DealBook Conference 2015 - Activist Investing

It is my pleasure now to introduce you to a guy who also needs no introduction. Carl Icahn is here and when you have a conversation about the long term, he's the only person you want to hear from in a weird way. side, although you may think you are on your side, so we will see Carl Icahn, so Carl, thank you for coming and being our cleanup hitter, please know that we have had this conversation all day about the long term, the short-term dividend buybacks. the pressure that corporations feel from

activist

s and the role that activism has played in some of those decisions and I wanted to get your take from top to bottom on whether you think it's contributing to short-term behavior or long-term behavior. , Well I think. that x' activism

activist

s are not all the same, there are many different types of many different types and the way I have seen it over the years and one of the reasons I came is because Andrew called me and said: you know that they will talk about Short and Innocent Short Term Turbot, they have held all their shares for so long that they should come and talk about it in the deal book and I don't usually do this but I have made a list so read it real quick because no one wants to hit me, read something like that, look at the companies we bought over the years.

I'm amazed at the long-term ISM we do. ACF I am a 31 year old owner. I hate to admit that I have held this stock for so long 31 years and then I looked at it American Railroad Industries 23 years federal magnate PSC metals 17 years federal magnate 14 years this case 14 years Excel 14 years factor 13 years American casino 11 years national energy 11 years West Point 11 and on and about us and many activists who are not short-term oriented, I can't say everything, it depends, I mean, if you have associations and people want to make profits, I guess you have to be somewhat short-term oriented, but the real money that I made over the years, he's had companies four seven eight nine years in Peter, I could look back, we bought casinos and you have to buy them when no one really wants them.

I mean, that's the real secret, but you buy things, it sounds very simple but it's very difficult. do what everyone hates, you buy them and then when everyone wants them you sell them to them and that's what we do and we go in and clean up a company. There are many companies in the country that are very well managed, but many are terribly managed and you don't have corporate democracy, you don't have it yet, so you have people who run companies, there are no bad people, but they shouldn't run companies excessively or they have different agendas, so yeah think about it if this is corporate America if your uncle left you a vineyard or a beautiful vineyard view of the Terfel apple orchards beautiful thought the left you know vineyard said congratulations that's great you're going to be in the vineyard You'll be able to enjoy it, you have all this money coming in and then, eight months later, you see that your friend is successful, you enjoy it.

I said what happened, how are you doing terribly terrible. What is the problem? So, big is fine, it's nice, but the manager, the guy who runs it, plays golf all day. He has a plane that he rents for himself and he parties for his friends and he doesn't really do any work and sells bits here and there and doesn't give me any money. I told him, what are you crazy? He calls the police. and kick them out but that's corporate America you largely go to the corporations and that's how they act and they think 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 and some of these boards are good, you know, the board is friends with a CEO, but a lot of them listen to us after they get there for a year or two and the reasons why the ones who make all this money I'm not a brilliant stock picker I don't think anyone is I think if we go in we discover that there are problems and it doesn't always work and it doesn't work, you have to wait many years sometimes, but the problem with our country and I think we're going to pay a price for it sooner than we think is that many of our companies are not well managed now, that doesn't mean that many of the companies we had were good managers and that there are many other good managers and good boards directives, but if you ask me about the future and what we think here, you will know that I had the opportunity to listen to Stanley for a few minutes because I got here a little early and I was listening. him watching it on television there so I can hear it very well and I think a lot of what he says is correct, they have to be real problems, we are walking into a minefield with what is happening with the Federal Reserve.

I mean, we can go on and on about this, but I think we have problems. I want to get to the Federal Reserve, but go back to talking about activism for a second, which is when you look at that list. Do you consider that the activist list that means that all assets are those situations in which in each case you consider them an activist investment or those direct investments and the reason I ask is that you know, for example, right now that you are going after AIG. We can talk about it, but one of the things he wants to do is break up that company.

I assume you want to own that company only during the period in which it would be dissolved and then you would want to leave not necessarily sometimes many times but you talk about the list of activists let's go for the first one I'm still 31 years old ACF well let me tell you a little story about ACF and I know mine listen a few minutes have a few drinks A few minutes later for something, but I'll tell you the quick little story here, so I was a kid, you know, 31 years ago compared to today and I see this ACF and I'm a workaholic.

