Value Investing with Chris Pavese

Our guest is Chris Pavese, a Wall Street veteran and current President and Chief Investment Officer at Broyhill Asset Management. In this episode, we dive deep into the world of value investing. We discuss whether the tech sector still holds value amidst the AI frenzy and how market dynamics have shifted since the late '90s. We address top-down vs. bottom-up strategies, navigating drawdowns in today's market, and uncovering investment opportunities beyond tech, including a unique take on the online music industry's valuation. Plus, we explore the impact of the ESG craze on stock markets, the fascinating story of tobacco stocks, and the energy industry's current landscape. Don't miss our conversation and insight about catalyst-driven value in a market that has gotten bananas for growth.

RECORDED AUGUST 25, 2023

• SHOW NOTES

  Paul Barausky: 0:02

  Hey everyone. Welcome to this episode of the fat pitch podcast. As always, I'm your host Paul Borowsky from ceiling investment securities and I'm joined by my co host, Clint Sorenson. Clint. Good afternoon.

  Clint Sorenson: 0:15

  Hey, Tom, nice to be here.

  Paul Barausky: 0:17

  So once again, you supply this episode's guest someone you've known a long time, someone I've known a short time. Why don't you introduce them to our audience?

  Clint Sorenson: 0:27

  Yes, it really excited. We have Chris Purvis here to talk about what he believes is a fat pitch in today's investment environment. And I've known Chris for quite some time he suckered me into the CFA Institute in North Carolina to be on the board many years ago. And I'm thankful to be able to call him a friend. And he's just one of the great minds as it relates to investing. So Chris, thanks so much for joining us once you but tell our audience a little bit about yourself, how you got started the industry and what you do now.

  Chris Pavese: 0:57

  Yep, thanks for Happy, happy to be here for the intro. Thanks for the invite. So let's see where to start. I started my career at a big bank on Wall Street back in the late 90s. There through about 2005. So pretty close to the peak in the housing market after living through the peak in the tech bubble, at least the first tech bubble at that point moved down to North Carolina to help manage the assets for a family office, which was an old furniture family in western North Carolina. So fast forward almost 20 years. And we've now spun the investment team out of the family office. So Broyhill Asset Management is a newly independent entity as of last year. And focus is value oriented global opportunistic equities. So finally having some fun. Well, at least we were having some fun last year after a tough stretch for value investors. But I think we're just getting started.

  Paul Barausky: 1:58

  Yeah, there's certainly some value being created out there or some wreckage depending on how you look at that. And while we're recording this as this will be delayed. Chairman Powell is either already spoke correct.

  Chris Pavese: 2:10

  I think he's this afternoon.

  Paul Barausky: 2:13

  Yeah. Last year, when he spoke it was every sector down. So you said value investing? How do you guys think about value in the traditional sense or the Afghan spin on? Thanks?

  Chris Pavese: 2:24

  Yeah, no, that's a good question, Paul, I think you can use the word value investor. And it's like saying your mutual fund investor, right? It means different things to different people. You know, the old fashion, Ben Graham definition of value was pretty much looking at statistically cheap stocks on a PE or PP basis. I think it's become pretty clear sooner than some than others over the years that, you know, in a world where intangible assets are making up a greater portion of the balance sheet, and it is making up a greater portion of the s&p and overall market that no longer cuts it. So value us is just simply buying something for less than we think it's worth. You could be buying this, you know, the classic Graham cigar, but so you know, looking for that 50 cent dollar, or we could buy an 80 cent dollar that we think is going to be worth two and a half years. So we don't, you know, we don't necessarily define it by any particular metric. It's just investing in things that we think we can understand that we can think we can understand better than most, where we can define our edge up front. Know why something's undervalued, know how our view differs. And just wait for that gap to close.

