00:00You've been pretty early in some major dislocations in this market, be it COVID, be the inflation that followed and
00:06some really successful hedging strategies behind that.
00:08Do you see any dislocations like that at the moment and hedging strategies you'd want to deploy?
00:15No, actually, I think we're in a pretty we're heading into a very good place.
00:20Obviously, we have a war still underway, but I think we have by far the upper hand.
00:24I think the Iran has been denuded of military capability, and I think it's only a matter of time.
00:31Administration, I think, this move of closing the strait, I think, was a kind of a Kung Fu grip type
00:37move on the part of the president.
00:39And I think it's putting a huge pressure on Iran.
00:42So I think we're going to get this resolved in the relative short term.
00:46I think that's really the biggest overhang on the market.
00:49Right. You know, the you know, we close the strait obviously has an impact.
00:53You know, some whatever four percentage points or something of oil on a daily basis can can can move a
00:58market.
00:59And that has an impact causes inflation in the short term.
01:02But I think it's a short term phenomenon.
01:03And I think once we're through it, I do see a Federal Reserve that should be able to reduce interest
01:07rates.
01:08We have massive, you know, AI spending.
01:12We have massive energy spending.
01:14We have a tax bill that's driving investment every day.
01:17There's how many deals that are being announced.
01:20You have administrations very supportive of transactions as opposed to an FTC, which would stop everything.
01:26So there's I think you're going to see lots of reasons to be bullish on markets generally.
01:30You're pretty early in this call posting on X that any dips would be short lived and they were.
01:36I didn't say any dips.
01:37I was very I basically called a recent bottom.
01:41Let's put it that way.
01:42I thought stocks were getting stupidly cheap.
01:44So I sort of called it out.
01:45They didn't even sell off 10 percent.
01:46I feel like some people feel uncomfortable with that.
01:48I think oil today is trading somewhere around 116 and stocks feel unbothered.
01:53You see, you can't think about stocks.
01:55You're thinking about stocks from an index perspective.
01:57OK, the index is like looking at the surface of the ocean.
02:00I mean, sorry, the index is like looking at inside the ocean, but the surface is moving around a lot.
02:06And what I mean by that is there are a lot of stocks.
02:11There's enormous disparity in terms of enormous volatility.
02:15We have a lot of earnings coming out in the next 24, 48 hours.
02:18And you can see you can see massive moves in different directions.
02:22There's so much capital leveraged, short term focused, tightly risk managed, which means stop losses and things like this.
02:30And the result of that is that our capital markets, you can see massive moves in share prices.
02:33If you have the ability to be long term, every once in a while, you know, the price of a
02:38really high quality company gets stupidly cheap because someone gets, you know, is forced to sell because of a bad
02:44print for the quarter or a guidance change.
02:47Really something that doesn't necessarily have any material impact on the long term business.
02:51And those are the kind of dislocations we take advantage of.
02:54But the dislocations, it sounds like, are over.
02:56The stupidly cheap moment has has come in pass.
02:58Is that fair?
02:58I would say we're above stupidly cheap bottom.
03:02But I still think there are a lot of very high quality, like the way we sort of model each
03:06of our companies, we build a model.
03:08And we were our kind of go forward next three year IRR was something north of 30 percent at the
03:14bottom.
03:14You don't see that with really high quality companies.
03:16It's probably now in the mid 20s.
03:18It's still a very high rate of projective return for some of the best businesses in the world.
03:23And that's suggestive to me.
03:25The market's cheap or at least cheap.
03:28Some of the this is a case where the highest quality companies are cheap.
03:31I'm not saying that energy companies are cheap today.
03:33Sure.
03:34So you have to avoid value traps, essentially, in this market as it stands.
03:38That's I think that's a good idea of any market.
03:41Fair enough.
Comments