Carl Icahn on Investing, Activism and Politics



it's my pleasure right now to introduce a guy who also doesn't really need an introduction Carl Icahn is here and when you have a conversation about the long term he is the one person that you want to hear from in an odd way from the other side though he may think he's on their side so we'll see Carl Icahn mr. Karl thank you for coming and being our cleanup batter if you will you know we've had this conversation all day now about the long term the short term buybacks dividends the pressure that corporations feel from activists and the role that activism has played in some of those decisions and I wanted to get your take just straight up and down as to whether you think you are contributing to short term behavior or long term behavior well I think that activism x' activists aren't all the same there are many different types of many different kinds and my way of looking at it over the years and one of the reasons I came is Andrew called me up and said you know they will talk about short Turbots and short term innocent you've held all of you stock so long you had to come and talk about it at the deal book and I generally don't do this but I made a list I'll just read it very quickly because nobody wants to hear me read anything like that you look at the companies that we bought over the years I'm surprised myself about the long term ISM that we do so ACF I own 31 years I hate to admit that I have these stocks this long 31 years and then I looked at it American railcar industries 23 years federal-mogul PSC metals 17 years federal-mogul 14 years this case 14 years Excel 14 years vector 13 years American casino 11 years national energy 11 years West Point 11 and it goes on and on we and many activists not short-term oriented I can't say all of lomarr it depends I mean if you have partnerships and people want to get returns I guess you have to be somewhat short-term oriented but the real money that I made over the years is holding companies four seven eight nine is that keeping them I looked back we bought casinos and you got to buy him when nobody wants them really I mean that's the real secret you but you buy things it sounds very simple but it's very hard to do what everybody hates it you buy them and then and then when everybody wants them you sell it to them and that's what we do and we go in and we clean up a company there are many companies country that are very well-run but many a terribly run and you don't have corporate democracy you still don't so you have people that run companies there aren't bad people but shouldn't be running the companies the way over the heads or what they have different agendas so if you think about it if you this is corporate America if you your uncle left you a vineyard where beautiful vineyard beautiful apple orchards beautiful fob the left you know vineyard said congratulations that's great you're going to be on the vineyard you could enjoy yourself have all this money rolling in and then 8 months later you see your friend succeed in jury said what happened how you doing terrible terrible as here what's the matter so the big is ok it's nice but the manager the guy that manages it he plays golf all day he has a plane that he rents for themselves and his parties for his girlfriends and he really doesn't do any work and he sells little pieces here and there and he won't give me any money I said what you crazy get the police and kick him off but that's corporate America for a lot of it you go to corporations and this is how they act and they believes that they own these companies and they don't really care and the reason I made so much money over the years is that you hold these people accountable and it's amazing what and some of these boards are good you know the board's a buddies with usually buddies with a CEO but a lot of them listen to us after you get there for a year or two and the reasons we make all this money not I'm a brilliant stock picker I don't think anybody is I think that we get in we find that there's problems and it doesn't always work and it doesn't work for you have to wait many years at times but the problem with our country and I think we're going to pay a price for it sooner than we is that many of our companies are not run well now that is not to say that many of the companies we own dub have good managers and that there are many other good managers the good boards around but if you ask me the future and what we think here you know I just had the opportunity to listen to Stanley for a few minutes because I got here a little early and I was listening to him watching him on the TV there so I could hear him real well and I think a lot of what he says is right on that they've got to be real problems that we're walking into a minefield with what's going on with the Fed I mean we can go on and on about this but I think we got problems I want to get to the Fed but just just come back to me with on activism for one second which is when you look at that list do you consider that the activist list meaning all of those active are those are those are those situations where in each case you consider those an activist investment or those straight-up investments and the reason I ask is you know for example right now you're you're going after AIG we can talk about it but one of the things you want to do is break that company up I assume that you want to own that company only for the period of which it would be that it would get broken up and then you'd want to leave no not necessarily sometimes a lot of times but you talk about activists list let's go for the first one I still own it 31 years ACF well