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Speaker 2: Let's start off strong here we get the thoughts about
Speaker 2: where we're going on these markets. Sema Sho, chief global
Speaker 2: strategist at Principal Asset Management. She's based in London, but
Speaker 2: she's getting ready to do like a Midwest America trip.
Speaker 3: Good for her.
Speaker 2: I mean East Lansing, Michigan. I have a soft spot
Speaker 2: in my her for East Lansing, the state capital Michigan,
Speaker 2: Des Moines, Iowa, another great town. Seema, thanks so much
Speaker 2: for joining. You're giving us a little time here in
Speaker 2: New York City. What's the conversation you're having with your
Speaker 2: clients as you come through the US and meeting with
Speaker 2: your clients.
Speaker 4: These days, Hellie, thanks for having me so. The main
Speaker 4: conversation is of course around the FED. That has to
Speaker 4: be the key conversation. And actually it's interesting because what
Speaker 4: we had seen is that over the previous six months
Speaker 4: there really wasn't a conversation about the FED, no one
Speaker 4: was talking about interest rates, and now, of course that
Speaker 4: conversation is completely turned on its head, questioning about inflation,
Speaker 4: whether the rate hikes are coming, and then of course
Speaker 4: if the market can digest that.
Speaker 5: So do you think Kevin a Ware's just the biggest
Speaker 5: change is more policy or communication or maybe both?
Speaker 4: I think could be both. I mean, I think communication
Speaker 4: is obviously at the moment it is the key one,
Speaker 4: and we did see that actually without the communication, the
Speaker 4: market puts more emphasis on the dots, which is the
Speaker 4: exact opposite of what he wanted. But I think as
Speaker 4: we go down the line, as we get towards the
Speaker 4: end of the year, policy really could have some meaningful changes.
Speaker 4: So much it's going to depend on.
Speaker 5: That task force.
Speaker 4: So you know, we're going to be thinking about volatility
Speaker 4: in the next few months around what happens to rates.
Speaker 4: But then at the end of the year there's a
Speaker 4: significant potential for a pretty big market moves around what
Speaker 4: happens from those task forces.
Speaker 3: See what's your inflation call.
Speaker 2: These days, we've seen oil come down, as it seems
Speaker 2: like we may have some progress here on some peace
Speaker 2: and negotiations in Middle East, what's your inflation call overall.
Speaker 4: Yeah, so we've got headline CPR, for example, at around
Speaker 4: four point two percent by year end. The ore price
Speaker 4: coming down certainly helps, but we do think that there's
Speaker 4: structural inflation. It's going to come down further through twenty
Speaker 4: twenty seven. We do think it gets pretty close to
Speaker 4: two percent, but still above and the main reason for
Speaker 4: that is there are some other structural drivers behind inflation
Speaker 4: which are not going to be disappearing anytime soon, mainly
Speaker 4: around the AI capex build out. So this is still
Speaker 4: a high inflation environment. We think that the FED is
Speaker 4: going to stay in hold, but I have to say,
Speaker 4: you know, clearly the risks around a potential hike have
Speaker 4: increased since last week, and so that is something which
Speaker 4: is a life edge for US.
Speaker 2: Hi e Sema, thank you so much for journsh'ming to
Speaker 2: go to Switzerland right now. Seem cheap global strategist for
Speaker 2: phusible Global Investment to stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
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Speaker 2: David Katz, Joints, President and Chief investment Officer, Matrix Asset Advisors.
Speaker 3: David, how do you guys think about small cap stocks
Speaker 3: these days?
Speaker 6: Well, small caps have underperformed large caps for quite some time,
Speaker 6: so we think they are due to start to do better.
Speaker 6: You're starting to see it now. You know, a lot
Speaker 6: of that has come from smaller AI type plays that
Speaker 6: have done well within the small cap space. But we
Speaker 6: think if you look at the next two to four
Speaker 6: years of interest rates ever start trending lower, economy starts
Speaker 6: to pick up. Small caps are selling in a much
Speaker 6: more reasonable valuation than the large caps and megacaps.
