VALUE: After Hours (S03 E19): Crypto Special Situation, Value vs Growth and Momentum, Wild Swings

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In this episode of the VALUE: After Hours Podcast, Thomas Braziel, Corey Hoffstein, and Tobias Carlisle chat about:

  • Crypto Net-Nets
  • Growth Got Crushed
  • Crypto Arbitrage
  • $ARKK Drops 35%
  • The ‘We Don’t Know’ Narratives
  • There’s Just Too Much Money Sloshing Around
  • Wild Swings
  • The Marriage Between Value And Momentum
  • Retail In The Way Of The Eye of Sauron
  • The Market Is Top-Line Placid With Violent Undercurrents
  • Hong Kong’s Warren Buffett – Li Ka-shing
  • Garpy Special Situations
  • When $GME Was A Value Stock
  • When A Net-Net Isn’t A Net-Net
  • Pirates Of Finance

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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Full Transcript

Thomas: -like, brothers from another mother. [crosstalk]

Tobias: Nice.

Corey: Honestly, how have you and I not crossed paths before? You know everyone I know.

Tobias: All right, fellas.

Thomas: I feel like [crosstalk] profile. You look too clean cut for me. I’m like– looking at your LinkedIn I’m just like, “Oh, this is like somebody serious. I’m just like home gaming it.”

Corey: I’ll send you my YouTube videos. I’m anything, but serious.

Thomas: Well, I’m sorry.


Tobias: I’m not telling you to stop. For the folks who are just tuning in, slightly different lineup today. JT is out camping and Bill is traveling back from Markel. So, we’ve got some subs. Thomas Braziel, who’s a deep value bankruptcy specialist, special situations guy. How are you, Tom?

Thomas: How are you? Good to be here. I’ll be JT today.

Tobias: You’ve gone quiet on me. We haven’t decided who’s going to be here yet, but I’ll be playing myself in this one. We got the great Corey Hoffstein, Quant Extraordinaire. I called you Global Macro before, but how would you describe yourself, Corey?

Corey: I would definitely just lean into quant and then say derelicts tourist of many other depraved forms of investing, I suppose.

Pirates Of Finance

Tobias: You’ve got the new Pirates of Finance podcast which I love–

Corey: Thank you, sir.

Tobias: -with Jason Buck. So, you guys are gone vol and crypto. There’s nothing that you won’t talk about on that podcast.

Corey: There’s nothing sacred at the moment. Look, you know how it is. When you’re in investing at least for me, I love exploring all these other ideas of investing, and very often I don’t get a chance to talk about them. When you run us fund or a strategy, sort of everything you publish is on the narrow of what you do but doesn’t mean you’re not interested in other stuff. So, Jason came to me with this idea of, “Hey, let’s put together a show that’s a little less serious, hopefully a little bit more fun, 10 minutes a week of content on whatever we want.” So, last week was a crypto cash-and-carry trade that is a little bit– what’s the word I want to use? Makes me a bit of a degenerate running it.

Tobias: [laughs]

Corey: But it’s fun and hopefully people laugh.

Tobias: It’s appropriate that you’re Pirates of Finance, which is Pirates of Penzance. Is that the–[crosstalk]

Corey: It is. One of the first comments we got was someone telling us how arrogant we were to pronounce [phonetic] fynance as fin-ance and I was like, “You don’t get the joke then.”


Tobias: But you’re usually in the Caribbean, or is it [phonetic] Saribbean?

Thomas: [laughs]

Corey: It’s whatever you want it to be. Yeah, I’ve been hired– I’ve been squirreled away in Grand Cayman for a couple months. Now, I’m actually back in the States for a little bit for a wedding, but my wife and I decided we’d had enough of Venice, California, when the pandemic hit and did that very cliche thing of picking up and moving somewhere else. A couple of the Caribbean islands are offering these work-from-home visas. So, you can just pick up and move to Barbados or Bermuda, Grand Cayman was offering one. So, we were early to apply and put all of our stuff in storage and pack two bags and headed to live that beach life.

Thomas: Nice.

Tobias: Tom, you’re in the same deal, right? You’re normally London based. You’re American, but you’re normally London based. Now, you’re in Italy for the same reason.

Thomas: Yeah, similar reason. Although I have to comment on all these connections. Okay, so Corey, you have this Pirate Podcast, you’re wearing your shirt, by the way. So, shipwreck on it, I believe.


Corey: Yeah, shipwreck rum.

Thomas: And you’re hanging out in Caymans. I think there’s a theme going on here. I think you’re coming out as–

Corey: Not to interrupt, but when I was younger, my people used to ask me what I wanted to be and I said, there’s two things I want to be. One, was either a pirate, or the second, my father was an entrepreneur, I always said I wanted to be a businessman. So, my mother finds it hilarious and ironic that I ended up going to finance, which she considers to be the intersection of business and piracy.


Thomas: Nice.

Tobias: Last time I was in the Caribbean, I was on a– this sounds really grandiose, but it’s not at all. I was on a yacht with Chris Cole.

Thomas: [laughs]

Tobias: And it was fun. My wife– [crosstalk]

Thomas: It’s a work event.

Tobias: My wife wanted to marry a pirate, so she married an Australian, which she says it’s about as close as you can get in the modern day. Same accent at least.

Thomas: Yeah.

Corey: You’re the land pirate, I suppose.

Tobias: Land pirate. How do you guys approach this market? It’s been five years of pain and suffering for value guys and we might have had a little turn, maybe fingers crossed, sort of somewhere in November/September last year. It didn’t really help me much until more into this year because that rally in value last year, I thought was more of a junky rally in value, and I try to be more high-quality value. Corey, you’re considering that from a factor level. What do you see happening? I should give a shoutout to your– You’ve got this great newfound page on your newfound website, where you’ve got the factors and it shows the performance over the last rolling year, three years and then the whole years of them which I love.

Corey: Yeah, it’s kind of a hidden page. I don’t even think we link to it anywhere, but it still gets update it every day.

Tobias: I use it all the time. I’ve got a hard– [crosstalk]

Market Is Top-Line Placid, Violent Undercurrents

Corey: Yeah, for those who didn’t know, it exists. It’s been a weird year. In particular, if we just focus on 2021, except for maybe the last two days, the top-line returns have been very placid. Realized volatility in the S&P 500 has been fairly muted, and yet, the undercurrents have been incredibly violent. If we look at, say, a basket of retail favorite stocks, or SPACs, or EV thematic type stuff, it spiked for the first six weeks, and then has gotten absolutely wrecked.

