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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest,

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Speaker 1: and you are in for quite a treat. His name

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Speaker 1: is Leon Cooperman and what a storied background he has,

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Speaker 1: from Hunter College to Columbia NBA to Goldman Sachs who

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Speaker 1: Omega Advisors. Essentially, we discuss everything from value investing and

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Speaker 1: growth in a reasonable price to what it's like to

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Speaker 1: have dinner at the White House with President Trump. UH.

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Speaker 1: He is a participant in the Giving Pledge, where he

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Speaker 1: has committed to giving away all of his billions of

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Speaker 1: dollars to various philanthropies, including Columbia University, Hunter College. He

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Speaker 1: UH funds a program in New Jersey that sends five

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Speaker 1: hundred students to college. UH and there are few p

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Speaker 1: people who know as much about the industry of investing

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Speaker 1: as he does. He has seen it from just about

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Speaker 1: every angle, be it creating Goldman Successet Management Division to

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Speaker 1: beating the SMP five hundred by a substantial percentage over

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Speaker 1: a long period of time at the Hedge Fund. I

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Speaker 1: think you'll find this to be an absolutely fascinating conversation.

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Speaker 1: And so with no further ado my Master's in Business

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Speaker 1: conversation with Lee Cooperman. My special guest this week is

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Speaker 1: Lee Cooperman. He has returned guest and we decided to

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Speaker 1: bring him on because of some changes that he has

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Speaker 1: made to his hedge funds Omega, which was launched in

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Speaker 1: and has substantially beat the market by a fairly wide

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Speaker 1: margin since then. Lee went to Hunter College undergrad got

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Speaker 1: NBA from Columbia Business School, where he went with a

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Speaker 1: number of esteemed colleagues. He joined Goldman Sachs in nineteen

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Speaker 1: sixty seven, where he spent twenty two years in investment research,

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Speaker 1: where he was frequently voted onto the Institutional Investors All

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Speaker 1: America research team for portfolio strategy. He helped create and

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Speaker 1: launched the Goldman Sacks Asset Management Unit, where he was

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Speaker 1: eventually Chief Investment Officer, Chairman and CEO UH prior to

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Speaker 1: launching Omega hedge fund in Lee Cooperman, Welcome back to

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Speaker 1: bloom So. You recently set out a notice that you

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Speaker 1: were converting Omega to a family office, and I thought

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Speaker 1: that was as good an excuse as any to get

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Speaker 1: you back UH into chat about markets in the economy.

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Speaker 1: But first let's talk about that conversion. What was the

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Speaker 1: thinking behind it? What what motivated that? Well, two factors.

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Speaker 1: I turned seventy five in April, and I recalled reading

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Speaker 1: somewhere that the statistics say, if you make it past

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Speaker 1: sixty five and cancer doesn't get you, on average, will

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Speaker 1: make it to eighty five. And I did not want

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Speaker 1: to spend the next ten years, the remaining ten years

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Speaker 1: from average running after the SMP and there would solidified

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Speaker 1: that was. I went to a concert with Kenny Rodgers,

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Speaker 1: the country and Western singer who I and like his talent,

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Speaker 1: and I found an interesting He was having great difficulty

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Speaker 1: negotiating a stage, getting around, and he made the comment

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Speaker 1: that he's turning eighty, he shouldn't be doing this anymore.

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Speaker 1: But he's on his fifth marriage. He needs the money.

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Speaker 1: And I said to myself, and though I've been lucky,

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Speaker 1: having married fifty four years to one woman, I don't

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Speaker 1: need the money. My money is going back to society

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Speaker 1: through charitable giving. Um and uh. I wanted to fold

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Speaker 1: at the top. So you know that's the difference between

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Speaker 1: you and Rogers. You know when to hold them and

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Speaker 1: went to fold them. Apparently Kenny does not. I hope.

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Speaker 1: So basically, um Over the years, I've noticed, particularly in

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Speaker 1: two thousand and eight, that a lot of hedge funds

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Speaker 1: close up when they're down, and I don't consider they're

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Speaker 1: just a personal view. I'm not moralizing, but I think

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Speaker 1: a high water mark is an asset of the investor.

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Speaker 1: And if you basically close up and give them their

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Speaker 1: money back involuntarily, there was one thing that the investors, look,

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Speaker 1: I had enough, I want my money back. They get

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Speaker 1: their money back. But to give them their money back

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Speaker 1: when they don't want it and they're willing to bet

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Speaker 1: on you turning the ship around is not right. So

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Speaker 1: I was up in the sixteen seventeen, them up about

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Speaker 1: seven percent this year. So everyone that's with me at

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Speaker 1: this moment time is it a record high and their

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Speaker 1: capital count and now's the time to fold them? Because

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Speaker 1: I do believe looking out Uh you know, I'm not

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Speaker 1: a pessimist, but I think it's stands the reason that

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Speaker 1: who have a market setback. I tend to be more

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Speaker 1: long oriented and I don't want to be seventy seven

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Speaker 1: years old owning some of the high water mark and

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Speaker 1: feeling obligated to stay in business. What did clients say

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Speaker 1: when you notified them, Hey we're here's some capital back.

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Speaker 1: Thanks for sticking around for twenty six years. Uh, I've

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Speaker 1: been very gratified. I'm not shocked, to be honestly, I

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Speaker 1: don't want to stund self serving, but yeah, I've lived

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Speaker 1: a very straight life. I've run the business and always

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Speaker 1: through the eyes of the investor. And the emails I've

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Speaker 1: gotten are just off the charts. Uh, favorable. I could

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Speaker 1: read some of the m to you. I don't want

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Speaker 1: to take your time, but it's um, it's very very gratified.

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Speaker 1: Hold on to those. We're gonna come back to some

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Speaker 1: of those emails a little later. Um. Internally within the firm,

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Speaker 1: what was the decision making process? Like you obviously have

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Speaker 1: employees were the most painful part of the decision. The

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Speaker 1: most painful far and away is I have to resize

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Speaker 1: the staff. You know, I have between thirty five and

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Speaker 1: forty loyal working, very competent people, whether it be analytical

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Speaker 1: or support. And in the family who officers, I'll probably

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Speaker 1: have twelve to fifteen. So I have to help place

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Speaker 1: or take care of upwards of and uh, that's the

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Speaker 1: most painful part of it. You know, I've spent twenty

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Speaker 1: six years building the right team, the right infrastructure, right computers, programs,

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Speaker 1: everything to run the business. And I love what I do.

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Speaker 1: To be honest with you, I do what I love. Uh.

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Speaker 1: In fact, tonight I'm speaking to thirty five students at

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Speaker 1: Columbia Business School. I tell them the secrets of successes.

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Speaker 1: Do what you love, love what you do. Don't go

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Speaker 1: in through a field for money. Go into a field

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Speaker 1: because you have a passionate about it, and I have

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Speaker 1: a passion about investing. We're not going to continue to do.

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Speaker 1: I just did not want to have the responsibility of

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Speaker 1: running other people's money at this stage of my life.

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Speaker 1: So I've called you the hardest working man. And Hedge Funds,

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Speaker 1: you know you're quoting my mutual friend Doug cast Brown

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Speaker 1: of Hedge Funds is where I was gonna go with. Doug.

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Speaker 1: Doug called you, um, when you this this transition, Are

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Speaker 1: you still going to be starting at ungodly early hours

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Speaker 1: and reading writing reports till midnight? Or is that right now?

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Speaker 1: My alarm clock goes over five fifty in the morning,

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Speaker 1: and I spent nar in ten minutes coming in from

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Speaker 1: the suburbs to New York and nar and ten minutes

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Speaker 1: going home at night, and I expect that I'll sleep

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Speaker 1: a little bit later, but I'll visit more companies, will

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Speaker 1: be intense. I will be oriented towards long term capital games. Uh.

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Speaker 1: The SMP five will be in irrelevancy to me. Uh

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Speaker 1: with right now, it's not. My investors paid me a

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Speaker 1: fancy fee and they deserve to get the best performance

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Speaker 1: I can give them. But I'm gonna be managing the

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Speaker 1: money for AfOR tax returns after tax returns. So that's uh,

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Speaker 1: that's a substantial change. What other changes are you looking at?

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Speaker 1: You don't strike me as a golfer. I'm not a golfer.

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Speaker 1: But I have a particular problem now as we sit

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Speaker 1: here talking. I ride a bicycle in Florida every day

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Speaker 1: and some octogenarian was not careful his golf cart and

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Speaker 1: he hit me while I was riding my bike and

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Speaker 1: fell on my shoulder. And I have a four and

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Speaker 1: a half sent to me to rotate a cuff tear,

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Speaker 1: which is, you know, reasonably painful, but at this kind

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Speaker 1: of ending my golf days unless I go for surgery

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Speaker 1: for repair, and the surgery I'm told it's very complex

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Speaker 1: and the terrible. A year of physical therapy, you you

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Speaker 1: got it. And so basically I've been to four different

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Speaker 1: doctors and they all said the same thing. The only

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Speaker 1: reason I have surgery is if you're can't sleep at night,

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Speaker 1: you're in excruciating pain or affects your lifestyle. Thankfully, I'm

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Speaker 1: able to sleep at night. The pain is mild but

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Speaker 1: reasonably consistent, and it has affected my lifestyle. But I'm

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Speaker 1: not a passionate golfer, so I'll live with it, and

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Speaker 1: I go to physical therapy twice a week and they're

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Speaker 1: trying to build up the muscles in the area to

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Speaker 1: compensate for the tear. Huh. Let's talk about those days

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Speaker 1: in when you first started. Jim Chano said, when he

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Speaker 1: began his fun there were only a few hundred UM managers,

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Speaker 1: and most of them were generating alpha. Today there's eleven

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Speaker 1: thousand hedge fund managers, and it seems the same few

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Speaker 1: hundred are generating alpha. What was it like back in

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Speaker 1: when you launched Omega, Well, there was less competition. I'm

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Speaker 1: not sure what the exact number of hedge funds were,

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Speaker 1: but one of the statistics that strikes me is about

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Speaker 1: a decade ago to today, the number of publicly traded

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Speaker 1: companies are down by about because it merges consolidations going private.

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Speaker 1: In that same period, hedge funds are have gone up

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Speaker 1: by fourfold. So you know, a number of companies down,

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Speaker 1: number of competitors looking for alpha up fourfold. So you

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Speaker 1: know it's difficult. But I never went into the hedge

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Speaker 1: from business to make a lot of money. I was

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Speaker 1: a very happy partner of Goldman Sachs. I was I

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Speaker 1: think at the time, fifth high percentage partner of the firm.

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Speaker 1: The firm was doing well. I loved what I did

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Speaker 1: for a living, but I wanted to start a hedge

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Speaker 1: fund as a way of code investing with my investors

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Speaker 1: respective investors. And the firm at that time wasn't ready

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Speaker 1: to have a hedge fund because they were they have

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Speaker 1: vision in their mind which was incorrect in my opinion,

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Speaker 1: that I would be short some investment banking client at

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Speaker 1: the firm. The client would find out, find out and

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Speaker 1: they'd have hell to pay. Um. The fact of the

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Speaker 1: matter is I'm a long term investor and uh and

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Speaker 1: that had the problem. And the firm is really the

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Speaker 1: views of maturated because I think they have a lot

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Speaker 1: of hedge funds on the premises. Now, in fact, there

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Speaker 1: has been a fairly steady stream of people departing Goldman Sachs,

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Speaker 1: but retaining the relationship with Goldman as a prime broker

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Speaker 1: for for that hedge fund. What was the big change?

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Speaker 1: You know, you when you left Goldman, you had previously

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Speaker 1: said they were they were pretty supportive of everything you do.

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Speaker 1: You know, how did they manage to mature their views

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Speaker 1: on this? Well, just a passage of time, you know, Uh,

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Speaker 1: if you go back to ancient history. Really a decade

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Speaker 1: before I left, I was telling Goldman they were they

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Speaker 1: were making a very big mistake by not being an

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Speaker 1: asset management. And the senior partners at the time said,

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Speaker 1: you don't get it. Lead. We're of the view that

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Speaker 1: brokers should do brokerage, money manage and do money management.

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Speaker 1: Don't compete with your customer. And I al would say,

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Speaker 1: then wake up, smell the roses. Look at they have

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Speaker 1: Merrill Lynchs in management. You have Webster, which the division

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Speaker 1: a kid at Peabody CSFPSI management. Everybody was in the

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Speaker 1: business except one firm who they viewed as their arts rival.

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Speaker 1: In trading, there were Solomon Brothers and one day, Solomon

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Speaker 1: announced that Bob Solomon Jr. Who's a good man, was

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Speaker 1: leaving the research department to start Solomon Brothers Asset Management,

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Speaker 1: at which point the Steve Friedman and Barb Brubin collb

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Speaker 1: me and said, you know you were right. We made

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Speaker 1: a mistake. We should go into the business. Would you

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Speaker 1: leave research and start asset management and build us a

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Speaker 1: business like you built us in research. For the record,

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Speaker 1: not blowing my own horn, but just factually, when I

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Speaker 1: took over Golden Research and D and I guess there

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Speaker 1: was seventy five seventy four road unranked, and when I

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Speaker 1: left the research department, we were number one. I I

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Speaker 1: number one in Greenwich Research, number one in financial world.

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Speaker 1: I also happened to be the lead strategist, and I

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Speaker 1: was number one for nine straight years in strategy. So

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Speaker 1: I was ready for new challenge. And I accepted their

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Speaker 1: invitation and started Goldmen's Access in Management. And frankly, about

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Speaker 1: a year after I started, I realized I had made

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Speaker 1: a mistake. The firm is a great firm, and they

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Speaker 1: understood assets in the management times fee equal revenue, and

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Speaker 1: they were interested in me building a big business. I

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Speaker 1: was really focused on investment performance. I wanted to co

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Speaker 1: invest with the investors and build a track record. And

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Speaker 1: it became obvious to me that, you know, they wanted

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Speaker 1: me on the road innovating new products, raising more money,

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Speaker 1: and I wanted to manage the money. You know. I

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Speaker 1: was a guy that discovered Henry Singleton of Teldine in

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Speaker 1: Wall Street and made a big bet on him and

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Speaker 1: proved to be correct. And so I went to them

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Speaker 1: and said, look, you know, I'd like to start a

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Speaker 1: hedge fund as part of the asset management business. And uh,

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Speaker 1: they originally said yes, and then they changed their mind,

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Speaker 1: and they changed your mind again. All this is nuances.

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Speaker 1: They had a sponsored a fund called the Water Street

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Speaker 1: Recovery Fund, which was a vulture fund. They would buy

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Speaker 1: up the stress debt from the fault of the issuers

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Speaker 1: and reorganized them. And that created some consternation from the

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Speaker 1: high yeld clients of the firm. They were selling them

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Speaker 1: bonds which they didn't know the firm was intending to

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Speaker 1: restructure the companies, and so they had a lot of

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Speaker 1: adverse biblicity. John Weinberg, bless him, Uh, it was impressed

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Speaker 1: by the negative, you know feedback, and went in and

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Speaker 1: closed the fund down and returned all the money. And

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Speaker 1: they came back to me and they said, you know,

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Speaker 1: forget about We're not going to go for the frying

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Speaker 1: pan to the fire. No hedge fund will put you

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Speaker 1: on the executive committee and you run g Sam. It's

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Speaker 1: a business manager, not as a money manager. You couldn't

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Speaker 1: be a money manager because you come into contact and

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Speaker 1: a lot of confidence information if you're on the executive committee.

