An Interview With Mario Gabelli: Masters in Business (Audio)

then within that industry goes hunting for value. Uh. He's also a force of nature. As you'll here, I very much completely lose control of the interview and and he um pretty much steam rolls over um a lot of the questions I asked. It was really a fascinating conversation. And if you're at all interested in stock picking, uh, this is a guy you really want to listen to. So, without any further ado, here is my conversation with Mario Gabelly.

This is Masters in Business with Barry Ridholts on Bloomberg Radio. I know I say this every week that I have a special guest. But this week I have a very special guest, founder, CEO, chairman of Gabelly Asset Management, Mario Gabelly. I'll give you a quick version of his background. Formed the company in the midst of the bear market in the nineties seventies UH now managing over forty billion that's billion with a being assets, known as an intense researcher

into the businesses of the companies who stock he buys. Mario, also known as Super Mario, buy stocks as if he was purchasing the whole companies. He's recently UM gifted the Formum School of Business, which has since been renamed the Gabilly School of Business at Fordham University, Nario. Gabilly, welcome to Bloomberg. Heys terrific to be here. Talk about stocks. Let's talk a little bit about stocks. So your background is that you UM went to the Columbia UH School

of Business. What do were you doing before you went for your business degree. Well, essentially, back in the period of time the early sixties, you did not have to take the two or three years of work experience so college rights. So I graduated from Fordham in June, went to Columbia in September, and obviously had a variety of entrepreneurial gigs, so to speak, for the prior twenty years, starting at the age of five, Oh, what were you doing? Uh,

prior to college? What? What sort of work were you doing? Well? Arranged from everything from caddying to shining shoes, to picking up crates and supermarkets for recycling purposes to actually working a gig with ABC down at UH sixty seven Street and Broadway just as they were building Lincoln Center. I mean, there's so many it's unusual not to be able to remember to mention the will, including some where I was running dances for college students along with two partners back

in the sixties. We'd hired the band the Bounces and A and the location which the booze was served, any any finance, any Wall Street prior to business school or where these two no, I think the I I did

take some summer internships. The one with ABC, as I mentioned, was where I would go in using my undergraduate degree in accounting or a study of accounting at the time, but also essentially checking off the each television station where a TV ad was placed and whether it was preempted and whether they'd have to get what make make goods. In addition to I think, I worked for W. A. Grace for a while down in Wall Street UH in the County Department, and that's where I learned about the

UH and Choby's disappearing when El Nino came along. And it was kind of fascinating because I was plugging in a lot of numbers. What happens when Elnino comes along? What does that mean to UH? The anchobies probably go up, disappear, and the price goes up. So if you've got a big fleet off Peru or Chili, you would have a little challenge of finding those little fishies. And that started

a lifetime deep dive research into that. Really that was just that that was just basically generating cash flow, and it to pay my tuition because I didn't want to have any tuition loans, but I did have some coming out of graduate school. So you went to Columbia with a couple of other guests that we found on the show. Um Lee Cooperman told us that he used to car pool. Is this true? He would car pool with you Art

Sandberg back and forth to college. There were four of us and what happened is at the time I was at Columbia, we both and all of us lived up in the West Bronx and Riverdale and I by Van Cortland Park. There was a subway strike, so I we figured out that we should car pool, a very practical solution. And then when we did that, for several years we didn't took turns driving. And I'm surprised that both of them still alive since I was the driver many times.

And in addition to there was always a fourth fellow, and then we would have a Stanley shop corn at one time we'd car pool with. And so it was a wonderful bunch of guys that were focused on stocks, love the markets, had great passion for making money for clients. Even then, Lee said he learned more in the car pool than he did in class. Well, I can't remember any of that. So you had a professor. You started with Roger Murray known as um Uh, one of the editors of Graham and Dott, and I think he did

the fourth or fifth edition of Security Analysis. Let me make it simple, Columbia Business School had two professors back in the late twenties early thirties. Graham and Dodd, and they wrote a book on cold security analysis. UH the fifty Warren Buffett takes the class and writes a story saying, hey, I was a pretty good investor before I got Ben Graham teaching me, and that I became an extraordinarily good investor after Graham retired, Roger Murray succeeded and took on

that program. So when I took security analysis, who at Roger Murray, Cooperman was there, Sandberg was there for me? It was the moon, the sun and the stars. I always known that to be in the markets, but I didn't know exactly what aspect and so that was a very important light chatting and changing moment formative. That's what you said, I want to go out and research companies

and buy stocks and be an investor. Um. So one of the quotes that you that was attributed to you in that car was we were all pH d s, poor, hungary and driven. Explain that, well, I think it's a little different version as time goes on. The fish was twenty two ft as opposed to twenty two inches. What happened was about I gonna I'm gonna cuff numbers. Maybe twenty years ago, Rick Pettino was coaching for Quotes Kentucky.

He said, now at Louisville, obviously, and he had a player, Jamal Marshburn, and he was looking around for a money manager. Came up to our office and he was walking down and I was introducing to analyst. He looks and he says, Mario, how do you find these guys or gals? And I said, well, they have to be bah bah bah, but they also have a PhD attitude. He looks at he says what

I said, poor, hungry and driven. Then one of the individuals in the office of woman who went to Wesley and and then went to Columbia Business School and her father was especially says, don't ignore the fact that could also be privileged, hungre and driven. So Rick, writing a book called Success as a Choice that wrote the success put a chapter on there called the PhD attitude. And that's the dynamic barrier about how we came about with the notion that we love to hire PhD s po,

hungering and driven with a passion for the market. You're listening to Masters in Business on Bloomberg Radio today. We are speaking with super Mario Mario Gabelli, CEO chairman and portfolio manager of about sixteen different funds at GAMCO. You picked quite an auspicious time to launch Gabelly Asset Management. Nineteen seventy six or so was when you first about right. Yeah, let me give you a little background. I started right out of Columbia, graduated on Friday, and on Monday morning

I joined Low Bros. On Friday night, Michael Stinhart quit. Michael started an extraordinarily successful hedge fund called Stinhart Berkason Fine, and they gave me his industry. So I became the auto analyst, farm equipment and conglomerate analysts. Fast forward. I covered the media and entertainment business when nobody wanted to do it, and a bunch of business service companies. Fast forward.

