Daniel C. Chung on Probability Theories for Investors

dollars in assets. In addition to the CEO and c i O rolls, he also runs a couple of different portfolios to a great acclaim. Um Alger is you know, best known as founded by Fred Alger. We talk a little bit about various mentors as well as what the firm's experience was in nine eleven and what they've done

after that in terms of the room philanthropy. UH, they're a fairly unique growth firm that focuses on UM tech, healthcare, variety of other things, specifically growth companies, and we go over how they're managing through uh what is both a challenging but target rich period with great opportunities. UH. So, with no further ado, my interview with Alger Managements Dan Chung. This is Masters in Business with very Renaults on Bloomberg Radio.

My extra special guest this week is Dan Chung. He is the Chief Investment Officer and Chief Executive Officer at Alger Management, which runs over thirty five billion dollars in assets. He's been c i O since two thousand and one. He earned his j d from Harvard in eight seven, got a master's in law from n YU before going to Clark for the Honorable Justice Anthony Kennedy at the

Supreme Court of the United States. He is also portfolio manager for multiple funds and strategies, including the four and a half billion dollar Alger Spectra Funds. H Dan Chung, Welcome to Bloomberg Than. So, I've been looking forward to having this conversation with you for a while, and I have to start by asking you had a storybook legal career. What happened? What made you say, Yeah, the hell with Harvard in the Supreme Court, I'm gonna switch gears and

try something totally now. Yeah, it was. It was a storybook career, and uh, if I had a another opportunity, I probably would have tested out what the legal world would have been like, but and where where where many of my friends still are today? Um, including Justice Selena Kagan? Were you a colleague of We co Clark together and we went to law school together, and we served on the Larvae together. And she's an amazing person. So it's very weird to have a friend who becomes a Supreme

col Right, that's kind of interesting. Do you guys ever stay in touch? Do you have a chat? You know? I was just getting to the point in my career where I wanted to sort of give back to the Harvard Law School. At the time, she was the dean,

so she talked about a story career. She was the dean, and so that the last time I I saw her on a one on one situation, it was like, you know, talking about let's do something law and business and and my whole issue was that lawyers um are uh, you know, the vast majority of them are consulting in some way for businesses and they don't understand the business at all, and and it reduces the quality of the work. And she was she was very into it, um and um.

And then I don't know, a couple of months later, she's nominated for the Supreme Court. So that's all over. So she saved you writing a check. Yeah that's true. Yeah, yeah, yeah, I save the money. So you end up at Simpson Thatcher, which was known for international law and and corporate law and litigation. Right, what were you doing for them? And then how did that end up transferring over to finance? Right? So, Um, my parents are both academics and knew absolutely nothing about

Wall Street and only a little bit about business generally. I, on the other hand, was always interested in it, probably not in a very educated way, but probably from like things like the movies. Um, I did grow up in the Silicon Valley and so, but my Silicon Valley was Hewlett Packard, not undergraduate Stanford, undergraduate Stanford. So there was an interest I had there in in the business in Wall Street and and frankly in New York, you know, and like the Frank Sinmetris song, you know, if you

can make it here, you can make it anywhere. And so I wanted I wanted to In some ways, I was more driven by the idea, come to New York, work at a top notch law firm. That will be a way to learn about business as well as you know business law. UM. And essentially along the way, I realized I loved the clients who were UM making deals

complicated financial investments. Uh, you know, using you know numbers, accounting analysis fundamental as well as accounting analysis to figure out, you know, what's the what's the right paris to pay for something and you know, UM and UM. But I was just I was, as a lawyer, just an observer on the You're not making any decisions really, And so at some point I realized I thought I would be more interested in that, and I thought I would be

good at it. So I so I started to call around Wall Street to try to get a job on Wall Street basically. And what was that process like? Well, UM, it started off extremely well in that the first person I told was a client UM. And it was like, I don't know what their title was. UM, certainly a VP, not an m D, I believe, but you're not the head of the group. UM. But it was the Financial Derivatives and Complex financial Instruments group UM Merrill Lynch. So

I always think very fondly, Mary Lynch. They're a big client of ours. Thank you, Meryl UM and the associate. You know, we've been working on something in the associate. I told the associate, we've become friendly and and he said, if you're leaving Simpson, I am sure my boss would want to talk to you, probably give you a job. I said, okay, great, So so I go down and meet his boss and UM, he says, like, I loved working with you. You know, Uh, my dad was a

math professor. So he actually said something to the effective, you're one of the few lawyers who seemed to actually understand and like the math that we're doing here that's around the options and derivatives, and I, you know, and uh basically gave me a job offer. Um before I left his office, and he said it's a standing offer Staya Sampson if you want, but anytime you want to leave, you've got an offer here for our group Merrill Lynch and UM. So so that that's a confidence booster right

So here. Then I started looking around. So was it the pre existing math skills that translated to finance or was it some of the legal training and experience that

that helps you once you started having a career in investing. Um, I would say the math skills, it's more about a numbers sense, seeing patterns in numbers, liking statistics, understanding probabilities, and again I mentioned my father again, but he was actually a professor of probability theory, so which I think is much more important for investors than the bulk of what you're gonna learn in the CFA exam. Yes, I mean, investing is basically first recognizing that nobody knows anything about

the future. Anybody who tells you they're predicting the future, you know, it sounds like they're so confident that they're going to be right. It's like you know they're selling something. They're selling you something. So the only way really do pro at least from my perspective and algers, is where the probabilities of a bearer case, the base case, a bowl case. You know what's the black Swan event, and you know what works and what doesn't work? What are

the values you know? And and and the stock market obviously is is I mean, it is the greatest real world probability machine, right, I mean, the price of of any asset in the stock market is essentially the combined probabilities of everybody bullish, bearish, neutral, ignorant, highly informed insiders outsiders.

What is that worth? And it changes because things happen and people change their minds a little bit, sometimes too much and sometimes not enough right, And and that I think has always been, Um, I've always been I think very good numbers since I didn't had to prove it Alger. You know, I thought I had good numbers since I think I think, uh, I think I proved it an Alger.

But the law, I don't want to underestimate the law did it did help me a lot, I think, um one, I like complex situations because I know that a lot of people don't or they just don't want to take the time to dig into them. And so as a fundamental investing shop, getting into the details, getting into the complex situations is sometimes where you get the most opportunity because of that. And then on the flip side, running

the business. Lawyers are are very disciplined, organized, detail, deadline oriented, all of which is pretty good um for a career, but it's it's especially good if you're trying to run a business. So, so, how did you end up at Algae? You join in? Was that your first job in finance out of Simpson Thatcher first job in finance? Um? And uh I ended up there because uh I so I've gotten a couple offers um on walls rate. I had

the Mary Lynch one, I had another. I hadn't gotten another off for UM, and I thought, you know, I don't really know any serious Wall Street you know, um, senior mentor types. So I should I should try to find one to ask their advice, like where should I go? And at the time, the only one that I knew was my uh father in law, my my, my just my Fred Alger had just become my father in law. June. I married his daughter, Alexandra, my wife today. Uh. Still,