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Speaker 1: And I told him my wife. I went home, what

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Speaker 1: a boat. My wife came up with a great line.

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Speaker 1: She said, you know how old you're gonna be and

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Speaker 1: how rich you're gonna before you do what you want

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Speaker 1: to do. So I went back. I said, listen, that's

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Speaker 1: been a great place to me, Goldman. I really want

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Speaker 1: to manage money. Uh and uh basically, UM, you know,

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Speaker 1: I'll stay as long as you want me to stay,

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Speaker 1: but I would like to basically ultimately. And I stayed

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Speaker 1: for a year and consulted for a year, and it

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Speaker 1: was a great place. I grew up at Goldman, and

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Speaker 1: I have great, great feelings about Goldman. So walk us

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Speaker 1: through what your process was like at Omega or is

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Speaker 1: still like it Omega When you're trying to make you

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Speaker 1: still we're still in business and Omega and uh, I'll

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Speaker 1: run it the same way. I like to have a

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Speaker 1: lot of arrows in my quiver. You know, it's very

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Speaker 1: hard to take fifteen off the top and beat the market, okay,

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Speaker 1: and so I like to have a lot of different

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Speaker 1: strategies that I could pursue and um. Basically, we try

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Speaker 1: to make money for the investors in five different ways. First,

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Speaker 1: stocks or high risk financial assets. Short term bonds in

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Speaker 1: cash are low risk financial assets. And we spent a

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Speaker 1: lot of times is Steve Ian who are my partner,

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Speaker 1: we've been working together for over forty years. A terrific guy.

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Speaker 1: Terrific guy, and we spent a lot of time studying

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Speaker 1: the economy, the FED valuation and trying to figure out

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Speaker 1: is the market undervalued going up, overvalue going down, It

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Speaker 1: could be fully valued going up, etcetera. Because that de

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Speaker 1: termines our exposure to risk assets. Number two, all the

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Speaker 1: studies I've read on portfolio returns say more important being

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Speaker 1: the right individual stock in anyone years also being the

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Speaker 1: right asset class. So we spent a lot of time

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Speaker 1: looking at returns in fixed incomeverse equities and fixed income

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Speaker 1: we cover the gamut where government bonds, high grade, industrial bonds,

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Speaker 1: high yield bonds, structured credit, and we're trying to look

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Speaker 1: for the store hat in the winter. What's the mispriced asset? Okay?

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Speaker 1: The third thing we do we shually have bread and

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Speaker 1: butt of business, was right? Spend most of my time

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Speaker 1: is UNDERVAD stocks and alongside uh not a successful We

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Speaker 1: spend time looking forward a stocks in short side. And

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Speaker 1: then we do a certain amount of macro trading where

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Speaker 1: we'll basically go longer, shorter, currency, longer, shorter commodity, longer

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Speaker 1: short and index away from the SMP five hundred, and

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Speaker 1: we risk about two percent of capital in the macro

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Speaker 1: area to make it an incremental five or six percent

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Speaker 1: a year. So I would bill Omega saying we're an

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Speaker 1: equity oriented hetche fhow with a macro capability. So let's

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Speaker 1: let me put some numbers, some flesh on the bones.

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Speaker 1: You return twelve point six percent a year net of

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Speaker 1: fees versus nine point six percent for the SMP five hundred,

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Speaker 1: about a third better than the broad index did. What

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Speaker 1: do you think is the single biggest contributor to that

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Speaker 1: out performance? Well, you know, uh, number one with the records. Okay,

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Speaker 1: there are better records around, but you know you've got

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Speaker 1: address for risk. We've done it, maybe set long over

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Speaker 1: twenty six years, twenty six years, and I said, we

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Speaker 1: were disciplined. You know, we're we're value oriented. So as

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Speaker 1: I said before, we figured trying to figure out the market.

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Speaker 1: We've got the market right a lot of the time.

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Speaker 1: And then second we really look at individual stocks and

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Speaker 1: my benchmark and I look at the SP five hundred

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Speaker 1: and what is that represent Most people don't even know

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Speaker 1: what the recup five represents an index of five companies

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Speaker 1: that are growing about five percent a year that have

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Speaker 1: a dive it in the yield of about one that

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Speaker 1: have debt about the capital structure. I think I've mentioned

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Speaker 1: growing about five six percent a year. And for that

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Speaker 1: statistical compilation, you're paying about eighteen times earnings. So we're

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Speaker 1: looking for more growth. More earning is more asset value. There,

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Speaker 1: they're training around three times book value for a lower price,

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Speaker 1: and that's what we do. So we just looking for value.

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Speaker 1: And generally speaking, if you correctly identify value, that's one

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Speaker 1: of the big protectors of your downside. If you're buying

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Speaker 1: something as a reasonably cheap to begin with margin of safety.

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Speaker 1: Let's talk a little bit about something we discussed the

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Speaker 1: last time you were on and we had a kind

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Speaker 1: of dance around it because it was still um an

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Speaker 1: open live issue. Uh, you had a run in with

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Speaker 1: the SEC. Tell us a little bit about that. What

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Speaker 1: was it like when you first learned uh they were

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Speaker 1: looking into Omega and how did it affect your your trader.

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Speaker 1: Let me just say this, I entered into what's called

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Speaker 1: and no admit and no deny agreement. So I don't

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Speaker 1: admit I did anything right or wrong whatever the hell.

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Speaker 1: But between last time you were here, you were pretty

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Speaker 1: adamant you didn't do anything wrong. Yeah. Yeah, but like

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Speaker 1: I said, I'll repeat, there's a sort to legally is

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Speaker 1: below no no deny UM. I totally did not appreciate

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Speaker 1: the power of the SEC, their abusive nature, UM, and

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Speaker 1: the problems with the system where they served me. There

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Speaker 1: was no broad escale investigation to also to trade and

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Speaker 1: new was investigation to trade on one company and Uh,

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Speaker 1: basically we told them when we received the subpoena that

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Speaker 1: withdraw the subpoena. And I guess I want to make

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Speaker 1: the point every step along the way where they had

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Speaker 1: the chance to uprate in in a proper manner, in

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Speaker 1: my opinion, proper matner. They basically rejected it. They tried,

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Speaker 1: you aren't adversarial, you're very cooperative. Try to get them

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Speaker 1: to sit down. Let me explain this to you. This

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Speaker 1: is really very simple. Every step on the way they

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Speaker 1: rejected it like they wanted to inflict maximum damage. We

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Speaker 1: stay succeeded in doing so. We get to subpoena and

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Speaker 1: I tell my lawyers, tell them, withdraw the subpoena. I'll

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Speaker 1: meet with you. I'll answer all your questions, and if

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Speaker 1: you don't like the answers, you can reinstate the subpoena

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Speaker 1: and you have nothing to lose. They refuse, They say,

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Speaker 1: respond to subpoena. So I spent a couple of million

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Speaker 1: dollars or more. Respond to the subpoena and uh. Basically

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Speaker 1: they then and my lawyer, you know, my lawyer basically

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Speaker 1: tells me, and you're ruining the man's business. We've studied

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Speaker 1: the trading. There's no inside trading here. It's unfair. And

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Speaker 1: they went down to Washington and basically the guy at

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Speaker 1: the AC says, well, if Mr Coopman wants to settle,

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Speaker 1: will take a five year bar from the industry, the

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Speaker 1: mission of guilt, effective admission of guilt, and ten million

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Speaker 1: I'll fine. And I told my lawyer's look, you tell

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Speaker 1: him whatever somebody from Harvard and Yale Law school tells them.

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Speaker 1: I grew up in the South Bronx and you can

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Speaker 1: give them the Rockefellow salute for me if your viewers

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Speaker 1: know what that is. But when Nelson Rockefellow spoke, but

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Speaker 1: the inmates of Attica and they shoutowed him down, and

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Speaker 1: he got frustrated and he gave him the index finger

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Speaker 1: or the adjacent to thee in the middle of the

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Speaker 1: middle of thing, whatever that's called. And um, five months later,

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Speaker 1: after my business was substantially damaged, the SEC, with no

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Speaker 1: new information, comes back and says, okay, no admission of guilt.

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Speaker 1: No no, it's called no admit, no deny, no time out,

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Speaker 1: and give us four point nine million dollars. As lawyers say, congratulations,

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Speaker 1: you win, And I said, what did I win? We

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Speaker 1: don't have losing party pays in America. The government has

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Speaker 1: sovereign immunity. I can't sue them. Uh, And they basically

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Speaker 1: are using taxpay money to fund their piccadillos um. And

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Speaker 1: so my advocacy after I close up Omega and become

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Speaker 1: a family office is we should have a losing party

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Speaker 1: pays system because what happens, so it shouldn't be a speculative.

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Speaker 1: Let's just throw it against the walls lawyers. Again, I'm

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Speaker 1: attributing this to my lawyers, which are factual in a

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Speaker 1: court of law. You know, I don't want any problems

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Speaker 1: with the sec. My lawyers say, congratulations, you won. Okay.

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Speaker 1: If we go to trial, we think nine percent probably

390
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Speaker 1: you're gonna win, but of course you let me finish,

391
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Speaker 1: not even probably gonna win. Okay. The temper cent chance

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Speaker 1: you don't win has nothing to do with the case

393
00:21:45,680 --> 00:21:48,080
Speaker 1: is because you're rich. It's because you run a hedge

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Speaker 1: fund and because you're a former Goldman Sachs partner. The

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Speaker 1: juries don't like guys like you. I said, but listen,

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Speaker 1: I'm sending five minute kids to college in Newark, New Jersey.

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Speaker 1: They don't care. They don't like guys like you. If

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Speaker 1: we go to trial, the change you win, we estimated,

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Speaker 1: they'll tie you up for two years with appeals, and

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Speaker 1: of course you twenty million dollars give him the four

401
00:22:07,119 --> 00:22:09,320
Speaker 1: point one million. It's over, so I gave him the

402
00:22:09,320 --> 00:22:11,679
Speaker 1: four point a million. I'm still conflicted about that decision

403
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Speaker 1: to even today, because it just it bothers me. The

404
00:22:16,080 --> 00:22:18,280
Speaker 1: system is wrong. The system is wrong. I don't want

405
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Speaker 1: to go through all the facts of the case because

406
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Speaker 1: that could be an hour and it will come to

407
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Speaker 1: light when I write the book. So and you should

408
00:22:25,119 --> 00:22:27,119
Speaker 1: write the book. But let me ask you this question.

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Speaker 1: If a young colleague came to you, a person who's

410
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Speaker 1: not running a few billion dollars, running a small hedge fund,

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Speaker 1: and and he's screwed, Well, if he were to say

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Speaker 1: to you, Lee, I have this. I think I'm completely innocent,

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Speaker 1: and here's the deal. It'll cost me a couple of

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Speaker 1: million dollars to make it go away. But I could

415
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Speaker 1: fight and win. It will cost me ten times that.

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Speaker 1: What should I do? What? What would your advice to them? Well? Number,

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Speaker 1: when does he have the twenty million? Maybe probably not

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Speaker 1: if he's a young guy and he's starting at he

419
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Speaker 1: doesn't have the money. I spent close to fifty years

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Speaker 1: developing my putation. God has been very good to me.

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Speaker 1: I've worked very hard, but you know, I know people

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Speaker 1: that work hard that don't have the money. I've made

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Speaker 1: the decent sum of money I've had, been taken a

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Speaker 1: giving pledge with the Warren Buffin Bill Gates. But to me,

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Speaker 1: my reputation was paramount and I would spend whatever I

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Speaker 1: had to spend to defend myself. But if you take

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Speaker 1: a thirty year old kid or twenty five year old kids,

428
00:23:22,240 --> 00:23:24,200
Speaker 1: he can't do it to the odds or I will fold,

429
00:23:24,240 --> 00:23:26,200
Speaker 1: will give them the money, and that's what they bet on.

430
00:23:27,080 --> 00:23:30,640
Speaker 1: I will tell you a little anecdotal story about five

431
00:23:30,720 --> 00:23:34,360
Speaker 1: months ago an account major counting firm. That's how Price

432
00:23:34,480 --> 00:23:38,159
Speaker 1: Waterhouse had a seminar in Palm Beach. I live in

433
00:23:38,240 --> 00:23:41,400
Speaker 1: Boca Retard in six half months a year and basically

434
00:23:41,600 --> 00:23:44,200
Speaker 1: the guest speaker was Mary Joe White, and I wanted

435
00:23:44,240 --> 00:23:46,760
Speaker 1: to go because she was ahead of the SEC at

436
00:23:46,800 --> 00:23:49,120
Speaker 1: the time my case was brought. And I walk over

437
00:23:49,240 --> 00:23:51,440
Speaker 1: to her and I said, you're lucky, Ima, gentleman. I'm

438
00:23:51,440 --> 00:23:53,320
Speaker 1: not going to attack in public, but I told who

439
00:23:53,359 --> 00:23:55,000
Speaker 1: I was. You knew exactly who I was when I

440
00:23:55,080 --> 00:23:58,480
Speaker 1: told her. Okay, says, here's a sealed envelope. In the

441
00:23:58,640 --> 00:24:01,879
Speaker 1: envelope is a question. If you answer the question, I

442
00:24:01,920 --> 00:24:05,440
Speaker 1: will give a hundred thousand dollars your favorite charity. She's

443
00:24:05,480 --> 00:24:07,840
Speaker 1: I can't wait. What's the question? I said? When you

444
00:24:07,920 --> 00:24:11,720
Speaker 1: originally and your staff originally after me, basically you asked

445
00:24:11,760 --> 00:24:13,840
Speaker 1: for five of your bar admission of guilt at ten

446
00:24:13,880 --> 00:24:17,800
Speaker 1: million dollar fine, and I refused. Five months later, with

447
00:24:17,880 --> 00:24:20,720
Speaker 1: no new information on your part, your staff came back

448
00:24:20,760 --> 00:24:23,480
Speaker 1: and said, okay, no admission of guilt meaning and no admit,

449
00:24:23,600 --> 00:24:26,040
Speaker 1: no deny, no time out, and give us four point

450
00:24:26,119 --> 00:24:28,800
Speaker 1: nine million. What did you learn between your first ask

451
00:24:28,960 --> 00:24:31,840
Speaker 1: which destroyed the business because was totally unacceptable, and your

452
00:24:31,880 --> 00:24:34,359
Speaker 1: second asked, which was if you first ask, I would

453
00:24:34,359 --> 00:24:36,840
Speaker 1: have accepted to get rid of you. And a response

454
00:24:37,080 --> 00:24:39,719
Speaker 1: was innocent people. She didn't say it was innocent. Innocent

455
00:24:39,760 --> 00:24:43,440
Speaker 1: people often settled because the litigation cost and time demands

456
00:24:43,680 --> 00:24:46,560
Speaker 1: are so much greater than the settlement course. Now I submit,

457
00:24:46,600 --> 00:24:51,320
Speaker 1: that's a disgraceful situation. And what happens with these regulators

458
00:24:51,600 --> 00:24:53,919
Speaker 1: is they bring a case with the hope of bringing

459
00:24:54,000 --> 00:24:57,880
Speaker 1: down a high profile guy or gal, taking that accomplishment

460
00:24:58,160 --> 00:25:00,720
Speaker 1: and getting themselves a job in the private actor as

461
00:25:00,760 --> 00:25:05,920
Speaker 1: defense attorneys. When I told my attorney what MS White said,

462
00:25:06,359 --> 00:25:08,440
Speaker 1: they say it's not a surprise because that the sec

463
00:25:08,600 --> 00:25:12,159
Speaker 1: she was acting like a prosecutor. ASH is in private practice.

