Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Let's
Speaker 1: turn out to one stock and one story. In particular,
Speaker 1: Century Fox shares higher right now by more than seven percent.
Speaker 1: This comes after an increased bid from Disney seventy one
Speaker 1: billion dollars to acquire those uh century Fox assets. Here
Speaker 1: to tell us more, Paul Sweeney expert when it comes
Speaker 1: to all things Internet and media related. He is our
Speaker 1: director of North American Research for Bloomberg Intelligence and our
Speaker 1: Internet analysts. Paul, what do you make of this particular
Speaker 1: move by Disney? Is this the coda? Is this the
Speaker 1: final final bid? You know, we'll have to see. The
Speaker 1: ball is definitely in Comcast court here, but you know,
Speaker 1: this is a very aggressive move by Bob Buyer and
Speaker 1: and Disney. Not only did they raise the price of
Speaker 1: their deal by approximately thirty but they also added a
Speaker 1: cash component allowing shareholders to elect between cash and stock,
Speaker 1: and that really makes the deal very compelling for sellers,
Speaker 1: particularly the Murdoch family, who may prefer to take stock
Speaker 1: and defer some of their their tax gains versus a
Speaker 1: a Comcast deal which is all cash and which would
Speaker 1: clearly result in a significant tax liability for the Murdoch
Speaker 1: So this is about as compelling a deal as Disney
Speaker 1: could have come back with. I think it's actually a
Speaker 1: little surprising how aggressive they were. So again, the ball
Speaker 1: is really in the court of Comcast and Brian Roberts,
Speaker 1: and they need to decide how much they want this asset.
Speaker 1: I'm really confused about the market response to this. Disney
Speaker 1: shares are up more than one percent, even though, uh,
Speaker 1: you know, the risk of Disney over paying, the risk
Speaker 1: of a bidding war ending up with an outcome that
Speaker 1: isn't so great is rising. Can you explain why investors
Speaker 1: are cheering this the power of cash? Um so. I
Speaker 1: think what's happening here is the original all stock deal
Speaker 1: that Disney put on the table is actually diluted to
Speaker 1: Disney shareholders per our analysis. However, as they reduced the
Speaker 1: amount of equity that they put in deal and increase
Speaker 1: the cash. Even at today's low rates, the deal becomes
Speaker 1: less and less dilutive and actually a little bit of
Speaker 1: creative here. So depending upon the elections of cash versus stock. So, um,
Speaker 1: it's actually for Disney from a near term perspective a
Speaker 1: little bit better believe it or not. And then I
Speaker 1: think it just kind of goes to I think it
Speaker 1: reflects effected. I think investors feel like this might be
Speaker 1: a knockout punch by Disney. Well, taking a look at
Speaker 1: the shares of Comcast. On the other hand, you know,
Speaker 1: Comcast investors don't seem to have liked this deal. The
Speaker 1: stock is down nearly eighteen percent so far this year
Speaker 1: today basically unchanged. Do you think that the if indeed
Speaker 1: Disney walks away with this, that this will be something
Speaker 1: that will be positive for Comcast? I think so in
Speaker 1: the short term. You're exactly right. The stock has been
Speaker 1: down this year. It's been underperforming given Charter, which is
Speaker 1: another big cable company, And I think the concern there
Speaker 1: with Comcast was just exactly what happened, that they would
Speaker 1: try to use their balance sheet to make a big
Speaker 1: acquisition and uh and uh, you know, really limit the
Speaker 1: amount of stock they can buy back or the amount
Speaker 1: they can invest in some of their other core businesses.
Speaker 1: And I think Comcast investors, while they're obviously very supportive
Speaker 1: of Brian Roberts and its management team, I think they
Speaker 1: feel like, UM, the Fox assets are not as critical
Speaker 1: to the future of Comcast as they might be for Disney.
