Episode #327: Mario Gabelli, GAMCO Investors, “We Have Accumulated Compounded Knowledge of Certain Industries Over An Extended Period Of Time”

Episode #327: Mario Gabelli, GAMCO Investors, “We Have Accumulated Compounded Knowledge of Certain Industries Over An Extended Period Of Time”


Guest: Mario Gabelli is the Chairman and Chief Executive Officer of GAMCO Investors, Inc., the firm he founded in 1977. A 1965 summa cum laude graduate of Fordham University’s College of Business Administration, he also holds an M.B.A. from Columbia University Graduate School of Business, and honorary doctorates from Fordham University and Roger Williams University.

Date Recorded: 6/22/2021     |     Run-Time: 31:15

Summary: In today’s episode, we hear the framework behind one of the best stock pickers over the last 50 years! Mario walks us through what he thinks about when analyzing both industries and companies. He touches on the impact of fiscal and monetary stimulus, labor costs, and supply chains. Then we walk through some different industries – media, autos, energy, and farmland and agriculture.

As we wind down, we hear about Mario’s recent focus on PPP – people, profits, planet, and why he chose to launch an actively managed ETF.

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Links from the Episode:

  • 0:52 – Intro
  • 1:44 – Welcome to our guest, Mario Gabelli
  • 3:27 – What the market looks like from Mario’s perspective
  • 11:32 – Thoughts on portfolio construction
  • 16:51 – Mario’s experience with SPACs prior to 2020
  • 18:15 – Mario’s thoughts on farming and agriculture
  • 19:16 – Sponsor: NordVPN
  • 23:47 – PPP: People, profits and planet
  • 27:16 – A lack of financial literacy in the public education system
  • 29:00 – What has been Mario’s most memorable investment


Transcript of Episode 327:

Sponsor Message: Today’s episode is sponsored by NordVPN. Go to nordvpn.com/meb or use the code Meb to get a huge discount on a two-year plan plus a bonus gift. I’ll tell you why later in the episode.

Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: What’s up friends? Today we have a monster episode. Our guest is chairman, chief executive officer of GAMCO Investors, the firm he founded in 1977. In today’s show, we hear the framework behind one of the most renowned stock pickers in the last 50 years. Our guest walks us through what he thinks about when analyzing both industries and companies. He touches on the impact of fiscal and monetary stimulus, labor costs, and supply chains. Then, we walked through some different industries, media, autos, energy, and yep, I even got to talk about one of my favorites, farmland and agriculture. So, we wind down, we hear about our guest’s recent focus on PPP, not what you think, it’s people, profits and the planet, and why he chose to launch an actively managed ETF. Please enjoy this episode with GAMCO Investors’ Mario Gabelli. Mario, welcome to the show.

Mario: Well, thanks for the privilege of including long-only value guys on your program.

Meb: Mario, you’ve been doing this for a little while, you’ve seen a few different cycles, booms and busts and everything in between. I’m here during almost a tropical storm on the east coast of North Carolina. But I imagine for your perch, what’s the world look like to you today? Things getting back to normal? Are you seeing lots of opportunity or lots of warning signs?

Mario: We like to visit companies, and I’ve been able to visit three or four recently in the local area and I had a company come in from Cleveland. I had dinner with them, my first dinner in New York inside of a room. We’re getting back slowly. We have practically 250 individuals that work for us, and of those, about 155 are in our Rye office and about 15 or so are in the Greenwich office, and we have offices around the world. The U.K. is still locked down. The guys in Shanghai and Hong Kong are locked down for different reasons. And that’s us. We have 33 analysts, 20 portfolio managers. I started as a sell-side analyst in 1967, coming out of a local school and thought of covering the autos, farm equipment conglomerates and then picked up the media and entertainment. So, we have accumulated and compounded knowledge of certain industries over an extended period of time and all that they’ve changed into. And our analysts and I drill into annual reports, 10-Qs, visit companies, which we’re going to start doing again, and we do it with a microscope, and then we look at it with a telescope, what is the company going to look like in 5 years, and what kind of multiples will exist 5 years from now, and what are our rates of return, and what’s going on in terms of consolidations in an industry, Meb. That’s the process.