We’ve seen a huge rotation between growth and value. We’ve seen momentum move dramatically away from your defensive growth names into your cyclical names. We’ve seen high-quality stocks have some of their worst performance in the last 20 years relative to junk stocks and yet, we’re not seeing any of that at the top-level volatility. It’s been one of the highest cross-sectional volatility environments in the last 20 years. And so, you’re getting, when you look at performance between managers, huge dispersion based on where they’ve been concentrated.

Tobias: What do you attribute that to? That’s very odd isn’t it to have? That’s one of the things I keep on– I zoom back out on the Spy every now and again and I’m just astonished at how smooth and upward sloping it is. Given that you can look at anything, look at the tech ETFs, they’re absolutely destroyed, but I guess it because FANG is still pretty strong in there. Is that what’s holding everything up?

Corey: Well, FANG is definitely still pretty strong, but FANG has largely gone sideways for six months. I probably have what I would consider to be my serious-Corey’s-on-a-panel-answer and then my fun conspiracy theory answer.

Tobias: Do both.

Corey: My serious-Corey’s-on-a-panel-somewhere-in-a-suit-and-tie-is-that, if you look post COVID, there was a very strong transition into companies with strong balance sheets and these companies were tended to be profitable growth names that could survive in a work from home environment. They tended to be large cap names, because it’s easier for them to raise debt and you’ve got this huge divergence between all the factors. Normally, if you say the pantheon of factors is your size and value and momentum and quality, they normally act in a fairly uncorrelated manner.

Last year, they split in half and became super correlated within the groups and the two groups became super uncorrelated from each other, and that persisted until around November, when it became more certain that there was light at the end of the tunnel. That you didn’t need to just stick in the quality names anymore, that the junkier names, there was going to be a reopening, they were going to be able to cross the chasm that was COVID. I think what you’re seeing potentially is just this huge repositioning. So, that’s one part of it, which was, you had everyone going to the obvious play and the safe play and then you get this violent repositioning that takes a while to manifest.

Retail In The Way Of The Eye of Sauron

Corey: The other part of it that I don’t– joke conspiracy semi-half-truth for me is, there’s a lot of capital sloshing around particularly with retail, and retail is in a way the Eye of Sauron right now, like, when it turns its eye on something, you better hope you’re not holding it. And so, we saw it with GameStop and that type of huge retail focus, inviting institutional attention has big knock-on effects for how a lot of institutions have to be allocated, the type of risk they’re allowed to take, force de-risking that’s going to occur and it’s not just retail. I mean, we saw Archegos goes blow up at the end of Q1. So, I think you’re getting these violent repositioning’s where it’s more of a steal a quote from Tracy Alloway of, “A flows over pros” tight market right now.”

Tobias: I asked you this at a time, because I just DMG this a few months ago, but I was like, after a crash, it’s very common to have momentum break down for about 12 months afterwards. Then coming up on that, it just starts working again for whatever reason coming up on the anniversary. So, I said to you at the time, isn’t this just a completely normal breakdown in momentum and then, aren’t we now just seeing it all start working again? It seemed to be two quarters of was tougher, anybody who’s got any momentum in their strategy at all and then it seems to me, it’s just started all– Isn’t this what you’d expect to see after a crash value starts working, momentum breaks down for a bit, momentum starts working again? Isn’t this just a totally normal market?

Corey: I love– I’ll steal another phrase from Andrew Lapthorne from Soc Gen who said, “Value is a basket of all the world’s problems, but a call option on hope.” I think a lot of people think of value from dotcom days and think of it as being this moat in your portfolio, but I think the dotcom era was really the exception to the rule. That was–[crosstalk]

Tobias: They are unusual high quality?

Corey: Unusually high quality, exactly. That was a scenario where the quality factor and the value factor emerged. That is typically not how value behaves. So, I think you do see this jump in value in a recovery, because you’re buying garbage for the most part. Stuff that seems like it’s at the end of its, rope, it’s that cigarette butt can you get one last puff out of it, and then all of a sudden–

Thomas: Talking about my name. [crosstalk] [laughter]

The Marriage Between Value And Momentum

Corey: And then you get that glimmer of hope. That glimmer of hope, which you don’t need it to actually go up, you just need that first derivative to turn around. It just needs to get less bad and that all of a sudden allows for a very sudden repricing, because these things are call options effectively at that point and so they can become super explosive. With that, you get typically a reversal in momentum, because momentum is probably not owning those names. In fact, it’s by short those names and momentum which is just going to buy the recent winners and sell the recent losers, you end up in a scenario where, by definition, when the momentum factor isn’t working, it’s just going to flip what it owns.

So, if all the losers are now winning, and all the winners are now losing, it’s just going to flip and that’s what you’re seeing with momentum today. For the last five years, momentum and growth were synonymous. That is not true anymore today. Momentum has moved strongly towards cyclicals.

Tobias: I did remember you saying that’s– Probably a year, I guess in COVID term, I’m not entirely sure if it’s like, last couple of years, you said to me that, that could happen that value could become momentum and I thought, “Gee, can you imagine? I’d just die of happiness if that happened?” What about Tommy? I don’t want to label you, the wrong kind of label, but your special situations, but you started in a bankruptcy-type scenario. What do you do in a market where you’ve got not many people going bankrupt? How do you confront this market?

Thomas: There were some bankruptcies, some pretty sizable bankruptcies pre-COVID, or I should say pre-COVID but in the earlier part of COVID and there still are some now– I don’t know. I don’t have a golden–[crosstalk]

Tobias: What do you to do in a market like this? Are you still trying to hunt for those very specific– [crosstalk]?

Garpy Special Situations

Thomas: For myself, I think there’s ton of a great special good stuff out there. Predominantly, we run for capital basically private distress deal type stuff. Someone sent me the Markel thing yesterday that Bill was on and I thought he had a very interesting take on it which is, you bring your unique perspective to the markets and for me, there’s a lot of special stuff out there and I think there’s a lot going on. Maybe it’s not scalable for institutional investors. It’s definitely not a factor-driven approach. Some of these specialists can fall into buckets that look a lot like a deep value and then I’m sure some of them can look GARPy and I like both of them depending upon the flavor of it. I suppose that’s the craft of doing a bottom-up portfolio.

Tobias: How do you find a GARPy special situation? What’s the GARPy special situation look like?

Corey: Sounds like a special, special situation.