Speaker 1: As a result, I don't think Comcast shareholders were quite
Speaker 1: as supportive of the Comcast management team and board as
Speaker 1: the Disney shareholders have proven to be. UM. So the
Speaker 1: question then will be, you know, A, what does Comcast
Speaker 1: do here in response to the Disney bid? And be
Speaker 1: if they lose, where does Comcast go next? UM? Do
Speaker 1: they try to copple together some assets like a Discovery Communications,
Speaker 1: like some other media companies that might be out there,
Speaker 1: like some film studios that might replicate in some way, um,
Speaker 1: the assets that they did not get with Fox. Paul Sweeney,
Speaker 1: thank you so much for being with us, and I'm
Speaker 1: sure we'll be following this on an ongoing basis as
Speaker 1: this saga continues to play out. Paul Sweeney as US
Speaker 1: director of Research and senior Media and Internet analyst for
Speaker 1: Bloomberg Intelligence. General Electric shares are down more than one
Speaker 1: percent today, following in early two percent laws yesterday after
Speaker 1: getting kicked out of the Dow Jones Index. This is
Speaker 1: a symbolic move, but it also could affect gees fortunes
Speaker 1: going forward in a fundamental way. Sarah pon Sech joins
Speaker 1: US now she's bloomber Cross Asset reporter um and this
Speaker 1: story is fascinating from so many perspectives. But first, can
Speaker 1: you just sort of paint the picture. General Electric has
Speaker 1: been in the index for a long time, storied company.
Speaker 1: Why was it kicked out? Of course, so this is
Speaker 1: pretty bitter sweet. G E was one of the original
Speaker 1: down members and now we don't have any of them.
Speaker 1: But the problem with ge is that we have been
Speaker 1: seeing it come forth with so many issues lately. I mean,
Speaker 1: it's lost half its market value in the last year.
Speaker 1: This year, it's down already last year it's down. I mean,
Speaker 1: it's been struggling with weak demand for industrial equipment. It's
Speaker 1: had cash flow problems. They're also going through an accounting
Speaker 1: probe right now. So there's just so much right now
Speaker 1: that's hurting the company. And it dropped to a point
Speaker 1: that's so low because the doubt is price weighted that
Speaker 1: it really didn't have too much weight within the Dow,
Speaker 1: and the doubts also supposed to represent the economy and
Speaker 1: the down makers, if you will feel like the economy
Speaker 1: is moving forth and maybe g E is in the
Speaker 1: next part of it. Well, just to be clear, right,
Speaker 1: the way in which the Dow Jones Industrial Leverage is
Speaker 1: put together is it is a price of and it's
Speaker 1: the sum of the actual price of all of the
Speaker 1: components and the index, and then that price is then
Speaker 1: divided by something called the Dow divisor, and that is
Speaker 1: designed to account for stock splits as well as a
Speaker 1: variety of other kind of changes in the actual stock price.
Speaker 1: And it's interesting because this is a very human decision, right,
Speaker 1: This is not something like g E reached a certain
Speaker 1: level of sales, you're out. It's not about it. It's
Speaker 1: not about that, right. It's not rules based, and like
Speaker 1: you said, it is price weighted, whereas a lot of
Speaker 1: the other industries are market cap weighted. But it's not
Speaker 1: a rules based system that either adds stocks or takes
Speaker 1: stocks out of the index. Rather, there's actually a committee
Speaker 1: that sits around and discusses which stocks should be the
Speaker 1: next one added, But this raises so many questions. It
Speaker 1: is about just you know, what is passive management and
Speaker 1: you know with index strategies, is this smart investing? I mean,
Speaker 1: given the fact that this company's shares has have absolutely tanked,
Speaker 1: is now the time to sell out and solidify losses
Speaker 1: and then bringing another name that's done really well that
Speaker 1: might not have as many games looking forward? Right. So
Speaker 1: Stephen Gendell, he wrote an opinion column for Bloomberg this morning,
Speaker 1: and he made a really interesting point saying, is it fair,
Speaker 1: uh for a committee to sit around and kind of
Speaker 1: choose what the economy is supposed to look like going forwards?
Speaker 1: And he pointed out that the DAL dropped A T
Speaker 1: and T back in and since then a T and
Speaker 1: T is we just saw the acquisition with Time Warner.