Can I continue working in companies? Look, this company sells for $30 and I'm looking at the railroad because they own it and I look at all the things they have, they don't make money and I look at, you know, I'm an old Graham and Dodd. Boy I still am and you look and say this is so cheap. I think all the money I would make I would like to see aired that time. You know, you know, he had a good amount of money. I don't mean anything like today, I guess, but. You know, I put in four or five hundred million or I borrowed or whatever I did and I bought a lot of stock, so now we go and say, you know, this is so cheap it's 30 dollars and he kind of The assets don't make money, but what the hell, so I finally control the company.

I get the company and now I walk in and you know I'm a good mathematician. I don't believe in micromanagement II, so I meet with the CEO and it's all fog, I think I'd love to have you, I mean we had a bit of a fight, we still love having you on board, you know, buh, buh, you do great , let's be friends, so they make wagons. I won't bore you with the details, but they had many companies and in the railroad car business the secret is very simple: you make railroads, but the government wants to incentivize you, so the government says, "Okay, in other In other words, you can depreciate the railroad car. five six seven years, but you can hold it for 40 years to get this big depreciation, so it's a big tax incentive, so the secret is you have to make money to properly use the tax benefits, so these guys kept going buying companies in every company they bought. they lost money so that was a real problem so now we go and they got 12 flats on 3rd Avenue when real estate was pretty good at a young age and I'm like, well you're the guys, at least the railroad because They have the guys to do all the dog work and that's a true story and it's kind of surprising, but it still applies a lot today maybe not as well as a lot you're going to hear this is hard to believe I know I walk in and that's it You know, I'm a good math guy who's good enough, his guys are a good poker player.

I'm going to go understand what they do, so it's a technical lost icon to the 12th floor, let's go to the 12th floor, right on the yellow platform and they. try to explain anyway why and you do this and these guys do this these guys do that I go to the seventh floor you guys spend the whole day go home look at my yellow notebook I can't understand what the hell you're doing do it, I come back the next day and it's well, the seventh floor, a ninth floor, eighth floor, a boo boo boo and I say I'm not an idiot, I can't understand what the hell they're doing, it's like dazzling this guy. that and I study us well, what do you need me to do that, oh, this is something very arcane, you're not going to understand it, I say, okay, so I finally tell him that I'm going to st.

Louis, I want to see the guy who's the CEO. Oh, I want to see the guy who runs the stuff that makes the wagons. You know, don't go, mr. Icahn don't go so I say well why should I go he told you this scare I said what do you mean scared what did I do he said man they depend on us they depend on us and we tell them what to do and they are very worried that you can do something with us that is which I'm not threatening to do anything but I'd like to see if we don't go so I'm coming back eight four nine four seven four boom boom boom boom come home I can't figure out what the hell is going on so I said fuck these guys so I called the guy.

His name is Joe, he's in St. Louis, look Joe, I want to come see, look, of course, if 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 I'll go myself and talk to you, but don't be nervous about anything, why should I be nervous? I said like this guy Joe like a John Wayne character he was a Marine captain a tough guy I was afraid of him and and and and I'm sitting there looking at him talking and we're laughing and he's showing me things.

I understand what he's doing here, so boom boom bah sergeant, I want to have a drink with him, so we go out and have a drink and certainly have a martini both of us. of us said, Joey asks you something. I don't want you to think that he intends to do something because I don't want you to be nervous. Do you know why he should be nervous? I said, I just want to tell you that I can. I don't know how many of those guys in New York you need to support your operation here because I honestly can't understand what they do.

He says. I'll tell you what you should do. I'll tell you how many. props I need I need minus 30 so I go, I say Joe, what the hell does that mean minus 30 because you don't have the balls to do it? I'll tell you to do this, I said, what is that, get rid of everyone? they get rid of all of them tomorrow with only 30 people less they have to support it with the numbers they don't need from me, so I go and say hey, this is incredible, I can't believe this now, today I would have done it.

I did it, I immediately got rid of all the 12 flaws, but I was still wondering, you know, maybe this guy is Joe, he's a little crazy, you know, how could I get rid of the 12 laws of people, so I wonder how I do that and in the meantime, I knew the owner of the building and he said to me: you know Carl. I could use the lease if you free yourself and I don't think these people will do anything. I look at him and told him he's a real estate guy. He went to hell. I know, now I go and wonder what the hell I do, so this is a consultant and you know, consultants, okay, sometimes you don't know very often, but sometimes, but sometimes I brought in these guys who had good guys at Columbia University in those days and they were the big boys. leasing experts in the world, you know, we've seen them do this for all these companies.