Tobias: [laughs]

Thomas: Yeah, okay. I don’t know, GARPy special situation would be a relative value, special set. There’s a transaction and corporate action because– and to find to sort of– to me a special set is a corporate action and then the valuation overlay would be like, “Okay, this is the value of growth, GARP, what is this?” Sometimes, you can find growthier or GARPier special sets. There’s one that was which is basically net-net. The net guys rolled out of it. They did a crypto mining deal. So, of course, net-net guys are like, “Oh, wow, okay. We doubled. Let’s get out.” Then, you have crypto people that won’t touch it until it’s fully big transaction, but if it does, somewhere probably between 2 to 3 to 4, maybe more of a 5x, just on comp valuation. So, to me, that’s a special sit. That’s GARPy. Let’s be honest.

Tobias: Yes.

Thomas: The comps you’re using are insane. That doesn’t mean they shouldn’t be there. I’m not passing judgment. I’m just saying that there’s no way you could describe the comps you are using is value comp, like an absolute– You know, “Oh, I’m making 10% free cash flow yield,” like, no, it’s not happening.

Tobias: was in my-

Thomas: You own it?

Tobias: -small and micro screen for a while. No, it was in my small and micro [unintelligible [00:16:14] now. I don’t think I ever did hoover it up. It’s just one of those ones, but sometimes I’m just so deeply embarrassed by the names that that thing spits out, [laughs] I just can’t look at it.

Thomas: I think I remember looking, because you have an automatic tweet or something on automatic Twitter, like the best, blah, blah, blah, from our screen is this-

Tobias: Yeah, my little bot picks it up.

Thomas: I didn’t pick your screen by the way.

Tobias: I’ll give you access.

When $GME Was A Value Stock

Thomas: Yeah, and I thought I looked at it and I was like, “Oh, I hate that company so much.” I even tweeted out how much I hated it. But you tweeted out a few that were really good gems. What was the good one?

Tobias: Well, I picked up GameStop too.

Thomas: Did you pick up GameStop? Oh, yeah.

Tobias: I picked up GameStop. That was a battleground stuff for a while.

Thomas: I wouldn’t have the [unintelligible [00:17:00] to put that on. I don’t think so. Although I do love the guy, he’s great.

Tobias: It was net-net. It was net cash. You had to operating leases in there and everybody you talked to could tell you it was a dying business. No one wants to go in and buy them physically in the store. They want to download them.

Thomas: How do you feel of the net-net inventory? It’s a net-net. Oh, but because of inventory. That’s always one of the– [crosstalk]

Tobias: Oh, yeah, that’s tough. That was the scariest thing about when the– oh, now, I’m going to forget which suit it was but I think it was Joseph A. Banks was like a perennial net-net–

Thomas: Oh, net-net.

Tobias: -because they had huge– you’re basically buying suits.

Thomas: Suits that nobody wanted?

Tobias: Yeah, that always made me a little bit uncomfortable and there was also John Hampton had this short out on it saying that he thought that there was– because it was such a huge asset and it was such a weird– they justified it by saying, if somebody walks into a store, they want to be able to buy the suit that they want and Hampton said, “That’s just weird that they have so much inventory in suits. There’s something else going on there.” Whenever the guy,

When A Net-Net Isn’t A Net-Net

Corey: As the guy who’s never done net-net than, inventory seems like it could go both ways. There’s certain businesses where you might say that I want to mark this inventory to zero. [crosstalk] Yeah, and there’s other businesses where the inventory might be worth a ton and liquidation. So, but you’ve done net-net purely on screening. Do you think are there are ways to work that idea in or do you just have to go in by hand?

Thomas: Not only that, there are net-net that are not net-net. So, companies will have– You know who famously said this was– now, his name is escaping me, Third Avenue Value or something.

Tobias: Yeah, Marty Whitman has a great quote on it.

Thomas: Yeah, Marty Whitman is famous for saying that, like, “Oh, these guys on Fifth Avenue real estate, if you’re telling me that’s not a net-net, you don’t understand what [unintelligible [00:18:39] I’m trying to do,” which is, I can sell these buildings by making five phone calls. I put that guy into trouble buying a bunch of like Asian real estate company. So, let’s just forget that for a second and focus on the actual idea.” Because it’s a powerful idea, because one of the net-net that worked out quite well for myself was, it wasn’t a net-net, but it wasn’t net-net and when I tried to explain to them why because it had real estate for sales. It was industrial real estate, and I could easily sell and that was going to be converted into cash next year. They were like, “Oh, that’s a slippery slope, Tom. You’re breaking the rules.” I was like, “That’s what you’re supposed to do. The rules are there to just– as guideposts–” [crosstalk]

Tobias: Sub liquidation value. It’s sub liquidation value. That’s okay. And then, I think Graham specifically talks about land and property, plant and equipment, a few other things like that. He just applies a bigger discount, but that might not be appropriate as Marty Whitman. The Whitman quote is something like he says, “If you’ve got grade A real estate that’s fully tenanted in a business district, you can pick up the phone and sell it tomorrow.”

Thomas: Yeah, he also says that a lot of things can be assets and liabilities as Corey was saying. So, there’s a lot of things that can be it looks like a liability, it’s actually an asset and vice versa. People don’t appreciate that, because they just like they want to cookbook it and– [crosstalk]

Tobias: What’s an example of a liability is actually an asset?

Thomas: Operating lease.

Tobias: An operating lease.

Thomas: Below-market operating lease.

Tobias: That’s what he is saying.

Thomas: Whatever. I’m not complex. All right, I’m going to get murdered here. When Toby said, “Hey, you have time? [unintelligible [00:20:19] podcast,” but I’m like, “Wait, am I getting brought before the value tribunal here? Is that something I’ve done wrong. Talk too much about bitcoin or something?”

Tobias: I’d only talk about crypto if I wanted an absolute shit ton of followers. I’m trying to keep the podcast really small.


Thomas: Yeah. Anyway, crypto is a whole another subject. But there are even crypto net-net and things like that, and is that a special set? Yeah, okay. Some of them is very special. To me, is the special set is not only soft, but a really hard catalyst that’s going on and you can find different flavors. I don’t really do this whole top-down thing. I just like special set. I like event-driven stuff, because it’s fun and interesting. There’s a feedback loop so I can get something out of that as a human. When you start talking, we you start talking about the things where the feedback loop is 10 years from now. It’s like, “Okay, great. You were right about Amazon and now you’re dead,” because it’s 30 years later or your business is out of– I’m not saying it’s not interesting. It’s just quite hard to get a feedback loop with any sort of– I won’t say scientific precision, but you get the idea because of quantitative like, there’s no this worked this, this didn’t. Why didn’t it work?

Corey: You get a lot of bad bets with special sets.