Speaker 5: What to you is the most crowded trade in the
Speaker 5: market right now? Or should I even ask that? And
Speaker 5: it's AI.
Speaker 6: Exactly So, it's AI, but it no longer is AI
Speaker 6: like the Googles and the Amazons of the world. It's AI.
Speaker 6: The semiconductors and those benefici areas. The pricing has gone crazy.
Speaker 6: Prices are up one hundred two hundred percent. As a result,
Speaker 6: earnings and profitability and margins are rough very significantly for
Speaker 6: a lot of chip companies, and they're being valued as
Speaker 6: if it's going to stay up there forever. As a result,
Speaker 6: they're selling it very very rich valuations, and we think
Speaker 6: that that's an area to be wory about. We would
Speaker 6: not be throwing new money into the chip area of
Speaker 6: AI right now.
Speaker 2: So when you see an IPO seventy five billion dollars
Speaker 2: of SpaceX, the biggest of all time and whatnot, you've
Speaker 2: got Anthropic in the pipeline.
Speaker 3: We've got open AI in a pipeline again, a jillion
Speaker 3: dollar ie. Because does I tell you anything about the
Speaker 3: nature of the market. Is it light cycle? Is it frothy?
Speaker 3: Is it just sign of a healthy market? How do
Speaker 3: you think about it? All three?
Speaker 6: It's healthy, you're able to sell these things. But it
Speaker 6: definitely is frothy right now. If you look at chat
Speaker 6: EBT and you look at Anthropic, they're looking to be
Speaker 6: about a one trillion dollar company. Microsoft right now sells
Speaker 6: it about three point two trillion dollars. There isn't a
Speaker 6: big mode in a lot of these AI companies. As
Speaker 6: you see Claude is now dominating CHATCHBT. Things change. So
Speaker 6: we think that ultimately you're paying a lot for those
Speaker 6: companies and we think there probably is better opportunity in
Speaker 6: the Googles and Microsofts of the world, because you're not
Speaker 6: getting a AI startup at a low valuation, you're getting
Speaker 6: it at a top valuation.
Speaker 5: You do warrant, though, that AA sentiment could peak before fundamentals.
Speaker 5: Do you think we're getting close to that point.
Speaker 6: We don't know when that point's going to come, but
Speaker 6: that's exactly the point. Typically the stocks are going to
Speaker 6: go down three to six months before the fundamentals start
Speaker 6: to slow. We don't think we're at that point yet,
Speaker 6: but we do think you'll probably get there in the
Speaker 6: next six to eighteen months. And we think that from
Speaker 6: a stock price valuation, they're much better opportunities in the
Speaker 6: market in other areas that are not caught up in
Speaker 6: the excitement.
Speaker 2: What are you doing in the bond market? Do you
Speaker 2: take credit risk cure or do you just clip a
Speaker 2: four point two percent coupon on the two year?
Speaker 6: We clipped the four point two percent coupon in the
Speaker 6: two year. We don't think you want to take credit risk,
Speaker 6: and we don't think you want to take duration. We'd
Speaker 6: focus on one the five years. You're getting a good return.
Speaker 6: We think Ultimately, inflation is a longer term problem. The
Speaker 6: budget deficit is a longer term problem. The FED losing
Speaker 6: its autonomy is a problem. So as a result, we're
Speaker 6: a little bit wary about longer term bonds. Short term bonds, though,
Speaker 6: we think, is a lot that you get that four
Speaker 6: point two percent return.
Speaker 5: You've been bullish all year mostly. What's stopping you from
Speaker 5: being even more bullish today, Well.
Speaker 6: We're sort of counterintuitive. The fact that the market's gone
Speaker 6: up so much this year and the last three and
Speaker 6: a half years, and now sales at twenty three times
Speaker 6: earnings means that there's less upside. We think if the
Speaker 6: market regresses to the normal valuation that you're more limited.
