Founder and CEO of hedge fund Pershing Square Capital Manage

the problem with short selling is it's still not accepted as a particularly well accepted as an American way of investing there seems like something inherently shadowy or evil about short sellers you called an activist that's quite an adjective nowadays when you hear this charm what do you think about think about picking another job no the answer is I think a very interesting presentation from a map from from Black Rock and Black Rock is a built a business large Leone passive strategies and you know phenomenal business the vast majority of the capital markets today the public capital markets the investors are passive you know they're indexed their closet indexed their index plus an alpha strategy and if you look at the shareholder lists of major companies its Blackrock its fidelity its cap research its Vanguard and and by charter these institutions are passive if you think about capitalism you know hundred years ago it was very different right you had Carnegie at JPMorgan you had players who'd buy big stakes and businesses they were control shareholders there was an owner on the board of directors so so capitalism over time has democratized which i think is great for accessibility to you know the average man in terms of investing in the market but you get rid of owners controlling companies and I think what activists do is they're sort of they represent other shareholders you know if you think back to a friend mr. Icahn in the 80s he operated very differently today an activist shareholder takes a stake in a business and is only successful if all the shareholders benefit it's not greenmail where the the activist investor buys a stake gets a benefit for himself and goes on you know if you take a stake in Canaan Pacific Railroad and other people follow you in and they vote in your directors and a new CEO comes in and the stock does well you know the shareholders benefit collectively so it's a I think it's a very valuable feature for the market if the shareholders don't support the activist it never gets done and we're not a control investor we're a lead investor or leading the charge on behalf of other Sheryl actually you're allowing me to segue perfectly into the next question so when an activist or specifically you invest on the long side tell us about that first call to the c-suite because usually it means there's some change you're looking to do whether it's board seats or strategy and so you know what what's that call like when you make it well firstly it's rare that we look for board seats on three boards today but we've made you know 26 activist investments I'll call it and we've been on four or five boards over so it's it's a minority of the time you know I think it's you know what I call we get a very poppin reception and we're dealing with very sophisticated CEOs and companies and the vast majority of the time you know we're in favor of we like the business we think it's undervalued that's not a bad thing to hear as a CEO of a company and we have some ideas on how the business can be made more valuable it's rare that the idea is replace the CEO that's not a call the CEO likes to receive right they know that there's change in the air when you're making a call sure about look at Fortune Brands right we took a stake in the business in October 2010 we sat down with the management of the company and we outlined why we believed Fortune Brands which owned Titleist business called Fortune Brands homeand security Jim Beam why that consolidated conglomerate made it was time for that business to be separated and we walked through this fatigue logic you know what's going on in the spirits industry why there are opportunities we could have a standalone Home Products business and why was probably time to sell Titleist and that was a private quiet meeting we walked through a 85 page presentation we asked management how long they would need to kind of think about what we had to say they said you know give us five six weeks five weeks later they announced that they would be selling Titleist spinning off the home products business that stock was 40 the day before we started buying the pieces today are worth ninety six dollars a share and it's two and a half years later I've got a very appreciative phone calls from the management's of the respective subsidiaries you know I think they love running their own business is you know the the CEO of the spirits company you know when the housing market was not in a good place you could be doing a fabulous job selling Jim Beam but still you're not your stock options aren't worth very much so I think it's a it's a positive development or the shareholders I think it's very good for the management of the company so are you intimating that when you make that call they like that you're on board I think the answer is perhaps there's some degree of concern and what we have might have in mind but in the vast majority of cases there you know people seem receptive to hearing what we have to say and and we're we're not there's a full spectrum of techniques in activist investing so most your positions on the long side when you go the other way to the short side and we'll talk about one specifically but do you then eat also make that c-suite call or do you kind of do it in a different fashion you know I did not call Herbalife prior to making a presentation in the case of MBI MBIA you know ten years ago or more we did sit down with the management the company at least to hear how they were you know some answers to some questions we had an Herbalife we were able to figure things out without meeting with the management mm-hmm so tell us a little about your portfolio why so few names you know obviously there has been some rumors of the performance up six percent for the first quarter I know you can't say that's accurate