464
00:25:12,200 --> 00:25:14,560
Speaker 1: He's talking like a defense attorney. And I don't think

465
00:25:14,640 --> 00:25:16,159
Speaker 1: the way it should be. I think they should have

466
00:25:16,200 --> 00:25:19,000
Speaker 1: sat down with me, understand all the answers. I could

467
00:25:19,000 --> 00:25:21,399
Speaker 1: give a whole bunch of things. My son I was

468
00:25:21,480 --> 00:25:24,280
Speaker 1: half his capital runs around a hedge fund. He was

469
00:25:24,440 --> 00:25:26,840
Speaker 1: short the stock to day of the announcement, not long

470
00:25:26,920 --> 00:25:31,399
Speaker 1: he lost money with stock. I didn't buy any stock myself.

471
00:25:31,440 --> 00:25:33,480
Speaker 1: It was only brought in two accounts. But I don't

472
00:25:33,520 --> 00:25:35,159
Speaker 1: want to. We could spend now and a half and

473
00:25:35,200 --> 00:25:38,680
Speaker 1: all the facts. Huh. Quite fascinating. But it's a sad

474
00:25:38,800 --> 00:25:42,040
Speaker 1: situation and hopefully there'll be some remediation make it better

475
00:25:42,080 --> 00:25:44,639
Speaker 1: for the next person. But to specifically answer your question

476
00:25:45,119 --> 00:25:47,520
Speaker 1: and for your youngster, and don't have a lot of money,

477
00:25:48,040 --> 00:25:51,280
Speaker 1: you're out of business. Unbelievable. Let's talk a little bit

478
00:25:51,320 --> 00:25:54,840
Speaker 1: about where we are in the state of the economy today.

479
00:25:55,520 --> 00:25:58,920
Speaker 1: Um as a value investor, what do you think about

480
00:25:59,000 --> 00:26:03,879
Speaker 1: markets here? I think the SMP five is recently adequately valued,

481
00:26:04,119 --> 00:26:07,399
Speaker 1: fair value, fair value, fully value, fair value. Say what

482
00:26:07,480 --> 00:26:13,680
Speaker 1: you want, um My, overriding theme is we're heading towards normalization.

483
00:26:14,440 --> 00:26:16,400
Speaker 1: For the last seven or eight years, and even now

484
00:26:16,640 --> 00:26:20,240
Speaker 1: to some degree, we're in that abnormal environment. What do

485
00:26:20,320 --> 00:26:23,560
Speaker 1: I mean by that? There's nine trillion dollars of sovereign

486
00:26:23,640 --> 00:26:26,400
Speaker 1: debt around the world that carries a negative interest rate,

487
00:26:26,760 --> 00:26:29,880
Speaker 1: whereas you've got to pay the government to carry their debt.

488
00:26:30,160 --> 00:26:33,560
Speaker 1: It's crazy, okay, and so we're heading to normalization. To me,

489
00:26:33,760 --> 00:26:37,480
Speaker 1: normalization is the labor force grows about a half a

490
00:26:37,560 --> 00:26:40,880
Speaker 1: one percent peratum. The productivity the labor force grows about

491
00:26:40,920 --> 00:26:43,719
Speaker 1: one half percent peratum, so that's real growth about two

492
00:26:43,880 --> 00:26:46,840
Speaker 1: Right now, we're growing, you know, three to four um.

493
00:26:47,119 --> 00:26:51,600
Speaker 1: The inflation rate maybe two percent, So nominal GDP grows

494
00:26:51,680 --> 00:26:55,240
Speaker 1: at four percent two percent real two percent inflation uh

495
00:26:55,359 --> 00:26:57,920
Speaker 1: and in four percent nominally growing world, the Fed funds

496
00:26:58,040 --> 00:27:00,920
Speaker 1: rate or to be two and after three, which will

497
00:27:00,960 --> 00:27:02,520
Speaker 1: take you a year to get there. Currently I think

498
00:27:02,560 --> 00:27:05,119
Speaker 1: one in three quarters or two uh, and the tenure

499
00:27:05,200 --> 00:27:10,040
Speaker 1: government order to be close to four currently hovering under three.

500
00:27:10,800 --> 00:27:13,800
Speaker 1: In that world, the SMP multiple should be I think

501
00:27:13,840 --> 00:27:18,000
Speaker 1: about seventeen times, so seventeen times this year. We're using

502
00:27:18,000 --> 00:27:22,639
Speaker 1: an estimate of a fifty eight six UM and seventeen

503
00:27:22,720 --> 00:27:25,520
Speaker 1: times next years one sight, which by estimate at the

504
00:27:25,560 --> 00:27:29,800
Speaker 1: preliminarily now is six and we're hovering in those areas.

505
00:27:29,800 --> 00:27:33,159
Speaker 1: So I think the market is addequally valued. On the

506
00:27:33,240 --> 00:27:37,080
Speaker 1: other hand, the conditions for a big decline are not present.

507
00:27:37,280 --> 00:27:40,240
Speaker 1: The words beer markets don't emerge have a maculate conception.

508
00:27:40,320 --> 00:27:43,800
Speaker 1: They come about for fundamental reasons, generally speaking. Number one,

509
00:27:44,160 --> 00:27:47,480
Speaker 1: the stock market smells an oncoming recession. If anything, the

510
00:27:47,520 --> 00:27:52,960
Speaker 1: economic data reads exempt opposite exactly. The second reason we

511
00:27:53,080 --> 00:27:55,879
Speaker 1: have a beer market is the central bank gets to

512
00:27:55,960 --> 00:28:00,160
Speaker 1: the market and the through aggressive tightening, turns it down down,

513
00:28:00,240 --> 00:28:02,240
Speaker 1: and they've been moving very slow. I think that behind

514
00:28:02,320 --> 00:28:06,359
Speaker 1: the eight bowl myself. Third is invested exuberance. And I

515
00:28:06,400 --> 00:28:07,879
Speaker 1: would say if you look at the flow of funds

516
00:28:07,920 --> 00:28:11,080
Speaker 1: out of ecuity funds into fixed income product, you know

517
00:28:11,160 --> 00:28:14,440
Speaker 1: there's a few signs of exuberance. You know, an Amazon

518
00:28:15,080 --> 00:28:18,000
Speaker 1: which could be justified by the fundamental growth, or a Tesla,

519
00:28:18,119 --> 00:28:20,800
Speaker 1: which I don't think is justified. But you know by Lodge,

520
00:28:21,119 --> 00:28:23,119
Speaker 1: you know the great line I only wish I coined it.

521
00:28:23,280 --> 00:28:25,440
Speaker 1: I give him great credit all the time. Is John

522
00:28:25,480 --> 00:28:29,160
Speaker 1: Templeton's beaux markets are born and pessimism, They grow on skepticism,

523
00:28:29,359 --> 00:28:32,080
Speaker 1: they mature and optimism, and they die in euphoria. We

524
00:28:32,200 --> 00:28:35,280
Speaker 1: clearly have optimism bio lodge, but we do not have

525
00:28:35,400 --> 00:28:38,200
Speaker 1: any signs of euphoria. And the fourth thing is some

526
00:28:38,360 --> 00:28:40,760
Speaker 1: kind of signal cause of a market is some significant

527
00:28:40,800 --> 00:28:44,080
Speaker 1: geopolitical event which you can forecast. And certainly a lot

528
00:28:44,120 --> 00:28:47,280
Speaker 1: going on in the world. It's very clear that you

529
00:28:47,360 --> 00:28:51,320
Speaker 1: know what's going on with Russia and the Putin and Trump, etcetera.

530
00:28:51,680 --> 00:28:54,239
Speaker 1: It's very complex. Let's let's talk about that a little bit.

531
00:28:54,560 --> 00:28:57,560
Speaker 1: We have North time, I got in trouble talking about politics. Well,

532
00:28:57,600 --> 00:29:02,600
Speaker 1: but let's talk about global events and politics. North Korea

533
00:29:02,880 --> 00:29:06,080
Speaker 1: or I am rand has been saber rattling at and

534
00:29:06,240 --> 00:29:10,440
Speaker 1: with both countries. Are either of those a legitimate threat

535
00:29:10,520 --> 00:29:13,000
Speaker 1: to the market, Well, if something went wrong, I mean

536
00:29:13,160 --> 00:29:15,640
Speaker 1: I think that the president, I think he's been the

537
00:29:15,760 --> 00:29:18,000
Speaker 1: right track with North Korea, and I think he was

538
00:29:18,040 --> 00:29:21,160
Speaker 1: on the right track with Iran. I think I never

539
00:29:21,200 --> 00:29:23,400
Speaker 1: worried much about North Korea. The only concerned with North

540
00:29:23,480 --> 00:29:27,520
Speaker 1: Korea is if rocketman launched a rocket that they lost

541
00:29:27,560 --> 00:29:30,200
Speaker 1: control over and landing in the wrong place. But as

542
00:29:30,240 --> 00:29:34,760
Speaker 1: long as the rockets land in the water and we're fine. Um,

543
00:29:35,200 --> 00:29:38,000
Speaker 1: But no, these are potential risk. But you know, no

544
00:29:38,040 --> 00:29:42,800
Speaker 1: one knew about the missile crisis, Kennedy Steel confrontation. You know,

545
00:29:43,200 --> 00:29:45,800
Speaker 1: there are things in the geopolitical world that can go wrong.

546
00:29:46,320 --> 00:29:50,320
Speaker 1: I mean, clear, we have a usual president um um,

547
00:29:50,720 --> 00:29:53,320
Speaker 1: and I think we'll get a referendum about his policies

548
00:29:53,360 --> 00:29:55,920
Speaker 1: in November, and it's not clear what to happened. And

549
00:29:55,960 --> 00:29:58,800
Speaker 1: I myself, I'm conflicted and all honestly, what what about

550
00:29:59,360 --> 00:30:03,400
Speaker 1: issues of tariffs and trade? Tariffs are wrong? And I

551
00:30:03,480 --> 00:30:07,000
Speaker 1: think the market believes that they're wrong, and the market

552
00:30:07,040 --> 00:30:12,520
Speaker 1: has been up until now generally complacent because what's happened

553
00:30:12,600 --> 00:30:17,080
Speaker 1: is he's generally backed off on controversial policies and ultimately

554
00:30:17,200 --> 00:30:19,880
Speaker 1: cave didn't listen to his advisers. You know, during the

555
00:30:19,960 --> 00:30:23,920
Speaker 1: campaign he was very negative on NATO. Uh, Madness told

556
00:30:24,000 --> 00:30:25,680
Speaker 1: him the NATO was important. So all of a sudden,

557
00:30:25,760 --> 00:30:28,400
Speaker 1: NATO is important, you know, although there's been a lot

558
00:30:28,480 --> 00:30:30,960
Speaker 1: of Joe boning about NATO and the less more on

559
00:30:31,000 --> 00:30:35,840
Speaker 1: the expense side, the equabil carrying of expenses. Uh, what

560
00:30:35,960 --> 00:30:38,120
Speaker 1: worries me, to be honest with you, is more the

561
00:30:38,200 --> 00:30:41,160
Speaker 1: fiscal policy we're pursuing in the sense that you know,

562
00:30:41,240 --> 00:30:45,440
Speaker 1: the unemployment rate is near full employment, um, and UH,

563
00:30:45,880 --> 00:30:48,400
Speaker 1: the deficitor is not coming down. So I think that

564
00:30:48,480 --> 00:30:50,240
Speaker 1: there's a good chance that not only is it not

565
00:30:50,360 --> 00:30:52,320
Speaker 1: coming down, it's been exting. I think it's a good

566
00:30:53,560 --> 00:30:55,320
Speaker 1: which is one of the reasons I decided to become

567
00:30:55,360 --> 00:30:58,440
Speaker 1: a family office. You know, I lost money uh in

568
00:30:58,840 --> 00:31:02,480
Speaker 1: two thousand eight personally, and I did a poor drop

569
00:31:02,520 --> 00:31:06,000
Speaker 1: from my investors in inwo eight. I lost a lot

570
00:31:06,040 --> 00:31:08,360
Speaker 1: of money. Market was down thirty seven percent that year.

571
00:31:09,080 --> 00:31:11,080
Speaker 1: Less in the market, but I lost a lot of money.

572
00:31:12,240 --> 00:31:16,000
Speaker 1: And the truth be known, I was less concerned about

573
00:31:16,040 --> 00:31:18,240
Speaker 1: my own money, but very concerned about my investors money.

574
00:31:18,720 --> 00:31:20,720
Speaker 1: I live a very simple life. I've been married fifty

575
00:31:20,760 --> 00:31:23,440
Speaker 1: four years to say woman she toured for thirty five years.

576
00:31:23,840 --> 00:31:27,440
Speaker 1: I don't collect art. Uh. Last time we spoke, you know,

577
00:31:27,600 --> 00:31:31,360
Speaker 1: my my had one of the mobilits uh sixteen years old.

578
00:31:31,400 --> 00:31:33,160
Speaker 1: I know I lectured you to go get a new

579
00:31:33,200 --> 00:31:35,560
Speaker 1: car with blue Did you succeeded? I got a new

580
00:31:35,600 --> 00:31:37,760
Speaker 1: car for the safety features, But I still have a

581
00:31:38,680 --> 00:31:40,720
Speaker 1: two thousand two World Won't Bible that I drive and

582
00:31:40,760 --> 00:31:43,280
Speaker 1: I like um. And so you know, I live a

583
00:31:43,400 --> 00:31:45,760
Speaker 1: very simple life and I have no borrowings or own

584
00:31:45,760 --> 00:31:48,400
Speaker 1: anybody a penny. But I cared about my investors because

585
00:31:48,400 --> 00:31:52,120
Speaker 1: I let them down. And so uh, I am concerned

586
00:31:52,120 --> 00:31:55,240
Speaker 1: about fiscal policy. The deficits should be coming down, not

587
00:31:55,400 --> 00:31:59,600
Speaker 1: going up. The President is very very much, you know,

588
00:32:00,040 --> 00:32:03,280
Speaker 1: promoting things for his base. Um. And if we're gonna

589
00:32:03,320 --> 00:32:07,800
Speaker 1: buy American and you disregard the law of comparative advantage

590
00:32:07,840 --> 00:32:10,560
Speaker 1: and we put on these tariffs, um, and the labor

591
00:32:10,640 --> 00:32:12,840
Speaker 1: markets are tightening, and the price of what is growing up.