  Paul Barausky: 3:37

  You know, you mentioned your mutual fund investor, and we're talking about value. And not a lot of people know that I was in the equity world before real estate because I've been in this so long, but you still get a chuckle. I was in York City with a large momentum growth manager in the late 90s. Right up through the.com. Bubble. And I remember as a brash, 28 year old declaring the value is dead, never to come back. And then I see a bubble and a lot of tech that you guys both saw being much more skilled in the musings of the stock market a lot of people call the.com bubble point, or 2.0. So do you think there's a lot of value out there across the tech space? Or is the AI run up to kind of soured that or I think there's a lot of interest in that coin. I know you get asked a lot of questions in that area.

  Chris Pavese: 4:28

  Cleany. Want me to jump in or you want to share your two cents? Oh, yeah.

  Clint Sorenson: 4:32

  I have no sense that it's nonsensical at this moment. So yeah, go ahead, jump through that

  Paul Barausky: 4:39

  one out there.

  Chris Pavese: 4:42

  Yeah, you know, I was waiting for that one fall. We've written a lot about this. What's interesting is and I do think 99 2000 is probably the right analogy for what we've just lived through the last several years and by some measures, I'd say, last several years were magnitudes greater than 99 2000. lot of ways, I mean, it's still different in a lot of ways. But what's interesting is, if you were shopping around for beaten down tech stocks in Oh 102 After the Nasdaq fell 80 some odd percent, you still underperform value for the next 10 years from market cycle to market cycle leadership rarely stays the same. You know, you can think back to the nifty 50 or starting in the 90s. Tech leading, specifically us tech, leaving the market and global markets higher. Right, once that bubble burst. Tech didn't lead us out of there. It was what was left behind in that prior cycle that led the way out. So whether it was non US International, em stocks, whether it was reached, whether it was materials, but it was financials like housing, which carried us to the next bubble, and then in Oh, 809, right, it looked like buying Citigroup and banks that were down 90% Plus was the way to go. But again, that's not what led us for the next 10 years, we went back to tech, the one thing they are this year was how quickly the same stuff reinflated that's lasted as long as it has. We've been wrong in saying this so far this year, but I don't think we'll be wrong, you know, over the going forward period. But I would be surprised if this market continued. And we were just right back to the same old party we've been at for the last several years. And I think the market's reaction in the video yesterday was telling, right? I mean, if markets can't rally on 88%, top line growth, right, like what's left to get us going here,

  Paul Barausky: 6:28

  refresh our audience. We're estimates 207. And it was like 290, or am I wrong? Am I thinking about something else?

  Chris Pavese: 6:35

  I don't have the exact numbers offhand. Paul. I just know, right? It was a blowout quarter by any measure. It was a blowout guidance, raise stock was up double digits after hours opened up big and closed down flat and is selling off hard today. So I mean, yeah, I think that's telling.

  Paul Barausky: 6:54

  Yeah, quite what's your take on what Chris, since you said, I'm not going to touch that now that he did?

  Clint Sorenson: 6:59

  Yeah, he knows. I agree. I tend to a lot smarter than me. So I just want to stick to the macro the easy stuff. But no, I think one of the things, Chris, that I've noticed it's happened before. But you know, it's so funny to talk about the 90 90,000 period, because there's so many similarities between what happened in 21, right 21 through maybe this little echo move now. But we had growth outpaced value by such a wide margin. And over the next 10 years, like you said, value just dominated em dominated. And I think it's interesting to see, like commodities dominating start to see a lot of those similar setups today, right? Where everything kind of pushed growth up, growth got extremely extended relative to value. And now you can have that potential mean reversion or at least that bet long term. And you know, you and I talked about privately that profits over promises kind of theme, right, getting away from this long duration, low rate, you know, easy money trade, and moving towards something that's more fundamentally based. Does that kind of your view to you kind of echoed those thoughts

  Chris Pavese: 8:06

  be No, I agree with that also say, Clint, you were right on the call early this year, right to make the call that growth was due for a bounce. I'm looking forward to you reversing that call, because it'll tell us we're about to have a tailwind.