and not accurate with most of your portfolio up double digits one down to double digits which we'll talk about but give us just to take on why so few names and so for a bunch of reasons I mean I've always had the view that you know why why not own the best ten or eleven investments as opposed to ideas twelve through twenty five or twelve through 100 which is more typical and you know I think there are very few great investments at any one time so the ability to concentrate is an enormous e valuable asset of a strategy the problem with it is most it leads to bumpier returns and it leads to more attention on on mistakes or things that aren't going well you know that I don't know a portfolio manager that doesn't have a stock that's down in history portfolio right but you don't read articles about when we're getting an awful lot of attention for a pretty high-profile situation that's that's struggling but I think there's you know it depends what your business model is but if you want to make high rates return over a long period of time it's hard to do that being very diversified I mean if you look through the Forbes 400 wealthiest people in the world most of them made their fortune in one business or a portfolio of two businesses very few made it in a portfolio of a hundred so it's it's that and the other benefit allows you to run a much simpler investment firm we have an eight-person investment team if we had 30 names we couldn't manage that portfolio the way we do with a small team well there's a small team you can hire better talent there's actually an argument that some people are now making that you know buying the index or buying diversified funds have had much better returns than buying you know those hedge funds that have you know a very specific smaller portfolio approach like yours oh I haven't seen that article I mean I think we've done very well relative to any index alternative certainly so I couldn't depend zhan how you judge us I think if you judged us on a 90 day basis I have no idea how we're going to do relative to an index but I think this is a strategy that over time should are in a meaningful premium over you know any kind of benchmark or you shouldn't give us your money yeah so talk to us about the Bill Ackman strategy or that mental checklist that you go through before deciding to go long a shorter position I mean for some Bill Ackman strategies Pershing Square strat urgings Square and it's it you know I do get a fair amount of the but you have the final say yay or nay that's correct okay so some could pick that and CEO buck stops with me absolutely we just want to make sure that it could London the only manager by committee that's correct okay but just to be clear every idea has a leader at Pershing Square so the leader may not be me some tells me sometimes not go through that strategy and go through how it works and when you come you know maybe you'll override that portfolio manager not but what's the checklist you kind of go through so we look for very high quality businesses what we describe is simple predictable free cash flow generative dominant businesses a business that Warren Buffett would describe is having a moat around it right if you if you believe that the value of anything financial is the present value of the cash you can take out of it over its life we need to know how much cash is going to generate over its life so the business quality to us is the single most important criterion for determining what's interesting because if we can't predict the cash flows we don't know it's worth we don't know it's worth we can invest and we figure out what it's worth figure how good the business is how predictable will this cash flows be from a railroad or a spirits company or a real estate company shopping mall business and then we say okay well where's the trading and if there's a wide gap between price and value you can buy for 50 cents it's worth $1 20 and then we're going to take a hard look and try to understand why it trades at a deep discount and once we understand the reasons we decide well these things that we can solve you know where can we in light of the situation the circumstances can we be influential and changing these these levers that can cause this valuation discrepancy to narrow and is this a business that while we're causing the valuation discrepancy to narrow we can also perhaps contribute to the valuation growing those things are truly found something that looks quite interesting for us and usually this investment philosophy does it take a week a month three months to do the research a year I mean you have 10 names what how long it depends I mean one of the best investments we ever made took us four hours to do the work I was during the financial crisis which was that Wachovia corporation so I was on my blackberry eating breakfast the Brooklyn diner in front of my building and the story went across the I was just you know Wall Street Journal headline our Broder's headline excuse me went across saying that Citigroup to acquire the Wachovia banking subsidiaries for two dollars in Citigroup stock stock was halted this was kind of an interesting transaction because they were buying the subsidiaries for Citigroup stock I figured that's interesting what happens to the holding company so I went back to the you know kind of went upstairs to the office and you know cracked open the 10k and another member of the team Nick McGuire he and I worked on it and what was interesting is the thousand page 10k of Wachovia corporation I think nine hundred pages were on the banking subsidiary there's fewer than 100 pages on the holding company by buying the banking subsidiary city was leaving a holding company which had cash you know in Wachovia Securities AG Edwards they had paid six seven billion four to six months before evergreen asset management and they were