Speaker 6: We think earning growth is very good. An interesting fact,
Speaker 6: a hyper earnings growth twenty percent or more. Earnings growth
Speaker 6: has generally not been an ideal market to make optimal returns,
Speaker 6: usually zero to five percent, five to ten percent better
Speaker 6: for stock market returns. So the fact that we have
Speaker 6: great earning growth doesn't mean that you're gonna have great
Speaker 6: stock market returns, especially going forward, because you've already gotten
Speaker 6: a year's worth of returns in six months.
Speaker 2: Gives name two that you like, right, now because it's
Speaker 2: got to be hard to pick individual names given some
Speaker 2: of the runs we've had.
Speaker 3: But a lot of names have not participated.
Speaker 6: Well, that's the thing, you know, there are certain parts
Speaker 6: of the market that are very expensive. There are lots
Speaker 6: of parts of the market that are very inexpensive. So
Speaker 6: even though we think the market is originally priced, lots
Speaker 6: of opportunities. We like healthcare companies like a Metronic or
Speaker 6: a Thermo Fisher real attractive, we think, you know, also
Speaker 6: consumer staples. You know, companies like Constellation brands pretty attractive.
Speaker 6: Tyson Foods, which is a protein play, is doing quite well.
Speaker 3: They're getting some protein free studio protein acting.
Speaker 2: That's what the kids are doing. It's chicken, it's meat.
Speaker 2: I mean, what are you guys talking about. Go ahead,
Speaker 2: I know you've got to go there.
Speaker 6: But basically with the GLP ones, yeah, people are not
Speaker 6: eating as much of carbohydrates, but they do need more
Speaker 6: and more protein. And the fact that you're having problems
Speaker 6: with the beef market now means more people are going
Speaker 6: to go to chicken. Tyson food benefits by any of that,
Speaker 6: and it's selling it twelve times earnings, three and a
Speaker 6: half percent yields so there are lots of things out
Speaker 6: there that are good if you have a long time
Speaker 6: horizon and you don't mind being in boring stocks.
Speaker 5: So much of the enthusiasm is coming from the back
Speaker 5: of strong corporate earnings. But do you think investors are
Speaker 5: becoming a little bit complacent about the geopolitical risk coming
Speaker 5: from the Middle East?
Speaker 3: We think so.
Speaker 6: You know, you still have the Iran conflict going on
Speaker 6: in terms of they possibly a resolution, but you have
Speaker 6: problems this weekend again with closing the straits. Yet stocks
Speaker 6: are up sixteen percent in the last two months. There
Speaker 6: are at a higher level than when the conflict started.
Speaker 6: So we do think there is a lot of optimism
Speaker 6: and people are ignoring the possible shortfalls. Again, that doesn't
Speaker 6: mean we're bearish, but we do think that you're going
Speaker 6: to be in a trading range. We would not chase
Speaker 6: the market here. If the market were to pull back
Speaker 6: five to ten percent, we'd start to buying on that dip.
Speaker 6: If it goes up five percent, you'd want to look
Speaker 6: at things that have done real well and take some problems.
Speaker 2: David, I'm not going to call you old, but you've
Speaker 2: been around the block once or twice, been.
Speaker 5: Around experience, experience Veteran Alan.
Speaker 3: Greenspan passed away this morning.
Speaker 2: Impact on the markets in general to FED in particular, gular,
Speaker 2: What are your thoughts as you think about the tenure
Speaker 2: of Ellen green spinning FED.
Speaker 6: He was an extraordinarily smart person, did very good things,
Speaker 6: different time. He's not been involved, as you know, for
Speaker 6: quite some time, so it's not going to affect the
Speaker 6: markets now, but the markets should pay, you know, a
Speaker 6: nice respect to him because he really did a good
Speaker 6: job and was a really smart guy.
Speaker 2: Absolutely, all right, Dave, thank you so much for joining us.