Speaker 1: And even before that, the DAL dropped Bank of America,
Speaker 1: and since then Bank of America shares are up. So
Speaker 1: it really comes down to the point of who whose
Speaker 1: choice is it to really decide who goes and who
Speaker 1: comes out. American Cotton Oil Company that was one of
Speaker 1: the original down members just to give it and it's
Speaker 1: now part of Unilever. After a variety of you know,
Speaker 1: a sires and sellers and so on. But I mean,
Speaker 1: it just reflects the ongoing change in the way that
Speaker 1: the economy is represented in the financial markets right right.
Speaker 1: And something that we've been discussing a lot is why Walgreens.
Speaker 1: We've been trying to figure it out because with Walgreens
Speaker 1: you can go both ways. Of course, it is actually
Speaker 1: classified as a consumer staples company, but a lot of
Speaker 1: people do think of it as a bit of a
Speaker 1: healthcare company. So if you look at the waitings and
Speaker 1: the members of the makeup of the Dow, consumer staples
Speaker 1: hold about five point seven percent of the entire index,
Speaker 1: but healthcare, on the other hand, holds about So is
Speaker 1: this a safe way to get more at retail but
Speaker 1: not get into traditional retail. Someone I spoke with this morning,
Speaker 1: she said, you're not gonna add Mazis, You're not gonna
Speaker 1: add J C. Penny. But is it kind of a
Speaker 1: cop out? I also wonder, you know, just with respect
Speaker 1: to General Electric getting booted, how much the company shares
Speaker 1: will now decline further just to sort of a de
Speaker 1: facto response to these indexed funds that are being forced
Speaker 1: to sell the shares. And so I wonder if this
Speaker 1: sort of creates a spine, and that includes exchange traded funds,
Speaker 1: as you mentioned. But Goldman Sacks actually they came out
Speaker 1: with an interesting note. I thought it was a bit contrarian,
Speaker 1: because that's what you would think, um, But an analyst
Speaker 1: over Goldman Sachs he actually found that stocks that have
Speaker 1: been removed from the index recently have typically outperformed the
Speaker 1: rest of the doubt over the next twelve months. And
Speaker 1: some are saying, in a way, maybe this is good
Speaker 1: for g E because maybe this takes off that label
Speaker 1: of ge being that old, sturdy industrial company and maybe
Speaker 1: it allows it to move forwards. Actually, Brooks Sutherland of
Speaker 1: Bloomberg Opinion ort com and was discussing how perhaps this
Speaker 1: freees up General Electric to think more radically about how
Speaker 1: to reshape itself and perhaps to a wholesale breakup of
Speaker 1: the company and really reckoned with some of the problems
Speaker 1: that has been facing over the past few months. Yeah,
Speaker 1: I mean, we'll definitely see going forwards, and it'll be
Speaker 1: interesting to keep an eye on GEES price just because
Speaker 1: it has been torn down so much over the past
Speaker 1: year or even more a year or so. But it's
Speaker 1: gonna be good for the shares of Walgreen. Oh yeah,
Speaker 1: I mean if you look at Walgreen shares right now,
Speaker 1: Walgreen shares are trading up about almost four and a
Speaker 1: half percent, so we're seeing it reflected in the share
Speaker 1: price today and I'm sure going forwards as it's added,
Speaker 1: I think it's supposed to be effective Tuesday before the
Speaker 1: open of the market. I'm sure we'll see a bit
Speaker 1: of a of a booth there. Yeah, And just to
Speaker 1: give you the perspective, Walgreens Boots Alliance has three hundred
Speaker 1: and forty five thousand employees. Compare that to a General
Speaker 1: Electric three hundred and thirteen thousand employees, So at least
Speaker 1: in terms of a number of people work for the companies,
Speaker 1: not dissimilar. And I will just make one additional note
Speaker 1: that while we're talking about General Electric in the down
Speaker 1: Jones index, uh, there are other index related decisions that
Speaker 1: are affecting vast amounts of money right now as well.