I call him and three guys come in and one is the professor from Columbia and he says Miss Icon, we understand his problem, it's very arcane. I told him yes, I heard that word before. arcade so I say I want to know what they do don't worry about it three weeks we'll be back it's a quarter of a million dollars I said okay I'll pay a quarter of a million they're back in three weeks they're back in three weeks this is a little hard to believe but it represents United States, but the people who don't believe it, who don't believe it, come back in three weeks with a book like this, a big book in a boom, boom, boom, the yellow grabs the grid charts, the green subsidy.

I say, hey, I'm not going to read this book, I said, and I'm colorblind anyway, so I say, I say, all I want you to do, here's a yellow notebook. 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 dollars. I give it to him and he looks at me, smiles and says: you know something, you have been honest with us, Mr. Icon, you seem like a good guy, so I'm going to tell you something we don't know what they do either I'm not I'm not kidding I'm not kidding but he's the funniest thing he's really kind of funny I said screw it I'm calling Joe you know? he comes he's a great great do it I understand receipt in this severance no one was mad he got rid of the entire 12 floors he sold the lease for 10 million dollars that was a lot that and and and if you close a grocery store, let's say you were born a grocery store close it you hear from someone you know someone didn't buy the apples right you know someone the pears were rotting or something like that if you had a flower he shot the fly you know the rose withered it was like something out of a science fiction movie it's like They would never have existed I never received a letter No one ever called me They left It was like aEB one of those bombs, you know, just hitting what you know kills all the people and the building remains and but I follow those principles in much of what I do many companies there are many, many companies where and it's really no one's fault, but the CEO doesn't care, he is making a lot of money and today it is very dangerous because many of these mediocre companies are borrowing money and they are borrowing very cheap money and that is what theoretically generates profits that I think are very questionable, but You can argue that some of these CEOs are borrowing the money to do buybacks and dividends and other financial engineering initiatives because they're worried that otherwise if they don't do it, you'll come, yes, I know, I know they say that, but that's not true, okay, they buy it again because they have options, okay, they want to stock up and that's all they really care about, it's human nature, they know that. they're not very good at what they do they really know it and they don't even want to do it they're out there they're all scratch golfers these guys and and and and really and by the way even if I was going there, right?

This isn't great, let's keep buying the stock. You know, there are companies out there, many of them, by the way, that are going to earn 30 times our earnings because I continue to grow earnings because of share buybacks. I mean, teaching one is a little bit of a different story, but they are buying back shares, buying them back at very low interest rates and inflating the profits by then, they are in no way showing you the actual real profits, so, then, then I'll look at you , you'll look, you look at a lot of these, for example, they're not depreciating properly, they're coming in and if you look at a lot of companies, I mean value is a perfect example. but but you have others: I mean the ridiculous example of Valiants, of course, I mean Valiant and the analysts let them get away with it, they come in and say, well, we won't care about GAAP, Ernie, we won't care. profit gap, okay, no one cares, but okay, so Valiant Valiant goes and buys a company that you know has a product, the compound is a good compound, but they will get a patent in three years, so we don't It matters that we don't have. announce that because we are so good, we will buy other companies, but by the way, when they buy the other company it is not research development, they are not expensive, so we will buy these other companies, so we are great. in the balance of geniuses, you are geniuses and go ahead and make it so that the profits are so exaggerated because it is simply the intention.

Take many companies, take intangible assets, you know goodwill, don't advertise them when you give guidance. Earn a hype in this country you mentioned brave. Did you listen to Bill Ackman's phone call last week? No, I didn't hear it, but I imagine you know, I know what you said. I'm not mad at Gagman anymore. We're not going to get into that we are we are friends we are friends how many dates we are friends I don't agree with him completely I don't agree move completely for an honorable life but you know, so you're with Mon in Valiant I I'm not in Valiant, well , I don't want to say I'm not completely into this, but I'm not going to tell you where I am and with that, but that's not the problem, the problem really is. and I don't even want to use value.