I left joined William D. Witter, a great research firm, and we were emerged into Drexel Burn, not merged, taken over by Drexel. I walked into Tubby Burn and I said, Tubby, you are a great investor, much like Mr Loebe. However, I'm looking for smaller firm and I'm going to start my own. And the reason I picked starting my own I was in Denver reading with a Guyared Richard Goldstein. Goldstein was one of the founders of Janice Bailey, Griffiths and Goldstein, and he says, Mario, why do you want

to go to work for someone else? Start your own firm. And at the time I knew I could make money in the market. I had been very successful in picking stocks within the context of the areas of which I had accumulated and compounded knowledge. That is what I mentioned, which is entertainment and media, automotive and farm equipment, as well as conglomerates. But I didn't have the rolladex of

collecting assets. And so I started an institutional research firm and had clients like General Motives paying me cash from my research as well as uh the institutions that we had been covering when I was at William D. Winter. So you launch your own shop. What you was a seventy the first time in which we got to prove from the regulators, and it wasn't as bad as it is today because no one was starting a business at the time. Uh So we got started a bit of

first week in January of nineteen seventy seven. That's we actually applied for the ability to do that, and no one else wanted to join me. Two other individuals at William D. Witter thought about it for a while and I would have been called brand Wailed, Gabelly and Hathaway in that seat in that alphabet sequence. But we didn't get paid. I think in my first year I made five thousand dollars. So this was as just doing research or you really kind of launched the set of hedge

funds as well. No, no, no, no. In nine hundred and seventy seven we had one business. We did research and sold it for commission and or cash to whoever we could figure out anywhere in the world. However, about three weeks after I started, maybe two weeks after I started, I was going to Toronto, which have previously scheduled meeting, to visit a company that ran shock absorbers in Canada and Barrio liked this one, the guy whose name is

Jack Vanderhoten public company. Jack and I taught out chatity. I tell him what I'm there. I'm learning all about the shock absorber business, getting an update on on Merriman, Monroe, Competitive Dynamics, other companies that are doing it. And then he says to me, Mario, tell me what your businesses. I said, blah blah blah. He says, he looks at me, says, Mary will never succeed. I said, Jack, I'm very good

at picking stocks and making money. So Jack says to me, I know because I made money off your ideas over the years, opens a drawer, hands me a check and gives me my first client of a hundred thousand dollars to match. And he said to me, the reason you're going to fail. You forgot to ask for the order always be closing. Is that the uh that the advice and even he said, followed the eleven commandment. If you

don't ask, you don't get. Notwithstanding that, within that framework, we then decided that we were also started managing money. So the initial structure was that along only separately managed accounts charging a one percent fee up to a certain breakpoint. And today we have two thousand separately managed customized accounts, tax sensitive for those that attack sensitive Institute of Corporate

and that's about twenty billion dollars all all equities. In terms of what we are a portion of what we're managing. So when did the mutual funds come along? Well, the hedge funds started earlier in the early eighties, we started a hedge fund, premillion arbitrage. We actually have written a book on that subject. There's only been three or four

written on the subject. The first one was written by g. Wiser Pratt when he was taking his studies at n y U, and it really unclothed a really closely guarded aspect of how firms made money with proper money on Wall Street. And then somewhere in the mid eighties somebody else wrote a book on it, and uh, then we wrote a book on it. And the bottom line, um, that was our first hedge fund. It's still a very important part of our business. We manage a billion dollars

in a hedge fund of arbitrage. That is, company announced his company buying company B, and at what point do you buy it? And whether the risks It's called risk arbitrage. The second part was that I was on Barons starting on about nineteen seventy eight, seventy nine or eighty. I got a call from Alan Nabelson said, Mario, come by for the round table. No, he called me for a different subject. I had known Alan I would send them copies at my research. By somewhere around nineteen seventy seventy

eight or seventy nine. I wrote a report on Chris graft herb Seagulls Company and uh the manufacturer, and well he was not well. Bottom line, he was in a broadcast business. He also had perhaps some other businesses. He was trying to do things like go after Piper Aircraft and he's a really great entrepreneur. Bottom line. I write to Alan, I say, Alan, I'm in closing a report I wrote and Chris Craft for three reasons. One, I liked the stock. Secondly, my clients along, so I want

you to publish it. And third I understand that if you do publish it, I get fifty bucks and I need the money. So Alan and he said that that blunt, just right out, and he was receptive to that. Allen is Allen. It was Allen Allen is one of the great writers of all time in the financial world. But anybody invites me over. And that's how I got into the Barrage round Table. And I'm the longest living member of that round table. I've been on it for about

thirty odd years, over thirty five years or whatever. I don't remember the math, that it could be thirty five years. So starting in nineteen nine, you began exploring companies that were headquartered overseas. It weren't a whole lot of people who either had boots on the ground. Well, you know,

that's a great point. But in two or three I was involved with the Auto Analysts of New York and we had a trip to Tokyo and Japan, uh Tokyo and China, in part through Henry Kissinger Walton kiss of his brother who ran a company in Long Island called Ellen. But prior to that, in the mid seventies, we hoganized, as part of my institutional research, a trip to c Forge Motor Company of a US here as well as

Ford Motor Company and several companies in in Europe. So we had been following companies but not necessarily recommending it. You're listening to Masters in Business on Bloomberg Radio. I'm Barry Rihults. I'm here with Marioga Belly Master, stock picker, portfolio manager CEO and chairman of gam COO the Belly Asset Management. Let's talk a little bit about you as an investor. You come out of Columbia, which is known for generating all these fantastic value investors, but you're not

quite the usual mold. How do you describe yourself as an investor? Well, what we did with security analysis, which means in my terminology, you gather the data, you read the public company data in a given industry, you develop a core competency in that industry. You are raided data based on the way we like to look at it, and then you project it and then you interpret it and then we communicate it. So we call it gaping.

So we take an industry like automotive. We cover companies that are either distributors of parts like O'Reilly's and Genuine Parts or AutoZone. We do a car dealerships, we do original equipment manufacturers, we do the car companies, and we do a global today. But at that time Barry was not very complicated. What is a company worth? How do

you value the business? And so we looked at it from the point of view of what would you pay for the business if you can buy So, if their company was public, again this is the late seventies, if the company was public, what would you pay to own a dent of it? So you treat you treated stocks as if there were businesses, not as if they were just little pieces of paper representing a small ownership. Well, they were not soybeans, and they would not come out of these that you can trade like an ETF. So

it was not mindless investing. It was basically understanding and industry understanding your company, dealing with all the public information, going to trade shows, going to meet the company's. I mean I used to spend a lot of time in Detroit, uh, you know, and all of the emviron's uh that one would go to go to see a company and I think it was Romulus and uh Kelsey Hayes and a

Tryer business and so on. And you go down in Monroe, Michigan, and then you go to U Dayton, Ohio, and then you would go to uh Toledo and you'd see all these companies that you do it three or four times a year, and you'd read everything, and then you start giving speeches, and so you would learn about the details, and you start anticipating how managements would think, what if there was an oil crisis, what if there was a car strike, what if the price of steel went up?