Speaker 1: For example, with respect to Saudi Arabia and Argentina both
Speaker 1: looking for their inclusion m ms c I index, which
Speaker 1: would affect six hundred billion dollars of assets. I mean
Speaker 1: it's just these and just recently happened with China. That's
Speaker 1: rights Leather. I'm gonna leave you with that last thought.
Speaker 1: You know why the US leather company was an original
Speaker 1: member of the TAO. The Thanks very much, Sarah Ponzac,
Speaker 1: Bloomberg News, Cross Asset Reporter. All about general electric investing
Speaker 1: in small and mid cap stocks, that's the specialty of
Speaker 1: our next guest, Eric Kubi. He is the chief investment
Speaker 1: officer for north Star Investment Management. They are based in Chicago.
Speaker 1: Eric joins us though in our eleven three oh studios. Eric,
Speaker 1: thank you very much for being with us. All right,
Speaker 1: step up to the plate and tell us how do
Speaker 1: you define small and mid cap stocks? And tell us
Speaker 1: about the north Star dividend fun This is the symbol
Speaker 1: is n s d v X right, great, well, thanks
Speaker 1: for having me here. Um, So we define, uh, small
Speaker 1: cap stocks as actually being companies that have market caps
Speaker 1: under two and a half billion dollars. The definition changes.
Speaker 1: I know, uh, when I first got into business, a
Speaker 1: small cap stock probably had a market cap under a
Speaker 1: hundred million dollars. So you you have to keep moving
Speaker 1: with the times, um. But we focus actually on the
Speaker 1: smaller end of the small cap stocks. The billion dollar
Speaker 1: in under area. Alright. So you know, this is a
Speaker 1: very important interview to be having right now because the
Speaker 1: rust of two thousand, which is often viewed as a
Speaker 1: proxy for smaller companies in the US, has been on
Speaker 1: a terar. It has more returned more than twice as
Speaker 1: much as the SMP five hundred and uh nearly three
Speaker 1: times as much as the Dow Jones Industrial Index. So
Speaker 1: I have to wonder, you know, right now many investors
Speaker 1: are viewing small cap stocks as a haven in from
Speaker 1: trade tensions because these companies are less exposed to any
Speaker 1: economic impacts. Do you think that this is an accurate
Speaker 1: bet so to a certain extent, Yeah, I mean, I
Speaker 1: think that there are certain characteristics of small cap companies
Speaker 1: which make them a haven from from what is concerning
Speaker 1: the market right now. Most small cap companies don't do
Speaker 1: much international business, so they're not going to be that
Speaker 1: affected now. They're not immune because their supply chain still
Speaker 1: is affected. Um and so I don't think that it's
Speaker 1: a safe haven per se, but I do think it's
Speaker 1: a good place to go into. The other aspect is
Speaker 1: the dollar. The dollar has strengthened quite a bit. Again,
Speaker 1: that's typically good for small cap companies. That shows the
Speaker 1: domestic economy is strong, and also they're not exporting, so
Speaker 1: the strong dollar doesn't hurt them. Again, largely, I think
Speaker 1: what's happening is a rotation. Two thousand seventeen was the
Speaker 1: year of the large cap growth stock. The entire year,
Speaker 1: twelve months in a row, uninterrupted through January uninterrupted large
Speaker 1: cap growth stocks. And since then there's been a rotation
Speaker 1: into small cap companies, mainly into the Russell two thousand,
Speaker 1: because people like to index, and I don't think that
Speaker 1: that's really the right way to do it because within
Speaker 1: the index, you know, there's a lot of companies that
Speaker 1: aren't benefiting from the corporate tax cut, that aren't benefiting
Speaker 1: from the strong dollar. But so we like, we like
Speaker 1: more specific small cap companies. But it's the easy trade,
Speaker 1: is the Russell two thousand. People like the easy trade.