I'm using a brave concept, they're choosing value in some way because a lot of companies are doing the same thing, a lot of companies are exaggerating profits in this country and you than 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 come in just hyping the gains, one day there will be a comeuppance day, okay, and it will be a very difficult day. and that was the week. I really agree with what Stanley said, but you don't know when you have real problems.

I mean, not going back to anything, but he was reading something today, you know, he was working on it. It is Alliance Bernstein who says that these ETFs are very insecure and daily these ETFs coin what Buffett said about derivatives: they are weapons of mass destruction because what is behind an ETF a guarantor does not negotiate and you know. It's Larry Fink and he's a good guy and I like them and we're friends putting Larry Fink, you know, if he doesn't think they're unsafe, he'll guarantee liquidity, so when people want to get out of the ETF, I didn't want to sell the bond step behind him who the hell is going to buy those bonds is Larry Fink is going to buy them okay that's my point the black rocks are not going to buy with friends look I'm not going to get between Bill Ackman and Larry Fink they are great friends, let me, I will never I said to build by Ackman, well let me ask you, but I'm not saying he's the best, I think he does what he does and he does a great job, he sells that stuff and it's a great job that he does and he does just what he should be doing , your job is to make money for Blackrock and you do that, but I will tell you that at the end of the whole cut was that for CGS the whole system is really to some extent on a cliff, let me go back to activism for one last second and I'll get you out of over there.

In fact, I'm going to put it on Bill Ackman, I mean, there are activists who are sometimes right and sometimes they're wrong and I'm going to use Bill in the sense that he's had six years and he's been very successful at certain times, but Herbalife obviously it's turned out to be the least so far not having the same success and if you were to look at JCPenney for example, you could see the real damage that took place as a result of that. Are you worried about making the wrong decision? Yes, I think we all make wrong decisions.

However, I think in some ways over the years I've learned this: If you're conservative. a little bit and you have capital, which is why, frankly, I got out of the hedge fund business. I did it for a while and he was actually a good guy. I got Pat. They paid me to be really ethical because Inouye, when everyone wanted money, I didn't. I have to give it to him because you know I had money for three years, so I did it. I said it was fine. I made a deal with people that I bought while away was the best buy.

One of the best places I've ever done. I spent about a billion and a half anyone wanted money. I gave it to him and then the problem with the business and being an activist doesn't really go together, I don't think, and I mean, I have good friends who are activists who earn a lot. of money, but the problem is that if you don't have permanent capital, relatively permanent capital, you get caught in this kind of quagmire, we're going to have cycles, I mean, look, we're going to lose money in Chesapeake, for example, not nothing. not a lot because we made money the first time but Transocean will lose a lot of money actually energy we did well because CVI worked for us but what I mean is in a weird way you know some of these companies.

I know it sounds completely against you to interview you and you won't believe me, but I really don't care if they go down because I know in my mind that I'm going to buy more. I'm waiting. buy more of all these companies and no, no, it sounds anthea tuna, but I've done it my whole life, when these companies go down, I have the money in the right purchase, but I have the power to do it, so you can laugh and say what about Yeah? It really gets depressing, but I say that I was a great buyer by no means, number 9 of many companies. um, you mentioned AIG, it's in the news, you want to break up that company, you're going to see the CEO.

I think on Thursday the hallmark was that on television he will come to see it, he will come to see it, don't go, don't go see it, eh, how's that conversation going? What will that be like? Just bring us. inside the room what's up, we're actually very friendly, I could make you laugh at my expense, okay, because I'll tell you this is kind of funny, you know, I have these CEOs, in this case I'm just going to I'm just going to meet him at my office, but I think there was one and he was laughing when we went in to get a family dollar, so this guy comes from Tennessee, he came to my apartment for dinner and we went in there and there he knew that You would never know that he can buy me and it's not a secret, he wasn't the guy who ran this company, although he comes just to chat a little and shows up, he's a good guy, but he laughs.

He comes and he and he says still oh and we have a terrorist I make a martini and I told him to have a martini he said you know I would love it if you actually did it says I would love to have about tini I would love to but I have to keep my wits about me for this meeting . I said he won't help you. I want to briefly turn the conversation toward politics. I mentioned before. Al Gore was here and I mentioned the idea that Donald Trump thinks you should be his Treasury secretary. Should he officially win the presidency?