What if? And so you would then say, but who's going to buy the business. So again you started the conversation by saying This was the murky world of the mid seventies when you could buy stocks at three times EBIT. But interest rates at that time, Barry, a ten year govy was ten percent. In fact, in August you had you could get fifteen percent, fourteen and seven eights for ten year government. Today's two point one oh tax free, risk free out. There was a tax. It was a

government volda, not immunity. But the communities I assumed were locked step I mean, but any event, so we said, look, let's figure out who Again. Back in the sixties when I was at Low Broads, you did bootstrap financing. You'd go out and you figure out what was the receivable's worth ninety cents on the dollar, you figure it out, what was inventory worked fifty cents on what was property planned,

equipment worth at the gabble. So you would string together a company and then figure out how to assemble the financing. Then in the seventies or eighties came along Henry Cravis and so on, and they did leverage buyouts. And then today it's private equity. But at the time we said, let assume I'm a wealthy family, what would I pay to buy this business? Why would I want to own it, and then I would ask myself what would a strategic that as a company, what would they pay because they

would get some synergies. So we developed a phrase called the private market value. So this was in the mid seventies late seventies. What was the value of a business that was publicly trading if I could buy the whole thing. So it's the intrinsic value that is the present value of the future stream plus the takeout premium. And then we said, it's not complicated. We had no tenure in our client's money and they were very uncertain, so we try to figure out a time frame in which we

would have to hold the stock. So we said maybe two or three years. So we look for a catalyst that would surface the value that is the spread between the public price and the private price, and then we try to figure out what was the was the value growing just in case this thing didn't work right away. So you're looking at a number of things, but let

me see if I understand the key points. First, you're trying to find things that are worth less, that are trading for less than you think the intrinsic value and or takeout value is going to be. Secondly, you're looking for some events, some catalyst, something that's gonna draw i've or uncover that value. We're driving into the private to the public price you're very quickly. In addition to that, some of the language that's used in the value investing

world is called margin of safety. Seth Klarman, ETCETERA. Well, Girl, Graham and Dodd Murray now Greenwald. So he learned well. Uh, Seth is a good, good, good practitioner of that strategy. So you want to make sure there's enough head overhead value so that if you're wrong or as you call it early, you got to look at the price of the stock that you're buying. Okay, you can have all of the same dynamics. If you pay two x as

supposed to x. Uh. You know, you're on a ten foot wall, you can get hurt if it comes down. If you're on a two foot wall, you'll do Okay, that's that sounds great. You're listening to Masters in Business on Bloomberg Radio. We're speaking with Mario Gabelly. He is the founder and chairman of Gabelly Asset Management and portfolio manager for about sixteen different funds. Is that about right

or old portfolio manager. We we have our fingerprint on two thousands separately managed accounts because I helped direct those, and we have a growth team in our firm, and then we have teams that do specialty products. So I'm involved with the value and all cap value team. In addition to that, we have an oversight in some of the hedge funds that we run. In addition to that, we do have a fingerprint on some of the mutual funds. So you're pretty busy. Well. I enjoy it is. I

like the competitiveness. I like every day I come in, something goes wrong and I look stupid. I feel stupid, and that keeps you up at night, and that's why you get up at four in the morning to figure out what do you make? What mistakes did you make today? Right? And They're always gonna be mistakes. It's just how you respond to them and how you prevent them from getting out of hand. The world changes very quickly. For example, you know, somebody will come along and say, you know,

why should any healthcare company be public? They should always rationals, you know, owned by the state. Somebody can come along and say that the government will go on strike. I mean, there's always something that goes on, and that's not just here, but that's all around the world. Let's let's talk a little bit about your trips overseas. You're you're a inveterate traveler, You're not exactly a home body. How many countries have

you been to kicking the tires and looking at different companies. Look, I avoided uh certain countries over the last forty years, of fifty years, sixty years. Notwithstanding that, we would go to follow industries globally, so simple example barriers. If you drink it, we follow it. So I would be in Paris to visit with Pernoul. I would go to London to revisit Grand Bet now known as the Agio. I would go down to visit companies that were in the booze business. I go to Chicago to visit James Beam.

I will go to Japan to visit Centauri. Along with the analysts, so we have a team that covers beverages, wine, water, beer, soda and so on. There are certain characteristics about that industry, uh, the rising middle class around the world. Fact that after the brilliant Wall came down, you had three billion new customers to try and ease and the UH people in India do drink and that's good UH. And those are beverages that I have certain pricing characteristics. So the beer industry,

for example, we did the craft brewers. I went to see Sam Adams and I had to go all the way to Boston. It was terrible. As a Yankee fan, it was a challenge. But notwithstanding that, I like Bob Kraft and the past and stockers up to two and you know, we still have tax clients with twenty dollar tax bass. But the point is we cover industries. So what is going on at any point in time, And if you're traveling to Europe, do you have time? For example,

I would go to Milan to see Expo Balan. That is a food expo that deals with food that was by antibiotic uh no, natural and organic, and so you learn a lot about who's doing what. And we let's see a company called Comparti which owns UH beverages and it owns Bourbon Bourbon. This is one of the areas that we like. So that's an example. The other one is simple. Following the movie industry in the late sixties and following the broadcasters. You follow the cable guys today,

So you look at content and distribution globally. So you would follow companies around the world that do that and you develop a core competency and so you'd go around the world. Same thing with vendors to Boeing and Airbus. So let's talk a little bit about the process for selecting a stuff. You become an expert in an industry, in an industry you and your team, um is that that's where the process begins. How do you then take that industry expertise and apply it to specific company? You know,

that's a great question. We started following a company h an individual starting about the mid seventies, Dr John Malone. John was in Denver. He actually started a cable business, a T and T s PhD, and so we would follow everything he's done. So as a result of that, recently, about a year and a half ago, there was a company in London that relocated to Miami called Cable and Wireless. They had they had operations in the Caribbean, so we were following it. All of a sudden, they decided to

buy a company called Columbus, which is privately Ombican. But John Malone was on the board and an important owner. So Malonea was running Liberty at the time. He runs a whole bunch of guys. He's got his fingerprints on about a hundred and hundred forty billion dollars of assets. He's personally worth about twelve billion, uh not that anybody's

counting that. Notwithstanding that, he's a moneymaker for clients. He's constantly coming in to look at scale instructure, look at text uh way to handle things from a tax basis, and he's a great financial architect. Independent of that. He understood the content of cable and understand speed and understand video and content. So he was a master chess player in a multidinancial game. Now independent of that, So go

back to cable and wireless. It was on our radar screen because I started following it in the early nineties because they owned uh Hong Kong Telecom. So when I went to Hong Kong to follow the telecom industry, you would then go in London to figure out what Cable and Wallace is doing, but also understanding what was going on Hong Kong Telecom. Bottom line, we kept track of it. They spun off the business, they sold it to Vota Phone in the UK and they have this company. They

sold it. It is a way to consolidate the Caribbean, Latin America and the Caribbean in terms of wireless, cable, old fashioned pots playing, old telephone service. And John owned a company called Columbus emerges it into it. So now I have a new management that's very good at Cable and Wallace located in Miami, and now I'm looking at the whole ecosystem in the Caribbean. Uh. Dennis O'Brien was going to go public, which did you sell? He didn't do it, So we watched, we visit with him on

that company. We're watching Milcom, which has lots of fingerprints and footprints in the Caribbean. We go to scott Holm to visit the company of controls it called Shinevic. So this all starts from being an expert industry and then drilling down and then finding new ideas all the time. And that is the short version of how to do it. So when you're looking at these companies, do you have any favored metrics, anything is that you like or don't like?