taking a twenty seven billion dollar loss on the sale of the subsidiary and it also had a liability called non-cumulative perpetual preferred stock which if you ever want to have a liability in your life this is the single greatest liability to have it's a it's a form of equity where you never have to pay a dividend and when you don't pay them they don't accumulate in the worst case is they get a couple directors in the board and say hi to them each meeting and you have this very interesting I said look this could be our Berkshire Hathaway and the end of the day we figured the asset you know in four hours we determine the holding company was worth at least eleven to fourteen dollars cash a tax refund that you could carry back the twenty seven billion dollar loss recover cash taxes have been paid they have this cash vehicle you don't walk oviya securities which is a you know good wealth management business you don't AG Edwards another interest in asset you either businesses you know well and the stock opened after it was halted at a dollar eighty four so he said look it's worth a you know eleven to fourteen a dollar eighty four we bought forty two percent of the volume for the next four days and then it was acquired by and wells came in and put in the topping bid of seven dollars in Wells Fargo stock which wasn't actually a topping bid but the Wells Fargo deal did not require government assistance right so I think Sheila Bair lapped I remember that like they interviewed Sheila Bair sure who our show sure so before we go into some of the investing uh bring me some water and that would be great right maybe a bottled water thank you so you're known for occasionally hiring people with some non-traditional financial backgrounds form a fly-fishermen a tennis pro someone you met in a taxi so what actually are you looking for so most of the people that we have on the investment team are people with more conventional backgrounds half the team worked at Blackstone and either private equity or Investment Banking a few guys from Goldman Sachs but I'm a big believer you know I had internships in my life and you know if I meet a great human being mean I want to give some you know people who didn't go to Harvard Business School and didn't work at Goldman Sachs for four years you know some exposures I met the beginning of Pershing I met a guy named Oliver White who I believe is one of the you know he's become recognized as one of top fly fishing guides in the world very smart interesting guy taught me fly fishing and I said look if you're interested in business and you want to intern at learn something about it you know come work for me and Oliver came and spend 18 months with us you're taking a very outdoorsy guy and you're putting them in Hatton which is kind of an interesting thing he didn't like that part of it but you learn a ton about business and then he left he actually worked a lot on one of our proxy contest situations in the Ceridian we had a proxy contest one of the issues was the the CEO was using the corporate jet to do a lot of fly fishing junkets so we were able to track that stuff through his network of fly fishermen so it was a useful in the proxy contest anyway and Oliver left you know to do it and I backed him to buy a fly fishing lodge which the Abaco lodge and in Abaco in the Bahamas and it's like you know 20% on levered return on capital and he's done an unbelievable job managing in and we hired a guy named Mary it's Adamski who I met on the tennis court super talented guy went to Wake Forest you know top tennis player and he you know I offered him a job and he's worked for us for the last couple of years and he did a lot of the research on Herbalife he did a phenomenal job so I just you know he's going to go to business school because he's gonna need more training to come back into the business but I think it's a you know a nice thing to offer people those kind of long I was offered opportunities like glad I flew down with you maybe maybe I have a role for at Pershing soon so now let's get into a little of the fun pot so you've been in quite a bit of news lately I mean I've had 30 interviews on impact players and actually researching you I thought would be quite easy but actually it's very difficult because you actually have to separate fact from fiction sure it's become very difficult with you I have to have noticed that as well I have to be honest with you but you most knows what do you think is fact because what you think exactly I'm my own version of mom you've become most notably famous for this public feud you've had what Carl Icahn and I'm not going to get into that other than do you feel like you underestimated how personal this fight over herbal life was going to become and for someone that has been relatively a private guy in a you know an investor and really sticking to his business and his family life and how you know keep things separate you now you can't go anywhere without seeing Bill Ackman whether it was a New York Times op-ed or this month's Vanity Fair or today on I thought I bought up most of those Vanity Fair shoes yeah they're still around so I'm coming you have to be surprised how this takes off and how does it you know so does it make you second-guess how you kind of gone about this whole affair it looks sure taking a short position and going public with it is a pretty serious business we and I debated long and hard as to whether I wanted to do that again you know we I took a lot of heat for taking a big short position in MBIA yeah and in sharing my thinking publicly about why I thought that 150 to 1 levered triple-a rated institution guaranteeing subprime CDOs is not good for America and not good for your pocketbook and could cause a financial crisis by the way and there's some similarities because you thought the regulators were missing that as well and we