What can one LEARN from 25 yrs of Investing?!

A Talk about Investing, Career and Star Wars!

Distilling and Encapsulating two and half decades worth of experience is not an easy task. But our Ben Horowitz from a16z does an amazing job by having a conversation with Mellody Hobson from Ariel Investments.

I have attached a link to the podcast itself for our audio listeners.

I have attempted to summarise for our visual readers.

And for our ferocious readers I have attached a transcript using Watson.

My appreciation goes to Ben Horowitz, Mellody Hobson, Andreessen Horowitz, Ariel Investments for sharing your story and journey with us.

Highlights

  • Patient Investing
  • People > Money
  • Fixer vs. Thinker
  • Cold IPO
  • Focus on Follow Up
  • Debt is bad in Small Cap
  • Board Meetings in Movie Theatres watching a good film
  • Long Term vs Short Term Thinking
  • Merchandise Rights + Licences >>> Directors Salary
  • Yearly Strategy wins over Quarterly Results
  • Would you do it in the light of day
  • Learn how to Ease into being Uncomfortable
  • Pick your Board wisely

Transcript

I am Ben Horowitz of Andreessen Horowitz I like to thank you all for coming them we have a really exciting and thrilling I guess tonight Mellody Hobson. And I’m going to give a brief introduction since we live in the world of Google I won’t go through her childhood in everything. He’s the president of Ariel investments which is one of the larger investment firms and with a thin absolutely stellar reputation she’s also and that’s a thing you know running a big yeah investment fund is one thing but he’s also terrible chairwoman of the board at. On the board of some companies you may have heard at Starbucks and Estee Lauder. And she runs something that I know she runs a conference called the black directors conference which is. About one of the very best business conferences in the world I think and I. Bring that up because it’s important to know that I’m as an investor she’s also like she’s the type of investor could actually like run a company quite easily include Amadis into an investment firm. I and then. See I was married to a decent filmmaker he made a movie that some of you may have seen called Star Wars. I. But the the the big thing about a melody is that anyone who you ever run into who knows her will say she’s the real deal sees unbelievable and I had this experience. Two nights ago I was with the legendary musician Quincy Jones and his son is here tonight. Yeah the various QT three and. He asked me you know what he doing that’s because like I’m interviewing melody how things like melody happen. And you have to understand Quincy Jones little he knows like everybody like he knows guys he knows like the president of Israel he knows people like who were in the third Reich and any. Eighty two so he’s like way too honest. But if you don’t like you know. And he goes melody half and he’s like. Well she’s the best I give all my money late and there’s like suggesting thing going says that she’s the best person the wealth. And third like that that’s a kind of reputation TSO everybody welcome melody had something. The melody by Ariel some logo is eternal holding up a Cup. And I thought that’s a quite interesting logo and. How does that reflect the firm’s investment philosophy. Ariel has a turtle as a logo we’ve had it since our inception thirty two years ago soon to be thirty three. And the idea is to really underscore the investment philosophy which is patient investing we call ourselves the patient investors. And on our pitch book it says at the bottom patients wins and we feel very strongly that are the core of what we do is play time arbitrage. So the short term market gyrations and volatility exact track that exists and will always exist also always excess and varying degrees. Allow last week we are able to take it apart take advantage of those moments. And because we take such a long term view we look we can look beyond what is going on at any one point in time and say okay in a normalized environment what does this company look like so that is part and parcel because we are patient we can think independently. Because we are patient we can be extraordinarily focused at what we do so I always use the line that an expert is someone who knows more and more about less and less you know if you need brain surgery you don’t go to our internist Brazil where the people are learning more and more about less and less that because we’re very patient we can continue to peel the onion and go deeper and deeper and very very niche areas. And last but not least because we are patient we’re able to build a team. So how does a big diverse area and getting an example. Of like how that might play out on an investment like what’s an investment that you’ve made where the where the world had turned on it in the short term simple one that I think works for this audience in that everyone can understand a few years ago we bought Madison Square Garden. And Madison Square Garden was at an interesting moment first of all it had the Dolan family that was an owner and they would be called the Dolan discount because people didn’t like the family running the business or that they like on the next to which is well it’s the name the liberty it’s you know that but it’s also a lot of other things they own state you know us Rockefeller sorry that. Right is there it is all excuse me I can get out fast enough they’ve a bunch of properties that lay forum. Cadillac theater in Chicago so they own a bunch of properties around the country but obviously the necks are major major asset. And so and Madison Square Garden itself. So the time that we bought it. It was the NBA lockout. Okay let’s start with that and that’s a good short term that the classic short term they were in a retrofit of the garden that was totally over budget I mean just. They messed bag. And. They were also at the same time about to renegotiate the television contracts we looked at Madison Square Garden more as a media play then as this conglomerate of various. Businesses that were put together so we sat. Basketball will eventually be played again. This guy is you know is that you know people have obviously. Sold off the company because of the immediate situation. And. We went to visit Madison Square Garden and we saw what they were doing with the garden inside and we said this is genius. They created the skyboxes on the ground floor that actually you don’t sit in the skybox you sit in a seat and you go back to your food if you’ve ever been there our it was actually a brilliant idea brilliant way to use space back of the house. And sell it at a premium said that even though they were over budget we said this is going to sell out. And we said when you know all the television contracts that are being renewed because sports is such a great asset. In the next or the next. That they’ve been renewed at a higher rate. So when we look at all that together we said this is a great asset and you could not rebuild Madison Square Garden in New York City if you tried. Because of the size of the bread the number signum locket rep exactly so he said there’s a barrier to entry here that is pretty significant. As we put all that together we bought the stock then Jeremy Lin came yeah well insanity and you know they raised all of their ticket prices by forty percent drop right to the bottom line renegotiated their television contract that was when we were just said this is a moment everything that has gone moron wrong has gone wrong it’s priced in. So let’s just get beyond this and then say what is this look like the Vinland sanity hits do sell even that short term or how big of a actually we ended up about owning that stock for quite a long time we still own it and then we benefit from the spin offs. Right which was also another great moment. No but since you yourself have public shareholders arm. How do you. So your long term. But. They’re not always they are they’re not always and they do tend to be prone to panic and. You know I’m Madison Square Garden the NBA lockout could have lasted years or hit you know they probably never hear civic ahead of you know continued to be the next some and lose all their games and try to weigh all the good players but interestingly they’re sold out yeah it’s like they have a lot anyway they thought well you know it really only from Chicago I’m from Chicago nd they’ve sold that well so you know there may be a prospective their winning or not winning but that the proof is then you we could look at data like season ticket holders buying every year that’s data you can just see right writer gives you a great deal of confidence. So what you’re right we have public shareholders in our mutual funds and then we have institutional shareholders that we manage big pension fund accounts are endowments and foundations and there’s no question we call it the velocity of money who’s got much faster. When I first started in the business. I start aerials the only place I’ve ever worked. I graduated from Princeton with Ariel had been there for twenty five years next year. The average mutual fund investor held a fund for ten years but it dropped to seven and now it’s more like three. For a mutual fund for emo mutual fund not an individual got hope you print your stock right now my gosh and in. To arm the mutual funds get electronically traded in the same way that stock Stewart are not as mature. Dare there like the computer center the picture on mutual fund turns out there are people who do programmed trading around everything as you might expect and some do it on mutual funds the thing about mutual funds is the delay in pricing so what really taken the place of that are EDS I think he can do high frequency mutual fund drive not really it’s hard to do. Doesn’t my next start a fight death to. So. You said earlier your you’ve been known to say that don’t make decisions based on money. Which is a kind of a different sort of thing for an investment manager to say what do you mean by that like what do you make the decisions on if you’re not making them on. So I got this advice when I first started working and it actually came from the person is the chief investment officer of Ariel who started our firm. John started a firm when he was twenty four years old when twenty four year olds didn’t start investment firms a good pension funds and ask for money. And he added unusual way of coming to be I’m just a and absorb more than a casual observer of a stock market but obsessed with that and that his father given stocks every birthday in every Christmas instead of toys. He said in the beginning it was a very fine he cried theory about that you don’t have to write out a lot but he let him keep the dividend check so he was a twelve year old with cash flow I think that if he wanted to buy a candy bar iqa Dan. Slowly he did in this modest portfolio started reinvesting the dividends etcetera so John this is the backdrop to the story of this is the chief investment officer of our firm his started Ariel I’m twenty two years old the first thing he says to me on the first day of working don’t make any decision based on money. Sunlight will Duchess incongruous with what I would think an investment person would say he said I believe people. Undervalue time and over value money. And because of that they make a lot of decisions that are actually not rooted in the right. Set of circumstances so example he said a lot of people will take a job based upon money and not the job. HM. Yeah envelopes that Silicon Valley and they may try to talk him out of it. You know they may never be happy in that job but they’re chasing the money is not worth it right volatility yes or. Make big decisions about it could be marketing at area are hiring someone at Ariel he’s at the biggest decision mistakes that he made is in the very very early years of our firm when we literally had no clients and no money under management he wants all of his friends and family and ask them to give him twenty thousand dollars each so that he could have a track record he started the aerial fund which is now a two point five billion dollar publicly traded mutual fund. And that that was to get five hundred thousand dollars together to have a track record. So he said during that period he was so can you know fees on five hundred thousand dollars in our businesses five thousand dollars a year. One percent yeah so he said he was so concerned. With you know making sure that he was very frugal and thoughtful that he let really great talent. Go away he didn’t grab him when he could because he was concerned about making sure he didn’t over extend themselves. And he said that was a bad decision that was making a aback a decision based upon money and he probably lost people who would have accelerated the growth had he hired them right right and then. I. Is there an application of that to investments themselves as well or is it is it more of a management life philosophy or is that also. In investment philosophy like our their investment decisions that you should be. Make based on my main sounds like almost an oxymoron but I don’t think we would say it that way because we’re obviously modeling a return ethnically and while we’re taking a long term view and we’re patient investors we there’s a sense of urgency right we don’t want you to think or legs and hoping it works out. We actually. Believe that a company lays out its goals and objectives. And unless. They have a very good reason that they don’t need we shouldn’t be there. So that might change our investment decision but our decisions are