592
00:32:13,320 --> 00:32:16,200
Speaker 1: I would think common sense suggests there should be an

593
00:32:16,200 --> 00:32:19,920
Speaker 1: inflation surprise which will affect the FED, and they'll affect

594
00:32:19,960 --> 00:32:21,920
Speaker 1: the market a little bit like what's happening with the

595
00:32:22,000 --> 00:32:25,840
Speaker 1: Fang stocks. Now. You know, Facebook missed the number that

596
00:32:26,160 --> 00:32:28,080
Speaker 1: decline and uses an all of a sudden, everybody thinks

597
00:32:28,080 --> 00:32:29,600
Speaker 1: the world has come to an end for Fang, which

598
00:32:29,600 --> 00:32:34,400
Speaker 1: I doubt no. But you're totally talking my book. With inflation.

599
00:32:35,080 --> 00:32:37,720
Speaker 1: You look at this aluminum and steel tariffs and the

600
00:32:37,760 --> 00:32:42,200
Speaker 1: automobile tariffs. That could be extreme wrong footed policy. But

601
00:32:42,920 --> 00:32:45,680
Speaker 1: I think he's not wrong in saying we have to

602
00:32:45,800 --> 00:32:49,080
Speaker 1: have a fairy game, and so maybe there'll be a

603
00:32:49,120 --> 00:32:52,520
Speaker 1: compromise that will work out. You know, we we can't

604
00:32:52,560 --> 00:32:55,600
Speaker 1: sell him short. He's the president country, and therefore he

605
00:32:55,680 --> 00:32:57,800
Speaker 1: used the pilot of the airplane, and I always root

606
00:32:57,840 --> 00:33:00,400
Speaker 1: for the pilot. I want to do well. I'm troubled

607
00:33:00,440 --> 00:33:03,640
Speaker 1: about the environment. You know. I was privileged to have

608
00:33:03,680 --> 00:33:06,200
Speaker 1: dinner with him in the White House in July of

609
00:33:06,520 --> 00:33:09,080
Speaker 1: last year, and when it was only ten people in

610
00:33:09,120 --> 00:33:11,800
Speaker 1: the president we sat down at the dinner table. He

611
00:33:11,840 --> 00:33:13,640
Speaker 1: could have been more gracious. He said to me leave,

612
00:33:13,640 --> 00:33:16,480
Speaker 1: you had great reputation. Do you think your open letter

613
00:33:16,480 --> 00:33:20,320
Speaker 1: of President Obama created your SEC problems? So somebody had

614
00:33:20,360 --> 00:33:22,680
Speaker 1: briefed him, and I told him. A lot of people

615
00:33:22,760 --> 00:33:24,360
Speaker 1: say that I have no idea if it did or

616
00:33:24,360 --> 00:33:26,800
Speaker 1: it didn't. All I know is that they basically ruined

617
00:33:26,840 --> 00:33:29,000
Speaker 1: my business, and they did not conduct themselves in a

618
00:33:29,120 --> 00:33:32,400
Speaker 1: proper manner. Uh Still, they refused to answer the question

619
00:33:32,480 --> 00:33:34,560
Speaker 1: what did you learn between you first ask and your

620
00:33:34,560 --> 00:33:38,280
Speaker 1: second ask? I sent two very polite letters to uh

621
00:33:39,360 --> 00:33:41,200
Speaker 1: Jay Clayton, the head of the SEC. He did not

622
00:33:41,320 --> 00:33:44,320
Speaker 1: respond to him. And when I encountered the Mary Joe

623
00:33:44,400 --> 00:33:47,040
Speaker 1: White at this seminar and I promised a hunt a

624
00:33:47,080 --> 00:33:49,440
Speaker 1: thousand dollars her favorite charity if she answered the question.

625
00:33:50,000 --> 00:33:52,440
Speaker 1: She demured, and answer the question, I'd like to know

626
00:33:52,520 --> 00:33:54,520
Speaker 1: what'd you learn? I don't. I don't think you can

627
00:33:54,560 --> 00:33:58,600
Speaker 1: get an answer to that question, I think anytime soon.

628
00:33:59,120 --> 00:34:02,560
Speaker 1: So if you so, currently you sound like you're fairly

629
00:34:02,640 --> 00:34:06,000
Speaker 1: constructive about the market. Are you more or less fully

630
00:34:06,080 --> 00:34:09,279
Speaker 1: invested or or what? Pretty much? But I have a

631
00:34:09,400 --> 00:34:12,400
Speaker 1: unique problem now in the sense that by becoming a

632
00:34:12,480 --> 00:34:16,479
Speaker 1: family office, about forty of the money is that client

633
00:34:16,600 --> 00:34:19,560
Speaker 1: money and have a legal obligation to return their money.

634
00:34:19,600 --> 00:34:21,719
Speaker 1: So between now and the end of the year, I'm

635
00:34:21,760 --> 00:34:27,080
Speaker 1: not buying anything, basically selling uh and hopefully intelligently, and

636
00:34:27,239 --> 00:34:29,160
Speaker 1: hopefully the market is higher at the end of the

637
00:34:29,239 --> 00:34:31,200
Speaker 1: year than it is now. And I so I had

638
00:34:31,200 --> 00:34:33,600
Speaker 1: a good prices and then I revert to a family

639
00:34:33,719 --> 00:34:36,719
Speaker 1: office and I get the SMP five off my back.

640
00:34:37,160 --> 00:34:42,440
Speaker 1: So hypothetically, let's say your views change. You mentioned nine.

641
00:34:43,480 --> 00:34:47,200
Speaker 1: Let's say it's two years hence and you you're saying, hey,

642
00:34:47,280 --> 00:34:51,320
Speaker 1: I really smell something bad coming. How would you adjust

643
00:34:51,440 --> 00:34:54,560
Speaker 1: your portfolio then, and how would that be different from

644
00:34:54,640 --> 00:34:58,560
Speaker 1: when you were running client money? Uh? It wouldn't be

645
00:34:58,760 --> 00:35:02,719
Speaker 1: the only different, and it's a significant difference is I

646
00:35:02,800 --> 00:35:06,800
Speaker 1: would be willing to buy buy into more liquid things

647
00:35:06,960 --> 00:35:10,279
Speaker 1: that I felt the value. We're outstanding because I didn't

648
00:35:10,280 --> 00:35:13,000
Speaker 1: have to worry about quarterly redemptions, so you could hold

649
00:35:13,080 --> 00:35:15,759
Speaker 1: it longer term. You could be early and not worry

650
00:35:15,760 --> 00:35:19,840
Speaker 1: about screaming clients exactly. You don't have that bugaboo of

651
00:35:19,880 --> 00:35:23,239
Speaker 1: running after the SMP and outperforming, and I would try

652
00:35:23,400 --> 00:35:27,080
Speaker 1: to invest more for long term capital gains. I'm not

653
00:35:27,200 --> 00:35:30,239
Speaker 1: sure what year it was, but thirty odd years ago

654
00:35:30,320 --> 00:35:34,719
Speaker 1: Warren Buffett had in his annual report an example of

655
00:35:34,920 --> 00:35:39,120
Speaker 1: a money manager who every year brought that year's hot stock,

656
00:35:39,200 --> 00:35:43,440
Speaker 1: made fift sold it, and invested next year's hot stock,

657
00:35:44,160 --> 00:35:48,080
Speaker 1: compared to basically buying a fifteen percent grow of that

658
00:35:48,160 --> 00:35:51,239
Speaker 1: compound in the fifteen percent every year. After thirty or

659
00:35:51,320 --> 00:35:54,480
Speaker 1: forty years, you have thousands of times more money after texts.

660
00:35:54,760 --> 00:35:56,680
Speaker 1: And that's what I constantly say. You know, Warren is

661
00:35:56,719 --> 00:36:00,160
Speaker 1: a phenomenon in his own right, but people thought give

662
00:36:00,200 --> 00:36:05,040
Speaker 1: adequate credit his record half attacks is truly unbelievable. You're

663
00:36:05,120 --> 00:36:08,239
Speaker 1: not giving up thirty in short term capital gains and

664
00:36:08,360 --> 00:36:11,759
Speaker 1: then letting that compound over decades. I would hope that,

665
00:36:11,840 --> 00:36:14,359
Speaker 1: say seventy what I do would be oriented towards long

666
00:36:14,480 --> 00:36:17,680
Speaker 1: term capital gains twenty five percent. Maybe short term where

667
00:36:17,719 --> 00:36:21,320
Speaker 1: we think we have a d variant perception, etcetera. But

668
00:36:21,360 --> 00:36:24,440
Speaker 1: I'd like to invest for long term capital gains. And uh,

669
00:36:25,239 --> 00:36:27,719
Speaker 1: I'm gonna have a different fee structure um, and I'm

670
00:36:27,760 --> 00:36:31,160
Speaker 1: a different approach the way I've run my fund, which

671
00:36:31,239 --> 00:36:34,160
Speaker 1: is why my people turnover has been very nominal even

672
00:36:34,239 --> 00:36:37,640
Speaker 1: during this sec period. Very nominal is I tell the people,

673
00:36:37,640 --> 00:36:40,040
Speaker 1: if you make money for the investors, you get paid

674
00:36:40,080 --> 00:36:42,839
Speaker 1: no matter what. So I accepted a big netting risk.

675
00:36:43,360 --> 00:36:45,680
Speaker 1: There was any one year, you know, if like energies

676
00:36:45,680 --> 00:36:47,520
Speaker 1: had a favor energy guy might lose money if you

677
00:36:47,520 --> 00:36:49,520
Speaker 1: didn't get it right, and you are the people might

678
00:36:49,600 --> 00:36:51,600
Speaker 1: make money. So I paid the people that made money.

679
00:36:51,800 --> 00:36:53,400
Speaker 1: I didn't get a check back from the guy or

680
00:36:53,440 --> 00:36:55,319
Speaker 1: the gall that lost money. So I had a big

681
00:36:55,360 --> 00:36:57,839
Speaker 1: netting risk. And in the new business I said, I'm

682
00:36:57,840 --> 00:37:00,359
Speaker 1: not gonna accept the netting risk. The families gonna put

683
00:37:00,400 --> 00:37:02,480
Speaker 1: ten percent of the profits above three percent in the

684
00:37:02,560 --> 00:37:05,120
Speaker 1: pool to be shared by the twelve or fifteen people.

685
00:37:05,560 --> 00:37:07,440
Speaker 1: And so We're all going to be in this together.

686
00:37:07,960 --> 00:37:09,400
Speaker 1: Can you stick around a little bit. I have some

687
00:37:09,440 --> 00:37:12,480
Speaker 1: more questions for it. Absolutely, we've been speaking with Lee

688
00:37:12,560 --> 00:37:16,360
Speaker 1: Cooperman of Omega Advisors. If you enjoy this conversation, be

689
00:37:16,480 --> 00:37:18,880
Speaker 1: sure and come back for the podcast extras. Will we

690
00:37:19,040 --> 00:37:23,719
Speaker 1: keep the tape rolling and continue discussing all things value investing.

691
00:37:24,280 --> 00:37:28,560
Speaker 1: We love your comments, feedback, end suggestions right to us

692
00:37:28,640 --> 00:37:32,480
Speaker 1: at m IB podcast at Bloomberg dot net. You could

693
00:37:32,520 --> 00:37:36,560
Speaker 1: follow my daily column on Bloomberg dot com. Check me

694
00:37:36,600 --> 00:37:40,160
Speaker 1: out on Twitter at rit Halts. I'm Barry Hults. You're

695
00:37:40,200 --> 00:37:58,520
Speaker 1: listening to Masters in Business on Bloomberg Radio. Welcome to

696
00:37:58,600 --> 00:38:01,160
Speaker 1: the podcast leaf. Thank you some for doing this again.

697
00:38:01,360 --> 00:38:04,840
Speaker 1: I've been looking forward to um having a conversation. I

698
00:38:04,920 --> 00:38:08,160
Speaker 1: still have a ton more questions. I didn't get to

699
00:38:08,239 --> 00:38:11,640
Speaker 1: talk about the Giving Pledge or your philanthropy, and you

700
00:38:11,800 --> 00:38:14,759
Speaker 1: told a wonderful story. I don't even believe it was

701
00:38:14,880 --> 00:38:19,360
Speaker 1: on on air the last time. The Giving Pledge is

702
00:38:19,800 --> 00:38:22,600
Speaker 1: warm buffing and Bill gates the commitment from people to

703
00:38:22,680 --> 00:38:26,799
Speaker 1: give away the majority of their assets technically half half. Well,

704
00:38:27,560 --> 00:38:30,320
Speaker 1: I've told I'm gonna say sold Warren. You know I

705
00:38:30,520 --> 00:38:35,920
Speaker 1: was on TV a competitive network the other day, and

706
00:38:36,040 --> 00:38:39,320
Speaker 1: Warren sent me a very nice uh email which he

707
00:38:39,400 --> 00:38:42,880
Speaker 1: gave the fellow at the other network up at the

708
00:38:43,480 --> 00:38:47,000
Speaker 1: approval to read, and I'm trying to pump around and

709
00:38:47,200 --> 00:38:50,440
Speaker 1: find it. He says, highly. You were terrific on X

710
00:38:50,600 --> 00:38:54,279
Speaker 1: y Z. You can say CNBC today. I think I

711
00:38:54,400 --> 00:38:57,680
Speaker 1: know exactly emotions you experienced the reason you followed, since

712
00:38:57,760 --> 00:39:01,080
Speaker 1: I have done somewhat the same thing in nineteen nine.

713
00:39:01,840 --> 00:39:03,520
Speaker 1: The one thing I can guarantee you is that your

714
00:39:03,520 --> 00:39:06,000
Speaker 1: parents would be extraordinarily pleased at the course you're followed,

715
00:39:06,280 --> 00:39:09,440
Speaker 1: and I're going to continue following life. Example can be

716
00:39:09,480 --> 00:39:13,440
Speaker 1: powerful at the giving pledge. We have disproportionately a low

717
00:39:13,560 --> 00:39:16,040
Speaker 1: number of people who have made their fortunes in Wall Street.

718
00:39:16,440 --> 00:39:19,000
Speaker 1: You can be a powerful influence in having them rethink

719
00:39:19,040 --> 00:39:22,480
Speaker 1: their priorities. Hope you make use of the moral podium

720
00:39:22,560 --> 00:39:24,880
Speaker 1: on which you stand. I agree with you that I

721
00:39:24,920 --> 00:39:26,880
Speaker 1: didn't ask for enough when I called on you to pledge,

722
00:39:27,960 --> 00:39:29,920
Speaker 1: and I'm glad you're correcting him form ere. I told

723
00:39:30,000 --> 00:39:32,120
Speaker 1: my plan to give it all the way you also

724
00:39:32,360 --> 00:39:37,320
Speaker 1: you also told the charming story about dinner with Buffett

725
00:39:37,520 --> 00:39:41,320
Speaker 1: Gates and a bunch of other partists, Mike Bloomberg, Reenforcement,

726
00:39:41,360 --> 00:39:44,640
Speaker 1: who's deceased, John Poulson. I was the poorest guy that

727
00:39:45,080 --> 00:39:47,440
Speaker 1: that's the joke you said, is the poorest guy at

728
00:39:47,480 --> 00:39:50,759
Speaker 1: the table. I've lived the American dream. Who picked up

729
00:39:50,800 --> 00:39:54,239
Speaker 1: the bill for that? The mayor? It wasn't you in

730
00:39:54,280 --> 00:39:57,840
Speaker 1: the philothropic, it was in philanthropical officers. I mean, he

731
00:39:58,000 --> 00:40:01,960
Speaker 1: just terrific guy. And uh, you know, basically, look, I

732
00:40:02,080 --> 00:40:04,279
Speaker 1: figured out a long time ago there's only four things

733
00:40:04,360 --> 00:40:05,719
Speaker 1: you can do with money. When you think about it.