did and it took us a couple years to get the regulator's interested in taking a look at the accounting issues reserving issues and so on for the company but I learned a lot about dealing with the regulatory community and also now a lot of headaches associated with it in the case of Herbalife I couldn't really believe I came to the conclusion that how can this company really exist how is it possible that a four billion revenue business with a seven billion dollar market cap is a pyramid scheme and but you know how could Bernie Madoff I've had 50 billion dollars under management in a pyramid scheme and I debated do I want to go public with this and you know the first part of that analysis is one we've got to get to a level of certainty here that is higher than any other investment we've ever had because again to come out and say a company's effectively violating the laws of Ricci rias accusation we did want to do it on our own you know we hired one of the top law firms in the country who did six months worth of work and came to the same conclusion and agree to meet with regulators with us which I think was important part of our the work we did but still do I want to go public and take the heat the problem with short selling is it's still not accepted as a particularly well accepted as an American way of investing there seems like something inherently shadowy or evil about short sellers you look at some of the you know David Ireland's call on Lehman Jim Chanos is call on and Jim Chanos on he's still talking about China and if Lehman had done a recapitalization in response to David Einhorn saying they had inadequate capital yeah Lehman would still exist and I don't know exactly what if the the course of the financial crisis we've stood out a financial crisis probably not as severe at MBIA in effect recapitalized when we pointed out the enact adequacy of their capital you know it's municipal bond holders would have a better would have a better insurer and the case of Herbalife concluded the risk reward was very attractive we thought it by virtue of sharing our thinking publicly and pyramid schemes rely on deception there are they've got to recruit almost a couple million people a year to keep the scheme going kind of growing number to keep the scheme growing it's harder to do that when there's tremendous visibility about the business model the company's been forced to update its disclosures that it's now sending to its distributors and in fact eighty eight percent of the distributors make nothing they get no royalties from from rely that's not a fact that they were going to disclose publicly before they've been forced to shut down some of this lead generation recruitment that happens on the internet which is a completely the way it's done by their distributors is we believe totally in violation of law so just by virtue of going public we mitigate the risk and being short because it affects their ability to deceive people affects the fundamentals of the company and that reduces the downside of being short the stock price rising and then we have the benefit of a potential regulator you would never guess that so oh that's the kind of thesis now did I think that a group of hedge fund managers would take the other side of the trade and and try to you know orchestrate a short squeeze now I didn't think that in fact what I think is disappointing about that and again I doesn't bother me at all if someone takes the other side every investment we have there's probably some one short things that were long or obviously long things that were short that's how the markets work what what's sort of nice about the hedge fund industry is it was an industry where it was more cooperative industry I didn't view my people in the industry as competitors because we would find value together you know ultimately we see partnerships and various investments this was the first case where a lot of sniping going on between managers which I think it's just a negative of the industry yeah so I want to walk so to quote you if the FTC misses herbal life it's the equivalent of the SEC missing Madoff so why have the regulator's missed it for over a decade so look it's not an easy thing to be regulator it's you know it's a job where you don't get a lot of awards for being a regulator unfortunately you get in trouble for missing things you have limited resources even though it's the government they have limited budgets companies have you know you know lobbying organizations they have influence and they've you know they push on the margin to minimize regulation over side of their business so their forces fighting against regulators but what are you seeing so clearly that they are not took us 18 months to do the work we could spend an unlimited amount of money hiring the best lawyers in the country we can put unlimited amount of resources to figure things out we could focus just on this one company and we have no obligation to regulate the rest of the direct zone called multi-level marketing industry we found one outlier we spent all of our time and energy on it we studied it and it took us a very long time to get to a level of conviction and certainty that we could feel comfortable going public a regulator can't do that they just don't have the resources to do that and that's you know same thing on you know in fact if I were if I were chairman of the SEC I would have a regular meeting with Jim Chanos David Einhorn and all the best short sellers and say what are your favorite shorts so have you sat down with the SEC giving them your presentation I've been told that I'm not allowed to answer that answer that question but you should assume that we're fairly proactive approaching square yeah and that we will meet and have met with a a wide array of regulators who have jurisdiction of the company so um you have said that you'll donate any of