let me tell you a little story about ACF and I know mine listen a few minutes you have you drinks a few minutes later for something but I'll tell you the fast little story here so I was a kid you know 31 years ago compared to today and I'd see this ACF and I'm I'm a workaholic gotta keep working on companies I see this company sells for 30 bucks and I'm looking at the rail cause they own and I look at all the stuff that they got they don't make any money and I look at the you know I'm an old Graham and Dodd guy I still AM and and you look and say this is so cheaper so I think all the money I'd made I would by that time aired I you know it you know I had a fair amount of money I mean nothing like today I guess but enough to you know put in four or five hundred million or borrow it or whatever I did and I bought a lot of a stock so now we're going in and we're saying you know this is so cheap it's 30 bucks and he got a assets are not making any money but what the hell so I finally get controlled the company I get the company and now I go in and you know I'm a good math guy I don't believe in micromanage so I meet the CEO and it's all miss thang I would love to have you I mean we had after a bit of fighting we still love to have you aboard you know boom boom I said great let's be friends so they manufacture rail cars I won't bore you with the details but they and they had a lot of companies and in the rail car business the secret is very simple that you make rail cause but the government wants to incentivize you so the government says ok you get in other words you can depreciate the rail car over five six seven years but you can keep it for 40 years so you get this great depreciation so it's great tax incentive so that secret is you got to make money though to use the tax benefits right so these guys kept buying companies at every company they bought they lost money so that's what it was a real problem so now we go and they got 12 floors on 3rd Avenue when real estate was pretty good I don't say early 8 and I say ok you are the guys at least the rail cause you're the guys to do all the dog work and that's a true story and it's sort of amazing but it still applies a lot to today maybe not as much well pretty much as much you're gonna you're gonna listen to this it's hard to believe I know so I go in and I you know I good math guy who's good enough his guy's a good poker player I'm gonna go understand what they do so they said mist icon take a look go to the 12th floor we go to 12th floor right at the yellow pen and they try and explain and I buy and you do this and these guys do this these guys do that I go to the 7th floor who got spending the whole day go home take a look at my yellow pad I can't figure out what the hell they do so I go back the next day and alright the 7th floor a ninth floor eighth floor a boo boo Boyd I say I'm not an idiot I can't figure out what the hell they do it's like razzle dazzle this guy does that and I study us for what do you need him to do that oh this is very arcane stuff you're not gonna understand that I say okay fine so finally I say to him I'm going to st. Louis I want to see the guy who's the CEO oh I want to see the guy that manages the stuff that makes the rail cars you know don't go mr. Icahn dokgo so I say well why should I go he said this scare to you I said what do you mean scared what did I do he said they depend on us they depend on us and we tell them what to do and they are very worried that you might do something with us that's what I'm not threatening to do anything but I'd like to see her but don't go so I go back eight four nine four seven four boom boom boom boom go back home can't figure out what the hell's going on so I said screw these guys so I called the guy his name is Joe he in st. Louis is it look Joe I want to come see see of course but it's like I'd love to see you I said do me a favor don't tell the CEO I'm coming I just want to come myself and talk to you but don't get nervous about anything he's why should I be nervous I said like this guy Joe like a John Wayne character he was a captain in the Marines a tough guy I was scared of him and and and and I and I'm sitting there looking at him good talking and we'll laughing and he showed me stuff I understand what he does you're there so that boom boom bah so I said I want to have a drink with him so we go out and have a drink and sitting there having a martini the two of us I said Johnny asked you something I don't want you to think that he attempt to do anything because I don't want you to be nervous you know why should I be nervous I said I just want to tell you I can't I wouldn't know how many of those guys in New York you need to support your operation here because I honestly can't figure out what they do he says I'll tell you what you should do I'll tell you how many supports I need I need minus 30 so I go I say Joe what the hell's that mean minus 30 cuz you don't have the balls to do what I'll tell you to do just like that it's oh what's that get rid of all of them tomorrow get rid of all of them at all need 30 people less that have to support him with the numbers that they don't need from me so so I go and I say hey it's unbelievable I can't believe this now today I would have done it immediately got rid of all a bunch of 12 flaws but then I still was wondering you know maybe this guy's Joe's a little crazy you know how could I get rid of 12 laws of people so I figure how do I do that and be meanwhile I knew the guy who owned the building and he said you know Carl I could use the lease if you get out and I don't think these people do anything I watch him and I go I