1 00:00:00,400 --> 00:00:03,840 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:04,120 --> 00:00:13,880 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:13,960 --> 00:00:17,840 Speaker 1: What Goes Up, a Bloomberg weekly market podcast. I'm Sarah Ponzek, 4 00:00:18,120 --> 00:00:21,200 Speaker 1: reporter on the Cross Asset team, and Mike Reagan, a 5 00:00:21,320 --> 00:00:24,440 Speaker 1: senior editor at Bloomberg. This week on the show, an 6 00:00:24,440 --> 00:00:27,880 Speaker 1: election like no other. At the time of recording this episode, 7 00:00:28,000 --> 00:00:30,200 Speaker 1: the next president of the United States has still not 8 00:00:30,320 --> 00:00:33,720 Speaker 1: been declared. There's questions over the Senate too. But even so, 9 00:00:33,880 --> 00:00:37,239 Speaker 1: stocks stage their best post election rally and history and 10 00:00:37,320 --> 00:00:40,920 Speaker 1: text talks are back on top. So what's the deal, Mike, Well, Sarah, 11 00:00:40,960 --> 00:00:42,600 Speaker 1: I don't know, but I will tell you. What the 12 00:00:42,640 --> 00:00:44,680 Speaker 1: deal is with the end of the show is that 13 00:00:44,800 --> 00:00:47,240 Speaker 1: we will finish off with the craziest things we saw 14 00:00:47,240 --> 00:00:50,280 Speaker 1: in markets, of course, and uh. The deal is for 15 00:00:50,400 --> 00:00:52,919 Speaker 1: listeners out there, if you saw something crazy, please give 16 00:00:53,000 --> 00:00:55,840 Speaker 1: us a call on the Bloomberg Podcast hotline and leave 17 00:00:55,920 --> 00:00:59,120 Speaker 1: us a voicemail and maybe we'll play your crazy thing 18 00:00:59,160 --> 00:01:02,920 Speaker 1: on the show. Number is six four six three to 19 00:01:03,120 --> 00:01:08,440 Speaker 1: four three four nine zero. Uh and sorry, Sarah. Very 20 00:01:08,480 --> 00:01:11,520 Speaker 1: excited for this week's guests. As you know, I usually 21 00:01:11,560 --> 00:01:15,280 Speaker 1: I'm excited regardless who the guest is, but especially excited 22 00:01:15,319 --> 00:01:18,480 Speaker 1: this week first time on the show. He is a 23 00:01:18,520 --> 00:01:24,040 Speaker 1: portfolio manager at Buffalo Funds. His name is Jamie Quare. Jamie, 24 00:01:24,080 --> 00:01:26,760 Speaker 1: welcome to the show. Thanks for having me on. And Sarah, 25 00:01:26,760 --> 00:01:30,200 Speaker 1: that firm name again is Buffalo Funds. You know, Buffalo 26 00:01:30,280 --> 00:01:32,959 Speaker 1: Funds are like regular funds, just with hot sauce on top. 27 00:01:33,480 --> 00:01:35,240 Speaker 1: Of course, you know Buffalo That was in my favorite 28 00:01:35,240 --> 00:01:37,759 Speaker 1: slace night. I heard our other guests grown at that joke, 29 00:01:37,840 --> 00:01:40,240 Speaker 1: I think, which is not a good sign. Uh. And 30 00:01:40,319 --> 00:01:43,640 Speaker 1: that voice that is our very own Chris Nag, executive 31 00:01:43,760 --> 00:01:47,040 Speaker 1: editor at Bloomberg for Markets. Chris hasn't been on this 32 00:01:47,080 --> 00:01:49,640 Speaker 1: show in a while, but he's got his own fan 33 00:01:49,720 --> 00:01:53,960 Speaker 1: club out there who demands his appearance occasionally. So obviously 34 00:01:54,120 --> 00:01:57,840 Speaker 1: very powerful fan club. They've managed to keep me keep 35 00:01:57,880 --> 00:02:00,240 Speaker 1: me off the show for about nine months. If we 36 00:02:00,240 --> 00:02:03,160 Speaker 1: weren't living through a pandemic right now, we weren't doing 37 00:02:03,200 --> 00:02:05,520 Speaker 1: the podcast through Zoom, and we were still in the office, 38 00:02:05,560 --> 00:02:07,840 Speaker 1: you know, you would be on more often. Yeah, I'm 39 00:02:07,880 --> 00:02:10,280 Speaker 1: Sarah's boss, I would point out at this point. But anyway, 40 00:02:10,600 --> 00:02:14,200 Speaker 1: your evaluation period is coming up. So we're having we'll 41 00:02:14,200 --> 00:02:16,160 Speaker 1: have Chris on for every episode for the rest of you. 42 00:02:16,320 --> 00:02:18,880 Speaker 1: But but Jai, of course I was joking about the 43 00:02:18,919 --> 00:02:21,320 Speaker 1: hot sauce, but not a joke about how hot that 44 00:02:21,400 --> 00:02:24,240 Speaker 1: that small cap fund has been doing really impressive. I 45 00:02:24,240 --> 00:02:27,560 Speaker 1: want to get into your specific strategy because it's obviously 46 00:02:27,600 --> 00:02:29,920 Speaker 1: you're doing something right. But before that, I want to 47 00:02:29,919 --> 00:02:32,720 Speaker 1: talk a little bit about just small caps as an 48 00:02:32,760 --> 00:02:36,679 Speaker 1: asset class um. You know, obviously, if you're you're looking 49 00:02:36,760 --> 00:02:40,600 Speaker 1: at just the Russell two thousand, uh, still down on 50 00:02:40,639 --> 00:02:44,120 Speaker 1: the year last time I checked, really been underperforming the 51 00:02:44,280 --> 00:02:47,000 Speaker 1: SMP with all the mega caps for a few years. Now, 52 00:02:47,760 --> 00:02:51,120 Speaker 1: what is sort of your outlook for not your fund 53 00:02:51,200 --> 00:02:54,440 Speaker 1: and your specific stock picks in the fund, but just 54 00:02:54,560 --> 00:02:57,360 Speaker 1: the small caps as an asset class in general. I 55 00:02:57,400 --> 00:03:00,480 Speaker 1: think there's this kind of notion that maybe a need 56 00:03:00,840 --> 00:03:03,760 Speaker 1: sort of a big fiscal stimulus, uh some kind of 57 00:03:03,800 --> 00:03:06,280 Speaker 1: blue way from the election that that looks like it's 58 00:03:06,320 --> 00:03:09,880 Speaker 1: not going to happen. But what's been holding small caps 59 00:03:09,880 --> 00:03:13,799 Speaker 1: back compared to the mega caps in the SMP, And 60 00:03:14,000 --> 00:03:17,600 Speaker 1: is there any reason to believe that the whole asset 61 00:03:17,680 --> 00:03:20,320 Speaker 1: class can can sort of turn around and sort of 62 00:03:20,320 --> 00:03:23,480 Speaker 1: close up that performance gap. Yeah, I don't know if 63 00:03:23,480 --> 00:03:25,760 Speaker 1: that's totally fair, and i'd separate a little bit the 64 00:03:25,840 --> 00:03:28,520 Speaker 1: kind of the growth versus value performance that we've seen 65 00:03:28,560 --> 00:03:31,320 Speaker 1: within small caps. So certainly the value names have been 66 00:03:31,400 --> 00:03:35,680 Speaker 1: dramatically underperforming growth this year, but growth in small cap 67 00:03:35,760 --> 00:03:39,600 Speaker 1: has done quite well. If anything, I think that's probably 68 00:03:39,640 --> 00:03:42,320 Speaker 1: going to continue to to go in terms of being 69 00:03:42,440 --> 00:03:45,600 Speaker 1: a in favor of growth going forward. So, you know, 70 00:03:45,880 --> 00:03:48,520 Speaker 1: things probably would have been a little bit better for 71 00:03:48,720 --> 00:03:51,640 Speaker 1: small caps over the last couple of days if um, 72 00:03:51,680 --> 00:03:54,040 Speaker 1: you know, there had been a massive stimulus, which looks 73 00:03:54,080 --> 00:03:56,920 Speaker 1: like obviously it's not going to come through with with 74 00:03:57,040 --> 00:04:01,320 Speaker 1: kind of a split Congress. But overall, um, everything continues 75 00:04:01,400 --> 00:04:04,360 Speaker 1: to be quite solid and the outlook is still very 76 00:04:04,440 --> 00:04:07,760 Speaker 1: strong for small caps. Earnings have gone quite well. Um. 77 00:04:07,920 --> 00:04:10,480 Speaker 1: You know, we still have the same I think concerns 78 00:04:10,480 --> 00:04:12,280 Speaker 1: that everyone else does in terms of kind of what's 79 00:04:12,320 --> 00:04:14,720 Speaker 1: going to happen with covid UM, But you know, we've 80 00:04:14,720 --> 00:04:17,720 Speaker 1: got an accommodate of fed UM. I think it did 81 00:04:17,960 --> 00:04:20,800 Speaker 1: will eventually have a little bit more stimulus that comes 82 00:04:20,839 --> 00:04:24,080 Speaker 1: probably next year, maybe as a skinnier package that may 83 00:04:24,120 --> 00:04:26,920 Speaker 1: come in the lame duck period. But overall, I think 84 00:04:26,920 --> 00:04:29,200 Speaker 1: the autook for small cap is still still quite solid. 