Meb: So, during those decades, there’s been a fair amount of different markets on the macro side. We’ve had high-interest rates to near-zero interest rates and negative in some parts of the world in the past 10 years. We’ve had high inflation, low inflation, growth, bear markets, everything in between, or sitting here with U.S. markets darn near all-time highs, or thereabouts. And valuations in some parts of the U.S. market are certainly looking pretty, depending on who you would ask, euphoric, or right in line. Of the various industries you’re looking at, what’s the opportunity set look like? Does it look pretty good in some spots or are you a little cautious?

Mario: All of the above. Independent of that, when you look at the global GDP as the International Monetary, IMF lays out, the U.S. is about 25% of the market, the GDP, and this year, everybody talks about 6%, 7% growth but they’re talking about real, I’m talking about nominal. If you add in inflation, you’re talking about 10% nominal growth in 2021. And a lot of the challenges are the carryover for the first half of 2022, and then Europe will kick in, and we have China doing their thing. And Europe is about 18% or 19% of GDP. China’s about 18%, 19% of global GDP. So, when we look at the U.S., we do the following, what are the revenues going to look like? What do cost of goods sold going to be and cost of goods sold last year were impacted by PP&E? And then what happened is companies starting in March, April accelerated deferral of CAPEX, they decided to cut back on inventory to improve liquidity. And you had a particularly nasty time with regards to the bottle stocks since March, April, May, June, and that is banks, oils, travel, and leisure. And then starting in the summer of 2021, in part because of the Fed 2020, and then, in part because of the Fed stepping on the accelerator, in terms of putting liquidity in the system, and then obviously coupled that with significant doses of fiscal policy and the Biden administration took over and put pressure on the fiscal area, for example, a new budget for the year starting in October which looks like it’s going to be over $6 trillion. And the revenues are about $4.2 trillion, even though revenues are rising, this is going to have a deficit again of $2 trillion, and that adds to the amount of money.

And the Fed remains accommodating. Powell, at some point, will basically take his foot off the accelerator and cut back on his bond purchases. And every time it does that the market has a challenge. Independent of that, gross margins are impacted by cost pressures. It’s no different, Meb, than what happened a year ago, people will rush to the Costcos and loading up on toilet paper and everything else. And businesses are doing that today, double ordering. And you saw that in lumber, and then all of a sudden, they say, whoa, we got too much and they stopped, and the prices will come down. China meanwhile is saying, hey, we’re doing what the U.S. did with the strategic oil reserves. We’re doing that on commodities. And we’re saying to the speculators, “Hey, stop.” And that has the ripple effect. So, from a gross margin point of view, I think we’re looking for companies of that virtual pricing power. And we’re seeing companies raising price and they’re being accepted. And secondly, you’ve got wage inflation that’s coming in, and whether that’s spiked in part by the government payments, or whether that’s people having to stay at home or want to stay at home, and that labor cost increase is going to be with us for a while. Independent of all of that, the SG&A, however, is not rising as fast, so you’re going to have a pretty good improvement in pre-tax profits. And you’ll see that year to year in the second quarter. And then that will continue for several quarters on a top-down basis.