Tobias: I had Dan Zwirn on the podcast in the ones currently out now and he’s got a great run. He’s a great investor. He’s the scary smartest person I’ve chatted to for a long time, but he had this great line where he says, “I believe in the voting machine-weighing machine analogy. I just like to bring a weighing machine to the table on the day.”

Thomas: [laughs] Nice.

Hong Kong’s Warren Buffett – Li Ka-shing

Tobias: Guess they’ll do anything really credit or equity, but they want that hard catalyst somewhere and they take warrants and do other things like that. So, he’s trying to build out like a Berkshire Hathaway, Cheung Kong Holdings. So, he gave me Li Ka-shing. Do you guys know anything about Li Ka-shing?

Corey: No.

Thomas: Little bit, but not a lot.

Corey: Name is familiar but–

Tobias: He’s Superman Li. I think he’s Hong Kong based he started out selling plastic flowers and now he’s 92 and he’s one of the wealthiest men in the world and he’s got a very similar investment approach to Buffett’s where he’s unlevered 10% free cash flow yield on the asset side and then trying to manage the cost of capital to make it as cheap as possible on the liability side, and it’s very hard to find much information about him. You can read the annual reports, but it’s hard to get much out of it. I’ve found a really old biography, but I don’t know anything. I haven’t got it yet.

Thomas: Westaim [unintelligible [00:23:06] [crosstalk] basically public.

Tobias: Yeah.

Thomas: [unintelligible [00:23:15]

Tobias: Do you look at it? Do you like it?

Thomas: I don’t own it. You know what’s funny about that stock? I always tell people it’s my favorite security. It’s one of the best ideas that I’ve lost the most money on because it’s a long story, but before they had bought– or backed, I shouldn’t say bought, they put Dan back in business, because he went through the SEC thing, I don’t know if you went into the podcast regarding the whole thing. But he’s a little bit of a hard to touch kind, of an untouchable and the guys– Cam McDonald and the guys at Westaim put him back in business. That was a good transaction. I like that.

But Westaim before that had backed thing called Houston International or HIIG. Houston International Insurance Group, which is the Stephen Way and his son– Steven Way was very famous insurance guy. He compounded book value at 22% or something at Houston. The names kind of escaped me HCC like, Houston Casualty Corp, which is then sold– but that was a very great story. So, I knew the guys at HIIG and I saw the transaction at Westaim. So, I knew about Westaim before Arena did a transaction and then when I saw transaction, like, “Oh, man this is great.” And I plowed into the stock and nothing happened. [chuckles] The stock, forgot I owned it.

Tobias: That’s the best.

Thomas: I bought everything I can buy. Go up now.

Tobias: There are a lot of people upset about– not that I didn’t mention. didn’t talk to him about the SEC stuff, but he’s been exonerated. He’s got the two letters in Lucite on his desk from the SEC saying he did nothing wrong. So, I’m inclined to take that as a–

Thomas: Yeah, you got to like– we have a competent court that exonerated him. I think I have some people, I know some people that were investors or knew him back when these weren’t– some people think he’s great. Some people think he’s–

Tobias: Polarizing.

Thomas: More aggressive than they like, in terms of mark, but distressed world is full of that stuff honestly. I feel bad for you guys. You have to actually use a mark that’s public.

Tobias: Yeah. [laughs] I was going to ask you.

Thomas: [crosstalk] in distress, where you can just mark it wherever you want.

DIP-Loan Investing

Tobias: I have some friends who are who bond guys, who like to do a lot of off the run bond stuff and when they told me about selling stuff in it, that just sounds terrifying. You’ve got to call people up and say what’s the market on this thing without telling them which way you want to trade, and they give you–

Thomas: I mean, that’s why people use brokers. There’s not a [unintelligible [00:25:53] dealer broker market, but there are a lot of brokers who people use because you don’t want to sell it on a name basis. But I don’t really do that stuff. The stuff we do is even more off the run, because we’re basically buying– for the most part, we do dip loans, [unintelligible [00:26:07] loans. I’m going to get on Corey for not producing any academic research on these topics, because I think the returns are great and more people should know about it, because eventually it’ll go away. But to be fair, a lot of distress guys have made tons of money doing some of the stuff, in a dip loan market and the trade claim space, which is probably only 10 or 20 firms that do it and of that, 10 are brokers and probably 10 have actual proprietary capital. Trade claims are just basically, if Hertz goes bankrupt and they owe Corey $100,000 for his consulting, I’ll call Corey, “Hey, Corey, these guys, they owe you this money [unintelligible [00:26:47] in your business. I’ll buy it for 50 cents on the dollar,” whatever. Hertz has gotten, of course, very competitive. That’s what we’ve been doing this cycle, but [crosstalk] all the top down.

Tobias: How confident are you that you’re going to recover closer to 100 cents on the dollar? How do you make that assessment? I’m sure it’s easy to buy that stuff. I just want to hear you–

Thomas: It’s not as easy as you are saying, because I think everyone just views it as homogenous. And I think even a lot of the players in the space think of it as being like– Did I say homogenous? Homogeneous, I guess, we’re going to go with homogeneous. Not homogenous.

Tobias: [phonetic] Fynance, finance.

Thomas: [phonetic] Fynance, finance, finance.

Tobias: [phonetic] Carabbean, Caribbean.

Corey: [crosstalk]

Thomas: Anyway, okay. It’s not and that’s where you can really add a lot of value is knowing the legal frameworks well enough to be able to rifle in and out and add value now on both sides of the transaction. If you’re buying it, but also to sellers that might need liquidity and you’re able to structure something that really works for them. So, it is a consulting solution providing. I think if you view it that way, you can add a lot more value. Just in the same way you guys would approach your clients like, “How can I add value to their lives, not just sell whatever the hell I want to sell,” which is what a lot of the [unintelligible [00:28:09] guys historically have done, which is just, they get on the phone, they call you up like a boiler room, and they’re like, “Hey, they’re never going to pay you. You guys are deadbeats. We’ll buy it. blah, blah blah.” That was the pitch.

We’ve eaten their lunch by doing it differently. We approach it to say, “Hey, this is what’s going on in the case. This is a disclosure statement. This is what Hertz is going to emerge. They’re saying they’re going to pay this. We can factor your claim, we can buy your claim, we can offer different solutions, whether it’s recourse, nonrecourse, lender recourse.” Yeah, so the idea is to be more of a solution provider, just like you guys taking lunch from larger companies that don’t want to tailor to certain customers, because they’re like, “Oh, there’s not enough market in that. There’s not enough AUM in that or something.” Yeah, I think there is, anyway.