Do you want the job? No, no, I think dad, I know he says that, but there's no way I'm doing it and it's a joke, maybe I don't know if you're joking, huh, but I think. He's serious, well, certainly not. I will never be secretary of anything in Washington. I mean, I deal a lot with Washington and we're very involved with Washington now and, by the way, I have to tell you something: Washington has tremendous gridlock. and we all know it and there is a law that is almost absurd, it is almost a no-brainer not to pass it in the next month, and it can be passed and it is actually closer than people think and I have been working on this assiduously for the last three weeks talking to Juma, you know, talking to Paul Ryan, talking to all these guys about repatriation, in other words, we need a law that allows these companies before they move, like Pfizer, and this is what you're in against. investments definitely shouldn't be investments because we have 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 always doing it Warren Buffett Senate said look if I do it charitable obligation to my company, If the law allows it, then people will do it and I don't blame them for doing it, but what needs to be done is so simple is to change the law, they are the only ones who don't do it.

I really want to do it, it seems to me because I spent literally the last week on the phone with all these guys, senators and congressmen on the House Ways and Means Committee and on the Finance Committee, all to one man they say: I should definitely do this now. What you do is pass the law and say that the money that these companies earned there is right not to pay them taxes because you know why, because they manufactured widgets in another country and paid. taxes in that country what do you think is the realistic answer do you think there is a realistic possibility I hope I hope and I will be proud I will be proud of myself and we will get it done but I will be proud of the congressmen and senators who do it I really think Ryan wants to do what Schumer wants to do.

I think they'll want to do it. The fight is that you have these two in Washington. The problem is not that these guys. I find a lot of these guys I talk to on the phone in Washington? I know you're not going to believe this much brighter than some of these CEOs that I talked to, so you know, I'm serious, so that's not what I'm right, but the problem is that they're entrenched in that the left wing of the Democratic Party is entrenched in an ideology and the right wing of the Republican Party is entrenched in it, so the argument is do we do this and Peneston. aversions there is money that we are never going to get there are companies that are going to leave like Pfizer and as we sit here they are increasingly planning to leave and it is very, very, very bad for this country if that happens, jobs will be lost and I think economically we are much more on the edge of the precipice than other people, maybe Stan Lee, who just spoke to you, thinks so, but what I am telling you is that the left we are going to double our party, he said why should we forgive those taxes and you say - but you don't but you will never receive the taxes, isn't it your money?

You will never receive them, they will not be repatriated and they leave and not only not repatriate but leave the country, so it is idiotic, well, we believe that it is wrong to reduce the time. I don't, the Republican side says hmm, we should take the money back, let it be returned to them and not tax it at all. So actually it's almost like in a fantasy world, Alice in Wonderland, these two sides are submerging each other, but I think in this case it would be so bad for the country that if you don't piss on this, What is going to happen? happen there could be a lot more looks at Pfizer Warren Buffett did it Pfizer did it there will be a lot of companies like you say you know the CEO likes to buy back stock the CEO also likes to make money for his company because his options go up and releases cause their stock to rise and therefore a lot of that will happen if they don't approve this in the next three weeks or months.

I'm going to open the questions in two seconds when I'm just asking you real quick: are you supporting Trump just so we know? Yes, I am supporting them. He is your candidate. When I say he's my candidate, right now I don't see who else he would support. I want someone who changes. Washington gets rid of that problem with the right being so crazy and the left being so crazy and I think you need someone who's not just the politician, but someone who can go and do it from the outside, so you need someone like Trump. that he can confront it and fight and get something done, what do you think then of the widespread opinion that his candidacy, at least atInitially, there was a general view that it wasn't serious?

Oh, I think it's very serious. I don't agree with that at all. I know I don't know him very well, but I've known him for years and years. He is very serious and believes he has a chance to win. I mean, and you don't and I can't say I'm not really a politician. I don't go to Washington much. In fact, I don't go at all, but you know I spoke to him on the phone. You know. uh I think my time is better spent here, but I would say that Trump to Syria, one last question for you, he just started a super PAC. 150 million dollars, right.