Speaker 2: David Catz, President and Chief investment Officer Matrix Asset Advisors.
Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: John mclithwait joins us here, editor in chief of Bloomberg News.
Speaker 2: He is in our London office at the moment. John,
Speaker 2: talk to us about your thoughts here on Alan Greenspan,
Speaker 2: such an extraordinary career, spending so many years, so many
Speaker 2: presidencies and reshaping kind of the Federal Reserve. Love to
Speaker 2: get your thoughts on mister green and his passing.
Speaker 7: Well, first, obviously it's a sad day in that respect.
Speaker 7: I think he, you know, Greenspan was one of the
Speaker 7: great central bankers a multiple different levels. Really very very intelligent,
Speaker 7: also kind of very cryptic in terms of the way
Speaker 7: he often communicated to people. But I think he also
Speaker 7: had this very long sort of intellectual history, goes back
Speaker 7: all the way to the fact that he was involved
Speaker 7: with him Anne Rand and stuff like that. He went
Speaker 7: through different kind of intellectual fashions and on the whole
Speaker 7: he ran the economy pretty well. There will always be
Speaker 7: people who question, you know, how much his loosening set
Speaker 7: up the kind of financial crisis, but you know, there
Speaker 7: were other factors at work there as well. It wasn't
Speaker 7: just him. So I think he will he goes as
Speaker 7: a giant of central banking.
Speaker 5: What do you think is the biggest legacy that he
Speaker 5: left us with, especially now as the Federal Reserve and
Speaker 5: questions about it independence continue to hound markets and investors.
Speaker 7: That's a good point. I think he was a very
Speaker 7: strong advocate of Central Bank independence. I mean, sometimes you
Speaker 7: forget these things that you forget how different the world
Speaker 7: was at one time. But the fact that you ended
Speaker 7: up with Paul Volka, Alan Greenspan, obviously people like Ben
Speaker 7: Bananke afterwards. The whole presumption of what they did was
Speaker 7: that the Federal Reserve should be separate and independent. In
Speaker 7: places like Britain where I am at the moment, you know,
Speaker 7: that was also a more recent things. It's this is
Speaker 7: not something that has always been there. It's a kind
Speaker 7: of reputation has to be built. And it's interesting the
Speaker 7: way that Jay Powell has managed to sort of defend that,
Speaker 7: I think actually relatively successfully against Donald Trump's attempts to
Speaker 7: sort of intervene in that area.
Speaker 2: John, like the switch gears here a little bit and
Speaker 2: focus a little bit on what's happening where you are
Speaker 2: right now in Great Britain. Here Starmer said he would
Speaker 2: step down in Britain's Prime Minister, paving the way for
Speaker 2: Anny Burnham.
Speaker 3: To succeed him. John, I'll al for you to just
Speaker 3: give us a little perspective here.
Speaker 2: It was just two years ago that mister Starmer won
Speaker 2: the office seemingly with some pretty broad support.
Speaker 3: What happened in the past two years.
Speaker 7: Well. The interesting thing is that people like me always
Speaker 7: used to be rude about the Italians for their degree
Speaker 7: of political volatility. But what seems to have happened is
Speaker 7: that England Britain has become more like Italy, and Italy
Speaker 7: has become more like Britain, with Georgia Maloney now holding
Speaker 7: on to power quite solidly. I think when you look
Speaker 7: at Starmer, a lot of people, me included, thought that
Speaker 7: he knew exactly what to do. You know, he came in,
Speaker 7: it seemed, with a very efficient campaign. He seemed to
Speaker 7: be heading towards being a kind of Blair Part two.
Speaker 7: He seemed to be friendly to business, especially with his
Speaker 7: Chancellor Rachel Reeves. And really I think it shows two things.