Crypto Net-Nets

Tobias: You want to talk about crypto for a little bit? Because the crowd want some crypto net-net commentary.

Thomas: Ooh.

Corey: That one piqued my interest.

Tobias: [laughs]

Thomas: Oh, yeah. There are a number of crypto net-net situations. Sometimes, they’re not necessarily net-net, but they’re pretty dang close. When I say net-net, it’s not fiat cash, it’ll be like Bitcoin, net-net, Ethereum –[crosstalk]

Tobias: It’s real money.

Thomas: Yeah, the real money. Real hard money. It’s interesting because Corey, you and I were talking before we started about [unintelligible [00:29:32] that. I assume all you factor guys, I assume you’re starting to put crypto in your models. I hope.

Corey: You really can’t.

Thomas: Because there’s not enough data.

Corey: Well, it’s not just that there’s not enough data. From a regulatory perspective, it’s very hard to get even just spot crypto into a client account–

Thomas: Oh, you can’t build on your system as well right now.

Corey: Yeah, for example right now, I can mess with a lot of the offshore exchanges, because I’m a Cayman resident. Once I come back to being a US resident, I’ll get shut out of all those systems. I’ll also say, talking to other institutional managers–

Thomas: It’s called VPN, Corey. [laughs]

Corey: Yeah, well, the problem is the KYC, to be honest. It’s the VPN to get you access. But systems like,, if you don’t go through the KYC, the most you can take off per day is between $2000 and $9,000. You’re certainly not going to manage an institutional account only being able to withdraw $9,000 a day.

Tobias: [giggles]

Corey: Look, from an institutional perspective, you have adverse incentives here. What’s the upside to adding a little crypto in the portfolio, some excess return? Great, what’s the downside? You lose all the money, because you mishandled the crypto or there was an exchange hack or you didn’t hard wallet it correctly. There’s so many things that institutions feel uncomfortable with right now that there isn’t a good onramp and don’t get me wrong there are, if you start to look for them, very good solutions. But until the regulatory environment loosens up and really allows people to invest in these offshore exchanges, or the onshore exchanges become as attractive as the offshore exchanges, I think it remains a non-US endeavor.

Thomas: Oh, okay. I was thinking that you were saying more like when you build them into your factor models, or any risk parity models or tactical asset allocation models, it’s impossible, because the data is not deep enough and–[crosstalk]

Corey: No, you can definitely get the data for sure. You can definitely get the data [crosstalk] and look, in certain– if you’re running a hedge fund, there are ways in which you can get access. There are funds now that are including the CME bitcoin futures, and there are the mini-futures now, give you better access. But you’ve got to put up a lot of collateral. It’s not a cheap trade.

Thomas: Yeah, that’s the thing, is I hate those things, because the collateral is enormous. I, of course, test all these things out just for fun and I’m just amazed at the collateral. We kind of stepped into crypto through distressed stuff and it’s worked out incredibly well, not just because of the stress, but really because of the [unintelligible [00:32:23]. But in terms of crypto, then that there’s stuff out there, I think I mentioned it recently on another podcast.

Tobias: The interns are getting younger and younger.

Corey: [giggles]

Thomas: For those interns, they need a lot of ice cream. Anyway, but let’s see. Yeah, so Nexus Mutual is one that I think is super, super interesting. So, let me explain what it is. It’s basically insurance for DeFi contracts. That sounds like gobbly-goob. But it’s basically insurance for the distributed finance or decentralized finance, excuse me, protocol like lending and basically trades close to book value. You get a company that’s growing at 300% quarter over quarter, which, in any stretch of the imagination– I think I was using at one point I was saying, “Okay, so Lemonade–” I can’t remember what Lemonade’s trading at but it’s trading at, I don’t know, 10, who knows what multiple revenue is trading at and yet you’re buying this thing around net-net now.

It’s hard because you have to get into crypto, so you have to buy Ethereum and then convert into I think it’s called NRX. I can’t remember what Nexus Mutual. We can post it in the comments. Actually, I can look it up real quick. But then you have to like, if you want to join the mutual, you have to go through– not KYC, but there are some requirements you have to do. I love trades like that. I love trades that require actually work.

There’s Just Too Much Money Sloshing Around

Tobias: We’ve got a question here for you about asset allocation, given valuations and potentially inflation coming. I know you are not necessarily running on that basis, but do you have any thoughts?

Corey: Yeah, things are going to stay weird. That’s my thesis.

Tobias: What’s causing the weirdness?

Corey: I think it is for me–

Tobias: Aggressive central banks.

Corey: Yeah, aggressive central banks, like the passive concentration in a bunch of systematic strategies that are all highly correlated. There’s just a whole bunch of things giving retail investors access to new asset classes, and then giving them a whole bunch of money and untapped leverage.

Tobias: When you put up like that–

Corey: –Using market as a savings vehicle, seeing target date funds go from $8 billion to $3 trillion in 15 years. There’s a lot of things that have changed in the market over the last 15 years that could make it weird. I think it’s easy to point to what’s happening in the commodity complex right now and say, there’s inflation, there’s inflation, look at lumber, look at copper, look at what’s happening with the 10-year versus copper. I think the problem is it’s hard to disentangle those between what was an obvious mismatch in supply and demand shocks.

You had supply take a dramatic decrease in a lot of these commodities during COVID and then all of a sudden– especially like the home improvement related commodities had a positive demand shock that a lot of people didn’t expect, and you get these bullwhip effects throughout the entire production chain. It’s hard to know whether those bullwhip effects are going to be persistent, or whether they’re just going to be transitory and whether what’s happening within a market like lumber ultimately do less to money printing and that sort of thesis, and much more to just the effect that, look you had a large structural decline in production pre-COVID, you had an immediate collapse during COVID, then all of a sudden, everyone started going to Home Depot.

It’s going to take a while for these things to equalize. So, I don’t have strong views on inflation right now. I tend to lean a little bit more towards, there’s going to be a lot of money sloshing around in the system everywhere and what you’re going to see is that it’s just going to get siphoned off on to corporate balance sheets, where it’ll act like a black hole, because they don’t have enough good projects to spend the money on. And you won’t ultimately end up seeing a whole lot of inflation, it’ll just end up on the black hole of balance sheets, as it has over the last 10 years or so.

Valuations are an interesting question, because to that point, when you just put a bunch of money in the system and the money has to go somewhere, it ultimately is probably, again, going to end up in corporate earnings, in corporate balance sheets and you might have just structurally increased what the market should be trading at. There’s only a limited supply of assets out there and if you increase the supply of dollars, those assets go for a higher price.