734
00:40:06,200 --> 00:40:07,600
Speaker 1: The first thing you can do with money is you

735
00:40:07,680 --> 00:40:10,799
Speaker 1: spend it on yourself. I mentioned before my wife has

736
00:40:10,840 --> 00:40:13,120
Speaker 1: worked for thirty or five years as an educator. I

737
00:40:13,200 --> 00:40:17,280
Speaker 1: don't collect art. I worked very long hours by design,

738
00:40:17,880 --> 00:40:19,680
Speaker 1: and so I'm not a consumer. I'm not a closed

739
00:40:19,719 --> 00:40:21,960
Speaker 1: horse for obvious reasons that people they can't see me.

740
00:40:22,000 --> 00:40:23,919
Speaker 1: I'm on radio. But you know I'm a chubby guy.

741
00:40:24,480 --> 00:40:27,560
Speaker 1: So you know, um, I can't consume what I used

742
00:40:27,560 --> 00:40:29,560
Speaker 1: to make. I don't make any money anymore because the

743
00:40:29,880 --> 00:40:32,759
Speaker 1: SEC took care cooking my business. So the first thing

744
00:40:32,760 --> 00:40:34,520
Speaker 1: you can do is spend it on yourself. I'm not

745
00:40:34,640 --> 00:40:37,319
Speaker 1: a consumer. I happen to think that material possessions bring

746
00:40:37,440 --> 00:40:40,120
Speaker 1: with them aggravation. So I like that. I think less

747
00:40:40,280 --> 00:40:42,719
Speaker 1: is more. That's just my own view. Second think you

748
00:40:42,760 --> 00:40:44,040
Speaker 1: do is you give you money to kids. But I

749
00:40:44,080 --> 00:40:46,040
Speaker 1: think anybody who gives, if they have a lot of money,

750
00:40:46,080 --> 00:40:48,160
Speaker 1: give all your money to kids is wrong, which is

751
00:40:48,400 --> 00:40:51,759
Speaker 1: that deprives them of self achievement for sure. And you know,

752
00:40:51,920 --> 00:40:54,640
Speaker 1: you look at what happens to lottery winners and sports.

753
00:40:55,000 --> 00:40:57,640
Speaker 1: So I want to leave not not how kids get

754
00:40:57,880 --> 00:41:01,560
Speaker 1: some money, but not not nothing remotely approaching what I have.

755
00:41:02,080 --> 00:41:03,440
Speaker 1: The third thing you can do is you give it

756
00:41:03,520 --> 00:41:05,600
Speaker 1: the government, but only a full gives the government money

757
00:41:05,640 --> 00:41:07,400
Speaker 1: you don't have to give him. And the four thing

758
00:41:07,520 --> 00:41:10,040
Speaker 1: is you recycle it back in society. And that's what

759
00:41:10,200 --> 00:41:13,080
Speaker 1: my family and I have decided to do. My signature

760
00:41:13,160 --> 00:41:14,880
Speaker 1: have a lot of things I'm doing, but my signature

761
00:41:14,880 --> 00:41:17,719
Speaker 1: event is called Kopman College scholars If you live in

762
00:41:17,880 --> 00:41:21,600
Speaker 1: s s Canton, New Jersey, UM and you show the initiative,

763
00:41:21,680 --> 00:41:24,880
Speaker 1: enroll in a free three week pre college program designed

764
00:41:24,920 --> 00:41:28,120
Speaker 1: by Frankly and Marshall. You're academically qualified. I'm big on

765
00:41:28,239 --> 00:41:31,880
Speaker 1: equal opportunities, not on equal outcomes, and you have financial

766
00:41:31,960 --> 00:41:33,920
Speaker 1: need I'm met by government. I give these kids up

767
00:41:33,920 --> 00:41:35,840
Speaker 1: at ten thousand dollars a year for six years to

768
00:41:35,880 --> 00:41:43,279
Speaker 1: get college degree. And it's life changing, very emotional. But no,

769
00:41:43,800 --> 00:41:46,200
Speaker 1: you've been doing this every year for I'm in my

770
00:41:46,280 --> 00:41:48,320
Speaker 1: fourth year. I put twenty five million dollars in a

771
00:41:48,400 --> 00:41:50,359
Speaker 1: fund and there's enough money to send five minty kids

772
00:41:50,400 --> 00:41:53,840
Speaker 1: to college. I told the guys at the sec for

773
00:41:53,960 --> 00:41:56,239
Speaker 1: what your cost to me, I could go to kids.

774
00:41:56,239 --> 00:41:58,040
Speaker 1: They didn't see him to the care and so this

775
00:41:58,200 --> 00:42:01,680
Speaker 1: is life changing and it's impoor to me. Uh. It's

776
00:42:01,719 --> 00:42:04,200
Speaker 1: called Cookman College College. And I have other things I

777
00:42:04,280 --> 00:42:07,600
Speaker 1: do in the Jewish world. I've done a lot talking

778
00:42:07,600 --> 00:42:11,040
Speaker 1: about Birthright. Weren't you in earl Un fund where I

779
00:42:11,120 --> 00:42:14,759
Speaker 1: send a bunch of busloads kids to Birthright Israel. I

780
00:42:15,080 --> 00:42:19,719
Speaker 1: subsidized Jewish summit camps. My granddaughter and my daughter in law,

781
00:42:19,840 --> 00:42:24,640
Speaker 1: Jody Uh preside over request from mits for money Uh

782
00:42:24,840 --> 00:42:28,960
Speaker 1: to for Barbot Mitzpah's. I did a major wing the

783
00:42:29,000 --> 00:42:31,200
Speaker 1: same bottom as medical center, which I got more than

784
00:42:31,239 --> 00:42:33,080
Speaker 1: I bargained for, and I said, this is a dedication.

785
00:42:33,560 --> 00:42:36,080
Speaker 1: They asked you for number. I gave the number, and

786
00:42:36,120 --> 00:42:38,279
Speaker 1: when I looked with a built was fabulous, like a

787
00:42:38,360 --> 00:42:42,440
Speaker 1: hundred forty yard private rooms, fifty neon NATO centers. My

788
00:42:42,560 --> 00:42:44,920
Speaker 1: name is on the building. I get more credit than

789
00:42:44,960 --> 00:42:47,040
Speaker 1: I deserve. I feel blessed to be in the position

790
00:42:47,080 --> 00:42:48,480
Speaker 1: to give it away. And it wasn't all that way,

791
00:42:48,880 --> 00:42:51,200
Speaker 1: as I set to Warren Buffing, Bill Gates, and Mike

792
00:42:51,239 --> 00:42:54,800
Speaker 1: Bloomberg on the fist. First generation born in America, my family,

793
00:42:55,160 --> 00:42:58,080
Speaker 1: first generation go to college upen to Columbia. All my

794
00:42:58,320 --> 00:43:01,160
Speaker 1: education was public school base. I went public grade school

795
00:43:01,200 --> 00:43:03,239
Speaker 1: in the Bronx. I went to public high school in

796
00:43:03,239 --> 00:43:06,239
Speaker 1: the Bronx. I followed the advice of Harley Schoolly, I

797
00:43:06,280 --> 00:43:08,080
Speaker 1: went west and I went to college in the West

798
00:43:08,160 --> 00:43:12,160
Speaker 1: Bronx Hunter Colleges and now called called Lieman College. And

799
00:43:12,239 --> 00:43:14,920
Speaker 1: then I had a short sixteen months stay at Columbia,

800
00:43:15,280 --> 00:43:19,400
Speaker 1: which opened the door to Goldman Sachs. Because Goldman probably

801
00:43:19,480 --> 00:43:21,640
Speaker 1: hiring at someone out of a mold, wouldn't hire out

802
00:43:21,640 --> 00:43:25,040
Speaker 1: of city university and the NBA. Columbia got me in

803
00:43:25,080 --> 00:43:28,719
Speaker 1: the goldment. I started my career. I mean, I got

804
00:43:28,800 --> 00:43:31,960
Speaker 1: my MBA on January thirty one, sixty seven. Had a

805
00:43:32,040 --> 00:43:34,359
Speaker 1: six month old kid who was now approaching fifty one,

806
00:43:35,200 --> 00:43:38,239
Speaker 1: I had no money in the bank. Uh and um

807
00:43:38,880 --> 00:43:41,320
Speaker 1: I had a student loan to repay. So by definition

808
00:43:41,360 --> 00:43:43,759
Speaker 1: how negative net worth? So I didn't I couldn't take

809
00:43:43,800 --> 00:43:46,440
Speaker 1: the next vacation at that time. I think they were

810
00:43:46,480 --> 00:43:49,000
Speaker 1: going to Mexico. Now they go to Australia. And I

811
00:43:49,160 --> 00:43:50,920
Speaker 1: went to work at Goldman the very next day. And

812
00:43:50,960 --> 00:43:52,759
Speaker 1: I started my career with negative net worth, made a

813
00:43:52,800 --> 00:43:54,680
Speaker 1: lot of money and taking the giving pledge with Buffett

814
00:43:54,680 --> 00:43:56,520
Speaker 1: and you know, I mean I liked the ark of

815
00:43:56,560 --> 00:43:58,800
Speaker 1: my life. I feel good about things and uh, but

816
00:43:58,880 --> 00:44:00,400
Speaker 1: I do a lot of people that worked hard, it

817
00:44:00,520 --> 00:44:03,120
Speaker 1: didn't make it, you know. So I was lucky. I

818
00:44:03,200 --> 00:44:05,920
Speaker 1: went to a firm whose name didn't change. You know,

819
00:44:06,000 --> 00:44:08,080
Speaker 1: you could have gone a good body, could have gone

820
00:44:08,120 --> 00:44:10,680
Speaker 1: the Kidney Peabody. You could have gone the Coon Lobe.

821
00:44:10,920 --> 00:44:14,680
Speaker 1: You could have gone to you know, um Low Roads. Uh.

822
00:44:14,800 --> 00:44:17,239
Speaker 1: Instead I went to go home in Sacks. Uh. That

823
00:44:17,400 --> 00:44:19,840
Speaker 1: was a good decision. So I deserved some credit for

824
00:44:19,960 --> 00:44:22,120
Speaker 1: making a good decision because it wasn't the best financial offer.

825
00:44:22,160 --> 00:44:24,680
Speaker 1: I had. The best decision I made in my life

826
00:44:24,800 --> 00:44:27,960
Speaker 1: was I went to down school. Okay, back in the sixties,

827
00:44:28,080 --> 00:44:31,520
Speaker 1: if you finished your major minor in college in three years.

828
00:44:32,000 --> 00:44:33,800
Speaker 1: They will allow you to count your first year of

829
00:44:33,880 --> 00:44:36,000
Speaker 1: dental medical school towards a fourth year of college in

830
00:44:36,040 --> 00:44:39,239
Speaker 1: a separate degree. So I toiled very hard in the

831
00:44:39,400 --> 00:44:42,279
Speaker 1: summer of nineteen sixty three and took physical chemistry at

832
00:44:42,320 --> 00:44:44,680
Speaker 1: the University of Pennsylvania. It was my major was chemistry.

833
00:44:44,719 --> 00:44:48,040
Speaker 1: My mind was math and physics. And I I enrolled

834
00:44:48,440 --> 00:44:51,200
Speaker 1: in August of sixty three in the University of Pennsylvania

835
00:44:51,239 --> 00:44:54,560
Speaker 1: Down School. And after eight days I developed a concern

836
00:44:54,640 --> 00:44:57,000
Speaker 1: that I was pushing myself in the direction that I

837
00:44:57,120 --> 00:45:01,080
Speaker 1: wasn't fully committed to. And it is traumatic. My father

838
00:45:01,160 --> 00:45:02,960
Speaker 1: may rest in peace, was pissed this hell at me

839
00:45:03,320 --> 00:45:05,120
Speaker 1: because you know, I paid tuition for a year. I

840
00:45:05,160 --> 00:45:08,160
Speaker 1: paid room and board. Uh. The dean of the Down

841
00:45:08,239 --> 00:45:09,600
Speaker 1: School put me on a guilt trip. He said, you

842
00:45:09,640 --> 00:45:12,000
Speaker 1: took the hunting first applicant. You deprived him of the

843
00:45:12,040 --> 00:45:15,279
Speaker 1: dental education. My dad was going around talking about my

844
00:45:15,360 --> 00:45:18,120
Speaker 1: son the dentist, and uh, it was very traumatic. Was

845
00:45:18,200 --> 00:45:20,800
Speaker 1: the best decision I've ever made. And so you know,

846
00:45:20,960 --> 00:45:23,640
Speaker 1: life is partly making good decisions both so a lot

847
00:45:23,680 --> 00:45:26,160
Speaker 1: of luck. Let's talk a little bit about Columbia where

848
00:45:26,200 --> 00:45:30,120
Speaker 1: you got your m b A. You had some fairly

849
00:45:30,840 --> 00:45:33,600
Speaker 1: interesting colleagues that you hung out with them. Yeah. Well,

850
00:45:34,040 --> 00:45:36,319
Speaker 1: two of my best friends to this day I met

851
00:45:36,360 --> 00:45:41,759
Speaker 1: at Columbia, married Ga Belly and Art Sandberg. And what

852
00:45:41,960 --> 00:45:45,400
Speaker 1: Columbia did is it gave me the language of business

853
00:45:45,480 --> 00:45:49,640
Speaker 1: with accounting, operations, research statistics, what have you. Uh. It

854
00:45:50,000 --> 00:45:52,080
Speaker 1: gave me three initials after the end of my name

855
00:45:52,239 --> 00:45:54,880
Speaker 1: that I kept for the rest of my life. And

856
00:45:55,480 --> 00:45:58,440
Speaker 1: it gave me a bunch of relationships that went out

857
00:45:58,480 --> 00:46:00,520
Speaker 1: into the business world where you could work in the

858
00:46:00,600 --> 00:46:03,719
Speaker 1: future with relationships. I made friendships that I kept for

859
00:46:03,760 --> 00:46:05,759
Speaker 1: the rest of my life. And that's what life is

860
00:46:05,800 --> 00:46:08,760
Speaker 1: all about. That that must have been some car communing

861
00:46:08,840 --> 00:46:11,040
Speaker 1: back and forth to time he did it. I may

862
00:46:11,120 --> 00:46:15,600
Speaker 1: find his recommendation record lectures. Mario and I and Art

863
00:46:15,719 --> 00:46:18,399
Speaker 1: had the same stockbroker. I think he's I'm sure he's

864
00:46:18,440 --> 00:46:22,800
Speaker 1: deceased high fishman. Uh and Mary and I used to

865
00:46:22,920 --> 00:46:25,239
Speaker 1: push each other, jostly each other to get into the

866
00:46:25,320 --> 00:46:28,000
Speaker 1: one phone booth at the business school to broker to

867
00:46:28,040 --> 00:46:30,520
Speaker 1: put in order in But it was good. You know,

868
00:46:30,600 --> 00:46:32,719
Speaker 1: I love Mario because you know, the only thing has

869
00:46:32,800 --> 00:46:34,600
Speaker 1: changed about Mary in the last fifty years of the

870
00:46:34,640 --> 00:46:36,840
Speaker 1: color of his hair. He has the same physique he

871
00:46:36,880 --> 00:46:38,239
Speaker 1: had when he was in Busines school. I wish I

872
00:46:38,280 --> 00:46:42,239
Speaker 1: could say the same. He's a good friend, terrific human being,

873
00:46:42,800 --> 00:46:46,560
Speaker 1: and his heads, his hairs gone from red to white,

874
00:46:47,040 --> 00:46:50,080
Speaker 1: but he has it all. So so you mentioned, um,

875
00:46:50,680 --> 00:46:54,600
Speaker 1: some of the philanthropy you've done with sending some kids

876
00:46:54,680 --> 00:46:58,400
Speaker 1: from from New Jersey to college. Um, you talked about

877
00:46:58,680 --> 00:47:03,480
Speaker 1: one of the buildings you endowed in one of the hospitals,

878
00:47:03,520 --> 00:47:06,680
Speaker 1: and bottom, let's talk a little about Columbia because you

879
00:47:06,840 --> 00:47:11,680
Speaker 1: set up multiple scholarships. What else have you done with

880
00:47:11,840 --> 00:47:14,759
Speaker 1: Colombia and how do you see that manifest given him? Uh,

881
00:47:15,320 --> 00:47:18,160
Speaker 1: I think come to over thirty million dollars towards the

882
00:47:18,200 --> 00:47:22,000
Speaker 1: building and data share their economics and finance. I've given

883
00:47:22,040 --> 00:47:24,279
Speaker 1: a similar amount of money to Hunt the college. You know,

884
00:47:25,000 --> 00:47:27,440
Speaker 1: the truth of the matter is Columbia is more aggressive

885
00:47:27,480 --> 00:47:30,520
Speaker 1: and asking. They're both worthy causes when you think about it.