  Paul Barausky: 8:19

  But you want to reverse

  Clint Sorenson: 8:21

  it reverse. Reverse reverse last month. So

  Chris Pavese: 8:25

  that makes sense. Right? Like, I think we're seeing the same opportunity. We were jumping up and down and 1920 and 21 saying like, people are leaving these companies on the table, like everyone's just ignoring these businesses that are throwing off so much cash, gobbling up share count, and just stocks weren't moving, right. And so as long as they weren't moving, we were buying as much as we could hand over fist. And then we know how that played out. Right? So I mean, running long, only concentrated value, we wound up ending 22 with a positive number. And I've managed to squeak out another 15 or so percent, year to date hasn't kept up with nividia hasn't kept up with the NASDAQ at least this year, but you're looking on a long term basis and avoiding those big drawdowns is the way to go. And how you compound longer term?

  Paul Barausky: 9:13

  Well, you know, it's interesting, you say that I preach risk adjusted returns all the time, not just returns, you start to factor in emotions. Most people don't stomach the draw downs, they've gone and run. And there's a lot of new investors out there that started after the global financial crisis, both professionals and amateurs. I mean, they wrote in a near Goldilocks period, right. So the other thing I would imagine you saw, Chris is a lot of these value companies also just had to operate good, sustainable debt free businesses, whereas the high fliers were just taking their own stock and levering it more to acquire more businesses and companies. So that probably I imagine that further cemented your belief that you know, when the storm comes, you want to have a clean balance. She

  Chris Pavese: 10:00

  right there's nothing wrong with leverage on the balance sheet. You just don't want to mix financial leverage and operational leverage. And that's where you get in trouble.

  Paul Barausky: 10:08

  Yeah, yeah. So are there any themes besides tech right now that you from a let's just say top down, not bottom up some other things on your mind? That might be a fat pitch?

  Chris Pavese: 10:17

  Yeah, I think so what saved us last year to a large degree is? Well, I would point to two things, right. One is the theme that Clint has been talking about for the last couple of years. And that's profits over promises I like is a nice little catchy phrase, we're not smart enough to come up with cute phrases like that for what we do. But so we just borrow clients. But you know, that's true. I mean, people were just right, literally just buying profits blindly. Right? With I mean, companies that were not printing, you know, not making any money, either on a cash flow or even EBIT da basis. And, you know, even ignoring stock based comp, which we won't even get into that, and just completely ignoring these businesses that are gushing cash flow and just trading at, you know, historically very cheap multiples. The other side of that, and I'll give an example of one of those in a second. But the other example top down, I'll say is, you know, catalysts are more important in this market. Right? So we think the market overall, broadly, right, so there's pockets of value inside of the US and s&p 500. But overall, I would say is, you know, trading at historically rich valuations on historically stretched profit margins. And so you don't want to be dependent, right. So you know, cheap stocks can get cheaper in a bear market. And so in a tough market like this, we like having hard catalysts. So whether that be a pending spin off, or separation of two businesses, you know, or there's a specific acquisition out there. And last year, and Clint knows, we've talked about this quite a bit. But Activision has been our largest position in the portfolio for some time. I think people for a number of reasons were afraid to get in front of this FTC. Because they've been very verbal, and very anti competitive, right. And so the spread was about as wide as we'd have ever seen for what looked like a pretty clear cut case for the courts to decide that's still being played out. But for what it's worth, depending upon when this airs. You know, we still think the stocks mispriced here, right, it's trading between 9192 We think the deal closes in the next month. So right, it's not a whole lot in terms of dollar gains. And you have to assume if you annualize that number, it looks good. But obviously, that assumes you can reinvest in that rate, which is a whole different story, but still 91 to 95, over a month. Looks pretty good, particularly, you know, in a month when markets down four or five 6%.

  Paul Barausky: 12:40

  Yeah. Clearly, you're much more of an equity expert than men. You've known Chris a long time, why don't you think of a couple of well cooked questions you have for your friend?

  Clint Sorenson: 12:50

  Yeah, so one of the things I would ask, Chris is, what other areas have seen opportunities? I mean, one of the things I really loved about your approach, especially over the last several years, right, it's just been, you've got a knack for picking out companies that tend to get taken out too, which has obviously been great. What are you seeing now, you know, I know you do deep work, you know, you have a pretty concentrated portfolio, which are like, you know, what are some other names or even that you mentioned, major industry segments of the market sectors, or even regions globally, that you're really focused on.