Speaker 1: All Right, I'm gonna ask Lisa to check your footwear
Speaker 1: right now, because I want you to talk about a
Speaker 1: company that I know is in the portfolio. This is
Speaker 1: Rocky Brands out of Nelsonville, Ohio. How did you find
Speaker 1: nelson How did you find uh Rocky Brands? That? Do
Speaker 1: you want my report? Okay, come on. They're they're pretty classic, alright,
Speaker 1: black office shoes, no boots today. All right. So we
Speaker 1: found Rocky the same way we find most of our companies,
Speaker 1: which is we screen. We're screening for companies in our
Speaker 1: market cap arena that are had nice dividend yields. We
Speaker 1: when we bought Rocky, it was over three percent. That's
Speaker 1: our dividend screen was over three and it was trading
Speaker 1: extraordinarily cheaply versus book value versus their earnings. UH and UH,
Speaker 1: what's happened is their business has gone It's had a
Speaker 1: terrific year. All of their markets are doing really well,
Speaker 1: outdoor work, Western and military. They also do um a
Speaker 1: great business with UH with companies. About two million employees
Speaker 1: have to wear protected footwear in the country, and they've
Speaker 1: got a great system for delivering the right footwear that
Speaker 1: companies need to buy for their employees. So it's been
Speaker 1: terrific company having a fantastic year. If you go down
Speaker 1: the list, some of the other names that you identify, McGrath,
Speaker 1: rent Corps, Brooks Automation, BG Staffing, among others. Just want
Speaker 1: to get your sense real quick. We have about a
Speaker 1: minute here on just the U S economy. From the
Speaker 1: small business perspective, are you hearing from leaders of the
Speaker 1: companies that we are peaking and that their profits and
Speaker 1: potential are peaking, or that this is the beginning of
Speaker 1: another sort of leg up in this business cycle. Small
Speaker 1: business optimisms at all time high. When I talk to
Speaker 1: company managements, they sound very enthusiastic about the near and
Speaker 1: intermediate term. Uh, there is some concern about the you
Speaker 1: know again, some of the tearoffs, how that's going to
Speaker 1: affect them, what's going to happen to the consumer if
Speaker 1: there is inflation. But we talked to CEOs all the time,
Speaker 1: and uniformly they feel great about the future, very positive,
Speaker 1: and they can hire people and they and they're looking
Speaker 1: to hire people. And b G Staffing, which is a
Speaker 1: temporary help firm, is doing a good job of helping
Speaker 1: companies find people to hire. So employment is terrific and
Speaker 1: they're looking to hire people all. Eric kubi thank you
Speaker 1: so much for joining us. Eric Kuby is chief investment
Speaker 1: officer at north Star Investment Management, which is based in Chicago.
Speaker 1: But he checked out here to a sultry New York
Speaker 1: City where we're enjoying some really Uh maybe maybe he
Speaker 1: trecked wearing his Rocky brand boots. Yeah. Maybe, although if
Speaker 1: you have to take those off and then then then
Speaker 1: lay them back up again when you're going through security,
Speaker 1: it might be in might PN conference, I always used
Speaker 1: slip on there is a profound dissonance in markets these days.
Speaker 1: If you look at the political headlines crossing UH highlights
Speaker 1: a deep polarization of several nations and a sense of
Speaker 1: high drama. If you look at the markets, the drama
Speaker 1: is not. They're joining us to talk about uh, you know,
Speaker 1: just how to view tariff hawk and other sort of
Speaker 1: uh policy driven news that we've been getting. From an
Speaker 1: investing standpoint. Is Mark Freeman, chief investment officer at Westwood
Speaker 1: Holdings Group, and he joins us here in our eleven
Speaker 1: three oh studios. So at what point, Mark, do you
Speaker 1: start to change your allocations in light of the tariff
Speaker 1: discussions that we've been getting in the back and forth
Speaker 1: between Jun Ping and and Donald Trump. Yeah. Well, first,
Speaker 1: great to be with you. Um, I think you raised
Speaker 1: a real key point, certainly for investors. I think ultimately
Speaker 1: what we have to differentiate in this in this areas
Speaker 1: is that ultimately, when do these issues tariffs obviously your
Speaker 1: front and foremost. But when do these issues move from
Speaker 1: being what I would say, impacting the multiple, which is
Speaker 1: a confidence gauge, and impacting on that, but moved from
Speaker 1: that to being an earnings factor, because that's ultimately it's
Speaker 1: when it becomes a much more significant issue for the market.
