55:45,279
Speaker 4: As long as it owns Bearings, It's going to be

1105
00:55:45,280 --> 00:55:47,799
Speaker 4: around many many years after I'm gone, and I'm a

1106
00:55:47,840 --> 00:55:49,920
Speaker 4: steward of it currently at this but my job is

1107
00:55:49,960 --> 00:55:52,759
Speaker 4: to bring other people along and so therefore it has to.

1108
00:55:52,680 --> 00:55:53,160
Speaker 3: Be a team.

1109
00:55:53,360 --> 00:55:55,640
Speaker 2: Let's talk about books. What are some of your favorites?

1110
00:55:55,680 --> 00:55:56,560
Speaker 2: What are you reading right now?

1111
00:55:56,640 --> 00:55:59,480
Speaker 4: Yeah, I'm just finishing up the Steve Jobs book by

1112
00:55:59,520 --> 00:56:04,400
Speaker 4: Walter He's fantastic. Before that, I read the Musk Book

1113
00:56:04,440 --> 00:56:07,120
Speaker 4: and then actually read a book by him called Code Breakers,

1114
00:56:07,160 --> 00:56:08,400
Speaker 4: which was out the about.

1115
00:56:08,200 --> 00:56:10,040
Speaker 3: The m R and a technology.

1116
00:56:10,920 --> 00:56:14,360
Speaker 4: So I get most I read mostly nonfiction when it

1117
00:56:14,680 --> 00:56:17,160
Speaker 4: comes to that, So I'm going through those kind of

1118
00:56:17,239 --> 00:56:19,520
Speaker 4: juggle books at the same time. I just also finished

1119
00:56:19,560 --> 00:56:24,320
Speaker 4: seventeen seventy six by David mccaugh. Uh huh, So that's

1120
00:56:24,360 --> 00:56:26,080
Speaker 4: that's really what I'm reading, but most of the stuff

1121
00:56:26,120 --> 00:56:26,719
Speaker 4: is nonfiction.

1122
00:56:27,200 --> 00:56:29,640
Speaker 2: I every time someone brings up mccaullaughy, I have to

1123
00:56:29,640 --> 00:56:32,520
Speaker 2: bring up the Right Brothers book by him. Amazing.

1124
00:56:32,600 --> 00:56:34,959
Speaker 4: Yeah, never, Okay, well that'll we'll put that on the list.

1125
00:56:35,000 --> 00:56:36,880
Speaker 4: I haven't read it yet, but I'll put that on

1126
00:56:36,920 --> 00:56:39,440
Speaker 4: the list. And a good writer is so gifted. I mean,

1127
00:56:39,480 --> 00:56:41,640
Speaker 4: it's it's amazing what they can do with stories. So

1128
00:56:41,640 --> 00:56:43,319
Speaker 4: I've enjoyed reading reading those.

1129
00:56:43,440 --> 00:56:46,719
Speaker 2: Our final two questions, what sort of advice would you

1130
00:56:46,800 --> 00:56:50,480
Speaker 2: give to a recent college grad interested in a career

1131
00:56:50,760 --> 00:56:56,920
Speaker 2: in either private investing, insurance investing, or in general if

1132
00:56:57,080 --> 00:56:59,720
Speaker 2: if that was what they were interested in as a career.

1133
00:56:59,800 --> 00:57:02,840
Speaker 3: Yeah, I mean, first, it's a great it's a great industry.

1134
00:57:02,880 --> 00:57:03,200
Speaker 3: I love it.

1135
00:57:03,239 --> 00:57:05,360
Speaker 4: And there's a lot of aspects of financial services. And

1136
00:57:05,400 --> 00:57:07,200
Speaker 4: this is somewhat timely. I've got a I've got a

1137
00:57:07,239 --> 00:57:10,439
Speaker 4: sophomore in college now who I'm somewhat counseling on, although

1138
00:57:10,480 --> 00:57:11,800
Speaker 4: he listens less.

1139
00:57:11,560 --> 00:57:12,800
Speaker 3: To me and more to other people.

1140
00:57:13,440 --> 00:57:17,040
Speaker 4: But I've always advised when we bring in two year

1141
00:57:17,080 --> 00:57:19,680
Speaker 4: analysts out of college, we have a two year analyst program.

1142
00:57:19,680 --> 00:57:22,600
Speaker 4: When I'm fortunate enough to speak with them, it's take

1143
00:57:22,640 --> 00:57:25,680
Speaker 4: it all in. You don't know exactly what you want

1144
00:57:25,680 --> 00:57:28,960
Speaker 4: to do today, but look around, ask a lot of questions.

1145
00:57:29,040 --> 00:57:33,120
Speaker 4: Intellectual curiosity is key. If you've got intellectual curiosity about something,

1146
00:57:33,400 --> 00:57:34,080
Speaker 4: you'll be.

1147
00:57:33,880 --> 00:57:35,160
Speaker 3: Better at it.

1148
00:57:35,480 --> 00:57:38,960
Speaker 4: But most importantly, find a place where you want to

1149
00:57:38,960 --> 00:57:41,240
Speaker 4: be working with who you want to work with, doing

1150
00:57:41,280 --> 00:57:43,280
Speaker 4: what you want to do, and that that, to me,

1151
00:57:43,480 --> 00:57:45,640
Speaker 4: is the key. If if you find yourself in any

1152
00:57:45,680 --> 00:57:48,439
Speaker 4: of those three don't match up, I really think it's

1153
00:57:48,560 --> 00:57:52,200
Speaker 4: it's irrespective of how great you think the industry is,

1154
00:57:52,360 --> 00:57:55,640
Speaker 4: the prestige of it, you just won't be happy long term.