886
00:47:30,560 --> 00:47:33,200
Speaker 1: I I went to Hunter for twenty four dollars a semester.

887
00:47:34,040 --> 00:47:36,840
Speaker 1: I met my wife my sophomore year and we married

888
00:47:36,880 --> 00:47:40,160
Speaker 1: fifty four years. So somebody gave your wife in a

889
00:47:40,239 --> 00:47:44,239
Speaker 1: top education for virtually nothing yo, and today I think

890
00:47:44,239 --> 00:47:46,680
Speaker 1: the tuitions about six thousand dollars a year. So I

891
00:47:46,800 --> 00:47:51,480
Speaker 1: gave them aid a financial aid uh at thet at

892
00:47:51,560 --> 00:47:54,120
Speaker 1: Hunter and they needed some help in a library, So

893
00:47:54,440 --> 00:47:57,000
Speaker 1: in data library. My name is in a lot of things,

894
00:47:57,040 --> 00:47:58,920
Speaker 1: but that's secondary to me. I don't care about the

895
00:47:59,360 --> 00:48:03,000
Speaker 1: highest form of giving his anonymous. So whoever is in

896
00:48:03,280 --> 00:48:07,960
Speaker 1: Hunter College alumni office, you should reach out to leave.

897
00:48:08,000 --> 00:48:09,600
Speaker 1: They have to have to have of giving up a

898
00:48:09,640 --> 00:48:12,480
Speaker 1: thirty million dollars. They tapped me out. I give and

899
00:48:12,560 --> 00:48:15,000
Speaker 1: I give Jennifer rab the president Hunter, all the credit.

900
00:48:15,840 --> 00:48:17,400
Speaker 1: When she called me up, I said, you've got a

901
00:48:17,480 --> 00:48:21,600
Speaker 1: problem in dealing with me. Whis what's the problem? I said,

902
00:48:21,600 --> 00:48:23,920
Speaker 1: I never stepped foot and Hunt the college. I went

903
00:48:24,000 --> 00:48:26,279
Speaker 1: to Hunter in the Bronx. Hunter in the Bronx today

904
00:48:26,360 --> 00:48:28,400
Speaker 1: is called Lehman College. Is at the end of the

905
00:48:28,520 --> 00:48:32,240
Speaker 1: Korean War, Hunter and the Bronx when co ed because

906
00:48:32,239 --> 00:48:34,719
Speaker 1: it was inadequate capacity, and the colleges who absorbed the

907
00:48:34,719 --> 00:48:37,040
Speaker 1: returning g i's and so I went to Hunter in

908
00:48:37,080 --> 00:48:39,920
Speaker 1: the Bronx and she was very sharp. He says, pull

909
00:48:39,960 --> 00:48:42,120
Speaker 1: out your diploma and look at your diploma. What did

910
00:48:42,160 --> 00:48:45,520
Speaker 1: you say to college. So she got me for a

911
00:48:45,600 --> 00:48:47,520
Speaker 1: lot of money that I'm happy to be in a

912
00:48:47,560 --> 00:48:51,040
Speaker 1: position to do it. My granddaughter, one of my my

913
00:48:51,120 --> 00:48:53,799
Speaker 1: youngest granddaughter says, Pop, everybody who asked you for money,

914
00:48:53,800 --> 00:48:55,920
Speaker 1: you give them money. I said, money is like the

915
00:48:56,000 --> 00:48:58,800
Speaker 1: new are supposed to be spread around. Well, we'll speak

916
00:48:58,840 --> 00:49:01,839
Speaker 1: after the interview, will have a conversation about that. Also, UM,

917
00:49:02,280 --> 00:49:05,040
Speaker 1: let's let's jump to some of my favorite, uh, some

918
00:49:05,160 --> 00:49:07,880
Speaker 1: of my favorite questions. I'm just looking through all my

919
00:49:08,080 --> 00:49:12,520
Speaker 1: notes to see what I missed, because we bounced all

920
00:49:12,680 --> 00:49:16,600
Speaker 1: over before. There was one question I had circled to

921
00:49:16,640 --> 00:49:19,440
Speaker 1: have I had wanted to ask you. Oh, here it

922
00:49:19,600 --> 00:49:23,920
Speaker 1: is so you and and certainly Columbia must have influenced

923
00:49:23,960 --> 00:49:27,239
Speaker 1: you this way. You're you're known as a value investor,

924
00:49:27,960 --> 00:49:33,840
Speaker 1: UM and and uh some of the greatest value investors

925
00:49:33,880 --> 00:49:37,080
Speaker 1: of all time have come out of Columbia Business School.

926
00:49:38,239 --> 00:49:42,520
Speaker 1: The past couple of years, value has been lagging growth dramatically,

927
00:49:42,760 --> 00:49:47,280
Speaker 1: As it often does. Over long periods of time, value

928
00:49:47,320 --> 00:49:52,000
Speaker 1: beats growth, but over short periods of time sometime growth dominates.

929
00:49:52,640 --> 00:49:55,120
Speaker 1: How do you deal with that when you're running a

930
00:49:55,200 --> 00:49:58,640
Speaker 1: fund and you have quarterly UM letters to put out

931
00:49:58,719 --> 00:50:02,760
Speaker 1: and quarterly responses a client's when what you know works

932
00:50:02,800 --> 00:50:05,520
Speaker 1: over the long term is lagging over the short time.

933
00:50:05,560 --> 00:50:07,640
Speaker 1: I would just point what is value? What is growth?

934
00:50:07,840 --> 00:50:11,200
Speaker 1: My largest position my fund is Google. You know, I

935
00:50:11,239 --> 00:50:13,719
Speaker 1: would say Google is growth. It's not growth, but it's

936
00:50:13,760 --> 00:50:16,279
Speaker 1: not an expensive value Google. When I bought it was

937
00:50:16,320 --> 00:50:19,200
Speaker 1: on the twenty times earnings, you know, growing at twenty

938
00:50:19,239 --> 00:50:23,800
Speaker 1: percent a year with an unbelievably fortress balance sheet, tremendous company.

939
00:50:24,280 --> 00:50:28,759
Speaker 1: You know, Um, that's not that's not it's growth, but

940
00:50:28,840 --> 00:50:31,680
Speaker 1: it's value at a reasonable price. Warren Buffett were the

941
00:50:31,760 --> 00:50:34,040
Speaker 1: great value investors of all time. Is correctly sort of

942
00:50:34,200 --> 00:50:38,440
Speaker 1: value in Apple. So uh, you know, Uh, I try

943
00:50:38,480 --> 00:50:44,200
Speaker 1: to resist labels. I would I want to be value oriented,

944
00:50:45,400 --> 00:50:48,480
Speaker 1: but it could be a growth company. Uh. And I

945
00:50:48,600 --> 00:50:50,440
Speaker 1: take him each one at a time. And the way

946
00:50:50,480 --> 00:50:52,480
Speaker 1: I run the firm is, you know, the analysts proposed

947
00:50:52,520 --> 00:50:56,719
Speaker 1: and I dispose, so a position that I have a

948
00:50:56,840 --> 00:51:01,560
Speaker 1: decent sized position. Something called a MC Media. Uh. Simbos

949
00:51:01,600 --> 00:51:05,439
Speaker 1: a m c XUM cable channel and movie. They owned

950
00:51:05,480 --> 00:51:09,400
Speaker 1: The Walking Dead and things like that, and the Dolan

951
00:51:09,520 --> 00:51:12,880
Speaker 1: family owned seventeen percent of the economic interests of the company.

952
00:51:13,880 --> 00:51:18,719
Speaker 1: And because own cable Vision and oh they sign what

953
00:51:18,760 --> 00:51:21,359
Speaker 1: about MSG and the ins is they still own that's

954
00:51:21,400 --> 00:51:26,920
Speaker 1: the Jimmy Dolan, that's his prize son the Sun. So anyway,

955
00:51:26,960 --> 00:51:29,560
Speaker 1: getting back to a m c X so, seventhea Be said,

956
00:51:29,640 --> 00:51:32,640
Speaker 1: the economic interest is owned by the Dolan family because

957
00:51:32,640 --> 00:51:34,799
Speaker 1: it's an A stock and the BE stock, and they

958
00:51:34,840 --> 00:51:37,000
Speaker 1: have the BE stock. They own sixty to the vote.

959
00:51:37,480 --> 00:51:39,640
Speaker 1: So anybody owns sixty percent of the vote is not

960
00:51:39,880 --> 00:51:43,000
Speaker 1: doing things to entrench themselves. What they do is they

961
00:51:43,520 --> 00:51:46,000
Speaker 1: with a seventy percent economic interests. They're doing what they

962
00:51:46,000 --> 00:51:48,759
Speaker 1: think is economically sensible. Well, if you look the last

963
00:51:48,800 --> 00:51:51,600
Speaker 1: two years, every quarter, like Clockwort, they brought back fifty

964
00:51:51,640 --> 00:51:54,840
Speaker 1: to hard million dollars to stock. Every quarter they paid

965
00:51:55,719 --> 00:52:00,920
Speaker 1: between the like very high forties up until sixty. I

966
00:52:01,040 --> 00:52:04,120
Speaker 1: pay attention to that, and when a sent owners buying

967
00:52:04,200 --> 00:52:06,360
Speaker 1: significant amount of stock. Now I happened to think the

968
00:52:06,400 --> 00:52:09,160
Speaker 1: industry is consolidating and I wouldn't be surprised if somebody

969
00:52:09,200 --> 00:52:12,840
Speaker 1: brought this company and uh, the private market value probably

970
00:52:12,840 --> 00:52:15,760
Speaker 1: approaches eighty another one, so I would call that value.

971
00:52:15,800 --> 00:52:18,520
Speaker 1: But they're growing the business. The earnings in the last

972
00:52:18,520 --> 00:52:22,239
Speaker 1: two quarters substantial exceeded Wall Street expectations. Another one that

973
00:52:22,360 --> 00:52:23,960
Speaker 1: just had a good quarter. But I wouldn't qute a

974
00:52:24,000 --> 00:52:27,400
Speaker 1: growth company. We'll grow in line with GDP. The United Airlines.

975
00:52:27,840 --> 00:52:30,600
Speaker 1: United air Lines is brought back over the stock in

976
00:52:30,680 --> 00:52:33,919
Speaker 1: the last three years. Wow, that's a lot. Yeah, market

977
00:52:33,960 --> 00:52:36,680
Speaker 1: straining and seventeen times earnings and this thing is training

978
00:52:36,719 --> 00:52:39,120
Speaker 1: it out eight eight and a half times earnings with

979
00:52:39,280 --> 00:52:41,320
Speaker 1: a big buy back in place, and they're on record.

980
00:52:41,400 --> 00:52:44,480
Speaker 1: Is I think we're talking eight ten, twelve and for

981
00:52:44,640 --> 00:52:47,239
Speaker 1: all in tents of purposes, they're agreeing with that progression.

982
00:52:47,719 --> 00:52:51,200
Speaker 1: And the twelve dollars we're using assumes very modest buy back.

983
00:52:51,920 --> 00:52:54,080
Speaker 1: Giving the paste to buying back. They probably earned over

984
00:52:54,200 --> 00:52:58,239
Speaker 1: thirteen um. And the stock is uh, you know, and

985
00:52:58,320 --> 00:53:00,640
Speaker 1: think the last night check was about eight dollars. So

986
00:53:00,800 --> 00:53:03,760
Speaker 1: you don't limit yourself to anyone sector. We're very eclectic.

987
00:53:03,840 --> 00:53:06,520
Speaker 1: We're very eclectic. It's growth in a reasonable price, and

988
00:53:06,719 --> 00:53:08,759
Speaker 1: I have no problem with growth as long as the price.

989
00:53:09,640 --> 00:53:11,520
Speaker 1: You know, I if I listened to my analysts, I

990
00:53:11,560 --> 00:53:14,160
Speaker 1: would be making more money. He's been very bullish on Amazon,

991
00:53:14,280 --> 00:53:16,520
Speaker 1: but you know, the multiple scares me off. There was

992
00:53:16,520 --> 00:53:19,319
Speaker 1: a very unique special company had a great quarter this year,

993
00:53:19,560 --> 00:53:22,799
Speaker 1: very good quarter. We own Amazon, we owned a Facebook,

994
00:53:23,239 --> 00:53:28,359
Speaker 1: smaller amount, we owned Adobe, we own a Google. Um

995
00:53:28,760 --> 00:53:31,680
Speaker 1: so let's let's talk about Facebook for a second. That

996
00:53:32,040 --> 00:53:34,920
Speaker 1: they got and I want to get your thoughts on

997
00:53:35,719 --> 00:53:39,960
Speaker 1: how a manager and a trader response to something like

998
00:53:40,239 --> 00:53:44,960
Speaker 1: their quarter that their numbers were disappointing their subscription. Um.

999
00:53:45,520 --> 00:53:47,680
Speaker 1: I reduced a position response to the number, to be

1000
00:53:47,719 --> 00:53:49,799
Speaker 1: honest with you, but I had after the fact. After

1001
00:53:49,880 --> 00:53:52,840
Speaker 1: the fact, my course is still well below the card market.