Speaker 1: Right now, we're seeing it from a volatility standpoint, and
Speaker 1: that's why when I say it impacts the multiple, you're
Speaker 1: seeing volatility or changes in in that. But when it
Speaker 1: becomes a much more fundamental issue is when you actually
Speaker 1: start to see it impact either actual or earnings or
Speaker 1: perhaps even more importantly, the market's expectation for for what
Speaker 1: future earnings will be. That that's that that's when it
Speaker 1: becomes an important issue. Okay, So just so so that
Speaker 1: we're clear here, it's about the difference between what investors
Speaker 1: are willing to pay for every dollar of earnings, that's
Speaker 1: what they're willing to pay, versus the actual performance of
Speaker 1: the company. So there are two kind of different things
Speaker 1: exactly right. Okay from there, all right, now, I want
Speaker 1: to get to the point about cash because I know
Speaker 1: you you you help manage the Westwood UH Fund. This
Speaker 1: is w h G I X right, and this is
Speaker 1: the Westwood Income Opportunities Fund. Do you recommend people hold
Speaker 1: onto a decent amount of cash now or do you
Speaker 1: want to be fully invested? Well, I think in this
Speaker 1: environment and our view is as we go forward, that volatility,
Speaker 1: which has been largely absent prior coming into this year,
Speaker 1: but that volatility will normalize. And that's just another way
Speaker 1: of saying returned back to where it was prior to
Speaker 1: the UH, prior to the to the Great Financial Crisis
Speaker 1: and that. But basically the volatility going forward will be higher.
Speaker 1: So whether it's issues like this or some other items
Speaker 1: from there, we expect volatility to go back to more
Speaker 1: normalized level. Under that assumption, we would advocate holding at
Speaker 1: least some cash. Now we can define what is significant
Speaker 1: or how much that is for us, that's typically between
Speaker 1: say six two maybe ten percent cash. We view that
Speaker 1: as just be it so, and what that allows you
Speaker 1: to do is to be opportunistic. It's not it's not so,
Speaker 1: you just keep it and it's there. But I think
Speaker 1: the other thing that that's that at the margin, which
Speaker 1: now starting to matter and which is very different where
Speaker 1: we've been roughly from the last decade, is now the
Speaker 1: rate of return on cash has actually moved up. I
Speaker 1: mean that is one of the things that the FED,
Speaker 1: from a tightening standpoint, has has probably impacted the most
Speaker 1: is actually the rate on cash and is that continues
Speaker 1: If that continues to drift up, which it seems most
Speaker 1: likely that FED is very much committed to continuing to
Speaker 1: raise rates, then that's another. So now the opportunity cost
Speaker 1: is diminishing on that front. But I think in this
Speaker 1: environment and allowing to be opportunistic makes sense. I ask
Speaker 1: a lot of people this, and I'd love to get
Speaker 1: your response to it. Almost the last time that you
Speaker 1: made it significant change to your allocations in your portfolios.
Speaker 1: Oh goodness. Um, well, in terms of our specific income
Speaker 1: opportunity strategy, we use up to eight different asset classes
Speaker 1: and those are changing literally on a quarterly basis. It's
Speaker 1: ultimately driven though by the market environment and where we're
Speaker 1: seeing opportunities and where things perhaps are getting repriced, and
Speaker 1: so it's moving. It shifts, uh, incrementally, you know, on
Speaker 1: a quarterly basis, even on sometimes on a weekly basis,
Speaker 1: but but over time it does change rather significantly. So
Speaker 1: what's been the most recent significant change that you made
Speaker 1: an allocation. I think one of the things is actually
Speaker 1: is is a couple of a couple of different areas.