There is a discussion in this country about money in Washington and the role it plays or should not play. I'm not playing around and just explaining to us: you're thinking about starting the super PAC and whether you think philosophically that's a good thing or a bad thing, I think it's a super PAC revealing what they're doing, a lot of that law that you're talking about was because they weren't revealing that it was secret, the money was being given in secret, but I don't see anything wrong with going in and trying to insist on your point and trying to get things across in Washington, the problem is that most of them at the time where these guys want you to go out and try to raise money, they keep working to raise capital.

I think if you really want to change the laws, it should be more like that in England, where there is a certain amount of government money. it pays you, you want to be, you want to go to the nomination, you want to go run to God, hey, you pay a certain test, I mean, I'm not going to do the law sitting here and I haven't even thought much about it, but you. go pass certain tests, do certain things, show a certain track record, they give you money and now you don't have to worry, you don't have to worry about kissing someone, they asked you to get the money and this is what should really happen, that's it what I think.

Thank you. You, Carl, let's open it up for a handful of questions before we all have a cocktail, so it sounds like the cocktail might not help, but we have a question at the beginning. Do you think other financial institutions are open to investment like you? Investment banks. I mean clearly. urged AIG in your letter last week, but I was wondering if other banks, investment banks, asset managers, would be open to your kind of letter, like you about AIG, you mean exactly yes, well, look, I think I have said it publicly. I think it's obvious that it should be dissolved and usually when it's evident it's gotten to a point where over the years you know I've earned this reputation, I've made a lot of money off of a lot of these funds and listen to me. for you they do but I can get an audience with some people I can't on the one hand on the other hand I would love to listen and that's why I'm waiting I haven't answered what Hancock said today would be the hair guys today because you know he reached out to call and say: I want to come see you, so I say I might as well listen to what you have to say.

Frankly, I can't, I can't understand why you can. I don't and I think what he said today I don't think makes much sense, but I don't really want to criticize him. You have to have an open mind to these things and he might have things to tell me that he will change, you know, I will change my opinion and I will change it, so I want to hear what he has to say. We'll try to turn around quickly, if you want, thank you for coming today, so in early May, you made an elevator investment, you made a hundred million dollar investment and earlier in this

conference

we had Chris Sacca and Peter Teal talking about uber and how wonderful it is and they claimed there is only room for one and you say there really is room for two so I want to hear your comment I can't understand what the question was you are wrong apparently yes and Chris Sacca was here earlier today, one of the first venture investors in uber, yes, Peter Teal was here too, he's an investor in, raises the question.

What I'm thinking about is whether he thinks there's an opportunity for two of these companies to coexist in sort of an AT&T Verizon-like model or whether this is a winner-takes-all network effect business. We're just an uber that could win the game. fair, yeah, well, obviously, I wouldn't have put in a hundred million elevations if I'd just thought about what might exist, thank you, so I think it's a no-brainer. Okay, I wasn't giving away a hundred billion because Emma is a good guy. you know, you know, but I'll say like an old car charge or it's almost, I think it's completely absurd that uber is selling for fifty-five billion and lip is selling for two billion.

Now you could say two billion is too low, it was too high, you know? and none of them are worth anything, but if someone was willing to pay fifty-five billion in the old days, I would short it and buy it live, but I can't show it, so I just buy high. I think it has a very good shot, yes, all the way back, you have a cheap seat, so there you go, thank you, sir. Icahn, I have a question about disclosures and short positions, and the York Stock Exchange has proposed that the SEC make hedge funds disclose their short positions.

Long's, how do you feel about that? If they should reveal what they show, it's like yeah, I've done it. I haven't really thought about it, you know, I believe in disclosure, but then you can't. I have to see exactly what they posted. You know, I never thought about it, really, yes, sir, yes, sir. Icahn that you mentioned earlier about Valiant and Valiant has been criticized for being unethical by buying companies with products and then firing all the employees and then increasing the stock by increasing the price of its drugs by up to five thousand percent. Do you have any feelings about it with the investment?

Is the company you invest in ethical or not, yes, look, I certainly come from the old school where your handshake was your word, it sounds corny and today you don't have it as much, but to be brave again, I want to make it clear. I'm not here to criticize Valiant or is my purpose in mentioning that my purpose in mentioning that is that a lot of companies today, if you really studied hubris, they don't even amortize intangible assets, there are a lot of assets that are amortized, so I think the profits are overstated and the SP really goes when I made a lot.