Speaker 7: One is that Britain is much harder to govern than
Speaker 7: it was before Brexit, certainly, and secondly that you know,
Speaker 7: but it wasn't just that. I think he just didn't
Speaker 7: come in with an idea about what exactly he was
Speaker 7: going to do. He was quite sure footed overseas in
Speaker 7: terms of foreign policy. I think he handled Donald Trump
Speaker 7: on the whole relatively well. Although Trump made a predictably
Speaker 7: catty comment about him yesterday. But on the whole he
Speaker 7: did that quite well. But at home he always seemed
Speaker 7: at see. He got into trouble almost immediately with a
Speaker 7: silly thing to do with kind of c expenses. He
Speaker 7: then did this thing to do with pensioners and the
Speaker 7: winter fuel pavement, which sounds like something rather archaic but
Speaker 7: effectively as a way to help people keep warmer in
Speaker 7: the winter. That kind of blew up. But on the
Speaker 7: other hand they hit him, and especially Rachel Reeves really
Speaker 7: did quite a lot of damage to the idea that
Speaker 7: this new version of a labor party was something to
Speaker 7: could get on with business. So he ended up losing
Speaker 7: on both sides, and suddenly in between this he started
Speaker 7: being kind of outsmarted by his own MPs. Normally, when
Speaker 7: you come in with a massive majority, you know that
Speaker 7: should be a sign of strength. But in a strange way,
Speaker 7: that that sheer number gave people room to rebel when
Speaker 7: they wanted to, and that made it very difficult. So yes,
Speaker 7: it does show that Britain is very hard to govern,
Speaker 7: but I think most people would admit that Starmer didn't
Speaker 7: make He certainly didn't govern as well as he can.
Speaker 7: Campaign to become prime Minister.
Speaker 5: And do you think that Andy Burnham will he be
Speaker 5: seen as a continuity candidate or a change candidate. I'm
Speaker 5: just thinking of what the biggest policy difference is we
Speaker 5: could see under a potentially Burnham premiership.
Speaker 7: That's a really good question. The answer is, we don't know.
Speaker 7: He's emerging with something that you people talk about Manchester Manchsterism,
Speaker 7: and it's a bit like an American governor coming in
Speaker 7: to be coming into the White House where people tried
Speaker 7: desperately to work out, you know, what they did in
Speaker 7: Texas or what they did in California, and then trying
Speaker 7: to work out how they could apply that to the
Speaker 7: federal government. With one massive difference is that you know
Speaker 7: that when you become president you have to go through
Speaker 7: lots of campaigns and things. In this case, kind of
Speaker 7: the basic starting point is Andy Burnham has been a
Speaker 7: successful mayor of Manchester. It's quite a long career in
Speaker 7: the Labor Party, and he's enormously more popular than Kirstar,
Speaker 7: so let's give him a go. But nobody, as you
Speaker 7: point it out, really knows exactly what he thinks. To
Speaker 7: the left, he's saying, look, I want to take people
Speaker 7: talk about the way he sort of nationalized the buses
Speaker 7: in Manchester to the right. When people talk at Mansterism,
Speaker 7: it's really about quite a lot, doing quite a lot
Speaker 7: of things with business and working out how to kind
Speaker 7: of boost growth in that way, and that again has
Speaker 7: been something that Starmer has not been good at. So
Speaker 7: at the moment he is a kind of blank slate
Speaker 7: which works brilliantly if you're running to be something, because
Speaker 7: everyone can paint their hopes, dreams, fantasies on you and
Speaker 7: think that you're going to be all these things at
Speaker 7: the same time. But at this precise moment he really
Speaker 7: needs as a plan and a direction and then to
Speaker 7: say look, we're going in this way, and he really
Speaker 7: needs to bring the kind of parliamentary party behind him.
Speaker 3: John, thank you so much.
Speaker 2: We really appreciate getting your thoughts here and your perspective.
Speaker 2: John mcadd wait. He is the editor in chief of
Speaker 2: Bloomberg News. He is in Bloomberg's London headquarters at Queen
Speaker 2: Victoria Street there giving us some thoughts on the passing
Speaker 2: of Alan Greenspan one hundred what a nice life there
Speaker 2: of full life, and then as well as the latest
Speaker 2: on the changes.