Crypto Arbitrage

Tobias: Is that why– do you think that has any influence on the crypto run? How much of the crypto run is speculation? How much of it is people consciously trying to get out of dollars into doge dollars?

Corey: I was going to say, I don’t know if you can look at Doge and say it’s a well-thought-out anti-inflation play. I think a lot of people have been saying that about bitcoin, but the bitcoin narrative changes year-to-year, for better or worse. It’s this interesting cognitive dissonance play where it’s like, you have to keep believing new things to keep justifying bitcoin and yet bitcoin keeps working. So, maybe there is something there. Again, another area that I, for full disclosure, have some personal holdings in crypto, but not a tremendous amount, nor with incredibly strong conviction.

I look at things like if you do go to these offshore exchanges, there’s two different types of futures contracts. There’s your standard fixed maturity, you buy it today, it expires in September. And there’s another type that’s called a perpetual, that either resets every hour, four hours, every eight hours. Those perpetuals come with a funding rate. So, basically, if the funding rate is negative, your longs pay your shorts and if it’s positive, your shorts pay your longs and the basic idea is that funding rate should help incentivize the other side of the trade when there’s a lack of people who want to be short or a lack of people who want to be long.

What you’re seeing right now is those funding rates are annualizing between 20% and 40%. In other words, if I buy bitcoin and short the bitcoin perpetual, I’m effectively creating a 20% to 40% annualized return in US dollars.

Tobias: Wow.

Corey: That’s basically me lending synthetic dollars into this crypto space. It’s because there’s like-

Tobias: That’s an arb.

Thomas: You can arb it. Yeah, there is a lot of cash, there is a lot of carry-through–

Corey: It’s an arb.

Tobias: Why is it not an arb? Not a–

Corey: Well, because you could have the spread block against you, you need to maintain margin. You could have mass liquidation, in which case, you could have your position closed on you, the exchange could get hacked.

Thomas: [unintelligible [00:39:23]

Tobias: Okay.

Corey: It’s an arb. But I think it speaks to the massive demand for leverage. So, to come way back to your question, it speaks to the demand for leverage and for something like, there’s $4 trillion in the crypto space that want to be long and half a trillion willing to lend them money. You just have this huge mismatch, and it shows up through its pricing. The premium has shot way up in Q1, but I personally have some of the raids on doing the cash and carry to harvest some of this, just again with my own personal money. But I think it’s, yes, that there is a long-levered demand for the assets that is probably– it’s an inflation play, but it certainly seems to be a play for just let’s make some money.

Tobias: There’s quite a few of those in this market at the moment.

Thomas: There’s lots of spot futures arbed and there’s no triangle and arb, and whatever, [unintelligible [00:40:26] I guess as a basis trading whatever. There’s lots of arbitrage in the crypto market. Part of it I guess is the nascent nature, but you’re definitely right. It’s funny that you come at it from a quantitative but for me, just being quite buried in the crypto space somewhat, is most people that are in crypto just want to be long. It’s funny, every time I talk about a cash and carry trade with any clients or anything like that are in crypto, they’re like, “What if bitcoin goes up 100%?” I’m like, “Huh? It’s already up 100%.” So, you do get that. So, I think it is fun to structure trades in the space, so anybody that likes structuring, there’s a ton of opportunity in my opinion. And what you’re talking about, those trades you’re talking about, they’re not easy, but they’re not insurmountable to figure out– [crosstalk]

Corey: They’re not hard if you can get on those exchanges. To that, I’ll also say I think if you look at your average wallet size, you got your whales, but a lot of people who are playing in crypto are playing with $5,000. A 20% annualized return on a trade you put on in the crypto space for $5,000 is not attractive to most people. They’re in the crypto space because they want to take $5,000 and turn it into a million. You’re not going to do that with a cash and carry trade. I look at the cash and carry trade as, “Okay, this is a high-yield bond. I’m basically constructing myself a high-yield bond. Now, it happens to be in the crypto space, but I don’t think of it as a crypto trade, the same way someone else might buy Ethereum, because they have a long fundamental view on it.”

Tobias: That’s a very interesting trade.

Thomas: The income in cryptos is a huge area, it’s super interesting. Even though most well established, Gemini or Genesis, which are top tier firms in institutional world crypto, you can make 8% to 10% lending them dollars. Now, you’re not long crypto, your counterparty risk compared to like an FTX– I love FTX, fans will be mad, is lower and it’s simpler. You don’t have to manage anything. You’re literally just giving money to some of the largest players in crypto and you’re going to get their balance sheet. But if you go further out and you’re willing to take that off take on the management, there’s even further stuff out like that.

Corey: [crosstalk] To your point, lending dollars in the crypto space, so I’ll just say FTX as an example. Their lending rates spiked to 80% annualized yesterday for dollars and now it’s not normally that high–[crosstalk]

Thomas: It’ll come all over. It’ll move all around but yeah–[crosstalk]

Corey: And you’re in stablecoins, I’m in USDC which I think of all the stablecoins is probably the safest, but you’re lending out and there’s just so little Doge floating around in the space, I think the lowest lend rate I have is probably 10%. Like, you do this crazy cash and carry trading hopefully get 20% to 30%, maybe juice it if I’m smart about when I– if the premium collapses take the trade early and then put it back on again, I might be able to compound a little more. Or, I could just leave cash in the account and lend it out, and probably pretty safely make 10%. Now, safe is a relative– again, you do have big counterparties here.

Thomas: I love that trade. No, you can assess the counterparty risk. There’s real money to be made and the thing, even FTX and stablecoins not being in the world. The only thing is, yeah, I would agree with you that most people just want to be– I’m not sure what the phrase is, they’re like thinking of yachts and lambos when really probably– I mean of course their interest in products be very long, but there’s also a lot of income and alpha on just the pure nascent taking advantage of the volatility. So, it’s like volatility harvesting, but in crypto stock being better than traditional market volatility harvesting. I have no idea what kind of returns you can make there. Maybe Chris Cole could tell you, Toby, since apparently, he’s got a yacht.

Yacht Week

Tobias: I don’t know. You know there’s Yacht Weeks?

Thomas: Is that off camera? [laughs]

Tobias: I don’t think so. There is a Yacht Week. They are not that expensive. They take a fleet and a–[crosstalk]

Thomas: Oh, they are not that expensive, says the owner.

Tobias: Well, I don’t know. I was a guest.

Corey: It doesn’t sound like a value investor to me.

Tobias: With my pregnant wife, it was fun.

Thomas: It was a used– it was a certified pre-owned yacht. What do you want from me?