We just look at that to see how our various companies and our various sectors perform. And then on top of that, you then have to ask yourself, what’s the tax rate going to be? And that’s work in progress. Where our models are saying 25% corporate, we think we maintain territorial versus global. We obviously want to see minimum taxes. And then from an individual point of view, you’re going to worry about the rates, you’re going to worry about carried interest, you’re going to worry about Section 1031…not worry about it, you just be aware of it. And that’s work in progress. And then what we all hoped for, and particularly here, we’re driving a long goal. You have roads and bridges, and a Section of I-95 has been going through massive challenges. And so an infrastructure conventional one anyway is totally needed. Whether they do that or not between now and July 4th, we’ll see, when the Congress goes into recess. In that regard, we think it’s necessary. When a bridge collapses in Mexico City or in Genoa, you know that we have that. I’m glad even Nancy Pelosi is citing the American Society of Civil Engineers, which we host a conference every year. We host about seven or eight of those, and the head of that American civil engineering shows, Society of Civil Engineers, and points out that our systems improved to a C plus, but that bridges are still in need of repair. And there’s 500,000 of them, and the roads need funds. And then we need broadband speed because of remote learning, remote work, remote medicine, and so on, particularly in rural America. So, we see a need for conventional infrastructure with the broadband kicked.

And now they want to put in some social infrastructure. Whether that’s split, we don’t know, but clearly sensitive about that. And the stocks are going to move up and down depending on how the political system is working. Though from our point of view, we have accumulated and compounded knowledge, like on the auto industry. We’ve had 46 years of conferences all taking place in Las Vegas. When the industry get-together was virtual last year, this year we don’t know yet. And four years ago, we went to autonomous driving. We brought in the head of engineering from Intel to give us a talk. A couple of years ago we brought in an EV. The last year we used the notion of what’s going on in the pre-owned car, better known as used cars. This year we’re going to focus on something different. I will give you an idea. Back in the early ’60s, the University of Virginia was thinking about it. Basically, there was a movie called “The Graduate.” “The Graduate” had a segment and it basically says there’s a great future in plastics. Well, today it is recycling of plastics. So, we have one of our teammates who does research, he has done a good job on it, looking at what is a substitute, like aluminum cans. So, if you’re drinking Keurig, you’re drinking LaCroix, you’re drinking White Claw, you look at it in the can and the very high percentage of that is recycled whereas plastics are a problem.

But the one we’re going to use now is batteries. You mentioned it before, whether you’re doing renewable energy, wind, solar, you need cybersecurity, you need transmission, but you also need batteries, whether it’s solid-state, all of which are the lithium-ion, either way, you’re going to use lithium. And so where’s the shortage? And what are the dynamics there? So, what companies that we like that have recycling of batteries down the road? Which ones are doing it now for lead-acid? Which ones are doing it? We’re going to visit those companies. One of them is in fact spun off from Johnson Controls bought by a company called Clario, and that announced…in a quiet way they’re going public. And we’re teeing up some individuals that spun out of Tesla that understand battery recycling. So, that’s an area that is very important and fundamental, whether it’s wind, solar, that you need to store it when the wind is not blowing, and the sun isn’t shining, but you also need transmission. You have to go where the wind power is. And so we’re looking at companies, both in Europe…so our research team, we have four or five analysts in London. We have a couple in Tokyo that are looking at things, like what is Toyota doing in hydrogen, particularly if you do green hydrogen, and alternative fuel cell approaches. So, that’s what we do. And that’s just an example. And we do vendors to Boeing and Airbus, and what does that mean if the max gets back, and what does it do with this talk between Airbus and Boeing with regard to subsidies, and companies in that area that also have capabilities that are…like drones, can you use them in the commercial applications. And so we have 35 years of conferences. So now we do it in media and entertainment. We’re doing one on healthcare. Last year, we had the head of Pfizer, we had the head of several hospitals. And we do that in conjunction with Columbia Business School. We just did one on media and entertainment. We do it on specialty chemicals. So, that’s how we gather data, but we like to go visit companies, Meb, and that is what our analysts are going to start doing all over again, wherever they are in the world.

Meb: You guys have been well known for that. It is almost like your calling card for a long time, being really industry-focused, reading the trade mags, getting really deep, like you mentioned, on a lot of these industries and themes. How much of that does then inform the actual security purchase? And what I’m getting at is really the sort of portfolio sizing, thinking about, hey, look, we see an opportunity in, whatever the theme may be, in batteries, or…?