the money that you might gain from Herbalife to charity I should say as a side note my wife is hoping you win because she's at the RFK Center for Human Rights and she's hoping that you win and then wants to sit down with you okay God why have you decided that this is something that in some ways you're now giving to charitable side and we'll talk about you philanthropy which has been really outstanding and not discussed enough about how much you've given back but I mean why are you making this case a little different than others look I think the answer is well first of all I'm philanthropic generally there is a taint associated with short-selling my experience with MBIA is every time we talked about or made a presentation about MBIA people would say oh he only believes that because he's going to make a profit if the stock price goes down and what's interesting is all day people go on CNBC and talk about stocks they like and no one discredits them by virtue of the fact they're going to make a profit if it rises but on the short selling side there's something at least some people perceive parently wrong with it in the MBIA case the stock basically went up for years the credit spreads got tighter and tighter and the Triple A rating remained until one day I gave a presentation at forgot which conference and I said the end of my presentation I hereby to commit to give away 100% of the profits that I personally make from this investment that was the high for the stock it went straight down the credit spreads went from 13 to 2000 we made you know a lot of money i seated the Pershing Square Foundation with 140 million dollars from that situation fantast and we spent the money already so we need to refill the foundation so yeah under a million on charitable things and we're running out of resources yes so now on to JCPenney you own somewhere around 15% of the company makes you the largest shareholder sure the stocks dropped north of 20 percent this year you've taken a bit of a hit or both you and your investment in it why the confidence that you this retailer can turn it around you will see but here's what we find interesting about JCPenney it's a great brand it's been around 110 years by virtue of being around for a hundred and ten years JCPenney has 110 million square feet of some of the best shopping mall real estate in the country that's a great place to start if you're a retailer it has long-term ladder debt maturities over a very long period of time and it's a great platform but it was really a retailer that was dying slowly you know it really peaked probably in the you know late 80s early 90s and it's been difficult from there and the thesis was if we can bring you know my Coleman was approaching retirement 66 or so years old perhaps we can help recruit a top retail CEO who can bring kind of a growth strategy to the company and we recruited Ron Johnson and he and he's gone to work and it's and he's doing one of the most difficult kinds of business turnaround I mean hunter Harrison at CP is done an unbelievable job turning around a railroad which is not an easy thing by any means but he doesn't need to change the business model the railroad right you know the revenue side sort of takes care of itself here what Ron is doing is you know fixing the cost structure they've taken a you know something approaching a billion dollars out of the cost structure changing the merchandise in the stores changing the way the merchandise is presented if you had to know the impact has been on a consolidated basis something very close to a disaster right sales are down tremendously sequential comms have declined dramatically no business can survive the the trend here and he's working very aggressively with his team to fix the mistakes of in May there been some big mistakes and I think one of the big mistakes was perhaps too much change too quickly without adequate testing what the impact would be and so you know again as I have told our investors JCPenney is the highest risk and highest reward investment in portfolio you think about retail just a Segway for a second yeah the wealthiest people in the world are retailers in every country whether it's the Waltons on the United States or whether it's the guy who owns IKEA in Sweden or the Indiglo you know Japan the end of Inditex in Spain if you get a retailer fixed if you get a good model and you can replicate it's about the best way to make money ever but it's not easy it's hard JCPenney has huge structural competitive advantages by virtue of its asset base by virtue of its brand that's a good place to start but it doesn't guarantee success and my guess you won't answer this next question but when it stocks down roughly 25% and the stock market's gone up dramatically at what point do you decide I'm going to buy more or what point decide I'm cutting my losses this is just the wrong direction it has nothing to do with the stock price for us it has to do with what's going on in the business you know in JC Penney case we're on the board we're working hard along with the other directors and make sure that this ship is steered steered correctly you know as a general rule you know we if we conclude that we're wrong or we've learned you know investing is about the best investments are the ones where we are the confident we're right and everyone else is wrong okay and you have to in order to be you know I've been accused recently of being arrogant among everything I know I'm gonna actually ask you that it was called it was pompous but that's okay pompous I don't think of kompis but I've been certainly been accused of being arrogant and there's a difference between arrogance and confidence yeah if you're arrogant and investing you're gonna get killed right if you're not confident you'll never make an investment all right so you have to do in a sufficient amount of work to be