made based upon what we believe the intrinsic value of a business is worth at Ariel we call that private market value so we say what would a rational reasonable person pay if they were to buy this whole business or if it were broken up into pieces and salt and so ultimately that’s a a price apply to that we want to buy companies when they’re selling at a forty percent discount to what they’re worth that to us creates a margin of safety for us. And or thirteen times or last next year’s earnings which is why a lot of your companies don’t follow it purview unless something has gone wrong. Yeah I like that the will generally for technology. Companies in that position is probably not a good thing to buy what’s interesting not necessarily I mean Microsoft was and that from an earlier they are not where they had a few ratio absent I think got down to ten times yeah and you know it didn’t the last couple years that our portfolio managers own that it’s been a great stop for her we didn’t know they were going to fire Steve Balmer. Sorry but that signal to our discussion know anything like this is true so one of the things we think about it Ariel will of a company where they’ll be a subsidiary that’s dragging down earnings or there’s something broken inside the company or could be a leadership issue although we tend to align ourselves what we think are strong leaders. But we say what are the what is the likelihood that this company will let itself keep going in a way that is not on a good path right enjoyed some point you say with a company like Microsoft. How much. A. They’re much more can Bill Gates take right before he actually make for the floor I mean all the bomber says he opted out himself I mean he clearly has. More at stake than Bill Gates dnmt in terms of his. You know how he sold that. But how do you. Predict that or how how would you think about it’s hard to predict things like really is that you know you’re you’re our in our situation we are. Literally looking we do scenario analysis if this thing lasts. What would happen death. And we’re modeling actually the company based upon multiple scenarios. Right so we could be they shut down the division and take the loss. They sell the division. They fix the division and it starts to grow me would that’ll be just one Lee’s own McCormick spice company. McCormick spice company is you know the largest maker of spices and our world their annual reports are centered with spices I think ultimately you get like peppery ga or cinnamon or what have you at which is a way of becomes in a mylar envelope. And McCormick spice was interesting they had a real estate division that was like completely at the block all. At McCormick spice company so we looked at that were like world’s largest spice company. Sold to both the end user consumer and the food company. So if you’re Sara Lee. Our outer track if you are a huge fire of their spy says they are it. But also we’re buying it for a table. Interesting philosophy in a bad economy where people can’t buy maybe as upscale an item like steak or shrimp or whatever it might be. They buy cheaper items that they season more. I think that that does Frank so it ends up being counter cyclical cyclical in some ways but McCormick spice company we were modeling it we said there’s no way this great business. This unbelievably dominant brand lets this ridiculous real estate division take the company down. And they sold it to rouse. Which was another one of our companies. Okay so you said you said two things earlier that I know that a lot of our portfolio CEOs. Our thinking is extremely interesting one. John found you when you’re twenty two years old. Which is. Like how did he identify. You at that age and so. Who you’re going to be. And then you’ve been married twenty five years next year which is unheard of where we are. And the average American will have eleven jobs in their lifetime. Average and obviously tech it’s much higher yeah and so. And you know it’s interesting you probably had eleven jobs if you count all your directorships and other work that you do right but but. That Ariel the whole time so. How he accomplished at like one how does he get some. How does he identify talent like you that early and then hold it up genius thing and I give John a lot of credit because I have to say I struggled with us I have been able to replicate it. In the same way. John that we one of seventeen. That’s even more Bertha who like I said I know a lot of seventeen year olds and they just scare me. You met me when I was seventeen I wasn’t your typical seventeen year old I was very driven and very focused. For a whole host of reasons. And I was a summer intern at Ariel when I was nineteen results. When I was twenty John sent me to be an intern at euro price was the first undergraduate and turn they’d ever had. And he said you know I got this woman working with me she’s great we happened to be the largest shareholder of terror price at the time. So obviously they the gentle nudge worked. So listen to Baltimore to work on the research side for very famous portfolio manager named Jack laporte who managed the New Horizons fund which is a famous mark up fun and a joke at your place was that they were training me for John which was better there so I Li I graduate from college and go back to Ariel and this is something that I have never. Seen or heard before. John used to take me to meet people. And we would go meet people we didn’t know and he said your job is to get a San and I was literally like twenty three twenty four years old. And hello to take the path you have to know John because time is like he needs that service hit like his personality is legal because he’s sounding like. Because he’s a genius on the th if it sounds like he’s the most extroverted like totally any lawyers like you gotta pull it’s pulling teeth your usual unlikely and I really very very uncomfortable kind of he’s like the classic he’d fit right in and so yeah probably a little. Probably I see this term with love and like you had asked burgers and like there was no spectrum backlash yeah you know like you like that but he’s genius and great and wonderful and slightly awkward and wonderful. So. I am twenty four and it’s true he said he hired people to do things he couldn’t do. True story one day when he read an article about Dick Parsons was running time savings and loan he was featured in New York Times magazine section any stability get us in to see Dick Parsons. So Dick Parsons in this article says. He loved bacon. I. So I wrote him an unsuitable are vacant wrote him a letter and I said you know I tried to connect some dots of how he might know us and we don’t want anything we just want to come in and tell you who we are and what we’re doing and if you say yes we will bring Baker. Mississippi and he said yes. Nothing really overdressed the water with me he brought me to ask a lot or we’re literally like pip squeaks coming into his office before Time Warner what to Time Warner right after that to be CEO. Saddam would have me go and make this effort to you know see people he was on the board of print co president that’s a management company. And Jack Bogle from vanguard was on the board as well. So one day John called and he said. Instead of you actually getting us to Jack Bogle I’m gonna tell Jack Bogle I want to come and see him and I want you to follow up and make it happen. So I’m emailing back and forth which apple goes office and you know Jack Bogle says listen I’m really busy but I’m riding the train from New York to Philadelphia on this day. Buy a ticket. And you and John can write to Philadelphia with me. The so we fly to New York to write the train to Philadelphia. We get on the train and Jack Bogle is like you know industry legends you know indented vanguard and I was a senior thesis at Princeton and then you know this is you know someone who’s just. Very very very they don’t address our where Julia. So on the train and John says one it melodies to meet you because she’s going to be president of aerial. And how you are twenty fourth I fell off the chair and look what are you talking about he said I think it’s really important to expose her to all the people that she needs to know and help her but when she’s thirty she’s going to be president. So that’s also for you. Going after FIFA Theo question. What about the other people at Ariel that then make them like that they hear about it the Macomb cellist where they it was interesting were you able to keep it contained or did you roll back at the office and garment out there that now. I was. Such. I I think it was brilliant for so many reasons but one being. He I knew and then I knew I had to be up to it. So I was like what do I have to do to kill it for he just read your personality and said if I say this to melody. She’s going to be different violence is going to fill it and then the second thing was I think I gave it was bad but that point I was probably six years away. Give everyone time. And they knew I mean we all know but it was a very it was a. They kept me very loyal. Ariel became my company to I mean a lot of things happen in that six year period. And I tell you I’d I don’t know. Wow how he knew to do that but he did. Well. And I assume he didn’t tell other people who are going to be president say just I don’t know you. And there were you know there was one person who had a problem with it there and was you know we you know he was like if it’s a choice I choose her wrath that’s. That’s amazing and I have been able to replicate that I was joke which I I want me yeah apparently yeah I with the person who you could take all this off your desk in your material like you do to me every day and he’s like no no that’s. He. Well the other thing I’ll just tell you one other piece that I thought was interesting so early you know I’m having things thrown at me that we we divorced our mutual fund company had never been done before we took to operating it will finds out of an operating it will fund company called the Calvert group and went off on our own and I made this presentation are bored to say that we should do that we spent our life savings on it and it had all sorts of repercussions and at the time it was when they came to us it was three hundred million dollars in assets and today in those ritual funds we five billion dollars in assets would obviously worked. But. John during that period which was you know extraordinarily difficult and hard and a lot of stuff was going on. He was. Really smart about. Making it clear to me what the rules were so. But where one day this is the rule. I walk into his office and literally on the pip squeak like I’m literally like I was called Johns grasshopper was the one who just did everything he wanted me to do. So. I walk into his office and I’m having a meltdown full line about something not going well and I start crying. And it and John is like the nicest most gentle person that you’ve ever met ever like has. But when he the pool in as often sn equipment for votes too far that it’s we are that but if there were any the Pooh stuffed animals all sorts of things he likes teddy bear. So he’s like. This is not the playground. And he said now I want you to understand something today and for ever more. You do not bring me any problems. I give you problems. The south. And I was like. In shock and I just pulled myself together and walked out. And then the follow up to that this big issue that I was working on were on a plane. And I’m like you know deep in thought writing like crazy he sitting right next to me is what what is wrong with you I finally tell him what I was working and he starts laughing hysterically. As I said to him why are you laughing egos and so glad it’s your problem not mine nnj. No there would have he he think he would’ve given that thing kind of instruction to somebody else who was that like. Special for you because he knew. Do you what was the role he wanted me to serve I was the fixer. Now I was not the person I was to simplify his life not make it harder ever. I was my job was to leave his brain free to think about investing. Right right. May think so are so are the other employees at Ariel like how long do they stay with a long time yeah longtime so they’re ton that you know we’ve a hundred people approximately but there’s a bunch of us that are really young but have been there for a long time so we have multiple twenty twenty five year you know fifteen years and the people are not fourty results. Well so it’s pretty amazing I mean we say patience is not just a slogan for us it’s a way we do business. And we want to attract people to our firm who take a patient view so when we read resumes. We next job hoppers. If you’ve had too many jobs. We withdraw your resume. Leon is Alabama. Before we set you’re not going to be the person who comes and stays here. Right because they haven’t given those jobs a chance to work right and that’s what Johnnie Lee says even with CEOs that we’re looking at we’re investing he said there’s nothing worse than a person who is that some people move just in time. There. And we all know those people right where it’s like holy hell no I don’t know how do I have any. Start of CEOs here you can they fail up they go just in time to before the thing falls apart and they can take credit for something and you never quite know what they built. Yeah. No no Chloe we see a lot of that here in it and it’s interesting because here there were events hyper competitive town environment and. You know it’s an advice that I always give but it’s very very hard CEOs to follow because. The