I can't believe it's been twenty nine years. Um. So I hadn't really met him much, UM, but I knew he was on Wall Street, and I knew that he did investing, and so I figured, this is a great guy to ask, um, I must know the whole landscape. And uh, I'll never forget that I didn't know him really very well. You know, it's sort of like, h of course we were engaged. So I met him in some really kind of formal dinner with his his wife

and you know, I'm my son in law. I have to admit I didn't ask him permission to marry his daughter. I was she isn't that kind of woman, and I'm I'm not. I wasn't that kind of guy. I sort of regret that maybe I should have done it. Now, Um, her kids are doing that now again, you know, but I'm more like a seventies kid, because seventies kids didn't ask permissions for their parents. Um. Anyway, so you speak to him, so I say, yeah, I say, I'm thinking,

I'm thinking I'm thinking of leaving the law firm. And I had these offers on Wall Street and like your advice, and um, he basically begins to tell me how bad both of the offers I have are and how neither of the firms that I'm talking about are particularly good. Now, um, he stops there, but I would say less than a week later, maybe two weeks later, he calls me and says, you know what you gotta really do is come down to my office and consider joining Alger. It took him

two weeks to come around. Well, I think he was giving me like a little week. Just let it sink in. You know, look, he is a he is who he is, not just a founder, but it was a master businessman because he's pretty good at let's just say, the m word of managing people has another word that's a little bit motivating. Well, some people say manipulating. Um, you know, uh and I think he understood that I didn't know much and uh that his you know. So anyway, that

turns out to be an insightful play on his part. Well, because not only do you join Alger, you'd be eventually become president, then you become c I O, and then you become CEO. So clearly he saw potential in you to take over his his work. I'm gonna be you know,

just really really candid. I mean, his daughters all laugh about it because they said what they knew was that he had long longed for a successor that was in the family, his daughters at all past you know, I'm not interested um and and uh uh uh that as soon as I said this thing, he had no interest

in actually advising me in any accurate, objective sense. It was a campaign to get me on board, using you know, a very wildly and very intelligent um sixty plus years of experience against a pretty naive, you know, thirty year old. Well it seemed to have worked out. It worked worked out absolutely. Let's talk a little bit about algiers investment philosophy.

I like this description discovering companies undergoing positive dynamic change, which immediately raises the question how do you identify these companies? Is this quantifiable? How much of this is less definable and squishy and qualitative? Uh? What is positive dynamic change? So? UM, this is our our investment philosophy. It's what the firm was founded on in nineteen four. UM. It's also what we're recognized for as essentially creating the growth style of investing. UM.

So what does it mean? UM? It's first a recognition UM that UH changes all around us and in our industries. UM, in our customers and the competitors and the competitive pressures UM in an industry are basically always about adapting to change. UM. So what we recognize in our philosophy is the opportunities for investors, in particular fundamental investors are where the change

is the greatest. And the reason for that is because where the change is the greatest, for example, and what has driven revenue growth or profits or you know, customer demand, you know where the change is the greatest in those those those key drivers and others for an industry, it's where the opportunity for new winners to be created, you know, for old winners potentially to continue, but if they don't adapt,

but potentially become losers. So the pressure to change wherever that's the greatest is always of extreme interest to us. And what we recognize UM within an industry is there's two areas where the change or the pressure to change is though is the greatest, and one is where is

the highest new growth in an industry. If you look at any industry and ask what's the highest fastest growing new product or service, that is a kind of change, right, and that's inherently innovation, changing preferences by consumers or maybe a changing costs um. But whatever is growing the fastest UM is a huge challenge because you can either be a leader and innovator and capture that high growth, or you can be the company that's selling the product that

is getting cannibalized. Right, it's growing, is growing, was once growing perhaps, but it's now growing slower and slower and slower. So if you think about the high growth UM, a great example I like to use is the music industry as a transition from record to tape, from tape to UH cassette, cassette to c D, c D to digital. Each one of those technology transitions, at the beginning of it,

the new media is always the fastest growing. I mean, yes, it's starting from zero, but but also in each one of those we can see it's ultimately completely eaten up the past technology. And so if you're a company selling records music, or you're selling the electronics that play music um or a producer of it, you know, you have to be aware that the transitions there are important for

your company to adjust too. And we can think of a lot of leading companies from say the eighties, which I you know, I grew up in loving music and going to college and but Tower Records uh hmv Records, uh, Sony with the Walkman um uh. You know that today either went out of business or are no longer leaders in you know, streaming digital music UM, which is really dominated essentially by Apple uh, Spotify and a few others

as you know. UM. So we know that high growth is one area where the change is extreme and the opportunity to identify as fundamentally as investors, who are the leaders, who are the ones driving that change? Is it going to be durable? And of course you know, the examples are countless um retail it's uh, first you had department stores, then you had the big box retailers, and then you had Amazon come along and end it all, and now it's all e commerce, and well you know, and so

so important to be basically be in the right position there. Um. But the other part of our philosophy again it's about change and where is the pressure to change. Well, interestingly, it's what we call life cycle change. So that's often at the other end of the spectrum, it's industries in decline,

companies really struggling to and in decline negative dynamic change. Well, um, for our hedge fund, absolutely interested in the negative dynamic, meaning you could both go along with absolutely um on alongside. We're looking for the positive dynamic change. So the industries are companies with potentially new management, new innovation, restructuring, or just new opportunities that can re accelerate and reinvigorate their companies into a new growth phase. And again often companies

like these sometimes their turnarounds. Sometimes it's just industries shifting. Um, they offer great investment opportunities because again, the the key inside about change is where is where change is happening, and if it's extreme, it often translates into worry, fear in the investors, and it often trans that often translates into undervaluation. Right, missed up missing an opportunity because instead of sort of leaning in to the situation, investors flee

to what they think is safety. R So, so let's talk about that, because what you've been describing is a fundamental change at a company level, either with a product or service um that that's penetrating a new market, finding new consumer acceptance. How do you contextualize what's been going on in this market since sometime towards the back half of where all those fast growing, high flying tech stocks

have been taken out to the wood shed. And it's not that anything fundamental has changed in these companies or their prospects. But maybe it's inflation or a new interest rate regime or the end of the pandemic. But something in macro environment is changing and causing investors to revalue these How do you look at that sort of cyclical change relative to what you've been describing as a fundamental element. Uh So, this is probably one of the most dynamic periods.

Uh you know, we have really ever seen in thirty years. And uh, when I say the period, I actually want to go back into pre COVID. If you think about what we have seen in our country and across the world and in the markets pre COVID right, political change, COVID right, a global pandemic hasn't been seen in basically hundred years, right, special influence hundred years, literally hundred years,

and there's no modern market back then. So this is completely different COVID forcing um and a global experiment in logistics, healthcare, e commerce, deliver vere um, remote work um and also lifestyles you know um um uh that we haven't seen and now yes, we're to me, we're still in the same period. Um. Now we're in the coming out yeah, where COVID is is ending in one way or the other. Economies are still trying to recover from it. Supply chains

were tangled up before. We're barely recovering. And now, of course we've been hit by Ukrainian Russian war and uh China. Uh, they're really in their COVID crisis right now because of the way they managed to delay it through zero COVID policy. Right. Um, So there are an incredible number of things happening in this period. UM, that are are very challenging, and certainly

are in the sense that algia likes UM. But yet it is, of course the challenge dynamic and changing right now to the near term UH market action clearly, UM Yes, interest rates and inflation caused by supply chain shortages exacerbated by Russian Ukrainian War, and then also the concerns about what's happening in China, because I remember China's economy going into a deep percession. It's never really had a deep percession.