How do you determine valuation? How do you determine what gives you that little margin? Of safety or what's ge that's sexy, but it's the start off with some simple principles. What company will do well with the business model in an inflationary environment, in an inflationary environment, and what will that company, how will that company do well in a deflationary environment. So if I can get one that does well in an inflationary environment as well as doing okay

in a deflationary environment, that's a good story point. Then the second thing you look at is if I sell you a pound of sugar and I make a dollar, that's one transaction. But I sell you a subscribe razor blade. I sell you a razor blade at a dollar. I made a dollar and I got a gross margin. But if I sell you a subscription to sell you razor blades for the rest of your life and a monthly revenue,

is that has a higher valuation. So we look at not only the accounting, we look at the cash, We look at the economics and look at the calory, and then look at the methodology of pre ability and what's the valuation un though, so these are not complicated, very simple to do. Let's talk a little bit about the accounting, which has changed so much over the past twenty or thirty years. How has the shift in the fasby rules

for things like stock options and what have you? Has that made it harder to be a stock picker, to actually get to the core numbers lying underneath. No, not really is you gotta understand. I was an accounting major at Fordham. I had thirty two credits of accounting philosophy, so I can tell you a lot about what if a tree falls in the woods, if an accounting falls in the woods, whether there's a sound or not, any of it. The The point is that rules change, but

people that implement the rules also don't change. Notwithstanding that, you have to be aware of gap accounting as much as you would like to run a business for cash economics. And there's a material difference between all of these. So you have to understand the accoun I mean, and obviously that comes into play a lot. Uh, and how companies could use the the erasa, the old eracer on the back of a pencil. So you haven't other than talking

about John alone, you really haven't mentioned companies management. How important is it um if there's a good business but you know, yeah, well that's the old fashioned story. A good business run by a great manager. You know, broadcasting was a great business. Tom Burfy was a fantastic manager, and therefore cap Citi's became a great company. They brought ABC and Mergeon into Disney. Okay, and uh he was very good. He hired a goett me of Bob Eiger. Bob Eiker has been a head of Disney now for

um teen years. And uh, you know, the moon of the sun and the stars come together for that company with the right management, and so it's both the both the horse and the job. Well, ideal world would be that, but I I tend to uh, you know, I don't know. American Faraoh run by a different Jackey would have still won. Interesting question. Okay, yeah, fascinating philosophical question. Um, so let's talk a little bit about out your research staff. You

have a couple of hundred people working for you. How much do you rely on this deep bench that you have or are you still you know, rolling up your sleeves and pouring over spreadsheets every morning? Combination of both. I look, we have developed a wonderful team Christmas Andy, Kevin Dryer and the value team Bob Blenager, Barbara Marson and so on. And we have the UH. Some would like to do large cap, some will do microcap. So I have a team that does microcap Lailta Handed, Beth

Lily and so on. They don't have to be in one location anywhere. They could be everywhere. And as a result of that, they are constantly looking at stocks that we think would fit within the framework of what we match the portfolio. So if you're dealing with a we have a fund called Mighty Mites dealing with companies under ideally six hundred million dollar market cap. The name came from my family children playing football in the pop Wornal League.

They were the Midgets, the Peeweees, and the Mighty Mites. So if I picked Peewee's, I'd be sued. If I picked Midgets, I'd be sued. But unfortunately, I picked Mighty Mites twenty five years ago as the brand name. And that's what we do. And they look for ideas. For example, they were just in New Jersey looking at x y Z company UH. And we follow industries in which we like the other day, a company called Lance uh what about three years ago, merged with a company called Snyder's.

Snyder's Lance Pretzels, you know, the pretzels lightest pretzels, and yesterday they announced to buying Diamond Foods. But it was something that we had thought about that would fit like interesting a long time. So we've been speaking with Mariol Gibelly. He's the chairman and chief investment officer and just about everything else at Gabelly Asset Management. If you enjoy this conversation, be sure and check out our podcast extras, where we

keep the type rolling and continue the conversation. If you want to learn more about what Mario Gabelly does, it's easy enough to go to Gabelly dot com and you can look up all of various fun and their outstanding track records. Be sure and check out my daily column on Bloomberg View dot com or follow me on Twitter at rid Halts. I'm Barry rid Halts. You've been listening to Masters in Business on Bloomberg Radio. Welcome back to the show. This is the podcast portion. As you've probably

figured out before, I forget Mario. Thank you so much for doing this. Um, I've really been looking forward to having this conversation with you, and you know you're my colleagues that you have interviewed to pass say you're terrific, and I can see why they said that they're all right, And um, I they're both all right, and they are right. That wasn't what I meant. But um, they've all been fantastic interviews. Samberg and Cooperman, we're both, um, really interesting

guys to speak to. Since you brought that up, let me ask you something that um Cooperman and and uh Samberg both alluded to, which was the role of luck, the role of serendipity in both people's years and in markets. But what are your what are your thoughts on that? There is no question that you have to step back when you're in figure out what do you want to do? What's your passion? Okay, a lot of very smart people in the world, a lot of people. I want to

work from five to nine, not nine to five. So then you gotta say where do I want to spend my life at the next forty or fifty or sixty or seventy years. And so that's for me. It was very simple. I was carrying at something the old country Club in Westchester County. I would hitchhike up from the Bronx or somehow get up there by public transportation. And because I didn't have a van that would drove me to pick me up in your arcors, I would stay late and as a side by by the way, the

caddy and the prose name was Whitey Void. He had two sons, West Void, who became a fabulous singer under the name of Chip Taylor, and a son by name of John Void, the actor, the actor whose father of who is the father of angel Lea Jolie. So I used to caddy for him. He was it was an assistant pro any event. It went to a great school in West Chess called Stepanax. So, but I was around and the specialist would come up from the New York Stock Exchange and they played golf and I would be

able to caddy for them. So I was like twelve or thirteen years old, and I figured out this was an interesting gig, that's fascinating. But I never knew which part of it that I wanted to be in until I went, as I mentioned earlier, to be in graduate school and took the security analysis court with Roger Murray. And how did you end up choosing Columbia just because it was local in New York or what led to that?

Since I have no idea. How I chose my grammar school, UH was PS four in the Bronx, and then I went to a school called Saint Joe's on on Tremont Tremont Avenue at a hundred seventy seven, right across from police station. Those are long stories, not necessary. I'm sure they're fascinating though they are so, so let's let's hear some stories from the Bronx. You grew up in the Bronx, by the way, no Leon Cooperman, and we go through the risk list. I'm amazed at how many people in

this industry are right here. They're spinning distance from uh from Wall Street. They're growing up in in Staten Island or Brooklyn or the Bronx, and somehow Wall Street. I give you. I give you an example three blocks from where I moved through by Vanachelse High School, Ivan Sidenberg, literally four blocks away. So that you know a lot of individuals, and I is a long list that you can name. I'll give you a quick Ivan Suidenberg story. His daughter married my wife's cousin and it was the

Saturday right after September eleven. That was one of the most astonishing weddings of all times. And that's a whole another agree with that. You got a lot that you can talk about. But we're here to talk to you, not not to have me tell my stories. So let's um, let's talk a little bit about Gamco and a little bit about stock picking, and a little bit about your bad around. So you start out, it's really just you and a couple of guys, and no, no, no, when

I started out, it was very lonely. It was just you. BRANDWOA wouldn't join me, hath the way I wouldn't join me because they needed I was willing to make five thousand and two and a half or three and a half kids at the time, and obviously nobody from the government came along to say I was gonna help you. Bottom line. Fast forward, we go public in through Maryland Smith Barney. So for the last sixteen years were a public company. So we have a simple a mission statement.