1155
00:57:55,680 --> 00:57:59,040
Speaker 4: And I think I was again fortunate. I loved public accounting,

1156
00:57:59,040 --> 00:58:02,160
Speaker 4: but I couldn't see myself doing that forever. I enjoyed it,

1157
00:58:02,200 --> 00:58:04,320
Speaker 4: and I was fortunate and to find myself in the

1158
00:58:04,360 --> 00:58:08,000
Speaker 4: situation like this. So if you're not where you are,

1159
00:58:08,120 --> 00:58:09,960
Speaker 4: with who you want to be with doing what you want,

1160
00:58:11,040 --> 00:58:11,960
Speaker 4: it'd be time to move on.

1161
00:58:12,320 --> 00:58:14,800
Speaker 2: And our final question, what do you know about the

1162
00:58:14,800 --> 00:58:19,240
Speaker 2: world of finance, credit, lending and investing today you wish

1163
00:58:19,280 --> 00:58:21,840
Speaker 2: you knew twenty five years or so ago when you

1164
00:58:21,880 --> 00:58:23,600
Speaker 2: were really first getting started.

1165
00:58:23,720 --> 00:58:26,920
Speaker 4: Yeah, I think what I would say is what I

1166
00:58:27,000 --> 00:58:31,560
Speaker 4: knew back then, or thought I knew back then, that fundamentals.

1167
00:58:31,040 --> 00:58:33,600
Speaker 3: Ultimately will are key.

1168
00:58:34,200 --> 00:58:37,000
Speaker 4: You lose track of that sometimes when you see euphoria

1169
00:58:37,000 --> 00:58:38,760
Speaker 4: and you see bubbles and you start to get away

1170
00:58:38,800 --> 00:58:42,080
Speaker 4: from really long term cash flows of things or what

1171
00:58:42,160 --> 00:58:45,160
Speaker 4: really matters over time. So I think it's not what

1172
00:58:45,240 --> 00:58:47,480
Speaker 4: I wish I knew then, it was what I wish

1173
00:58:47,560 --> 00:58:50,640
Speaker 4: I hadn't forgotten over time, because mistakes are made really

1174
00:58:50,680 --> 00:58:53,280
Speaker 4: when you lose sight of the fundamentals of things. And

1175
00:58:53,360 --> 00:58:57,280
Speaker 4: so I'd encourage folks that long term valuation should be

1176
00:58:57,360 --> 00:59:01,080
Speaker 4: based off an expectation of growth and expectation that that

1177
00:59:01,200 --> 00:59:03,400
Speaker 4: sooner or later will turn into earnings, which will ultimately

1178
00:59:03,400 --> 00:59:06,120
Speaker 4: turn into cash flows. In keeping that in mind that

1179
00:59:06,360 --> 00:59:09,920
Speaker 4: that's the fundamental for all investments. In what investments that

1180
00:59:10,000 --> 00:59:12,640
Speaker 4: or people are made in Ultimately, valuations.

1181
00:59:12,920 --> 00:59:17,120
Speaker 2: Really really very fascinating. Mike Freno, thank you for being

1182
00:59:17,120 --> 00:59:20,320
Speaker 2: so generous with your time. We have been speaking with

1183
00:59:20,400 --> 00:59:24,160
Speaker 2: Mike Freno, chairman and CEO of Bearings, which manages over

1184
00:59:24,280 --> 00:59:28,600
Speaker 2: four hundred and thirty billion dollars in global financial assets.

1185
00:59:29,000 --> 00:59:32,120
Speaker 2: If you enjoy this conversation, check out any of the

1186
00:59:32,200 --> 00:59:36,560
Speaker 2: five hundred previous interviews we've done over the past ten years.

1187
00:59:37,040 --> 00:59:41,720
Speaker 2: You can find those at Bloomberg, iTunes, Spotify, YouTube, wherever

1188
00:59:41,800 --> 00:59:45,120
Speaker 2: you find your favorite podcasts. And be sure and check

1189
00:59:45,160 --> 00:59:50,360
Speaker 2: out my new book, How Not to Invest The Ideas, numbers,

1190
00:59:50,360 --> 00:59:54,160
Speaker 2: and behaviors that destroy wealth and How to avoid them,

1191
00:59:54,600 --> 00:59:58,640
Speaker 2: coming March eighteenth, twenty twenty five. I would be remiss

1192
00:59:58,640 --> 01:00:00,560
Speaker 2: if I did not thank the Cracked team that helps

1193
01:00:00,560 --> 01:00:04,760
Speaker 2: put these conversations together. Adam Luke is my producer. John

1194
01:00:04,840 --> 01:00:09,520
Speaker 2: Wasserman is my audio engineer. Sean Russo is my researcher.

1195
01:00:09,800 --> 01:00:12,760
Speaker 2: Sage Bauman is the head of podcasts here at Bloomberg.

1196
01:00:13,360 --> 01:00:17,400
Speaker 2: I'm Barry Richdolts. You've been listening to Masters in Business

1197
01:00:17,960 --> 01:00:23,040
Speaker 2: on Bloomberg Radio.