In the last twenty it has been a growth driver, UM and a and a huge growth driver at that, a huge growth driver on the march on an incremental basis across the globe, it's probably been half of the growth of global GDP growth. Half of it has probably been attributable to China's growth over the last twenty years. I'm not an economist, but I I bet that's a very good guess, because you know, Europe has been fairly stagnant,

and uh, you're not seeing a lot in Africa. South America has its own problem, and we've been we've been

a good contributor. But but you know, uh so so I think what we're seeing here is um concerns of course, that the inflation is not going to be transitory, uh, that the Russian Ukrainian War has changed things around the energy commodities complex um, and that a twenty thirty year process of globalization is actually unwinding into more localization, more on shoring, and even of course trade war conflict, which of course that didn't start with the Russian War, you know,

started actually um with the U. S and China, Right, But now it's going to be potentially even more disruptive because how are the sanctions against Russia going to play out over the following years, Because it does appear it will be years, not nothing. It's going to be resolved very quickly here, right, I Mean, we could hope that it's resolved in months, but so far we're seeing no indication that that this is anything but a long haul.

I could still cross our fingers and hope before ends the war ends, but that's just a lot of wishful thinking on my part, right, Well, I think so. So your question was how do you invest in what's going on with growth stocks? And the key for Algin our process it is a fundamental research process driven by over fifty UH animal supportfolio managers looking at every sector and across the globe. What we first look at is UM

industries and trends. UM. You know what will be enhanced by the current environment, what will be hurt by it. UM High energy costs, high commodity costs, high labor costs will put a lot of pressure on efficiency. UM driving

efficiency is usually technology, software and robotics. For manufacturing industries, UM efficiency might include remote work may get even more entrenched because saving on the commute, right if you're if you're only going to work three days a week instead of five, the two days of savings for a lot of a lot of consumer or is where they're driving to work is actually quite significant. And and all the studies have shown that businesses are getting actually more labor

out of people who are working remotely. Right, So, so we're always looking for is the technologies, the services, the products that increase efficiency that benefit from the trends that we think are durable. There are some trends that of course cyclical, but others are more durable. UM. What's durable in our view UM E commerce, um AI, machine learning.

I think we all we always believed in renewables, solar, wind and energy efficiency generally, very clearly in a high oil and natural gas price environment, that's going to be even more in demand than it was. UM. Consumer lifestyles, that's harder to predict. UM. I think we're clearly going to have uh significant portion of our population as well as those across the world, are going to feel a

lot of pain because of higher and energy food prices. However, we should also note that the upper sixty of Americans are actually UM going to be able to weather this quite easily. Food and energy costs are not significant in particular the upper UM, it's not really a significant part or a fact. The middle band, there's some effect, but actually they're doing quite well. You know, we entered this period UM partially because of COVID with consumer savings at

record levels. Businesses UM lots of lots of deferred capex, and therefore financial situation in corporation is quite strong. Um. You know. The only thing that that concerns me about the consumer mostly is UM higher interest rates affecting the value of their homes, which clearly is going to be uh you know, a negative wealth effect for for a lot of consumers. Of course, a lot of us had seen a wealth effect that we never really expected nor needed.

And so some of that's probably gonna online, right that that giant boom in home prices. If if we roll ten or the back, it's really not not the worst thing in the world. That's that's right, quite interesting. So, so let's talk about a couple of different sectors that you mentioned. On on the one hand, we're seeing stores

like home Depot do pretty well. On the other hands, UM stores like Walmart and Target have had you know, the worst UM drop post earnings since seven What do you make of this environment where even within a sector like retail, you have to slice the market very finely, very thin to separate the winners from the losers. So I would say, in in the consumer landscape, you know, the combination of a couple of things, it's really pretty negative.

And it's reflected in the results of like Walmart and Target. And and why we're generally actually not UM we're not really they very much invested in retail or in consumer goods. UM one is high labor costs and high inflation, uh, matched up against not so easy for some of these companies to pass that through to the consumer. With higher prices, right, especially when many like Walmart and Target customers are feeling

pressure from higher energy and food UM. And also and very important to remember, many of those companies of Walmarts and Targets, they UM were able to stay open during COVID. They benefited from remote work, stay at home people not

going to restaurants, eating at home more. Uh, they benefited from being open when other retailers had to close, like department stores, and so they saw a lot of them saw strong growth in demand for you know, apparel, home goods, furnishings, that kind of stuff, sporting goods, and and Walmart and Target in many ways were beneficiaries of COVID relative to

other other retail UM. So right now, we think in the consumer sector, uh, and we've had this actually sort of trend for a belief in a trend for a long time, which is that over time, the demographics of the U S consumer particular, it's a trend towards experiences

over things, and that's definitely pre pandemic. UM. The pandemic seem to have temporarily reversed it when everybody's stuck at home getting deliveries exactly exactly right, and so I think in the consumer you know, there are still things that UM in that experiences category that have not yet recovered from COVID's effects. Live entertainment, travel, UM are are great

experiences restaurant industry to many respects. Hotel industry. Obviously there's a travel related UM, but it's a little bit far and few between because if you look at the stock market of the dominant part of the consumer error is really goods, you know, many of which did fairly well during COVID. UM. Now, you know, I think we're still leaning into companies like UM, Amazon, which obviously was a COVID beneficiary. UM. But Amazon is much more than just

a store. Now AWS Web Services is you know, the leading cloud services provider. UH. The transition to the cloud is a major uh RE platforming of business processes from you know, running running computers and storage and network equipment on in Europe office to letting a public cloud provider do it for you. And Amazon is a winner there

and UM. I think it's UM you know, important to note how significant that business is to Amazon because it's much higher margin than the retail business UM, and they are the dominant leader there and it's still growing very very fast growing over right now. So so you mentioned AI and so off wearing robotics UM in that same space, I gotta think Microsoft is a credible competitor. I think they're what is it Azure is the second biggest cloud

provider after Amazon. UM. What else is catching your eye in areas like AI, in and robotics right, so, you know, I think a lot of the leading growth companies, many of which have come down significantly, um you know in the last six months, UM in software like Microsoft, Adobe, but also for example in stomach connectors like a m

D or again going to software service now dated dog. Uh. I think many of these UH companies have come into In the case of the bigger, larger cap ones, I think they're absolutely attractive in terms of the evaluation now and um the need for what Microsoft provides cloud services of course, enterprise computing, UH you know, their own linked in. I mean, this is an incredibly well capitalized company. It's hard to believe Microsoft and it's scale, it it's growing

revenue six um. You know, the pe right now is below that of companies like UM. You know in the staples sector, I think is one of the most overvalued. I mean staples. You've got a lot of leading staple companies are twenty six to thirty times PE. Most of them struggle to grow revenues more than five So I think a lot of the leading tech companies are are attractive and continue to play into a lot of the trends. Um. Digital transformation again, this is you know, businesses. This seems

to happen about once every ten to fifteen years. Um. You know, it happened in the nineties with the move to the internet, but then there wasn't a lot of tools yet for digital business. Right, what is digital business? This is instead of paper documents, it's digital documents. Right. By the way, both of us work in firms that live and die in the cloud, and yet the two of us have papers spread out all over the desk. Are we just are we just the old school old timers?