85 00:04:29,640 --> 00:04:32,520 Speaker 1: So Jamie, just keeping it broad for now with the 86 00:04:32,520 --> 00:04:35,440 Speaker 1: outcome of the election, Yes, it's still unclear, but is 87 00:04:35,480 --> 00:04:37,400 Speaker 1: there any reason to believe though that the status quo 88 00:04:37,480 --> 00:04:40,359 Speaker 1: and markets is going to change over the next twelve 89 00:04:40,440 --> 00:04:43,560 Speaker 1: months three years, Let's keep it a little shorter, say 90 00:04:43,600 --> 00:04:46,360 Speaker 1: twelve months with the outcome that we've seen, even though 91 00:04:46,640 --> 00:04:49,039 Speaker 1: at least as it stands, it doesn't look like markets 92 00:04:49,080 --> 00:04:52,080 Speaker 1: getting exactly what we were told it was pricing in 93 00:04:52,080 --> 00:04:54,719 Speaker 1: ahead of time. Yeah, you know, I think from the election, 94 00:04:54,920 --> 00:04:57,240 Speaker 1: I think the results really kind of threaded the need 95 00:04:57,279 --> 00:04:59,960 Speaker 1: of pretty perfectly, and just in terms of you know, 96 00:05:00,040 --> 00:05:02,200 Speaker 1: what would have been the best for the markets and again, 97 00:05:02,240 --> 00:05:06,440 Speaker 1: like you mentioned, especially for growth investors. Um. Again, because 98 00:05:06,480 --> 00:05:08,520 Speaker 1: we have a split Congress, we're not going to have 99 00:05:08,520 --> 00:05:11,120 Speaker 1: a huge stimulus, so that you know, the market overall 100 00:05:11,240 --> 00:05:13,680 Speaker 1: really likes to see gridlock, and that's certainly what we're 101 00:05:13,680 --> 00:05:16,600 Speaker 1: getting from here. Um. And you know, it really takes 102 00:05:16,640 --> 00:05:19,440 Speaker 1: off things like you know, tax increases on both the 103 00:05:19,440 --> 00:05:23,320 Speaker 1: corporate and personal side. Um. You know, the interest rates 104 00:05:23,360 --> 00:05:26,480 Speaker 1: are probably gonna stay pretty low given that we're probably 105 00:05:26,480 --> 00:05:28,640 Speaker 1: not going to have this big reflationary period that was 106 00:05:28,680 --> 00:05:33,120 Speaker 1: expected if if we boosted stimulus pretty dramatically. So yeah, 107 00:05:33,160 --> 00:05:35,159 Speaker 1: like I said, I think it's really is kind of 108 00:05:35,200 --> 00:05:38,640 Speaker 1: status quo and and really the best possible outlook that 109 00:05:38,680 --> 00:05:42,359 Speaker 1: we could have gotten from the election we got. You know, Chris, 110 00:05:42,400 --> 00:05:45,080 Speaker 1: I'm I'm thinking back to when I started working for 111 00:05:45,120 --> 00:05:48,599 Speaker 1: you with Bloomberg. I'm really gonna date myself here, way 112 00:05:48,600 --> 00:05:51,719 Speaker 1: back in early two thousand and seven. Uh, George W. 113 00:05:51,839 --> 00:05:56,120 Speaker 1: Bush was was still the president. Uh, you know, obviously, Uh, 114 00:05:56,160 --> 00:06:00,120 Speaker 1: there was that two thousand and eight election, Um, and 115 00:06:00,120 --> 00:06:02,320 Speaker 1: there was certainly some talk about while is Obama gonna 116 00:06:02,320 --> 00:06:04,279 Speaker 1: be good or bad for the stock market, but really 117 00:06:04,320 --> 00:06:06,960 Speaker 1: the whole world was was just distracted with the financial 118 00:06:07,000 --> 00:06:11,200 Speaker 1: crisis at that point. I don't ever remember politics being 119 00:06:11,440 --> 00:06:15,000 Speaker 1: this important to markets as they've been in the last 120 00:06:15,240 --> 00:06:21,040 Speaker 1: few years, the Trump the Trump uh administrations specifically, How 121 00:06:21,080 --> 00:06:24,640 Speaker 1: do you look at the intersection of politics and markets 122 00:06:24,720 --> 00:06:26,919 Speaker 1: going forward? I mean it's I feel like the business 123 00:06:26,960 --> 00:06:29,960 Speaker 1: page and the political pages of the newspapers have been 124 00:06:29,960 --> 00:06:33,000 Speaker 1: fused together in the last four years. Are they going 125 00:06:33,040 --> 00:06:36,040 Speaker 1: to be attached at the hip going forward? Is the 126 00:06:36,040 --> 00:06:39,560 Speaker 1: political narrative under a Biden administration going to also be 127 00:06:40,040 --> 00:06:42,479 Speaker 1: the market narrative, do you think, uh? Or will that 128 00:06:42,560 --> 00:06:46,120 Speaker 1: wear off eventually and we'll be back to ignoring politics 129 00:06:46,200 --> 00:06:48,320 Speaker 1: like we used to. Yeah. I mean what I would 130 00:06:48,320 --> 00:06:50,320 Speaker 1: say is our role in the press will be, no 131 00:06:50,360 --> 00:06:52,440 Speaker 1: matter whether it matters or not, it will be to 132 00:06:52,480 --> 00:06:54,679 Speaker 1: make sure that those narratives are joined at the hips, 133 00:06:55,320 --> 00:06:58,080 Speaker 1: whether they deserve to be or otherwise. What what I mean. 134 00:06:58,400 --> 00:07:00,200 Speaker 1: I do feel like that's sort of the the key 135 00:07:00,240 --> 00:07:01,640 Speaker 1: thing and the point that there is I'd be very 136 00:07:01,640 --> 00:07:04,039 Speaker 1: interested to hear how our guests feels about that. I mean, 137 00:07:04,320 --> 00:07:07,440 Speaker 1: there's a perception right now because of whatever some of 138 00:07:07,480 --> 00:07:11,120 Speaker 1: the big personalities, possibly possibly because of things like Twitter, 139 00:07:11,360 --> 00:07:14,880 Speaker 1: that no matter what happens on Earth, Uh, it gets 140 00:07:15,160 --> 00:07:18,400 Speaker 1: dialed back to politics. And I wonder if you know 141 00:07:19,080 --> 00:07:22,760 Speaker 1: it actually does matter significantly more now than it did 142 00:07:23,040 --> 00:07:26,160 Speaker 1: back in the you know, Obama period or Bush period, 143 00:07:26,600 --> 00:07:29,240 Speaker 1: or if it's just something that we we as journalists 144 00:07:29,280 --> 00:07:31,760 Speaker 1: like to ascribe like everyone else. I mean, you look 145 00:07:31,800 --> 00:07:34,120 Speaker 1: at the beginning of the Obama period, there was a 146 00:07:34,200 --> 00:07:36,840 Speaker 1: lot you know, there was nothing like what's going on now, obviously, 147 00:07:36,840 --> 00:07:39,880 Speaker 1: but there was a fair amount of naysayers willing to 148 00:07:39,920 --> 00:07:42,880 Speaker 1: speak up against his likely stewardship of the things like 149 00:07:42,920 --> 00:07:45,640 Speaker 1: the economy, in the stock market, and certainly in the 150 00:07:45,680 --> 00:07:49,400 Speaker 1: stock market, nothing could have played out anymore against the naysayers. 151 00:07:50,000 --> 00:07:51,680 Speaker 1: And to me, I look at something like that and 152 00:07:51,720 --> 00:07:53,920 Speaker 1: I say, there's any of this is Is this just 153 00:07:54,440 --> 00:07:57,800 Speaker 1: an imagined correlation that we should you know, to some 154 00:07:57,840 --> 00:07:59,880 Speaker 1: degree stop talk. But I wonder what our guests thinks 155 00:07:59,880 --> 00:08:03,400 Speaker 1: of how much of his investment philosophies premised on anything 156 00:08:03,400 --> 00:08:05,560 Speaker 1: having to do with the government. Yeah, so Jamie, let's 157 00:08:05,600 --> 00:08:07,920 Speaker 1: pose that question to you. Then our markets and politics 158 00:08:07,960 --> 00:08:11,160 Speaker 1: actually tied at the hip, and should they be. I 159 00:08:11,200 --> 00:08:13,400 Speaker 1: think they've been that way for the last four years. 