bar for engineers do you have to be not just a good engineer you could be a great engineer and a missile and so many of those amendments has up. But guess what they were only at their last out two years. You know do you take him or do you not and more often than not people take them and I think that. More often than that they’re gone into years it’s interesting as I’ve often thought you know from my. Glimpses at your worlds and and times that I spent on the group onboard that. You know. It’s like mercenaries. You know that that that to get that person is truly committed to the company. It’s so hard to do because there is that sense that you can trade up. And so I get that it’s harder probably and in the technology space the maybe what we do in terms of what we’re looking for is just the natural. On. You know ebb and flow of people moving around your friend the chances the companies themselves her. Ephemeral tell large degree through there aren’t that many long lasting technology companies like right Microsoft is one of the oldest technology companies and they were found in nineteen seventy five in your overall that’s not that old room where as in our world like. The ancient you know that all you guys older than memory like IBM three right. And and generally when you get really old you struggle and technology because the product cycles are so short Sharon sexually that’s a good. Segue into you know one of the big. Memes that we haven’t technology is. It’s a bad idea to go public term because public investors are all just totally short term. And. That actually becomes extremely dangerous for a technology company because. I if you don’t invest in the next product cycle which. Only makes your bottom line worth are you’re going to be dead soon because no product cycle lasts more than you know five to ten years that’s the longest. And some are much shorter than that and you can see that with companies like them. You know Facebook godlike roundly a attacked in the public markets and by public market analysts and on CNBC. For buying Instagram album but. That was the exact right thing to do and that that story is repeated and repeated and repeated and so. How how would you how would you advise us on Matt and giving your position as the public market investor so on which piece the well on that life recent go public because public market investors are all searching I would only as long as you possibly can. And make a life for ever thinking forever and I think that. I think it’s interesting how Travis is talking about at at uber saying you know we’re just trying to crawl and you want to go to the prom I thought that was pretty genius. That the one thing that is we see that is true with companies are going public faster than they used to go public. So when you are talking about this on the phone I said if you look at the history of companies being born in going public even and technology that that period is getting shorter and shorter and shorter. And to be public is a very transparent existence. Maybe leading up to it with some of the filings you have to do obviously there’s transparency they are when you get over your number shareholders but. It is a transparent existence and I think it at times if you are very concerned about public sentiment may lead you to do things that you don’t want to do. So I think you wait as long as possible also think that. Public. A the analysts. Engagement and and and what you have to do there is going to take a lot of time and energy that you have to learn how to handle I mean you’re talking about how you have to go out and see your investors we own and some of our cases of aerial stocks were we don’t twenty percent of the company and we call and say we want a meeting they stop what they do and give us a meeting we just do and that is you know challenging embedded in the stock market your twenty percent holding starts ill. Inside yelling it’s just saying we want to sit down with you and understand whatever this issue is. The way that I often tell people you know and what are those meetings like so what young twenty percent of my second you come after nearly been. I’d like to have a meeting. You know what what what I expect in a meeting like that and what are the kinds of questions that you want to ask me them. So we’re not gonna ask about a quarter. When I can ask about any earnings short term. We don’t care. We’re gonna ask you about long term issues retired about strategy. Do you have a plan to win. And. It’s not going to even though we’re asking for a meeting we’re talking to every quarter one of the reasons we want to touch a management team every quarter and we want the same people to do it they get to know the people and they can start to discern moods have a answer questions how upbeat or downbeat they are you get lots of non verbal cues and that’s very helpful especially when you talk to some for and for ten years every quarter. We ask questions that are different a you know I’ve heard Charlie one rose one say it’s not the first question it’s the follow up. The it’s always about the follow up in so many people leave the follow up on the table which is the critical issue we actually use an organization called the I a associates business intelligence advisers ex CIA agents who helped us in in questioning. And they litter wrecking the light. They are unbelievably great they literally. Train you. To understand and know when someone is uncomfortable when you’re starting a probe. So it’s not some kind of all the things you think it is like I contacted they shifted it’s not it’s not that simple generally what happens when someone is uncomfortable they do a cluster of actions that once. The like move in their chair wipe their brow look away there are a few things happen that shows there the body gives away the issue. The other thing they teach us to do is again not ask the obvious so here’s a simple example we would ask a a a. You know Regev demands they can’t tell us something that they’re not telling everyone right so we will say. We don’t wanna ask you about next quarter worse will say hot considering. How oil has traded down so dramatically we wouldn’t be surprised if you missed earnings by fifty percent. Will come of the wild answer that’s cool planting a virus. In the goal is to see how they react. And if they say like all got what do you think that’s crazy or if they don’t they could be then you know you’re closer at that not. Well if you have a very very very like our house sympathy. You’ll ask that’s very tricky presumptuous quiver that rather that shortly but I think of that we learned carrot works better than yesterday you don’t yell at people you want them to feel aligned with you when we are date we are in it together with that we are owners of their business with them. We often on very we are often the largest shareholder of the companies were invested and. Especially on the domestic side if you say that to me and I go. We could’ve missed by fifty percent like our. View the flag sell my start now like without overall reaction no it could be the person says something like you know. It’s going to be really tough and you know we’re we’re looking at everything you kinda know you’re in the right ballpark we may be seeing at that point a week on average down. Because this is a temporary moment they’re gonna report didn’t disappoint and then we’re going to go in and buy if we had that high level of conviction and in that way over the long term it ends up being anything better return. So the stock that we’ve been doing that on lately that it’s been just a real problem child is this company called Bristow the Bristow is a helicopter company that takes. Oil workers back and forth to oil rigs as far six hundred miles offshore right right well ahead of the view that the oil business so it is not as interesting overheard you could press now this is the perfect example of an aerial stock. The trade in tandem with oil and the contracts have nothing to do with oil prices. Because they have contracts that are stand and waits for the client because if there’s an accident or a rag there to get there very quickly right to their contract is three to five years okay so nothing to do with oil and I says he’ll trade it with oil Ursuline oil goes down by. Regardless of its forget. But their numbers but they’ll still have their numbers anyway while their access very they’ve their online competitive had some issues that have. That have affected their earnings because they have a search and rescue business that some pretty significant and they provide searching rescue for the UK government’s. Where the oil business is so dirty like real big they they literally have guys in helicopters to search and rescue for the like the people who die and the oil rig fires now or it could be search and rescue for anything so immersed in that country Britain they are the outsource provider for search and rescue for the country of of the conservative even though their number two competitors based in Britain. And. Interesting right slurred rivers the stock is trading for less. Then all the helicopters if you sold them. Interesting thing about helicopters they don’t appreciate the way other vehicles do this every five years you’re to replace the engine and the rotor. You basically Avenue helicopter every five years okay so that’s already baked into the price thing so we have to all that matters and say right this makes a lot of sense. So when we have those conversations with them. We are going to add that the issue with them as they put a hundred million dollars in their search and rescue business in the UK so people think they’re going to raise equity we don’t believe they are we think they’re gonna just borrow the money so the stock is traded down on that path. A very very very interesting so. I I know kind of from previous conversations with you that you Europe. Estimate of leadership in you and you look at leadership in the companies that. That you’re invested in. What do you look for you know in those conversations from the CEO to go. You know this is somebody who knows where they’re going who can get the organization there and the like maybe Scott about quarter maybe she’s got a bad quarter but. I’m not even worried about it because I know like this this is the person and when you go I don’t care how good the quarter is like this thing is going to be in trouble over time be so you’re always worried about something that I wish I could say were never worried because anything can happen but I would say we are looking for leaders who are aligned with shareholder. If we see CEOs who don’t own any stock. That’s just not guide simply CEOs too you know pay themselves too much or where you have a closely held business and by family members are on the board. Now that you know that day and they’re all making you know huge. They have sort of phantom titles and big paychecks. Those are the kind of things we don’t like to say we like to see companies that that where the CEOs are smart aleck haters of capital that’s really important. And as usual bye birdie suggested they have a vision and they can articulate with that vision because remember we’re going in as value investors when something’s wrong. Something has not gone well if we’re interested in your company right right. So it seems like it hit him. Thought of this serve melody says a legacy probably are they probably already know their problems. No but they love us when we show up because we’re such a long term investor right shareholders I mean company management teams want Ariel in their stock because they know we’re not going to trade around with saw their cut their set their shares right wrote one also and you’ve got. Potentially very large filth and anti remember when my stock went to forty seven cents. And thirty five cents them but the people who invested then held it forever because. You know they they have a way to fourteen twenty five because they. If you could buy it then Clinton than you would take the time to understand what it was whereas if you’re buying it on the rise. You’re just buying momentum so that really are asking yourself do you believe in the people you know there are certain people who hype everything. And we want to avoid that in their certain people who were truth tellers you know they’re telling you the pros and cons with the really confronting what’s going well and what’s not going well so that you have an honest assessment that you can look at it and hopefully an unbiased way we’ve to force ourselves we talk a lot about behavioral finance not get anchored and what was it to really try to understand what could be in a warm bath it as a way of saying you know don’t get mad at the stock it doesn’t know you own it you know so you know if it goes down you know you’re looking at it fresh from today not what you paid for. And that’s very very hard for some people to understand. Yeah them no question. Arm. And so like of the companies he looked up like. How often are they truth tellers versus how people we’re avoiding trying to avoid the high people. But China and that’s like of the CEOs that you look at them like how. Unusual is that for us. The theater benefit that most of them is that twenty five percent of them though I think cars are largely you know if we’re investing alongside of them we believe in them and that doesn’t mean we always get it right we get wheat you know that’s one thing about again investing your batting average that have to be a hundred percent to do very very well so we messed sometimes we get we invest in the wrong person or that the