confident enough to have the conviction do something that's contrarian right we bought the stock of a base soon to be bankrupt retailer I'm sorry a shopping mall company during the financial crisis at pennies per share you have to be willing to look silly when you do something like that general growth stocks up 90 fold since our original investment you know on that's we had confidence maybe we'll flow is arrogant to believe that we could be successful in turning around but you also have to be humble and you have to recognize when there are new facts you hadn't consider that are inconsistent with your thesis well if you look at Herbalife none of the bull case for Herbalife none of those arguments have in our view any merit and therefore were we continue to have conviction but if we were to learn a new fact that all of a sudden we realized Herbalife was a great company and it wasn't a pyramid scheme and the products really had tremendous efficacy and they were priced correctly and there was real demand for them you know we would change her mind so what last question on JCPenney but they've their sales has been stemmed 32% same store sales and you commented that the media has been very negative and CEO Johnson gets picked on more than any other CEO in the country do you really believe that criticism is not deserved criticism is deserved and Ron is working very hard I don't know the date of that comet is but you know look he's this is a very difficult thing to do he is you know I'd say the ad hominem criticism I think is inappropriate but look he's a buck stops with him he's CEO the company if it's failing under his watch you know he deserves and the board deserve responsibility for that so I'm pretty sure I may be mistaken that your entire portfolio is us except for Canadian Pacific Railway which may have been your best performer last quarter why is this your only non-us play and do you think actually this may be a trend where you're starting to look outside of the US so we do very few things in fact we do very few things a year right over average holding period is four or five years for our kind of active investments and we have 10 stocks right we need to find a couple of ideas a year it doesn't make sense to me unless the universe we play in we've run out of targets why go why fly to Europe to have a meeting with management why you know deal with a jurisdiction where we're less well known we have fewer relationships we don't understand the legal system the regulatory environment so we focus on the United States and Canada we've invested in Canada before because we you know we understand the language we understand the law it's close to home it's a short flight to Calgary this connects to a few hours but you know just close to home I can go see my kids you like to feel and touch it yeah yeah it's very important so what has been your signal biggest mistake you've made either investing in a company or deciding to walk away from investing you know we spend an enormous amount of time looking at MasterCard before it went public and I've always believed that you know I had said previously I was asked by you know at a business school by student what's the single best business in the world I said if you could own a royalty on people spending money like visa and mastercards greatest business in the world and that ever became a public company you want to buy that company or you ever good buy that company well became a public company and we did an enormous amount of work in the company we couldn't get comfortable with the regulatory risk to exhume a Protection Agency thing no there was there was outstanding kind of kind of antitrust litigation okay relating to kind of monopolistic practices of the the Visa MasterCard and when you have a strategy we put ten fifteen plus percent of your assets in any one investment you can't take even a very small risk of a catastrophic outcome interest and so we passed on MasterCard and it's been a incredible investment management so an amazing job yeah that was that's a big miss yeah well but it's either a interests it's either that one the question is whether it's a miss did we did we overestimate the regulatory risk or or did it just work out in a real way so I think as a as part of a you know 50 stock portfolio we would have bought it as part of a ten stock portfolio we couldn't do it so unclear to me but I still look at that one and say do we really have a Miss there so I'm sure you know you have some fans some critics and you've been described as pompous and needlessly competitive although I have to admit I've been called worse in my own industry as well so tell me how would how do you think that your peers describe you and how do you how do you think those that you invest in describe you so in the last 90 days I've had one very vocal critic no actually two really yeah I don't think any of us has seen it there's Carl and then this guy that I met money manager named Bob Chapman who I met on a panel seven years ago we were on a panel together shook hands never spoken to him since I've never had an email correspondence I've never seen him since but in the last 90 days he's been running the talk-show circuit on how I'm you know either wrong or stupid or arrogant you know giving quotes to Vanity Fair it's unfortunate you know I don't mind criticism but I do I don't like reading things that are I don't you know it's hard to repay for somebody doesn't know me well to be commenting on what I'm like as a person I find I find that difficult but you know whatever I got it you have to have a thick skin to be in this business and you know if you end up in a very public situation you should expect to have fans and critics and you know I just try to focus on what my job is and we focus on making money for our investors and I live my life and well I want to talk about the side that