The Business Brew

In this episode of the Business Brew, host Bill Brewster sits down with the esteemed investor Bruce Berkowitz. They delve deep into Berkowitz's illustrious career, from his strategies during the financial crisis to his current outlook on various investment opportunities, including midstream energy and Florida real estate.

Berkowitz shares anecdotes, personal reflections, and valuable lessons learned over decades in finance. Additionally, Berkowitz emphasizes the importance of due diligence and remaining rational amidst market fluctuations.

Don't miss this enlightening conversation that offers unique insights into the minds of one of the most successful investors in the industry.

00:00 Welcome to The Business Brew

00:07 Introducing Bruce Berkowitz

01:12 Disclaimer and Due Diligence

02:01 Shoutout to the Editing Team

*Dope music*

03:23 Starting the Interview with Bruce Berkowitz

04:19 Bruce's Investment Philosophy

05:06 Insights on Wells Fargo

09:01 The Importance of Management and Culture

10:11 Challenges in the Banking Sector

12:46 Bruce's Focus on U.S. Investments

14:25 Research and Concentration in Investments

20:28 Fairholme's Unique Approach

27:01 Reflections on Sears and Real Estate

30:43 Lessons from St. Joe

32:38 Discussion on St. Joe's Elevated Properties

33:27 Hurricane Resilience and Modern Building Codes

35:07 Investment Strategies and Market Perspectives

35:54 Interest Rates and Duration Risk

39:14 Corporate Spreads and Reinvestment Risk

41:43 Societal Changes and Financial Perspectives

46:17 Enterprise Products and Midstream Energy

48:30 Energy Logistics and Environmental Impact

57:17 Technological Evolution in Energy

01:00:40 Mutual Funds vs. ETFs

01:02:04 Concluding Thoughts and Media Engagement

Blake Haxton, analyst at Brandywine Global Asset Management's High Yield and Corporate Strategies Group, joins the Business Brew. This discussion focuses on the companies Blake covers as well as his views on markets generally. Blake tends to focus on "old economy" industries so prepare yourself for plenty of energy discussion. Bill and Blake also discuss industrials and homebuilders. The conversation also touches on the merits of high yield as an asset class.

Blake was recently featured in Barron's. You can find the article here: https://www.barrons.com/articles/paralympian-blake-haxton-high-yield-brandywine-global-6305e6e5

We hope you enjoy the conversation.

Detailed Show Notes:

4:00 - What Blake covers

5:10 - commodities are fairly tight from a supply demand perspective

8:00 - airline discussion

13:00 - energy as an example of how Brandywine looks to take advantage of capital cycles

16:00 - the prospective outlook for high yield

19:00 - how the high yield benchmark is different from the equity benchmark

24:00 - how the improvement in counterparty risk changed the risk/reward of lending to pipeline companies

28:25 - how to think about decline curves in the US vs. Canadian oil companies

30:25 - how differentials impact Canadian energy economics

38:30 - does it make sense to have an allocation to energy?

42:10 - a discussion about how assets generally are priced

52:00 - the pitch for debt vs. equities

54:45 - where is the US housing market in the cycle?

1:06:00 - trading down in credit quality for yield

1:13:00 - how ETFs can provide opportunities when they sell

1:21:00 - how was covering energy in COVID?

1:29:00 - what’s different today with shale as a key producer

Bill Chen returns to The Business Brew to explore the current landscape of Real Estate Investment Trusts (REITs). Delve into Chen's comprehensive due diligence process, investment strategies, and the future of multifamily and office REITs. Discover key insights on market conditions, cap rates, capital allocation, and the impact of interest rates on investment returns.

The discussion also highlights strategic decisions by large-cap public REITs, dealing with distressed assets, and the potential risks and opportunities in today's real estate market.

A must-watch for anyone looking to understand the intricacies of real estate investing in uncertain times.

Note: This episode was recorded on July 9, 2024.

00:00 - Welcome to The Business Brew

00:05 - Introducing Bill Chen and REITs Discussion

00:35 - A Walk-Through Manhattan with Bill Chen

03:28 - The Future of Office Spaces

09:48 - Bank Balance Sheets and Office Exposure

19:24 - Analyzing REIT Investments

38:12 - Analyzing Cap Rates in Real Estate Investments

41:45 - The Impact of Public Company Costs on Returns

49:30 - Liquidity and Market Dynamics in Real Estate

53:11 - Challenges and Opportunities in the Current Market

1:00:10 - Grocery-Anchored Shopping Centers: A Resilient Asset Class

1:06:17 - Interest Rates and Their Influence on Real Estate Returns

1:15:02 - Understanding Real Estate Multiples and Leverage

1:15:41 - Market Fears and Multifamily Capitalization Rates

1:16:32 - Challenges in Real Estate Development

1:16:56 - Opportunities in a Down Market

1:17:20 - Connecting with the Speaker

1:18:25 - Investment Strategies and Market Timing

1:19:51 - Balancing Market Humility and Aggression

1:21:23 - Psychological Approaches to Real Estate Investment

1:23:24 - Resilience of Multifamily Assets

1:24:48 - The Future of Home Ownership and Renting

1:27:54 - Personal Experiences with Real Estate

1:30:56 - The REIT Mafia and Investment Benchmarks

1:35:16 - Long-Term Investment Perspectives

1:42:22 - Final Thoughts and Farewell

Al Goldstein, Co-Founder, CEO, and Chairman of Stoic Lane stops by The Business Brew to discuss what his firm is doing in the private markets. Stoic lane is focused on acquiring controlling positions primarily in short term rental management and back office solutions for entrepreneurs. The entity is structured as a corporation with shares rather than as a partnership. As of now, Al's long term goal is to go public.