strategy is not doable and of the deals that you look at like how often would you invest. We look at a lot of things before we buy we look at a lot so on. Our universe is about in our small cap product is about four hundred stocks but we only own forty mb and if we found a new name we wanted to buy it would force the name out of the portfolio we can’t we won’t go over forty. We like glasses Morris we’ve concentrated portfolios honorable Bhansali who runs our international global portfolio you know she’s looking at thousands of stock she eliminates two thirds of them right off the top. Mrs process is one of elimination every she describes it which I love she says she assumed she doesn’t own anything. Until she can’t reject. Everything as a rejection. And like what is the basis for like rejecting all they thought so lots of things you it could be anything from the businesses seats to cyclical it has too much of a commodity emphasis that which is something we cannot project we want companies have brands are franchises that have moats around them that’s where buffet talks about that are very hard to to copy or to provide new competitors to command. And or they have some defining aspect of them this gives us great confidence in its long term but we we don’t like commodity business as we don’t like on new people doing new things for the first time we we actually avoid that for the where you don’t you can’t seem to history our track record. So that’s not to say we won’t buy an IPO using your mind cold IPOs thriller buying IPOs that the company’s been in business for enough time for us to look at the history. But it sounds like you start with a business type financials. Is that accurate and the financials come next right. Okay. Interesting what we’re screening for a whole host of issues I mean we’re looking at thousands of companies. Yeah so ethnicities. Plenty of Alaska do so what wetter and investment that you didn’t make where you said like bats like. Were taken out off the listener and then went back and said boy that was a mistake John has one that he talks a lot about so we have had a tremendous we had tremendous success over the years and casinos we don’t Caesar’s three times. And there were you know obviously a leveraged buy outs all certain things happened along the way that made that just a really wonderful stop for us I’m only owned it and John at one point on was looking the casinos casino space and on. Two thousand eight two thousand nine Mandalay bay was a stocky didn’t buy because he thought there was too much debt. And schools that will be. I will reason we won’t buy a and yeah here CEOs. What’s that especially small Arthur note you know debt is poison if you’re small cap and you can’t. The you know you don’t have the cash for you can find plenty of targets. It’s. A disaster so debt interest coverage ratios we play at the Honda of attention to. And data Mandalay bay was one that was really on the ads on the debt side even though the cash flow there is unbelievable John didn’t buy the stock he still talks about it still like I missed that Mandalay bay you know hit spectacular returns from. The bottom spectacular and he just misunderstood the he did way his own principle the core business hard enough and I think he felt that he was discouraged by the debt peace but the debt piece was manageable because of the cash flow until with a little bit of a chicken and egg thing. So them on the switch gears a little bit or a lot better your husband George his entrepreneurs story is quite amazing story and that he was the entrepreneur that no investor believed in our life. Having watched the making of Star Wars Hutchison credible story if you hadn’t seen it. They try to set down a movie I don’t know how many Telerate they come in like percentage down like it’s over and then he finally negotiated that the movie go on by saying like you don’t have to pay me any money. For this film at all I want is the merchandising rights for the sequel and the next week off there fell and they gave it to him and it was like the greatest deal anybody’s ever cat and the history of mankind. You can imagine that so he is like the ultimate person that nobody believed in and. What do you learn from that knowing him and who he is. And do you look for that sometimes and companies will your facts are close but a little hooked directly artists on the original Star Wars budget was ten million dollars and George made it for thirteen. The board. Actually greenlit the movie and had a people like princess grace on the board a twentieth century fox at the time. He was paid a director’s fee for writing for for directing the movie. And he was so concerned when he wrote the original Star Wars the script was so long was a hundred pages. That he divided up into three movies and said no matter what I will get these movies made no matter what. So the first movie was made. It ended up being this giant success. It was in the theater for over a year. Yeah but we can’t even imagine that vannatter who over here is art right. So now it’s time to make the sequel so they say he’s he’s coming off of American graffiti which it was made for seven hundred thousand dollars and grossed one hundred million. And he’s coming off of Star Wars he’s going to ask us for a huge amount of money for this next one. They thought he was going to judge the terms of the deal rights is that no I won’t change the terms of the deal but I want to eat because I want to make these two others I want to see quote because I feel that the club inning on the front right exactly so they there was no such thing as licensing there there were no action figures there was no he said that you know toys were like GI Joe and they were dolls rate were twelve and twelve inches tall so he would he thought the licensing would be that they could do tee shirts. And the teachers would be a form of advertising and so that’s what he thought he was doing. And then it turned into obviously toy you know and you know fifty thousand separate licenses and all these other things and so. They gave him that this is classic corporate America yeah. They gave him the sequel rights in order to make their quarter. Yeah sure till second. Who make their quarter there were million dollars off which was George is very. Well I wanted the. Ballpark what were all those rights where that they did not leave a fairly no four billion dollars I think person you know them Lucasfilm was eventually sold for but you know we’re not we see all the revenues and we are happy that were generated over those forty years but it was a big mess. Yeah but it was to make their quarter that they made that trade. But knowing that story term. That you have an entrepreneur like that whose. Got the confidence in himself to cut the deal but then even he didn’t know what he had right arm. How do you think about that when you’re looking at new entrepreneurs who new businesses like does that affect your thinking arm do you see George in any of these people like like okay I know what that is that person’s kind of you know I see George more investors. That I see in the company’s. Just because of the vantage point that I have so we had dinner with Mario Gabelli Margie believes a great medium faster rates. And sitting there with Mario Gabelli and having Mario talk about media for the last forty years with detailed that was like at a level of detail that I’ve never it was exquisite like earnings for Time Warner in nineteen eighty nine nt you know where I might have to stop and see if he’s right and he’s right. You know just exquisite that was the kind of you know that kind of conviction around the set of beliefs and seeing something that other people don’t see. I see I see that a lot with some of the great investors that I really admire and them again taking a long term view George was in it for the long term. He will tell you he did nothing to make money. He did he was. Practicing his craft and he happened to make money but he ended up being. Incredibly thoughtful about how to monetize those assets so for example everything I thought that to me was every movie had different. Stuff. Different toys to the franchise area now Aussie for different things in the movie to drive his merchandising business. They said he was in it for the money. No but I think the for him it was about the the story for you know this is what he says people think that in the movie business you can have a a property and just have merchandise anything says it’s very very hard their ten thousand named characters in Star Wars. Is that we have all early about ten thousand named characters. You know it it does always seem so amazingly. Intricate like what one of the things that that that that we take people love about it is just like the. Just sheer force of imagination to create that whole thing with. All those all that stuff all it’s a whole nother world like it’s so he violently killed out like Jim and populated I guess with with that many legitimate that avatar the near Times called George and they said they were making advertised Skywalker and he said they were mixing it at the end and they did some of the visual effects. So he said those near Times called them in a so what do you think about avatar and George at scene and he’s like I will just tell you one thing. It’s very hard to create a world. So when you go to our if you go to George’s writing room. Every planet has a binder. When I went there and saw this for the first time I was like this is the level of detail that you are with your business that these entrepreneurs are in this room with their start ups that the Twitter product guy was telling me about his new product. It’s the same level of I mean fanaticism in detail so you pull out Tatooine. Language. Close plates. Silverware terrain. Like it’s the spec. Well every cut every planet. Hoss. Same thing you know he go you go on and on usatsi next was bad he just writes names. Her. So one day such a Georgia made a joke with him I was like you know you really need to luffa he’s like Lou fraternity that’s going to be the character in clone wars. And it was like. And it was like literally like like wrote down loop affinity it was a character. Well. Like that without intimidating when you when you had the baby to name the picketers ahead to get further. Yeah. Like this maybe going to be and Star Wars nnj now not intimidating. But if there is a genius there that has been very his brain in the brains of his friends. They work in a completely different way probably more similar you know a lot of everything he did was tech based. So you know he. Sold Pixar to Steve Jobs when I was a medical device company that and they were and that capital wanted to take it into the direction and John Lasseter of animation. He created he checked sounds. He. Yeah president out you know Lazar didn’t see attacks was from his first movie theater checks eleven thirty eight he created a Detroit which was a way that they they edit movies I mean they’re all these he use technology to serve the art and he always tells people that. Art is just basically about a process of hitting up against technology any gives you dislike lecture on it that’s brilliant we talked about the fact that. I am a better Horowitz of Andriessen hearth I like to thank you all for coming them we have a really exciting and thrilling I guess tonight melody Hobson. And I’m going to give a brief introduction since we live in the world of Google I won’t go through her childhood in everything. He’s the president of Ariel investments which is one of the larger investment firms and with a thin absolutely stellar reputation she’s also and that’s a thing you know running a big yeah investment fund is one thing but he’s also terrible chairwoman of the board at. On the board of some companies you may have heard at Starbucks and Estee Lauder. And she runs something that I know she runs a conference called the black directors conference which is. About one of the very best business conferences in the world I think and I. Bring that up because it’s important to know that I’m as an investor she’s also like she’s the type of investor could actually like run a company quite easily include Amadis into an investment firm. I and then. See I was married to a decent filmmaker he made a movie that some of you may have seen called Star Wars. I. But the the the big thing about a melody is that anyone who you ever run into who knows her will say she’s the real deal sees unbelievable and I had this experience. Two nights ago I was with the legendary musician Quincy Jones and his son is here tonight. Yeah the various QT three and. He asked me you know what he doing that’s because like I’m interviewing melody how things like melody happen. And you have to understand Quincy Jones little he knows like everybody like he knows guys he knows like the president of Israel he knows people like who were in the third Reich and any. Eighty two so he’s like way too honest. But if you don’t like you know. And he goes melody half and he’s like. Well she’s the best I give all my money late and there’s like suggesting thing going says that she’s the best person the wealth. And third like that that’s a kind of reputation TSO everybody welcome melody had something. The melody by Ariel some logo is eternal holding up a Cup. And I thought that’s a quite interesting logo and. How does that reflect the firm’s investment philosophy. Ariel has a turtle as a logo we’ve had it since our inception thirty two years ago soon to be thirty three. And the idea is to really underscore the investment philosophy which is patient