Tobias: [laughs] There’s this thing called Yacht Week. They do it all around the world. It’s what it sounds. You rent for a week and you get some– We had a Norwegian guy who came on and he just got to pay for his food and then he tipped them at the end of the week and they just– [unintelligible [00:45:33] really for the captain. But he just gets to sleep for free on the boat which for these guys is all they want, so they’re close to all the young girls. It’s a big party, but I was there with married couple. So, it was very sedate for us.


Tobias: Totally derailed.

Thomas: I don’t know where to go from here. Where do we go, for Yacht Week? I don’t know, yachts investments? I don’t know. There are guys that are in the chartering business, that’s probably a good business.

Growth Got Crushed

Tobias: I’ve been saying this more and more recently, but I’ve been completely, totally bamboozled by this market just because the trends is that top line spire is so smooth, and then there’s these huge moves underneath in particularly tech and now value is having a little run as well, which always makes me feel a bit uncomfortable, because I know that that’s coming to an end in the not-too-distant future.

Corey: That spoken like a man who’s just been beaten by value for the last five years. You can’t even have a glimmer of hope.

Tobias: Longer than that. It’s like five years of straight down, but the five years before that wasn’t– The five years before that, it did sort of outperform over that five years, but it was weird, it spent a lot of time going sideways and down. I remember end of 2015, that doesn’t quite make it into these five years, that was savage.

Corey: And then a strong rebound in 2016, right?

Tobias: Yeah. So, we’re having a little run here and the run for me, because I’m quality and value, that’s really only started in the last month or so.

Corey: What’s interesting to me looking at growth is, it has just been beaten in the last quarter. If you start to look at some of the like– not that I’m big on the technicals, if you start to look at some of the technical, compared to 20 years, growth versus value, growth is one of the largest relative drawdowns over a three-month period versus value for the last 20 years. The speed of the selloff, again– and this is what makes this particular environment, I think, so difficult to navigate, or one of the things when I’m looking at the portfolio, I manage so difficult to navigate, is if you take on too much concentration risk and you’re in the wrong undercurrent, it’s a violent unwind for you. So, you have to either play Whac-a-Mole a lot faster and move around a lot faster or potentially take less tracking error risk.

Tobias: I saw a piece today that said that the drawdown in tech has been the biggest drawdown in any of the factors over the last 20 years, I think. Maybe it’s 10 years.

Corey: I wouldn’t be surprised. Growth or tech?

Tobias: It might have been growth, but I think it was in the context of a tech discussion. I think they’re talking about growth, but it’s mostly tech.

Corey: Yeah. I was looking at some numbers from some of the Goldman Sachs baskets that they published this morning, and it is a bloodbath and what’s funny is because I think people think so positively about the FANGs– and the FANGs have just gone sideways. It’s like the top-level pain has not been there, but when you look at the growth basket as a whole, it’s been really bad and then pockets of the growth basket, like your nonprofit double growth, your high enterprise value, or your high multiple stuff– look, just use Ark as a proxy.

Tobias: Yeah.

$ARKK Drops 35%

Corey: I hate to say it, but just use Cathie Wood as a proxy. Her drawdown right now is 35%.

Tobias: Yeah.

Thomas: Yeah. You don’t think Tesla’s going to $5000?

Corey: [laughs]

Tobias: Oh, maybe.

Thomas: $20,000? I forgot what it was.

Tobias: Maybe. She was at 156 ARKK, A-R-K-K, the flagship fund was– I think it topped out at $156 and I think last time I looked it was $104. So, it’s a 30% drawdown at least, but in terms of flows, the flows haven’t really gone backwards, which I was like– they–[crosstalk]

Corey: They have a little. By the way, here’s a stat for you. I just pulled this open from Goldman. Their growth versus value basket has closed in the red for 9 of the last 10 trading sessions and is down 18% over those sessions, 10 trading sessions.

Tobias: I’ve been on the other side of that trade for five years. So, I didn’t have a huge amount of sympathy. It’s not schadenfreude. I’m not enjoying it, but I’m just like–

Corey: Yesterday was– their prime brokerage desk showed that last night or yesterday was one of the top five dollar net selling in US tech in the last five years.

Tobias: Crazy.

Thomas: Don’t you guys worry about some of the stuff in the sense of like just from an investor’s sector, because everybody knows that dollar-weighted returns versus the underlying returns in the strategy are basically two very different things, like the dollar return. Those are strategies where people really get shaken out hard. They ride the wave. They basically pile in late. They basically get out late. It’s like the actual dollar for dollar in and out can be bad, even though there’s nothing wrong when people are doing like growthy strategies, but I don’t know, I’m sure you guys–[crosstalk]

Tobias: That’s not the manager’s fault. That’s definitely true–[crosstalk]

Thomas: No, it’s not. But I’m saying that’s my issue with these products, is like– even for myself, it’s hard to keep the discipline. If I had an 18% face ripped off in a week, I’d be like, “What the hell just happened?”

Tobias: Well, you can look at the volume into Ark, like, the volume goes up exponentially with the stock price of Ark. I saw somebody published something yesterday that they’re only a few percent away from having made no money collectively on dollar-weighted basis over five years or something–[crosstalk]

Corey: I think they’re now at zero on a dollar-weighted basis– [crosstalk] nothing.

Thomas: Here is my problem with the products though.

Tobias: But it’s true for every strategy.

Corey: Really interesting, though, in my opinion, because– so, when they started to get a ton of inflow, Cathie, and I don’t want this to be a knock on Cathie. I think she’s built a phenomenal business.

Tobias: Me too.

Corey: I think she’s made some brilliant branding stuff. She’s had a really great career prior to Ark with knockout performance.

Tobias: Yep, I agree with all that.

Corey: But what’s really interesting is, is she is willing to own a huge proportion of the underlying stocks she’s in. It’s difficult to navigate that and you were seeing procyclical effects on large inflow days, the stocks that she held a higher proportion of the underlying float of went up much more than the stuff she owned less of. So, it’s sort of a self-fulfilling prophecy. Now, I had arguments with people where they said, “Look, that’s what you expect to happen. If there’s an increased demand for stocks, the price of those stocks should go up,” and I said, “I agree with that. The problem is the demand here was not for the stocks she was owning, it was for Cathie.”

Tobias: Right.

Corey: The demand was for Cathie. So, all this volume is flooding into Ark, you’re getting this pro cyclical performance, because the money going in is driving those prices higher, which makes the ETF outperform, I think you’re seeing the unwind now, and it could get violent and ugly in what she’s holding and I think this just goes back to this flows over pros market environment, where that’s about what you own and more about the flows driving the performance around you.