Mario: You had it right with regards to our disciplines. And when we buy a stock, like HRI, which was spun off from Hertz Equipment Rentals, new management came on board, reasonably poorly managed before. The stock was trading at around $28 on the spin-off. The ETFs, like some of them, couldn’t own it because it was too small. It had $28 stock, it had about $30 million shares, a billion-dollar market cap. So, we were able to buy 15% of the company. But when we do that, we don’t own it in one account. We own it in mutual funds, and we own it in separately managed accounts. And now that the stock’s $110, we trimmed it back a little bit, depending on the tax nature of the individual client. So, we customize the approach for the client, whether it’s taxable or tax-deferred, that is tax-free. And that’s an interesting challenge and doing that, independent of that, we don’t like to have a position get over 5%. I’m on the Barron’s panel for the last 35 years and one guy, Bailey Griffith, had…Tesla’s becoming a very significant portion of his portfolio. And so they logically trimmed it back. And that’s us. And we don’t like something getting up 6%, 7% or 8%. No matter how good it is, there’s always something that go wrong. Then you get the market mechanics that are different this time. In the 1960s, when I joined Loeb, Rhoades, and I had been buying stocks in the late ’50s, you had guys sitting at a trading desk looking at the tape, and they were basically looking at MOWOS and doing it that way. Commissions were fixed, and they were significant. And May of 1975 comes along, Meb, and the commissions are broken, they start trading at 25 cents. They dropped to a dime and today you’ve got Robinhood at zero even though they’re paying for order flow and not making it as transparent as they should be.

Gary Gensler is going to look at that with a microscope and start saying, is this what they call national best bid and offer? Are they getting the best bid and offer? How was the Citadels, Susquehannas,

Virtus work in that environment? How much do they pay? How much are they making? And the second part was back in January of this year when you had the short squeeze and we had a big position at Tootsie Roll, for example, they went from $30, which we figured was worth $45. And the individual running it is now close to $90. And at some point, somebody is going to want to own it, but the stock spikes to $48. And so we would take significant gains in that and then we’ll buy it back at $28, which is a cut, too. And the same thing with a company called National Beverage located in Boca. Tootsie Roll is run by an individual who lives up in Newton, Massachusetts and works it out of Chicago. And then you have the AMC, and we follow the theatre business because we follow the movie industry for 1968 or forward, and so we know the concepts of content and distribution. And so when you look at an AMCX, what does it do for all the content providers? And how does that work with regards to the Disney, Fox deal? The new Fox, how does that work? And so we keep that high on the agenda. Obviously, you’ve got streaming music. Streaming music is new. And what is Spotify doing? How many customers do they have? How much individuals are willing to pay for it?

But then we look at the vendors, there are three companies, Warner Music, which went public. It was selling at $27, $28. We own Vivendi, we’ve visited them often in Paris. Sony I have not visited them in Tokyo, my office has. And Tokyo we keep track of that, and we look at what is going on in Vivendi. Why did Ackerman, for example, just buy 10% of the company? Why did Tencent Music by 20%? Why’s the company spinning it off? So, we look at those things with great detail and figure out what is the value of the company today? And what is it going to be in three or four years and can that multiple hold? Going back to what I said, what is the tax rate on the corporate profits that are going to be robust this year and early next year? And what does that impact on the deficit? Corporate taxes are like $300 billion of the $4.2 trillion that we’re raising. And will that go up? It will go up, even if they don’t raise rates because companies are very profitable. Well, what impact does that have on EPS? And then on top of that, and the final thing, which you started this conversation with, what’s the multiple? What happens to a 10-year bond, which you use as a discount factor? And if that’s a 150 today, or whatever pips they are, you basically look at that and say, if inflation is going to be at 2%, they can have a cooling-off period and it stays at 2%, what’s the 10-year going to look like or what does that headwind going to do to stocks? And what are the implications for exit multiple five years from now? And then you look at the buyers. You’ve got the PE guys, you’ve got strategic, and then you’ve got SPACs. And the SPACs are…Gary Gensler is trying to slow down the SPAC dynamic, but if you and I were talking three years ago, if you’re doing podcasts then, we’d say, “Hey, look, companies need to go public,” the decline of number of publicly traded companies, this is just one of the ways that Wall Street comes up and a capitalistic system comes up with ways of having companies go public. And obviously, they’ve got to have new rules and new regulations and electronic fence around it. But if you buy a SPAC as an individual investor, and you buy it at the IPO price, you have what I call no risk because the money has to be put into a trust fund and you get that money back in two years and you got a free peek, you stripped the warrants out. So, there’s a lot of going on in the mechanics of the market.