investing we call ourselves the patient investors. And on our pitch book it says at the bottom patients wins and we feel very strongly that are the core of what we do is play time arbitrage. So the short term market gyrations and volatility exact track that exists and will always exist also always excess and varying degrees. Allow last week we are able to take it apart take advantage of those moments. And because we take such a long term view we look we can look beyond what is going on at any one point in time and say okay in a normalized environment what does this company look like so that is part and parcel because we are patient we can think independently. Because we are patient we can be extraordinarily focused at what we do so I always use the line that an expert is someone who knows more and more about less and less you know if you need brain surgery you don’t go to our internist Brazil where the people are learning more and more about less and less that because we’re very patient we can continue to peel the onion and go deeper and deeper and very very niche areas. And last but not least because we are patient we’re able to build a team. So how does a big diverse area and getting an example. Of like how that might play out on an investment like what’s an investment that you’ve made where the where the world had turned on it in the short term simple one that I think works for this audience in that everyone can understand a few years ago we bought Madison Square Garden. And Madison Square Garden was at an interesting moment first of all it had the Dolan family that was an owner and they would be called the Dolan discount because people didn’t like the family running the business or that they like on the next to which is well it’s the name the liberty it’s you know that but it’s also a lot of other things they own state you know us Rockefeller sorry that. Right is there it is all excuse me I can get out fast enough they’ve a bunch of properties that lay forum. Cadillac theater in Chicago so they own a bunch of properties around the country but obviously the necks are major major asset. And so and Madison Square Garden itself. So the time that we bought it. It was the NBA lockout. Okay let’s start with that and that’s a good short term that the classic short term they were in a retrofit of the garden that was totally over budget I mean just. They messed bag. And. They were also at the same time about to renegotiate the television contracts we looked at Madison Square Garden more as a media play then as this conglomerate of various. Businesses that were put together so we sat. Basketball will eventually be played again. This guy is you know is that you know people have obviously. Sold off the company because of the immediate situation. And. We went to visit Madison Square Garden and we saw what they were doing with the garden inside and we said this is genius. They created the skyboxes on the ground floor that actually you don’t sit in the skybox you sit in a seat and you go back to your food if you’ve ever been there our it was actually a brilliant idea brilliant way to use space back of the house. And sell it at a premium said that even though they were over budget we said this is going to sell out. And we said when you know all the television contracts that are being renewed because sports is such a great asset. In the next or the next. That they’ve been renewed at a higher rate. So when we look at all that together we said this is a great asset and you could not rebuild Madison Square Garden in New York City if you tried. Because of the size of the bread the number signum locket rep exactly so he said there’s a barrier to entry here that is pretty significant. As we put all that together we bought the stock then Jeremy Lin came yeah well insanity and you know they raised all of their ticket prices by forty percent drop right to the bottom line renegotiated their television contract that was when we were just said this is a moment everything that has gone moron wrong has gone wrong it’s priced in. So let’s just get beyond this and then say what is this look like the Vinland sanity hits do sell even that short term or how big of a actually we ended up about owning that stock for quite a long time we still own it and then we benefit from the spin offs. Right which was also another great moment. No but since you yourself have public shareholders arm. How do you. So your long term. But. They’re not always they are they’re not always and they do tend to be prone to panic and. You know I’m Madison Square Garden the NBA lockout could have lasted years or hit you know they probably never hear civic ahead of you know continued to be the next some and lose all their games and try to weigh all the good players but interestingly they’re sold out yeah it’s like they have a lot anyway they thought well you know it really only from Chicago I’m from Chicago nd they’ve sold that well so you know there may be a prospective their winning or not winning but that the proof is then you we could look at data like season ticket holders buying every year that’s data you can just see right writer gives you a great deal of confidence. So what you’re right we have public shareholders in our mutual funds and then we have institutional shareholders that we manage big pension fund accounts are endowments and foundations and there’s no question we call it the velocity of money who’s got much faster. When I first started in the business. I start aerials the only place I’ve ever worked. I graduated from Princeton with Ariel had been there for twenty five years next year. The average mutual fund investor held a fund for ten years but it dropped to seven and now it’s more like three. For a mutual fund for emo mutual fund not an individual got hope you print your stock right now my gosh and in. To arm the mutual funds get electronically traded in the same way that stock Stewart are not as mature. Dare there like the computer center the picture on mutual fund turns out there are people who do programmed trading around everything as you might expect and some do it on mutual funds the thing about mutual funds is the delay in pricing so what really taken the place of that are EDS I think he can do high frequency mutual fund drive not really it’s hard to do. Doesn’t my next start a fight death to. So. You said earlier your you’ve been known to say that don’t make decisions based on money. Which is a kind of a different sort of thing for an investment manager to say what do you mean by that like what do you make the decisions on if you’re not making them on. So I got this advice when I first started working and it actually came from the person is the chief investment officer of Ariel who started our firm. John started a firm when he was twenty four years old when twenty four year olds didn’t start investment firms a good pension funds and ask for money. And he added unusual way of coming to be I’m just a and absorb more than a casual observer of a stock market but obsessed with that and that his father given stocks every birthday in every Christmas instead of toys. He said in the beginning it was a very fine he cried theory about that you don’t have to write out a lot but he let him keep the dividend check so he was a twelve year old with cash flow I think that if he wanted to buy a candy bar iqa Dan. Slowly he did in this modest portfolio started reinvesting the dividends etcetera so John this is the backdrop to the story of this is the chief investment officer of our firm his started Ariel I’m twenty two years old the first thing he says to me on the first day of working don’t make any decision based on money. Sunlight will Duchess incongruous with what I would think an investment person would say he said I believe people. Undervalue time and over value money. And because of that they make a lot of decisions that are actually not rooted in the right. Set of circumstances so example he said a lot of people will take a job based upon money and not the job. HM. Yeah envelopes that Silicon Valley and they may try to talk him out of it. You know they may never be happy in that job but they’re chasing the money is not worth it right volatility yes or. Make big decisions about it could be marketing at area are hiring someone at Ariel he’s at the biggest decision mistakes that he made is in the very very early years of our firm when we literally had no clients and no money under management he wants all of his friends and family and ask them to give him twenty thousand dollars each so that he could have a track record he started the aerial fund which is now a two point five billion dollar publicly traded mutual fund. And that that was to get five hundred thousand dollars together to have a track record. So he said during that period he was so can you know fees on five hundred thousand dollars in our businesses five thousand dollars a year. One percent yeah so he said he was so concerned. With you know making sure that he was very frugal and thoughtful that he let really great talent. Go away he didn’t grab him when he could because he was concerned about making sure he didn’t over extend themselves. And he said that was a bad decision that was making a aback a decision based upon money and he probably lost people who would have accelerated the growth had he hired them right right and then. I. Is there an application of that to investments themselves as well or is it is it more of a management life philosophy or is that also. In investment philosophy like our their investment decisions that you should be. Make based on my main sounds like almost an oxymoron but I don’t think we would say it that way because we’re obviously modeling a return ethnically and while we’re taking a long term view and we’re patient investors we there’s a sense of urgency right we don’t want you to think or legs and hoping it works out. We actually. Believe that a company lays out its goals and objectives. And unless. They have a very good reason that they don’t need we shouldn’t be there. So that might change our investment decision but our decisions are made based upon what we believe the intrinsic value of a business is worth at Ariel we call that private market value so we say what would a rational reasonable person pay if they were to buy this whole business or if it were broken up into pieces and salt and so ultimately that’s a a price apply to that we want to buy companies when they’re selling at a forty percent discount to what they’re worth that to us creates a margin of safety for us. And or thirteen times or last next year’s earnings which is why a lot of your companies don’t follow it purview unless something has gone wrong. Yeah I like that the will generally for technology. Companies in that position is probably not a good thing to buy what’s interesting not necessarily I mean Microsoft was and that from an earlier they are not where they had a few ratio absent I think got down to ten times yeah and you know it didn’t the last couple years that our portfolio managers own that it’s been a great stop for her we didn’t know they were going to fire Steve Balmer. Sorry but that signal to our discussion know anything like this is true so one of the things we think about it Ariel will of a company where they’ll be a subsidiary that’s dragging down earnings or there’s something broken inside the company or could be a leadership issue although we tend to align ourselves what we think are strong leaders. But we say what are the what is the likelihood that this company will let itself keep going in a way that is not on a good path right enjoyed some point you say with a company like Microsoft. How much. A. They’re much more can Bill Gates take right before he actually make for the floor I mean all the bomber says he opted out himself I mean he clearly has. More at stake than Bill Gates dnmt in terms of his. You know how he sold that. But how do you. Predict that or how how would you think about it’s hard to predict things like really is that you know you’re you’re our in our situation we are. Literally looking we do scenario analysis if this thing lasts. What would happen death. And we’re modeling actually the company based upon multiple scenarios. Right so we could be they shut down the division and take the loss. They sell the division. They fix the division and it starts to grow me would that’ll be just one Lee’s own McCormick spice company. McCormick spice company is you know the largest maker of spices and our world their annual reports are centered with spices I think ultimately you get like peppery ga or cinnamon or what have you at which is a way of becomes in a mylar envelope. And McCormick spice was interesting they had a real estate division that was like completely at the block all. At McCormick spice company so we looked at that were like world’s largest spice company. Sold to both the end user consumer and the food company. So if you’re Sara Lee. Our outer track if you are a huge fire of their spy says they are it. But also we’re buying it for a table. Interesting philosophy in a bad economy where people can’t buy maybe as upscale an item like steak or shrimp or whatever it might be. They buy cheaper items that they season more. I think that that does Frank so it ends up being counter cyclical cyclical in some ways but McCormick spice company we were modeling it we said there’s no way this great business. This unbelievably dominant brand lets this ridiculous real estate division take the company down. And they sold it to rouse. Which was another one of our companies. Okay so you