  Chris Pavese: 13:22

  So another thing we've talked a lot about this is similar, but it's sort of a little bit more granular than just talking tech and cash flow. But the recurring story that we're hearing again this year with AI, but is just the amount of money that Silicon Valley is throwing a lot of these tech companies means that like, anything that looks like it could be disrupted, you know, has gotten completely clobbered. And anything that looks like it is positioned to disrupt an incumbent is trading at just obscene multiples. The first time we really laid out the steam was in the payments industry, right? So you've got the whole Buy now pay later, you got the whole FinTech craze, you had companies like PayPal, right, which we've owned prior to being spun out of eBay. We did not own it last year, and we have not owned it for some time. But PayPal, which used to trade at a mid 20s, multiple, for no reason whatsoever, went to 70 times earnings in 2021. Today, it's trading back down close to a high single digit multiple, right? Like it's literally 1112 times earnings, the same business, it's literally gone from 70 times earnings to 10 to 12. Nothing changed, nothing changed. And so, you know, we've seen that over and over again, another example more recently. And Clint, we've talked about this at length, but you know, AI, all the craze and so anything that looks like it's going to be in trouble, right? It's interesting. You look at the amount of times people have mentioned AI on earnings calls over the last year and it's like, it's probably a pretty good correlation with their stock price. And the flip side of that is companies that look like they're at So AI, musics an industry with followed for some time, I think it's an extremely attractive model for the content owners. But for some reason markets got on its head that we were all going to be listening to AI generated. Drake and Taylor Swift rather than actually going to see real people live at concerts. And the reality is, nobody wants to watch a computer generated artist on stage. And that content has tremendous value. You know, the decades and decades and decades of back content have tremendous value. And the reality is that, you know, if AI is going to continue to generate songs that sound like Taylor Swift Guess what? Taylor Swift probably going to figure out how to get paid on that, or specifically Universal Music is going to figure out how they get paid on that. And there was an interesting comments, right, there was news this week or last, that they're coming out in partnership with Google, to be able to do that, just that right to identify AI generated tracks to make sure that the artists are properly compensated when their likeness or voice is being used. And so it's just a good example where like, you know, AI generated craze everything was going through the roof. Meanwhile, UMG was like last quarter of its market cap in the first few months of this year, which for business that's generating high single digit, double digit top line growth, with little cyclicality with little recession risk. And pretty much as far as the eye can see, I think that's a super interesting opportunity.

  Paul Barausky: 16:29

  Now, if I can sum that up or dumb it down, that's a really good thought is everybody always talks about the disrupter go look at those that got disrupted where it was unnecessary. Yeah, a lot. Probably better risk adjusted thinking or at least to accompany your growth, right. Don't try to ride the disrupter. Yeah, go and look for what got routed unnecessarily. Yeah,

  Chris Pavese: 16:52

  a lot of times, it's really not a Silicon Valley would like us all to believe, right, like the payment space, the regulatory hurdles to get into banking and right like and how ingrained some of these companies are. So we've talked about the Fiserv. So the world and FIS has another interesting story right now, which is basically unwinding the acquisition of global payments they just did a few years ago, which again, might be a super interesting, soft catalyst. But those businesses are so ingrained into community banks, credit unions, small regional, and some of the largest banks in the world, JPMorgan Chase and Bank of America of the world are not going to just boot their legacy infrastructure to work with a Silicon Valley, upstart that might have a nicer looking user interface. It just doesn't happen overnight, if at all.