said he's a realistic I went the hell does he know so I now go and I figure what the hell do I do so this is a consultant around and you know consultants okay sometimes you know not too often but sometimes but I thought these guys had nice guys Columbia University those days and they were the great leasing experts of the world you know we seen they do this for all these companies I call him and three guys come in and one is a professor Columbia and he says miss icon we understand your problem very arcane I said yeah I heard that word before really arcade so I say I want to know what they do don't worry about it three weeks we'll be back it's quarter of a million dollars I said okay I'll pay a quarter of a million come back to three week they come back in three weeks now this is sort of hard to believe and but it typifies America but people who don't who don't believe it comes back in three weeks with book like this big book in a boom boom boom yellow grabs grid graphs green grab I say hey I ain't gonna read this book I said and I'm colorblind anyway so so I say so I say all I want you to do here's a yellow pad I did very well in school I'm a numbers guy tell me what they do and I said here's your quarter of a million bucks I give it to him and he looks at me smiles he says you know something you've been square with us mist icon you seem like a good guy so I'm gonna tell you something we don't know what they do either hiram God and I'm not I'm not joking I am not joking but he is the funniest thing I mean it's really sort of funny I said screw it I called Joe up you know he comes over he's a great great do it I get I get in this severance nobody was mad got rid of the whole 12 floors sold the lease for 10 million dollars that's was 11 and and and if you shut down a grocery store let's say you bought a grocery store shut it down you hear from somebody you know somebody didn't get the apples right you know somebody the pears with rod nurse of it if you had a flower shot the you know the roses wilted it was like out of a science fiction movie it's like they never existed I never got a letter I never got anybody calling me it they left it was it was like an EB one of those bombs you know to just hit the thing and you know kills all the people and the building stays I but but I follow I follow those principles a lot of what I do very many companies there are very many companies where and it's nobody's fault really but it's just the CEO doesn't care he's making a lot of money and today it's very dangerous because a lot of these mediocre companies are borrowing money and they're borrowing money very cheaply and that's what theoretically makes the earnings that I think are very questionable but but there's an argument to be made that some of these CEOs are borrowing the money to pursue buybacks and dividends and other financial engineering initiatives because they're worried that otherwise if they don't you're coming yeah I know I know they say that but that's not true okay they buy it back because they have options okay and they want to stock up and that's all they really care about it that's human nature they know they're not very good at what they do they really do know this and they don't even want to do it they're out there they're all scratch golfers these guys and and and and they really and by the way even if I was coming there right will be this ain't great let's just keep buying the stock back you know there companies out there many of them by the way that are going to 30 times our needs because I keep increasing earnings because the buying back stock I've been in since we're each one is a little bit of a different story but they're buying back stock buying it back at very low interest rates and inflating earnings by then they're not in any way showing you the real real earnings okay then then then they look at you look at you look at a lot of these up for instance they're they're not depreciating correctly they're they're going in and if you look at a lot of companies I mean value is a perfect example but but but you have other ones – I mean Valiants ridiculous example right I mean valiant the and the analysts let them get away with it they go in and they say well we're not gonna care about gap earnings we're not gonna care about gap earnings okay nobody cares but mm-hmm okay so so a valiant valiant goes and buys a company that you know has a product a compound that's a good compound but he's going to a patent in three years huh we don't care about that we don't have to advertise that because we're so good we'll buy other companies but but by the way when they buy the other company it's not research development they're not expensive it so what we'll buy these other companies so we're great at the balance of genius you're geniuses and go ahead and do it so the earnings are so overstated because it's just it's just intended take a lot of companies taking tangible assets you know goodwill you don't amortize it with you when you give guidance so you earn you some way overstated in this country you mentioned valiant did you listen to Bill Ackman's phone call last week no I didn't listen to him but but I I could imagine you know I know what you said I'm not manic Ackman anymore we're not gonna get into that we're we're we're we're friends we're friends something in quotes we're friends I disagree with him completely I disagree moon completely honorable life but you know so you wanted to get him on on valiant I I'm not in valley i well I I don't want to say I'm not completely in it but I'm not going to tell you where I am and with it but but that's not the issue the issue really is the the