160 00:08:13,400 --> 00:08:15,400 Speaker 1: But I don't think there will be as much in 161 00:08:15,440 --> 00:08:17,440 Speaker 1: the next four years. I mean, clearly we had a 162 00:08:17,520 --> 00:08:21,200 Speaker 1: very polarizing figure in the White House, which certainly I 163 00:08:21,200 --> 00:08:23,880 Speaker 1: think brought a lot more attention to that post than 164 00:08:24,240 --> 00:08:27,200 Speaker 1: other than I Otherwise we would have had um But 165 00:08:27,560 --> 00:08:28,760 Speaker 1: you know, I think it kind of is going to 166 00:08:28,800 --> 00:08:30,960 Speaker 1: go back a little bit more to you know, more 167 00:08:31,040 --> 00:08:33,160 Speaker 1: like how it was when Obama with an office, and 168 00:08:33,160 --> 00:08:36,120 Speaker 1: when not every day had an event with a controversial 169 00:08:36,160 --> 00:08:39,120 Speaker 1: tweet or something that was controversial that the market needed 170 00:08:39,200 --> 00:08:41,800 Speaker 1: to figure out. You know, there are a few issues 171 00:08:41,840 --> 00:08:44,120 Speaker 1: that will have to think about, you know, come early 172 00:08:44,200 --> 00:08:48,160 Speaker 1: next year, when most likely Biden has inaugurated. But um, 173 00:08:48,400 --> 00:08:50,320 Speaker 1: you know, I just don't think it's going to be 174 00:08:50,960 --> 00:08:53,840 Speaker 1: quite as much of a focus going forward as it 175 00:08:53,840 --> 00:08:56,960 Speaker 1: has been in the past. And quite honestly, just to 176 00:08:57,000 --> 00:09:00,720 Speaker 1: mention one thing, in terms of how we manage money, UM, 177 00:09:00,760 --> 00:09:02,840 Speaker 1: it has very little to do, quite honest with who's 178 00:09:02,880 --> 00:09:05,040 Speaker 1: in the White House. Um. You know, we had a 179 00:09:05,080 --> 00:09:06,960 Speaker 1: few names here and there that would have probably done 180 00:09:07,000 --> 00:09:10,040 Speaker 1: better if the election had turned out different. But the 181 00:09:10,080 --> 00:09:13,520 Speaker 1: way we invest, um, you know, with our process, it 182 00:09:13,600 --> 00:09:16,120 Speaker 1: really kind of depends on what are the underlying long 183 00:09:16,200 --> 00:09:19,720 Speaker 1: term trends that we see that are really impacting the 184 00:09:19,760 --> 00:09:22,520 Speaker 1: companies that we invest. Uh, and that's going to change, 185 00:09:22,520 --> 00:09:24,920 Speaker 1: not going to change regardless of who's in the White 186 00:09:24,920 --> 00:09:27,720 Speaker 1: House or how much controversy there is in politics going 187 00:09:27,720 --> 00:09:29,880 Speaker 1: on at the time. Jam's gonna say, I don't get 188 00:09:29,920 --> 00:09:34,400 Speaker 1: the impression that you really thought about positioning for for 189 00:09:34,440 --> 00:09:37,120 Speaker 1: this election too much at all. You seem to look 190 00:09:37,160 --> 00:09:42,400 Speaker 1: for companies that have sort of a longer secular story, Uh, 191 00:09:42,640 --> 00:09:44,440 Speaker 1: that is you know, I don't know if that was 192 00:09:44,480 --> 00:09:46,760 Speaker 1: on purpose or it just so happens that the companies 193 00:09:46,800 --> 00:09:49,320 Speaker 1: you're looking at are a little bit insulated from sort 194 00:09:49,320 --> 00:09:52,079 Speaker 1: of the whims of the market. But walk us through 195 00:09:52,400 --> 00:09:55,640 Speaker 1: how you do go about picking stocks, because I feel 196 00:09:55,640 --> 00:09:59,200 Speaker 1: like this the small cap universe is so large that 197 00:09:59,240 --> 00:10:02,560 Speaker 1: I'm always reus how managers like you start narrowing it down. 198 00:10:02,559 --> 00:10:04,520 Speaker 1: I mean, does it start with some sort of stock 199 00:10:04,600 --> 00:10:09,160 Speaker 1: screen for evaluation or growth metrics, or is it more 200 00:10:09,640 --> 00:10:13,840 Speaker 1: sector specific targets. Walk us through sort of how you'll 201 00:10:13,840 --> 00:10:16,040 Speaker 1: pick your next stop. What will be some of the 202 00:10:16,040 --> 00:10:18,800 Speaker 1: criteria you're you're out on the look for. Yeah, sure, 203 00:10:18,880 --> 00:10:21,400 Speaker 1: let me start with our process, Mike, so um, you know, 204 00:10:21,440 --> 00:10:24,480 Speaker 1: it's pretty unique, but I think pretty intuitive. We really 205 00:10:24,520 --> 00:10:27,760 Speaker 1: start with kind of looking at We've identified twenty six 206 00:10:27,840 --> 00:10:29,960 Speaker 1: long term trends that we think are going to underlie 207 00:10:30,000 --> 00:10:32,760 Speaker 1: the secular growth opportunities that we'd like to invest in. 208 00:10:33,200 --> 00:10:37,679 Speaker 1: So these are things like corporate outsourcing, increasing demand for communications, bandwidth, 209 00:10:37,760 --> 00:10:40,400 Speaker 1: e commerce, stuff like that. And generally these are long 210 00:10:40,520 --> 00:10:42,880 Speaker 1: term trends, they don't tend to change much. We usually 211 00:10:42,920 --> 00:10:44,840 Speaker 1: think about them being here for at least three to 212 00:10:44,880 --> 00:10:47,400 Speaker 1: five years before they can kind of be considered a 213 00:10:47,440 --> 00:10:50,160 Speaker 1: trend for us. UM. It really keeps us out of 214 00:10:50,200 --> 00:10:53,440 Speaker 1: really deep cyclical companies and UM really we think it's 215 00:10:53,480 --> 00:10:55,120 Speaker 1: going to give us a good positive tail when for 216 00:10:55,160 --> 00:10:57,520 Speaker 1: the companies that we invest in, then we have a 217 00:10:57,520 --> 00:10:59,680 Speaker 1: bottoms up effort where we go and we look to 218 00:10:59,720 --> 00:11:02,760 Speaker 1: idea to find what we call premier companies UM. These 219 00:11:02,760 --> 00:11:06,400 Speaker 1: are ones that have solid revenue growth. We like companies 220 00:11:06,400 --> 00:11:09,240 Speaker 1: with high recurring revenues that don't have to resell their 221 00:11:09,360 --> 00:11:11,640 Speaker 1: entire book of business every quarter to make their numbers. 222 00:11:12,120 --> 00:11:14,560 Speaker 1: And we like proven management teams that we know we're 223 00:11:14,600 --> 00:11:17,720 Speaker 1: gonna under promise and over deliver relative to the targets 224 00:11:17,720 --> 00:11:20,080 Speaker 1: they set out for the street, companies with high margins 225 00:11:20,800 --> 00:11:24,640 Speaker 1: UM and that are hopefully increasing scalable business models UH, 226 00:11:24,640 --> 00:11:27,080 Speaker 1: and ones that really have kind of a sustainable competitive 227 00:11:27,080 --> 00:11:30,280 Speaker 1: advantage versus their peers. So a lot of our ideas 228 00:11:30,320 --> 00:11:32,559 Speaker 1: really kind of come out of what we shake out 229 00:11:32,600 --> 00:11:36,080 Speaker 1: from those twenty six trends. You know, in addition to that, 230 00:11:36,160 --> 00:11:38,600 Speaker 1: we have a lot of experience. We average about twenty 231 00:11:38,679 --> 00:11:41,160 Speaker 1: nine years among the three of us that manage this product, 232 00:11:41,960 --> 00:11:45,360 Speaker 1: and so you know, knowing those companies that since we've 233 00:11:45,360 --> 00:11:47,040 Speaker 1: done this for a long time, we know the companies 234 00:11:47,040 --> 00:11:48,959 Speaker 1: that are kind of stuck in small cap and are 235 00:11:48,960 --> 00:11:52,320 Speaker 1: not likely to ever get out of small cap. We 236 00:11:52,400 --> 00:11:55,800 Speaker 1: know those companies. And since we follow you know, particular industries, 237 00:11:55,880 --> 00:11:59,040 Speaker 1: we know there's when there's a cyclical change in the 238 00:11:59,080 --> 00:12:02,600 Speaker 1: space that we cover, or maybe some one that's gaining 239 00:12:02,640 --> 00:12:04,240 Speaker 