  Paul Barausky: 17:43

  Yeah. Hey, since we're talking about cute phrases, I came up with pernicious political partisanship. That's alliteration. Does what's going on in government planned in your thinking? Like, like,

  Chris Pavese: 17:58

  I don't know, if this would come into is a directly related to government. I think there's a loose correlation there. But I think, you know, another trend that I think has gotten just went incredibly too far over the last few years was this ESG craze. And it started out with good intentions, right? But the reality is like, Who determines what's good, and what's bad and what's right, and what's wrong. From a stock selection perspective, the s part is hard, the E part hard, the G part is pretty easy to score, right? But the rankings are inconsistent. And the reality is, there's so much money that flew into that industry over the last five years. And the reality is investors are basically buying the same funds with a higher expense ratio, just because they've got an ESG wrapper. But that's created massive distortions in the market, right? So we don't have energy exposure today, or a whole lot exposure to commodities, industrial materials. But that's one where people are looking towards this Evie evolution. And that's not going to happen overnight. We're gonna need fossil fuels to get there. And so you had this capital, just this enormous amount of capital just get sucked out of the energy industry and get thrown at EVs, which is going to take a generation before that those economics make sense. And in the meantime, we just stopped exploration production rig count, like they just fell off a cliff. So guess what, like energy prices, oil prices went back from literally, we had zero for a couple of minutes there right in the futures market. And went back to 7087 as a barrel. The other issue which we've talked a lot about us tobacco, right, so tobacco is a bad word. I mentioned it to institutional investors, and we're quickly like booed out of the room. But the reality is, there's something like 13 trillion in assets in Europe that have signed a tobacco free pledge. So literally, they've institutional managers that will not invest in tobacco. Same thing, right. Tobacco is historically traded in line with consumer staples. During this last five years, consumer staples got to a point where they were trading at a record discount to the market. because nobody wanted to touch boring staples, there was no reason to when you could own things like Tesla and the video. And these Buy now pay later companies. And then tobacco was trading at a record discount to staples that were trading at a record discount to the market because nobody wanted to admit that they were investing in tobacco. But the reality is like a company like Philip Morris, today, almost a third of their sales are in reduced risk products. They've said publicly that's going to be greater than 50. In a few years, the management team has said publicly that they've explored literally selling off their traditional combustible cigarette business. And if you look at the cigarette business, which by the way, is one of the most profitable businesses in history, even though volumes may be shrinking globally, they're not shrinking fast enough to offset price declines. But they're going to have half that business growing at 20% annually plus with actually better margins than the traditional business, which was one of the most profitable business in history. And so like, and Philip Morris today is trading at 14 times. Right? So I don't have to decide what traditional tobacco should get. And we can debate what traditional tobacco should trade at. But I can tell you that 14 times is not the right multiple for the growing portion of the business that's traded at now that's grown at 30% annually and generated margins higher than even tobacco companies, right? Like you think about a consumer staple company like Coca Cola, Procter and Gamble, like those companies trade at 25 times earnings easy. And they're not generating close to the returns on capital that tobacco are. And they're not growing. This is a consumer staple company that's growing 20 30% annually with higher and returns on capital than something like a Coca Cola. Like, you know, I feel stupid, saying publicly what we think that business should treat it as a standalone as a standalone entity, but like it's not 14 times earnings.

  Paul Barausky: 21:57

  Well, I can tell you based on all the time I've been spending in Europe lately, there's a lot of people

  Chris Pavese: 22:02

  using tobacco products. And a lot of people use

  Paul Barausky: 22:05

  NYCoS there's a few cities in Europe, where I think you come out of the womb with with a smoking product I really do. Well, that's fascinating, you know, I was at Clinton helped me prepare for something at the Booth School of Business at University of Chicago last year, to which Thank you, Clint, that was our startup telling people inflation was gonna come down. We're right, of course, we're not right about treasuries, they're stubborn and annoying, knowing the hell out of all of us. But they talked about the green tax on your return, Chris, that if you want to go ahead and do these things, you have to tell your investors that they will pay a higher fee and likely have a lower return. So if you want to do that, you're giving up alpha,

  Clint Sorenson: 22:48

  at the end of the day, what ESG investing should be used for. It's like an individual saying, Yeah, I don't like these type of companies for whatever values, reason and orienting their values. But instead, it became like, they tried to make it a standard, because it's a big marketing scheme. So it's