Speaker 1: One look, there is being some repricing on the short
Speaker 1: end of the Yeld curve, and so we're using that
Speaker 1: implementing some of our cash we've had, our higher cash balance.
Speaker 1: We can now use that to add some incremental yield
Speaker 1: for that UM in another part of the capital structure
Speaker 1: of the preferred market. And so there we're not to
Speaker 1: get too technical, but where we can use what we
Speaker 1: call they're called hybrids, but they're just floating right securities.
Speaker 1: They have a shorter duration than a typical preferred, but
Speaker 1: then they become a floater after either three years five
Speaker 1: years with a nice reset. And so if our expectations
Speaker 1: are that short rates and fed rates continue to move up,
Speaker 1: that's kind of a way for us to participate in
Speaker 1: that and still learned some attractive yield. And then the
Speaker 1: other area we're still in our largest components is still
Speaker 1: in the equity market. I want to ask you about
Speaker 1: one area of the equity market, and this is a
Speaker 1: transportation because I noticed you got a position in FedEx
Speaker 1: and I was reading a story today that UM logistic
Speaker 1: costs have really accelerated there, up about six percent year
Speaker 1: over year, and I would imagine that that's got to
Speaker 1: benefit a company like FedEx if they can pass along
Speaker 1: those increased costs of consumers. That's that's a fundamental part
Speaker 1: of our thesis, and in terms of owning the name
Speaker 1: and just kind of give you, um, not not necessarily
Speaker 1: an anecdotal um. Uh. Example of that is that if
Speaker 1: you look at the consumer staples sector and many of
Speaker 1: those companies when they were reporting that, they were saying, look,
Speaker 1: we knew in demand was a problem, but now we're
Speaker 1: facing cost pressures. And then more specifically, we're facing cost
Speaker 1: pressures on the transportation front. I heard that from the clus,
Speaker 1: General Mills, others, they've all highlighted that. And so so
Speaker 1: one company's cost pressures is another company's pricing power. And
Speaker 1: so if we're like, okay, well then maybe let's take
Speaker 1: a look at the company that has pricing power, and
Speaker 1: FedEx I think is a classic example of that. What
Speaker 1: do you think is the biggest mistake that many investors
Speaker 1: are making? Today? Oh? Gosh, um, that's that's that's a
Speaker 1: that's a great question. Um. To me, it's about I
Speaker 1: think it would be understanding. Maybe a mistake, but I
Speaker 1: think in terms of of understanding from a process standpoint,
Speaker 1: one of the things that we UM have been communicating
Speaker 1: to UM, to our investors and to others is that, look,
Speaker 1: don't lose sight of how the process works UM in
Speaker 1: terms of look, profit the market eventually always follows profit growth. Okay,
Speaker 1: so profits are item number one. So profit lead the
Speaker 1: market and the market UM leads the economy. The problem
Speaker 1: is the investors to from a from a relationship standpoint,
Speaker 1: they tend to think of it is exactly the opposite.
Speaker 1: And that's why so many times you see retail investors
Speaker 1: are saying, Okay, the time to invest is when the
Speaker 1: economy is doing really, really well, because then that's going
Speaker 1: to be good for the market, and then therefore that
Speaker 1: should be good for for profits. It's it's exactly the opposite.
Speaker 1: And so we're really just trying to highlight to people
Speaker 1: that ultimately, despite look, I'm not saying all these more
Speaker 1: politically oriented items and things like that aren't important, but
Speaker 1: it ultimately comes back to the fundamentals for the market,
Speaker 1: and that then the single most important fundamental for the
Speaker 1: market is ultimately is profit growth. And what that looks
Speaker 1: like and following that for going going forward there. I
Speaker 1: want to thank you very much for being with us.
Speaker 1: Much appreciate it. It's much pleasure to having you in
Speaker 1: the future. Mark Freeman is the chief investment Officer of
Speaker 1: a Westwood Holdings Group. They are based in Dallas, Texas,
Speaker 1: and much appreciated. Very interesting conversation. Thanks for listening to
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Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one
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