Or is there still is this still just a is this a generational thing? Are are the people who are the millennials who are twenty thirty years younger than us stuff like this doesn't happen? Or because I don't see anybody doing this on a tablet all that easily. I think you're actually absolutely right, because I tried to do it on tablet, and I realized there's no way you

can see me here. I I've got one, two, three, four, I got seven pieces of documents that I can easily just you know, my hand is a pretty My hand is better than the man. My hand so far has not crashed on me ever, that's right or frozen, and I can reach out and you know, one piece of paper I have. You know, So let me ask you

about another sector. You guys are fairly focused on health sciences and and given what took place with m r n A and companies like Fires from Maderna, this obviously is going to be a giant sector with the aging of the population, oncology, advancements, lifespan and extension. What are you looking at in the healthcare space and in the health science of space. Yeah, this is a great question.

I'm glad glad you brought it up, because healthcare is one of our favorite spaces, and I think it's a very good example of a sector that has actually opportunities both on the high growth innovation end, but also um great companies um that are great free cash flow a stable businesses and probably improving in their prospects. So we we like quite a bit across the health care spectrum and from pharma and biotech, medtech as well as healthcare

services and even health tax software. UM. You know, healthcare is UH of course not economically sensitive UM, but is driven of course by major trends and demographics. As you mentioned, is one of the big ones. But I would say within healthcare UM two major trends that are occurring right now, and one that more of a market phenomenal. So the market phenomenon is simply that a lot of the leading pharma UH and biotech companies household names UM looks severely

undervalued relative to their profitability. And while their growth is more modest, it's certainly competitive with say the staples that I mentioned earlier. Right Meanwhile, some of them are coming out of like patent expiations in periods where they were challenged to growth with new products UM. And so we think, you know, might in our life cycle change theory sort

of accelerate their growth going forward. UM. So these are leading companies like abv or one of our most interesting ones right now is is Bayer UM the big German boring company UM UM wise Bear interesting, Bear bought Monsanto almost at the very peak of the last agricultural fertilizer cycle and then also inherited the roundup litigation, which is costed about a decade. As a result, has became extremely undervalued and hated. UM. But they are coming out of

you know, the round up litigation. They have sort of ring fenced what the liabilities were they preserved for them. Their litigation will continue, but the you know, the unknown factor there is rapidly diminishing. Meanwhile, first of all, they should be created. They're not a bad farma company, including some aspects like Beyer and you know, like a Johnson

and Johnson, but they do also have innovation there. But finally, also and yes, very much driven by the commodities that problem that we're seeing now, the Monsanto business UM, you know, looks poised, poised, like a lot of agricultural businesses to actually um accelerate tremendously in the next few years as as commodity prices go up. So so there's a lot of examples in big PHARMAM. But I want to note there's also a lot of opportunity on the high growth

side of of healthcare. Because in health care, how are we how are we meeting the need for healthcare as with an aging population. A lot of it is better technology, better software, uh, and better services, better delivery of services. We all know that the health care system is pretty pretty inefficient. Um. It's also one of the slower adopters in particular things like cloud software, digital um uh you know,

um business processes. Are we ever going to see the health care sector come up with some form of uniform standards for healthcare records? You would think there's a massive opportunity there. Nobody seems to have come up with a way to to to create a standard thing so that your doctor, your hospital, your radiologists, your whatever, um, your pharmacy can all easily access the same data as directed

when needed. It just seems like the record keeping and the all the specifics and I'm dealing with um my mom is eighty six trying to move her records from Florida, New York. It was just a nightmare. And it feels like it's you're back in the nineties seventies. What do you mean I have to submit a fat request. It's two thousand and twenty two. Just email this. They don't

do email. UM. It's going to get better, And I think you and I are too old to benefit and your mother and my mother are way too Why because some of their records are old and they're in old systems, buried in US and doctors in a file cabinet of a doctor who retired, right, So so they're lost in kind of lost. Yeah, and so they'll do the test again. Yeah. No, I mean a lot of the efficiency and healthcare is is going to be more. There's going to be some there,

but it's always gonna be a messy process. I think it's getting better though, But a lot of things we're like robotic surgery, So, um, what companies do you look at in that space? Intuitive Surgical as the leader in that space? Um, and some of some of the things I've read in that space are really quite astonishing. What what is the advances that have taken what used to be somewhat risky so injuries or somewhat complicated surgeries and

turn them into fairly routine procedures. Is that a fair statement? I think it's No. I think it's absolutely amazing what med tech has done for all kinds of so. I mean, think about hip knee replacements that are just routinely done now, it's so successful UM uh CARDI heart valve replacement UM, minimally invasive no no more, you know, no more, not not needing open, not cracking you open anymore. Obviously massively

improved results and lowered cost. UM and frankly, you know the UH important to note the UH with COVID, the development of the vaccines. You know, the rapidity with which the m R and A technology was proven out by both fiser Um and Maderna and others. UM. And I think we can look forward to sort of, UM, you know, increased use of that technology to solve other other diseases.

So UM really really fascinated stuff. So what other sectors besides software, robotics, UM, healthcare are are really standing out as offering a lot of potential for positive dynamic change. UH. So let's see, we talked about tech, talked about healthcare. I'm trying to sort out I think AI big data. Well, so I guess what I what I would say is, look, the markets are highly uncertain, we aren't, you know, with

the interest rates and inflation the way they're going. UM. I think our portfolios at Algiele we're positioning a little bit more UMU diversified than perhaps we have been UH

in the past few years. UM. And the example so so you're so there isn't any one sector I think I would say that, you know, next most important, but I would note that for example, energy and renewables, I think given you know, high energy prices now, it's it's absolutely UM important as an investor to have a part of your portfolio exposed to UH the opportunity in solar in particular. UM. Who do you like in that space

or wind or any other world. It's mostly it's mostly providers of solar UM electronics inverters UM so not necessarily the panel makers, but not the panel makers, which is almost mostly Chinese. And there's actually some issues around you know, import export UM. Well, there's ongoing litigation, right, circumventtion. It's called circumvention. There's a lawsuit about this, whether importers of

solar panels circumvented um UH tariffs, tariffs, UM. But you know, it's a good it's a good example that controversy is important. But I view that as relatively short term. The big picture trend shouldn't be forgotten. If we are going to be living in eight dllar oil and natural gas is no longer going to be two dollars or less. Right, there's gonna be five dollars UM uh the and and I believe yes this these prices could recede by the end of the year, particularly get slower economic growth and

a better resolution of the Ukraine Russian situation. But nevertheless, I don't think we're going back to two dollar and thirty dollar oil. I think we're you know, pre COVID, we were in the sixty dollar oil arrange. And I think there's a lot of reasons why UM Europe having to move away from reliance on Russian gas will maintain

higher prices for gas and oil UM globally. I think that's I think, you know, there will be negative effects to that, but you know, we're looking for the positive dynamic change it and it to me it is clearly from renewables, and so the longer term growth there is only more likely to be durable solar, wind, hydro, many

things will be UM beneficiaries. Frankly, in the industrial space, it's harder to talk about any particular company because there's no pure play, but many of the industrials that do electrical equipment, pumps or are other kind of mechanical equipment. You know, I do have significant exposure to the electrical grid right, or natural gas transmission or old school oil and gas refining and drilling, right, all of which is

going to in my view, pick up an activity. So I think the energy sector is one place where you want to have some exposure. You want to think about, for example, electric vehicles. They are clearly a rising trend. TESLA is obviously the leader. There are now newer players.