issue really is and I don't even want to use value I'm using a concept valiant they're picking on value in a way because a lot of companies are doing the same damn thing a lot of companies overstating earnings in this country and you could just look at it and you know I mean this is what I do for a living I mean I know a lot of these comes just overstating earnings one day there's going to be a day of comeuppance okay and it's going to be a very tough day and and and it were weak I I agree a lot with what Stan Lee said but you don't know when do you have real real problems I mean not to go back to a thing but I was reading some thing today you know I was working that what is it Alliance Bernstein says that these ETFs are very unsafe and they on day I these ETFs I coin what Buffett said about the derivatives to weapons of mass destruction because to what what stands behind an ETF are bonds that don't trade you know it's Larry Fink and he's a good guy and I like him and we're friends put against Larry Fink you know if he doesn't think they're unsafe is he going to guarantee liquidity so when people want to get out of the ETF and they want to sell the bond set behind him who the hell is going to buy those bonds is Larry Fink gonna buy them is a ok that's my whole point black box not gonna buy out with friends loan I'm not going to get into between Bill Ackman and Larry Fink II these are great friends um let me I never said it to bear by Ackman well let me ask you but I'm not saying it's better best take think does what he does and he does a great job he sells that stuff and it's a great job he does and he does just what he should be doing his job is to make money for Blackrock and he does it and but I will tell you that dzt end the whole cut if that to CGS the whole system is is really on a precipice to some extent let's go back to activism for one last second and I'm gonna take you out of it I'm gonna put it actually on Bill Ackman which is to say that there are there are activists that are sometimes right and sometimes wrong and I'm gonna use bill in that he has had six he has had great success at certain times but Herbalife is obviously turned out the LEAs thus far not to be that same success and if you were to look at for example JCPenney you could see real damage that took place as a result of that do you worry about making the wrong decision yourself yeah I I think that we all make wrong decisions however I think in a certain way over the years I learned this that if your conservative somewhat and you have capital that's why I really frankly got out of the hedge fund business I did it for a while and actually I was a good guy I got Pat I got paid for being really ethical because Inouye when everybody wanted money I didn't have to give it to him because you know I had three-year money so I did it I said okay I sort of made a deal of people I bought him that was the best buy one of the best buys I ever made I spent about a billion a half just anybody wanted money I gave it to him and then the problem with the business and being an activist it really doesn't go together I don't believe and I mean I got good friends interactive astir make a lot of money but the problem is if you don't have permanent capital a relatively permanent capital you get caught in this kind of quagmire we're you're going to had cycles I mean look we're losing money in Chesapeake for instance not not a lot because we made money the first time you but Transocean will lose a lot of money actually the energy we did well because CVI worked out for us but my point to you is that you know in a strange way some of these companies I know it sounds completely anti you to interview to you and you're not going to believe me but I don't really mind them going down because I know in my mind that I'm going to buy more of them I'm waiting to buy more of all these companies and no no it sounds anti intuitive but I've done that all my life when these companies go down I have the money and the power to do it then you can laugh and say what if it really gets a depression but I was a big buyer in no way known I have a lot of company um you have mentioned AIG it's in the news you you do want to break up that company you're going to see the CEO I believe on Thursday the seal was at on television he's coming to see me he's coming to see you don't go to you don't go to see him what is that conversation going what is that gonna be like just sort of bring us inside the room what happens which we're really very friendly I could make you laugh at my expense that's okay because I'll tell you this is sort of funny you know I have these CEOs in this case I'm only gonna I'm only gonna meet him in my office but there was one I think and he was laughing when we were going after a family dollar so this guy comes in from Tennessee come up and have dinner in my apartment and we come in there and there I knew we would never you know we he in my my and he's not a secret wasn't the guy to run this company but was coming up just to schmooze little and he comes up he's a nice guy but he laughs it he comes up and he says you know we have a terrorist's and I make a martini and I said have a martini he said you know I'd love to have you really did it he says I love to have about teeny I'd love to but I must keep my wits about me for this meeting I said it's not going to help you I want to turn the conversation briefly towards politics I mentioned earlier Al Gore was here and I mentioned the idea that Donald Trump believes that you should be his Treasury secretary should he win the presidency officially do you want the job you know now I I think I dad I know he