Tobias: Is that unusual, or do you think that this is a new thing? Isn’t that the way it’s always been? Before Cathie even started falling over, before Ark started falling over, we had been discussing Janus 1.0. Janus was the fund that dotcom– did exactly the same thing. They raised a lot of money, and they pushed it into these very similar stocks, stocks that were losing money, and were thinly traded in and were small cap and Janus became the market. So, the Janus would get the flows, stocks would go up, Janus performance looks really good, Janus gets more flows, and so on. That works really well until it goes in reverse and then you get the reverse happening which is violent.

The ‘We Don’t Know’ Narratives

Corey: Every time there’s a definitive event in the market that we can point to and say, “We know what happened,” it’s a supply and demand mismatch, which is a very basic thing to say. But I do find it very funny that when we don’t know what’s going on, we have some economic narrative around what’s driving markets and then as soon as we know what’s going on, it’s like, “No, this hedge fund was liquidating.” Or, “No, it was a bunch of variable annuities having to sell down exposure, because market vol was up,” or “No, there was a forced unwind.” I just think that’s what’s always happening in the market. Cash flow and cash flow out, that’s driving a lot more than and look, I think it has to be we know fundamentals are far less volatile than stock prices are. What explains all the volatility of stock prices? Probably just a bunch of flow noise.

Tobias: I think it’s always micro too. And when you don’t know it’s micro, you just say it’s the Gods, it’s economics, it’s Gaia. It’s the Thunder God. It’s something else. We’ve offended somebody, and we have to atone, and then the market will go back to being normal. Then, to your point, you find out [unintelligible [00:54:24] this is hedge fund’s liquidating.

Corey: Or Archegos just keeps doubling down on Viacom, right?

Wild Swings

Tobias: Yeah, man. That’s one of the wilder things that I have seen that they could get that kind of leverage into that. I’m just amazed that he was still swinging at $20 billion. At some point, you just take a little bit off the table, maybe?

Corey: Well, it’s not just that. I just can’t imagine the risk departments in these banks being like, well, how much are we earning on what we’re lending and how big is that position now? It was just wild. And then of course, the big laugh to me is you get all these banks that are like, “Oh, it’s pretty consortium and try to make sure we’re selling fairly,” and Goldman Sachs is like, “Bleh.”

Tobias: [laughs]

Corey: “Sucks to be you guys, we’re front running the trade.”

Tobias: Tom, to your point before about these growth funds, I’ve got a story in one of my– I think in Quantitative Value about the seed. I think it’s CGX focus fund, which was– Ah, it’s just going to escape me now, but it’s a value fund and they similarly had great returns, very volatile returns over a decade and I think– I’m just blanking on the name of the manager at the moment, but at the end of that decade, they had returned 11% compound through that period, I think. Then, the average investor in that fund have lost a half a percent or 2%, or something like that, just because they do exactly like– when the fund rips, people put money in, and then they have the volatility going the other way. So, they sell out and then fund rips and they put money back in again. That’s just endemic, isn’t it, to any strategy that’s sort of a bit volatile? I don’t think it’s a growth thing, is what I’m saying.

Thomas: You’re saying it is a growth thing. You don’t think value [crosstalk]

Tobias: I don’t think it’s a growth thing.

Thomas: Yeah, okay. I agree with that point. In general, for strategies, I worry about people’s abilities, because at the end of the day, you try to get a good outcome. I feel the reason probably people like risk parity or try to have more top-down approach is that keeps him a bit more sane than just whipping around, and I guess–

The North Star Of Value

Thomas: For me, value is a bit of a Northstar, because you guys like– now value is codified or whatever in factors or whatever. But, yeah, it’s just an ingrained idea– I don’t know of ingrained idea but sort of a Northstar idea that merchants in Venice understood value investing and they bought it from here, and they did it here and then some of it was arbitrage and some of it was the value investing. So, I don’t know.

Tobias: To play devil’s advocate, though.

Thomas: Yeah.

Tobias: The growth guys would say, like, Cathie Wood says, “I’m a deep value investor, because I work out where the value is going to be after this period of growth in 5 or 10 years’ time. And I’m buying at a big discount where that’s going to be–” I’m thinking, where we’re going to be in the future and the problem with traditional value guys is that they’re looking at where the thing is now, they’re not thinking about the future.

Corey: Toby, this reminds me of a conversation that we had on my podcast.

Tobias: [laughs] What did I say?

The Problem With The Style Boxes

Corey: So, that’s a lot advertising for me. [laughs] Where I was saying it’s this interesting market dynamic, where if you want to be a value investor, the way allocators allocate is you have to stay in your style box, which means you are never allowed to say growth stock is value. It’s this interesting thing we’ve done as an industry, the way that we’ve created this divide, why can’t growth stocks be at a value to their actual growth rate?

Tobias: Well, I think that all growth investors would say that they are. That’s what they’re trying to achieve. I just think that historically, it’s been harder to do, but I think I have to– I’ve been trying to do these different tests where I try to buy and hold for the entire period of my data set. It’s interesting that one of the things that I found is that the price relative to the fundamentals is not particularly important to the future performance. But it’s got a very low R squared, but it is the only thing that has any R squared at all.

Corey: Hmm.

Tobias: I’m totally confused, but, folks, we’re coming up on time. This was really fun. Corey, if anybody want to get in touch with you or follow on with what you’re doing, what’s the best way to do that?

Corey: You can follow my podcast, The Business Brew, or find me on-

Tobias: [laughs]

Corey: -Twitter @BillBrewsterSCG.

Thomas: [laughs]

Corey: Now you can get me on Twitter @choffstein. Check out my podcast. There’s a new season out. Toby’s coming up on and I think in about a month your episodes coming out called Flirting with Models if you like the quants stuff, and then I run a nascent YouTube channel that’s mostly me just losing money on stupid trades called Pirates of Finance.

Tobias: That’s a great idea. How about you, Tom?

Thomas: I have my own podcast called Five Good Questions.

Tobias: [laughs]

Thomas: Is that right? Am I getting it right? I don’t even know. I feel bad. I should know for JT. No, I’m on Twitter. I love, I’ve met a ton of people through Twitter. So, thank you, everybody that ever reaches out. Just a ton of great community people to meet. So, Twitter and then of course, I have a website and it’s got my email if it’s something definitely urgent to reach out to me about.

Tobias: All right folks, this is really fun. Thanks, Corey. Thanks, Tom.

Corey: This was great. Thank you.

Tobias: See you. Bye guys.

Thomas: Bye guys.

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