Make money for the client, make money for my teammates, make money for the shareholders. That was what we did in seven that's what we do today. And uh so you bet on yourself and it worked out quite well. Uh no, I. But the underlying premise was that the methodology of gathering, arraying, projecting, interpreting data under the Murray Greenwald Graham and Dodd Murray Greenwald met the dology of

security analysis made sense for the extended period of time. Okay, this started, it's good for another eight or ninety years. It's this. It's basically buying it a business at a discount. And what business do you want to buy from? What it's worth? And every day you come in, whether you were looking at fires, are buying alegain this morning, or announcing they try to put their arms around it, or whether somebody's gonna buy star Wards. What are they willing

to pay? Why? When? And why are they willing to pay it? What are the elements that go into that parfait? What is a private equity firm willing to pay for a business? Why does stocks sometimes go up sharply when somebody announces they want to buy them? What? What's the rationale for that? And you've been quite successful at identifying these companies before the big increase in value. So let me shift gears a little bit on you and say, so you started loud, it was you. Now the firm

has over two hundred employees. Well, there, we call them teammates, teammates, you have two hundred and thirty two teammates. What is that transition? Like, granted was over period of time, but how different is it from being a running a portfolio, running a small shop to running a large corporation first or we're now a large corporation where what they call

in the world street it's a small cap stock. As a small cap company, we live by our ability to earn a return for our clients, which are most important, and every day we come in and want to be focused on that. That is the driving dynamic. Uh, nothing else is important. And we expect our teammates to have the same passion and some of them don't have it all the time. So if you're in quotes on vacation and something happens in your stock, you've gotta be available.

I mean, you know, you've got no choice. And so we have trained a lot of individuals that way, and I've been very fortunate. We have a team of really highly skilled individuals that were analysts and now are managing money and they are We announced that we have Kevin Dryer and Chris Moranji running as co chief Investment Off the value side, Howard Ward has a team doing growth, international growth, global growth, and then we have a great arbitrage team, and we have great individuals doing a lot

of different things. So your role within the company, how has that morphed over the years? Do you find yourself? I spent fifty forty years ago. It's when I first started Lowbros. I spent fifty percent of my time gathering data and understanding research and fifty communicating and either visiting clients. Okay, today I spent fifty percent of my time doing research, talking to analyst, listening to conference I was on the conference calls today. These earning season is very rich in content.

For example, today at eleven o'clock O'Reilly's was having a presentation, somebody else was having one attend, somebody else was having one at night. So I get the transcripts when I can't listen to them and read them at night. So you learn a lot. Cheesecake Factory fantastic insights into the business. If you read the details and ponder over them and pull them apart, you know the company for the last

twenty years. They started with seventy five minute In fact, I was at the one of this locations in Malibu or somewhere Marina del Rey is somewhere in California about I used to say this melody twenty five years ago. So you keep following that company and the things change. And meanwhile they've taken the cash flow, they've taken the shares outstanding from seventy five million forty eight million, So you owning two thousand shares, you own a bigger piece

of the company today. And the company is still doing quite well. Even in an environment which people in quote a calorie conscious there's always the menu changes and the people are changed, as long as they're good at what they're doing and they have skin in the game because they own a big piece of the company. Quite fascinating. Um, let's keep working down this list of of questions. So on the site on the belly side, it says that you are manager or co manager of sixteen different funds.

Are you the direct manager of that or are you really coordinating the team? How do you handle all of the above. And let's take one of our those than funds, which we started in two thousand and three. I've got Barbara Morris and Bob Leinager, i got uh Christmaer Andie Kevin Dryer Jeff Jonas. Each of us manage a piece of it, knowing full well that we each complement each

other where our core competencies are. So one fellow would have a significant competency in the in the financial services industries, one other one would have a terrific competency of accumulated knowledge that he's and compounded knowledge in the healthcare. So we blend that together much much the way you know, uh, you'd get a five star French restaurant a three star like per se. So someone's doing the dessert, someone else

is doing the main courses. You have associated or you can have something, You could have something on a Monday, Tuesday, Wednesday, Thursday. Very well, it is. The key is to blend it together. So you walked us through the process of how you identify a stock, starting with an industry and then drilling down what goes into the cell decision. How do you decide, well, this company is no longer fit for our PORTFOLI well

several else. First of all, if it gets over five percent of a particular portfolio, we really want to make sure that we examine, no matter how smart we are and how good the company is, we want to marginal save the in the portfolio. Secondly, we do not want to have, you know, a client with ten million dollars all in one industry, no matter how good, and so we diversify the industry and so on and uh uh, and maybe we'll have anywhere from ten names representing thirty

percent of portfolio. And if it's a taxable client, we try to make sure we are out of style. It's a very important one and that is that our turnover is probably six percent a year six year. That means you're holding companies on average sixteen years. So within the framework of buying something, we're already looking for our exits streaty. So why are we buying x y Z company today at eighty four dollars with sixty two million shares, five billion market cap, they're gonna do five of even after

the n start October one? What is the value of that business? And why was this company spun off from an another company? What were they thinking of? Why were they were they preparing the company so that it would be tax efficiently bought by someone else? And you see that all the time, whether it was Zoeta spun off from Fiser, whether it is x y Z spun off

from X, Y Z and so on. So we're constantly asking those kinds of questions analytically, So you talk a lot about very very specific bottoms up with different companies. How important is the overall here's where the economy is, here's what the market valuation is, and here's what's going

on in the world of macroeconomics. Is any of that significant or do you really just focus on the industry and the individual style Well to the degree that inflation accelerates from one percent to four percent over the next ten years because of rising wages um that is important to understand the implications on a industry or company from

the impact of higher inflation. For example, if I said to you tomorrow what you and I would shop for, Let's say a basket of shopping basket, everything constantly the same number of cereal box, the same number of yo good, same number of milk, same number of orange juice, coffee, and so on, same mix. If next year that basket would be five percent higher, that would be very positive for those that distribute those products because they are working on very low margins, and you would leverage the s

g n A with a rising constant un account. But higher revenues per unit. That's very positive. Take a company of genuine parts located in Atlanta, Georgia. I've been following the company only for forty five years. They sell parts on the NAPA brand. If inflation picks up first, there's two fifty million cars on the road each year. This year will sell seventeen million with scrap twelve or thirteen. That means we're adding four million cars. That's one five.

What's the average agent car? How long are they driven? Does the consumer want to repair cars? Where did they repair, where did they buy parts? And all of those elements. And then what happens to that bread basket of autoparts is their inflation. There hasn't been inflation, and that for two or three years the company has done extraordinarily well because miles driven her up. They you started off asking about gasolene price, fleet ages way up there also, Yeah,

it could be that's an important element. But the cars last a lot longer. I can sure you know, I can drive a car now for a hundred and fifty thousand miles and uh, it's like driving one for forty miles in the sixties. And by the way, gasolene in nineteen sixty two where I saw a photograph the other day thirty two cents, so I was getting ten miles in a gallon was three cents a gallon today I get. I bought some the other day in New Jersey for dollar eighty and I get twenty five miles in a gallon.