1: market share within that that we need to kind of 240 00:12:04,240 --> 00:12:07,000 Speaker 1: take a look at a closer level. But that's really 241 00:12:07,040 --> 00:12:10,480 Speaker 1: kind of how our ideas really shake out. In addition 242 00:12:10,520 --> 00:12:12,840 Speaker 1: to you know, of course corporate management teams going on 243 00:12:12,920 --> 00:12:15,079 Speaker 1: the road doing zoom calls, he says, instead of in 244 00:12:15,200 --> 00:12:17,960 Speaker 1: office meetings. We look at the I p O market 245 00:12:18,000 --> 00:12:21,000 Speaker 1: as well. So um, really our ideas came from a 246 00:12:21,000 --> 00:12:38,880 Speaker 1: lot of different places. So before I get into some 247 00:12:38,960 --> 00:12:41,960 Speaker 1: of those specific picks, Jamie, I want to talk about 248 00:12:42,000 --> 00:12:44,880 Speaker 1: secular growth on a broad level. This week, the narrative 249 00:12:44,920 --> 00:12:47,240 Speaker 1: has been all of a sudden that we might not 250 00:12:47,320 --> 00:12:50,000 Speaker 1: get the blue wave that was expected. We've seen bond 251 00:12:50,040 --> 00:12:52,640 Speaker 1: yields come down, and all of a sudden, secular growth 252 00:12:52,679 --> 00:12:55,440 Speaker 1: has really come back and vogue across the markets. I mean, 253 00:12:55,480 --> 00:12:58,400 Speaker 1: by Thursday, the NAZAC was up more than nine percent. 254 00:12:58,520 --> 00:13:01,480 Speaker 1: It was pretty unbelievable. Is is there any way to 255 00:13:01,640 --> 00:13:04,840 Speaker 1: actually explain this that, after the run that the NAZAC 256 00:13:04,920 --> 00:13:07,160 Speaker 1: has already had, this here, all of a sudden the 257 00:13:07,240 --> 00:13:10,440 Speaker 1: market gets an outcome that wasn't necessarily expected and you 258 00:13:10,480 --> 00:13:13,920 Speaker 1: get a nine percent boost in less than a week. Yeah, 259 00:13:14,000 --> 00:13:18,480 Speaker 1: not really no, But um I would say, as we've 260 00:13:18,520 --> 00:13:20,839 Speaker 1: discussed a lot ourselves, I mean, the thing with the 261 00:13:20,920 --> 00:13:26,000 Speaker 1: nastack goes up has become this sort of kind of 262 00:13:26,240 --> 00:13:30,240 Speaker 1: funereal like I believe we were using the word buzzard 263 00:13:30,320 --> 00:13:33,199 Speaker 1: like kind of symbol over the market at this point. 264 00:13:33,240 --> 00:13:35,719 Speaker 1: It is not. I guess on one level, there is 265 00:13:35,720 --> 00:13:39,680 Speaker 1: a cycle, there's a growth stock kind of optimism involved 266 00:13:39,720 --> 00:13:44,800 Speaker 1: in that. But another just as uh watertight interpretation of 267 00:13:44,800 --> 00:13:48,040 Speaker 1: what's going on there is that it's people expressing a 268 00:13:48,200 --> 00:13:52,200 Speaker 1: kind of defensive pessimism about the economy and COVID. Why 269 00:13:52,200 --> 00:13:55,360 Speaker 1: wouldn't you express such a thing right now? And you 270 00:13:55,360 --> 00:13:58,960 Speaker 1: know you've got these basically bulletproof, as you have reported 271 00:13:59,000 --> 00:14:03,120 Speaker 1: on before, almost in assailable intangible assets that do nothing 272 00:14:03,120 --> 00:14:05,880 Speaker 1: but to throw off money, and you know you're safe, 273 00:14:05,920 --> 00:14:09,080 Speaker 1: like like you would buy toothpaste stocks or whatever in 274 00:14:09,120 --> 00:14:12,679 Speaker 1: the seventies. Now you buy basically all of the instruments 275 00:14:12,679 --> 00:14:15,959 Speaker 1: that we're now talking over. I mean there's some Google, 276 00:14:16,040 --> 00:14:20,760 Speaker 1: there's some uh Apple, there's probably some Facebook involved in 277 00:14:20,800 --> 00:14:22,360 Speaker 1: what we're doing right now. You can't avoid any of 278 00:14:22,360 --> 00:14:24,720 Speaker 1: this stuff. So people are buying that stuff like crazy 279 00:14:24,800 --> 00:14:27,600 Speaker 1: just because they need similar to part money. And God knows, 280 00:14:27,640 --> 00:14:30,600 Speaker 1: it's gone done nothing but gone up basically since forever, 281 00:14:30,680 --> 00:14:33,520 Speaker 1: as far as the last five years are concerned. So 282 00:14:33,640 --> 00:14:35,720 Speaker 1: I'm not sure that there's some kind of signal about 283 00:14:35,720 --> 00:14:38,400 Speaker 1: the economy or good tidings or good time. There may 284 00:14:38,480 --> 00:14:40,760 Speaker 1: very well be the opposite in that, and that, you know, 285 00:14:41,040 --> 00:14:45,040 Speaker 1: I guess for lack of in the absence of better evidence, 286 00:14:45,120 --> 00:14:47,680 Speaker 1: is what's happening again right now. People are just doing 287 00:14:47,680 --> 00:14:50,360 Speaker 1: what they've learned to do in a Pavlovian way. I 288 00:14:50,360 --> 00:14:52,720 Speaker 1: guess the fear comes in when you have such a 289 00:14:52,800 --> 00:14:55,640 Speaker 1: concentration in such a few names. I mean, what is 290 00:14:55,680 --> 00:15:02,080 Speaker 1: the top four weights in the SMP are inde right now. So, Jamie, 291 00:15:02,120 --> 00:15:05,200 Speaker 1: I'm wondering from your perspective, when you're assembling of fund 292 00:15:05,240 --> 00:15:09,080 Speaker 1: like yours, do you worry about sort of um, Obviously 293 00:15:09,120 --> 00:15:11,960 Speaker 1: you're not going to have a concentration of individual names 294 00:15:12,000 --> 00:15:15,520 Speaker 1: that high, I would assume, But do you worry about, say, 295 00:15:15,560 --> 00:15:18,480 Speaker 1: a concentration in specific sectors. You know, I'm looking at 296 00:15:18,480 --> 00:15:21,760 Speaker 1: the small cap fund a lot of biotech, healthcare, pretty 297 00:15:21,800 --> 00:15:25,480 Speaker 1: heavy waiting there. Do you at least mentally or actually 298 00:15:25,920 --> 00:15:29,320 Speaker 1: have written down somewhere any type of limit on on 299 00:15:29,560 --> 00:15:32,800 Speaker 1: the waitings of sectors or is it just flow from 300 00:15:32,800 --> 00:15:35,520 Speaker 1: your process and you don't you're kind of agnostic to 301 00:15:35,760 --> 00:15:38,800 Speaker 1: to what sectors you're you're loaded into. Yeah, we do 302 00:15:38,880 --> 00:15:42,800 Speaker 1: have some limits on industry waitings about they're so high 303 00:15:42,880 --> 00:15:45,200 Speaker 1: that quite honestly, I don't think I would ever get 304 00:15:45,240 --> 00:15:48,560 Speaker 1: close to kind of what stated saying our perspectives, but 305 00:15:48,640 --> 00:15:51,880 Speaker 1: certainly we have to think about that. Um. You know, 306 00:15:51,960 --> 00:15:55,000 Speaker 1: you mentioned biotech. It is a very very large part 307 00:15:55,040 --> 00:15:57,240 Speaker 1: of the rest of the two thousand growth index. And 308 00:15:57,320 --> 00:16:00,240 Speaker 1: quite honestly, these are companies that aren't aren't really kind 309 00:16:00,240 --> 00:16:02,080 Speaker 1: of what we spend a lot of times doing. They're 310 00:16:02,120 --> 00:16:05,760 Speaker 1: heavily reliant on the capital markets to fund their future growth. 