says that but there's no way I would ever do that and it's a joke maybe I don't know if he's joking but I think he's serious no I certainly not I'm not ever going to be secretary of anything in Washington I mean I deal with Washington a lot and we're very involved with Washington now and by the way I have to tell you something that Washington has tremendous gridlock and we all know that and there's a law that it's almost absurd it's almost complete no-brainer not to pass in the next month which is and it can be passed and it's really closer than people think and I've been working on this assiduously for the last three weeks talking to Juma you know talking to the Paul Ryan talking to all these guys about it about repatriation in other words we need a law that allows these companies before they're moving out like Pfizer and this is the you're against inversions we definitely they shouldn't be inversions because we got to keep these companies in the country against is not the right word it's just ridiculous but I don't blame the guys for doing them it always Warren Buffett said it he said look if I do charity obligation to my company if the law allows these then people are going to do them and I don't blame them for doing them but what you have to do it is so simple is to change the law they the only ones that don't really want to do it it seems to me cuz I've spent the last literally week on the phone talking to all these guys senators congressman on the Ways and Means Committee in the house and on the Finance Committee everyone to a man since we definitely should do this now there's a what you do is pass the law and you say this money that these companies made over there they're right not to pay taxes on them because you know what because they made widgets over in another country and they pay tax in that country what do you think the realistic answer you think there's a realistic chance I'm hoping I'm hoping and I'll be proud I'll be proud of myself if we get it done but I'll be proud of the congressmen and Senators that do it I really do believe that Ryan wants to do what Schumer wants to do it I think they will want to do it the fight is that you have these two in this in Washington the problem isn't that these guys aren't I I find a lot of these guys that I talk to on the phone in Washington I know you're not gonna believe this a lot brighter than some of these CEOs I talked to so you know I really mean that so it's not that that I'm right but but the trouble is that they're dug in that the left wing of the Democratic Party is dug in on one ideology and and the right wing of the Republican up it and so the argument is if we do this and piercings aversions there's money we're never going to get there are companies that are going to leave like Pfizer and as we sit here they're more and more planning to leave and it's very very very bad for this country if that happens it's going to lose jobs and I think we're much more a precipice economically than other people to maybe Stanley to just talk to you things so but what I am saying to you is that the left we're going Democratic Party said why should we forgive those taxes and you say – but you don't but but you're never going to get the taxes then it's not your money you're never going to get them they're not going to be repatriated and they're going and not only not repatriated but leave the country so it's idiotic well we think it's wrong to lower the time I don't the Republican side say hmm we should take the money back let them take the money back and don't charge taxes at all so it's really almost it's it's almost like in a fantasy world that Alice Wonderland these two sides are so dunking as each other but I think in this case it would be so bad for the country that if you don't pass this that what is going to happen there could be a lot more Pfizer's look Warren Buffett did advisor did it there's going to be a bunch of companies like you say you know you know the CEO likes to buy stock back the CEO also likes to make money for his company because his options are go up in versions make you stock go up and therefore there's going to be a lot of that happening if they don't pass this in the next three weeks or month I'm going to open up the questions in two seconds when they just ask you very quickly are you supporting Trump just so we know yeah I'm supporting them he's your candidate he when I say he's my candidate at this point I don't see who else I would support I want somebody that's going to shake up Washington get get rid of that problem with the right wing being so crazy and the left wing being so crazy and I think you need somebody that's not just the politician but somebody that can go and do it from the outside so you need somebody like a Trump that can face up to him and and fight and get something done what do you think about then the conventional wisdom that his candidacy at least in the early on we there was a view broadly speaking that it was not serious oh I think it's very serious I I don't agree with that at all I know I don't know him that well but I've known him for years and years he's dead serious and he thinks he's got a chance to win I mean and you you don't and and I can't say I'm not really a politician I don't go to Washington very much in fact I don't go at all but you know I talked to him on the phone you know right so uh I I find my time better spent here but I would tell you that Trump is serious final question for you you just started a super PAC 150 million dollars correct there's an argument in this country about money in Washington and the role that money plays or shouldn't play and I just just walk