Meb: Well, Mario you’re doing SPACs before SPACs were cool, even in far-flung places like Italy.

Mario: No, we were teed up to do some SPACs. In ’08, ’09, we actually launched one, and they got a two-year life. And unfortunately, we teed up three companies to buy in February of last year when in January, Wuhan became obvious as to a challenge. But it became very obvious when it broke out in South Korea and Italy and how SPAC was designed to buy something in Italy. And we gave the money back. And now we have two others that we launched, then we’re thinking about one that I’m the CEO of a public company called LICT in the rural broadband and rural America telecom and we’re considering doing a SPAC there. So, we’re not early, but we’re there and we understand the mechanics and understand the process. And it’s an interesting part of the financial dynamics of a free market system. You’re going to make mistakes. Some of them, like Nikola, we were a little too aggressive in terms of what they presented. The stock at one point in time was selling at a market cap of like $40 billion. Today, it’s probably $4 billion.

And we had a company called Navistar. Navistar had more technology because 18% of the company was owned by a company in Europe called Volkswagen that had a lot of the capabilities in the new EV and dynamics and we figured they would buy it. And sure enough, they came along and bid $36 bumped it to $40-odd, and then they are paying us $44.50. And we, along with several other holders, were significant holders of that stock. And that becomes a liquidity event for our clients. Unfortunately, it’s an involuntary conversion. If I sell it, unlike a real estate guy with a Section 1031 you can’t roll it over. Our clients would prefer keeping Navistar, which has $4.5 billion market cap. That stock could triple from here. So, instead, we’re selling it to Traton. Traton was the Class A big truck spinoff from Volkswagen, and that went public at $27. They’re going to raise some money and we’re going to be a big owner of Traton over time. So, that’s how the dynamics work and how you know a company, you know an industry, how big is the big truck market in Europe? How big is it? They have, like, 24% share of that. They had none in the U.S. And it was logical that they would buy it. So, that’s why we teed it up and we had… So, a new management came in, Troy Clarke. We put him on our hall of fame this year because of the great work he did resuscitating the company. So, that’s what we do every day, every week, every month, every year.

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Meb: I was looking through some of your holdings and you guys tend to own these stocks for a while if they continue to deliver. We’re actually heading to our family farm in Kansas so…for wheat harvest, this next coming week and so that there’s quite a…I imagine there’ll be a lot of…John Deere is out there as one of your holdings.

Mario: That’s a good point. When you look at the three equipment companies, I started covering the farm equipment industry back in 1967. I visited with John Deere, Massey Ferguson in Toronto. J.I. Case was located in Racine, Wisconsin, and they moved down to Houston. Today we’re buying Case New Holland. And we’re buying it because of what’s happening to cash flows at the farm level, but we’re also buying it because they are going to do financial engineering. They’re controlled by a company called Exor which is an Agnelli family controlled business. And they’re going to do some financial engineering. They brought a new chap in from…that ran Polaris, did a great job at Polaris, his name is Scott Wine. They got like $1.3 billion shares, the stock $16, that’s a $20 billion market cap. John Deere is probably $80 billion last time I looked and they did have some profit-taking recently. But when you look at the price of beans, wheat, corn, and you say what’s going on in China, how are they buying beans? What does that mean for Brazil? What does it mean for the agricultural ecosystem? We keep all these dots in our perspective, and we try to visit these companies. J.I. Case is located…now the corporate headquarters in the Chicago area. We’ve got to get ourselves out to see them. We talk to them on the phone. We listened to the Zoom calls. We listened to the conference call when they bought Raven the other day, which gets them into precision farming, less water, more precise planting. So, when you’re doing wheat out in the family farm, they probably have contract combines… What do you got, 2,000 acres out there?