311 00:16:05,800 --> 00:16:08,360 Speaker 1: There's a lot of binary risk that comes with you know, 312 00:16:08,760 --> 00:16:12,720 Speaker 1: clinical stage assets, whether they're able to hit endpoints and 313 00:16:12,800 --> 00:16:14,600 Speaker 1: stocks her up a ton, and if you miss it's 314 00:16:14,680 --> 00:16:18,520 Speaker 1: lick out below. So, um, you know, we we try 315 00:16:18,560 --> 00:16:21,600 Speaker 1: to find areas. So in healthcare it's things like you know, 316 00:16:21,680 --> 00:16:25,000 Speaker 1: diagnostics or you know, some tools companies that we can 317 00:16:25,760 --> 00:16:29,040 Speaker 1: get exposure to healthcare with businesses that we can actually 318 00:16:29,040 --> 00:16:32,240 Speaker 1: feel good about owning. Um. But certainly, yeah, we kind 319 00:16:32,240 --> 00:16:34,800 Speaker 1: of keep an eye on what's in the benchmark. We 320 00:16:34,880 --> 00:16:38,440 Speaker 1: don't run our portfolio relative to what's in the bench 321 00:16:38,480 --> 00:16:41,600 Speaker 1: market really comes more from the bottoms up ideas that 322 00:16:41,680 --> 00:16:44,360 Speaker 1: we're finding. But um, yeah, like you said, we we 323 00:16:44,400 --> 00:16:47,880 Speaker 1: don't have a huge concentration within any particular name, and 324 00:16:47,920 --> 00:16:51,440 Speaker 1: we don't like to have huge overweights or underweights, um, 325 00:16:51,640 --> 00:16:54,120 Speaker 1: relative to each individual sector that we will make a 326 00:16:54,120 --> 00:16:56,800 Speaker 1: little bit of sector bets here and there. I'm looking 327 00:16:56,800 --> 00:17:00,040 Speaker 1: at your performance right now, so here to day, a 328 00:17:00,160 --> 00:17:05,080 Speaker 1: ninety nine percentile one year, ninety percentile goes on three year, 329 00:17:05,560 --> 00:17:08,199 Speaker 1: five year. I'm curious this year though obviously it's been 330 00:17:08,240 --> 00:17:11,719 Speaker 1: a pretty dynamic year in the midst of a pandemic 331 00:17:12,119 --> 00:17:14,359 Speaker 1: the election, even though you might not factor that into 332 00:17:14,440 --> 00:17:17,240 Speaker 1: your process too much. I wonder if there's anything this 333 00:17:17,320 --> 00:17:19,600 Speaker 1: year that's really changed your outlook and how do you 334 00:17:19,880 --> 00:17:23,400 Speaker 1: change any holdings or boost holdings within the portfolio. Yeah, 335 00:17:23,400 --> 00:17:26,159 Speaker 1: we did do a few things, um, you know around 336 00:17:26,160 --> 00:17:28,800 Speaker 1: the pandemic obviously made it a little bit different from 337 00:17:28,880 --> 00:17:32,320 Speaker 1: kind of a normal year year like you talked about overall, 338 00:17:32,359 --> 00:17:34,920 Speaker 1: you know, our process doesn't change again like I spoke up, 339 00:17:34,920 --> 00:17:37,919 Speaker 1: but certainly when you see a you know, pandemic, and 340 00:17:38,200 --> 00:17:41,640 Speaker 1: it's definitely an effect. How uh it affects the consumers. 341 00:17:41,640 --> 00:17:43,280 Speaker 1: So we had a lot of names that kind of 342 00:17:43,280 --> 00:17:46,240 Speaker 1: had rallied in to say January names have done you 343 00:17:46,320 --> 00:17:48,479 Speaker 1: know quite well that we kind of said, all right, 344 00:17:48,840 --> 00:17:51,240 Speaker 1: consumer can be pretty weak here, so we cut back 345 00:17:51,320 --> 00:17:54,399 Speaker 1: quite a bit on those consumer names. And then of 346 00:17:54,440 --> 00:17:57,600 Speaker 1: course when um, you know, the pandemic hit, you really 347 00:17:57,640 --> 00:17:59,320 Speaker 1: got to take a look and see, you know, what's 348 00:17:59,359 --> 00:18:01,919 Speaker 1: the truth stickle cality of some of these businesses. You know, 349 00:18:01,960 --> 00:18:05,199 Speaker 1: how recurring are their revenues, you know, is what's their 350 00:18:05,200 --> 00:18:09,120 Speaker 1: opportunity to be like once things start to recover. Um, 351 00:18:09,200 --> 00:18:11,439 Speaker 1: So we did make some changes on what you know, 352 00:18:11,480 --> 00:18:14,119 Speaker 1: we sold in consumer, but a few things here that 353 00:18:14,160 --> 00:18:17,280 Speaker 1: we thought would actually kind of be beneficiaries. Certainly that's 354 00:18:17,280 --> 00:18:20,600 Speaker 1: our trends go. There's some trends that actually accelerated through this. 355 00:18:20,800 --> 00:18:23,360 Speaker 1: You know, I mentioned kind of e commerce and increasing 356 00:18:23,400 --> 00:18:26,800 Speaker 1: demand for communications bandwidth. Um, you know, we we like 357 00:18:26,960 --> 00:18:29,199 Speaker 1: to take advantage of some of those areas that you know, 358 00:18:29,240 --> 00:18:32,600 Speaker 1: we had some socks that still got whacked despite you know, 359 00:18:32,640 --> 00:18:35,080 Speaker 1: the fundamental is actually probably improving. So we kind of 360 00:18:35,119 --> 00:18:39,280 Speaker 1: adjusted our portfolio accordingly. And so you know, that's part 361 00:18:39,320 --> 00:18:41,120 Speaker 1: of the reason basically why I turnovers up a little 362 00:18:41,119 --> 00:18:42,840 Speaker 1: bit higher than kind of on the normal years. We 363 00:18:42,880 --> 00:18:46,320 Speaker 1: did try to take advantage of of some of those opportunities. 364 00:18:46,600 --> 00:18:48,840 Speaker 1: One thing I love about looking under the hood of 365 00:18:48,880 --> 00:18:51,919 Speaker 1: small cap funds is a lot of names that aren't 366 00:18:52,040 --> 00:18:54,520 Speaker 1: exactly household names. You know, you think about how the 367 00:18:55,080 --> 00:18:57,960 Speaker 1: like I was saying, the markets dominated in the large 368 00:18:57,960 --> 00:19:01,160 Speaker 1: cap area by such a small number of name small caps. 369 00:19:01,240 --> 00:19:03,480 Speaker 1: It's always intriguing to me. Sorry, I feel like we 370 00:19:03,480 --> 00:19:06,640 Speaker 1: should list the some sicker symbols uh in Jamie's funds 371 00:19:06,640 --> 00:19:09,320 Speaker 1: and see if NJ can can identify the stocks. I 372 00:19:09,400 --> 00:19:11,320 Speaker 1: like it. It's a game other than prices, right, and 373 00:19:11,359 --> 00:19:18,520 Speaker 1: I'm not the target of it. Okay, yeah, okay, Chris, 374 00:19:19,280 --> 00:19:20,919 Speaker 1: all right, I'll start with an easy one because this 375 00:19:20,960 --> 00:19:26,040 Speaker 1: is what I actually recognized. Ticker symbol love Southwest. No, No, 376 00:19:26,200 --> 00:19:29,399 Speaker 1: that's all you, Madel. This is l O V like 377 00:19:29,480 --> 00:19:33,800 Speaker 1: the old Al Green song. H. I don't know, yeah 378 00:19:33,920 --> 00:19:35,679 Speaker 1: I did, I would. I didn't know the symbol, but 379 00:19:35,720 --> 00:19:39,600 Speaker 1: it's love sack, which is those bits bank chairs. Right. 380 00:19:39,600 --> 00:19:41,640 Speaker 1: What do you like about love sack, Jamie? What got 381 00:19:41,680 --> 00:19:44,400 Speaker 1: you into that that name? Yeah? So what initially got 382 00:19:44,440 --> 00:19:46,800 Speaker 1: us into it is the stock and they had great 383 00:19:46,800 --> 00:19:49,440 Speaker 1: products um and the stock actually kind of gotten beaten 384 00:19:49,520 --> 00:19:51,680 Speaker 1: up because of China terrorists as they sourced all out 385 00:19:51,720 --> 00:19:55,119 Speaker 1: of their goods out of China. But you know, we 386 00:19:55,160 --> 00:19:57,000 Speaker 1: actually kind of took a test drive, went over to 387 00:19:57,040 --> 00:19:59,800 Speaker 1: the store, like to the products, found them really compelling. 