We're paying seven cents, So you're paying twice what you did forty years ago. And that is the sad part about not raising the gasolene tax to fund out highways because the infrastructure is terrible. Roads, bridges, tunnels, and so on. I've been riding about that and screaming about that eighteen point four cents since nine hasn't gone up in what is that the federal tax. Jersey doesn't even have state taxes. That's why they're so cheap, or almost no gas tax.

Whatever it is. The point is that we need to cover our infrastructure. It increases productivity, whether it's an avionics, whether it's bridges, whether it's roads, whether it is cybersecurity. We need better infrastructure. Somebody's got to fund it, and somebody's gotta pay for it. The the electrical grid in the United States is absolutely vulnerable, not just a physical attack, but to cyber attack, we can lose large swaths of Electric'm glad you're thinking about things at night. It's that

it's a by the way post, not eleven. We've done almost nothing to really secure all. It sounds like an individual that wants to have solar power on this roof so that it could be independent enough the grid. If you have to be I live in an area that's so wooded, I can't um. You got to have these giant old ghost trees that I can't cut down. You can act part of them. I could. I could actually put it on a enough so any of it independable.

That The point is that there are elements that we look at that have that tie into the stocks we do. And going back to the question which I did not answer, our exit strategy, it's aside from clients specific is also baked into why we're buying a company because we think it's gonna be subject to some form of financial engineering. So at a certain point it hits a certain either it's taken out or it hits a certain dollar amount,

and that's what triggers this out. A certain dollar amount as a percentage of a client's portfolio Okay, I mean I've owned Genuine Parts now for forty years, even before I was managing money, we still on it. We owned Berkshire had the way since we started mutual funds seven. We still out it. Uh we uh. So, you know, there are certain companies like I think General Mills, Campbell Soup.

General Mills business model has more often changed than they are doing quite well over and yogurt is a nine billion dollar industry globally, twelve being in the United States, and they're doing quite well at your play. They now have the global brand and that's very good for quick, easy snacking, quick, easy grab and go, and it is also perceived to be a healthy product. So so how do you decide to to say, you know, for whatever reason, this one company isn't working out. What goes into that

decision to say we're gonna cut this one loose. Essentially, if the company leverages it up because the CEO she decides to get married again and wants to impress a new husband that she wants to be bigger, and makes an acquisition and maturely overpays, then we would seriously have some issues. So that's what that's a factor. Together, we acquisition, What about just pure valuation. At a certain point you say, hey, this is trading times, am I are you gonna hold

onto that? Or it depends on how we look at the world for the company over the next ten years. How will would this company do when it's business model? What are the risks to it? So we're having those conversations all the time about stock specific That's a much more sophisticated answer than ah, this is expensive punting it. You're really saying, this is a very complex picture with a lot of moving parts, and there is no one single metric that's gonna make us say we're very make

it life simple. We're overworked and we're overpaid, and we intend to stay that way. Overworked and over Well, let's talk about that. You you, um, there was somebody I think was over the summer that had looked at the highest paid people in finance, and I think you were number one or two on that list. And this goes to show you the tunnel vision of whoever that was. So here you are, You're the founder of a company, you're running sixteen portfolios, and they're saying, uh, you're overpaid.

What what's the pushback to that sort of my opic. Well, I, first of all, I anybody can say anything they want. God bless America. I really liked the notion of the French Charlie Liberdeaux approach to UH with it's just we Charlie, the notion of the free market, and it's very important to have that kind of pushback and don't worry about being politically correct. Notwithstanding that, you gotta get your facts right. So you mentioned two colleagues. What who am I competing with?

Is it the hedge fund guys? And where are they in the list of earning returns. Secondly, within the framework of what we do, we are a public company, and to compare a W two, an individual that did not start a firm, did not make five thousand dollars when he earned it, started into the firm and took all of the entrepreneurial risk. This is a slight difference. I just saw the movie Steve Jobs okay, and the and the risk that that individual took. So one has to

kind of way that no matter how you look at it. Um, I enjoy being competitive. I like the pressure, but I also like giving back. So you started off the conversation, but I've given significant amounts of money to Columbia, Boston College, Roger Williams, University of Miami, University of Nevada. What about Fordham, Fordham prep schools everywhere? Uh that we have fingerprints on ranging for even schools on the West coast. So and I'm sure this will create more conversation about more schools

that are indeed. So so your basic response to I don't remember the name of the company, but your responses, Hey, I I earn a competitive salary versus so you have a foot in the hedge fund world, foot in the separately managed accounts world, and a foot in your three feeded within the mutual fun world. You're running all these differences like, well, we need a fourth and then the fourth is the research world. So there's the four footed horse that is married a belly and you're saying what

I earn is competitive with other people's realistic. We have a challenge in this country to look my father I found that was a charter member of Local six in New York. That's a restaurant of hotel workers. And uh, you know, we need to raise wages. We need to have everyone have that vision of success and allow them to earn a faraway to return, so we have to deal with that. Notwithstanding that at my tax rate is

probably close. Okay, So you're you're kicking back both through philanthropy and through one Uncle Sam one of them, and maybe both are very inefficient ways for the money to be spent. But it is what it is, all right, So let's let's stick with um the discussion of of stock picking. I love the fact that you don't shrink from any question. It's like, bring it on and I'll take a swat at it. That's uh. There are some people like next question you You're not that sort of guy.

Next question, Okay, next question. Um. I got pages and pages of this stuff. So we um. We've been talking about individual stocks, but we never really got to the question of market valuation and what happens when the market is pricing does that really other than the inflation questions that really we try to be a dent invest at all the time within the framework of our client accounts. We're also very conscious that its X y Z individual gives us a dent of their assets. We're not gonna

put it dent equities all the time. On the other side of the point, if you're a two billion dollar pension plan to find benefits or to find contributions. And you give us a hundred million dollars and you want us to be the best in small cap, We're gonna be a hunder percent invested as best as we can all the time. And so we're constantly looking for ideas.

So we customize two thousand accounts for each client specific and I have a wonderful team both in terms of judgment and in terms of client service that does that. And there are challenges in times like this because we don't fully know all of the client's tax basis. Uh, they're all at their entire tax pictures that we have to be sensitive about all of that. So if you're on the on the other side, uh, the question is do you want me to look at how we do this?

So so if you're almost always invested, the assumption is are you hedging or do you not even bother with the client? The client the clients which we have twenty billion dollars and trusted us do not allow us to go short or hedge. The way we can hedge is by buying companies like Warren Buffett Is buying precision cast parts. Let's assume that we own a quarter of a billion dollars worth of that stock, or we own a quarter of a billion dollars worth of o'riley's. Uh that is

not being taken over. Should we sell a little bit of o'riley's and put it in because the stock is now selling it that they're gonna earn eleven dollars next year, eleven fifty next year. A great business model of great management, and that's twenty five times earnings. Should we take a little bit off the table and put it into precision hast parts. We have very low data and very low correlation with the market, and you could earn four percent annualized.