us through you're thinking of starting the super PAC and whether you think philosophically it's a good thing or a bad thing I I think it's a super PAC discloses what they're doing a lot of that law that you're talking about was because they weren't disclosed it was secret money was being given in secret but I see nothing wrong with going in and trying to press your point and trying to get get things across in Washington the trouble is that most of the time these guys are watching to just go out and try to raise money and they keep working on raising capital I think if you really want to change the laws it should be more like it in England where there's a certain amount of money the government pays you you want to be you want to go for nomination you want to go run to God hey you pay a certain test I mean I'm not going to make the law sitting here and I haven't even thought about that much but you go pass certain tests do certain things show certain record they give you money and now you don't have to worry you don't have to worry about kissing somebody's asked to get the money and this is what really should happen so that's what I think Thank You Carl let's open it up for a handful of questions before we all get a cocktail so it sounds like cocktail might not help but we got a question in the front do you think other financial institutions are open to investment like yourself investment banks I mean clearly you've urged AIG in your letter last week but just wondering if other banks investment banks asset managers would be you know open to your type of letter like you about AIG you mean exactly yeah well look I I think to me I've said it publicly I think it's self-evident that it should be broken up and usually when it's self-evident it's gotten to a point we are over the years you know I've gotten this reputation made a lot of money for a lot of these funds and they listen to you they do but I can get an audience with some people can't on the one hand on the other hand I'd love to hear and that's why I'm waiting I haven't answered what Hancock said today with Peter here cause today because you know he reached out to call and to say I want to come up and see you so I'm saying I might as well hear what he has to say I can't frankly I can't understand why you can't do it I think what he said today I don't think made a lot of sense but I don't want to really criticize it look you have to have an open mind to these things and he might have things to tell me that he'll turn you know turn my opinion and change it so I want to hear what he has to say we're going to try to go around rapid-fire if you will thanks for coming today so on so earlier on earlier in May you made an investment in lift you made a hundred million dollar investment and earlier in this conference we had a Chris Sacca and Peter teal talking about uber and how great it is and they claim there's only room for one and you say there's really room for two so I want to hear your commentary I can't quite hear what the question was you have a stake in lift apparently yes and Chris Sacca was here earlier today one of the early venture investors in uber yeah Peter Thiel was also here he's an investor in lift the question I think is whether you think that there's an opportunity for two of these companies to coexist sort of in an AT&T Verizon like model or whether this is a winner-take-all networking effect business we're only an uber could win the game is that a fair yeah well obviously I wouldn't have put a hundred million in lift if I thought only water could exist thank you so I think it's sort of self-evident I wasn't just giving a hundred billion away cause Emma's a nice guy well you know you know so I but but I will say there's an old Auto charge or it's almost I think completely absurd that uber sells for fifty five billion and lip sells for to Bill you know you could say two billion is too low it was too high you know and none of them worth anything but if somebody was willing to pay fifty five billion in the old days I would short that and buy lift but I can't show it over you know so I just buy lifted I think I think that it has a very good shot yeah so all the way in the back you got a cheap seat so there you go thank you I'm mr. Icahn I have a question regarding disclosures and for short positions the New York Stock Exchange has proposed was the sec make hedge funds disclose their their short positions out they do longs how do you feel about that whether they should disclose what they show is like yep I haven't I haven't really thought about it you know I believe in disclosure but then you can't really I have to see exactly what they put out I you know they never gave it any thought really yes sir yep mister icon you mentioned earlier about valiant and valiant has been criticized for being unethical buying companies with product and then firing all the employees and then boosting the stock boosting the price of their medications up to five thousand percent do you have any feelings about with investing whether the company that you invest in is ethical or not yeah look I I certainly come from the old school where your handshake was your word it sounds corny and you don't have that as much today but to get back to valiant I want to make you clear I'm not here to criticize valiant or is that my purpose bringing that up my purpose of bringing it up is that many companies today if you really studied the arrogance they don't even amortize intangible assets there are many assets that are amortized so I think earnings are overstated and the S P is really going when I did a lot of I did fair amount of work on it gonna 23 times