1002
00:53:53,520 --> 00:53:55,479
Speaker 1: I have an extra incentive, Like I said, I gotta

1003
00:53:55,520 --> 00:53:58,719
Speaker 1: return a bunch of money to the investors. And if

1004
00:53:58,800 --> 00:54:00,520
Speaker 1: something not gonna work for a while, I might be

1005
00:54:00,640 --> 00:54:02,759
Speaker 1: more prone to selling. So you you have a short

1006
00:54:02,920 --> 00:54:05,160
Speaker 1: term hard stop at the end of the year. But

1007
00:54:05,400 --> 00:54:09,279
Speaker 1: I have to give back cast In two thousand and eight,

1008
00:54:09,800 --> 00:54:11,520
Speaker 1: when a lot of hedge ones were closing up in

1009
00:54:11,600 --> 00:54:14,840
Speaker 1: gating Capital. Most people won't remember this, my picture was

1010
00:54:14,880 --> 00:54:17,480
Speaker 1: in the newspaper New York Times, and under the cap

1011
00:54:17,640 --> 00:54:19,680
Speaker 1: my picture was a caption, they have to load me

1012
00:54:19,760 --> 00:54:21,920
Speaker 1: into my grade before I would gate capital, not on

1013
00:54:22,000 --> 00:54:23,960
Speaker 1: a high water more. So, you know, I have to

1014
00:54:24,040 --> 00:54:26,160
Speaker 1: give the back, not in kind. They're gonna get back

1015
00:54:26,160 --> 00:54:28,520
Speaker 1: on her, but set in cash, and I'm gonna position

1016
00:54:28,560 --> 00:54:30,520
Speaker 1: to do it because a big chunk of my manage

1017
00:54:30,560 --> 00:54:33,560
Speaker 1: the GP capital. But I have to make a lot

1018
00:54:33,640 --> 00:54:37,719
Speaker 1: of sales. So let's assume it wasn't you didn't have

1019
00:54:37,960 --> 00:54:41,760
Speaker 1: the hard stop coming December thirty one. As a trader

1020
00:54:41,840 --> 00:54:44,720
Speaker 1: and a manager, how do you look at a stock

1021
00:54:44,840 --> 00:54:48,600
Speaker 1: that takes a haircut? Do you think the fund Is

1022
00:54:48,640 --> 00:54:52,080
Speaker 1: this a question of the fundamental story changing or just

1023
00:54:52,400 --> 00:54:55,040
Speaker 1: from a risk management perspective, you're gonna take a little

1024
00:54:55,120 --> 00:54:57,520
Speaker 1: off the table. From a risk managing perspective, I took

1025
00:54:57,560 --> 00:55:00,319
Speaker 1: something off the table. My guess is it's a cup

1026
00:55:00,840 --> 00:55:02,880
Speaker 1: that they have virtual future growth ahead of them. But

1027
00:55:02,920 --> 00:55:05,480
Speaker 1: you know, in the world of technology, somebody's innovation and

1028
00:55:05,520 --> 00:55:07,879
Speaker 1: somebody's obsolescence, and there was a decline and a number

1029
00:55:07,920 --> 00:55:11,120
Speaker 1: of users, and you know, maybe there's something changing. So

1030
00:55:11,400 --> 00:55:16,320
Speaker 1: you control risk by diversification, You control risk by position size,

1031
00:55:16,840 --> 00:55:19,640
Speaker 1: You control risk by the financial characteristics of the company

1032
00:55:19,680 --> 00:55:22,600
Speaker 1: you own. In the words your own fifty multiple stocks,

1033
00:55:22,719 --> 00:55:25,520
Speaker 1: the own twelve multiple stocks, And I would say that

1034
00:55:26,120 --> 00:55:29,080
Speaker 1: uh an amc X, which I sited, or United Airlines

1035
00:55:29,200 --> 00:55:31,320
Speaker 1: when you have big buy backs and large amounts of

1036
00:55:31,360 --> 00:55:34,360
Speaker 1: free catch flow and way below market multiples. You have

1037
00:55:34,480 --> 00:55:37,320
Speaker 1: an element of protection, and that's where I feel most comfortable.

1038
00:55:37,520 --> 00:55:40,640
Speaker 1: So I'd have concentrated bets, but in things that I

1039
00:55:40,719 --> 00:55:43,439
Speaker 1: perceived to be less risk here. So let's let's jump

1040
00:55:43,480 --> 00:55:45,719
Speaker 1: to some of my favorite questions. And I know only

1041
00:55:45,800 --> 00:55:49,359
Speaker 1: have you for a finite amount of time today, um

1042
00:55:49,800 --> 00:55:53,600
Speaker 1: tell us the most important thing that most people don't

1043
00:55:53,640 --> 00:55:55,680
Speaker 1: know about you. I think my life has been an

1044
00:55:55,719 --> 00:55:57,839
Speaker 1: open book. Let me just tell you what I think

1045
00:55:57,880 --> 00:56:00,800
Speaker 1: the most important thing I tell the kids, and I

1046
00:56:00,880 --> 00:56:02,719
Speaker 1: meet with a lot of kids, and I tell them

1047
00:56:03,080 --> 00:56:05,399
Speaker 1: the one thing it's most important, no matter how rich

1048
00:56:05,520 --> 00:56:08,720
Speaker 1: you are, the one luxury you cannot afford his arrogance.

1049
00:56:09,320 --> 00:56:12,120
Speaker 1: Be nice to people, be a good friend, be available.

1050
00:56:13,280 --> 00:56:17,160
Speaker 1: That's that's that's what I tell them. So I think

1051
00:56:17,280 --> 00:56:20,400
Speaker 1: people know about me. So you mentioned some of your

1052
00:56:20,440 --> 00:56:23,360
Speaker 1: early mentors in passing. Who were the people who helped

1053
00:56:23,480 --> 00:56:27,920
Speaker 1: form your your career and your worldview? It's hard to

1054
00:56:27,960 --> 00:56:31,960
Speaker 1: select one? Give us multiple Yeah. Well, I have an

1055
00:56:32,120 --> 00:56:35,400
Speaker 1: enormous respect for ken Land. I've said this publicly previously.

1056
00:56:36,120 --> 00:56:38,680
Speaker 1: I learned a lot from Bob Manusian, who was the

1057
00:56:38,719 --> 00:56:42,280
Speaker 1: head of trading at Goldman and my trading instincts emanating

1058
00:56:42,360 --> 00:56:46,759
Speaker 1: part from his wisdom. Very smart man. He's I think

1059
00:56:46,800 --> 00:56:49,560
Speaker 1: he's probably eighty something now. I speak with him frequently.

1060
00:56:50,520 --> 00:56:53,120
Speaker 1: On the industrial side. I visited twice a year for

1061
00:56:53,400 --> 00:56:56,600
Speaker 1: twenty five years with Dr Henry Singleton, the founder, and

1062
00:56:57,120 --> 00:56:59,480
Speaker 1: the man was in a class by himself, absolutely brilliant.

1063
00:57:00,120 --> 00:57:04,560
Speaker 1: Never got the recognition he deserved. Uh, and I tried

1064
00:57:04,600 --> 00:57:08,000
Speaker 1: to change that. I wrote a case study for Harvard

1065
00:57:08,520 --> 00:57:10,319
Speaker 1: on him. And there was a professor and a junct

1066
00:57:10,320 --> 00:57:15,160
Speaker 1: professor who wrote a book called The Outsiders and featured Singleton,

1067
00:57:15,239 --> 00:57:19,040
Speaker 1: which brought recognition to him. John Whitehead, John Weinberg, but

1068
00:57:19,160 --> 00:57:22,200
Speaker 1: co senior partners of Goldman, a bunch of people, my parents.

1069
00:57:22,320 --> 00:57:24,560
Speaker 1: You know. My father was a good influence on me.

1070
00:57:25,280 --> 00:57:29,640
Speaker 1: So that's who the folks who helped form and shape

1071
00:57:29,680 --> 00:57:33,400
Speaker 1: your career, who impacted the way you think about investing?

1072
00:57:33,520 --> 00:57:37,040
Speaker 1: What what Roger Murray, who was the professor and security

1073
00:57:37,040 --> 00:57:42,800
Speaker 1: analysis he's long gone unfortunately, Um just reading and what

1074
00:57:42,960 --> 00:57:45,560
Speaker 1: have you. But I said, Roger Murray was my professor

1075
00:57:45,600 --> 00:57:48,960
Speaker 1: and security analysis. Unique guy. He was an adjunct professor.

1076
00:57:49,480 --> 00:57:52,520
Speaker 1: He also ran college or time and equities fund and

1077
00:57:53,240 --> 00:57:56,120
Speaker 1: very very very good man. When when you say reading,

1078
00:57:56,960 --> 00:58:00,520
Speaker 1: you read more financial literature than anybody. You know, you're

1079
00:58:00,560 --> 00:58:03,560
Speaker 1: not necessarily sitting down with books, but you're looking at

1080
00:58:03,600 --> 00:58:06,600
Speaker 1: annual reports and that sort of stuff. Yes, yeah, you know,

1081
00:58:06,680 --> 00:58:09,680
Speaker 1: and I'm reading all the reports of my analysts. Keep

1082
00:58:09,720 --> 00:58:11,840
Speaker 1: me very busy. I don't read a lot of novels.

1083
00:58:11,960 --> 00:58:15,240
Speaker 1: I did read two good books I enjoyed recently, well

1084
00:58:15,360 --> 00:58:18,120
Speaker 1: one again they're financially oriented that I read. Uh. I

1085
00:58:18,240 --> 00:58:22,240
Speaker 1: love Capitalism by Ken Langne and I love Capitalism by

1086
00:58:22,520 --> 00:58:25,040
Speaker 1: It's a great read and it was very meaningful to

1087
00:58:25,120 --> 00:58:28,280
Speaker 1: me because you know, Ken's dad was a plumber in

1088
00:58:28,360 --> 00:58:31,080
Speaker 1: Long Island. My dad was a plumber you mentioned in

1089
00:58:31,360 --> 00:58:35,040
Speaker 1: the Bronx, and he had a paragraph from the book

1090
00:58:35,600 --> 00:58:39,880
Speaker 1: where he said his older brother typed invoices for his

1091
00:58:40,080 --> 00:58:44,360
Speaker 1: dad monthly on a Smith Corona typewriter. And I typed

1092
00:58:44,400 --> 00:58:48,760
Speaker 1: invoices along with my older brother on an underwood typewriter

1093
00:58:48,840 --> 00:58:50,560
Speaker 1: for my dad who was a plumber. In the Bronx,

1094
00:58:50,960 --> 00:58:53,440
Speaker 1: But you know, Kenn is self made, has not forgotten

1095
00:58:53,480 --> 00:58:56,400
Speaker 1: where he's come from, is extraordinarily generous and has a

1096
00:58:56,520 --> 00:58:59,600
Speaker 1: value system that I just totally relate to and he

1097
00:58:59,720 --> 00:59:03,880
Speaker 1: was to off a guy and uh, he said, two books.

1098
00:59:03,960 --> 00:59:07,160
Speaker 1: That's one I love, and the other one was Scott

1099
00:59:07,160 --> 00:59:09,680
Speaker 1: Watton's book. I enjoyed reading what's the name of that?

1100
00:59:10,240 --> 00:59:13,000
Speaker 1: Something to do the Wolves of Wall Streets. Oh sure, absolutely,

1101
00:59:13,720 --> 00:59:17,160
Speaker 1: that sounds like a fun book, good book. So what

1102
00:59:17,360 --> 00:59:19,920
Speaker 1: really excites you right now? What do you excites me?

1103
00:59:20,120 --> 00:59:23,600
Speaker 1: Frankly is seeing my kids and my grandkids grow old

1104
00:59:23,840 --> 00:59:29,000
Speaker 1: purposely with purpose, and health with health. But on the

1105
00:59:29,280 --> 00:59:33,480
Speaker 1: business side, I get excited by finding something somebody doesn't see,

1106
00:59:34,400 --> 00:59:36,640
Speaker 1: making a bet and having Mr Market proved me right,

1107
00:59:37,240 --> 00:59:39,040
Speaker 1: if not for the greed which the money is all

1108
00:59:39,040 --> 00:59:41,200
Speaker 1: going going to go back to this system. But that's

1109
00:59:41,240 --> 00:59:44,959
Speaker 1: what I do. I excited about finding things that people

1110
00:59:45,000 --> 00:59:48,200
Speaker 1: don't see and making a bet. And I just recently

1111
00:59:48,240 --> 00:59:50,800
Speaker 1: made a very large bet and an obscure company on

1112
00:59:51,000 --> 00:59:52,920
Speaker 1: time will tell whether it pays out, and I like

1113
00:59:53,240 --> 00:59:55,680
Speaker 1: like nobody owns it, nobody knows in about it. The

1114
00:59:55,920 --> 00:59:58,600
Speaker 1: second largest producer vanadium in the world, it's called Logo

1115
00:59:58,720 --> 01:00:03,280
Speaker 1: resource vanadium. Native vanadium is an alloy used in steel

1116
01:00:03,360 --> 01:00:06,360
Speaker 1: to strengthen the steel and the Chinese and mandated the

1117
01:00:06,560 --> 01:00:08,800
Speaker 1: need for improvement the quality of the steel. Well, they've

1118
01:00:08,840 --> 01:00:12,640
Speaker 1: had some disasters and the construct big construction project that

1119
01:00:12,800 --> 01:00:15,439
Speaker 1: there's increase in demand for an eighty with an aim

1120
01:00:15,520 --> 01:00:20,480
Speaker 1: also was used in the grids to strengthen the grid. Okay,

1121
01:00:20,920 --> 01:00:23,200
Speaker 1: van at um a year ago was four dollars a pound.

1122
01:00:23,680 --> 01:00:27,080
Speaker 1: It's currently hovering between eighteen and nineteen a pound. And

1123
01:00:27,120 --> 01:00:31,320
Speaker 1: there's been a big explosion and their revues and their earnings.

1124
01:00:32,040 --> 01:00:35,000
Speaker 1: And we have a consultant that we use who's an

1125
01:00:35,480 --> 01:00:38,360
Speaker 1: expert on vanadium, and he thinks the pricing going to

1126
01:00:38,400 --> 01:00:41,800
Speaker 1: the mid twenties. So they're gonna come to the stock price.