I worked hard to achieve 23 times earnings, not 17, which is too high, especially when you have zero interest rates, so I'm You know, I'm not telling you that the market will go down tomorrow and short tomorrow or that you will be next week or even next month or even maybe next year, but you have a real problem in this country: the profits are not there even though you have low interest rates. I didn't mean to criticize the value. I wanted to rather criticize the way it reports earnings. Many of them are exaggerated and in my opinion, no matter how brave it is, it's okay, we'll sneak it in for more questions.

You've been very patient Carl, I'm going to do this for you so you can get your microphone a little closer, okay, hello, John. Oh, move on, Larry Fink was here earlier today and he said that they are very committed to the companies in their portfolio in terms of they just don't do it publicly, so I wanted to ask what the difference is between the two processes from your point of view? , why does there seem to be less change by asset managers in comparison? to activists and does it have anything to do with a different process? Does it have anything to do with the way a security analyst sees things as opposed to maybe a private equity investor?

Is this a long-term strategy versus a short-term operational strategy? term, well, look, you know, like I say, I like him, I think I like him, he's a good guy, but I don't think that in any way you can categorize them as activists that I really know that he doesn't agree with this, but I don't think they do. They're very much an index fund, their job is to raise money for the index and there's a little bit of a different agenda here, you know, they're dealing with companies that give them money and they buy their funds so that when they give it to them.

Money buys your funds, why would they throw them away? Know? So why should there be a threat? Now they say that they do look at it, they do study it, but I have to tell you that I don't think they voted for me. and I've seen them a little bit, but to make another point, I think a lot of these other funds are becoming much more activism-oriented, which means I can't tell you much about the use of the funds, call us and tell us. You should look at this company or the one you know because these funds are overweight or underweight compared to index funds, which is helping the activism that someone increased.

Hello, my name is Nur Ellimist Runa, City University of New York. I just wanted to ask if you have any quick tips or advice for non-target students who are trying to break into the industry and stand out from the crowd. Yes, do you want to get into the industry? Yeah, good idea, bad idea, not now. I think it's a bad idea, but I think things are going to be difficult, just say it. I think it will be difficult in the coming years. I think that the public I join should not be pessimistic for next week. next year, but I think the public is going to have a big problem with what they are doing, these bubbles are forming that have formed, these are bonds that have high yield bonds, bonds that jump to me if there is a problem, they're going to fall off a cliff and the government, rightly, says, hey, we're not going to play with you, you're too big to fail, so you're too big to fail with the Volcker rule, it's a good thing you shouldn't. have that, so there's no one who can catch this, there's no one who can catch those falling knives, so I think the public could be very disillusioned in the years to come, but I'm not going to tell them not to get into the business .

I mean, if you can get into one of these big investment banking firms, I mean they get paid to give opinions, they get paid to raise money. I don't know what they get paid for, but they get paid, you know, and we try not to pay them. too much, but you know it's a great business if you can do it, the risk rewards hugely in your favor, hey look, if you can run a hedge fund, it's a big risk, reward, you don't take any risk, so you know, such you may take the risk of

investing

. part of your money, but really we were kind of talking about this in income equality now.

You know, I may be serving my own purposes, but if you wanted to, if you want to make a lot of money, take risks, you know. That's what a capitalist system is all about, but don't get paid all this money to qualify, what you're doing is managing money and, frankly, I'd like you to show me someone who really knows how to pick stocks. I never met anyone. Know? I think over the years you look for companies, you take care of them, you like them and you almost expect them to go down because the Greyman dog model shows you that this sells cheap, but today and then, ironically, my son got into the business during the last 10 years.

He worked very hard and introduced me to Apple, which I think is the biggest company in the world, but it's a gram and dot company in a very strange way because you buy an apple at eight times the earnings and nine times the earnings, so yeah you find those that take care of them and wait and be patient, they should make money, but today you have these guys making millions and millions of dollars to manage the money and I hate to say it because they are all my friends, but if you listen to it, I don't.

I think they know what the hell they're talking about. You know in that note how Coral Icon. Thank you all very, very much friend. Okay, I really appreciate you being here. Let me say thank you for a wonderful day. Thank you all for your wonderful questions. It's a conversation about the long term It's a longer conversation I hope we get the chance to do it