  Paul Barausky: 23:05

  got there. And Chris said, who dictates this? And look, I'll say, Clint, you know, me. I'm a huge I got huge concerns over climate change. I always have, I may not always fit in and Texas in the heart of oil and gas country. You know, and I'm a big believer like, Clint, that this transference to green energy does have good, good reasons. You know, there's very good reasons for it as it looks like our planet is heating up, we can get into a political debate on another podcast, there's 2000 of those. But that creates investment opportunities across the board. And I don't want any overlay deciding what I can or can't do. And I think that's your point, Chris, it creates, you know, opportunities to invest in and things you got to watch out for, I guess,

  Chris Pavese: 23:54

  we actually plotted right Google Trends in ESG, with tobacco multiples over the last three to five years. And that's almost perfectly inversely correlated. And I think the thesis was always as more and more of that business's revenue comes from reduced risk products. And as capital flows into ESG, slow, ultimately, that stock should rewrite. And for what it's worth, like, this year, shocker, right? We've seen all of a sudden people watch all these ESG conscious investors watched energy stocks and material stocks go through the roof last year. And so all of a sudden, they've either figured out a reason and rationalized investments in energy and materials, or they've stopped plowing money into ESG funds. And that's what we've seen this year. You've actually seen those flows start to reverse.

  Paul Barausky: 24:43

  Yeah. Hey, I got a question. Just out of left field share selfish. How do you feel about home builders?

  Chris Pavese: 24:50

  You know, that's a sensitive subject. We got that one wrong, Paul. So wrong. A home builder? No,

  Paul Barausky: 24:56

  Id got it wrong. I've just watched it with where interest rates are gone.

  Chris Pavese: 24:59

  Yeah. I think it's super interesting. I think it's a good story. So we were long builders, right? Like, I think the structural, the supply demand imbalance in housing, right? The fact that we've been under developing for home growth since the financial crisis. And we're so far below trend that, you know, it's just years and years and years to keep up, right. So there's plenty of data out there that support that thesis. So we were long a sort of mid cap builder, around COVID, pre COVID into COVID. And as rates started backing up, we panic and said, No way this works, right. Like with mortgage rates, where they're going, there's no way that you know, and with the home price appreciation we saw during COVID. And looking at price to income ratios being at record highs, even higher than what we saw during the housing market, we just thought there was no way that that worked whatsoever. It missed. And what we overlooked was, well, I'll use my home as an example, we moved to Charlotte in 2019. We're locked in a 3% 30 year fixed, we're not moving, we're never moving from here. We're just never moving. And so when you think about that, what that means is and you see it now, you know existing home sales have collapsed, because guess what, no one's moving. Right? And so what that meant for builders, which we totally missed and now looks you know, painfully obvious is new homes are the only things of selling and so they're just building all they can because if you want a home you have to buy something new because nobody's selling the old stuff. So I think that's been incredibly unique market and kudos to the guys that have stayed long throughout this run because

  Paul Barausky: 26:34

  me away, I would have done the same thing you did I armchair quarterback debt. And I'm here Look, you guys are in Charlotte. I'm in Dallas. They consider Texas the southeast the National Association of Realtors. So Clint knows I track inflation by using Case Shiller home price index, I look at the NAR, we look at the CRB numbers to look at commodities. And I look at wages. And if I can look at those three things, it kind of gives me my own roadmap, I'm looking at big decrease in the West, big decrease in the Midwest, big decrease nice. You know what we're off on home sales in the south point one or something like that, despite the just rates. So what it is, is it's new homes. They're pulling, because you're not moving all the guys that refight and locked in even better than you tell there was, I do not care what you not. So my other question for you. homebuilders also aren't paying nine bucks to buy for like there were a peak inflation. So do you do anything in the commodities area? Chris,