earnings not 17 which is way too high especially when you have zero rate interest rates so I'm you know I'm not telling you the market's going down tomorrow and go shorter tomorrow or you've been next week or even next month or even maybe next year but you have a real problem in this country the earnings aren't there even though you have low interest rates I wasn't out to criticize value I was more out to criticize the way you report earnings the earnings many of them are overstated and as valiant in my opinion is okay we're gonna sneak into more questions uh you served been very patient over there Karl I'm going to do this to you so you can get your microphone a little closer okay hi John ostrich so earlier today Larry Fink was here and he said that that they are very engaged with the companies in their portfolio in terms of they just don't do it publicly and so I wanted to ask what the difference is in the two processes from your point of view why is it that it seems like there's less fewer changes by asset managers as opposed to activists and does it have something to do with a different process because it has something to do with the way a security analyst looks at things as opposed to maybe a private equity investor is it something about long-term strategy versus operating strategy in the short term well look you know as I say I like Frank I like he's a good guy but I do not think you could in any way categorize them as some as an activist who really I I know he disagrees with this but I don't think they do very much they're an index fund their job is to raise money for the index and they think there's a bit of a different agenda here you know they're dealing with companies that give them money for the and by their funds so when they give them money by their funds why are they going to throw them out you know so why should there be a threat now they say they do look at it and they do study it but I have to tell you I don't think they have a voted for me and I've seen them somewhat but but to make another point I think a lot of these other funds are becoming much more active much more oriented toward activism meaning they I can't tell you a lot of these funds call us up and say you want to be looking at this company or that company you know because these funds are over weighted or under weighted against the index funds which is helping the activism someone what's wrong hi my name is nur Ellimist Runa the City University of New York I wanted to just ask you if you have a few quick tips or advice for students from non-target that are trying to break into the industry and kind of stand out of the crowd you want to get into the industry yeah good idea bad idea now I don't think it's a bad idea but I think I think things are going to be be difficult just me saying it I think it's going to be tough over the next few years I think the public I'm trying not to be pessimistic for next week the next year but the public I think is going to have a great problem in what they're doing you got these bubbles that are forming that have fun these are these are bonds that you have high-yield bonds jump bonds way to me if there's a problem they are going to you know go over a cliff and the government rightly so is saying hey we're not going to play with you it's too big to fail stuff so too big to fail with the Volcker Rule which is good they should have that so there's nobody to catch this there's nobody catch those falling knives so I think the public's could become extremely disillusioned in the next few years but I'm not going to tell you don't go into the business I mean if you can get into one of these top investment banking firms I mean they get paid for giving opinions they get paid for raising money I don't know why they get paid but they get paid you know and we try not to pay them too much but you know so it's a great business if you can do it the risk rewards greatly in your favor hey look if you can run a hedge fund it's great risk reward you take no risk so you know maybe you take risk of you invest some of your money but so you really in a way we were talking about this in equality of income now I you know I may be a serving my own purposes but if if you want it if you want to make a lot of money take risks you know that's what a capitalistic system is about but don't get paid all this money for rate what you're doing is managing money and and frankly I'd like you to show me somebody that really knows how to pick stocks I never met anybody they can you know I think over years you go find companies you nurture them you like them and you almost hope they go down because the greyman dog model shows you this is selling cheap but today and then ironically my son came in the business the last ten years he were pretty high and he introduced me to Apple which i think is the greatest company in the world but that's a gram and dot company in a very strange way because you buy an apple at eight times earnings and nine times earnings so if you find those and nurture them and wait and have patience you should make money but today you've got these guys making millions and millions of bucks for running money and I ain't the same because they're all my friends but you listen to them I don't think they know what the hell they're talking about you know I mean on that note coral icon everybody thank you very very much dude okay we appreciate you being here let me just say thank you for a wonderful day thank you everybody for your wonderful questions this is a conversation about the long-term it's a longer conversation I hope we get the chance to do with




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