But I'll note within the industrials and materials complex there are some very interesting plays within lithium batteries UM and companies that supply critical components in substrates for the you know, the electric vehicle battery UM of not only the car actually I should say, but storage storage for the sub units for UH that that's been an ongoing issue is how do you store energy from a wind farm or a solar farm UH so that it's accessible when there's

no wind and no sun. And so in the theme of this disversification that I want to know, like financials, we are also you know, currently interested in UM what are the opportunities within financials UM. The biggest change for financials for US where we have long been very minimally exposed. Is we are looking at a steepening yield curve? Right, interest rates have risen off the off the zero essentially UM and if we get a steepening yield curve, uh,

that is generally good for bank earnings UM. Potentially for the earnings of credit card companies UM. The offset of courses will will the higher rates and inflation recession? Will that end up in defaults on loans and slower credit card growth and spending? Now, I think we're right now

trying to be balanced there. But uh, if you think about UM, desire for experiences, UM, travel, you think about American consumer is actually entering this cycle now in very good financial shape, and in particular, you think about the upper forty or six spending on travel. What do we pull out? We pull out the American Express card a lot of us. So, uh, you know, we like, you know, we like. I think could be wrong, you know, he

procession could hit all that spending. But again I think in the interest of a diversified portfolio, I think, um, you know, there are interesting opportunities within financial So that's one example. Others are there are growthier banks that have been hit pretty hard. Recently, many of them are now trading as m as if they were sort of um, you know, like just any regular bank. The ones that we like are the ones who have been innovative within

banking uh names uh. Silicon Valley Bank has long been a leader in the Silicon Valley. Obviously all that their tech customers stocks are down, so people are taking their stock down, but actually as bankers doing well, they do well when as long as as long as a Silicon Valley doesn't go bankrupt as a whole, you know, the fact that some company stocks are dump or down doesn't

actually do anything for them. In fact, if anything, the potential for dealmaking increases, which they are often the banker. So um, and I should note that they did an extremely savvy acquisition of healthcare franchise a few years ago, one of the leading investment banking banking healthcare franchises. And again,

as a noted, healthcare is a very active area. You know, we should note that not only is it not economically sensitive, but healthcare because of the COVID crisis, has received a huge boost in funding, recognition, and interest in investment for the future, not just for preventing the next COVID pandemic, but also for UM, you know, how can we improve the telling medicine? You know, how can we improve outcomes? UM in the health care system. It's it's uh, it's

been a big challenge of the healthcare system. But I guess appropriately they're getting rewarded by a lot of interesting in investing in that to improve it. Right, So, but there, but there Again, going back to financial there's a lot of banking. There's a lot of banking opportunity in that. Let's let's talk a little bit about those different strategies UM, the ALGA thirty five, the dynamic return fund, dynamic opportunities,

capital appreciation spectro. We talked about health sciences earlier. Tell us a little bit about these different strategies. What is the goal of all these different approaches to investing so as growth specialists, UM, you know, all of these strategies reflect basically different market caps and market cap ranges, with the exception of the health care fund and dynamic opportunities. Dynamic opportunities is a hedge fund, uh so, uh long short UM and a health care fund obviously sector fund.

What about thirty five and the dynamic return or capital appreciation five? Uh so UM ALGE thirty five is actually very special to us. UM. There's a fund and it's also one of our first e t F s Alge thirty five e t F, which we launched actually in just last year. UM. It's named actually in memory and honor of the thirty five colleagues we lost on September eleven, UM, and we are donating a part of amagement fees to charities UH either in their memory or that we or

the firm support today in their memory. UM. But the thirty five is UM meant to reflect the best ideas across all of algiers, so regardless of market cap, regardless of whether it's US or international, best ideas focused fund UM and UH. So that's the ALGA thirty five idea. UM Capital Appreciation is a large cap strategy UM UH Spectra is an all cap strategy. Both of those are really very much US oriented, although they can invest in international or foreign stocks UM and then find dynamic return.

Dynamic return is UM a hedge fund UM and so it's our it's our private version of of a hedge fund. UH. We also have a forty a mutual fund called Dynamic Opportunities Hedge Fund, but only only um, the dynamic opportunity can go long and short. Is that right? No? Actually, um so um dynamic return, dynamic opportunity. And actually Spectra does a little bit of shorting. Spectra can do ten up to ten percent short. Is that really just as a hedge or or why uh at ten percent shorting,

we can't really hedge you know, the larger portfolio. So actually the idea of the ten percent short for Spectra is generate returns by identifying the as you said earlier, negative dynamic change. The companies that are going to be Amazon, the companies that are being disrupted by trends in their industry, the companies that are being mismanaged. Um so interesting, tell us a little bit about the E t F experience. Your your history is as a mutual fund and hedge

fund shop. What's it been like playing in those waters? So it's it's new and uh uh you know we I think you know the major theme at Algers as growth specialists. We want to be um, you know, offering our services investment services in whatever format uh context you know, the clients want them and and in particular, you know, keeping up with what lowers costs, increases transparency, for for the clients and E t fs actively E t F s are UM you know, the first opportunity to do

that for an active manager. You know, we're not interested in offering passive index E t F s UM and so it's been it's been interesting. UM you know, they're they're both just barely a year old and uh still small. But we see a lot of interests UM from in particular UM uh financial advisors on larger platforms who um you know who have clients who are interested in in uh you know, the E t F format. And that's a concentrated portfolio of h of thirty five names rus

every style. So we also have a forty two I'm not on that. That's round by Amy Jang, who's our small cap MidCap specialist. I was gonna say not not UM so that particularly alger forty MidCap and small caps not all cap correct. So so Cathy Wood recently said we're nearing deep value territory for a lot of growth stocks.

I'm not getting the same sense from you that you think we're heading into deep value for growth given how diversified and um broad your focus is looking at everything from finance to energy to staples to to what have you? What are your thoughts on on where we are in this cycle? Um? And how inexpensive have growth stocks become? So I sort of have three answers. One is I think leading growth names like so the larger cap names have gotten uh to evaluations where historically and relative to

the market, they are very attractive. UM. The higher growth names some that have been hit the hardest. UM, these are a little trickier. UM. You know many of these are cloud computing names, UH, cybersecurity names. UM. You know, part of the new generation of digital business enterprise software. UM. They have very high growth rates. You know. We should note that in this entire decline, we've now had two quarters, the fourth quarter of twenty one and the first court

at twenty two. They've been to much all done. And these most by large over of the companies. UM, they're hitting their numbers. UM. Uh and uh you know growing at rates over seventy percent. UM. I mean I'm looking at you know a list of holdings that we have. UM. Yes, they are still UM expensive on near term multiples. UM. Some of them, of course are only just now ramping and profitability. So the pe multiples are essentially not not meaningful. Um, but that is the wrong way to look at higher

growth names. Companies that are growing seventy percent, say this year. Uh uh, you know, are likely to be probably growing in our in our view for the next few years. So you have to be able to look out and value them on that future. So that's where I was going to go. I want to ask you, given this pullback and some of the high is growth names have gotten cut in half or worse, is this is this a target rich environment for a growth stock picker. I

think I think it's definitely a target rich environment. We're increasingly getting excited about the opportunity to build larger positions in these high growth names. UM. But in our experience, and it's pretty extensive since nineteen sixty four and mind personally since nine. UM, you can overshoot to the downside for sure, because and we're seeing that now. We're seeing days where percent of the stocks are down, you know,

where nothing is up. Well, we're recording this on a day that is going to end up being one of those days. Umm. I'm just looking up at the screen and I see, uh, lots of red. We're down about two and a half three UM. But that raises an interesting question. I've heard a number of growth investors say, hey, we've had a huge period of out performance in the growth space, and therefore we should discount of future returns and expect a lower UM rate of growth going forward.