Speaker 3: In Stay with us more from Bloomberg Surveillance coming up
Speaker 3: after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us Live on YouTube.
Speaker 2: Come back to these markets. We do that with a
Speaker 2: somebody does this stuff for a living. Molly Parni, partner
Speaker 2: and president at Jackman Asset Management. She's a graduate of
Speaker 2: Williman Mary University. I was just on the campus.
Speaker 3: Of Wayman Mary a couple weeks ago. Beautiful as ever
Speaker 3: down there in Williamsburg. It's a great place to visit. Molly.
Speaker 3: Let's talk about these markets here.
Speaker 2: You throw a lot of a black swam in the
Speaker 2: form of an Iranian war, you throw all kinds of
Speaker 2: geopolitical unrest at there, but corporate America continues to come
Speaker 2: through with very strong earnings.
Speaker 3: Is it as simple as that?
Speaker 8: It sounds simple, doesn't It's it's unbelievable. But you know,
Speaker 8: these things can go up into the right for quite
Speaker 8: some time until until they don't. And we've all, i mean,
Speaker 8: we've invested through the dot com, the telecom boom, and
Speaker 8: bust all of what we saw through the Actually, it's
Speaker 8: interesting that the S and P two thousand to twenty
Speaker 8: ten was flat.
Speaker 9: It was like it was flat because they pulled forward.
Speaker 8: All the returns in the dot com bubble, and it
Speaker 8: took that long for the market to actually move up again.
Speaker 8: It's just we haven't seen that in a very long time.
Speaker 8: We've instead seen mid twenties returns every year, seems like
Speaker 8: for several years.
Speaker 5: What about memory cycle? Your notes lean heavily on that.
Speaker 5: Do you think AI has permanently changed memory cycle or
Speaker 5: our investors still underestimating the risk of yet again another downturn.
Speaker 9: Yeah, it's a great question.
Speaker 8: We have a pretty substantial position in Samsung, which we think,
Speaker 8: like we like to do at Yakman, we like to
Speaker 8: get exposure without paying for it. We focus very much
Speaker 8: on the price that we pay for investments, and here
Speaker 8: we get to participate in AI without having to pay
Speaker 8: the multiples that we're seeing in some of the other
Speaker 8: memory players.
Speaker 9: We're actually looking at.
Speaker 8: You can you can invest in Samsung and in three
Speaker 8: years of their forecast you will you'll make the market cap.
Speaker 8: So so there is there is risk and memory it's
Speaker 8: historically been a very cyclical industry boom bus cycles, et cetera,
Speaker 8: et cetera. Uh, until until this giant tail wind came along.
Speaker 8: And uh and it's driving all kinds of purchases price.
Speaker 8: I mean they're taking price there. Uh, I mean they're
Speaker 8: they're big booking out capacity. They're we're hearing things that
Speaker 8: some some customers are even helping to fund capacity build out.
Speaker 8: So it's it's quite a big deal. We didn't see
Speaker 8: that in our thesis. We actually invested in Samsung and
Speaker 8: at the size when we thought it was just a good,
Speaker 8: really inexpensive memory player, and then this giant tailwind shows up,
Speaker 8: turns out to be one of the bottlenecks and all
Speaker 8: the AI build out and it's a really nice place
Speaker 8: to be.
Speaker 2: So how do you think about value when when you
Speaker 2: look at an individual name?
Speaker 3: Is it relative to the peer group? It's a relative
Speaker 3: to the earnings you guys forecast.
Speaker 2: How do you guys think about values when you think
Speaker 2: about entering into a name.
