This site uses cookies to improve your experience. To help us insure we adhere to various privacy regulations, please select your country/region of residence. If you do not select a country, we will assume you are from the United States. Select your Cookie Settings or view our Privacy Policy and Terms of Use.
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Used for the proper function of the website
Used for monitoring website traffic and interactions
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Strictly Necessary: Used for the proper function of the website
Performance/Analytics: Used for monitoring website traffic and interactions
00:03:14 [Mike Greene] So that was actually an outgrowth from my experience coming out of Wharton and you mentioned the, the, you know, the transition of people who tended to be skilled at math or physics into finance. And so it is important that at least you’re able to entertain that. Peter is unbelievably brilliant, right?
I think actually if you go public, there tends to be a more of a concentration in owners holding founder 00:17:41 [Speaker Changed] Stock. 00:23:35 [Speaker Changed] I mean very concentrated portfolios and long-term perspective. 00:23:48 [Speaker Changed] So, so when you say concentrated, how concentrated is concentrated?
I — I loved math, but really, I was going to go down that literature route more than anything else and — and study Spanish literature. We saw that concentrated exposure, right, with the — the — the staff that came out, that 85 percent of the world’s wheat production. What did you do to entertain them?
And you start doing the math of the staff, and you’re like, “I can hire people for less than this.” ” I’ve seen a lot of industry discussion that’s essentially, the math of it can be better on the RIA side because you just don’t have to pay for the things that you don’t need in your platform.
I’d say management consulting is any of the other thing that least at that time was the other career trajectory, just my personality, more of a math oriented introvert. Whereas the ETF is designed to be a more straightforward s and p 500 US only equity strategy 00:29:26 [Speaker Changed] And it’s concentrated 35 large cap stocks.
And I did the math, and I think at that point in time, roughly speaking, assets in ETS were roughly just 10 percent, 12 percent of assets in mutual funds and I was pretty convinced that that number was to increase significantly. I think I mentioned earlier, I have like a four-and-a-half-year-old that keeps me really entertain.
.” It’s really helpful to have had five other meetings with people who sit at analogous funds that had losses that were just as big, and in fact, they may have contributed to those losses more and be able to tell him, first off, your fund, just by my math, has a $250 million management fee. I’m not exaggerating.
So it’s, it’s just kind of ironic, and I’ll just throw this out as a bit of an advertisement, but like, we run a portfolio of 10 stocks, a concentrated portfolio, 00:27:41 [Speaker Changed] 10 stocks, 10 00:27:42 [Speaker Changed] Stocks, that’s it. So that’s the math.
And I was a math nerd as a kid. Low price stock has historically had some very large concentrated positions. And those concentrated positions happen because they have high conviction that they’re in that group where it’s not stupid to think about where earnings will be 10 years out. But it’s always a compare.
RITHOLTZ: So hold the duration risk aside with those two, but just for an investor in treasuries, I know you’ve done the math before. If you’re giving up that 1% big fat yield in 2019, 2021, let’s say you give up three years of 1% and get zero, how does the math work over the subsequent couple of years?
People who were deeply concerned about task loss harvesting, either they’re selling a business, they have low cost stock or founder stock, or some other capital gain they’re trying to manage through highly concentrated position that they want to de-risk but not create a giant tax obligation. Let’s jump to our speed round.
And most people think of Bill, his bread and butter business is activist, very concentrated stock investing, but he has a bit of a background in macro too, back from ’07, ’08, and he actually decides to do this in the credit markets, where spreads are incredibly tight. And that’s sort of the math. RITHOLTZ: Right.
I started out math and, and physics, and in high school I was a rock star in math and physics. We tend to be concentrated in those. Tell us what’s keeping you entertained these days? He went through the math and I’m like, wow, that’s a great return. But those guys are great, right?
Just as China’s turning on to make our pelotons and our, you know, bar backyard barbecues and trampolines to entertain our cooped up children. I do the math. But 01:01:28 [Speaker Changed] Beneath a lot of this, it turns out, is market concentration and various forms of collusion. I mean, oh, what, what a coincidence.
We organize all of the trending information in your field so you don't have to. Join 39,000+ users and stay up to date on the latest articles your peers are reading.
You know about us, now we want to get to know you!
Let's personalize your content
Let's get even more personalized
We recognize your account from another site in our network, please click 'Send Email' below to continue with verifying your account and setting a password.
Let's personalize your content