On the one hand, you're saying, there are a lot of really interesting companies that have really seen their prices come down, but I'm not hearing that you expect to see growth rates to disappear completely. Tell describe how you consider forward expected returns from here. So as a fundamental UM investment team bottoms up fundamental right, So we have UM sector experts, analysts and portfolio management, the extensive experience

across every sector. UM. You know, our healthcare sector head is actually a doctor, a PhD and an m b. A is all three degrees. Most agreed person I think we I've ever seen UM except for maybe one of my pm pms who also has a PhD and a bunch of other degrees in patents UM. So what we're looking at is the trends, right, the big economic the big business trends that the big societal trends that are

growing regardless of yes, near term economic cycles. So one thing that many people, um, you know did experience was in O eight oh nine e commerce continue to grow right through the recession, and that was a crushing recession, right right through it, double digits, even as the department stores were falling apart. What we're trying to identify now, fundamental bottom up stock pickers is what are the companies that are in the right trends They're gonna grow regardless.

So rising rates, inflation, maybe even recession next year, all those are short term concerns. You're looking out beyond exactly, and we know from our experience as investors that if we're not quite there, we're getting close to. Um, you need two things. Yes, I want to see better valuations and we're seeing them, but I also want to see timing. I want to see some fundamental changes in the market that says the sentiment is shifting, because um, you know,

the nature investing is is yes, it's quantitative and qualitative. Um. Right now, you know clearly the negative narrative is overwhelming and it's natural a lot of investors are I earlier said how many things have changed, and there's so much change going on and a lot of it seems negative. But um, you know, when I look at at this list of high growers that were sort of on our shopping list, and most of them we were owning. The question is at what time do we think it's better

to upsize them. I mean, you know, we're talking about companies that are for example, leading software company and healthcare technology helping manage regulatory risk, clinical trials, data storage safety, UM a vertically dominant company within an industry. We're talking about cybersecurity. Now we should you know, we should note that the company they're going over very high pe but we're looking at like six plus earnings growth because it's

going from a little to more. UM cybersecurity. I've been surprised that we haven't seen a major cybersecurity tech as part of the Russia Ukraine conflict. But we'll see. We know that they're happening. Maybe the good thing is that we haven't experienced it because we're getting great defense from some of the new generation of cybersecurity companies that are you know, defending us literally UM and UM. So, so that's the part where I think, you know, being more diversified,

looking for the opportunity to cross sectors. So so, for example, I mentioned financial services earlier. One thing to know is financial services and technology are almost acting like hedges to each other. When tech is up, financials are down. When financials are up, tech is down. And that again has

a lot to do with with interest rates. UM sure, so UM, I think, Uh, you know, we're still looking at at uh what are the fundamental opportunities to buy the best growth companies that will grow right through this UM. But we're also cognizant that in the near term a lot of uncertainty. Nobody, no, nobody, nobody really knows what

will happen right, so to say the very least. So. So before I get to my favorite questions, there were a couple of things I wanted to touch base with you about, uh, involving both Alger and involving some of your philanthropic UM activities. UH. Starting with you mentioned the Alger thirty five. Um, you guys also fund something we remember nine eleven and I've been pretty active in in September eleventh philanthropy. Tell us a little bit about what

you do, um, and the basis of that. So yeah, I mean September eleven, again, we lost thirty five people, in concluding David Alger, who was who was my boss. He was the CEO and CEO of Algrin Elite Performent, just like I am today. Um and uh, so I took over the firm um and led the rebuilding of the firm after nine eleven. And of course the first thing we dealt with was really the families who had lost someone. Um. And these were I mean, this is

just an amazing generation of people. And uh, you know, in all I think that I think I remember even in the darkest times, and it's importful. Is really good people far outnumber bad people. You know, we seem some horrible shootings over the weekend, right, but um, I could not believe some of the families that we saw after nine eleven. Um, they lost you know, their only son, their daughter, and they are heartbroken, but they are actually

also wanting to help. And many of them the first thing they did was create charities in their kids memories or in their husband's memory. Many many husbands were lost, and and and moms and everything and and we just we is you know, our mission has to be support these families and uh and part of that is to support them in the memory of their lost ones. So the charitable efforts uh since then, I mean obviously just

uh multiplied by magnitudes. We continue to support essentially every charity that is UH an Altro thirty five as well as many more. And I think you know, UM a few years UM, you know, after an eleven, I sort of formalized it with the creation of the employee Committee. We call it the Candlelight Committee, you know, so employees run that. And I think the the two things I request that they do and we still focus on, is UM we're trying to make an impact in our community

where we can so helping more locally rather than say, globally. Secondly, we're trying to recognize and support charities where we're not just giving money, we're giving of our time or our talent or in some ways doing something uh that UM maybe helps trigger in frankly, in our own individual you know, out myself and the Alter Alter employees, you know, our appreciation for how lucky we are, because you know, there's nothing like doing something, whether it's planning trees or habitat

for humanity and helping build a home for someone, or UM going to h Harlem Educational Fund and seeing kids who didn't have the economic opportunities you know, and education that we had, right. So I always believe that seeing that it is good for a person UM appreciate makes them appreciate the world around them, but also how lucky they we generally are, UM. And so it's it's you know, they always say that the person who give gets the most from giving is often the person who's supposed to

be the is you know, is the giver. Yeah, I get more back, you know than that I'm really giving. UM. So, so that's it. And then the final thing is, you know, we we do support some arts and things like that, but it's the arts that are more community based, smaller UM. You know, I love the big institutions, but you know, I don't believe that they we make as much an impact there as we do as if we support more

you know, community based, smaller local organization. The other thing I had to ask you about which really stood out when I was doing my research was Algrews is really kind of unique in terms of your portfolio managers are either women or minorities. That that's astounding compared to the rest of finance. Tell us a little bit about how

that developed. Is that relatively recent? When when did those numbers tick up to such a you know that that's just nothing like what we've seen in the rest of finance. So it comes from two things, UM, that are very very ingrained in our culture and old and maybe one

that's newer. The two old things are UM. The firm has always had UM, a meritacratic um culture UM and a belief that, uh, if you followed our investment process and philosophy UM, that uh, you know, anyone who was hard working, smart and and of course motivated could become a great investor in a particular part of a great investing team. We always believe in the team more than say a single individual. So we've had a robust training program that has gone on for decades and is really

widely recognized. And uh many of our leading pms are are actually from that program, as as I was when