I'm most proud about being your friend about and that's what you and your wife has done and so give me a few seconds here but you've been quite philanthropic and in some ways it's gone unnoticed because what's surprising is you are one of the youngest individuals to sign the giving pledge which for those who are not familiar with that it's giving 50 percent of your net worth away during the time you living more or more right and in 2011 you and your wife Karen were among the list of philanthropies 50 list of most generous and that's just great and I think we all read the journal and everyone likes to read about the things you know that goes viral but the truth is you don't get enough credit for giving back and I want to applaud you for that I also want to get an understanding of you know why did you sign the pledge and tell me about some of your foundation work that you and Karen and doing that's kind of true to your heart so we can get to know you away from some of the other things we read sure so my dad was a very successful businessman he still he's still active at 74 years old and what's interesting about philanthropy is its I don't think it's innate I think it's learned and my dad always pushed me on how important it was to be charitable and so I had the benefit of someone who provided real leadership to me you know the obvious points are you know I don't need anything else economically my family's in a great position financially I'm financially independent I don't have those kind of concerns it's the question what to do with the resources right you can give them to the next generation and they're you know a lot of times it doesn't work out very well right I benefited by note my father said to me bill you'll never inherit anything from me probably ever or unless you don't need the money and and so I didn't have to worry about that affecting my incentive structure and I think that you know I had grew up you know my closest friends was expecting to inherit a lot of money and it affected his ability he was very talented very smart but he couldn't commit to anything and stick to it because he had too much optionality in a way and so I think you know you can you can create a lot of damage by handing you know fortune to to the next generation and they're a lot more neater and more important causes so give us a couple of the things that the Afon Dacians involved with so I'll give you who I think will get the Nobel Prize seven eight years ago guy came to see me named Andrew youn and he had just started something called the one acre fund and the one acre fund young a guy moved to Kenya I don't know if it was there just on vacation or otherwise and met all these one acre farmers these are women that support their families and you know nine ten months of the year they can feed their families based on what they can produce on the one acre that the government has given them the other several months of the year either basically in the kids starve and they starve and through teaching modern farming techniques providing better seed technology better fertilizer he's able to increase their output by 3x and they have a surplus and he provides the seeds and and the fertilizer and the consulting advice in exchange for half of the excess increase in output and he takes that money reinvest in another farmer we've invested a relatively tiny amount of money with him and we're his biggest funder seven million dollars by the end of this year he will take him something approaching a hundred I think over a hundred thousand of these one acre farmers from starvation to feeding their families to having an excess we can send their kids to school it's incredible that's incredible and you know one of our members of advisory board you know with this former CFO of McDonald's Matt Paul he's helped Andrew and thinking about franchising how to build the system and they're in Kenya now and they're going into Burundi and it's an incredible model I just look at a guy like that and you know my added value here was pushing him okay and giving him capital to accelerate what he's doing is compounding and if this were growth by the way he could make that a profitable business if he slowed his rate of growth but we've given him capital T so he can do it more quickly like my stuff like that I mean you know fantast last question because it's what is on everyone give money to the one acre fund yep and find them online somewhere I mean certainly great work so there are four teams left in the Final Four we're going into the Final Four weekend so we want to know who you would short and who you would go long and and just - so I know you've been busy so I know you know who the Final Four is my resume you have to prep me because that would really go viral if you didn't know who the Final Four so I'm gonna tell you just in advance you have Louisville Wisconsin Michigan and Syracuse there's no pen there's no Harvard this year although you know Penn was the 79 team when Burton magic with Sumi went to new intimate I did so I'm just letting you know we made a final four ones but Harvard did have their first victory in the NCAA so kudos to them so who would you short and who would you go long I think short selling is risky I would not you gotta you gotta have one I picked Michigan cuz mom went there Michigan to go long I don't have a point of view okay then I only go publicly short if we really do or do die then I'll go Louisville to win so I'm Louisville young Michigan and we'll we'll have a nice lunch again appreciate it well I want to thank once again partners connect and Reuters for putting this together and my friend Bill for coming out do this thang Ramon [Applause] [Music]

Channel: PartnerConnectEvents

Views: 57,848

Rating: 4.949791 out of 5

Keywords: none

Id: PS-1eZ2Mge4

Length: 39min 44sec (2384 seconds)

Published: Thu Apr 17 2014