1127
01:00:42,480 --> 01:00:44,240
Speaker 1: I think the stock will probably worth three or four

1128
01:00:44,280 --> 01:00:46,800
Speaker 1: times were strady for but expeculative. You know, you're not

1129
01:00:46,880 --> 01:00:49,440
Speaker 1: dealing with a multi commodity company, dealing with one commodity

1130
01:00:49,520 --> 01:00:51,840
Speaker 1: but eight one mine. It's binary. Either it works or

1131
01:00:51,880 --> 01:00:53,920
Speaker 1: it doesn't. So far it's worked. I started at a

1132
01:00:54,000 --> 01:00:56,120
Speaker 1: forty cents and then as last I checked, there's two

1133
01:00:56,160 --> 01:00:59,400
Speaker 1: dollars and a few pennies. This company, it's called Logo

1134
01:00:59,520 --> 01:01:04,080
Speaker 1: Resource is larger Resources. Well, forty cents is a good. Uh, Well,

1135
01:01:04,160 --> 01:01:06,120
Speaker 1: what happened? There was a hedge fund. I won't mention

1136
01:01:06,160 --> 01:01:08,880
Speaker 1: that was going out of business and then they would

1137
01:01:08,880 --> 01:01:12,960
Speaker 1: liquid aiding. And uh, a good friend brought it the

1138
01:01:13,120 --> 01:01:16,360
Speaker 1: opportunity to my attention, and my friend and I split

1139
01:01:16,440 --> 01:01:18,840
Speaker 1: the ten million share block equally. It was much too

1140
01:01:18,880 --> 01:01:22,880
Speaker 1: small for Omega time the capital structure. That caught me

1141
01:01:23,000 --> 01:01:26,440
Speaker 1: with less than two million, and we bought the block

1142
01:01:26,520 --> 01:01:29,040
Speaker 1: at forty cents. And uh, it's not like two dollars

1143
01:01:29,440 --> 01:01:31,640
Speaker 1: and in some respects to better buy now than it

1144
01:01:31,800 --> 01:01:34,919
Speaker 1: was then because given the level of the price level

1145
01:01:34,960 --> 01:01:37,560
Speaker 1: of an adium, this will be a debt free company

1146
01:01:38,040 --> 01:01:41,280
Speaker 1: by the end of next year, and we'll probably generate

1147
01:01:41,360 --> 01:01:44,439
Speaker 1: over a billion dollars in cash if the vanadium price

1148
01:01:44,520 --> 01:01:47,640
Speaker 1: stays here over the next couple of years. That's crazy

1149
01:01:48,160 --> 01:01:51,680
Speaker 1: and a little bit outside of your usual uh sweet spot.

1150
01:01:51,840 --> 01:01:54,000
Speaker 1: Yeah yeah, but you you like that. You like it

1151
01:01:54,120 --> 01:01:57,000
Speaker 1: for the for the thrill um and the and the

1152
01:01:57,040 --> 01:02:02,400
Speaker 1: profit potential. What changes are you looking forward to, um

1153
01:02:02,640 --> 01:02:05,640
Speaker 1: now that you're gonna be running the family office, absolute

1154
01:02:05,680 --> 01:02:09,320
Speaker 1: return manager. Maybe get into the gym to deal with

1155
01:02:09,440 --> 01:02:12,520
Speaker 1: my weight. Sleep a little bit later. It's interesting when

1156
01:02:12,560 --> 01:02:16,240
Speaker 1: I'm dad in Florida, I see when I'm in Short Hills,

1157
01:02:16,280 --> 01:02:19,200
Speaker 1: New Jersey, I get in very early in the morning.

1158
01:02:19,760 --> 01:02:21,360
Speaker 1: Not because I want to get in at six forty

1159
01:02:21,360 --> 01:02:24,600
Speaker 1: in the morning, but the traffic. So I leave my

1160
01:02:24,720 --> 01:02:28,080
Speaker 1: house at five forty five. I walk in the office

1161
01:02:28,160 --> 01:02:32,960
Speaker 1: at six. In Florida, I had my battle with New York.

1162
01:02:33,000 --> 01:02:35,120
Speaker 1: They recognized my home office being legitimate. It is a

1163
01:02:35,200 --> 01:02:37,680
Speaker 1: real office. And I'm in my office in one minute.

1164
01:02:37,800 --> 01:02:39,919
Speaker 1: So I saved two hours and nineteen minutes. But get

1165
01:02:39,960 --> 01:02:42,520
Speaker 1: there more than six months a year, past seven months.

1166
01:02:42,560 --> 01:02:45,560
Speaker 1: I love. Nothing to do with taxes. It's the commute

1167
01:02:45,880 --> 01:02:48,320
Speaker 1: that us me nuts. Nothing to do with taxes. But

1168
01:02:48,720 --> 01:02:50,920
Speaker 1: I saved two hours of nineteen minutes a day. And

1169
01:02:50,960 --> 01:02:52,720
Speaker 1: if I want to read research and read research. If

1170
01:02:52,720 --> 01:02:53,560
Speaker 1: I want to go to the gym, I go to

1171
01:02:53,600 --> 01:02:54,960
Speaker 1: the gym. I want to sleep a little bit later,

1172
01:02:55,040 --> 01:02:57,720
Speaker 1: sleep a little bit later. But you know I ken

1173
01:02:57,800 --> 01:03:00,520
Speaker 1: Lan Going says it well. He imagines own money when

1174
01:03:00,520 --> 01:03:02,040
Speaker 1: he looks in them in the mirror in the morning.

1175
01:03:02,240 --> 01:03:04,760
Speaker 1: He knows who's to blame and who to credit. So

1176
01:03:04,920 --> 01:03:07,080
Speaker 1: this is it. It's gonna be my deal, and uh,

1177
01:03:08,240 --> 01:03:10,480
Speaker 1: I'm happy about it. I love my investors. Let me

1178
01:03:10,520 --> 01:03:13,880
Speaker 1: tell you, my investors are very, very loyal. The majority

1179
01:03:13,880 --> 01:03:16,440
Speaker 1: of the individuals were uh, you know, they stayed with

1180
01:03:16,600 --> 01:03:19,120
Speaker 1: me at a time when the sc was making accusations

1181
01:03:19,520 --> 01:03:21,600
Speaker 1: and they stayed with me. Most of the institutions pulled out.

1182
01:03:23,000 --> 01:03:25,840
Speaker 1: They used fiduciaries that don't want to use common sense.

1183
01:03:26,320 --> 01:03:29,440
Speaker 1: You invite them in willingness to answer all your questions

1184
01:03:30,040 --> 01:03:32,320
Speaker 1: and they basically their own boil coming in. They just

1185
01:03:32,400 --> 01:03:35,080
Speaker 1: fire you. But whatever, that's the life. It is what

1186
01:03:35,200 --> 01:03:37,000
Speaker 1: it is, right, that's what it is. So tell us

1187
01:03:37,000 --> 01:03:39,560
Speaker 1: about a time you failed and what you learned from

1188
01:03:39,560 --> 01:03:46,280
Speaker 1: the experience. Well, my biggest mistake, uh was basically put

1189
01:03:46,320 --> 01:03:48,080
Speaker 1: a lot of money into the vouchers were as a

1190
01:03:48,120 --> 01:03:53,000
Speaker 1: bijon privatizing. And what's the mistake. I bet on an

1191
01:03:53,080 --> 01:03:55,439
Speaker 1: employee that broke the law, you know. So I don't

1192
01:03:55,440 --> 01:03:59,000
Speaker 1: know what what I do differently, maybe not make the investment,

1193
01:03:59,040 --> 01:04:01,160
Speaker 1: but it was an employee. They was the most profitable

1194
01:04:01,280 --> 01:04:03,160
Speaker 1: guy that we had at the firm at the time.

1195
01:04:03,840 --> 01:04:06,600
Speaker 1: He was heads over heels of the investment and he

1196
01:04:06,720 --> 01:04:10,960
Speaker 1: basically was an unequivocal advocate for the investment. We met

1197
01:04:11,040 --> 01:04:13,600
Speaker 1: with the president of country who invited us in to

1198
01:04:13,680 --> 01:04:16,600
Speaker 1: make the investment. We had done also a due diligence

1199
01:04:16,680 --> 01:04:19,040
Speaker 1: but I did not know is my employee was aware

1200
01:04:19,080 --> 01:04:23,360
Speaker 1: of wrongdoing which you didn't disclose, And so I don't

1201
01:04:23,360 --> 01:04:24,800
Speaker 1: know what you say. You do it all over again,

1202
01:04:24,880 --> 01:04:26,960
Speaker 1: But maybe I just say I wouldn't have invested in

1203
01:04:27,000 --> 01:04:31,400
Speaker 1: that country. And then again, you know amazing after were

1204
01:04:31,480 --> 01:04:34,880
Speaker 1: discovered there was a corrupt regime running the country. I

1205
01:04:34,960 --> 01:04:39,800
Speaker 1: get a letter from when government agency encouraged me to

1206
01:04:39,920 --> 01:04:42,600
Speaker 1: invest the ass a vision. It's like one department has

1207
01:04:42,640 --> 01:04:45,440
Speaker 1: know what the other department is doing. World screwed up.

1208
01:04:45,800 --> 01:04:49,240
Speaker 1: So this is a question. I'm not sure how are

1209
01:04:49,240 --> 01:04:51,200
Speaker 1: you going to answer, or even if you can answer,

1210
01:04:51,880 --> 01:04:54,439
Speaker 1: other than say work, what do you do for fun?

1211
01:04:56,480 --> 01:04:59,000
Speaker 1: I walk with my older brother, have a very close

1212
01:04:59,040 --> 01:05:03,840
Speaker 1: relationship my brothers eight two. Um, I just said, I walk,

1213
01:05:03,960 --> 01:05:05,880
Speaker 1: and I read research, and I try to spend as

1214
01:05:05,960 --> 01:05:08,120
Speaker 1: much time with my grandkid as I can. I'm a

1215
01:05:08,240 --> 01:05:14,640
Speaker 1: very simple guy, you know, not multidimensional. Uh. If if

1216
01:05:14,680 --> 01:05:17,320
Speaker 1: a millennial or a recent college graduate came up to

1217
01:05:17,400 --> 01:05:20,560
Speaker 1: you and and said they were I'm not sure what

1218
01:05:20,680 --> 01:05:22,919
Speaker 1: to do with their career, what sort of advice would

1219
01:05:22,920 --> 01:05:25,360
Speaker 1: you give them? I just have do not go into

1220
01:05:25,400 --> 01:05:27,600
Speaker 1: a field for money. You know a lot of people

1221
01:05:27,880 --> 01:05:30,440
Speaker 1: romanticize hedge funds. Go into a field where you have

1222
01:05:30,520 --> 01:05:33,760
Speaker 1: an aptitude and you have an interest. You know, Warren,

1223
01:05:34,040 --> 01:05:37,240
Speaker 1: the different smart people have said it differently. Warren Buffers

1224
01:05:37,280 --> 01:05:39,560
Speaker 1: has got to work for people you admired, respect, tap,

1225
01:05:39,680 --> 01:05:41,880
Speaker 1: dance to work, and everyone will take care of itself.

1226
01:05:41,960 --> 01:05:45,520
Speaker 1: I agree with that. Henry Ford said, Uh, you know,

1227
01:05:45,760 --> 01:05:48,920
Speaker 1: don't think about money, you know, just do do what

1228
01:05:49,000 --> 01:05:51,640
Speaker 1: you love. Love what you do, You're bound to be successful.

1229
01:05:52,040 --> 01:05:54,840
Speaker 1: So find your gift in life and pursue that gift.

1230
01:05:55,080 --> 01:05:58,520
Speaker 1: And that's kind of what I advocate. And our final question,

1231
01:05:58,800 --> 01:06:00,720
Speaker 1: what is it that you know about the world of

1232
01:06:00,800 --> 01:06:04,560
Speaker 1: investing today that you wish you knew forty plus years

1233
01:06:04,600 --> 01:06:09,800
Speaker 1: ago when you were first beginning. Uh, it's a good question.

1234
01:06:10,080 --> 01:06:11,440
Speaker 1: I have to think about that. When I don't have

1235
01:06:11,520 --> 01:06:13,720
Speaker 1: you a good answer, I know more today that I

1236
01:06:13,840 --> 01:06:17,600
Speaker 1: know forty years ago. I've learned if something is too

1237
01:06:17,640 --> 01:06:21,040
Speaker 1: good to be true, it's not true. I've learned when

1238
01:06:21,080 --> 01:06:23,400
Speaker 1: everybody is on the same side of the boat, it's wrong.

1239
01:06:24,080 --> 01:06:27,400
Speaker 1: So you know, when everybody is talking about one stock

1240
01:06:27,720 --> 01:06:30,600
Speaker 1: and everybody's in that stock, generally something happens to go

1241
01:06:30,720 --> 01:06:33,400
Speaker 1: it was wrong and they're not right all the same

1242
01:06:33,480 --> 01:06:36,240
Speaker 1: time and the same thing when everybody in Wall Street

1243
01:06:36,280 --> 01:06:38,840
Speaker 1: is bullish and the same side of the boat be wary.

1244
01:06:39,680 --> 01:06:41,280
Speaker 1: So if our memory this is a memory. I didn't

1245
01:06:41,320 --> 01:06:46,480
Speaker 1: anticipate this question in twenty seventeen. At the beginning of

1246
01:06:46,560 --> 01:06:51,440
Speaker 1: the year. Uh, the average strategist had a year end

1247
01:06:51,640 --> 01:06:56,400
Speaker 1: objective of twenty three fifty, okay, And the year ended

1248
01:06:56,400 --> 01:06:59,720
Speaker 1: it like twenty six fifty. You would think somebody would

1249
01:06:59,760 --> 01:07:05,040
Speaker 1: turn and conservative. Now everybody marked up their expectations. Everybody

1250
01:07:05,200 --> 01:07:08,200
Speaker 1: was bullish, okay, and then you had the market took

1251
01:07:08,240 --> 01:07:11,200
Speaker 1: off in January, which further entrenched to bullishness, and then

1252
01:07:11,200 --> 01:07:12,640
Speaker 1: all of a sudden you had the big sell off

1253
01:07:12,720 --> 01:07:16,000
Speaker 1: in February. The market, I've learned, will do whatever it

1254
01:07:16,080 --> 01:07:18,440
Speaker 1: has to do to embarrass the largest group of investors.

1255
01:07:18,920 --> 01:07:21,200
Speaker 1: So just keep your wits about you. Don't be cocky,

1256
01:07:21,680 --> 01:07:25,400
Speaker 1: be humble, and be nice. Like I said, you know, basically,

1257
01:07:26,160 --> 01:07:28,120
Speaker 1: no matter how much money you have, the one luxury

1258
01:07:28,120 --> 01:07:31,880
Speaker 1: you cannot afford his arrogance. All that is quite fascinating.

1259
01:07:32,280 --> 01:07:36,040
Speaker 1: We have been speaking with Lee Cooperman of Omega Advisors

1260
01:07:36,240 --> 01:07:40,520
Speaker 1: and formerly of Goldman Sachs. If you enjoy this conversation.

1261
01:07:41,000 --> 01:07:42,840
Speaker 1: Be sure and look up an inch or down an

1262
01:07:42,880 --> 01:07:48,720
Speaker 1: inch on Apple, iTunes, Stitcher, overcast, Bloomberg dot com wherever

1263
01:07:48,920 --> 01:07:51,800
Speaker 1: finer podcasts are sold, and you could see any of

1264
01:07:51,920 --> 01:07:56,000
Speaker 1: the other two hundred plus conversations we've had previously. We

1265
01:07:56,200 --> 01:08:00,680
Speaker 1: love your comments, feedback, end suggestions right to us at

1266
01:08:01,360 --> 01:08:04,680
Speaker 1: m IB podcast at Bloomberg dot net. I would be

1267
01:08:04,840 --> 01:08:07,680
Speaker 1: remiss if I did not thank the crack staff that

1268
01:08:07,840 --> 01:08:12,160
Speaker 1: helps put together these conversations each week. Medina Parwana is

1269
01:08:12,240 --> 01:08:16,280
Speaker 1: my producer, Slash audio engineer. Taylor Riggs is our booker

1270
01:08:16,320 --> 01:08:21,080
Speaker 1: Slash producer. Michael Batnick is our head of research. I'm

1271
01:08:21,200 --> 01:08:25,560
Speaker 1: Barry Results. You're listening to Master's in Business on Bloomberg

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