I when I changed careers. UM. The amocratic part, you know, is about UM recognizing and I think our clients benefit directly from it that as a boutique investment firm UM, you know, specializing in growth, UM, we need to be significantly better than our competition, many of whom are much larger, or they're part of a big bank or at least they're part of an asset manager that has trillions of dollars, right, doesn't many different. We need to be much better in

our specialty than the competition. And the way you're gonna get that is if you recognize and promote within your organization the people who simply deliver the best results with you know, without much regard to anything else UM, and that has that has long resulted in what you see today. I think today we are also, of course more aware and making sure that as we recruit, as we mentor UM and as we promote that we're that we're you know, we're recognizing UM people that way. But we've always had

a very diverse UM leadership. The firm has always been very mimocratic and UH and we've always had a culture of of of of of people uh sort of coming from different industries and wanting to prove themselves. And often those people who who come from different industries are the ones who sort of UM, you know, re really passionately

get into the stock market. We have. You know, one of the biggest changes I'd say in the last thirty years in my career is the industry has become more professional, like in the nineties, there weren't investment management programs at business schools or and certainly the undergrad undergraduate was completely uninterested in what we did. Half the trading desks didn't

have college degrees. There you go, and so in some ways it was it was nice because the people who found their way to the industry in a bit like me. You know, we had no formal training. We weren't going there because it was a major or something that we were going there because somehow we had found it and we had fallen in love with it. Today, of course, you know, it's very different. You've got undergraduates that are taking investing courses and that's all well and good, but

high school courses are now offered. Yeah, and well, I'm much in favor of education. There's not there's nothing that there's nothing that replaces passion and drive. You know, you don't you don't need to be a rocket scientist to to do well in our industry. Doesn't hurt, doesn't hurt. And we have we have at least one person who

might might actually be a rocket scientist. But I have a doctor who's definitely so I know, I only have you for a few more minutes let me jump to our favorite questions that we asked all of our guests, starting with tell us, what kept you entertained during lockdown? What have you been streaming or listening to? Um m hmm, Amazon, Netflix, what, whatever? Okay, I mean it's it's it's uh and you can say you don't have Yeah, I love TV movie, Yeah I will.

I will pretty much watch any science fiction junk you put in front of me. Okay, so you're talking to the right guy. I'm watching. Let's let's tick through your favorites and well the way season three of the Boys looking forward to that, that's a good one. But I'll give you a one that I'm like, I'm not sure why I'm still watching it, but it's because there's eight

seasons of it. So so I'm like, in my mind, this is actually a bit of a researcher mind, right, If there's eight seasons, some audience must somebody like I want to understand why, even though I so I'm the expanse I love these I finished no spoilers, but what's so fascinating is how many different storylines and set ups are in that Because it began in a specific way and changed to something else before it. But you asked what I was watching, I actually not far into don't

really like it. What I really liked, Yeah, I really liked um by the Vikings and the Last Kingdom. That's very interesting. If you're a sci fi junkie, it's a Game of Thrones light right. If you're a sci fi junkie, I'm going to give you a couple of things that you will really like, and one is just two seasons could be the best thing I've seen all of down. I also have to say New Girl. I think I love that. She's hilarious. Have you watched Altered Carbon? Have

you seen that? I watched like two seasons. I've kind of it's done. Two seasons. That's all. Well, there may be a third coming, but so far it's only two seasons, or at least the last on my loaded. Um, I think that was Netflix. I don't. I don't remember um. And then I'm gonna go off on a little Tan which was also really good though, go ahead, Italian Mafia series. What's it called? Roma? I haven't seen that? That was

a movie? Also Roma? Yeah? That that one that The movie is a great movie, great movie, very very nice portrait of whatever but Roma I think, yeah, it's called roma Is. It's like, um, it's a little bit like Narcos, except that in Italy. And I love Italy, so so you see it's shot in Italy, it's I guess it's Italian and translated. So I love a lot of these UM shows that are there's this, this, this ridiculous one

from Denmark. It's about a prime minister or um. There's a lot of foreign you know TV that's now being you know, dubbed or whatever in English that I find kind of quite interesting because it's my agent, which is a great fabulous And the thing that a lot of people don't realize is the people playing French actors are actually famous French actors in France. We just don't know them.

They're the one in Spain where they're all about the murder mystery brother dies in Spain somehow sister from England, you know, goes to it to try to find but you know, you know, I realized that there is a theme here. I love travel UM. I think a lot of these shows are during COVID. We're a nice way to sort of see and remember the name of the show where there's a cop in Japan whose brothers in the Yukuza who disappears and he has to come and chase him down, trying to move Chicago and London. I'm

joining a blank on the name. Same like that, probably same same concept is what you're talking about in Spain, where it's some of it's subtitled and it was really we haven't watched as kingdom, haven't watched the last I

seriously recommend watching that, Okay, I'll put that on. What it's about is England before England, when it's five different kingdoms and Vikings are raiding England, and it's kind of like the English have to unite into a country if they're going to fend off the Vikings who have the awesome warriors, and the Vikings are basically trying to figure out what we like raiding But is this really a

sustainable lifestyle? You know? So my my wife and I like, I'll watch a show that she wants to watch, the watch show I want to watch, and that's how compromise the show. Similar to that where maybe it's a few hundred years, it's fifteen hundreds. Is rain R E I G N, which is the United It's France, it's England.

It's Scotland. It's just post Viking but before the Enlightenment, and the Vatican is very involved and it's not quite as um era accurate as the Crown was, but it's still you know, entertaining what goes on in the court politics and the various um wars between different uh different crowns, and sounds like it's a few hundred years after the Last Kingdom. I thought, I'll put Last Kingdom on my list, um and there's a bunch of others. I'll send you the name of that other show if I can, if

I can dig that up. I don't listen to podcasts, um I. I don't think they're gonna catch on. I can't think. I do listen to in the car my wife when I pick those in to Howard Stern. But still, yeah, he's hilarious. Sometimes that that's was not going to be my first guest. Well, I have to credit her. She she sort of rediscovered it. Okay, to be fair, he's

become an amazing interview that's it. So yes, a lot of it is nonsense and you know it's funny, but we have sometimes like no, but the interviews that he's done of rock stars. He's incredibly good at that. Well and all I wanted for forty years he better be. And and there's a there's a there's a there's a show where we we actually replayed the show Cuple times because it's just too funny, where you know, he asks viewers to call him, what are the three greatest rock

bands of all time? And you know, a music teacher calls in and on on that music teacher's list is Rush and Um, all right, and he doesn't have like the Beatles, and Howard Stern riffs on this for like two hours. I mean, by the end of it, you're just, you know, you're feeling sorry for this guy. Um. There's an argument over who is number three, but I think we can all agree that numbers one and you and I are comparable beats Stones. And then you know, number

three you can rotate, but it's not Rush three. You can't be rushed, right. I don't even know if Rush makes it mean right because he got you led Zeppelin. Well you want to start, Who's um, yes, Pink Floyd, Um you start, you start just working your way down.