Meb: Yeah. I tell you, well, less now, but I tell you, the one thing you notice is you wonder why… It’s like the most sophisticated technology you’ve seen anywhere. I remember riding around on the combine as a kid and it was like TV screens and monitors and GPS and air conditioning. It was much nicer than…

Mario: You’re giving away your age, you’re a rookie.

Meb: I know. I know.

Mario: That’s an expensive piece of equipment. The typical farmer has got to have at least X number of acres otherwise he does that on a contract basis.

Meb: Yeah. My old man used to say, I mean, the agriculture sector, just like every industry goes through its booms and busts and during the ’80s, and then there was a big run in the early 2000s for agriculture, then it kind of plateaued for a while. But it’s perking back up lately, I think over the last year. But one of the areas that you guys talk about, this sort of PPP, people, profits, and the last one being planet is kind of a cool theme that you guys have been hitting on. Would you mind talking about that just for a second?

Mario: Yeah. That’s great. Look, the climate is important. And we have to be concerned about that. So, when you look at renewables, wind, solar, and the various elements in the ecosystem, what company in Omaha provides infrastructure, that is transmission equipment? What company provides galvanizing, for example, and also infrastructure? So, you can identify the Valmont…and they also are better known for their irrigation equipment, which is, not for wheat but for corn and they’re using it now for beans, and sometimes for cotton. But you also do that because water is precious and scarce. And as you see the drought in the U.S. and the weather changes. But what we did, and I’m glad you brought it up, and it took us a year and a half to get it through the regulators, we did an ETF that was semi-transparent, in other words, it’s actively managed. And you don’t show your holdings until the end of each quarter, which your money managers file, which is a 13F. If you have over $100 million, you get to file it. That’s the only time in which we… And we offered it to our investors, that are existing investors, but no fees. So, basically no cost for the first 12 months up to $100 million, and then we’ll figure out what we’re going to do next. We launched another one for growth innovators, and we have three or four more on queue. And as a public company, we absorb the cost of that because we think it’s right for the environment, right? Because the climate changes. And so they put wind in that. We have a teammate who covers water out of St. Louis. He was working at A.G. Edwards. They were taken over by Wachovia, which is now Wells Fargo. And he joined us about 12 years ago. We had been covering utilities ever since Enron had a problem and we’ve decided that the utilities in an environment, which they would earn a rate of return based on a capital structure and based on the PSC, that public service commissions or public utility commissions in the states that we’re working in, we felt that they would do okay.

Now, they’re migrating to get rid of the old facilities but go to a transition fuel, which is not gas. So, we created this Love Our Planet and the People, LOPP. And it is a slow start. First, we’re raising assets but slowly and I think we’re up to, I don’t know, $25 million, $30 million in that and we will lose money, but it’s necessary. It’s the right thing to do. The other thing we do, which is not necessarily copied, but I copied it from Berkshire Hathaway about $20 to $30… I met Warren because he was at Columbia Business School. And I met him in part because I covered a company that he controlled…was actively invested in called Pinkertons. I was doing business service companies back and I watched what he did. And then he gave away a certain sum to shareholders. So, our public company, GACO, went public in 1999, just before Goldman Sachs did right after…I think Neuberger Berman went public after us as well. We give money to registered shareholders to allocate to the 501(c)(3), that is a charity of their choice. And we’ve been doing that with three companies now, Associated Capital, LICT, which is the telephone company I’m the CEO of, and the shareholders like that. The ETFs tend not to register their shares, unfortunately, but they don’t own any of our shares of the three companies. So, we hope more companies do that. Instead of the CEO giving money out to his favorite charity, we give it to the shareholders to give to their favorite charities. So, that’s part of our giving back. It’s part of our social responsibility. In the case of LICT, I actually gave money to all our 500 teammates to go out and give if they found them…the local schools where they would give Chrome if the kids couldn’t afford it, give them connecting devices, and give them the speed if we could bring it to them. That’s what we’re doing in that regard. So, that’s an example. The infrastructure area, we have a bunch of stocks, of which Case New Holland would be an example, but there are others. And whether it’s grace construction products, which put 7 of the 9 directors on the board, and we know they’re going to sell it within 2 or 3 years, the stocks, $22 or $23, got about $70 million odd shares, so it’s $1 billion private market cap. We think they’re going to get $30 to $35, so you make 50% in 2 or 3 years.