said you said two things earlier that I know that a lot of our portfolio CEOs. Our thinking is extremely interesting one. John found you when you’re twenty two years old. Which is. Like how did he identify. You at that age and so. Who you’re going to be. And then you’ve been married twenty five years next year which is unheard of where we are. And the average American will have eleven jobs in their lifetime. Average and obviously tech it’s much higher yeah and so. And you know it’s interesting you probably had eleven jobs if you count all your directorships and other work that you do right but but. That Ariel the whole time so. How he accomplished at like one how does he get some. How does he identify talent like you that early and then hold it up genius thing and I give John a lot of credit because I have to say I struggled with us I have been able to replicate it. In the same way. John that we one of seventeen. That’s even more Bertha who like I said I know a lot of seventeen year olds and they just scare me. You met me when I was seventeen I wasn’t your typical seventeen year old I was very driven and very focused. For a whole host of reasons. And I was a summer intern at Ariel when I was nineteen results. When I was twenty John sent me to be an intern at euro price was the first undergraduate and turn they’d ever had. And he said you know I got this woman working with me she’s great we happened to be the largest shareholder of terror price at the time. So obviously they the gentle nudge worked. So listen to Baltimore to work on the research side for very famous portfolio manager named Jack laporte who managed the New Horizons fund which is a famous mark up fun and a joke at your place was that they were training me for John which was better there so I Li I graduate from college and go back to Ariel and this is something that I have never. Seen or heard before. John used to take me to meet people. And we would go meet people we didn’t know and he said your job is to get a San and I was literally like twenty three twenty four years old. And hello to take the path you have to know John because time is like he needs that service hit like his personality is legal because he’s sounding like. Because he’s a genius on the th if it sounds like he’s the most extroverted like totally any lawyers like you gotta pull it’s pulling teeth your usual unlikely and I really very very uncomfortable kind of he’s like the classic he’d fit right in and so yeah probably a little. Probably I see this term with love and like you had asked burgers and like there was no spectrum backlash yeah you know like you like that but he’s genius and great and wonderful and slightly awkward and wonderful. So. I am twenty four and it’s true he said he hired people to do things he couldn’t do. True story one day when he read an article about Dick Parsons was running time savings and loan he was featured in New York Times magazine section any stability get us in to see Dick Parsons. So Dick Parsons in this article says. He loved bacon. I. So I wrote him an unsuitable are vacant wrote him a letter and I said you know I tried to connect some dots of how he might know us and we don’t want anything we just want to come in and tell you who we are and what we’re doing and if you say yes we will bring Baker. Mississippi and he said yes. Nothing really overdressed the water with me he brought me to ask a lot or we’re literally like pip squeaks coming into his office before Time Warner what to Time Warner right after that to be CEO. Saddam would have me go and make this effort to you know see people he was on the board of print co president that’s a management company. And Jack Bogle from vanguard was on the board as well. So one day John called and he said. Instead of you actually getting us to Jack Bogle I’m gonna tell Jack Bogle I want to come and see him and I want you to follow up and make it happen. So I’m emailing back and forth which apple goes office and you know Jack Bogle says listen I’m really busy but I’m riding the train from New York to Philadelphia on this day. Buy a ticket. And you and John can write to Philadelphia with me. The so we fly to New York to write the train to Philadelphia. We get on the train and Jack Bogle is like you know industry legends you know indented vanguard and I was a senior thesis at Princeton and then you know this is you know someone who’s just. Very very very they don’t address our where Julia. So on the train and John says one it melodies to meet you because she’s going to be president of aerial. And how you are twenty fourth I fell off the chair and look what are you talking about he said I think it’s really important to expose her to all the people that she needs to know and help her but when she’s thirty she’s going to be president. So that’s also for you. Going after FIFA Theo question. What about the other people at Ariel that then make them like that they hear about it the Macomb cellist where they it was interesting were you able to keep it contained or did you roll back at the office and garment out there that now. I was. Such. I I think it was brilliant for so many reasons but one being. He I knew and then I knew I had to be up to it. So I was like what do I have to do to kill it for he just read your personality and said if I say this to melody. She’s going to be different violence is going to fill it and then the second thing was I think I gave it was bad but that point I was probably six years away. Give everyone time. And they knew I mean we all know but it was a very it was a. They kept me very loyal. Ariel became my company to I mean a lot of things happen in that six year period. And I tell you I’d I don’t know. Wow how he knew to do that but he did. Well. And I assume he didn’t tell other people who are going to be president say just I don’t know you. And there were you know there was one person who had a problem with it there and was you know we you know he was like if it’s a choice I choose her wrath that’s. That’s amazing and I have been able to replicate that I was joke which I I want me yeah apparently yeah I with the person who you could take all this off your desk in your material like you do to me every day and he’s like no no that’s. He. Well the other thing I’ll just tell you one other piece that I thought was interesting so early you know I’m having things thrown at me that we we divorced our mutual fund company had never been done before we took to operating it will finds out of an operating it will fund company called the Calvert group and went off on our own and I made this presentation are bored to say that we should do that we spent our life savings on it and it had all sorts of repercussions and at the time it was when they came to us it was three hundred million dollars in assets and today in those ritual funds we five billion dollars in assets would obviously worked. But. John during that period which was you know extraordinarily difficult and hard and a lot of stuff was going on. He was. Really smart about. Making it clear to me what the rules were so. But where one day this is the rule. I walk into his office and literally on the pip squeak like I’m literally like I was called Johns grasshopper was the one who just did everything he wanted me to do. So. I walk into his office and I’m having a meltdown full line about something not going well and I start crying. And it and John is like the nicest most gentle person that you’ve ever met ever like has. But when he the pool in as often sn equipment for votes too far that it’s we are that but if there were any the Pooh stuffed animals all sorts of things he likes teddy bear. So he’s like. This is not the playground. And he said now I want you to understand something today and for ever more. You do not bring me any problems. I give you problems. The south. And I was like. In shock and I just pulled myself together and walked out. And then the follow up to that this big issue that I was working on were on a plane. And I’m like you know deep in thought writing like crazy he sitting right next to me is what what is wrong with you I finally tell him what I was working and he starts laughing hysterically. As I said to him why are you laughing egos and so glad it’s your problem not mine nnj. No there would have he he think he would’ve given that thing kind of instruction to somebody else who was that like. Special for you because he knew. Do you what was the role he wanted me to serve I was the fixer. Now I was not the person I was to simplify his life not make it harder ever. I was my job was to leave his brain free to think about investing. Right right. May think so are so are the other employees at Ariel like how long do they stay with a long time yeah longtime so they’re ton that you know we’ve a hundred people approximately but there’s a bunch of us that are really young but have been there for a long time so we have multiple twenty twenty five year you know fifteen years and the people are not fourty results. Well so it’s pretty amazing I mean we say patience is not just a slogan for us it’s a way we do business. And we want to attract people to our firm who take a patient view so when we read resumes. We next job hoppers. If you’ve had too many jobs. We withdraw your resume. Leon is Alabama. Before we set you’re not going to be the person who comes and stays here. Right because they haven’t given those jobs a chance to work right and that’s what Johnnie Lee says even with CEOs that we’re looking at we’re investing he said there’s nothing worse than a person who is that some people move just in time. There. And we all know those people right where it’s like holy hell no I don’t know how do I have any. Start of CEOs here you can they fail up they go just in time to before the thing falls apart and they can take credit for something and you never quite know what they built. Yeah. No no Chloe we see a lot of that here in it and it’s interesting because here there were events hyper competitive town environment and. You know it’s an advice that I always give but it’s very very hard CEOs to follow because. The bar for engineers do you have to be not just a good engineer you could be a great engineer and a missile and so many of those amendments has up. But guess what they were only at their last out two years. You know do you take him or do you not and more often than not people take them and I think that. More often than that they’re gone into years it’s interesting as I’ve often thought you know from my. Glimpses at your worlds and and times that I spent on the group onboard that. You know. It’s like mercenaries. You know that that that to get that person is truly committed to the company. It’s so hard to do because there is that sense that you can trade up. And so I get that it’s harder probably and in the technology space the maybe what we do in terms of what we’re looking for is just the natural. On. You know ebb and flow of people moving around your friend the chances the companies themselves her. Ephemeral tell large degree through there aren’t that many long lasting technology companies like right Microsoft is one of the oldest technology companies and they were found in nineteen seventy five in your overall that’s not that old room where as in our world like. The ancient you know that all you guys older than memory like IBM three right. And and generally when you get really old you struggle and technology because the product cycles are so short Sharon sexually that’s a good. Segue into you know one of the big. Memes that we haven’t technology is. It’s a bad idea to go public term because public investors are all just totally short term. And. That actually becomes extremely dangerous for a technology company because. I if you don’t invest in the next product cycle which. Only makes your bottom line worth are you’re going to be dead soon because no product cycle lasts more than you know five to ten years that’s the longest. And some are much shorter than that and you can see that with companies like them. You know Facebook godlike roundly a attacked in the public markets and by public market analysts and on CNBC. For buying Instagram album but. That was the exact right thing to do and that that story is repeated and repeated and repeated and so. How how would you how would you advise us on Matt and giving your position as the public market investor so on which piece the well on that life recent go public because public market investors are all searching I would only as long as you possibly can. And make a life for ever thinking forever and I think that. I think it’s interesting how Travis is talking about at at uber saying you know we’re just trying to crawl and you want to go to the prom I thought that was pretty genius. That the one thing that is we see that is true with companies are going public faster than they used to go public. So when you are talking about this on the phone I said if you look at the history of companies being born in going public even and technology that that period is getting shorter and shorter and shorter. And to be public is a very transparent existence. Maybe leading up to it with some of the filings you have to do obviously there’s transparency they are when you get over your number shareholders but. It is a transparent existence and I think it at times if you are very concerned about public sentiment may lead you to do things that you don’t want to do. So I think you wait as long as possible also think that. Public. A the analysts. Engagement and and and what you have to do there is going to take a lot of time