Bruce Springsteen. I'm just thinking about It's funny because when you go digital, you lose the visual visual cues used to get which look, how how many albums I had under um the Rolling Stones that's like eight inches of vinyl versus all right, it's a half an inch of Van Morrison and a half inch of credence. But um and the Doors are like two albums. So how do you anyway, let's um, let's keep working a way through these questions before they kick us out of the studio. UM,

tell us about your early mentors who helped shape your career. Uh, you know, that's an interesting one. And um, obviously Fred Alger has to be one of those clothes. Well he was Fred and David Fred Fred retired in so you were overlapped a year after a year after I joined. He had completed his task. He found you when he was able to tell. But David Alder absolutely and you know really um uh Ron Tataro and see like who um Um I worked for Ron. He was an analyst

when I worked for him as as his junior. Um he then became a portfolio manager. And see like who um was a leading tech analyst who became a portfolio manager. Both of them, well, actually all three of them died on nine eleven. Um, they were, um, so you know, I'll be frank. I mean, I I was a little um I was. It took for a long time to get me to come to them because I did not like the idea of going to be the son in law, you know. And uh, he did show me some stuff.

I met these people. Um and then one of the things he showed me about the meritocracies and we managed like individual analyst performance very rigorously. And he said, like this was posted like on the Bolleton board, the fact that your son in law, it doesn't matter. So I said, like, he said, like you're gonna have a year where you're you're not on the bolton board, and then you're not gonna be on the bulletin board. And if you don't look good on the bull on borge, you'll know. And

I said I will leave. He said you won't have to, And I said, I'm gonna leave if I'm not any good at this, you know. So I actually did go in thinking I'll take the training and then I'll probably go need to go somewhere else to get like my sense of um, you know that I'm not just you know, some guy, but um, uh, those guys ron and see lie Uh, they treat treating me like everybody else in both the good and bad ways. So did David. Uh,

David probably a little. I mean David once actually told me he was a little harder on me than anybody else because he had to be um, which included like yelling at me in public and stuff like that. I mean, he was he was a very colorful guy, but he did he did have a um. He did like to yell when you made a mistake. Um. But he would also stand up in front of five people and said, that's the best technolist on the street right there. That's fantastic. Yeah. Um.

So those those are my business mentors for sure. So so let's talk about everybody's favorite question. Tell us some of your favorite books and what you're reading right now. Oh. Um, I was an English major in college. I should have said I did do a lot of reading during I didn't just watch Netflix and a Game of Thrones. Um, I did a lot of reading. Um. Right now, I am reading The Committed, which is the second book after The Sympathizer by a Vietnamese author whose name I can't

quite remember. I finished reading a book given to me by my brilliant daughter, UM, who is going to a PhD in English literature, Um, Um, by an author named Ocean Vong. Yes, there's an Asian American theme going on here, although that's unusual for me. Actually, Um I UM, I am reading a book on environmentalism. Actually I cannot remember the name. It was sent to me by somebody at

Stanford University. Um. It's about, you know, um, what we need to do to to be make a more sustainable world and and how difficult it would be, but why we should do it anyway? Uh uh And I wish I could remember the name. But the committed is that viet Than Gillian? Yes, yes, Google to the Rescue. Yeah, and uh, what's the name of the what's the finished reading a book called American Dirt American? Yeah, that's an

interesting book. I think I had the name right. It's about um takes place in Mexico, Um, Janine Cummins, Um, it's a it's a it's a story of a woman who has to flee um her country because of drug you know, drug trafficking and just it's like the journey to America from that perspective, and it's it's a pretty amazing novel. I think quite quite interesting. What sort of advice would you give to a recent college grad interested in a career in gross stocks or investing? Um, do

not go on robin hood and just trade stocks. Uh Uh. I would say, you want to try to start your career. This is important at a place with a disciplined investment philosophy. Uh. This is not a place an industry where I think, you know, going with the startup or the kind of small shop is necessarily a good place. I I do think a lot of the value that the larger firms

bringing and I'll just large enough. Um. You know is that we do have an investment process in philosophy um, and so we will train you in it and it may not fit you ideally, but you'll have a good, clear foundation for whatever you do later. The second thing actually I would tell you is I know that you're you're you know, the the tech the tech world, e commics world suggests you've got a job hop a lot.

That's the way in our business. I think it's actually exact opposite, because seeing wherever you go, if it's a good place with a discipline process, you to see it through a full cycle. You know if you go to a firm for two years and then go to another, you know, a growth shop for two years and a value shop for two years, and then a macro shop for two years. I know that some would see people say, oh,

you've learned a lot there. I would say, no, you haven't, because what you really need to do is see how growth works through a full cycle, how value works through a full cycle, or how macro does if you if you job hop like that, you can become very articulate on the surface. But our business is that really tough one. I mean it's as tough as competitive professional sports because the number gets put up our our just worse. We

get a number every day. Even professional athletes don't play every day, We get a number every day and um, and then they add up to weeks, months, quarters, years, and um and and and Frankly, you can have a fifty plus year record like Alger and then have a horrible six months and you know you're like, wow, uh, did we get out? Did we get out too far

over our skis? Um? I don't think we did. But you know, it's a challenging and so you need to know the details and the depth and you need to do that consistently through a period of time that matters for our business. Otherwise you're going to be superficial in shallow and you might find yourself floating around too much longer than you ever thought you would. And our final question, what do you know about the world of investing today that you wish you knew when you were first starting

out back in UM? I think that I was so focused on what was put in front of me, which was technology UM, that I didn't really learn much about other sectors or other styles of investing. Now, being that I was an alger UM my boss and everybody around

me did not we learn about value investing. And I'm okay with that part, right, but I I think I I wish I had learned war and listen more to what the healthcare guys were saying about health care investing and and frankly that there wasn't that forum at at work. And maybe I'm thinking now maybe it still isn't like that,

and maybe I should help create one. I try, but I realize a lot of times, you know, if you're the tech guy, you just tune in for the tech and when the person starts talking health care, you tune out so cross sector experience and knowledge months. And I think that as I think because when you see what works in your sectors. You know, my my key sector was techn e commerce, which I lead for Algier in

the nineties. Um, what you see what works there? Um, and then you don't realize, well, does it work in another sector? Um? You know, maybe it will and maybe it doesn't. That's very important learning when you are a portfolio manager or as I am really trying to make sure that my analysts are better analysts, because I think if you learn what doesn't doesn't work in their sectors, you know how they work as well. I think it will come back in some way and help you understand

your own sector better. And now that I'm I guess I'm at the level that I'm at. I know this because often when I'm doing training sessions or discussions with the younger end of our analysts, I can see how they've kind of myopically focused on a very set of narrow metrics or very set way than an industry works.

They've self bulcanized and they yes and they yes, And that's the professionalization of our industry over the last thirty years, right, Um, and so so they're not only unaware of how things might work in other sectors, they can get completely blindsided when say, a business model or a practice in one sector jumps over into another sector. That's that's the risk of specialization, when you become a half inch wide and a mile deep because it's so specific and so detailed.

So if I can ask you a question that sends you back to the office and say, hey, maybe we have to make some changes, well that's a that's a good question. Yeah, really interesting. Dan. Thank you for being so generous with your time. We have been speaking with Dan Chung. He is the CEO and ce IO of Algier Asset Management. If you enjoy this conversation, be sure and check out any of our previous four hundred UH interviews. You can find those at iTunes, Spotify, wherever you get

your favorite podcasts. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Sign up from my daily reading list at rid Halts dot com. Follow me on Twitter at rid Halts. I would be remiss if I did not thank the crack staff who helps put these conversations together each week. Paris Wald is my producer. Sean Russo is my research director. Attica val Bron is my project manager. Jack Holsted is

my audio engineer. I'm Barry rid Halts. You've been listening to Masters in Business on Bloomberg Radio.