Meb: That’s not so bad.

Mario: Those are the kinds of things we look at. What’s the catalyst? What’s going to make the profits to the shareholder over an extended period of time?

Meb: Mario, two more quick questions, and I’m going to let you roll. One is, I think you would probably agree, I’ve heard you speak on this, at length, in the past about capitalism and free markets and investing being one of the best ways to build wealth by owning…ownership in amazing companies. And one of my big struggles is really trying to find the way that we can promote that in the United States. Our public school systems don’t teach personal finance and investing.

Mario: And they got to start teaching that in grammar school or in high school, just open an account, open a bank account, understand the negatives of credit cards, understand what savings are all about.

Meb: Yeah. I think it’s a challenge in the world of Robinhood and hyperactive day trading, it’s a frustration and then, hopefully, we’ll see that change.

Mario: Now, Robinhood, at least Robinhood is getting the individuals that learned how to be active on “Fortnite” and they’re gaming, but they should have put electronic fences around it. For the last 15 years, we host the dinner at Berkshire Hathaway, Morgan Stanley was doing it before. Alice Schroeder wrote a book on Warren, for whatever reason, he didn’t want to do it anyway, now I do it, I pay for the dinner, our firm pays for the dinner. We have 400 or 500 people who contribute to Columbia Business School and…every year and we’d like to look at how do we give back and what are we doing? And then in addition to that, we’re actively voting our stock from a governance point of view, what the companies do with regards to compensation, what are the golden parachutes, what are they doing with regards to other dynamics. And we started a green fund then that morphed into socially responsible and now it’s ESG. So, we’re kind of keeping our ore in a lot of waters, so to speak, or a lot of ores in the water.

Meb: Last question, Mario. If you look back over these number of decades, our closing question is what has been your most memorable investment? It could be good, it could be bad, but the one that’s seared in the front of your brain, anything come to mind?

Mario: Back in 1973, I think I was recommending LIN Broadcasting which run by a guy that left Cap Cities with Tom Murphy and Dan Burke. LIN Broadcasting with like a 40 bagger for us, so. It was then split up. They were also one of the first to go into the spectrum auctions and we went from the broadcasters to the Spectrum Cable and you watch the industry’s biggest failures were bidding too low for Netflix when Reed Hastings raised the price for the first time and the market got the shovel. We owned it, but it was a couple of years later, so we make a lot of mistakes, buying stocks that don’t work out because managements don’t execute on the plan. We try to give them training wheels if necessary. We’re active in the 13D filings. So, we’re owners and we represent surrogates for our clients who want to be owners. And when you deal with the ETFs, like, I’m not going to knock Vanguard, but they can’t do the kind of work that they do, in terms of each company and analysis because they don’t have the historical context of the company or the industry. And they need the ISSs and the Glass Lewises to aid them and abet them, but they own 25%, 30% of a lot of our small and mid-cap companies, and we have to deal with that. And if they want to vote a certain way, they don’t file 13Ds, they file 13Gs and the rules can change. We’ll see what Gary Gensler is going to do. So, far he’s putting his fingerprint on a lot of issues and he’s got a lot to look at.

Meb: Mario, you’ve been very generous and gracious with your time today. Thanks so much for joining us.

Mario: Thank you for the opportunity.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.