388 00:20:00,040 --> 00:20:02,480 Speaker 1: A Like you said, they have basically a modern version 389 00:20:02,480 --> 00:20:05,240 Speaker 1: of a bean bag, and they've been getting into sectionals 390 00:20:05,240 --> 00:20:07,840 Speaker 1: which they call sactionals, and they have a lot of 391 00:20:07,840 --> 00:20:10,080 Speaker 1: innovation around kind of new product there that we got 392 00:20:10,080 --> 00:20:13,320 Speaker 1: excited about. And Stock was, you know, we thought very 393 00:20:13,400 --> 00:20:16,400 Speaker 1: very much undervalued. One of the things that they did 394 00:20:16,480 --> 00:20:20,840 Speaker 1: exceptionally well during the during the pandemic time was you know, 395 00:20:20,880 --> 00:20:24,800 Speaker 1: they had about nineties showrooms that they had, Uh clearly 396 00:20:24,840 --> 00:20:27,720 Speaker 1: a lot of those got closed, so they they furloughed 397 00:20:27,760 --> 00:20:30,560 Speaker 1: some employees but actually got some and kind of got 398 00:20:30,600 --> 00:20:33,880 Speaker 1: them online and readjusted their marketing campaign to more digital, 399 00:20:34,560 --> 00:20:37,320 Speaker 1: and sales actually kind of took off from there. So 400 00:20:37,640 --> 00:20:39,879 Speaker 1: you know, it's a product that can be delivered to 401 00:20:40,000 --> 00:20:43,119 Speaker 1: the home through FedEx, and it's it's one that you 402 00:20:43,119 --> 00:20:45,760 Speaker 1: know for a you know, kind of smaller cap uh 403 00:20:45,960 --> 00:20:48,920 Speaker 1: team that manages it. They've done an acceptable job and 404 00:20:49,000 --> 00:20:51,800 Speaker 1: kind of pivoting this period through the through the pandemic, 405 00:20:51,840 --> 00:21:10,359 Speaker 1: and I've done quite well, Sarah. I've got one of 406 00:21:10,359 --> 00:21:12,679 Speaker 1: them right in my basement here where I'm recording this 407 00:21:12,680 --> 00:21:19,040 Speaker 1: podcast from. So there. Yeah, that's that's uh, that's why right, Well, 408 00:21:19,280 --> 00:21:21,080 Speaker 1: here's here's what. I'm not gonna put an ad on 409 00:21:21,080 --> 00:21:23,199 Speaker 1: the spot again, because, like I said, you're en evaluation 410 00:21:23,240 --> 00:21:26,600 Speaker 1: time is coming up. I'll put you up. I'll put 411 00:21:26,640 --> 00:21:32,240 Speaker 1: you on the spot, Sarah band I am cheating because 412 00:21:32,480 --> 00:21:35,240 Speaker 1: I have J's portfolio lists up in front of me, 413 00:21:35,320 --> 00:21:38,960 Speaker 1: So I'm gonna go ahead and say Bandwidth, this is 414 00:21:38,960 --> 00:21:43,000 Speaker 1: a two and alp pcent waiting in his portfolio and 415 00:21:43,359 --> 00:21:47,800 Speaker 1: basically software based communications for customers. Jamie, talk us through 416 00:21:47,880 --> 00:21:50,639 Speaker 1: that one. What's uh, this seems to be kind of 417 00:21:50,760 --> 00:21:55,040 Speaker 1: a theme in your picks series. Um, you know soft 418 00:21:55,359 --> 00:21:59,000 Speaker 1: sort of next generation soft communication software. Is that is 419 00:21:59,040 --> 00:22:03,880 Speaker 1: that fair? Yeah? That is extremely fair. Again, software, it's 420 00:22:03,920 --> 00:22:05,359 Speaker 1: kind of tough right now because a lot of the 421 00:22:05,440 --> 00:22:08,280 Speaker 1: high growth names have some really high valuations. But uh, 422 00:22:08,680 --> 00:22:11,199 Speaker 1: this is one I think still on evaluation basis, you 423 00:22:11,200 --> 00:22:13,800 Speaker 1: can make a really good case for So they actually 424 00:22:13,880 --> 00:22:16,560 Speaker 1: have really good software expertise and they carry a lot 425 00:22:16,640 --> 00:22:20,560 Speaker 1: of traffic for the next gen cutting unified communications companies. 426 00:22:20,600 --> 00:22:22,560 Speaker 1: If you've ever heard of ring Central or eight by 427 00:22:22,600 --> 00:22:27,240 Speaker 1: eight or Microsoft Skype for business, even companies like Zoom. 428 00:22:27,320 --> 00:22:31,000 Speaker 1: If you dial into a Zoom call instead of going 429 00:22:31,000 --> 00:22:33,399 Speaker 1: over the internet but actually dialing us your in your phone, 430 00:22:33,480 --> 00:22:36,919 Speaker 1: you're on Zoom's network. So all of their customers are 431 00:22:36,960 --> 00:22:41,280 Speaker 1: big share gainers. They've seen really nice accelerating growth. It's 432 00:22:41,320 --> 00:22:46,040 Speaker 1: again really highly recurring revenue. They've actually been getting into larger, 433 00:22:46,080 --> 00:22:49,959 Speaker 1: more strategic accounts, and they've actually been expanding internationally. They 434 00:22:50,000 --> 00:22:52,359 Speaker 1: did it starting organically a couple of years ago, but 435 00:22:52,560 --> 00:22:56,200 Speaker 1: recently made an acquisition of a coming called Voxbone out 436 00:22:56,240 --> 00:23:00,399 Speaker 1: of Belgium. Uh, that's really going to accelerate their growth 437 00:23:00,960 --> 00:23:05,399 Speaker 1: into Europe overall. That was highly creative as well. You know, 438 00:23:05,520 --> 00:23:08,280 Speaker 1: the margins there. They've kind of been investing for the 439 00:23:08,359 --> 00:23:10,520 Speaker 1: last couple of years in sales, but they're actually starting 440 00:23:10,560 --> 00:23:13,439 Speaker 1: to show some good margin expansion. So and again, like 441 00:23:13,480 --> 00:23:16,920 Speaker 1: imaged evaluation, it's just over kind of eight times next 442 00:23:17,000 --> 00:23:19,960 Speaker 1: year's sales. If you look at the sas comp group, 443 00:23:20,000 --> 00:23:22,440 Speaker 1: it's kind of probably twice that much. So it's one 444 00:23:22,440 --> 00:23:24,919 Speaker 1: that I think, although it's done quite well, it's got 445 00:23:24,920 --> 00:23:27,880 Speaker 1: a lot more to go from evaluation standpoint. Al Right, 446 00:23:27,920 --> 00:23:29,880 Speaker 1: I feel like that that kind of thing is vastly 447 00:23:29,920 --> 00:23:32,680 Speaker 1: more relevant, big surprise than who's in the White House. 448 00:23:32,720 --> 00:23:35,240 Speaker 1: I mean, again, not that this stuff is in any 449 00:23:35,240 --> 00:23:39,560 Speaker 1: way reliable as a specific timing tools. We are learning 450 00:23:39,640 --> 00:23:42,160 Speaker 1: this week in a way. I mean, we had last week, 451 00:23:42,160 --> 00:23:44,439 Speaker 1: we had this gigantic sell off that everyone putting us 452 00:23:44,480 --> 00:23:47,600 Speaker 1: sort of wrote off to valuations and people are you know, 453 00:23:47,720 --> 00:23:52,440 Speaker 1: COVID was alienating people from finally from the big fang structure. 454 00:23:53,200 --> 00:23:55,399 Speaker 1: And now those stocks are up whatever you said, or 455 00:23:55,400 --> 00:23:58,000 Speaker 1: we're ten percent ten percent in three days, So that 456 00:23:58,160 --> 00:24:02,440 Speaker 1: that bit of valuation stem didn't quite work out this time, Jim. 457 00:24:02,480 --> 00:24:04,760 Speaker 1: Yet you know that Chris brings up a great point 458 00:24:04,800 --> 00:24:08,680 Speaker 1: about valuations I always wonder how a small cap manager 459 00:24:08,840 --> 00:24:13,160 Speaker 1: approaches valuations. Obviously, if you're looking at forward estimates UM 460 00:24:13,240 --> 00:24:17,600 Speaker 1: for small cap companies not necessarily always a robust analysts 461 00:24:17,640 --> 00:24:20,639 Speaker 1: coverage for some of the smaller names, especially, do you 462 00:24:20,720 --> 00:24:23,439 Speaker 1: just sort of do all that work yourself or the 463 00:24:23,440 --> 00:24:25,560 Speaker 1: analysts on your team and you don't rely on the 464 00:24:25,560 --> 00:24:28,800 Speaker 1: cell side for their estimates. How do you sort of approach, uh, 465 00:24:29,240 --> 00:24:32,440 Speaker 1: figure out valuations on on some of the less covered names. Yeah, 466 00:24:32,480 --> 00:24:35,640 Speaker 1: we'll usually take a look at able to go through 467 00:24:35,640 --> 00:24:39,200 Speaker 1: a model and kind of decide where the upside could 468 00:24:39,200 --> 00:24:42,439 Speaker 1: be relative to street estimates. Obviously, you want street estimates 469 00:24:42,440 --> 00:24:44,720 Speaker 1: lower than where where you think they're gonna come in 470 00:24:44,760 --> 00:24:47,359 Speaker 1: because certainly missing estimates can be pretty devastating for these 471 00:24:47,400 --> 00:24:50,080 Speaker 1: small companies. UM. But yeah, you really got to dig 472 00:24:50,119 --> 00:24:53,520 Speaker 1: into the model understand um the drivers of of the 473 00:24:53,560 --> 00:24:58,480 Speaker 1: top line and margin expansion UM and really, again I 474 00:24:58,520 --> 00:25:00,320 Speaker 1: think it goes back to the inn if since he 475 00:25:00,400 --> 00:25:02,280 Speaker 1: has that class, you know, if you're able to go 476 00:25:02,320 --> 00:25:03,960 Speaker 1: in there and really peel apart where you think a 477 00:25:04,000 --> 00:25:07,359 Speaker 1: company could make UH, and if it's vastly higher than 478 00:25:07,400 --> 00:25:09,160 Speaker 1: where the street is, that's where you can make really 479 00:25:09,160 --> 00:25:13,160 Speaker 1: good money, So those consensus estimates sound like they even 480 00:25:13,200 --> 00:25:15,040 Speaker 1: though they're a little thinner, and then maybe the number 481 00:25:15,080 --> 00:25:17,320 Speaker 1: of estimates you get, they still matter a lot for 482 00:25:17,480 --> 00:25:21,440 Speaker 1: the small caps. Uh. I guess you know, it makes 483 00:25:21,480 --> 00:25:25,960 Speaker 1: me think, you know, the whole passive craze uh in 484 00:25:26,040 --> 00:25:30,960 Speaker 1: buying index funds tracking the SMP is not as popular 485 00:25:31,040 --> 00:25:33,760 Speaker 1: on the small cap level. Is that just a perennial 486 00:25:33,760 --> 00:25:36,560 Speaker 1: opportunity for active managers in the small cap space that's 487 00:25:36,920 --> 00:25:41,320 Speaker 1: less efficient, sort of less covered market. Yeah, I think 488 00:25:41,359 --> 00:25:43,520 Speaker 1: it kind of is. You know, I'm still amazed when 489 00:25:43,520 --> 00:25:46,600 Speaker 1: I talk to people who kind of either index or 490 00:25:46,680 --> 00:25:49,520 Speaker 1: kind of smart data their small cap exposure, just because 491 00:25:49,600 --> 00:25:52,359 Speaker 1: it is so inefficient, and you know, as more money 492 00:25:52,400 --> 00:25:54,400 Speaker 1: kind of moves into those, I think it's actually making 493 00:25:54,440 --> 00:25:58,359 Speaker 1: things a bit easier for active managers. Um. You know, 494 00:25:58,480 --> 00:26:00,960 Speaker 1: you you kind of to be careful when you say 495 00:26:00,960 --> 00:26:04,000 Speaker 1: things like that, but you know, we tend to see 496 00:26:04,000 --> 00:26:06,000 Speaker 1: things that just they either get to valuations that are 497 00:26:06,040 --> 00:26:08,760 Speaker 1: just too high because you know that, you know, people 498 00:26:08,800 --> 00:26:11,399 Speaker 1: who have multi factor models that they're you know, just 499 00:26:11,400 --> 00:26:14,040 Speaker 1: continuing to drive them higher higher, and you know you've 500 00:26:14,040 --> 00:26:16,560 Speaker 1: got nothing but downside. I mean it really I think 501 00:26:16,600 --> 00:26:19,320 Speaker 1: brings out a lot more opportunities and that's great for 502 00:26:19,359 --> 00:26:22,280 Speaker 1: active managers and small gap So one lest question for you, 503 00:26:22,359 --> 00:26:25,280 Speaker 1: Jamie before we get to our crazy things. Mike mentioned 504 00:26:25,359 --> 00:26:28,520 Speaker 1: love Sack and Bandwidth, and your other top holdings are 505 00:26:28,560 --> 00:26:31,000 Speaker 1: all in the healthcare space, in the Tera Lovengo health 506 00:26:31,080 --> 00:26:34,320 Speaker 1: care d X. Can't that be a really tricky space 507 00:26:34,359 --> 00:26:36,239 Speaker 1: and you have some really high flyers, you also have 508 00:26:36,320 --> 00:26:39,159 Speaker 1: ones that don't do so well. So how do you 509 00:26:39,200 --> 00:26:41,520 Speaker 1: go about actually sifting through the space and trying to 510 00:26:41,560 --> 00:26:43,680 Speaker 1: find ones that you don't think are going to fall 511 00:26:43,720 --> 00:26:46,919 Speaker 1: on the wrong side of the equation? Yeah, like I 512 00:26:46,960 --> 00:26:49,440 Speaker 1: mentioned earlier, it's kind of tough that, you know, biotech, 513 00:26:49,640 --> 00:26:51,960 Speaker 1: it's pretty large the index, and that's really an area 514 00:26:52,000 --> 00:26:54,399 Speaker 1: that we kind of don't like, the binary risk and 515 00:26:54,440 --> 00:26:56,760 Speaker 1: the reliance on the capital markets. So we've done a 516 00:26:56,760 --> 00:26:59,600 Speaker 1: few things. We we get pretty active and say the 517 00:26:59,640 --> 00:27:03,199 Speaker 1: tools space and even the healthcare diagnostic space, and that's 518 00:27:03,280 --> 00:27:04,800 Speaker 1: kind of a one area that we actually like a 519 00:27:04,800 --> 00:27:09,280 Speaker 1: lot right now is especially genomic diagnostics. Um, you know, 520 00:27:09,320 --> 00:27:11,439 Speaker 1: if you think about it, we've sequenced the human genome 521 00:27:11,440 --> 00:27:14,040 Speaker 1: about twenty years ago at a cost of hundreds of 522 00:27:14,080 --> 00:27:16,720 Speaker 1: millions of dollars with now that same sequence costs underd 523 00:27:16,720 --> 00:27:19,960 Speaker 1: a thousand dollars. And so we're able to incorporate that 524 00:27:20,880 --> 00:27:24,000 Speaker 1: data into screening tools and diagnostic tools with a lot 525 00:27:24,040 --> 00:27:28,040 Speaker 1: better accuracy, a lot less invasively, UM, and we can 526 00:27:28,040 --> 00:27:30,080 Speaker 1: test for a lot new things of new things. So 527 00:27:30,280 --> 00:27:35,000 Speaker 1: you know, oregon transplant rejection, identifying cancers or in genetic 528 00:27:35,119 --> 00:27:40,159 Speaker 1: mutations or monitoring for cancer relapses. UM. There's a huge 529 00:27:40,200 --> 00:27:42,840 Speaker 1: market that's opened up because of this, and so you know, 530 00:27:42,880 --> 00:27:44,680 Speaker 1: we try to find companies that we think are gonna 531 00:27:44,680 --> 00:27:46,560 Speaker 1: be able to take advantage of that, Like those names 532 00:27:46,560 --> 00:27:49,119 Speaker 1: that you talked about, Nitaria, care to X, those are 533 00:27:49,119 --> 00:27:52,719 Speaker 1: good examples, sir. I feel like I hear your puppy 534 00:27:52,800 --> 00:27:55,880 Speaker 1: Marley in the background there, wondering if you can hear. 535 00:27:55,920 --> 00:27:59,119 Speaker 1: I feel really bad. She's really upset right now. I 536 00:27:59,160 --> 00:28:02,040 Speaker 1: think she's demanding some crazy things. He is demanding some 537 00:28:02,119 --> 00:28:05,280 Speaker 1: crazy things. She's demanding me to come get her. She's 538 00:28:05,320 --> 00:28:10,639 Speaker 1: demanding stand clear of the craziest things we saw in 539 00:28:10,720 --> 00:28:14,880 Speaker 1: markets this week. Anyway, you know what, I'd never start 540 00:28:14,960 --> 00:28:17,080 Speaker 1: with the crazy things. I'm gonna start with the crazy 541 00:28:17,160 --> 00:28:20,040 Speaker 1: things just because mine is kind of obvious. And it's 542 00:28:20,760 --> 00:28:23,320 Speaker 1: you know, we woke up Wednesday morning. We have no 543 00:28:23,359 --> 00:28:25,440 Speaker 1: idea who the president is. We have no idea who's 544 00:28:25,440 --> 00:28:27,920 Speaker 1: going to control the Senate. We do know this sort 545 00:28:27,960 --> 00:28:32,600 Speaker 1: of nightmare scenario of Trump Trump not necessarily going quietly 546 00:28:32,600 --> 00:28:35,960 Speaker 1: into the good night is unfolding before our eyes. And 547 00:28:36,040 --> 00:28:40,880 Speaker 1: yet we see this the most incredible stock market rally, uh, 548 00:28:41,240 --> 00:28:44,560 Speaker 1: we've seen in a while, especially post election today. You know, 549 00:28:45,080 --> 00:28:46,560 Speaker 1: talk to my book a little bit here, but I 550 00:28:47,120 --> 00:28:50,040 Speaker 1: had a story out suggesting that a a Biden win 551 00:28:50,120 --> 00:28:53,840 Speaker 1: without a blue wave uh taken over Congress would not 552 00:28:53,880 --> 00:28:56,800 Speaker 1: exactly be friendly to the market. And I will piggyback 553 00:28:56,840 --> 00:28:58,560 Speaker 1: off of you because