  Chris Pavese: 27:41

  we have in the past, we don't have anything in the portfolio. Currently, I would say, you know, a few years ago, I went back and looked at every single trade we've done historically, since I've been at Roy Hill. And what we found was, you know, call it two thirds to three quarters of our investments have been in consumer tech telecom media related industries. So things we can touch and feel and businesses that we have direct experiences with. There's examples of, you know, over time we have invested selectively in commodities and materials and energy, I can also tell you from the data that we looked at our hit rate has been much lower. And so the hurdle for us to get involved I think, just needs to be much higher. I just know we're better investors and consumer, consumer facing businesses. And if we can make our money and meet a return hurdles there, I just prefer to stay there. We've been taking tires on energy and industrials and materials for the last 18 months. And we've probably missed a good bit, but we haven't done anything that Yeah, I think, particularly I think the you know, the copper story is super interesting. Anything with you know, I mean, the reality is, Evie is happening. I don't necessarily think that auto companies will exclude any names, there were battery companies may or may not be the best way to play it. But right, like looking at the picks and shovels. Right, there's going to be massive investment. Going back to the political environment. There's been massive under investment in energy and commodities. You could look at capex over the last decade, really since the commodity bubble popped right during the financial crisis, similar to housing, massively under invested. And so you can look at the supply demand cycle across a lot of commodity markets and start getting comfortable. It's harder math for us, right? Like, like, I can look at supply demand of oil. You know, we can look at what OPEC is producing, we could look at what demand is in the US. And even with all those numbers in front of us, right? Like you're taking that to an estimate of war. We think oil prices should trade. We're still just like sticking a finger in the air. And the reality is a lot of those businesses, that's the one variable you need to get right. Right. And if we don't have confidence in our ability to get that right, we've got two options right either pass We're looking for situations where we've got another driver of value. And that kind of goes back to catalysts. Like historically, when we've gotten involved there, they've been in situations where we've also had another angle or a unique catalyst that was going to move us and protect us from price movements on the commodity itself. That's best case scenario for us. But we haven't been smart enough to figure it out recently.

  Clint Sorenson: 30:22

  I love the car concept too, just because I mean, the under investment in that space we had Tom Holliday on. He talked a lot about that trade. I mean, we just simply don't have enough to meet current demand. So it's a pretty compelling story from

  Paul Barausky: 30:36

  I know, we don't have enough lithium. Nickel either, right? Aluminum cobalt. Yeah, I've heard about this crazy was in Indonesia, somewhere I read an article a couple of months ago about you can strip these rare earth metals, and you can literally turbocharged them. With some treatments, it's highly volatile. So of course, they put these plants for lack of a better word, and third world countries that all take the revenue, I just can't remember the exact article. But it was bananas, science fiction stuff to a guy like me. So we wrap up today, if we go back to the fat pitch, you're talking about catalysts driven value. That's what the fat pitch is. Now in a market that's gotten bananas for growth.

  Chris Pavese: 31:20

  I think that's fair, I think and pair that with stuff around where you're hearing the most stories and most enthusiasm for disruption. And see if you can find something on the other end of that trade. Now you want to be careful, right? Because that's a good way to get run over because some of these businesses are ripe for disruption and will be disrupted. But if you can find them that are priced like they're going away, and you can get comfortable with the assumption that they're not going away anytime soon, and still likely to continue to grow for the foreseeable future. We think there's a lot of money to be made there.

  Paul Barausky: 31:54

  And we like buying things on sale. Who doesn't right?

  Clint Sorenson: 31:58

  Yeah, absolutely. Chris, thank you so much for joining us. Tell people how they can get in touch with you follow you on Twitter and LinkedIn because we put out a ton of great content,

  Paul Barausky: 32:07

  your phone number like one of our chats.

  Chris Pavese: 32:13

  or resist the urge. Your best way will probably be the new website, Clint which I'm hoping by the time this airs will be up and running. We'll be sending out a press release announcing sort of the spin out of the new firm Broyhill Asset Management new firms same name, same team, same same process. But yeah, website WWW dot Broyhill asset.com. You can find me on LinkedIn and Twitter under some combination of my first and last name I don't remember offhand. But if you Google Chris puppies Broyhill asset management you should find plenty out there.

  Paul Barausky: 32:48

  This was fantastic for everyone out there. Thanks for tuning in to the fat pitch. We hope you enjoyed this episode's guest Chris Bubbies. Chris, thank you and I guess I'll say go heels for both of y'all. Take care