It's better than the T bills which is six basis points then, and it's better than you know, hedging and being wrong if the market keeps running. There are certain of those elements and so we are practitioners of this and we've been doing it very successfully. We've compound the client assets at about six kego for thirty nine years. Not too chevy, No, but what have you done for

me lately? Nothing? But that's the nature of yes of what we do is it's always what was the last month, what was the last quarter, you could have a yeah. On the other side of the coin, our private wealth management clients are really understand and appreciate it's not what

you make, it's what you keep. And if you can hold something for thirteen months as opposed to thirteen minutes, you pay eight percent tax versus forty three percent tax, depending on if you're living in a great state like Florida. New York has got all sorts of taxes. Sure they're tuesta, it's Californiausetts six percent. New York is eight if you're in New York City, and California's but there's you don't have an estate Texas. Everyone has everything. There are a

lot of pluses and minuses in every state. To say the least, let let me shift. Being in New York is a plus to be with you, that's and to be in in the city of which generates so much economic activity. Everybody just steps into the Have you been

to Singapore lately? London? I have Man Tokyo, Hong Kong, Um a lot of places, and there are a lot of places Dallas, Texas, where I was not too long ago, there are a lot of fantastic places that generate economic We were just in Seattle, that's a town that's on fire. And San Francisco the sitting on top of something that could be a fire. But that's beside the Seattle or San Francisco both what's going on in Seattle. Okay, So let's talk a little bit about some of your early mentors.

Who were the people that were the big influences early on in your career. Well, I was to admit I had a professor at Fordham that taught me money and banking. His name was Amon Kelly. Amon was getting his PhD at Columbia, taught at Fordham undergraduate of finance class. He then became the president of Tulane for seventeen years, and he was very good. So I had a whole bunch of individuals with the guy that taught me Latin uh

in high school. Uh and uh. You know, it was very influential because it taught you how to parse sentences and how to structure sentences. And I had a guy at Low Brows by name of Eric Renner who and Alan Kirschberg who would take a part your research reports and really make sure that you had every eye and every tea dotted grammatically and that kind of discipline. Uh, with that was important to the idea of communication. UM, let's talk about books. What are some of your favorite

nonfiction books, investment or otherwise. I read a lot of annual reports. No more books. Anyway, you at least said the same thing I I. My my wife said, you've got to read Steve Jobs, I said, when so. I read trade magazines, Billboard. I've been doing that for forty years. I read at age I read four in the orderable bile parts business. I read about three or four in the gaming industry, and that's more recent the last ten years. I read Asian There's a magazine that's fantastic if you

want to understand the Asian world. Uh. And then you obviously what's the name of that magazine, The Asian Way, Yeah, Nika, I uh owns it. They used to do it when I was in Japan thirty years ago. I started reading and they changed it over to a weekly magazine format, and then it's Bloomberg business Week. I started reading Business Week back in the thirties of forty forties and fifties, but it's changed a lot in the last five years. To say, to say the least of that. UM, what

other investors influenced your your approach. Obviously Graham and dot Are are big influences. And it sounds like, well, you know, I like war and I go to see his meetings every year for the last ten or twelve years. We in fact host a dinner on Friday night, our firm does, but for the Columbia Business Schools, their their guest list, our nickel and whatever money they raise they keep. So we do that every year. It's kind of like our

pilgrimage to h every year. That sounds like that's fun. Um. So thirty five thousand individuals trekking out there, all with a mission and all with an understanding. All what a way to say thanks to Warren for making them a return and to watch what he does within the context of investing. Though I must have been precision cast parts was a surprise to me, a little expensive, more than he know. I think the notion, well, it's a big deal. Twenty eight million shares at two thirty five dollars and

the mathis thirty odd billion. Uh. If you look at the cash flow over the next seven years, he will have recovered his cash, assuming they'll cost the capital for a moment, it does have a zero cost flow. Uh, that he would have gotten his money back and then you'll have a very interesting business for the next twenty years. So he seems to do that pretty well, doesn't he. Uh. He's made mistakes. We all have. Absolutely, it looks like he's made less than many and and has put a

lot of wood on the ball. Well, when you think about the market valuation of Apple, the think about the new up starts, he's missed all the technology because he says he I don't understand it, I can't investment. He has not missed him. He just didn't want to play that game. Okay, So the fangs of the world Facebook, Amazon, Ali Baba, Netflix and no Netflix. You're not afraid of these names, are you. That doesn't mean I'm buying them, but it's something it's a space that you're willing to

play in. But don't forget we do understand the subscription revenue model of a Netflix. Of course, that doesn't mean I pulled the trigger. And that means that there are mistakes that we've made that you won't know about. And that is not buying a stock. So you don't you find out, you find out about the mistakes you make when you buy something you perhaps shouldn't have, the ones that get away that you don't pull the trigger on.

No one really knows you that. Yeah, I do. Well, now we all know about Netflix also, but I wear my hair shirts. There's so many of them, and they come and bother me every day when I think about it, just trying to figure out my Listen. I've been on Google when they had the reversed Dutch auction and I got all of several hundred shares eighty bucks several very good at that. Um, you remember that painful And that's before the split, That's that's right. And that's before the

rename to Alphabet, which I have been unable to. It's fairly easy. They figured out how to not to pay royalty to get a name that was available, and Alphabet is a new holding company that allows them to do a lot of very creative things, very clever. Yeah. The financial engineering they certainly um seem to be. So you've been in the business the last ten minutes or so that we have. You've been in this business for forty plus years. What has change that you think is really

significant for the better or the worst. Well, I think that what has to change is to make sure that the American public understands that capitalism is a very very important way of allocating capital. It's a combination that's made America a unique study in the history of mankind, the combination of free markets with all the floors UH, the rule of law with all of its floors, and meritocracy, which means everybody could be educated. We got to go

back and really help individuals educated. From my point of view, in terms of the markets, you go through cycles. Okay, I was there in the sixties when you had UH the conglomerates and the and the pushback, and then you had the nifty fifty, and then you had the client of stocks, and then you had the T M T s and then you had in the eighties the UH leverage biouts but Drexel Burnham and then you had So you go through all these cycles and capitalism and there's

some excellent flows. But are the challenges today are trying to figure out whether this experiment of trying to keep the world afloat by pumping money into the system is an interesting subject that we are going to write a casebook on twenty years from now. Together, How has the actions of the Fed affected what you do professionally. The second question was let me finish up on the first.