my crazy thing was also a 554 00:28:58,600 --> 00:29:02,240 Speaker 1: bit obvious, just the fact, uh, Tuesday evening, as the 555 00:29:02,240 --> 00:29:04,880 Speaker 1: results are coming in, and we knew that Sam had 556 00:29:04,960 --> 00:29:08,720 Speaker 1: had changed the limit rules and they had announced this 557 00:29:09,240 --> 00:29:12,840 Speaker 1: dynamic circuit breaker essentially if one of the index futures 558 00:29:13,240 --> 00:29:16,560 Speaker 1: rise or falls three and a half percent within sixty minutes, 559 00:29:16,960 --> 00:29:19,560 Speaker 1: And it happened, and we got a all of two 560 00:29:19,600 --> 00:29:22,440 Speaker 1: minutes trading hall. You know, by the time by the 561 00:29:22,480 --> 00:29:27,320 Speaker 1: time we got a story out, it was over pretty 562 00:29:27,360 --> 00:29:29,360 Speaker 1: good stuff. Chris, you got anything crazier than that for 563 00:29:29,400 --> 00:29:31,719 Speaker 1: the week. I mean I would just say Mike building 564 00:29:31,720 --> 00:29:33,680 Speaker 1: on yours and building on seris to a degree big 565 00:29:33,800 --> 00:29:38,480 Speaker 1: rally on Wednesday, But they equalated SMP was flat, which 566 00:29:38,480 --> 00:29:40,800 Speaker 1: is amazing. The regular weight it was up two and 567 00:29:40,840 --> 00:29:43,680 Speaker 1: a half percent or whatever, The natstack was up it's 568 00:29:43,720 --> 00:29:47,600 Speaker 1: traditional eight thousand percent, and the and the equal equal 569 00:29:47,640 --> 00:29:52,200 Speaker 1: weight was flat, meaning meaning that um, everything else in 570 00:29:52,240 --> 00:29:55,720 Speaker 1: the index other than basically tech, basically the thangs didn't 571 00:29:55,720 --> 00:29:57,080 Speaker 1: do anything. I mean a lot of it fell to 572 00:29:57,240 --> 00:30:00,720 Speaker 1: bit JV. You must with you're holding, you must see 573 00:30:00,760 --> 00:30:04,240 Speaker 1: that a lot these sort of massive reactions to some 574 00:30:04,320 --> 00:30:07,640 Speaker 1: sort of press release that most of us cannot understand 575 00:30:07,640 --> 00:30:12,320 Speaker 1: in in the biotech or healthcare industry, that that must 576 00:30:12,360 --> 00:30:14,840 Speaker 1: be a pretty common occurrence for some of those stocks 577 00:30:14,880 --> 00:30:18,800 Speaker 1: you hold. I guess actually it is, especially with biotech. 578 00:30:18,920 --> 00:30:21,560 Speaker 1: I mean, you know, even on data you may think 579 00:30:21,720 --> 00:30:23,520 Speaker 1: is kind of okay, if it's kind of just missed 580 00:30:23,520 --> 00:30:26,040 Speaker 1: a little something, Uh that's sometimes I'll just go and 581 00:30:26,080 --> 00:30:27,640 Speaker 1: punish it. I mean a lot of it is just 582 00:30:27,680 --> 00:30:29,920 Speaker 1: based on kind of you know, what was sentiment going 583 00:30:29,960 --> 00:30:32,800 Speaker 1: into it, and uh, you know, any disappointment. I mean, 584 00:30:32,840 --> 00:30:35,320 Speaker 1: we have one stock today that Uh, you know, we 585 00:30:35,400 --> 00:30:37,560 Speaker 1: like a lot um. I thought it was kinda a 586 00:30:37,560 --> 00:30:40,440 Speaker 1: little bit more of a turnaround. Uh, and they came 587 00:30:40,480 --> 00:30:43,680 Speaker 1: up with good numbers, raised guy stocks. I mean, it's 588 00:30:43,680 --> 00:30:45,440 Speaker 1: about the last that class, and you just gotta be 589 00:30:45,960 --> 00:30:49,480 Speaker 1: put your chin strap on and get going. How about you, Jamie? 590 00:30:49,480 --> 00:30:51,600 Speaker 1: Have you did you see anything crazy this week? You 591 00:30:51,640 --> 00:30:53,840 Speaker 1: know a lot of what you mentioned. I mean there 592 00:30:53,920 --> 00:30:56,320 Speaker 1: was just a few things, you know, at last regards 593 00:30:56,360 --> 00:30:58,200 Speaker 1: with your election, I was kind of really shocked that 594 00:30:58,280 --> 00:31:00,400 Speaker 1: Republicans ended up picking It looks like it's gonna be 595 00:31:00,440 --> 00:31:03,640 Speaker 1: about six seats in the in the House instead of 596 00:31:03,680 --> 00:31:07,080 Speaker 1: losing five to fifteen, which that if that was a 597 00:31:07,120 --> 00:31:12,080 Speaker 1: big surprise. That was pretty surprising. Yeah, alright, good stuff 598 00:31:12,120 --> 00:31:14,800 Speaker 1: all around, Sarah. I I feel like I neglected the 599 00:31:14,840 --> 00:31:18,920 Speaker 1: alternative asset class this week. Well luckily though we did 600 00:31:19,000 --> 00:31:22,000 Speaker 1: get right in. Uh. People are getting creative on how 601 00:31:22,000 --> 00:31:24,560 Speaker 1: they're reaching out. This one was a Twitter dm um 602 00:31:24,560 --> 00:31:28,640 Speaker 1: from at Quintessential. So it's piggybacking on something that you 603 00:31:28,720 --> 00:31:33,280 Speaker 1: highlighted recently, which is that very expensive asteroid. People love 604 00:31:33,440 --> 00:31:36,120 Speaker 1: this asteroid. But he said, he said, Mike may have 605 00:31:36,160 --> 00:31:38,120 Speaker 1: found this already. He gave you credit, and then he said, 606 00:31:38,120 --> 00:31:39,880 Speaker 1: if not, definitely one of the crazier things I've seen. 607 00:31:39,920 --> 00:31:43,360 Speaker 1: Wonder what type of modeling is used to determine asteroid value? 608 00:31:43,400 --> 00:31:46,080 Speaker 1: And then he sent me a link about the ten 609 00:31:46,120 --> 00:31:51,520 Speaker 1: thousand quadrillion dollar asteroid, which it's not just iron, it's iron, nickel, 610 00:31:52,080 --> 00:31:58,160 Speaker 1: and plenty of other materials as well, where metals like gold, platinum, cobalt, iridium, 611 00:31:58,160 --> 00:32:01,200 Speaker 1: and rhenium to Mike, so add that to the iron. 612 00:32:01,520 --> 00:32:03,680 Speaker 1: Someone's got to figure out a way to wrangle that 613 00:32:03,800 --> 00:32:06,480 Speaker 1: aster I think Elon Musk I think it's gonna bring 614 00:32:06,520 --> 00:32:08,960 Speaker 1: that sucker home. I have no doubt. I think that's 615 00:32:09,440 --> 00:32:11,360 Speaker 1: I've said before. I think that's what's embedded in the 616 00:32:11,400 --> 00:32:13,800 Speaker 1: Tesla's valuation, is that Elon is going to go out there, 617 00:32:14,320 --> 00:32:16,840 Speaker 1: He's gonna he's gonna latch onto that aster all right. 618 00:32:16,920 --> 00:32:19,080 Speaker 1: Unfortunately that we're gonna have to leave it there. Jamie 619 00:32:19,080 --> 00:32:21,080 Speaker 1: Player and Chris n G thanks so much for coming 620 00:32:21,080 --> 00:32:24,080 Speaker 1: on the show this week. Thanks thanks for having me. 621 00:32:33,480 --> 00:32:36,680 Speaker 1: What goes up? We'll be back next week. Until then, 622 00:32:36,920 --> 00:32:39,520 Speaker 1: you can find us on the Bloomberg Terminal website and 623 00:32:39,560 --> 00:32:43,080 Speaker 1: app or wherever you get your podcasts. We'd love it 624 00:32:43,120 --> 00:32:45,080 Speaker 1: if you took the time to rate and review the 625 00:32:45,080 --> 00:32:48,000 Speaker 1: show on Apple podcast so more listeners can find us, 626 00:32:48,400 --> 00:32:50,920 Speaker 1: and you can find us on Twitter, follow me at 627 00:32:51,240 --> 00:32:54,480 Speaker 1: at Sara Pantzack, Mike is that pretty anonymous, and you 628 00:32:54,520 --> 00:32:59,120 Speaker 1: can also follow Bloomberg Podcasts at podcasts. Also thank you 629 00:32:59,160 --> 00:33:01,880 Speaker 1: to Charlie Pellett, Bloomberg Radio and the voice of the 630 00:33:01,920 --> 00:33:05,160 Speaker 1: New York City Subway System. What Goes Up is produced 631 00:33:05,160 --> 00:33:09,040 Speaker 1: by Jordan Gospore. The head of Bloomberg Podcast is Francesco Levie. 632 00:33:09,280 --> 00:33:11,000 Speaker 1: Thanks for listening, See you next time.