Speaker 8: Yeah, well we have we have a really interesting well
Speaker 8: it feels like a lost art because we're actually looking
Speaker 8: at the business itself. We're looking for what kind of
Speaker 8: free cash flow does a company generate, and we look
Speaker 8: back a very long period of time to be able
Speaker 8: to tell how does it behave in different market cycles
Speaker 8: and in different kind of economic environments. And so we've
Speaker 8: got we've got a portfolio built with companies that we
Speaker 8: own and we're and we're the kind of of we're
Speaker 8: thinking as an owner when we make these investments. So
Speaker 8: for Samsung, when we're looking at a three to four
Speaker 8: times kind of payback on the total market cap, that's
Speaker 8: the kind of bargains that we're looking for in the
Speaker 8: very best names in our portfolio.
Speaker 9: But it's always looking.
Speaker 8: At forward forward rates of return, the free cash flow
Speaker 8: that these companies can generate, and how much risk we
Speaker 8: have to take to make some of these investments.
Speaker 9: You can think about like a triple A bond.
Speaker 8: You have very little risk in a triple A bond,
Speaker 8: so you actually get paid less, right, But at the
Speaker 8: same time, if you have a riskier investment, you ought
Speaker 8: to be paid more in for a great return to
Speaker 8: be compensating for that risk. And it's that some of
Speaker 8: how we've generated our returns through some pretty tough tough
Speaker 8: cycles over their thirty year history of Yakman.
Speaker 5: How are you thinking about diversification within equities and even
Speaker 5: across that within the fixed income market, because it seems
Speaker 5: like it's getting harder and harder to diversify.
Speaker 8: Yeah, it's a pretty, it's a pretty. There's a lot
Speaker 8: of crowded trades out there, for sure.
Speaker 9: Actually we don't. We're actually generalists.
Speaker 8: We approach investing like we own the business and uh,
Speaker 8: and so we have a variety of different companies across
Speaker 8: different industries, and we actually are quite comfortable taking some
Speaker 8: outsized investments in companies that we believe strongly in. So
Speaker 8: you'll see names in our portfolio that are that are
Speaker 8: much larger than the rest because we're looking we see
Speaker 8: just a sort of an outsized opportunity in those in
Speaker 8: those investment pieces.
Speaker 2: All right, Samsung, the high tech, I get that. How
Speaker 2: about U Haul that seems low tech, but give us
Speaker 2: that story.
Speaker 9: Yeah, it's pretty, it's pretty low tech.
Speaker 8: I don't know if you've ever rent to the U
Speaker 8: haul and took it on the road, but it's uh,
Speaker 8: we love it because every time we see a U
Speaker 8: haul drip truck driving around, it's advertising the company and uh,
Speaker 8: you know, it's it's like Kleenex. Right, These trucks are ubiquitous.
Speaker 8: They've got like this gigantic network, you know, of different
Speaker 8: offices all over the country. And then they started building
Speaker 8: into the self storage business. And the self storage business
Speaker 8: is one where you have to put in a lot
Speaker 8: of capital up front, the units are not least and
Speaker 8: so you've got this sort of j curve effect as
Speaker 8: you get into the self storage business. But slowly but
Speaker 8: surely they've been using the cash flows from the truck
Speaker 8: business to build out what's what's one of the leading
Speaker 8: self storage UH properties in the country. Right, they're not
Speaker 8: they're not very good at breaking out their product lines,
Speaker 8: the lines of business, kinds of accounting. So it's actually
Speaker 8: takes a bit of work to really understand the trucking
Speaker 8: business versus self storage. But based on a recent there's
Speaker 8: a there was a recent UH self storage company UH
Speaker 8: basically the number five in the market.
Speaker 9: If you apply those kinds of metrics, you get the truck.
Speaker 8: Business for free, because it's it's very it's a very
Speaker 8: it's a great business and very much kind of owner
Speaker 8: occupied because the family owns and controls a huge portion
Speaker 8: of the company.
Speaker 3: Got it, Molly, thanks so much for joining us. Always
Speaker 3: fascinating discussion.
Speaker 2: Molly Peroni, partner and president of Yachtsman Asset Management.
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