Second thing was the way these products are packaged, starting with John Bogel and its mindless investing and yeah, but also the notion that they're cheaper. In some ways they are, but in some ways there are tax issues that are hidden. Some way, their transaction costs that are hidden. Uh. And then the notion of corporate governance. How did they vote? You know, they're getting better, but they got a long

way to go. They don't pay attention to the vote. Uh. And they are getting better, but as I said, and in addition that, there is a constant abuse. If you sit at trading desk and you see flash trading and they're constantly probing, what you're trying to do is to scalp. It was like the specialist on on steroids. Okay, and well they may not have been fake quotes, and you should they should have them there for a little longer than that. So there's a lot of elements that have

to go back into the free market. I don't like dark pools. I want to see everything in the fish bowl of the free market system because I want the world to believe that this is a fair game and that it's run by people that have come to work every day to keep it honest and open. And this

is a challenge. And UH, we had specialists and when I was around in the forties and fifties and sixties, so you know, everyone has their own approach over the counter trading, trading, UH, fixed income instruments today, what are the spreads? What are the markets? So there are ways that we can't and the SEC is doing a very good job, but they should have committees of people that are practitioners and meet with them and have somebody organized

it and open the UH that day. What is going on that we should be thinking about and things that things that are potentially problematic. That's correct, you guys, you're gonna see it before Mary Joe White sees it or any of our staff sees it as a problem. We're trained not marchhot, but we trained differently. Okay, if you look at flash trading, it's obvious if you look at

the coal location, how can you do that? You put a server next to the actual exchange servers, and those folks get the sniff out orders quicker, right, so they get if they want to jump up a front. They're they're taking an extra penny or a dime from these big and they have great language of coal liquidity. We provide liquidity. We provide liquidity providers. This is all kind of well, it's not nonsense, but it certainly can be.

Uh A past you really a practitioner is no. And the uptick rule, I mean, there is no advantage of having eliminated the uptick rule except as an accommodation to somebody's packaging products. So there's still a lot of things that are going on. And then disclosures. How can someone legally they can do it right now, and how can they buy derivatives and not file at thirteen D until

a certain time period. And so another word, they have to they have to disclose an ownership even if it's not the stock, if it's a secondary and do you own it? And how do you own it? And then on top of that, you know, if we keep going. For example, I can buy five percent of a bond, I don't have to file. I can buy of a bond and get control of a company. I don't have to file. I own five percent of a company, I

have to file. We file over five percent of holdings of a company on at D filing within ten days and then every time we go over one percent delta, we have to file. We do that religiously on a hundred odd companies and so as a result of that, why not do it on the dead world? So transparency. Everything in a fish bolt so trans So you're looking for people to honor their quotes, to have full disclosures and be transparent. So you're really kind of an eye to list, aren't you. Uh No, I want the free

market system to work because it worked for me. I grew up in the Bronx. Okay, I went to school and this system allowed me to flourish, and I think it allows should allow everyone to flourish, and we can. We want a system that allows everyone to succeed to the highest degree of their interests and their passion and the time they're willing to spend. So you want you want to actually create opportunity for anybody who wants to starting with grammar school. And so what do you do

to help grammar schools out? We do what we can in terms of taking kids from grammar school to go to high school, give them a pay for the tuition for private high school or college. These are not charter schools. These are primarily religious schools, Catholic schools, because that's the ones that are in our radar screen. So in the last five minutes I have you for let me ask you two of my favorite questions that I ask all of my guests, and and let's see, um what you

want to do with these. The first question is, well you you said I could say next, you can say next, I mshoo. You won't say next to either of these. So if you were dealing with a you were giving advice to a millennial or someone just graduating college who was interested in a career in finance, what would you say to them? Too late? Too late, they missed their window to get into finance. If they basically were a history major, they have to go to graduate school because

we don't have the time to train them. We think they should understand a lot more of the quotes, the elements that go into it. It depends if you. So, someone coming out of college with a business or economics background and goes to Columbia gets an NBA. Let me tell you where we recruit from. We have no problem with anyone from hart. I'm politically correct. Okay, I'm the most politically correct guy in the world. I will recruit

somebody from Wharton. Okay, so you will stoop that load. No, no, no, no. By the way, we just had Jeremy Siegel Heller, I understand Jeremy is a good guy. We we look at the best anywhere in the world, and they are rain individuals the way we want. Notwithstanding that, we will go in and if you're giving me advice, I'm in the high school. First of all, we should teach finance and basic uh what makes what? And how to save money for the rest of your life and how important is

that to create options in your life. So if I was giving in high school, yes, and there are no mandated courses like that pretty much few and far between. Well, I think Buffet has put something together in a very light way to help individuals and grammar school understand that the teachers should tell them about the virtues of saving and uh, individual how to open accounts, not accounts, but

the banking system and how that works. But uh, I would say the following by a stock really and get into the game, just like you would say you want to learn how to swim. You ain't gonna do it by thinking about it. So you buy one stock, I don't care what it is, us in square, garden, apple, whatever, hopefully the So you own a stock, and what does that teach you? As someone right out of high school? Well, you start following it. What do I own? Do I

own a piece of American business? What? And how? Read the annual reports and get the re annual reports, to read it online, and do whatever it takes to continue to follow a company. Then secondly, I would say start saving. And the way you start saving is the following, though I must admit you gotta work, not I would buy one less lotty per day, assuming there are five dollars

a day. That seven days a week is thirty five dollars at seventeen seventh almost two thousand dollars a year, and then figure out how much that would be in forty years compounding at four six and eight ten percent, And how you're gonna make that. Secondly, give up a beer. That's why I have to go that one has to be over the age of one and one bear per day, and see how much money you would have just for those simple things, assuming nobody smokes any more. Otherwise, the

numbers would be staggering. Right, cigarettes are are through the roof. You still you walk out of a building, you still occas when we see the junkies out there puffing on. Well, there's no question that a well, you can smell it, you don't have to see it. And so the building itself is smoked free, but the campus setting or this is not. And you gotta give me a Mike a really good credit for that years ago. The whole subject of healthy living, though, I must admit sixty an ounces.

He once said, uh to somebody, uh, sixteen ounces, And so he says, well, maybe they could have Baker's mark, that we have to be careful on all of those dynamics. But you know, I don't look. The advice is simple. Everyone's gonna be smart, but you have to work from five to night. Or if you're young, you could steal it from seven eleven because you want to watch the Mets games or something like that, or the Knicks tonight

is going to take a long time. You know this, the games thought at eight, it's not over till eleven, and you gotta work afterwards, such as life. Last question, what do you know about investing today that you wish

you knew when you began forty five years ago. I actually started buying stocks when I was thirteen, and forty five years ago, I was already working at low Broads, and so the notion of what I do is fairly simple, and buying a good business that I hold for an extended period of time to defer paying a cash tax

on the sale of that asset. I would say that if I were picking a career, the individual has to ask himself, how much can I make given the amount of ergs of energy I have to expend in my life, and how do I get the best payback for that? Or and why? In my particular case, I should have started business a lot sooner, and I should have listened to Michael Steinhardt, who was always saying, what do you want to do anything else? Why don't you just do

a hedge fund and go along? Short? But we're delighted with where you have. I have will continue to do what I want. I like the pressure or like the ATENSI I like me look stupid every day I come in. Mario Gabelly, this has been an absolute pleasure to have you. Thank you so much for being so generous with your

time we have been speaking with Mario Gabelly. He is the founder, chairman and CEO of Gabelly Asset Managements, publicly traded as gb L. If you enjoy this conversation, look upward down an inch on iTunes and you could see the other UH sixty five or so such conversations we've had b shure in check out UH all the rest of these interviews. I want to thank my producer, Charlie Bohmer, and my head of research Mike pat Nick, and and

Mark as Sinestalsi as my engineer. UH. You've been listening to Masters in Business on Bloomberg Radio