and energy that you have to learn how to handle I mean you’re talking about how you have to go out and see your investors we own and some of our cases of aerial stocks were we don’t twenty percent of the company and we call and say we want a meeting they stop what they do and give us a meeting we just do and that is you know challenging embedded in the stock market your twenty percent holding starts ill. Inside yelling it’s just saying we want to sit down with you and understand whatever this issue is. The way that I often tell people you know and what are those meetings like so what young twenty percent of my second you come after nearly been. I’d like to have a meeting. You know what what what I expect in a meeting like that and what are the kinds of questions that you want to ask me them. So we’re not gonna ask about a quarter. When I can ask about any earnings short term. We don’t care. We’re gonna ask you about long term issues retired about strategy. Do you have a plan to win. And. It’s not going to even though we’re asking for a meeting we’re talking to every quarter one of the reasons we want to touch a management team every quarter and we want the same people to do it they get to know the people and they can start to discern moods have a answer questions how upbeat or downbeat they are you get lots of non verbal cues and that’s very helpful especially when you talk to some for and for ten years every quarter. We ask questions that are different a you know I’ve heard Charlie one rose one say it’s not the first question it’s the follow up. The it’s always about the follow up in so many people leave the follow up on the table which is the critical issue we actually use an organization called the I a associates business intelligence advisers ex CIA agents who helped us in in questioning. And they litter wrecking the light. They are unbelievably great they literally. Train you. To understand and know when someone is uncomfortable when you’re starting a probe. So it’s not some kind of all the things you think it is like I contacted they shifted it’s not it’s not that simple generally what happens when someone is uncomfortable they do a cluster of actions that once. The like move in their chair wipe their brow look away there are a few things happen that shows there the body gives away the issue. The other thing they teach us to do is again not ask the obvious so here’s a simple example we would ask a a a. You know Regev demands they can’t tell us something that they’re not telling everyone right so we will say. We don’t wanna ask you about next quarter worse will say hot considering. How oil has traded down so dramatically we wouldn’t be surprised if you missed earnings by fifty percent. Will come of the wild answer that’s cool planting a virus. In the goal is to see how they react. And if they say like all got what do you think that’s crazy or if they don’t they could be then you know you’re closer at that not. Well if you have a very very very like our house sympathy. You’ll ask that’s very tricky presumptuous quiver that rather that shortly but I think of that we learned carrot works better than yesterday you don’t yell at people you want them to feel aligned with you when we are date we are in it together with that we are owners of their business with them. We often on very we are often the largest shareholder of the companies were invested and. Especially on the domestic side if you say that to me and I go. We could’ve missed by fifty percent like our. View the flag sell my start now like without overall reaction no it could be the person says something like you know. It’s going to be really tough and you know we’re we’re looking at everything you kinda know you’re in the right ballpark we may be seeing at that point a week on average down. Because this is a temporary moment they’re gonna report didn’t disappoint and then we’re going to go in and buy if we had that high level of conviction and in that way over the long term it ends up being anything better return. So the stock that we’ve been doing that on lately that it’s been just a real problem child is this company called Bristow the Bristow is a helicopter company that takes. Oil workers back and forth to oil rigs as far six hundred miles offshore right right well ahead of the view that the oil business so it is not as interesting overheard you could press now this is the perfect example of an aerial stock. The trade in tandem with oil and the contracts have nothing to do with oil prices. Because they have contracts that are stand and waits for the client because if there’s an accident or a rag there to get there very quickly right to their contract is three to five years okay so nothing to do with oil and I says he’ll trade it with oil Ursuline oil goes down by. Regardless of its forget. But their numbers but they’ll still have their numbers anyway while their access very they’ve their online competitive had some issues that have. That have affected their earnings because they have a search and rescue business that some pretty significant and they provide searching rescue for the UK government’s. Where the oil business is so dirty like real big they they literally have guys in helicopters to search and rescue for the like the people who die and the oil rig fires now or it could be search and rescue for anything so immersed in that country Britain they are the outsource provider for search and rescue for the country of of the conservative even though their number two competitors based in Britain. And. Interesting right slurred rivers the stock is trading for less. Then all the helicopters if you sold them. Interesting thing about helicopters they don’t appreciate the way other vehicles do this every five years you’re to replace the engine and the rotor. You basically Avenue helicopter every five years okay so that’s already baked into the price thing so we have to all that matters and say right this makes a lot of sense. So when we have those conversations with them. We are going to add that the issue with them as they put a hundred million dollars in their search and rescue business in the UK so people think they’re going to raise equity we don’t believe they are we think they’re gonna just borrow the money so the stock is traded down on that path. A very very very interesting so. I I know kind of from previous conversations with you that you Europe. Estimate of leadership in you and you look at leadership in the companies that. That you’re invested in. What do you look for you know in those conversations from the CEO to go. You know this is somebody who knows where they’re going who can get the organization there and the like maybe Scott about quarter maybe she’s got a bad quarter but. I’m not even worried about it because I know like this this is the person and when you go I don’t care how good the quarter is like this thing is going to be in trouble over time be so you’re always worried about something that I wish I could say were never worried because anything can happen but I would say we are looking for leaders who are aligned with shareholder. If we see CEOs who don’t own any stock. That’s just not guide simply CEOs too you know pay themselves too much or where you have a closely held business and by family members are on the board. Now that you know that day and they’re all making you know huge. They have sort of phantom titles and big paychecks. Those are the kind of things we don’t like to say we like to see companies that that where the CEOs are smart aleck haters of capital that’s really important. And as usual bye birdie suggested they have a vision and they can articulate with that vision because remember we’re going in as value investors when something’s wrong. Something has not gone well if we’re interested in your company right right. So it seems like it hit him. Thought of this serve melody says a legacy probably are they probably already know their problems. No but they love us when we show up because we’re such a long term investor right shareholders I mean company management teams want Ariel in their stock because they know we’re not going to trade around with saw their cut their set their shares right wrote one also and you’ve got. Potentially very large filth and anti remember when my stock went to forty seven cents. And thirty five cents them but the people who invested then held it forever because. You know they they have a way to fourteen twenty five because they. If you could buy it then Clinton than you would take the time to understand what it was whereas if you’re buying it on the rise. You’re just buying momentum so that really are asking yourself do you believe in the people you know there are certain people who hype everything. And we want to avoid that in their certain people who were truth tellers you know they’re telling you the pros and cons with the really confronting what’s going well and what’s not going well so that you have an honest assessment that you can look at it and hopefully an unbiased way we’ve to force ourselves we talk a lot about behavioral finance not get anchored and what was it to really try to understand what could be in a warm bath it as a way of saying you know don’t get mad at the stock it doesn’t know you own it you know so you know if it goes down you know you’re looking at it fresh from today not what you paid for. And that’s very very hard for some people to understand. Yeah them no question. Arm. And so like of the companies he looked up like. How often are they truth tellers versus how people we’re avoiding trying to avoid the high people. But China and that’s like of the CEOs that you look at them like how. Unusual is that for us. The theater benefit that most of them is that twenty five percent of them though I think cars are largely you know if we’re investing alongside of them we believe in them and that doesn’t mean we always get it right we get wheat you know that’s one thing about again investing your batting average that have to be a hundred percent to do very very well so we messed sometimes we get we invest in the wrong person or that the strategy is not doable and of the deals that you look at like how often would you invest. We look at a lot of things before we buy we look at a lot so on. Our universe is about in our small cap product is about four hundred stocks but we only own forty mb and if we found a new name we wanted to buy it would force the name out of the portfolio we can’t we won’t go over forty. We like glasses Morris we’ve concentrated portfolios honorable Bhansali who runs our international global portfolio you know she’s looking at thousands of stock she eliminates two thirds of them right off the top. Mrs process is one of elimination every she describes it which I love she says she assumed she doesn’t own anything. Until she can’t reject. Everything as a rejection. And like what is the basis for like rejecting all they thought so lots of things you it could be anything from the businesses seats to cyclical it has too much of a commodity emphasis that which is something we cannot project we want companies have brands are franchises that have moats around them that’s where buffet talks about that are very hard to to copy or to provide new competitors to command. And or they have some defining aspect of them this gives us great confidence in its long term but we we don’t like commodity business as we don’t like on new people doing new things for the first time we we actually avoid that for the where you don’t you can’t seem to history our track record. So that’s not to say we won’t buy an IPO using your mind cold IPOs thriller buying IPOs that the company’s been in business for enough time for us to look at the history. But it sounds like you start with a business type financials. Is that accurate and the financials come next right. Okay. Interesting what we’re screening for a whole host of issues I mean we’re looking at thousands of companies. Yeah so ethnicities. Plenty of Alaska do so what wetter and investment that you didn’t make where you said like bats like. Were taken out off the listener and then went back and said boy that was a mistake John has one that he talks a lot about so we have had a tremendous we had tremendous success over the years and casinos we don’t Caesar’s three times. And there were you know obviously a leveraged buy outs all certain things happened along the way that made that just a really wonderful stop for us I’m only owned it and John at one point on was looking the casinos casino space and on. Two thousand eight two thousand nine Mandalay bay was a stocky didn’t buy because he thought there was too much debt. And schools that will be. I will reason we won’t buy a and yeah here CEOs. What’s that especially small Arthur note you know debt is poison if you’re small cap and you can’t. The you know you don’t have the cash for you can find plenty of targets. It’s. A disaster so debt interest coverage ratios we play at the Honda of attention to. And data Mandalay bay was one that was really on the ads on the debt side even though the cash flow there is unbelievable John didn’t buy the stock he still talks about it still like I missed that Mandalay bay you know hit spectacular returns from. The bottom spectacular and he just misunderstood the he did way his own principle the core business hard enough and I think he felt that he was discouraged by the debt peace but the debt piece was manageable because of the cash flow until with a little bit of a chicken and egg thing. So them on the switch gears a little bit or a lot better your husband George