3:00 - Background and first exit

6:00 - Entering real estate in 2008

8:00 - Al's perspective as an immigrant

10:00 - Starting a private REIT

13:50 - Al's next venture in consumer lending

18:30 - What is Stoic Lane

26:15 - Capital light model with regional brands

30:00 - Creating the right incentives

34:00 - Focusing on the long term

40:00 - Execution is the hard part

Bill drops in to give a podcast status update and let the listeners know what is going on.

Come see him at The CFA Society of New York on June 25th.

If you are interested in the golf events please send your information to [email protected].

Thank you as always for listening!

Charles Lemonides, founder and CIO of ValueWorks LLC, stops by The Business Brew to discuss his investment philosophy. Charles started his career as a high yield bond analyst. Over time, he gravitated towards equity. In this episode he says "I find the best investment opportunities are where you can find something that is a real growth opportunity but it is selling for a value price."

Today, ValueWorks LLC, tends to run portfolios with 25-30 long securities in them. Charles tries to have 15 "very, very different" bets in each portfolio.

We hope you enjoy this conversation.

John Hempton on "When do you average down?"

Detailed Show Notes:

5:15 - Best investment setups/opportunities

7:30 - Conceptual position sizing

9:40 - ValueWorks different vehicles and philosophy

17:45 - How Charles built his firm around a philosophy

20:00 - Why Rivian may be a value investment

28:20 - Comcast

31:00 - How Charles manages different types of theses?

35:00 - Where are we in a market cycle?

39:30 - What stocks do you want into a top?

44:40 - What makes Charles tick

Consuelo Mack stops by The Business Brew to discuss her career in financial media. Consuelo hosts the show WealthTrack, a show Bill has watched and/or listened to for years. This conversation will help Consuelo's fans understand more about her early career and how she developed WealthTrack.

Bill was very happy Consuelo said yes to coming on the show. His only regret is messing up Ed Hyman and Ed Yardeni in the conversation. He hopes both Eds forgive him.

We hope you enjoy the conversation!

Hunter Hopcroft, Managing Director, Portfolio Solutions at Armada ETF Advisors, stops by The Business Brew to primarily discuss REITs. Hunter is quite a thinker and the conversation veers into other parts of markets such as AI, how the economy is changing and more. You can find Hunter's writing here: https://www.lewisenterprises.blog/

Bill pinged Hunter after someone (on the Twitter machine, so you know it's factual) made a comment that REITs are inherently bad investment vehicles. We hope this episode is informative and realistic about the investment vehicles. You may learn:

As always, we hope you enjoy the show. Thank you for your time!

PS. Reach out if you are interested in sponsoring the show. You can contact Bill at [email protected].

Detailed Show Notes:

3:00 - Hunter transitioned his career around an interest in REITs

7:00 - Private and public markets own basically the same assets

10:00 - How private markets create a lock in for RIAs that may help the RIAs' multiple when they sell the business

11:00 - Negative features of REITs

17:00 - The downside scenarios for multifamily housing

20:30 - What can dividend growth do for a portfolio?

27:30 - How Hunter thinks about the different REIT asset classes.

30:00 - The difference between private real estate allocations and public market market cap weighted allocations

41:00 - The different valuation methodologies to analyze $AIRC

48:00 - Why are private market cap rates still healthy relative to public markets?

52:00 - Hunter's view on markets and where they are right now

56:00 - Some riffing on AI

1:04:00 - In defense of Marty Whitman!

Elliot Turner, Managing Partner and CIO of RGIA Investment Advisors, returns to The Business Brew for a great conversation. To start, Bill and Elliot discuss what Elliot learned from the period of 2021 to now. They then discuss some specific stock ideas, thoughts on portfolio management, and much more. We hope you enjoy.

Note: This episode was recorded on April 3, 2024. Bill owns a small position in Fevertree (established after recording) and a basket of positions in some smaller life science companies.

Detailed Show Notes:

3:00 - Learnings

10:30 - Prioritizing health to lead to success

14:00 - Was it an everything bubble?

22:15 - Fevertree discussion

37:40 - Thoughts on position sizing

44:30 - Incentives in finance papers

49:00 - A great NVDA story

55:00 - Is life sciences similar to tech after 2000

58:50 - The 3 forces that make life sciences and biotech interesting for humanity

1:08:00 - Is The Street focused on the wrong things?

1:16:20 - Maravai

1:25:00 - Thinking about patent cliffs

1:29:00 - High costs of failure and why that may be a good opportunity for existing suppliers

Darren Fisk, Founder and CEO of Forum Investment Group, LLC, stops by The Business Brew to discuss his real estate investment firm, strategy, and thoughts. Darren focuses on multifamily real estate. His background is in lending and he added an equity focus during the GFC. This conversation covers lending, insurance, how to think about development, and more.

Darren's father in law taught him that "Cash may be king, but cash flow is queen." Thus, in the beginning of Forum they were focused on cash flow. Today they are willing to develop real estate as well.

Forum's investment structures are through LLCs as opposed to an LP/GP structure, which is interesting. We hope you find this conversation enjoyable.