his entrepreneurs story is quite amazing story and that he was the entrepreneur that no investor believed in our life. Having watched the making of Star Wars Hutchison credible story if you hadn’t seen it. They try to set down a movie I don’t know how many Telerate they come in like percentage down like it’s over and then he finally negotiated that the movie go on by saying like you don’t have to pay me any money. For this film at all I want is the merchandising rights for the sequel and the next week off there fell and they gave it to him and it was like the greatest deal anybody’s ever cat and the history of mankind. You can imagine that so he is like the ultimate person that nobody believed in and. What do you learn from that knowing him and who he is. And do you look for that sometimes and companies will your facts are close but a little hooked directly artists on the original Star Wars budget was ten million dollars and George made it for thirteen. The board. Actually greenlit the movie and had a people like princess grace on the board a twentieth century fox at the time. He was paid a director’s fee for writing for for directing the movie. And he was so concerned when he wrote the original Star Wars the script was so long was a hundred pages. That he divided up into three movies and said no matter what I will get these movies made no matter what. So the first movie was made. It ended up being this giant success. It was in the theater for over a year. Yeah but we can’t even imagine that vannatter who over here is art right. So now it’s time to make the sequel so they say he’s he’s coming off of American graffiti which it was made for seven hundred thousand dollars and grossed one hundred million. And he’s coming off of Star Wars he’s going to ask us for a huge amount of money for this next one. They thought he was going to judge the terms of the deal rights is that no I won’t change the terms of the deal but I want to eat because I want to make these two others I want to see quote because I feel that the club inning on the front right exactly so they there was no such thing as licensing there there were no action figures there was no he said that you know toys were like GI Joe and they were dolls rate were twelve and twelve inches tall so he would he thought the licensing would be that they could do tee shirts. And the teachers would be a form of advertising and so that’s what he thought he was doing. And then it turned into obviously toy you know and you know fifty thousand separate licenses and all these other things and so. They gave him that this is classic corporate America yeah. They gave him the sequel rights in order to make their quarter. Yeah sure till second. Who make their quarter there were million dollars off which was George is very. Well I wanted the. Ballpark what were all those rights where that they did not leave a fairly no four billion dollars I think person you know them Lucasfilm was eventually sold for but you know we’re not we see all the revenues and we are happy that were generated over those forty years but it was a big mess. Yeah but it was to make their quarter that they made that trade. But knowing that story term. That you have an entrepreneur like that whose. Got the confidence in himself to cut the deal but then even he didn’t know what he had right arm. How do you think about that when you’re looking at new entrepreneurs who new businesses like does that affect your thinking arm do you see George in any of these people like like okay I know what that is that person’s kind of you know I see George more investors. That I see in the company’s. Just because of the vantage point that I have so we had dinner with Mario Gabelli Margie believes a great medium faster rates. And sitting there with Mario Gabelli and having Mario talk about media for the last forty years with detailed that was like at a level of detail that I’ve never it was exquisite like earnings for Time Warner in nineteen eighty nine nt you know where I might have to stop and see if he’s right and he’s right. You know just exquisite that was the kind of you know that kind of conviction around the set of beliefs and seeing something that other people don’t see. I see I see that a lot with some of the great investors that I really admire and them again taking a long term view George was in it for the long term. He will tell you he did nothing to make money. He did he was. Practicing his craft and he happened to make money but he ended up being. Incredibly thoughtful about how to monetize those assets so for example everything I thought that to me was every movie had different. Stuff. Different toys to the franchise area now Aussie for different things in the movie to drive his merchandising business. They said he was in it for the money. No but I think the for him it was about the the story for you know this is what he says people think that in the movie business you can have a a property and just have merchandise anything says it’s very very hard their ten thousand named characters in Star Wars. Is that we have all early about ten thousand named characters. You know it it does always seem so amazingly. Intricate like what one of the things that that that that we take people love about it is just like the. Just sheer force of imagination to create that whole thing with. All those all that stuff all it’s a whole nother world like it’s so he violently killed out like Jim and populated I guess with with that many legitimate that avatar the near Times called George and they said they were making advertised Skywalker and he said they were mixing it at the end and they did some of the visual effects. So he said those near Times called them in a so what do you think about avatar and George at scene and he’s like I will just tell you one thing. It’s very hard to create a world. So when you go to our if you go to George’s writing room. Every planet has a binder. When I went there and saw this for the first time I was like this is the level of detail that you are with your business that these entrepreneurs are in this room with their start ups that the Twitter product guy was telling me about his new product. It’s the same level of I mean fanaticism in detail so you pull out Tatooine. Language. Close plates. Silverware terrain. Like it’s the spec. Well every cut every planet. Hoss. Same thing you know he go you go on and on usatsi next was bad he just writes names. Her. So one day such a Georgia made a joke with him I was like you know you really need to luffa he’s like Lou fraternity that’s going to be the character in clone wars. And it was like. And it was like literally like like wrote down loop affinity it was a character. Well. Like that without intimidating when you when you had the baby to name the picketers ahead to get further. Yeah. Like this maybe going to be and Star Wars nnj now not intimidating. But if there is a genius there that has been very his brain in the brains of his friends. They work in a completely different way probably more similar you know a lot of everything he did was tech based. So you know he. Sold Pixar to Steve Jobs when I was a medical device company that and they were and that capital wanted to take it into the direction and John Lasseter of animation. He created he checked sounds. He. Yeah president out you know Lazar didn’t see attacks was from his first movie theater checks eleven thirty eight he created a Detroit which was a way that they they edit movies I mean they’re all these he use technology to serve the art and he always tells people that. Art is just basically about a process of hitting up against technology any gives you dislike lecture on it that’s brilliant we talked about the fact that. The greatest thing that ever happened artist was oil paint being about going over to. Which allowed you to go outside right you know and he because before that was frescos there and you did those in the dark. They handed out and it showed nt server that several of the present. You chair of the board of DreamWorks so when you. You know are looking at what they’re doing and they are you know they’re they’re kind of in the if they’re almost like bottled off of of George’s work in terms of technology and. In the kind of creativity that they do. Do you bring some of which you learned at home to the job and say. You know like I know how this gets done but like the way you guys are thinking about how to do that although I think down on a board. You serve a role. You are representative of shareholders in your fiduciary my job is not to be the creative force at DreamWorks my job is not to even create a critique that. You know we watch a lot of movies in our board meetings which is also pretty cool and fun you know a lot of board meetings are we’re just in a movie theater. And it’s interesting because we come out and everyone who don’t like taking those. The next board meeting I go to I would like to see if. They say well you’re well and I say I’m always wrong. Yeah but I love. But if people don’t but I don’t love is like a giant hit so I am I don’t guess my job is process. You know big issues. Process budget vision. You know have we diversified our business enough to live through all the things that could happen when you only make two movies a year. For and that’s a giant source of your rather nails so those are the things I spend a lot of my time on not did I laugh at this joke. Because that’s not what my expertise says my expertise of the management and governance of the company and making sure that we’re holding the team accountable any Jeffrey has voting control of their of thought DreamWorks. Which is interesting you know both of my dream works in SD have voting control room to be with people who hold voting control and make sure that doesn’t. Get in the way of the making the best decisions for the company. I know that that may sound counterintuitive. But it really is something like if you have an independent board in there you want to make sure. That. Your own point of view doesn’t limit you. So I said it’s almost as though. You’re you’re bringing perspective and so they there’s no reason for them to lie to you because they have by voting control but they might be deceiving themselves or how you describe that went on and on you know certainly when you have those kind of executives and certainly there are a lot of them in this room who have those. Stock structures. You want to challenge their thinking. And you’ve got to be able to go toe to toe with them in a way that is not aggressive where they turn off to being open to the point of view so I ask questions always. So it’ll be a simple thing like. Will debate it be debating that we’re going to do something or not to let. It’s a one of my standard questions which I was told you is that I told you already told you as we do this if we were private breath. It’s interesting the number of times someone might say. For sure are. And you said yourself within that just answers the question. Because the not doing it is more about how the market going to react totally explained to Wall Street what will be but that’s not necessarily in the best interests of the company long term so when they say for sure unlike what we debating. You know it’s interesting because there’s probably an analog for private companies which we would you do this if. Would you do this if you are depressed in attacking or would you do if your public would you do it in the light of day right now. Which is it you know it’s it’s it it’s not about being honest or dishonest. Because I don’t spend Pete time with people or involve myself with people I have to ask myself that question. I assume a high level of integrity and we assume actually that with most of our management teams. Unless we were led to believe otherwise. If we’re sitting with people we believe they’re being straight and honest with us everything won’t go right. So we’re not going to assume that it went wrong because they were lying to us if they don’t have a good answer. Then that’s a different story but the back and forth with someone like Jeffrey is. Seoul robots. And so on energized. Because he wants you to poke holes in he wants your best thinking any doesn’t want you to handle him with kid gloves. And you end up with a better outcome when a bunch of diverse people around the table challenges thinking and diverse in terms of all of our backgrounds. We come at it from all different ways at the Wall Street perspective of the media perspective you know we have Mike Montgomery was the investment banking perspective we have a trump Preston who has the big media perspective Viacom buys six atra so everyone’s in that room with a different point of view we used to have made dinner Nathan merval W. stab mag on our board I mean the board was just unbelievable and Paul Allen and David Geffen I mean it was like I called it moguls are us hit her you know it was like but when you put someone asked a question it was. You know this wasn’t the guy holding all the marbles you know you don’t invite those kind of people into the room if you’re that guy right right. And I think that the thing you don’t give you don’t regret something over on that group. You know you just don’t and if you think you are you’re really wrong. Like the best whatever movies mogul of life here with tremendous. So we I’ve got over my time a little but I just wanna say thank you to melody visit them and credit I’ve been so like captivated think that I I thought that ran right by but thank you everybody lately from having.

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